MEDGENICS, INC. (Form: S-1, Received: 11/05/2010 18:03:00)

As filed with the Securities and Exchange Commission on November 5, 2010

Registration No. 333- ______

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

MEDGENICS, INC.

(Exact name of Registrant as specified in its charter)

Delaware		2836		98-0217544
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

8000 Towers Crescent Drive, Suite 1300

Vienna, Virginia 22182

(646) 239-1690

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Andrew L. Pearlman

President and Chief Executive Officer

Medgenics, Inc.

8000 Towers Crescent Drive, Suite 1300

Vienna, Virginia 22182

(646) 239-1690

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

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

Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, please check the following box. ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨		Ac celerated filer ¨

Non-accelerated filer ¨	(Do not check if a smaller reporting company)	Smaller reporting company þ

CALCULATION OF REGISTRATION FEE

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 Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine.

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.

SUBJECT TO COMPLETION, DATED NOVEMBER 5, 2010

PRELIMINARY PROSPECTUS

Shares of Common Stock

We are a medical technology and therapeutics company focused on providing sustained protein therapies. This prospectus describes the initial public offering of shares of our common stock in the United States. We expect the initial pubic offering price to be between $ and $ per share. We intend to apply to have our common stock listed on NYSE Amex under the symbol “ ”.

Our common stock is currently listed on the AIM Market, operated by the London Stock Exchange, plc under the symbols “MEDG” and “MEDU”. On , 2010, the last reported sale price of our common stock on AIM was $ per share on the MEDG line and $ per share on the MEDU line. We will effect a -for- reverse stock split prior to the consummation of this offering.

Investing in our common stock involves risks. See the section of this prospectus captioned “RISK FACTORS” beginning on page [__] for a discussion of the factors you should consider before you make your decision to invest in our common stock.

	Per Share	Total
Public offering price	$	$
Underwriting discounts and commissions (1)	$	$
Proceeds to us before expenses	$	$

(1) Does not include a corporate finance fee in the amount of 3%, or $ per share, of the gross proceeds of the offering payable to the underwriters.

We have granted the underwriters a 45-day option to purchase up to additional shares of our common stock at the public offering price, less underwriting discounts and commissions, to cover over-allotments, if any.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the shares of common stock, against payment on or about , 2011.

ROTH CAPITAL PARTNERS

MAXIM GROUP LLC

The date of this prospectus is , 2010

MEDGENICS, INC.

TABLE OF CONTENTS

	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

You should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized anyone to provide you with different information. We are not, and the underwriters are not, making an offer of these securities in any state where the offer is not permitted. You should not assume that the information contained in this prospectus is accurate as of the date other than the date on the front of this prospectus.

For Investors Outside the United States : Neither we nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus.

We obtained statistical data, market data and other industry data and forecasts used throughout this prospectus from market research, publicly available information and industry publications. While we believe that the statistical data, industry data and forecasts and market research are reliable, we have not independently verified the data, and we do not make any representation as to the accuracy of the information.

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere or incorporated by reference in this prospectus and may not contain all of the information you should consider in making your investment decision. We urge you to read this entire prospectus carefully, including the “Risk Factors” section and condensed consolidated financial statements and related notes appearing elsewhere in this prospectus, before making an investment decision. Unless the context provides otherwise, (i) all references in this prospectus to “Medgenics,” “we,” “us,” “our,” or similar terms, refer to Medgenics, Inc. and its wholly owned Israeli subsidiary, Medgenics Medical (Israel) Limited (MMI) and (ii) the information contained in this prospectus assumes no exercise of the underwriters’ over-allotment option. Certain technical terms used in this prospectus are defined in the Glossary contained at the end of this Prospectus.

Overview

We are a medical technology and therapeutics company focused on providing sustained protein therapies. We have developed proprietary technology which uses the patient’s own tissue to continuously produce and deliver the patient’s own protein therapy. We refer to this as the Biopump Platform Technology, which is designed to provide sustained protein therapy to potentially treat a range of chronic diseases, including the treatment of anemia, hepatitis C, hemophilia, multiple sclerosis, arthritis, pediatric growth hormone deficiency, obesity, diabetes and other chronic diseases or conditions. Our Biopump Platform Technology converts a sliver of the patient’s own dermal skin tissue into a protein-producing “Biopump” to continuously produce and deliver therapeutic proteins, and when implanted under the patient’s skin, has the potential to deliver several months of protein therapy from a single procedure without the need for a series of frequent injections. In our ongoing phase I/II renal anemia study, which includes 12 patients to date, anemia treatment has been achieved for several months without the need for erythropoietin (EPO) injections after receiving a single administration of our EPODURE Biopumps producing EPO. One of the patients in this study has exceeded two years free of EPO injections, which he had been receiving prior to treatment with our EPODURE Biopumps.

Our Biopump is a tissue micro organ (MO) that acts as a biological pump created from a toothpick-size sliver of the patient’s dermal tissue to produce and secrete a particular protein. We have developed a proprietary device called the DermaVac to facilitate reliable and straightforward removal of MOs and implantation of Biopumps. With the DermaVac, dermis MOs are rapidly harvested under local anesthetic from just under the skin to provide unique tissue structures with long-term viability ex vivo . This process allows us to process the dermal tissue outside the patient to become one or more Biopump protein producing units in 10-14 days, each making a measured daily amount of a specific therapeutic protein to treat a specific chronic disease. Based on a patient’s particular dosage need, we can determine how many Biopumps to then insert under the patient’s skin to provide a sustained dose of protein production and delivery for several months. The dosage of protein can be reduced by simple ablation of inserted Biopumps or increased by the addition of more Biopumps to provide personalized dosing requirements for each patient as needs change. We believe that medical personnel will only require brief training to become proficient in using our DermaVac for harvesting and implanting, which will enable implementation of Biopump therapies by the patient's local physician. We have demonstrated that MOs and Biopumps can be viably transported by land and air, and are also developing devices to automate and scale up the cost-effective production of Biopumps in local or regional processing centers.

We have produced more than 5,000 Biopumps to date which have demonstrated in the laboratory the capability for sustained production of therapeutic proteins, including EPO to treat anemia, interferon-alpha (INF- α ) to treat hepatitis C and Factor VIII clotting protein to treat hemophilia. We believe our Biopump Platform Technology may be applied to produce an array of other therapeutic proteins from the patient’s own dermal tissue in order to treat a wide range of chronic diseases or conditions. We believe our personalized approach could replace many of the existing protein therapies which use proteins produced in animal cells administered by frequent injections over long periods of time.

We reported proof of concept of the Biopump Platform Technology in 2009 using Biopumps that produced and delivered EPO to anemic patients with chronic kidney disease. We call such Biopumps EPODURE. In a further proof of principle of our Biopump Platform Technology, we have also reported months of sustained production by Biopumps of INF- α , the therapeutic protein widely used in the treatment of hepatitis C. We call such Biopumps INFRADURE. Based on the results of our phase I/II clinical study of the EPODURE Biopump and our other development and testing efforts for our Biopump Platform Technology, we have begun to commercialize this technology. In October 2009, we entered into an exclusive development and option agreement with a major international pharmaceutical company to develop the Factor VIII Biopump for the treatment of hemophilia. We believe this first collaboration agreement validates our technology. We received $3.6 million in research and development funding and standstill fees as a result of this collaboration. Although the agreement officially expired on October 22, 2010, we are in advanced discussions with this pharmaceutical company regarding continuation of our collaboration in development of Factor VIII Biopumps.

We also are engaged in discussions with a number of other pharmaceutical, biotech and medical device companies to commercialize and further develop our Biopump Platform Technology for other chronic diseases. We intend to further develop and leverage our core technology in order to seek multiple licensing agreements for many different proteins and clinical indications using the same core Biopump Platform Technology. Our current strategy is to take various applications of our Biopump Platform Technology through proof of basic safety and efficacy in patients (phase I/II), and then to negotiate out-licensing agreements with appropriate strategic partners. In this manner, we aim to receive revenues from milestone or other development or feasibility payments from such agreements in advance of regulatory approval and sales of our product candidates, while retaining control of our core technology. In addition, we are investigating various opportunities for the treatment of rare diseases using our Biopump Platform Technology. Rare diseases affect a small number of people worldwide. Due to the limited number of patients afflicted with one of these rare diseases, these niche applications may also offer a more expedited route to regulatory approval because pivotal clinical trials may require only a small number of patients before regulatory agencies will consider product approval.

We believe that the Biopump Platform Technology has the potential to offer a better treatment alternative and replace many current methods of protein therapy, which can often involve many months of frequent injunctions and significant side effects. We believe that the Biopump Platform Technology provides a wide range of advantages over existing therapies and will appeal and offer benefits to doctors, patients and third-party payers (e.g., Center for Medicare and Medicaid Services (CMS) or medical insurers) including:

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.

The in vitro stability and simplicity in handling of the Biopump is a key feature separating Biopump’s tissue therapy approach from that of therapies based on individual cells grown in culture. Another key advantage of using the patient’s intact tissue is that when it is implanted, it heals in place, thus facilitating location for ablation or removal if it becomes necessary to reduce dose or stop therapy. A major challenge of cell-based therapies is that protein-producing cells wander to unknown locations, making it difficult or impossible to reduce or cease therapeutic delivery. We believe that by remaining local and reversible by ablation, Biopumps avoid this problem and resolve a major hurdle of gene therapy.

The Biopump Platform Technology Process

(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.

Proof of Concept of Biopump Platform Technology

The concept of the Biopump has been proven in the phase I/II clinical trial for our first product, the EPODURE Biopump, which is being conducted in Israel under approval of the Israeli Ministry of Health in consultation with the U.S. Food & Drug Administration (FDA) (but not under an investigational new drug application process of the FDA (IND)). By maintaining hemoglobin levels in the target range for several months in several patients, our phase I/II clinical trial has demonstrated that a single administration of EPODURE Biopumps of appropriate dose can provide sustained anemia treatment for at least six months or more while alleviating the need for frequent EPO injections and thereby improving patient quality of life. As of October 2010, one of the earliest patients to receive treatment has shown sustained hemoglobin within the target range for more than 24 months following a single treatment by EPODURE Biopumps and without receiving any EPO injections in that period, whereas he had been under treatment by EPO injections prior to EPODURE treatment. By contrast, in standard practice today, EPO injections are required up to three times per week. We have begun to use the EPODURE Biopumps to administer the mid-range dose of 40 IU/kg/day of EPO in our clinical trial. To date we have treated 12 patients – seven patients at the low dose level of 20 IU/kg/day, and five patients at the mid-range dose level of 40 IU/kg/day and shown evidence that the EPODURE Biopump can be administered in a dose dependent way. Our trial is continuing.

While the EPODURE Biopump has been demonstrating the ability of tissue Biopumps to provide safe and sustained protein therapy in patients, we have been using the same Biopump Platform Technology to continue laboratory development of Biopumps producing additional proteins. We have demonstrated this in the laboratory and in animals with our next product, the INFRADURE Biopump which produces IFN -α to treat hepatitis C, and we are now planning to begin its clinical development. We have also produced Biopumps in the laboratory that make blood clotting Factor VIII and other proteins. We believe that the EPODURE clinical results and the laboratory results for the INFRADURE Biopump and Factor VIII Biopump demonstrate that our Biopump Platform Technology is capable of sustained continuous production of various therapeutic proteins.

EPODURE Biopump for the Treatment of Chronic Kidney Disease

Our EPODURE Biopump is designed to provide a safer, more reliable, and cost-effective anemia therapy which we believe can better maintain hemoglobin within a defined safe range while also reducing costs. According to a number of recent studies, there are increased risks of mortality and cardiovascular disease in connection with present EPO therapy and the FDA has recently issued a Black Box Warning imposing new limitations on current EPO therapy. These safety concerns, together with the known side effects associated with bolus injection treatment using EPO, make it more important and urgent to develop methods to manage EPO administration that maintains hemoglobin levels within a relatively narrow therapeutic range with a reduced upper limit, and avoiding the risks posed by “hemoglobin cycling” above and below that range. This supports the critical need for a more steady EPO delivery method, which the EPODURE Biopump is designed to address.

Results to date in our initial phase I/II study have showed that the EPODURE Biopump can stabilize patients’ hemoglobin levels and maintain them within the target range over many months. We believe the EPODURE Biopump can provide a more cost-effective replacement for the current treatment using EPO injections which costs approximately $15-25,000 per year in a typical anemia patient.

INFRADURE Biopump for the Treatment of Hepatitis C and Cancer

We are developing our INFRADURE Biopump to address the need for a patient-tolerable and cost-effective form of IFN-α therapy for use in treatment of hepatitis C and certain cancer applications. We believe that the INFRADURE Biopump can reduce side effects and promote patient compliance with treatment, while providing a more efficient and lower cost alternative to the approximately $35,000 average annual per patient treatment cost of INF- α injections. We have produced scores of INFRADURE Biopumps which have demonstra ted sustained production of IFN-α for several months in the laboratory and have been tested in mice, which results were shown at a major European conference of hepatologists in April 2010.

Factor VIII Biopump for the Treatment of Hemophilia

We are in early stage development of a Factor VIII Biopump to treat hemophilia. The Factor VIII Biopump represents a potential revolution in the treatment of hemophilia because it would be prophylactic (preventing bleeding) and thus could dramatically reduce the risk posed by bleeding in these patients. If the Factor VIII Biopumps succeed in producing sufficient Factor VIII and in delivering it into these patients’ circulation, it would represent a major step towards rendering the patient’s life more normal and provide significant cost savings for treatment of hemophiliacs, where the cost of Factor VIII injections in a typical hemophilia patient typically exceeds $100,000 per year. During 2010, we succeeded in producing scores of Factor VIII Biopumps which produce active Factor VIII protein in vitro , as confirmed by testing using a standard assay at a major hemophilia center in Israel. We are continuing development of our Factor VIII Biopump in an effort to further increase Factor VIII output in order to reach target levels. Once target levels are reached, we intend to seek to commence a phase I/II clinical trial in humans.

Market Opportunity

The worldwide market for protein therapy is forecast by RNCOS – Global Protein Therapeutics Market Analysis (Ed. 3, May 2010) to reach $95 billion in 2010, and we believe that the Biopump Platform Technology could be applied to many components of this market. Our initial focus has been on three of these proteins, which represent more than $15 billion in sales according to La Merie Business Intelligence, R&D Pipeline News, Top 20 Biologics 2009 (March 10, 2009):

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.

We also intend to expand our research into other potential Biopumps producing other therapeutic proteins to treat multiple sclerosis, arthritis, pediatric growth hormone deficiency, obesity, diabetes and other chronic diseases or conditions.

Recent Events

In September 2010, we issued $4 million of convertible debentures (the 2010 Debentures) to strategic investors through a private placement. The 2010 Debentures will convert into shares of our common stock upon the closing of this offering. In addition, investors received warrants to purchase 15,000,000 shares of our common stock at an initial exercise price of 16 pence ($ based on the currency exchange ratio of U.S. dollars to one British Pound sterling as of , 2010). We are using the proceeds of this private placement to pay outstanding receivables and to further the clinical development of the EPODURE Biopump and the INFRADURE Biopump, as well as for general corporate purposes and working capital.

Company Information

We were organized as a Delaware corporation on January 27, 2000. Our principal executive offices are located at 8000 Towers Crescent Drive, Suite 1300, Vienna, Virginia 22182. We conduct our research and development activities primarily from our Israeli location in Misgav Business Park, Misgav. Our telephone number is 1-646-239-1690 in the U.S. and +972-4-902-8900 in Israel. Our website address is www.medgenics.com. The information on or accessible through our website is not part of this prospectus.

We use Biopump, EPODURE, INFRADURE and the Medgenics logo as service marks in the United States and elsewhere. All other trademarks or trade names referred to in this prospectus are the property of their respective owners.

The Offering

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

The number of shares of our common stock that will be outstanding immediately after this offering is based on shares of common stock outstanding as of , 2010, and excludes:

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.

Except as otherwise indicated herein, all information in this prospectus, including the number of shares that will be outstanding after this offering, assumes or gives effect to:

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.

SUMMARY FINANCIAL DATA

The following statements of operations data for 2008 and 2009 are derived from our audited financial statements, which are included elsewhere in this prospectus. The following summary consolidated statements of income data for the six months ended June 30, 2009 and 2010 and the summary consolidated balance sheet data as of June 30, 2010 have been derived from our unaudited consolidated financial statements that are included elsewhere in this prospectus. This unaudited financial information includes all adjustments, consisting of only normal recurring accruals, which our management considers necessary for the fair presentation of our financial position and results of operations for such interim periods. Our financial statements are prepared and presented in accordance with generally accepted accounting principles in the United States (U.S. GAAP). Our historical results for any period are not necessarily indicative of our future performance. You should read the following information in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes included elsewhere in this prospectus. Note 2K to our financial statements explains the method we used to compute basic and diluted net loss per share allocable to common stockholders and pro forma basis and diluted net loss per share.

	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

BALANCE SHEET DATA:

	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	)

We have presented the summary balance sheet data as of June 30, 2010:

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.

Each $1.00 increase or decrease in the assumed initial public offering price of $ per share, which is the midpoint of the range set forth on the cover page of this prospectus, would increase or decrease each of cash and cash equivalents, working capital, total assets and total stockholders’ equity on a pro forma as adjusted basis by approximately $ , assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same.

The pro forma and pro forma as adjusted information presented in the summary balance sheet data is only for illustrative purposes and will change based on the actual initial public offering price, the date of closing and other terms of this offering determined at pricing.

RISK FACTORS

An investment in our securities is speculative and involves a high degree of risk. You should carefully consider the risks and uncertainties described below and the other information contained in this prospectus (including our financial statements and the related notes appearing at the end of this prospectus), before deciding whether to invest in our securities. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations and prospects. In the event that any of the risks listed below actually materialize, our business, financial condition, operations and/or prospects would likely suffer significantly. In such event, you could lose all or a substantial part of your investment.

Business-Related Risks

We are a clinical stage medical technology company and have a history of significant and continued operating losses and a substantial accumulated earnings deficit and we may continue to incur significant losses.

We are a clinical stage medical technology company and since our inception have been focused on research and development and have not generated any substantial revenues. We have incurred net losses of approximately $4,440,000, $4,992,000 and $548,000 for the years ended December 31, 2009 and 2008 and the period ended June 30, 2010, respectively. At June 30, 2010, we had an accumulated deficit of approximately $35,308,000. We expect to incur additional operating losses, as well as negative cash flow from operations, for the foreseeable future, as we continue to expand our research and development and commence commercialization of our potential product candidates. Our ability to generate revenues from sales of our potential products will depend on:

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.

We expect that full commercialization of any of our product candidates will take at least five years.

The report of our independent registered public accounting firm expresses substantial doubt about our ability to continue as a going concern.

Our auditors, Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global, have indicated in their report on our financial statements for the fiscal years ending December 31, 2008 and 2009 that there exist conditions that raise substantial doubt about our ability to continue as a going concern due to recurring losses and the lack of working capital and we expect to receive such statement in connection with the audit of our 2010 financial statements. Early-stage biotechnical companies often receive such a report, as our continued operations are dependent on our ability to raise additional capital until revenues are available and received. A “going concern” opinion could impair our ability to finance our operations through the sale of debt or equity securities. Our ability to continue as a going concern will depend on our ability to obtain additional financing when necessary, which is not certain. If we are unable to achieve these goals, our business would be jeopardized and we may not be able to continue. If we ceased operations, it is likely that all of the investors would lose their investment.

We have significant severance liabilities and may not be able to satisfy such obligations.

Our balance sheet as of June 30, 2010 includes a net liability of approximately $748,000 representing severance payments required under Israeli law and contractual obligations in excess of severance covered by our current insurance policies that would be due if our employees left under circumstances that triggered payment of severance. Of such amount, approximately $505,000 represents amounts that would be payable to our President and Chief Executive Officer if his employment with us terminated.

After giving effect to the proceeds of this offering, our capital resources will only fund our operations for at least 12 months after closing of this offering and we will need substantial additional capital for the continued development of our product candidates and for our long-term operations.

We will use the proceeds from this offering to fund our continued operations. We believe that the net proceeds of this offering, plus our existing cash and cash equivalents, should be sufficient to meet our operating and capital requirements for at least 12 months after the closing of this offering. However, changes in our business, whether or not initiated by us, may affect the rate at which we deplete our cash and cash equivalents. Our present and future capital requirements depend on many factors, including:

	·	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.

In addition to the net proceeds from this offering, we will require significant amounts of additional capital in the future, and such capital may not be available when we need it on terms that we find favorable, if at all. We may seek to raise these funds through public or private equity offerings, debt financings, credit facilities, or partnering or other corporate collaborations and licensing arrangements. If adequate funds are not available or are not available on acceptable terms, our ability to fund our operations, take advantage of opportunities, develop products and technologies, and otherwise respond to competitive pressures could be significantly delayed or limited, and we may need to downsize or halt our operations. Prevailing market conditions may not allow for such a fundraising or new investors may not be prepared to purchase our securities at prices that are greater than the purchase price of shares sold in this offering. In the event that future fundraising is at prices lower than the purchase price of shares sold in this offering, investors participating in this offering could suffer significant ownership dilution and/or a reduction in the market value of their holdings of our common stock.

We are still in the process of clinical trials and do not have a commercialized product and may never be able to commercialize our product candidates.

We are currently in phase I/II clinical trials with respect to our EPODURE Biopump and have not commenced clinical trials for our INFRADURE Biopump. Only a small number of research and development programs ultimately result in commercially successful drugs and drug delivery systems. Potential products that appear to be promising at early stages of development may not reach the market for a number of reasons, including:

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.

If any of these potential problems occurs, we may never successfully commercialize our Biopump Platform Technology. If we are unable to develop commercially viable products, our business, results of operations and financial condition will be materially and adversely affected.

Our Biopump Platform Technology is still being developed and has not been tested on a large scale, and, therefore, we do not know all of the possible side effects and may not be able to commercialize our technology.

Although the Biopump Platform Technology has been shown to be safe in a small number of patients for a long duration, it has not been tested on a large scale, and is still in an early stage of development. Aspects of the implementation and use of the Biopump Platform Technology are not yet fully developed or proven, and disappointing results and problems could delay or prevent their completion. Even if the Biopump Platform Technology works well in one indication, it could possibly have disappointing results in others. If so, the commercialization could be stalled or even blocked. The possible side effects and full efficacy and safety of the technology are not yet fully tested, particularly in substantial numbers of patients. There are therefore risks that potentially serious side effects of the technology could occur, which could result in an immune deficiency in a patient, or potential overdose of protein due to difficulties in managing the continuous supply in the patient. Our previous safety tests were only carried out on a small number of patients and therefore any conclusions may not be representative of either a larger multi-centric test or the commercial version of the technology in the general population. In addition, the full impact of the technology, and its many possible variations, on the body is, as yet, unknown. Although no side effects attributed to the Biopump Platform Technology were found to date in the phase I/II clinical trial for EPODURE, the possibility cannot be ruled out that serious side effects might be borne out by further trials, and if so, this could have serious implications on the viability of the technology and our business.

Although the Biopump Platform Technology aims to minimize the residual number of viral vector particles and their proteins introduced into a body, there is a chance that the cumulative effect of Biopump reimplantation could result in an eventual build up of viral proteins and an immunogenic reaction against the Biopumps preventing further implantations, which could question the viability of the technology.

Severe side effects or complications in trials, or post-approval, could result in financial claims and losses against us, damage our reputation, and increase our expenses and reduce our assets. In addition, our product candidates may not gain commercial acceptance or ever be commercialized.

We are completely dependent upon the successful development of our Biopump Platform Technology. If we fail to successfully complete its development and commercialization or enter into licensing or partnership agreements, we will not generate operating revenues.

All of our efforts are focused on the development of our Biopump Platform Technology. There is no guarantee that we will succeed in developing products based on our Biopump Platform Technology. If we or any partner(s) or collaborator(s) that we may enter into a relationship with are unable to consummate the production of Biopumps to provide the sustained protein therapy to treat various chronic diseases in a safe, stable, commercial end-product form, we will be unable to generate any revenues. There is no certainty as to our success, whether within a given time frame or at all. Any delays in our schedule for clinical trials, regulatory approvals or other stages in the development of our product are likely to cause us additional expense, and may even prevent the successful finalization of any or all of our product candidates. Delays in the timing for development of our technology may also have a material adverse effect on our business, financial condition and results of operations due to the possible absence of financing sources for our operations during such additional periods of time.

Clinical trials involve lengthy and expensive processes with uncertain outcomes, and results of earlier studies and trials may not be predictive of future trial results.

We cannot predict whether we will encounter problems with any of our completed, ongoing or planned clinical trials, which would cause us or regulatory authorities to delay or suspend clinical trials, or delay the analysis of data from completed or ongoing clinical trials. We estimate that clinical trials involving various applications of our Biopump Platform Technology will continue for several years; however, such trials may also take significantly longer to complete and may cost more money that we expect. Failure can occur at any stage of testing, and we may experience numerous unforeseen events during, or as a result of, the clinical trial process that could delay or prevent commercialization of the current, or a future, more advanced, version of our Biopump Platform Technology, including but not limited to:

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.

A number of companies in the medical device, biotechnology, and biopharmaceutical industries, including those with greater resources and experience than us, have suffered significant setbacks in advanced clinical trials, even after seeing promising results in earlier clinical trials. Despite the successful results reported in early clinical trials regarding our EPODURE Biopump, we do not know whether any clinical trials we or our clinical partners may conduct will demonstrate adequate efficacy and safety to result in regulatory approval to market our product candidate for the treatment of chronic kidney disease. If later-stage clinical trials involving EPODURE Biopump do not produce favorable results, our ability to obtain regulatory approval may be adversely impacted, which will have a material adverse effect on our business, financial condition and results of operations.

Potential difficulty with, and delays in, recruiting additional patients for phase I/II, phase IIb and phase III clinical trials may adversely effect the timing of our clinical trials and our working capital requirements.

Our research and development is highly dependent on timely recruitment of the requisite number and type of patients for our clinical trials. We have previously found it very difficult to recruit such patients and the increased volume and ethnic backgrounds required for future testing may render such testing even more difficult. Such larger studies will likely be based on the use of multicenter, multinational design, which can prove difficult to manage and could result in delays in patient recruitment. Delays in the recruitment of such patients could delay our trials and negatively impact our working capital requirements.

We may not successfully establish and maintain relationships with third-party service providers and collaborators, which could adversely affect our ability to develop our product candidates.

Our ability to commercialize our technology is dependent on our ability to reach strategic licensing and other development agreements with appropriate partners, including pharmaceutical companies, biotech firms and medical device companies. If we are unable to successfully negotiate such agreements, we may not be able to continue to develop the Biopump Platform Technology without raising significant additional capital for commercialization.

The successful adoption of Biopump Platform Technology also relies on our ability to bring about practical, reliable and cost-effective production of Biopumps on a commercial scale and its use in patients in widespread locations. This requires the design, development, and commercial scale-up of Biopump manufacturing capability, intended for implementation in regional Biopump processing centers, together with appropriate logistical capabilities to enable local treatment of patients in their communities, in a cost effective and reliable manner. Biopump processing is intended to be effected using semi-automated processing stations employing sealed cassettes and other single use items for each patient. Treatment of patients in various locations is dependent upon reliable acquisition of micro-organs and implantation or ablation of Biopumps by trained local physicians, using appropriate proprietary and nonproprietary devices and products, and upon the transport of micro-organs and Biopumps between the Biopump processing centers and local treatment clinics via reliable and cost effective logistical arrangements. It may also be important that the processing center not require highly skilled operators, specialist laboratories or clean rooms. The inability to adequately scale and rollout such technology could damage the cost-effectiveness and therefore one of the anticipated competitive advantages of the Biopump Platform Technology.

Our core business strategy is to enter into collaborative relationships or strategic partnerships and/or license appropriate parts or uses of our technology in order to establish, develop and expand the distribution and international sale of our product candidates. We may not be able to identify such collaborators and partners on a timely basis and we may not be able to enter into relationships with any future collaborator(s) or partner(s) on terms that are commercially beneficial to us or at all. In addition, such relationships and partnerships may not come to fruition or may not be successful. Our agreements with these third parties may also contain provisions that restrict our ability to develop and test our product candidates or that give third parties rights to control aspects of our product development and clinical programs.

The third-party contractors may not assign as great of a priority to our clinical development programs or pursue them as diligently as we would if we were undertaking such programs directly and, accordingly, may not complete activities on schedule, or may not conduct the studies or our clinical trials in accordance with regulatory requirements or with our trial design. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, or if their performance is substandard, we may be required to replace them.

In addition, conflicts may arise with our collaborators, such as conflicts concerning the interpretation of clinical data, the achievement of milestones, the interpretation of financial provisions or the ownership of intellectual property developed during the collaboration. If any conflicts arise with our existing or future collaborators, they may act in their self-interest, which may be adverse to our best interests. The third-party contractors may also have relationships with other commercial entities, some of whom may complete with us. If the third-party contractors work with our competitors, our competitive position may be harmed.

In addition, although we attempt to audit and control the quality of third-party data, we cannot guarantee the authenticity or accuracy of such data, nor can we be certain that such data has not been fraudulently generated. The failure of third parties to carry out their obligations towards us would materially adversely affect our ability to develop and market our Biopump Platform Technology. To date, we have only entered into one collaboration agreement which was for the development of the Factor VIII Biopump.

We have no marketing experience, sales force or distribution capabilities. If our product candidates are approved, and we are unable to recruit key personnel to perform these functions, we may not be able to successfully commercialize the products.

Although we do not currently have any marketable products, our ability to produce revenues ultimately depends on our ability to sell our product candidates if and when they are approved by the FDA and other regulatory authorities. We currently have no experience in marketing or selling pharmaceutical products, and we do not have a marketing and sales staff or distribution capabilities. Developing a marketing and sales force is also time-consuming and could delay the launch of new products or expansion of existing product sales. In addition, we will compete with many companies that currently have extensive and well-funded marketing and sales operations. If we fail to establish successful marketing and sales capabilities or fail to enter into successful marketing arrangements with third parties, our ability to generate revenues will suffer.

Furthermore, even if we enter into marketing and distributing arrangements with third parties, these third parties may not be successful or effective in selling and marketing our Biopump Platform Technology. If we fail to create successful and effective marketing and distribution channels, our ability to generate revenue and achieve our anticipated growth could be adversely affected. If these distributors experience financial or other difficulties, sales of our products could be reduced, and our business, financial condition and results of operations could be harmed.

We are subject to intense government regulation and we may not be able to successfully complete the necessary clinical trials.

Approval for clinical trials depends, among other things, on data obtained from our pre-clinical and clinical activities, including completion of preclinical animal and in vitro studies in a timely manner. These pre-clinical and clinical activities must meet stringent quality assurance and compliance requirements. Data obtained from such activities are susceptible to varying interpretations, which could delay, limit or prevent regulatory approvals. Approval also depends on our obtaining certain key materials such as the GMP produced gutless adenoviral vector, which is prepared through a contract with a GMP vector manufacturer. Being a new version of an adenoviral vector, production of gutless adenoviral vector involves the use of certain special techniques for its preparation, which are somewhat different from those normally used by GMP vector manufacturers of first generation adenoviral vectors and such manufacturer may not be able to meet our requirements on a timely basis, or at all. Delays in obtaining a GMP vector needed for a specific clinical trial could delay the start of the trial. Approval and commencement of studies further depends on the successful and timely completion of the necessary devices to harvest, implant and ablate Biopumps, which is largely dependent on the work of outside engineering contractors, and could suffer delays. Delays in starting or continuing the trials could have a material adverse effect on our business and operating results.

We currently have limited experience in and resources for conducting the large-scale clinical trials which may hamper our ability to obtain or comply with regulatory approval. The failure to comply with applicable regulatory requirements may result in criminal prosecution, civil penalties, product recalls, withdrawal of product approval, mandatory restrictions and other actions, which could impair our ability to conduct business.

The FDA and other health authorities will regulate our product candidates and we may never receive regulatory approval to market and sell our product candidates.

Our product candidates will require regulatory approvals prior to sale. In particular, our product candidates are subject to stringent approval processes, prior to commercial marketing, by the FDA and by comparable agencies in all countries where we operate and desire to introduce our product candidates, whether sold via a strategic partner or directly by us. These requirements range from vector and Biopump efficacy and safety assessment in phase III clinical trials to long-term follow-up assessments on treated patients in clinical trials for product approval for sale. The process of obtaining FDA and corresponding foreign approvals is costly and time-consuming, and we cannot assure that such approvals will be granted. Also, the regulations we are subject to change frequently and such changes could cause delays in the development of our product candidates.

It typically takes a company several years or longer to satisfy the substantial requirements imposed by the FDA and comparable agencies in other countries for the introduction of therapeutic pharmaceutical and biological products. Pharmaceutical or biological products must be registered in accordance with applicable law before they can be manufactured, marketed and distributed. This registration must include medical data proving the product’s safety, efficacy and clinical testing. Also included in product registration should be references to medical publications and information about the production methods and quality control.

To obtain regulatory approvals in the United States, we or a collaborator must ultimately demonstrate to the satisfaction of the FDA that our product candidates are sufficiently safe and effective for their proposed administration to humans. Many factors, known and unknown, can adversely impact clinical trials and the ability to evaluate a product candidate’s safety and efficacy, including:

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.

There can be no assurance that our clinical trials will in fact demonstrate, to the satisfaction of the FDA and others, that our product candidates are sufficiently safe or effective. The FDA or we may also restrict or suspend our clinical trials at any time if either believes that we are exposing the subjects participating in the trials to unacceptable health risks.

Delays in obtaining such clearances and/or changes in existing requirements could have a material adverse effect on our company by making it difficult to advance product candidates or by reducing or eliminating their potential or perceived value and, therefore, our ability to conduct our business as currently planned could materially suffer. Failure to obtain required regulatory approvals could require us to delay, curtail or cease our operations. Even if we invest the necessary time, money and resources required to advance through the FDA approval process, there is no guarantee that we will receive FDA approval of our product candidates.

Our failure to comply with applicable regulatory requirements could result in enforcement action by the FDA or state agencies, which may include any of the following sanctions:

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.

If any of these events were to occur, it could adversely affect our business, financial condition and results of operations.

Even if we obtain regulatory approvals, our products will be subject to ongoing regulatory review and if we fail to comply with continuing regulations, we could lose those approvals and our business, financial condition and results of operations would be seriously harmed.

Even if our Biopump Technology Platform receives initial regulatory approval or clearance for specific therapeutic applications, we will still be subject to ongoing reporting obligations, and such product and the related manufacturing operations will be subject to continuing regulatory review, including FDA inspections. This ongoing review may result in the withdrawal of our product from the market, the interruption of manufacturing operations and/or the imposition of labeling and/or marketing limitations related to specific applications of our product. Since many more patients will be exposed to our Biopump Technology Platform following its marketing approval, serious but infrequent adverse reactions that were not observed in clinical trials may be observed during the commercial marketing of such product. In addition, the manufacturer(s) and the manufacturing facilities that we will use to produce our Biopumps will be subject to periodic review and inspection by the FDA and other similar foreign regulators. Late discovery of previously unknown problems with any product, manufacturer or manufacturing process, or failure to comply with regulatory requirements, may result in actions, such as:

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.

In addition, from time to time, legislation is drafted and introduced in the U.S. that could significantly change the statutory provisions governing any regulatory clearance or approval that we receive from the U.S. regulatory authorities. FDA regulations and guidance are often revised or reinterpreted by the FDA in ways that may significantly affect our business and our product. We cannot predict what these changes will be, how or when they will occur or what effect they will have on the regulation of our product. If we, or our licensees, suppliers, collaborative research partners or clinical investigators are slow to adapt, or are unable to adapt, to changes in existing regulatory requirements or the adoption of new regulatory requirements or policies, we may lose marketing approval for any of the therapeutic applications of our product (to the extent that such applications are initially approved), resulting in decreased or lost revenue from milestones, product rental or usage fees, or royalties.

Even if approved by the necessary regulatory authorities, our product candidates may not gain market acceptance.

The development of a market for new technology is affected by numerous factors, many of which are beyond our control. There can be no assurance the Biopump Platform Technology will gain acceptance within the markets at which it is targeted. Further, the internal structure for medical service provision varies considerably from territory to territory throughout the world and may be, in some cases, subject to public sector procurement processes, which could delay penetration of this market by our product candidates. If the market does not accept our product candidates, when and if we are able to commercialize them, then we may never become profitable. Factors that could delay, inhibit or prevent market acceptance of our product candidates may include:

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.

Our success is first and foremost reliant upon there being a demand for our technology by potential strategic partners. Together with such partners, we intend to establish and manage reliable and cost effective Biopump production capabilities on a large scale. There is risk that such facilities may not be successfully established, may not meet their performance requirements or cost targets, or in other was fail to deliver the requisite level of reliable and cost-effective Biopumps for clinical use. In addition, sales will rely upon demand for Biopump products, which in turn is dependent upon patient and doctor and other medical practitioner perceptions as to safety, reliability and efficacy of our product candidates. Although our product candidates will be subject to extensive testing, there can be no assurance that consumers will ultimately accept them relating to safety.

Our efforts to comply with federal and state fraud and abuse laws could be costly, and, if we are unable to fully comply with such laws, we could face substantial penalties.

We are subject to extensive federal and state healthcare fraud and abuse laws and regulations, including, but not limited to, the following:

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.

If our past or present operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, exclusion from third-party payor programs such as Medicare and Medicaid and/or the curtailment or restructuring of our operations. If any of the physicians or other providers or entities with whom we may do business are found to be non-compliant with applicable laws, they may be subject to criminal, civil or administrative sanctions including exclusions from government-funded health care programs, which could also negatively impact our operations. Our ongoing efforts to comply with these laws may be costly, and our failure to comply with these laws could have a material adverse effect on our business, financial condition and results of operations. The risk of our being found in violation of these laws is increased by the fact that many of them have not been definitively interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of subjective interpretations. In addition, these laws and their interpretations are subject to change. Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses, divert our management's attention from the operation of our business and damage our reputation.

If any of our key employees discontinue his or her services with us, our efforts to develop our business may be delayed.

Our success will depend on the retention of our Directors, Strategic Advisory Board and other current and future members of our management and technical team, including Andrew Pearlman, our founder, President and Chief Executive Officer, Stephen Bellomo, our Chief Operating Officer, and Baruch Stern, our Chief Scientific Officer, and on our ability to continue to attract and retain highly skilled and qualified personnel. There can be no assurance that we will retain the services of any of our Directors, officers or employees, or attract or retain additional senior managers or skilled employees.

The Biopump Platform Technology is still in development and is dependent on further development and testing to reach commercial production. We currently employ a small number of key personnel including top managers, scientists, engineers and clinical experts who are important to developing the Biopump Platform Technology and have a high level of accumulated knowledge which would be lost if they left our company. If these employees leave our company or otherwise are unable to provide services, there could be significant implications on the timing and cost of future development of the technology. Because competition for qualified personnel in our industry is intense, we may be unable to timely find suitable replacements with the necessary scientific expertise. We cannot assure you that our efforts to attract or retain such personnel will be successful.

If we are not able to obtain and maintain adequate patent protection for our product candidates, we may be unable to prevent our competitors from using our technology.

Our ability to commercialize the Biopump Platform Technology, or our product candidates, will depend, in part, on our ability, both in the U.S. and in other countries, to obtain patents, enforce those patents, preserve trade secrets and operate without infringing the proprietary rights of third parties. Our owned and licensed patent portfolio contains ten issued patents and 53 pending U.S. and international patent applications. We may not successfully obtain patents in the other countries in which patent applications have been or will be filed, and we may not develop other patentable products or processes. In addition, any future patents may not prevent other persons or companies from developing similar or medically equivalent products and other persons or companies may be issued patents that may prevent the sale of our products or that will require us to license or pay significant fees or royalties. Furthermore, issued patents may not be valid or enforceable, or be able to provide our company with meaningful protection. Patent litigation is costly and time-consuming and there can be no assurance that we will have, or will be able to devote, sufficient resources to pursue such litigation. In addition, potentially unfavorable outcomes in such proceedings could limit our intellectual property rights and activities.

The patent positions of the products being developed by us and our collaborators involve complex legal and factual uncertainties. As a result, we cannot assure that any patent applications filed by us, or by others under which we have rights, will result in patents being issued in the U.S. or foreign countries. In addition, there can be no assurance that the scope of any patent protection will be sufficient to provide us with competitive advantages, that any patents obtained by us or our collaborators will be held valid if subsequently challenged or that others will not claim rights in or ownership of the patents and other proprietary rights we or our collaborators may hold. Unauthorized parties may try to copy aspects of our product candidates and technologies or obtain and use information we consider proprietary. Policing the unauthorized use of our proprietary rights is difficult. We cannot guarantee that no harm or threat will be made to our or our collaborators’ intellectual property. In addition, changes in, or different interpretations of, patent laws in the U.S. and other countries may also adversely affect the scope of our patent protection and our competitive situation.

There is certain subject matter that is patentable in the U.S. but not generally patentable outside of the U.S. Differences in what constitutes patentable subject matter in various countries may limit the protection we can obtain outside of the U.S. For example, methods of treating humans are not patentable in many countries outside of the U.S. These and other issues may prevent us from obtaining patent protection outside of the U.S., which would have a material adverse effect on our business, financial condition and results of operations.

We may also need to obtain additional licenses to use certain patents depending on the gene products, proteins, vectors and promoters used in conjunction with the Biopump Platform Technology. These licenses include, for example, one or more specific proteins and promoters used in conjunction with certain genes to control their expression. There is no assurance that we will obtain licenses for such technology or would be able to obtain licenses to any third party intellectual property on commercially reasonable terms.

Additionally, there can be no assurance that we can successfully develop non-infringing alternatives on a timely basis, or license non-infringing alternatives, if any exist, on commercially reasonable terms. A significant intellectual property impediment to our ability to develop and commercialize our product candidates could adversely affect our business prospects.

We are heavily reliant on licenses from Yissum Research Development Company and Baylor College of Medicine and any loss of these rights would adversely effect our business.

We do not own some of the patents upon which the Biopump Platform Technology is based. We license such patents exclusively from Yissum Research Development Company of the Hebrew University of Jerusalem (Yissum), subject to certain specific reservations and restrictions. We have certain monetary and operational obligations under the license agreement with Yissum. If we fail to perform any of our obligations under the Yissum license agreement, Yissum may have the right to declare a breach of the Yissum license agreement. Upon such a breach, the Yissum license agreement could be terminated and the intellectual property could revert to Yissum and we may be unable to use or further develop the Biopump Platform Technology in those circumstances.

We have also obtained a non-exclusive license to technology from Baylor College of Medicine (BCM), Houston, Texas. The license is subject to certain specific reservations and restrictions including BCM’s required approval for the sale, market, transfer, sublicense, use and filing of patent applications for the BCM technology. BCM’s technology is also subject to U.S. governmental rights to call for a license to exploit the technology. If we fail to get such approvals or rights, our ability to use and/or profit from products that incorporate the BCM technology may be inhibited or prevented. If we fail to perform any of our obligations under the BCM license agreement, the BCM license agreement may be terminated. If the BCM license agreement is terminated, the licensed technology could revert to BCM, which may impair our ability to use or further develop our products candidates.

Our business is dependent on proprietary rights that may be difficult to protect and such dependence could affect our ability to effectively compete.

In addition to our patents, we also rely on trade secrets, know-how, continuing technological innovations and licensing opportunities to develop and maintain our competitive position. However, others, including our competitors, may independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets or disclose our technology. We take precautionary measures to protect our proprietary rights and information, including the use of confidentiality agreements with employees and consultants, and those with whom we have academic and commercial relationships. However, we may not have such agreements in place with all such parties and, in spite of the measures, there can still be no guarantee that agreements will not be violated or that there will be an adequate remedy available for a violation of an agreement. Any of these events could prevent us from developing or commercializing our product candidates.

In addition, we have no trademark or applications pending; and third parties may have trademarks or have pending applications on our contemplated marks or similar marks or in similar fields of use that are confusingly similar; or may be using our contemplated marks or similar marks. We may have to change our use of certain marks currently in use or contemplated which could have an adverse impact on our business and may require us to spend additional funds to develop new marks. We anticipate that we will spend both time and management resources to develop and file trademark applications in the future.

We are subject to intense competition in the therapeutic protein market from companies with greater resources and more mature products, which may result in our competitors developing or commercializing products before or more successfully than us.

While we believe our Biopump Platform technology has significant advantages, there are a number of well-established and substantial companies engaged in the development, production, marketing, sale and distribution of products that are potentially competitive with our product candidates or the Biopump Platform Technology in general. Many of these companies are more experienced than our company is and represent significant competition. It is also possible that other parties have in development products substantially similar to or with properties that are more efficacious, less invasive and more cost effectively delivered than our product candidates or the Biopump Platform Technology in general. The success of our competitors in developing, bringing to market, distributing and selling their products could negatively affect our result of operations and/or general acceptance of our product candidates.

We face risks related to the current credit crisis that may adversely affect our business .

During 2009, we operated at a loss but had positive net cash provided by operating activities. However, the recent disruption in credit markets may impact our ability to manage normal relationships with our suppliers and creditors. Tighter credit markets could result in supplier disruptions.

In general, our operating results can be significantly affected by negative economic conditions, high labor, material and commodity costs and unforeseen changes in demand for our products and services. These risks are heightened as economic conditions globally have deteriorated significantly and may remain at recessionary levels for the foreseeable future. The current recessionary conditions could have a potentially significant negative impact on demand for our products and services, which may have a direct negative impact on our sales and profitability, as well as our ability to generate sufficient internal cash flows or access credit at reasonable rates to meet future operating expenses, service debt and fund capital expenditure.

The grants we received from the Israeli Office of the Chief Scientist place certain restrictions on us.

Through our wholly owned Israeli subsidiary, we have received, and anticipate continuing to receive, grants from the Israeli Office of the Chief Scientist (OCS). The grant agreements require repayment of the grants provided to us through the payment of royalties out of income received from commercializing the developed technology. Pursuant to the Israeli Encouragement of Industrial Research and Development Law, certain limitations will apply to the change of control of the grant recipient and the financing, mortgaging, production, exportation, licensing or transfer or sale outside of Israel of its technology and intellectual property, which will require the Chief Scientist’s prior consent and, in some cases, extended royalties or other fees. This could have a material adverse effect on and significant cash flow consequences to our company if, and when, any technologies, intellectual property or manufacturing rights are exported, transferred or licensed to third parties outside Israel. If the OCS does not wish to give its consent in any required situation or transaction, we would need to negotiate a resolution with OCS which would involve monetary payments, such as royalties or fees, in aggregate up to three times the applicable funding received from OCS.

Reimbursement policies of third-party payers may negatively affect the acceptance of our product candidates by subjecting the product candidates to sales and pharmaceutical pricing controls.

Third-party payers (Medicare, Medicaid, private health insurance companies and other organizations) may affect the pricing or relative attractiveness of our product candidates by regulating the level of reimbursement provided to the physicians and clinics utilizing our product candidates or by refusing reimbursement. If reimbursement under these programs, or if the amount of time to secure reimbursement is too long, our ability to market our technology and product candidates may be adversely and materially affected. In international markets, reimbursement by private third-party medical insurance providers, including government insurers and independent providers, varies from country to country. In certain countries, our ability to achieve significant market penetration may depend upon the availability of third-party government reimbursement.

Pharmaceutical pricing is also subject to regulation in Israel as well as other countries within which we may wish to distribute our product candidates. Healthcare reform is often a subject of attention in governments that are trying to control healthcare expenditures. Healthcare reform proposals are the subject of much debate in the U.S. Congress and some state legislatures, as well as in other countries. There is no assurance that legislation, resulting in adverse effects on our company or our product candidates will not be adopted in a country in which we intend to operate and/or upon the distribution of our product candidates in the U.S. We cannot determine how the recently passed healthcare legislation in the U.S. will affect the acceptance of a reimbursement rate of our product candidates.

We may experience product liability claims, which could adversely affect our business and financial condition.

We may become subject to product liability claims. We have not experienced any product liability claims to date; however, the production at commercial scale, distribution, sale and support of our product candidates may entail the risk of such claims, which is likely to be substantial in light of the use of our product candidates in the treatment of medical conditions. A successful product liability claim could result in significant monetary liability and could have a material adverse impact on our business, operations, financial position and/or reputation.

Risk Related to Our Securities and This Offering

There is not now, and there may not ever be, an active market for our common stock in the U.S.

Although our common stock has been admitted for trading on the AIM Market since December 2007, the volumes and trading in our common stock have been extremely sporadic. As a result, the ability of holders to purchase or sell our common stock on AIM is limited, with low-volume trading creating wide shifts in price. Prior to this offering, there has been no public market for our common stock in the United States. We expect that our common stock will be eligible to be quoted on the NYSE Amex. For our common stock to continue to be listed on the NYSE Amex, we must meet the current NYSE Amex listing requirements. If we were unable to meet these requirements, our common stock could be delisted from the NYSE Amex. If our common stock were to be delisted from the NYSE Amex, our common stock could continue to trade on the NASD’s over-the-counter bulletin board following any delisting from the NYSE Amex, or on the Pink Sheets, as the case may be. Any such delisting of our common stock could have an adverse effect on the market price of, and the efficiency of the trading market for, our common stock, not only in terms of the number of shares that can be bought and sold at a given price, but also through delays in the timing of transactions and less coverage of us by securities analysts, if any. Also, if in the future we were to determine that we need to seek additional equity capital, it could have an adverse effect on our ability to raise capital in the public or private equity markets.

We do not have a comprehensive trading record due to the very low trading volume in our common stock. There can be no assurance that the prices quoted on the AIM Market represent the fair market value of our company or the underlying value of our assets. The share prices of public companies, particularly those operating in high growth sectors, are often subject to significant fluctuations. The market price of our common stock has been volatile. The market for our common stock may be or become illiquid and it may be difficult for an investor to sell common stock.

Further, the stock market in general, and securities of small-cap companies in particular, have recently experienced extreme price and volume fluctuations. Continued market fluctuations could result in extreme volatility in the price of our common stock, which could cause a decline in the value of the securities purchased in this offering. You should also be aware that price volatility might be worse if the trading volume of our common stock is low.

Our ordinary shares will be traded on more than one market and this may result in price variations.

Our common stock has been traded on the AIM Market since December 2007 and we have applied to have our common stock be listed on the NYSE Amex. Trading in our shares on these markets will take place in different currencies (dollars on the NYSE Amex and British Pounds sterling on the AIM Market), and at different times (resulting from different time zones, different trading days and different public holidays in the U.S. and the United Kingdom). The trading prices of our shares on these two markets may differ due to these and other factors. Any decrease in the price of our shares of common stock on one of these markets could cause a decrease in the trading price of our shares on the other market.

The exercise of options and warrants and other issuances of shares of common stock or securities convertible into common stock will dilute your interest and may adversely affect the future market price of our common stock.

Sales of our common stock in the public market after this registration statement is declared effective by the SEC, or the perception that these sales could occur, could cause the market price of our common stock to decline below the offering price listed in this prospectus.

Nearly all of the shares of our common stock held by those of our current stockholders who are not affiliates may be immediately eligible for resale in the open market in compliance with an exemption under Rule 144 promulgated under the Securities Act of 1933, as amended (the Securities Act). Such sales, along with any other market transactions, could adversely affect the market price of our common stock.

In addition, as of September 30, 2010, there were outstanding options to purchase an aggregate of 45,896,779 shares of our common stock at exercise prices ranging from $0.044 per share to $0.264 per share, of which options to purchase 28,137,388 shares were exercisable as of such date. As of September 30, 2010, there were warrants outstanding to purchase 110,956,923 shares of our common stock, at a weighted average exercise price of $0.12 per share, all of which are currently exercisable. We have agreed to issue to the underwriters warrants to purchase a number of shares of our common stock equal to an aggregate of 10% of the number of shares of common stock sold in this offering (excluding any over-allotment) at an exercise price equal to 110% of the offering price of the common stock sold in this offering. We will also issue warrants to purchase shares of common stock in connection with the conversion of the 2009 Debentures upon completion of this offering. The exercise of options and warrants at prices below the market price of our common stock could adversely affect the price of shares of our common stock. Additional dilution may result from the issuance of shares of our common stock in connection with collaborations or manufacturing arrangements or in connection with other financing efforts.

Any issuance of our common stock that is not made solely to then-existing stockholders proportionate to their interests, such as in the case of a stock dividend or stock split, will result in dilution to each stockholder by reducing his, her or its percentage ownership of the total outstanding shares. Moreover, if we issue options or warrants to purchase our common stock in the future and those options or warrants are exercised, stockholders may experience further dilution. Holders of shares of our common stock have no preemptive rights that entitle them to purchase their pro rata share of any offering of shares of any class or series.

You will suffer immediate and substantial dilution in the shares you purchase.

The estimated initial public offering price of $ per share of common stock is substantially higher than the pro forma net tangible book value per share of our outstanding shares immediately after the offering. As a result, investors purchasing shares in the offering will incur immediate and substantial dilution of approximately $ per share or approximately % of the assumed offering price. Accordingly, existing shareholders will benefit disproportionately from this offering. If we raise additional capital through the sale of equity, including convertible securities, your percentage of ownership will be diluted. You may also experience additional dilution if stock options or warrants to purchase our shares are exercised at less than the offering price. As of the date of this prospectus, we have reserved 60,500,000 shares of our common stock for issuance under our 2006 Stock Incentive Plan, as amended (the 2006 Stock Plan), shares of our common stock for issuance upon exercise of the warrants issued in our private placements and to consultants and shares of our common stock for issuance upon the exercise of warrants to be issued to the underwriters at the completion of this offering.

Our principal stockholders have significant voting power and may take actions that may not be in the best interests of our other stockholders.

As of September 30, 2010, our officers and directors together controlled approximately 22% of our outstanding common stock on a fully diluted basis. In addition, as of September 30, 2010, our five largest stockholders other than management and the directors owned approximately 31% of our outstanding common stock on a fully diluted basis. This concentration of ownership may have the effect of delaying or preventing a change in control and might adversely affect the market price of our common stock, and therefore may not be in the best interest of our other stockholders.

Following registration of our common stock under the Exchange Act, we will become subject to the reporting requirements of U.S. federal securities laws, which can be expensive.

We currently have no class of securities registered under the Securities Exchange Act of 1934, as amended (the Exchange Act) and are not a reporting company in the U.S. In connection with this offering, we are becoming a U.S. public reporting company and, accordingly, subject to the information and reporting requirements of the Exchange Act and other federal securities laws, and the compliance obligations of the Sarbanes-Oxley Act of 2002, as amended (SOX). The costs of preparing and filing annual and quarterly reports, proxy statements and other information with the SEC and furnishing audited reports to stockholders will cause our expenses to be higher than they would be if we did not become a U.S. reporting company. We expect these rules and regulations to increase our legal and financial compliance costs, introduce new costs, such as investor relations, stock exchange listing fees and shareholder reporting, and to make some activities more time consuming and costly. Although our common stock is currently listed on AIM, the reporting requirements relating to the AIM listing are significantly different and our experience as an AIM-listed company may not be relevant to our experience as an Exchange Act registered company.

Our compliance with the Sarbanes-Oxley Act and SEC rules concerning internal controls may be time consuming, difficult and costly.

Although individual members of our board of directors have experience as directors of publicly-traded companies, we have never operated as a U.S. publicly-traded company subject to the reporting requirements of the federal securities laws and are not required to comply with SOX. It may be time consuming, difficult and costly for us to develop and implement the internal controls and reporting procedures required by SOX. We will need to hire additional financial reporting, internal controls and other finance staff in order to develop and implement appropriate internal controls and reporting procedures. If we are unable to comply with SOX’s internal controls requirements, we may not be able to obtain the independent accountant’s attestation report that SOX requires publicly-traded companies to obtain.

Although we will likely be exempt from the auditor attestation requirements of Section 404(b) of SOX due to our status as a non-accelerated filer under the SEC rules, we will still be subject to the annual requirements related to management's assessment of internal control over financial reporting, which are costly. Changes in the laws and regulations affecting public companies, including Section 404 and other provisions of SOX, the rules and regulations adopted by the SEC and the NYSE Amex, will result in increased costs to us as we respond to such requirements. These laws, rules and regulations could make it more difficult or more costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.

We have never declared or paid dividends on our capital stock and we do not anticipate paying any cash dividends in the foreseeable future.

We have never declared or paid dividends on our capital stock and we do not anticipate paying any cash dividends in the foreseeable future. We currently intend to retain future earnings, if any, to fund the development and growth of our business. Any future determination to pay dividends will be at the discretion of our board of directors and will be dependent upon our financial condition, operating results, capital requirements, applicable contractual restrictions and other such factors as our board of directors may deem relevant.

Our Amended and Restated By-Laws contain provisions that restrict our ability to borrow funds.

Our Amended and Restated By-Laws contain a provision that limits the amount of indebtedness that we can incur to three times the “Adjusted Capital and Reserves” as calculated pursuant to the provisions of Article VIII of our Amended and Restated By-laws. Given the limitations imposed by Article VIII of the Amended and Restated By-Laws, we currently have no capacity to incur borrowings at this time or for the foreseeable future. This borrowing restriction may continue to interfere with our plans to raise additional funds represented by debt securities or through loans in the future and we may need to seek stockholder approval in such instance. There can be no assurance that such stockholder approval will be given in the future and therefore our ability to seek and obtain necessary funding may be limited. Our board of directors has the right to repeal this bylaw provision at such time as (i) our common stock ceases to be admitted to trading on AIM or the Official List or (ii) our common stock becomes listed on the New York Stock Exchange, the NYSE Amex or NASDAQ. Until such time, stockholders holding at least a majority of the outstanding common stock may waive or other approve borrowings over the limits prescribed by this provision of our Amended and Restated By-Laws.

Provisions in our Amended and Restated By-Laws and Delaware law may delay or prevent efforts to acquire a controlling interest in us, even if such acquisition were in the best interests of our stockholders.

Our Amended and Restated Certificate of Incorporation and our Amended and Restated By-Laws will contain provisions that may make it difficult for a third party to acquire, or attempt to acquire, control of our company, even if a change in control was considered favorable by you and other stockholders. Our charter documents will contain provisions that could have an anti-takeover effect, including:

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.

In addition, we are subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law, which regulates corporate acquisitions. These provisions could discourage potential acquisition proposals and could delay or prevent a change in control transaction. They could also have the effect of discouraging others from making tender offers for our common stock. These provisions may also prevent changes in our management.

We may use these proceeds in ways with which you may not agree.

While we currently intend to use the proceeds from this offering for product development, intellectual property related costs, and general corporate purposes and working capital, we have considerable discretion in the application of the proceeds. You will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used in a manner agreeable to you. You must rely on our judgment regarding the application of the net proceeds of this offering. The net proceeds may be used for corporate purposes that do not immediately improve our profitability or increase the price of our shares.

Israel-Related Risks

Our business occurs primarily in Israel, and our company and our business could be adversely affected by the economic, political and military conditions in that region.

Our principal activities are based in Israel, which may be adversely affected by acts of terrorism, major hostilities, adverse legislation or litigation. If major hostilities should occur in the Middle East, including as a result of acts of terrorism in the United States or elsewhere, any such effects may not be covered by insurance. Our commercial insurance does not cover losses that may occur as a result of events associated with the security situation in the Middle East, such as damages to our facilities and the resulting disruption to our ability to continue our product development. Although the Israeli government currently covers the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot be certain that this government coverage will be maintained or will be adequate in the event we submit a claim. Any losses or damages incurred by us could have a material adverse effect on our business, financial condition and results of operations.

Israel withdrew unilaterally from the Gaza Strip and certain areas in northern Samaria in 2005. Thereafter Hamas, an Islamist terrorist group responsible for many attacks, including missile strikes against Israeli civilian targets, won the majority of the seats in the Parliament of the Palestinian Authority in January 2006 and took control of the entire Gaza Strip, by force, in June 2007. Since then, Hamas and other Palestinian movements have launched thousands of missiles from the Gaza strip into civilian targets in southern Israel. In late 2008, a sharp increase in rocket fire from Gaza on Israel’s western Negev region, extending as far as 25 miles into Israeli territory and disrupting most day-to-day civilian activity in the proximity of the border with the Gaza Strip, prompted the Israeli government to launch military operations against Hamas that lasted approximately three weeks. Israel declared a unilateral ceasefire in January 2009, which substantially diminished the frequency of, but did not entirely eliminate, Hamas rocket attacks against Israeli cities. There can be no assurance that this period of relative calm will continue.

We are directly affected by economic, political and military conditions in that country. Our Israeli production facilities are located in Misgav which is located approximately 150 miles from the nearest point of the border with the Gaza Strip. There can be no assurance that Hamas will not obtain and use longer-range missiles capable of reaching our facilities, which could result in a significant disruption of the Israel-based portion of our business. Any armed conflicts, terrorist activities or political instability in the region could adversely affect business conditions and could harm our business, financial condition and results of operations and may make it more difficult for us to raise necessary capital. Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place between Israel and its Arab neighbors and a state of hostility, varying in degree and intensity, has led to security and economic problems for Israel. For example, any major escalation in hostilities in the region could result in a portion of our employees, including executive officers, directors, and key personnel and consultants, being called up to perform military duty for an extended period of time. In addition, the political and security situation in Israel may result in parties with whom we have agreements involving performance in Israel claiming that they are not obligated to perform their commitments under those agreements pursuant to force majeure provisions in the agreements.

Service of process and enforcement of civil liabilities on our company and our officers may be difficult.

We are organized under the laws of the State of Delaware and will be subject to service of process in the United States. However, approximately 99% of our assets are located outside the United States. In addition, most of our executive officers are residents of Israel and the bulk of the assets of such executive officers are located outside the United States.

There is doubt as to the enforceability of civil liabilities under the Securities Act, and the Exchange Act, in original actions instituted in Israel. As a result, it may not be possible for investors to enforce or effect service of process upon these executive officers or to judgments of U.S. courts predicated upon the civil liability provisions of U.S. laws against our assets, as well as the assets of these executive officers. In addition, awards of punitive damages in actions brought in the U.S. or elsewhere may be unenforceable in Israel.

We may experience foreign currency exchange risks, which may increase the dollar costs of our operations in Israel.

The proceeds of this offering will be received in U.S. dollars; however, a substantial portion of our expenses, including those related to our clinical trial, our research and development, personnel and facilities-related expenses is incurred in New Israeli Shekels (NIS). Inflation in Israel will have the effect of increasing the dollar cost of our operations in Israel, unless it is offset on a timely basis by a devaluation of the NIS relative to the U.S. dollar. This may give rise to an exchange rate risk against NIS. We do not currently engage in hedging or use any other financial instruments or arrangements to manage this risk.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements, including statements regarding the progress and timing of clinical trials, the safety and efficacy of our product candidates, the goals of our development activities, estimates of the potential markets for our product candidates, estimates of the capacity of manufacturing and other facilities to support our products, our expected further revenues, operations and expenditures and projected cash needs. The forward-looking statements are contained principally in the sections entitled “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.” These statements relate to future events of our financial performance and involve known and unknown risks, uncertainties and other factors that could cause our actual results, levels of activity, performance or achievement to differ materially from those expressed or implied by these forward-looking statements. Those risks and uncertainties include, among others:

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.

Forward-looking statements include all statements that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “potential,” or the negative of those terms, and similar expressions and comparable terminology intended to identify forward-looking statements. These statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. These forward-looking statements represent our estimates and assumptions only as of the date of this prospectus and, except as required by law, we undertake no obligation to update or review publicly any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this prospectus. You should read this prospectus and the documents referenced in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

USE OF PROCEEDS

We estimate that the net proceeds from the sale of the common stock we are offering will be approximately $ million, or $ million if the underwriters exercise their over-allotment option in full, assuming an initial public offering price of $ per share, which is the midpoint of the range listed on the cover page of this prospectus, and after deducting estimated underwriting discount and commissions and estimated offering expenses payable by us.

The principal purposes for this offering are to fund our product development activities, including clinical trials for our most advanced product candidates, EPODURE and INFRADURE, for patent maintenance fees and intellectual property support and for working capital and other general corporate purposes, which may include the acquisition or licensing of complementary technologies, products or business.

We anticipate using the net proceeds from this offering as follows:

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.

We have no current plans, agreements or commitments for any material acquisitions or licenses of any technologies, products or businesses.

We expect that the net proceeds from this offering, along with our existing cash resources, will be sufficient to enable us to take the following actions through the end of the 12-month period following the closing of this offering:

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.

The expected use of net proceeds of this offering represents our intentions based on our current plans and business conditions. As a result, we will retain broad discretion in the allocation and use of the net proceeds of this offering.

The actual cost, timing and amount of funds required for such uses cannot be determined precisely at this time, and may be based on economic, regulatory, competitive or other developments, the rate of our progress in research and development, the results of proposed preclinical studies and clinical trials, the timing of regulatory approvals, if any, payments under collaborative agreements and the availability of alternative methods of financings. Other future events, including the problems, delays, expenses and complications frequently encountered by development stage companies and biotechnology companies in particular, as well as changes in our planned business and the success (or lack thereof) of our research, development and testing activities, may make shifts in the allocation of funds necessary or desirable. Our management has discretion in the application of the proceeds of this offering, and the proceeds may be used for corporate purposes with which you may disagree. Pending use of the net proceeds of this offering, we intend to invest the net proceeds in short-term interest-bearing investment grade securities.

A $1.00 increase or decrease in the assumed initial public offering price of $ per share of common stock, which is the midpoint of the range set forth on the cover page of this prospectus, would increase or decrease the net proceeds to us from this offering by approximately $ million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

DIVIDEND POLICY

We have never declared dividends on our equity securities, and currently do not plan to declare dividends on shares of our common stock in the foreseeable future. We expect to retain our future earnings, if any, for use in the operation and expansion of our business. Subject to the foregoing, the payment of cash dividends in the future, if any, will be at the discretion of our Board of Directors and will depend upon such factors as earnings levels, capital requirements, our overall financial condition and any other factors deemed relevant by our Board of Directors.

CAPITALIZATION

The following table sets forth our cash and cash equivalents and our capitalization as of June 30, 2010:

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.

The pro forma information below is only for illustrative purposes and our capitalization following the completion of this offering will be adjusted based on the actual initial public offering price and other terms of this offering determined at pricing. You should read this table together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited and unaudited financial statements and the related notes appearing elsewhere in this prospectus.

	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

The table above does not include the following:

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.

DILUTION

If you invest in our securities, your investment will be diluted immediately to the extent of the difference between the public offering price per share of common stock and the net tangible book value per share of common stock immediately after this offering.

Our net tangible book value as of June 30, 2010 was approximately $(2.5) million, or $(0.02) per common share. Net tangible book value per share is determined by dividing tangible stockholders’ equity, which is total tangible assets less total liabilities, by the aggregate number of shares of common stock outstanding. Tangible assets represent total assets excluding goodwill and other intangible assets. Dilution in net tangible book value per share represents the difference between the amount per share of common stock issued paid by purchasers in this offering and the net tangible book value per share of our common stock immediately afterwards. Assuming the sale by us of shares of common stock at an assumed public offering price of $ per share (which is the mid-point of the estimated initial offering price range set forth on the cover of this prospectus) and after deducting the underwriting discount and commissions and estimated offering expenses, our pro forma as adjusted net tangible book value as of would be approximately $ million, or $ per common share. This represents an immediate increase in net tangible book value of $ per share to our existing shareholders and an immediate dilution of $ per share to the new investors purchasing shares of common stock in this offering.

The following table illustrates this per share dilution:

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		$

The dilution information discussed above is only for illustrative purposes, and will change based on the actual initial offering price and other terms of this offering determined at pricing. Each $1.00 increase or decrease in the assumed initial offering price of $ per share would increase or decrease our pro forma adjusted net tangible book value by approximately $ million, or approximately $ per share, and the dilution per share to investors participating in this offering by approximately $ per share, assuming that the number of shares offered by us, as set forth on the coverage page of this prospectus, remains the same.

If the underwriters exercise their option in full to purchase additional shares of common stock in this offering at the assumed offering price of $ per share, the pro forma as adjusted net tangible book value per share after the offering would be $ per share, the increase in the pro forma net tangible book value per share to existing stockholders would be $ per share and the dilution to new investors purchasing common stock in this offering would be $ per share.

The above table excludes:

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.

To the extent that options or warrants are exercised, new options are issued under our equity incentive plans, or we issue additional shares of common stock in the future, there may be further dilution to investors participating in this offering. In addition, we may choose to raise additional capital because of market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans. If we raise additional capital through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders.

The following table set forth as of , 2010, on the pro forma basis described above, the differences between the number of shares of common stock purchased from us, the total consideration paid and the weighted average price per share paid by existing stockholders and by investors purchasing shares of our 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, before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us:

Shares Purchased

Total Consideration

Number

Percent

Amount

Percent

Weighted

Average Price

Per Share

Existing Stockholders

New Stockholders

Total

If the underwriters exercise their option to purchase additional shares in full, the common stock held by existing stockholders will be reduced to % of the total number of shares of common stock outstanding after this offering, and the number of shares of common stock held by investors participating in this offering will be increased to shares, or % of the total number of shares of common stock outstanding after this offering.

Each $1.00 increase or decrease in the assumed initial public offering price of $ per share, which is the midpoint of the range set forth on the cover page of this prospectus, would increase or decrease the total consideration paid by new investors by $ million, and increase or decrease the percent of total consideration paid by new investors by percentage points, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same.

SELECTED FINANCIAL DATA

You should read the following selected financial data together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and accompanying notes included later in this prospectus. The selected financial data in this section is not intended to replace our financial statements and the accompanying notes. Note 2k to our financial statements explains the method we used to compute basic and diluted net (loss) income per share allocable to common stockholders and pro forma basic and diluted net loss per share.

The following statement of operations data for the years ended December 31, 2008 and 2009, and the balance sheet data as of December 31, 2008 and 2009 are derived from our audited financial statements, which are included elsewhere in this prospectus. The following summary consolidated statements of income data for the six months ended June 30, 2009 and 2010 and the summary consolidated balance sheet data as of June 30, 2010 have been derived from the unaudited consolidated financial statements of Medgenics that are included elsewhere in this prospectus. Such unaudited financial information includes all adjustments, consisting of only normal recurring accruals, which our management considers necessary for the fair presentation of our financial position and results in operations for such interim periods. The statement of operations data for the period from January 27, 2000 (Inception) to June 30, 2010, has been derived from our unaudited financial statements, which are also included elsewhere in this prospectus. In the opinion of management, the unaudited financial statements have been prepared on the same basis as the audited financial statements and include all adjustments necessary for the fair presentation of our financial position and results of operations for these periods. Our financial statements are prepared and presented in accordance with U.S. GAAP. Our historical results for any period are not necessarily indicative of our future performance. You should read the following information in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes included elsewhere in this prospectus.

Statement of Operations Data

(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

Balance Sheet Data

	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	)

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis together with our financial statements and the notes to those statements included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. As a result of many factors, such as those set forth under “Risk Factors” and elsewhere in this prospectus, our actual results may differ materially from those anticipated in these forward-looking statements.

Overview

We are an autologous protein-therapeutics medical technology company, having developed our Biopump Platform Technology to provide sustained protein therapy to potentially treat a range of chronic diseases and conditions.

Since our inception on January 27, 2000, we have focused our efforts on research and development and clinical trials and have received no revenue from product sales. We have funded our operations principally through equity and debt financings, participation from the Office of the Chief Scientist in Israel and collaborative agreements. Our operations to date have been primarily limited to organizing and staffing our company, developing the Biopump Platform Technology and its applications, developing and initiating clinical trials for our product candidates, and improving and maintaining our patent portfolio.

We have generated significant losses to date, and we expect to continue to generate losses as we progress towards the commercialization of our product candidates. We have incurred net losses of approximately $4.4 million, $5.0 million and $0.5 million for years ended December 31, 2009 and 2008 and June 30, 2010, respectively. As of June 30, 2010, we had a shareholders’ deficit of approximately $2.5 million. We are unable to predict the extent of any future losses or when we will become profitable, if at all.

Although we have not yet generated revenues from product sales, we have begun generating income from partnering on development programs and we expect to continue to expand our partnering activity.

In October 2009, we signed a preclinical development and option agreement with a major international pharmaceutical company that is a market leader in the field of hemophilia, representing our first collaboration agreement for the Biopump Platform Technology. Pursuant to this agreement, the pharmaceutical company provided funding for preclinical development of our Biopump Platform Technology to produce and deliver the clotting protein Factor VIII for the sustained treatment of hemophilia. Under the terms of the collaboration agreement, we received $3.6 million through October 22, 2010 in development funding and standstill fees. Through June 30, 2010, we received $2.8 million in connection with this agreement of which $1.6 million has been recognized as other income, $0.5 million as a reduction of research and development expenses and, as of June 30, 2010, the balance is recorded as advance payments. Although the agreement officially expired on October 22, 2010, we are in advanced discussions with this pharmaceutical company regarding continuation of our collaboration in development of Factor VIII Biopumps.

We believe that the net proceeds from this offering and existing cash will be sufficient to fund our projected operating requirements for at least 12 months following the closing of this offering. Until we can generate a sufficient amount of product or licensing revenue, if ever, we expect to finance future cash needs through public or private equity offerings, debt financings or corporate collaboration and licensing arrangements.

Financial Operations Overview

Research and Development Expense

Research and development expense consists of: (i) internal costs associated with our development activities; (ii) payments we make to third party contract research organizations, contract manufacturers, investigative sites, and consultants; (iii) technology and intellectual property license costs; (iv) manufacturing development costs; (v) personnel related expenses, including salaries, benefits, travel, and related costs for the personnel involved in product development; (vi) activities related to regulatory filings and the advancement of our product candidates through preclinical studies and clinical trials; and (vii) facilities and other allocated expenses, which include direct and allocated expenses for rent, facility maintenance, as well as laboratory and other supplies. All research and development costs are expensed as incurred.

Conducting a significant amount of development is central to our business model. Through June 30, 2010, we incurred approximately $22.4 million in gross research and development expenses since our inception in January 27, 2000. Product candidates in later-stage clinical development generally have higher development costs than those in earlier stages of development, primarily due to the significantly increased size and duration of the clinical trials. We plan to increase our research and development expenses for the foreseeable future in order to complete development of our two most advanced product candidates, the EPODURE Biopump and the INFRADURE Biopump, and our earlier-stage research and development projects.

The following table summarizes the percentages of our gross research and development expenses related to our two most advanced product candidates and other projects. The percentages summarized in the following table reflect expenses directly attributable to each development candidate, which are tracked on a project basis. A portion of our internal costs, including indirect costs relating to our product candidates, are not tracked on a project basis and are allocated based on management’s estimate.

	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	%

The process of conducting pre-clinical studies and clinical trials necessary to obtain regulatory approval is costly and time consuming. The probability of success for each product candidate and clinical trial may be affected by a variety of factors, including, among others, the quality of the product candidate’s early clinical data, investment in the program, competition, manufacturing capabilities and commercial viability. As a result of these uncertainties, together with the uncertainty associated with clinical trial enrollments and the risks inherent in the development process, we are unable to determine the duration and completion costs of current or future clinical stages of our product candidates or when, or to what extent, we will generate revenues from the commercialization and sale of any of our product candidates. Development timelines, probability of success and development costs vary widely. We are currently focused on developing our two most advanced product candidates, the EPODURE Biopump and the INFRADURE Biopump.

Research and development expenses are shown net of participation by third parties. The excess of the recognized amount received from the healthcare company over the amount of research and development expenses incurred during the period for the commercialization agreement is recognized as other income within operating income.

General and Administrative Expense

General and administrative expense consists primarily of salaries and other related costs, including stock-based compensation expense, for persons serving in our executive, finance and accounting functions. Other general and administrative expense includes facility-related costs not otherwise included in research and development expense, costs associated with industry and trade shows, and professional fees for legal services and accounting services. We expect that our general and administrative expenses will increase as we add personnel and become subject to the reporting obligations applicable to public companies in the United States. Since our inception on January 27, 2000, through June 30, 2010, we spent $18.2 million on general and administrative expense.

Other Income

We have not generated any product revenue since our inception, but have received $2.8 million through June 30, 2010 in connection with our first commercialization agreement of which $1.6 million has been recognized as other income. To date, we have funded our operations primarily through equity and debt financings and funding from the Israeli OCS. If our product development efforts result in clinical success, regulatory approval and successful commercialization of any of our products, we would expect to generate revenue from sales or licenses of any such products.

Financial income and expense

Financial expense consists primarily of interest and amortization of beneficial conversion feature of convertible note, convertible debentures valuations and interest incurred on debentures.

Interest income consists of interest-earned on our cash and cash equivalents and marketable securities.

Results of Operations for the Six Months Ended June 30, 2010 and 2009

Research and Development Expenses, net

Gross research and development expenses for the six months ended June 30, 2010 were $1.37 million, increasing slightly from $1.28 million for the same period in 2009 due to an increase in purchasing of materials in connection with our phase I/II clinical trial in 2010.

Research and development expenses, net for the six months ended June 30, 2010 were $0.70 million, decreasing from $0.99 million for the same period in 2009. The decrease was primarily due to the $0.43 million participation in research and development from the pharmaceutical company in connection with our first collaboration agreement signed in October 2009.

General and Administrative Expenses

General and administrative expenses for the six months ended June 30, 2010 were $1.11 million, which did not change significantly in comparison with the same period in 2009.

Other Income

Other income for the six months ended June 30, 2010 was $1.29 million as compared to zero for the same period in 2009. The income in 2010 was recognized in connection with our first collaboration agreement signed in October 2009. As explained above, the excess of the recognized amount received from the pharmaceutical company over the amount of research and development expenses incurred during the period for that agreement is reflected as other income.

Financial Income and Expenses

Financial expenses for the six months ended June 30, 2010 were $0.11million, increasing from $0.05 million for the same period in 2009. This increase of $0.60 million was due to interest accrued on the debentures issued in June through September 2009.

Financial income for the six months ended June 30, 2010 were $0.07 million, increasing from $0.01 million for the same period in 2009. The increase of $0.06 million was primarily due to foreign currency remeasurement and convertible debenture valuations.

Results of Operations for the Years Ended December 31, 2009 and 2008

Research and Development Expenses, net

Research and development expenses, net for the year ended December 31, 2009 were $1.7 million, decreasing from $2.2 million for the year ended December 31, 2008.

The $0.5 million decrease in 2009 as compared to 2008 resulted from a $1.3 million decrease in gross research and development expenses as we cut back on research and development activity due to insufficient funding, net of a $0.8 million decrease in participation by the OCS.

General and Administrative Expenses

General and administrative expenses for the year ended December 31, 2009 were $2.5 million, decreasing from $2.8 million for the year ended December 31, 2008.

The $0.3 million decrease in 2009 as compared to 2008 resulted from cutbacks, mainly in personnel, due to insufficient funding, net of an increase in fundraising expenses.

Other Income

Other income for the year ended December 31, 2009 of $0.3 million was income recognized in connection with our first collaboration agreement signed in October 2009.

Financial Income and Expenses

Finance expenses for the year ended December 31, 2009 were $0.6 million consisting primarily of the convertible debenture valuations. Finance expenses for the year ended December 31, 2008 were $0.2 million consisting primarily of foreign currency remeasurement.

Financial income for the years ended December 31, 2009 and 2008 were $0.01 and $0.2, respectively, and consisted primarily of interest income on short term bank deposits and foreign currency remeasurement.

Liquidity and Capital Resources

Sources of Liquidity

We have financed our operations primarily through a combination of equity and debt issues and grants from the OCS.

We received $1.4 million, $0.7 million and $0.3 million during 2008, 2009 and the first six months of 2010 from the OCS in development grants.

We received $1.2 million in 2009 and $1.6 million during the first six months of 2010 in connection with the collaboration agreement related to Factor VIII.

In January and February 2009, warrants were exercised in consideration of $0.4 million and 11,025,832 shares of common stock were issued.

In October 2009, we issued a total of 4,420,000 shares of common stock in consideration of $0.4 million.

In a series of closings from March through June 2010, we issued a total of 14,465,591 shares of common stock consisting of 14,273,000 shares issued in March 2010 in consideration of $1.1 million and 192,591 shares issued to three of our directors (or their affiliates) in May 2010 in consideration of $0.02 million.

In May 2010, we issued 16,727,698 shares of common stock in consideration of $1.2 million.

Subsequent to the June 30, 2010 balance sheet date, in September 2010, we issued 24,059,852 shares for the exercise of warrants and options in consideration of $ $0.53 million. In addition in September 2010, we issued the 2010 Debentures in an aggregate principal amount of $4 million.

In addition, in November 2010 we were notified that we will receive a cash grant of $244,479 under the U.S. government’s Qualifying Therapeutic Discovery Project to further our Biopump research and development program.

Cash Flows

We had cash and cash equivalents of $1.4 million at June 30, 2010, $0.05 million at June 30, 2009, $0.5 million at December 31, 2009 and $1.0 million as of December 31, 2008. The increase in our cash balance during the first six months of 2010 was primarily the result of $2.1 million from private placements of our securities and $1.6 million of partnering offset by our loss during the period.

The decrease in our cash balance during the first six months of 2009 was primarily the result of the loss during the year offset by the increase in other accounts payable and accrued expenses and the proceeds from the issuance of shares of common stock and debentures.

Net cash used in operating activities was $1.2 million for the six months ended June 30, 2010, $1.4 million for the six months ended June 30, 2009, $1.7 million for the year ended December 31, 2009 and $3.1 million for the year ended December 31, 2008. Net cash used during these periods primarily reflected our losses and changes in working capital during those periods, offset in part by non-cash stock based compensation expense and depreciation as well as the change in fair value of convertible debentures mainly in the year ended December 31, 2009.

Our cash used in investing activities relates mainly to our purchases of property and equipment. During the year ended December 31, 2008, we moved our offices and laboratories to new and larger facilities investing $0.4 million in leasehold improvements, computers and laboratory equipment.

Net cash provided by financing activities was $2.1 million for the six months ended June 30, 2010, $0.5 million for the six months ended June 30, 2009 and $1.1 million for the year ended December 31, 2009. Net cash used in financing activity was $0.01 millions for the year ended December 31, 2008.

Our cash flows from financing activities are primarily proceeds from the issuance of shares and convertible notes and from the exercise of warrants, as well as grants from the OCS as discussed above.

In 2009, net cash proceeds from issuance of shares, exercise of warrants and from issuance of convertible notes were $0.4 million, $0.3 million and $0.6 million, respectively.

During the first six months of 2010, net cash proceeds from the issuance of shares of common stock were $2.1 million.

Funding Requirements

We expect to enter into licensing or other commercialization agreements for all or parts of applications of our Biopump Platform Technology to fund our continuing operations after this offering. If we are unable to enter into such agreements on terms acceptable to us, we will continue to incur losses from operations for the foreseeable future. We expect to incur increasing research and development expenses, including expenses related to the hiring of personnel and additional clinical trials, as we further develop the EPODURE Biopump and the INFRADURE Biopump. We expect that our general and administrative expenses will also increase as we expand our finance and administrative staff, add infrastructure, and incur additional costs related to being a public company in the United States, including investor relations programs, and increased professional fees. Our future capital requirements will depend on a number of factors, including the timing and outcome of clinical trials and regulatory approvals, the costs involved in preparing, filing, prosecuting, maintaining, defending, and enforcing patent claims and other intellectual property rights, the acquisition of licenses to new products or compounds, the status of competitive products, the availability of financing, and our success in developing markets for our product candidates.

Without taking into account any revenue we may receive as a result of licensing or other commercialization agreements we are pursuing, we believe that the net proceeds from this offering, together with our existing cash, will be sufficient to enable us to fund our operating expenses and capital expenditure requirements at least 12 months following the closing of this offering. We believe that if we sell our shares of common stock in this offering at an initial public offering price of $ per share ($1.00 lower than the midpoint of the price range set forth on the cover page of this prospectus), or if we sell a fewer number of shares in this offering than anticipated, the resultant reduction in proceeds we receive from the offering would cause us to require additional capital earlier. We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with out current and anticipated clinical trials.

We do not anticipate that we will generate revenue from the sale of products for at least five years; however, we do intend to seek licensing or other commercialization agreements similar to our agreement relating to the development of a Biopump producing Factor VIII. We anticipate that the funds received as a result of such agreements may be sufficient to fund our operations in the future. In the absence of additional funding or adequate funding from commercialization agreements, we expect our continuing operating losses to result in increases in our cash used in operations over the next several quarters and years.

Absent significant corporate collaboration and licensing arrangements, we will need to finance our future cash needs through public or private equity offerings, or debt financings. We do not currently have any commitments for future external funding. We may need to raise additional funds more quickly if one or more of our assumptions prove to be incorrect or if we choose to expand our product development efforts more rapidly than we presently anticipate, and we may decide to raise additional funds even before we need them if the conditions for raising capital are favorable. We may seek to sell additional equity or debt securities or obtain a bank credit facility. The sale of additional equity or debt securities, if convertible, could result in dilution to our stockholders. The incurrence of indebtedness would result in increased fixed obligations and could also result in covenants that would restrict our operations.

We are a company in the development stage. As reflected in the accompanying financial statements, we incurred a loss during the year ended December 31, 2009 of $4.4 million and had a shareholders’ deficit of $4.3 million as of December 31, 2009. These conditions raise doubt about our ability to continue as a going concern. Our plans include seeking additional investment and commercial agreements to continue our operations. However, there is no assurance that we will be successful in our efforts to raise the necessary capital and/or reach such commercial agreements to continue our planned research and development activities.

Principal Uncertainties Related to Potential Future Milestone Payments

We have acquired the exclusive right to make commercial use of certain patents in connection with the development and commercialization of our product candidates through a license granted by Yissum. The Yissum license agreement contains milestone payments, royalties and sub-license fees as follows:

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.

The total aggregate payment of royalties and sub-license fees payable by us to Yissum shall not exceed $10 million. To date, we have paid the first two installments of the non-refundable license fee (totaling $0.2 million). No royalties or sub-license fees have yet accrued. Additionally, we cannot estimate when we will begin selling any products that would require us to make any such royalty payments. Whether we will be obligated to make milestone or royalty payments in the future is subject to the success of our product development efforts and, accordingly, is inherently uncertain.

Critical Accounting Policies

Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses. On an ongoing basis, we evaluate these estimates and judgments, including those described below. We base our estimates on our historical experience and on various other assumptions that we believe to be reasonable under the circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results and experiences may differ materially from these estimates.

While our significant accounting policies are more fully described in Note 2 to our financial statements included elsewhere in this prospectus, we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating our reported financial results and affect the more significant judgments and estimates that we use in the preparation of our financial statements.

Convertible Debentures

We irrevocably elected to initially and subsequently measure the convertible debentures issued in June through September 2009 entirely at fair value, in accordance with ASC 825-10. As a result, we will not separate the embedded derivative instrument from the host contract and account for it as a derivative instrument. The convertible debentures are subject to remeasurement at each balance sheet date, and any change in fair value is recognized as a component of financial income (expense), net in the statements of operations. We estimate the fair value of these convertible debentures at the respective balance sheet dates using the Binomial option pricing model. We use a number of assumptions to estimate the fair value, including the remaining contractual terms of the convertible debentures, risk-free interest rates, expected dividend yield and expected volatility of the price of the underlying common stock. These assumptions could differ significantly in the future.

During 2009, we recorded financial expense of $0.4 million to reflect the change in the fair value of the convertible debentures. For the six-month period ended June 30, 2010, we recorded financial income of $0.02 million as a result of a decrease in the fair value of the convertible debentures.

Stock-Based Compensation

We account for stock options according to the Financial Accounting Standards Board Accounting Standards Codification No. 718 (ASC 718) “Compensation – Stock Compensation.” Under ASC 718, share-based compensation cost is measured at grant date, based on the estimated fair value of the award, and is recognized as an expense over the employee’s requisite service period on a straight-line basis.

We account for stock options granted to non-employees on a fair value basis using an option pricing method in accordance with ASC 718. The initial non-cash charge to operations for non-employee options with vesting are revalued at the end of each reporting period based upon the change in the fair value of the options and amortized to consulting expense over the related vesting period.

For the purpose of valuing options and warrants granted to our employees, non-employees and directors and officers during the year ended December 31. 2009, we used the Binomial options pricing model. To determine the risk-free interest rate, we utilized the U.S. Treasury yield curve in effect at the time of grant with a term consistent with the expected term of our awards. We estimated the expected life of the options granted based on anticipated exercises in the future periods assuming the success of our business model as currently forecast. The expected dividend yield reflects our current and expected future policy for dividends on its common stock. The expected stock price volatility for our stock options was calculated by examining historical volatilities for publicly traded industry peers as we do not have sufficient trading history for our common stock. We will continue to analyze the expected stock price volatility and expected term assumptions as more historical data for our common stock becomes available. Given the senior nature of the roles of our employees, directors and officers, we currently estimate that we will experience no forfeitures for those options currently outstanding.

Preclinical Development Agreement

On October 22, 2009, we signed a preclinical development and option agreement which was amended in December 2009, with a major international pharmaceutical company that is a market leader in the field of hemophilia. The development agreement included funding for preclinical development of our Biopump protein technology to produce and deliver the clotting protein Factor VIII for the sustained treatment of hemophilia.

Under the terms of the development agreement, we received $3.6 million to work exclusively with the pharmaceutical company for one year to develop a Biopump to test the feasibility of continuous production and delivery of this clotting protein. Such amount included a payment of $1.5 million for our obligation to work exclusively with the pharmaceutical company for a period of one year ended October 22, 2010 ("Standstill" period) and up to $2.1 million as funding for our operations related to the development of the Biopump Technology for Factor VIII. We are in advanced discussions with this pharmaceutical company regarding continuation of our collaboration in development of Factor VIII Biopumps.

W e recognize income in our Statements of Operations based on hours incurred assigned to the project and expenses incurred. The excess of the recognized amount received from the pharmaceutical company over the amount of research and development expenses incurred during the period for the development agreement is recognized as other income within operating income.

Funding for our operations related to the development was based on an agreed amount for each Full Time Equivalent (FTE). FTE was agreed to be measured, by the parties, as 162 development hours. The amount to be paid for each FTE is not subject to recalculation based on actual costs incurred by us.

This Factor VIII development agreement provided that we will receive all rights of the jointly developed intellectual property and will be required to pay royalties to the pharmaceutical company at rates between 5% and 10% of any future income arising from such intellectual property up to a maximum of ten times the total funds paid by the pharmaceutical company to us.

We recognize income in the statements of operations according to the performance based method.

Through June 30, 2010, payments totaling $2.8 million were received from the pharmaceutical company under the terms of the Factor VIII development agreement.

Recent Accounting Pronouncements

In October 2009, the FASB issued an accounting standards update that provides application guidance on whether multiple deliverables exist, how the deliverables should be separated and how the consideration should be allocated to one or more units of accounting. This update establishes a selling price hierarchy for determining the selling price of a deliverable. The selling price used for each deliverable will be based on vendor-specific objective evidence, if available, third-party evidence if vendor-specific objective evidence is not available, or estimated selling price if neither vendor-specific nor third-party evidence is available. We will be required to apply this guidance prospectively for revenue arrangements entered into or materially modified after January 1, 2011. To date, no revenue has been recognized from the sale of our products. Therefore, adoption of this guidance is not expected to have a material impact on our financial statements.

In April 2010, the FASB issued an accounting standards update which provides guidance on the criteria to be followed in recognizing revenue under the milestone method. The milestone method of recognition allows a vendor who is involved with the provision of deliverables to recognize the full amount of a milestone payment upon achievement, if, at the inception of the revenue arrangement, the milestone is determined to be substantive as defined in the standard. The guidance is effective on a prospective basis for milestones achieved in fiscal years and interim periods within those fiscal years, beginning on or after June 15, 2010. The adoption of this guidance is not expected to have a material impact on our financial statements.

Off-Balance Sheet Arrangements

Pursuant our license agreement with Yissum, Yissum granted us 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, we agreed to pay Yissum the following amounts, provided, however, that the total aggregate payment of royalties and sub-license fees by us to Yissum shall not exceed $10 million:

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.

In 2007, we signed an agreement with Baylor College of Medicine (BCM) whereby BCM granted us a non-exclusive worldwide license to use, market, sell, lease and import certain technology (BCM technology), by way of any product process or service that incorporates, utilizes or is made with the use of the BCM technology. In consideration we agreed to pay BCM the following amounts:

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.

All payments to BCM are recorded as research and development expenses. The license agreement shall expire (unless terminated earlier for default or by us at our discretion) on the first day following the tenth anniversary of our first commercial sale of licensed products. After termination, we will have a perpetual, royalty free license to the BCM technology.

Under agreements with the Office of the Chief Scientist in Israel regarding research and development projects, our Israeli subsidiary is committed to pay royalties to the Office of the Chief Scientist at rates between 3.5% and 5% of the income resulting from this research and development, at an amount not to exceed the amount of the grants received by our subsidiary as participation in the research and development program, plus interest at LIBOR. The obligation to pay these royalties is contingent on actual income and in the absence of such income no payment is required. As of December 31, 2009, the aggregate contingent liability amounted to approximately $3.7 million.

Subsequent Events

In August 2010, 150,000 share of common stock were issued to a consultant for services rendered to us as well as future services which will be provided to us.

In September 2010, we extended the expiry date of certain warrants and options held by Dr. Andrew L. Pearlman, our President and Chief Executive Officer, 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.

In September 2010, we granted options to purchase 1,000,000 shares of common stock under our 2006 Stock Plan at an exercise price of $0.234 per share to each of Dr. Bauer, Mr. Kanter, Mr. Brukardt and Dr. McMurray, in recognition of their past service as non-executive directors of 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.

In September 2010, we granted options to purchase 667,397 shares of common stock under our 2006 Stock 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.

In September 2010, we 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.

In September 2010, Dr. Eugene Bauer, our Chairman of the Board of Directors, exercised warrants to purchase 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 additional warrants to purchase 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.

In September 2010, Dr. Stephen McMurray, a Director of our company, exercised warrants to purchase 1,069,575 shares of common stock and options to purchase 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.

In September 2010, Mr. Joel Kanter, a Director of our 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 an exercise price of $0.071 per share, or an aggregate exercise price of $217,703.

In September 2010, we also issued 1,067,800 shares of common stock in payment of advisers’ fees relating to our ongoing financing activities and consultancy advice to our Board’s Compensation Committee.

In September 2010, we issued $4 million of 2010 Debentures. The 2010 Debentures are unsecured obligations of our company, accrue interest at 4% per annum and mature and become repayable 12 months from the date of issuance. Holders of such debentures may convert them anytime into shares of common stock, at an initial conversion price of 13 pence per share. The 2010 Debentures will automatically convert upon the closing of this offering at a conversion price of $ (equal to the lesser of 13 pence per share and 75% of the price of our common stock sold in this offering). Purchasers of the 2010 Debentures received warrants to purchase an aggregate 15,000,000 shares of common stock. Such warrants are immediately exercisable, have a 5 year term and have an initial exercise price of 16 pence. If we issue additional securities in the future at a lower price, the exercise price of the warrants will be subject to downward adjustment to such lower issue price. As of the date of this prospectus, these warrants could be exercised for cash for an aggregate 15,000,000 shares for an aggregate exercise price of $ (based on the currency exchange ratio of U.S. dollars to one British Pound sterling as of , 2010).

In November 2010, we were notified that we will receive a cash grant of $244,479 under the U.S. government’s Qualifying Therapeutic Discovery Project (QTDP) to further our Biopump research and development program. The QTDP program was created by Congress as part of the Patient Protection and Affordable Care Act. The funds are immediately available and we intend to record the full award during the fourth quarter 2010.

BUSINESS

Overview

Biopump Production and Administration

Key to the Biopump is the micro-organ (MO): a sliver of the patient’s dermal tissue which is harvested in such a way that it creates a unique tissue structure with long-term viability ex vivo . The following diagram and associated notes illustrate the processes involved in the Biopump Platform Technology.

The Biopump Platform Technology Process

(a)

(b)

Transfer to processing station – after harvesting, the MOs are transferred to a Biopump processing center for processing into Biopumps.

(c)

(d)

(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.

Key elements of the Biopump Platform Technology

MOs – The MO process was developed at Hebrew University in Jerusalem with the intellectual property rights for such concept being held by their technology transfer company, Yissum, from which we have an exclusive, world-wide license to commercialize MOs in Biopump applications. The MO is a unique tissue explant taken from a subject in a manner that preserves the microarchitecture of the original tissue, and whose dimensions enable the cells in the MO to take up nutrients and excrete waste from surrounding medium via passive diffusion. This enables sustained viability ex vivo , which in turn permits processing of the structure into a Biopump outside the body. By preserving the natural microarchitecture of the tissue from which it was harvested, the critical interactions between the cells of the structure are maintained. We have found that good results can be obtained using various lengths of dermal core cylinders measuring approximately a few millimeters in diameter.

Vector – The vector currently employed for the EPODURE and INFRADURE applications is a gutless adenoviral vector (helper dependent adenovirus, or HDAd vector, used under license from Baylor College of Medicine. HDAd vectors combine high titer production capability with high transduction efficiency in dermal fibroblasts where they are taken up in the nuclei but remain episomal in form so they do not integrate into the chromosomes in the cells. They have been selected from alternative vectors for these advantages, and also because they are deleted of all viral coding sequences that enable the independent production of new viral particles, which can cause immune rejection. As a result, HDAd vectors have increased safety and non-immunogenicity. When the vector enters the cells of the MO, it brings its payload gene (encoding for the desired therapeutic protein) into the nuclei of the cells. The capsid of the vector is then broken down by the cell, but leaves the gene inside the nucleus where the cell’s existing protein expression mechanism uses the gene to produce the therapeutic protein, which is secreted from the cells of the MO and results in the “pump” action of the Biopump. None of the patients in our phase I/II clinical trial of EPODURE has shown signs or evidence of any negative immune system reaction as a result of the HDAd vector.

DermaVac harvester – We have developed a proprietary dermal MO harvesting device, the DermaVac system, to facilitate rapid harvest of MOs from under the patient’s skin under local anesthetic, in a way designed to make it minimally traumatic to the patient. Proper use of DermaVac is intended to require only moderate training of appropriate medical personnel, while facilitating reliable harvest of viable dermis MOs. The DermaVac harvester makes use of vacuum to help shape and stabilize the skin in the appropriate geometry and guides the insertion under the skin of a precise hollow-core drilling tube attached to an appropriate high-speed medical drill, so as to help rapidly excise a defined section of dermal tissue. The procedure is minimally invasive, to minimize any external wounds at the harvest site. This device has been used in excising thousands of MOs from tissue samples, and in our phase I/II clinical trial, and has been found to be a reliable means of harvesting dermal MOs.

Biopump Bioreactor – We are currently preparing Biopumps using manual processing methods in a GMP class 10,000 clean room; however, we have also demonstrated in the past the feasibility of production of Biopumps from MOs in a prototype ex vivo processing station. We intend to design and develop an upgraded processing station to utilize a single-use sealed processing cassette for each patient to maintain sterility and avoid cross-contamination. We believe this will reduce the requirements for a clean room and operator expertise, and allow safe, reliable and cost-effective Biopump production.

Implanter – We have developed a proprietary Biopump implantation device in order to facilitate reliable, reproducible implantation of Biopumps with minimal trauma to the patient. The implantation device also makes use of vacuum, similar to the DermaVac harvester, to stabilize the skin and control the trajectory of the implantation needle to the interface between the dermis and the fat layer beneath the skin. This implantation device has been used in our phase I/II clinical trial and has been found to be reliable and minimally traumatic to the implantation sites. In addition, the Biopump implantation sites are marked so that implanted Biopumps can be easily located if there arises a need to ablate them in the future.

Ablation techniques – In order to reduce the protein dose or effectively to cease protein secretion, we are developing safe and effective methods to halt the function of one or more implanted Biopumps using ablation. For example, if a patient has received four Biopumps but needs to reduce the dose by approximately 25%, we believe that this can be achieved by ablating one of the Biopumps, which are located just under the skin where they were implanted. We have tested different methods of ablating Biopumps: laser, radiofrequency needle and surgical removal.

Competitive Advantages of the Biopump Platform Technology

We believe that the Biopump Platform Technology provides a wide range of advantages over existing therapies that appeal and offer benefits to doctors, patients and third-party payers (e.g., CMS and medical insurers). The advantages include:

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.

We believe our proprietary technology can achieve objectives and priorities of the recent U.S. healthcare reforms, since the Biopump directly addresses major objectives such as:

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.

Applications of the Biopump Platform Technology Currently in Development

EPODURE Biopump for the Treatment of Anemia in Chronic Kidney Disease

The EPODURE Biopump is designed to address the growing need for a safer, more reliable, and cost-effective anemia therapy by means of providing a continuous supply of EPO for 6 months or more from a single administration. EPO is a protein produced naturally in the kidneys that stimulates red blood cell production in the body. A shortage of EPO in the body, such as that caused by kidney disease, can cause anemia. Anemia is a condition in which the number of red blood cells, or the hemoglobin in the red blood cells, is below normal. Hemoglobin enables red blood cells to carry oxygen from the lungs to all parts of the body and carry carbon dioxide to the lungs so that it can be exhaled. A person becomes anemic when the body produces too few healthy red blood cells, loses too many of them or destroys them faster than they can be replaced. Anemia is caused by, or associated with, a wide variety of conditions including chronic kidney disease (CKD), ESRD (e.g., in dialysis patients), AIDS, hepatitis, cancer and chemotherapy, and is characterized by low levels of hemoglobin or hematocrit (red blood cell count). The National Kidney Foundation estimates the 2010 CKD population in the United States alone exceeds 20 million people, and the National Anemia Action Council estimates that 65 million Americans with hypertension and 17 million Americans with diabetes are at increased risk for CKD and subsequently anemia.

The current treatment for a number of chronic anemic conditions, to raise and stabilize hemoglobin levels, is by multiple and frequent subcutaneous injections of recombinant EPO produced in animal cells, each injection having a typical half life of about eight hours. The recommended dosing for recombinant EPO according to FDA labeling guidelines is three times per week with Amgen, Inc.’s EPOGEN ® , or once a week with Amgen, Inc.’s longer-lasting Aranesp ® which has a half life closer to 25 hours. A recent study has shown that with each typical injection, peak EPO levels in patients reach 10-100 times the intended concentration often exceeding 1,000 mU/ml (Woo Woo et al., J Pharmacokinet Pharmacodynamic (2007) 34:849), which can cause a bad response along with the good response. The good response is a stimulation of the intended cells in the bone marrow, which produce red blood cells. This requires elevation of serum EPO levels into the “therapeutic window”, which typically ranges from 20 up to 100 mU/ml . The bad response is a stimulation of the cell lining of the blood vessels, at levels of 1-2,000 mU/ml or more, which can increase risk of hypertension and emboli that can cause stroke or heart attack.

Managing hemoglobin levels using periodic short-acting injections is often challenging, with anemia often under-treated or over-treated to compensate, with the result that the hemoglobin levels alternately rise above the maximum recommended levels, or drop below recommended minimum. Major studies have repeatedly shown increased risk of morbidity and mortality in patients from such hemoglobin cycling. Patients with ESRD typically undergo dialysis sessions three times per week, and EPO is often administered through the dialysis tubing or subcutaneously by the dialysis healthcare staff when the patient is in the clinic for the regular dialysis treatment. This form of administration involves a considerable amount of time and resources provided by the healthcare provider, with an annual anemia treatment regimen for an ESRD patient typically costing at least $15,000 to $25,000. CKD patients are not connected to a dialysis machine, and generally need to visit a doctor’s office to receive each EPO injection. This can lead to non-compliance with the therapy regime due to the inconvenience of arranging appointments with doctors or reluctance to receive regular injections, and can further complicate the challenge of maintaining hemoglobin within the desired range.

The risks of current anemia practice recently led the FDA to issue a “Black Box” warning (its highest level of FDA warning) of increased death and cardiovascular risks involved in current EPO practice, recommending reduced EPO dosing and reduced recommended maximum target hemoglobin level in anemic patients. These concerns indicate the importance of managing EPO administration to keep resulting hemoglobin levels within the desired range, which has narrowed as a result of the FDA warning. In addition, there are safety concerns regarding immune risks of recombinant EPO, because some manufactured recombinant EPO has been shown to cause PRCA, a serious and life-threatening condition where antibodies to EPO destroy the red blood cell precursor cells in the bone marrow. Although the recently reported incidences of PRCA have been associated primarily with one brand of EPO, it illustrates the potential vulnerability of recombinant proteins to small changes in manufacturing or handling which can cause generally safe proteins to become immunogenic. We believe our EPODURE Biopump addresses each of these risks.

Through our phase I/II clinical trial of the EPODURE Biopump, we have demonstrated that Biopump Platform Technology can produce and deliver EPO for several months without exceeding the therapeutic window, and has helped to stabilize hemoglobin for 6 months or more. In the 12 patients treated to date, the EPODURE Biopump has shown its potential to help stabilize patients’ hemoglobin levels, and, with appropriate dosage, to also maintain hemoglobin within the target range over several months. In most patients whose hemoglobin levels varied greatly over the year prior to treatment, the levels stabilized following their EPODURE Biopump treatment. This stabilization has been achieved despite the limitations imposed by the study protocol, which assigns patients to a fixed single dose at “low”, “mid” or “high” level rather than the mode of intended clinical usage in which dose can be adjusted, through the additional of more EPODURE Biopumps or the reduction through ablation of existing EPODURE Biopumps, based on patient response.

To date, our phase I/II clinical trial of EPODURE Biopumps for the treatment of anemia in patients with chronic kidney disease has treated twelve patients and produced the following results:

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.

We seek to further add to these results as we continue our phase I/II clinical trial of the EPODURE Biopump. The results of our phase I/II clinical trial will be presented at the annual convention of the American Society of Nephrology in November 2010, one of the largest meetings of nephrologists in the world. The presentation will be given by a member of our Strategic Advisory Board, Professor Anatole Besarab of Ford Hospital, Detroit, Michigan, a leading authority in renal anemia.

By recent Congressional action, commencing in January 1, 2011, Center for Medicare and Medicaid Services (CMS) will set a single “bundled” or composite reimbursement rate for dialysis, including its related anemia treatment, which will provide an even greater incentive for a lower cost, safer and more reliable way to manage hemoglobin in dialysis patients. We believe that EPODURE Biopumps directly address the opportunity for a cost effective alternative to deliver better hemoglobin control at lower cost than EPOGEN® or biosimilars.

Our key clinical advisors, who include leading experts in renal anemia from industry and academia, believe that the EPODURE Biopump has great potential to improve significantly the safety, reliability and efficacy of anemia treatment over existing EPO therapies. We believe that the EPODURE Biopump can be developed into a highly cost-competitive and better alternative to current EPO therapy methods, as well as to other therapies under development such as EPO biosimilars and Affymax’s Hematide. Long lasting EPODURE Biopump treatments are consistent with the growing home dialysis sector and the growing pre-dialysis chronic kidney disease market, where frequent administration of EPO injections can be a significant challenge. We believe the combination of these factors will position the EPODURE Biopump to capture a significant proportion of the current EPO anemia therapy market.

Key Advantages of EPODURE Biopump

The EPODURE Biopump is designed to directly address the need for a safer, more reliable, and cost-effective anemia therapy that better maintains hemoglobin levels within a defined range.

Safety

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.

Efficacy

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.

Cost Savings

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.

We believe that, in addition to providing a better alternative to EPOGEN and other forms of EPO, the EPODURE Biopump will provide a cost-effective alternative to Aranesp and other erythropoietic stimulating agents (ESAs), and will directly address some of the key issues noted by nephrologists in current CKD therapy. This follows because the longest period between treatments using current drugs or those in clinical trials is four weeks, and requires strict adherence to injection schedules, whereas our EPODURE Biopump potentially offers six months or longer of anemia treatment between administrations and therefore requires less compliance and imposition on the schedule of the CKD patient.

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

INFRADURE Biopump for the Treatment of Hepatitis C and Cancer

We are developing the INFRADURE Biopump to address the need for a patient-tolerable form of IFN-α therapy for use in treatment of chronic hepatitis C and certain cancer applications. We introduced the INFRADURE Biopump in April 2010 at the leading European conference on liver disease, the European Association for the Study of the Liver (EASL), where we presented data that INFRADURE Biopumps produce sufficient quantity of IFN- α to treat patients and deliver active protein in SCID mice. The INFRADURE Biopump is designed to provide sust ained-action IFN-α therapy or more from a single treatment using the Biopump. Chronic hepatitis C is an inflammation of the liver caused by a viral infection with hepatitis C virus (HCV). Hepatitis C is described as acute if the condition resolves within six months and chronic if the condition persists longer than six months. According to the World Health Organization (WHO) Hepatitis Fact Sheet No. 164, it is estimated that there are 170 million chronic HCV carriers and three to four million new infections each year globally. Furthermore WHO reports that, of individuals with HCV infection, approximately 80% will develop a chronic infection, of which approximately 10% to 20% will develop chronic liver disease progressing to cirrhosis and 1% to 5% will develop liver cancer over a period of 20 to 30 years.

Chronic HCV infection is the leading cause of liver disease in the U.S. and many other western countries. According to the U.S. Center for Disease Control and Prevention, it is the most common chronic blood-borne infection in the U.S. Although the incidence of infection in the U.S. has decreased since the 1980s, the rate of deaths attributable to HCV continues to increase as people infected decades ago begin to succumb. Approximately 8,000 to 10,000 people currently die each year from HCV-related liver disease and it is predicted that the death toll will triple by the year 2010 and exceed the number of U.S. deaths due to AIDS. In addition, HCV is the most common reason for liver transplantation. Over the next 10 to 20 years, chronic hepatitis C is predicted to become a major burden on the U.S. healthcare system.

There are two main treatment methods using IFN-α currently available, namely:

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.

We believe the above treatments can result in transient overdosing of IFN-α associated with bolus injections weekly, which can cause unpleasant side effects in most patients and severe side effects in many patients, resulting in patients often reducing therapy dosages and causing 10% to 20% of patients to discontinue treatment altogether. Early side effects can include flu-like symptoms. Moderate level side effects that a patient may experience with continued therapy can include fatigue, hair loss, low blood count, difficulty focusing, moodiness and depression. Severe side effects (which can effect up to 2% of individuals) include thyroid disease, depression, suicidal thoughts, seizures, acute heart or kidney failure, eye or lung problems, hearing loss, blood infection and, although rare, death due to liver failure or blood infection. The epidemic proportions of chronic hepatitis C, the limited efficacy and costly nature of approved therapeutics, the high cost of liver transplants and the enormous burden on the healthcare system in medical and work-loss costs alone, all call attention to the need for prophylactic vaccines as well as new therapies to treat the disease.

The current standard of care in treating hepatitis C involves weekly bolus IFN-α injections that are usually accompanied by mild to severe side effects in the grea t majority of patients, ranging from flu-like symptoms to neutropenia and severe depression. Experts believe the side effects are in large part due to the short-term substantial overdose of each injection. The overdose is deliberate to try to overcome the inherently short half life of the IFN-α (5.5 hours) and keep the concentration above the minimum effective level for sufficient time after each injection. Patients often complain about the unpleasant effects of these injections, and there is a well recognized need for a much more patient-tolerable way to offer the benefits of IFN-α for fighting the HCV virus with far fewer side effects. Some researchers have tried to reduce the effects by extending the half-life, through modifications of the IFN-α molec ule (e.g., pegylation or attachment to albumin), but these modifications have not eliminated the side effects.

Using slow continuous delivery of IFN-α to provide the therapeutic benefits while avoiding the bolus overdoses and their side effects has been shown to have potential advantages in hepatitis C patients. A clinical study in several patients published in 1997 (Schenker et al: Activity and tolerance of a continuous subcutaneous infusion of -interferon – α2b in patients with chronic hepatitis C. J Interferon and Cytokine Res. 17: 665-670, 1997.) reported that steady delivery of IFN-α via infusion pump in HCV patients can provide effective therapy with fewer side effects than from regular bolus injections. However, IFN-α delivery through infusion pu mps is not commonly used in patients. We believe this is in part due to the fact that this treatment still requires a supply of expensive and unstable recombinant protein and presents practical difficulties in administration (e.g., it requires cooling and regular refilling). However, the continued need for a tolerable form of interferon therapy has led Medtronic, Inc., a U.S. medical device company, to launch a clinical study in 2009 (COPE) of a large group of patients with hepatitis C, in which standard IFN-α is administered daily to each patient by portable infusion pump – similar to the study by Schenker. We believe that t he COPE trial hopes to show, as the small 1997 study suggests, that continuous delivery can provide the benefits of IFN-α therapy wi th fewer side effects. We believe the continuous delivery approach is correct. If the COPE trial succeeds in showing the benefits of continuous delivery, we believe it argues for our INFRADURE Biopump, because we believe the INFRADURE Biopump represents a more reliable and cost effective way to provide continuous IFN-α, through the continuous production of natural protein on a sustained-action basis in the patients’ own cells. Based on our preclinical data for the INFRADURE Biopump, together with our clinical data from EPODURE, we believe that a few biopumps may deliver the required IFN-α dose for six months or more in typical patients with hepatitis C, whereas the infusion pump approach requires the industrial production of IFN-α and the practical challe nges and costs of reloading and maintaining portable infusion pumps. We are planning to launch a phase I/II INFRADURE clinical trial in hepatitis C patients near the end of 2011, which if it proceeds as planned, could provide key initial proof of concept data in 2012 showing the intended advantages from single administration of INFRADURE Biopumps in these patients.

Our scientific advisors, who include leading world experts in hepatitis C, believe that steady delivery of INF-a provided by the INFRADURE Biopump could provide the benefits of IFN-α without the debilitating and dangerous side effects caused by massive overdoses associated with each of the serial injections. They believe that in combination with various antiviral drugs, IFN-α and its immunothera peutic benefit will continue to play a significant role for the foreseeable future in the treatment of the estimated 170 million people afflicted with hepatitis C, even as new and very costly antiviral agents are developed. As a result, we believe that the INFRADURE Biopump will provide a unique and cost-effective alternative to current treatments involving serial injections of various forms of INF-a, while reducing the side effects and promoting patient compliance with treatment.

Key Advantages of INFRADURE Biopump

Based on the research to date, we believe that the INFRADURE Biopump has the potential to addresses the key issues in current therapy of chronic hepatitis C and has many potential advantages over current INF- α therapies.

Safety and Compliance

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.

Efficacy

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.

Cost-Effectiveness

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.

We do not believe that the potential benefits of the INFRADURE Biopump will be minimized by the development of new direct acting antiviral agents (DAAs). We believe that the INFRADURE Biopump, used in conjunction with more conventional antiviral agents and compounds, could well offer an attractive and effective alternative at significantly lower cost than DAAs, and where interferon therapy is needed in conjunction with DAAs, the INFRADURE Biopump could provide such interferon treatment.

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.

Factor VIII Biopump for the Treatment of Hemophilia

We are in early stage development of a Factor VIII Biopump for use in the treatment of hemophilia. We believe the Factor VIII Biopump represents a potential improved therapy in the treatment of hemophilia, because it would be prophylactic (preventing bleeding) and therefore could reduce the risk posed by bleeding in these patients. The current treatment is primarily to administer Factor VIII by injection after bleeding has already started. We also believe that if the Factor VIII Biopump succeeds in producing sufficient Factor VIII, and in delivering it into a patient’s circulation, it would represent a significant step towards rendering the patient’s life more normal. It could also provide significant cost savings for treatment of hemophiliacs, in which the cost of Factor VIII injections in a typical hemophilia patient typically exceeds $100,000 per year. The Factor VIII global market was $4 billion in 2009 according to La Merie Business Intelligence, R&D Pipeline News, Top 20 Biologics 2009 (May 10, 2009).

We have successfully developed Biopumps producing active clotting Factor VIII protein in vitro . We believe this is a further confirmation of our Biopump technology as a platform for continuous production of a range of different proteins, by reproducibly producing Biopumps making a new protein, especially Factor VIII which is considered by many to be one of the more challenging of proteins. We are continuing to develop our Factor VIII Biopump to further increase Factor VIII output per Biopump to bring output to target levels thought sufficient to improve blood clotting, if they were administered to patients with hemophilia. We are in advanced discussions with the pharmaceutical company with whom we worked since October 2009 on the research and development of Factor VIII Biopumps regarding the continuation of our collaboration in Factor VIII Biopump development.

Overall protein market and current therapeutic treatment platform

The worldwide market for protein therapy is forecast by RNCOS – Global Protein Therapeutic Market Analysis (Ed. 3, May 2010) to reach $95 billion in 2010. We estimate that the Biopump Platform Technology could potentially be applied to many elements of this market, starting with proteins to treat an emia (EPO) and then hepatitis C (IFN-α). In 2 009, EPO injections to treat anemia generated revenues of $9.6 billion and IFN-α injections for treatment of patients with hepatitis C and some forms of cancer -generated revenues of $2.6 billion according to La Merie Business Intelligence, R&D Pipeline News, Top 20 Biologics 2009 (May 10, 2009). We have identified the anemia and hepatitis C markets as first priorities for applying the Biopump Platform Technology.

Examples of other conditions that may benefit from proteins produced and delivered by the Biopump Platform Technology are listed in the table below:

Condition	Protein therapy

Diabetes	Insulin

Obesity	Peptide YY 3-36

Multiple sclerosis	IFN- β

Arthritis	IL-1R α

Cancer recovery	G-CSF

Chronic pain	IL-10

Growth failure/muscular atrophy	hGH

Wound healing	PDGF-BB

The current standard platform for protein production and delivery which involves a highly complex and capital-intensive manufacturing process based on large-scale animal cell tissue culture and delivery in the form of frequent injections (due to the short half-life of recombinant proteins as described below). Protein manufacturing plants generally take several years and substantial capital to build, secure regulatory approvals and bring into production. Once produced, the protein is typically distributed to, and stocked in, pharmacies and physicians’ offices and administered by injection. Injections can be painful and costly and require frequent visits either by home healthcare nurses or to the doctor’s office. A treatment based on the administration of serial injections can suffer from poor patient compliance and, therefore, inadequate treatment can result.

As recombinant proteins are typically metabolized (i.e. broken down) by the body very quickly, they have a very short therapeutic life, ranging from a few minutes to a few hours. This means that, for many proteins, injections need to be taken at least once a week and often more frequently, to maintain concentration in the blood within the therapeutic window, i.e., above the minimum level required to be effective. It is widely known in the medical community that, below certain levels, the protein has no therapeutic effect. In order to keep protein levels in the blood above the minimum therapeutic level for as long as possible in between injections, large bolus injections are typically administered. Although this can extend the time before the protein levels in the blood drop below the minimum therapeutic level (undershoot), it also causes initial levels to rise to many times above the maximum desired level (overshoot). Current therapies produce extended periods of overshoot, which can cause significant side effects, followed by undershoot, which leaves the patient under treated until the next injection. In the case of EPO for treating anemia, the overshoot can cause stimulation of the lining of the blood vessels, raising the risks of hypertension and ebolic stroke, and in the case of IFN-α for treatment of hepatitis C, the overshoot typically causes serious flu-like symptoms with each injection, and can cause loss of white blood cells (neutropenia), depression, and other serious conditions.

Competition for Protein Therapy Market

Our industry is subject to rapid and intense technological change. We face, and will continue to face, intense competition from pharmaceutical, biopharmaceutical and biotechnology companies, as well as numerous academic and research institutions and governmental agencies engaged in activities related to the treatment of disease based on the protein therapeutics, both in the U. S. and abroad. Some of these competitors are pursuing the development of drugs and other therapies that target the same diseases and conditions that we are targeting with our product candidates.

Many of the companies competing against us have financial and other resources substantially greater than ours. In addition, many of our competitors have significantly greater experience in testing pharmaceutical and other therapeutic products, obtaining FDA and other regulatory approvals of products, and marketing and selling those products. Accordingly, our competitors may succeed more rapidly than us in obtaining FDA approval for products and achieving widespread market acceptance. If we obtain necessary regulatory approval and commence significant commercial sales of our products, we will also be competing with respect to manufacturing efficiency and marketing capabilities, areas in which we have limited or no commercial-scale experience.

Nearly all protein therapy currently utilizes recombinant protein delivered via serial bolus injections; however, there are many alternative ways to make protein and to deliver it. New ways to produce proteins are emerging, including production in plant cells, as well as generic production of off-patent proteins using more standard recombinant protein technology. However, we believe that each of these new production methods faces the same challenges of how to deliver the protein reliably in the intended therapeutic window over the required extended periods of treatment. We believe that the personal production of therapeutic protein inside a patient’s body as provided by Biopump Platform Technology has distinct advantages over the development of these new production methods.

There are also new methods for delivering protein from implanted slow-release depots, through the skin, through inhalation or through “smart pills” that evade the digestive track. However, these all face the common problem of who will supply the expensive protein to be delivered, which will still be produced in cells other than the tissue of the patient. Most of the alternatives to bolus injection are aimed at reducing the traditional patient resistance to injections; however, these alternatives to date do not adequately deal with the challenge of peaks and troughs in between each administration and the need for high patient compliance over an extended period to sustain therapeutic levels. Longer lasting versions of therapeutic protein have been achieved through alteration of the protein molecule itself and may offer the potential to reduce the number of injections, but still require administration every one-to-two weeks. These longer lasting versions of proteins remain expensive to produce and run the risk of prolonging the overdosing period resulting from any given injection. New molecules mimicking the action of proteins are showing promise in clinical testing, but are still only expected to extend the inter-injection period to up to four weeks, as compared to the Biopump’s potential to provide 6 months or more per treatment.

We face competition within protein therapeutics, directly from established competitors using alternat ive protein manufacturing and delivery methods for EPO and IFN-α to treat anemia and hepatitis C, respectively. Additionally, many of these competitors currently manufacture, or are developing, a wide array of proteins such as G-CSF and hGH - protein therapies that we intend to target with the Biopump Platform Technology in the future.

Business Strategy

During 2009-10, we transitioned our business from focusing solely on research and development and the initial clinical stage of our product candidates to seeking to commercialize the Biopump Platform Technology through both additional research and development and seeking partnerships and relationships with other pharmaceutical, medical device and healthcare companies. Our primary strategy is to complete development of the core elements of the Biopump Platform Technology and associated key devices, and to be able to apply them to different clinical indications. While this is proceeding, we intend to seek to enter into multiple licensing agreements for many different proteins and clinical indications using the same core Biopump Platform Technology. Our preferred approach is to develop the Biopump technology for a particular indication through proof of basic safety and efficacy in patients (phase I/II), and then to negotiate out-licensing agreements for the Biopump Platform Technology with appropriate strategic partners for such indication.

The demonstration of several months to over 24 months of sustained anemia treatment from a single administration of the EPODURE Biopump in patients with chronic kidney disease has shown that an appropriate administration of the EPODURE Biopump can provide sustained anemia therapy without any EPO injections and represents an unprecedented duration from a single treatment in patients – replacing scores of EPO injections. Assuming continued positive results in our trial, we intend to seek a strategic partner for the license of the EPODURE Biopump.

We anticipate taking a similar approach with our INFRADURE Biopump to treat hepatitis C. Subject to receipt of the required regulatory approvals, we intend to commence phase I/II clinical trials of the INFRADURE Biopump for the treatment of hepatitis C in patients prior to the end of 2011. Assuming receipt of successful initial results from such trials demonstrating proof of concept, we would then intend to seek a strategic partner for the license of the INFRADURE Biopump.

The approach of first demonstrating proof of concept in patients before partnering is not our only option. We were able to successfully enter into a commercial development and option agreement with a major pharmaceutical company in the field of hemophilia for the development of a Factor VIII Biopump for hemophilia. Prior to entering into such agreement, we had not begun to develop a Factor VIII Biopump and had no clinical results for such indication. However the sustained clinical results of our EPODURE Biopump, taken together with our prior production of IFN-α by INFRADURE Biopumps, supported the concept of the Biopump as a platform to potentially provide safe and sustained production and delivery of therapeutic protein on a continuous basis. This first commercial deal provided us with $3.6 million in research and development participation and standstill fees. We believe the Factor VIII Biopump deal structure provides a model for collaboration with strategic partners in completely new applications more generally, including a funding mechanism for proving feasibility of a new Biopump application before commencement of licensing negotiations. We are exploring opportunities utilizing this model for further commercial interest in new applications using the Biopump platform. We may seek additional commercialization or development deals with strategic partners for other clinical indications or proteins using Biopump Platform Technology before we have reached the phase I/II clinical trial stage for such indication or protein.

In addition to developing new protein applications of the Biopump, we are also planning for practical scale-up and commercial implementation of Biopump treatment technology. This includes automated Biopump processing technology utilizing low cost single-use sealed cassettes, in the context of regional or local Biopump processing centers capable of producing and storing Biopumps for hundreds or even thousands of patients per year, in a cost-effective manner. The practical implementation of the Biopump system will take advantage of the robustness and stability of the MOs and Biopumps for practical logistical transport using standard shipping means, to enable local implementation of MO harvest from patients, and Biopump administration to patients, by their own local physicians.

As the Biopump processing center model evolves, a potential role has emerged for a manufacturing partner to set up and run Biopump processing centers, which would produce Biopumps, using scaled-up cost-effective devices and methods currently under preliminary development. Appropriate agreements could then be made with pharmaceutical or other commercial partners for harvesting MOs from, and administration of Biopumps to, patients in local medical centers. At least one major manufacturing company has expressed interest relating to this model, and we are exploring this route. This model can offer pharmaceutical partners the advantages of Biopump therapy in their market applications, building on their existing infrastructure for selling injected therapeutics, while sparing them the need to establish their own Biopump processing centers.

Regulatory Strategy

Our overall regulatory strategy is aligned with our business strategy of partnering with pharmaceutical, biotech, or medical companies to advance clinical development, request regulatory approvals, and eventually commercialize approved products. To that end, our strategy is to perform laboratory and animal feasibility studies and early clinical feasibility (phase I/II clinical trials) to demonstrate the potential of the Biopump application. Generally, a strategic partner is sought after sufficient Phase I/II data have been gathered to show proof of concept; however, as with hemophilia, we may reach feasibility or partnering agreements at an earlier stage, even before start of preclinical development. For most applications after the completion of phase I/II clinical trials, we would seek to continue clinical development through the product approval stage with a partner or collaborator who provides funding for the development. As a result, we would not be pursuing the regulatory process on our own. However, for some indications we may determine to conduct our own phase IIb clinical trial or even take a product candidate to final the product approval stage without a strategic partner. The general path towards regulatory approval of each Biopump product is:

Select disease condition and protein therapeutic for application for FDA approval

Conduct pre-pre-IND (Investigative New Drug application) meeting with FDA to clarify preclinical requirements and outline of the clinical protocol

Collect preclinical data, and pursue either

Non-U.S. phase I/II: obtain approval by Israeli Ministry of Health, or equivalent in other country

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

Conduct the phase I/II study, with preference generally in Israel, where Medgenics can provide maximal support

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

Obtain IND approval, conduct phase IIb in U.S.

Complete review, obtain IND to conduct phase III in U.S.

Submit BLA (Biologic License Application) for product sales

We currently intend to take the EPODURE Biopump through these regulatory steps first, although we will continue to evaluate the results of our development of the INFRADURE Biopump and the Factor VIII Biopump and may seek to obtain regulatory approval of one of those product candidates first. We are also evaluating the possibility that the shortest path through regulatory approval for the first Biopump application could be to select a rare disease condition that has an orphan drug designation granted by the FDA, particularly for a life-threatening disease. Orphan drug status grants additional rights to approved products and the application to a rare disease, typically diseases thought to affect less than 10,000 people worldwide, generally requires fewer patients in clinical trials because of the rare nature of the disease. According to the National Organization of Rare Diseases, there are thousands of such diseases, and we are exploring the possible applications to identify those most promising for our Biopump technology. An initial approval of a Biopump product by the FDA will help establish the safety and effectiveness of Biopumps as treatment for chronic diseases. Future regulatory approvals of Biopumps for other disease conditions will still need to prove their safety and effectiveness in a clinical setting, but the general questions on the safety and practicality of Biopumps as a treatment modality will become less of an issue.

We are currently focused on seeking FDA approval initially as the U.S. market for therapeutic proteins is the largest. We also believe that the Biopump offers unique advantages addressing key issues of urgent importance in the U.S. market, such as cost-effectiveness, preventive treatment, and patient compliance. Although an EMEA approval strategy has not yet been devised, to date we have conducted our clinical trials so that the results of these trials will support applications to both the FDA and EMEA. We intend to conduct our future trials in such manner as well. We also intend to submit applications for other geographical markets.

We believe that the Biopump Platform Technology will be considered as a combination product by the FDA, being a combination of biological products and devices, with the primary mode of action being a biologic. Therefore, the CBER Center for Biologics Evaluation and Research (CBER) division of the FDA will lead the review of our product, with support from Center for Devices and Radiological Health (CDRH) for the device aspects of the Biopump product.

EPODURE Biopump Clinical Trials: Anemia in patients with chronic kidney disease (CKD)

During 2003 and 2004, we undertook a phase I clinical trial using a short acting version of the Biopump producing EPO. That short acting version utilized a first generation adenoviral vector to process the micro-organs into Biopumps to produce and deliver EPO in ten anemic patients. The results of that phase I clinical trial were reported in the peer-reviewed publication “Blood” (the Journal of the American Society of Hematology) in October 2005:

“The results of this study represent proof of principle that the implantation of an autologous genetically modified tissue into human dermis could significantly and safely increase the level of secreted proteins in the serum of patients. Furthermore, the secreted protein induced a physiological effect by increasing the level of the reticulocyte count. The implantation and physiologic effects were not associated with any significant side effects associated with the experimental drug.”

The first generation adenoviral vector used in the Biopumps tested in the phase I clinical trial contained a substantial number of viral genes in addition to the gene for EPO. Consequently, the transduced cells were capable of producing not only EPO but also viral proteins, which the report published in the “Blood” concluded were probably responsible for drawing the immune response against those cells thereby curtailing EPO delivery after ten to fourteen days. Having proved the principle of the Biopump in the short-action phase I clinical trial, we then developed a non-immunogenic gutless (i.e. having none of its own genes) version of the adenoviral vector to produce the Biopumps which we believed was not likely to elicit an immune response in humans, and therefore, should be able to produce the therapeutic proteins over a sustained period in human patients. Utilizing the gutless adenoviral vector, we produced sustained-action Biopumps for two different applications: one producing EPO, and the other produci ng IFN-α. Each demonstrated continued protein production in the range of thousands of nanograms per day for six months in vitro . We now use the gutless adenoviral vector to produce the Biopumps used in our current phase I/II clinical trial of the EPODURE Biopump.

The current phase I/II clinical trial of the EPODURE Biopump for the treatment of chronic renal anemia was initially conducted at Hadassah Medical Center since September 2008 under approval of the Ethics Committee of Hadassah Medical Center and the Israel Ministry of Health. In April 2010 we received further approval to add an additional site of Tel Aviv Sourasky Medical Center to the clinical trial. The study is a Phase I-II, open label, dose escalation study, comprising three EPODURE sustained dosage groups of erythropoietin (EPO) (approximately 20, 40, and 60 IU/kg/day) for the treatment of anemia in chronic kidney disease patients (stage III-IV), starting with the lowest dose. These dose levels were selected to roughly correspond to the FDA recommended dosing range for injected EPO is from 50 to 150 IU/kg given three times per week, corresponding to 150-450 IU/kg per week, or 20-60 IU/kg per day.

CKD patients diagnosed as having renal anemia (i.e., having insufficient hemoglobin levels associated with reduced production of EPO by the failing kidneys) are candidates for the study, whether the patient is already under treatment for the anemia by a regimen of EPO injections (EPO dependent), or has yet to commence such a treatment (EPO naïve). Each patient is treated with a group of his or her own subcutaneously implanted Biopumps that were measured before treatment to produce the requisite aggregate amount of EPO per day (20, 40, or 60 IU/kg) based on the patient’s weight. The intention is that by producing and delivering EPO continuously for months, the Biopumps will help stabilize the patients’ hemoglobin levels, and if the EPODURE Biopump dose is adequate for the patient’s specific needs, the hemoglobin level will also be maintained in the target range of 10-12 g/dl.

Under the approved protocol, ten dermis micro-organs are harvested from each patient by simple needle biopsy performed under local anesthesia using our proprietary device, the DermaVac, typically from the dermis of the abdomen. These tissues samples undergo a standardized, reproducible procedure over the course of two weeks to convert them into EPODURE Biopumps which each secrete a measured and sustained amount of EPO/day. A group of the patient’s Biopumps which together produce the dose of EPO required by the protocol is subsequently implanted back into the patient subcutaneously, again under local anesthesia.

As of the end of October 2010, 12 patients had been treated: seven at the low dose level of 20 IU/kg/day and five at the mid-dose level of 40 IU/kg/day. The mid-dose was administered after submission and approval of a safety report on the first six patients treated at the low dose. No related adverse events have been reported for any of the treated patients, with the exception of minor, local subcutaneous hematoma (bleeding) seen at the harvest and implantation sites, as can be expected for any invasive procedures dealing with the skin. The hematoma was generally seen to clear up within several weeks for all patients treated. In addition, no immune response to the implanted Biopumps was reported. Because the protein secreted by the implanted Biopumps is the patient’s own naturally-produced human EPO and not a foreign substance, no adverse reaction was expected, and none has been noted. Evidence that the Biopumps were not rejected by the patients’ immune system is seen in the sustained elevation and maintenance of hemoglobin levels in most of the patients. All of the patient procedures have been well tolerated and no complaints of discomfort have been received.

For the patients that were not EPO naïve, their treating physicians discontinued EPO injections at least four weeks prior to the day of Biopump implantation, as required in the approved protocol.

In all treated patients, EPO levels were quickly elevated by 10-50 mU/ml above baseline with a generally larger net rise attained in proportion to the implanted dose and resulting in an increase in the number of new red blood cells (reticulocytes), showing that the EPODURE Biopump delivers active EPO into the patient’s serum a dose-dependent manner. However, the key result of clinical interest is the level of hemoglobin (Hb). In the six patients who received the low dose, the treatment was adequate to raise or maintain hemoglobin in the 10-12 g/dl range for at least several months.

Clinical results so far, although in a limited number of patients, demonstrate that a single EPODURE Biopump treatment in the appropriate dose can help provide stable control of patients’ hemoglobin level over several months without EPO injections.

As further positive results are collected in the phase I/II clinical trial, we intend to arrange a pre-IND meeting with the FDA during 2011, intended to confirm the remaining steps to be completed to obtain IND for a multi-center phase IIb clinical trial. Our regulatory advisors have advised that we use the safety and efficacy data from the phase I/II clinical trial as part of the IND application to the FDA for Phase IIb. We do not currently contemplate moving directly to a phase III clinical trial following the phase I/II clinical trial, preferring first to ensure the reliable implementation of the full method at widely dispersed centers.

We believe that the phase IIb clinical trial would likely involve 60 to 120 patients, and seek to reproduce similar results to the phase I/II clinical trial in multiple centers (and in more patients), and further seek to test:

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).

Initial discussions with our regulatory advisers indicate it is possible that following successful demonstration of these points in 60-120 patients in the phase IIb clinical trial, such trial could be converted into a broader pivotal phase III clinical trial for product approval. More than one major U.S. clinical site has asked to take part in the planned phase IIb clinical trial, with costs estimated in the $6-10m range. With sufficient funding, we could perform the phase IIb clinical trial on our own, or alternatively, if agreement is reached with an appropriate strategic partner as more of the Phase I/II data comes in, the phase IIb clinical trial could be conducted with such partner under that agreement.

It is important to note that the phase I clinical trial and the phase I/II clinical trial both involved manually processing the MOs into Biopumps, while maintaining them using open incubation wells in GMP (good manufacturing practices) quality clean rooms. This approach results in a much higher cost of processing as compared to the eventual commercial method anticipated, in which processing is to be performed by semi-automated Bioreactors using sealed cassettes. The limited availability of such facilities and the high levels of expertise required to manually produce Biopumps in accordance with strict GMP standards would limit the practical ability to perform clinical trials in multiple centers. The GMP clean rooms are required to prevent accidental agent introduction and cross contamination in the phase I/II clinical trial and ensure accurate results are obtained. This is acceptable for purposes of proving the Biopump concept and early clinical trials, but for larger clinical trials and for commercial implementation, an automated processing system using closed cassettes is to be developed. We are actively working on the design and development of a closed cassette and bioprocessing system for use in clinical trials, and in scale-up for future commercial use.

We are hopeful that if the phase IIb study produces the anticipated results, a phase III pivotal clinical trial for product approval will probably involve hundreds of patients at multiple centers, and would aim to use a version of the automatic processor and sealed cassettes which is similar to that intended for commercial use. A phase III clinical trial would likely include study of the long-term treatment and follow-up of patients on therapy (potentially including those who were part of the phase I/II clinical trial). We are hopeful that if the Phase IIb study will produce the anticipated results, FDA will agree that any large scale follow-up study would be performed as part of phase IV post-marketing.

Patient recruitment is often a significant challenge for many clinical trials, and we have experienced significant difficulty to date in finding and recruiting sufficient appropriate patients for our EPODURE phase I/II anemia study in Israel. We cannot determine whether this is due to the particular healthcare economics and clinical management practice in Israel, or to other factors, and we are hoping this will improve in future trials that we may conduct in Israel or elsewhere.

Intellectual Property

Our goal is to obtain, maintain and enforce patent and trademark protection for our products, processes, methods and other proprietary technologies of the Biopump Platform Technology, and preserve our trade secrets both in the United States and in other countries. Our policy is to actively seek to obtain, where appropriate, the broadest intellectual property protection possible for our Biopump Platform Technology through a combination of contractual arrangements, trade secrets, patents and trademarks, both in the U.S. and elsewhere in the world.

We also depend upon the skills, knowledge and experience of our scientific and technical personnel, as well as that of our advisors, consultants and other contractors, none of which is patentable. To help protect our proprietary knowledge and experience that is not patentable, and for inventions for which patents may be difficult to enforce, we rely on trade secret protection and confidentiality agreements with our employees, consultants, vendors, collaborators, advisors, customers and other third parties to protect our interests. To this end, we require all employees, consultants, advisors and other contractors to enter into confidentiality agreements, which prohibit the disclosure of confidential information and, where applicable, require disclosure and assignment to us of the ideas, developments, discoveries and inventions important to our business.

Our ability to compete and maintain profitability depends in part, on our ability to enforce our intellectual property rights and operating without infringing the intellectual property of others and our ability to enforce our licenses. Our business could be materially harmed and we could be subject to liabilities because of lawsuits brought by others against our licensors and licensees with whom with have a strategic alliance.

Our existing owned and licensed patent portfolio currently contains 13 issued, one allowed and 51 pending patents. Applications for patents, and other intellectual property rights capable of being registered have been, and will be, filed in certain key jurisdictions.

Our licensed and owned patent portfolio covers the key elements of the Biopump Platform Technology, ranging from tissue engineering to device implementation and systematic treatment. Our patent portfolio includes our proprietary dermal genetically modified micro-organ biopump, which includes the EPODURE Biopump, the INFRADURE Biopump and production, processing, implantation and the tools designed for use in the Biopump procedure.

Many of the patent and patent applications pertaining to the Biopump Platform Technology are licensed under an exclusive, worldwide license from Yissum. The patent portfolio at the date of this document is comprised of the following issued and pending patents:

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.

There can be no assurance that the pending applications will result in patents ultimately being issued.

We have accumulated trade secrets and expertise in developing our technology and processes. As well as seeking patent registration protection where appropriate, we seek to protect this expertise and our trade secrets through a combination of copyright protection and contractual provisions with third parties, including contractors and employees. We will continue to take all appropriate steps to protect our intellectual property, including maintaining an active program for patent protection for novel elements in the development of our products and technology.

Licenses

Yissum license

The licensing arrangements with Yissum formally commenced in 2000 and have since been replaced by the current arrangements prescribed by the License Agreement, which was entered into on November 23, 2005. The License Agreement is for a term that expires on the later of:

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.

The scope of the License Agreement includes the exploitation of MO and MO technologies in the development and implementation of gene therapy for use in the prevention, treatment and diagnosis (or curing) of disease and for producing recombinant proteins or nucleic acids for therapeutic applications.

The License Agreement requires that we reimburse Yissum for the costs and expenses of prosecuting the pending patent applications and of maintaining all registered patents licensed to us. If, however, for reasonable commercial considerations, we decide that we do not wish to fund the registration or maintenance of a patent in a certain state or country and Yissum applies for, registers or maintains a patent covered by the License Agreement in that state or country at its own cost, the patent license with respect to that state or country will revert to Yissum and be capable of being licensed to a third party or exploited by Yissum. In addition, if the License Agreement ends or is terminated for any reason, all rights in the Yissum patents will revert to Yissum.

BCM license

We also have licensed from Baylor College of Medicine (BCM) the non-exclusive right to use technology developed by BCM in producing the HDAd (gutless adenoviral vector).

The BCM license commenced on January 25, 2007 (and references collaboration agreements between us and BCM dated January 25, 2006 and April 6, 2006). The license expires on the first date following the tenth anniversary of our first commercial sale of products incorporating the BCM licensed technology. After the license expires, we will have a perpetual, non-exclusive, royalty free license to the licensed BCM technology. If the BCM license is terminated, the rights to the licensed technology (except our developed technology) will revert to BCM.

Trademarks

Certain of the names utilized for our products and tools are the subject of trademark applications in certain jurisdictions, though the final choice of name for products and tools has not yet been made and will be subject to marketing considerations and other factors. We do not currently have trademark protection in any jurisdiction for the names Biopump, EPODURE, INFRADURE or DermaVac. We have not currently made any trademark applications for such names and have been contacted by a third party regarding the use of that party’s Biopump trademark which we believe is inapplicable to our Biopump.

Legal Proceedings

We are not currently a party to any material legal proceedings.

Government Regulation

General

The production, distribution, and marketing of products employing our technology, and our development activities, are subject to extensive governmental regulation in the United States and in other countries. In the United States, our products are regulated as biologics and medical devices and are subject to the Federal Food, Drug, and Cosmetic Act, as amended, and the regulations of the FDA, as well as to other federal, state, and local statutes and regulations. These laws, and similar laws outside the United States, govern the clinical and preclinical testing, manufacture, safety, effectiveness, approval, labeling, distribution, sale, import, export, storage, record-keeping, reporting, advertising, and promotion of our products. Product development and approval within this regulatory framework, if successful, will take many years and involve the expenditure of substantial resources. Violations of regulatory requirements at any stage may result in various adverse consequences, including the FDA’s and other health authorities’ delay in approving or refusal to approve a product. Violations of regulatory requirements also may result in enforcement actions.

The following paragraphs provide further information on certain legal and regulatory issues with a particular potential to affect our operations or future marketing of products employing its technology.

Research, Development, and Product Approval Process in the United States

We believe that the Biopump Platform Technology will be considered combination product by the FDA because it will consider the product to combine two regulated components: a medical device and a biological product. The FDA regulatory center which has primary jurisdiction over a combination product is determined by the combination product’s “primary mode of action,” i.e., the single mode of action that provides the most important therapeutic action. We believe the most important therapeutic action is provided by the biological product(s), so that FDA’s Center for Biologics Evaluation and Research (CBER) will lead the review of our product, with consultation from the Center for Devices and Radiological Health (CDRH) for the device aspects of the Biopump product. We also believe combination products like this are likely to be evaluated under a biological license application (BLA) if and when it is submitted for approval, although it is possible that FDA might require a different approach. But at this time, we believe that it is likely the research, development, and approval process for our product is likely to take a path that is usually followed for therapeutic biologicals.

The research, development, and approval process in the United States is intensive and rigorous and generally takes many years to complete. Also, there is no guarantee that a product approval will ultimately be obtained. The typical process required by the FDA before a therapeutic biological may be marketed in the United States includes:

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.

During preclinical testing, studies are performed with product candidate or related formulations. These studies must generally meet GLP requirements to be considered valid by FDA. Biological testing is typically done in animal models to demonstrate the activity of the compound against the targeted disease or condition and to assess the effects of the new product candidate on various organ systems, as well as its relative therapeutic effectiveness and safety.

An IND application must be submitted to the FDA and become effective before studies in humans (i.e., clinical trials) in the U.S. may commence. FDA will consider, among other things, the safety of allowing studies proposed under the IND to proceed. Support for the IND can include preclinical study results as well as relevant human experience. Some human experience might be provided from foreign clinical trials that were not conducted under an IND. FDA will accept as possible support for an IND a well-designed and well-conducted foreign clinical trial if it was (1) conducted in accordance with good clinical practice (GCP), including review and approval (or provision of a favorable opinion) by an independent ethics committee (IEC) before initiating a study, continuing review of an ongoing study by an IEC, and compliance with informed consent principles, and (2) FDA is able to validate the data from the study through an onsite inspection if the agency deems it necessary.

Clinical trial programs generally follow a three-phase process. Typically, Phase I studies are conducted in small numbers of healthy volunteers or, on occasion, in patients afflicted with the target disease. Phase I studies are conducted primarily to determine the metabolic and pharmacological action of the product candidate in humans and the side effects associated with increasing doses, and, if possible, to gain early evidence of effectiveness. In Phase II, studies are generally conducted in larger groups of patients having the target disease or condition in order to validate clinical endpoints, and to obtain preliminary data on the effectiveness of the product candidate and optimal dosing. This phase also helps determine further the safety profile of the product candidate. In Phase III, large-scale clinical trials are generally conducted in patients having the target disease or condition to establish the effectiveness, and support the safety, of the product candidate.

In the case of products for certain serious or life-threatening diseases, the initial human testing is sometimes done in patients with the disease rather than in healthy volunteers. Because these patients are already afflicted with the target disease or condition, it is possible that such studies will also provide results traditionally obtained in Phase II studies. These studies are often referred to as “Phase I/II” studies. However even if patients participate in initial human testing and a Phase I/II study carried out, the sponsor is still responsible for obtaining all the data usually obtained in both Phase I and Phase II studies.

United States law requires that studies conducted to support approval for product marketing be “adequate and well controlled.” Usually this means, among other things, that either a placebo or a product already approved for the treatment of the disease or condition under study must be used as a reference control, although other kinds of controls are sometimes used as well. Studies must also be conducted in compliance with GCP requirements, including informed consent requirements. In addition, with certain exceptions, sponsors of clinical trials are required to register clinical trials, and disclose clinical trial information, for posting on the publicly-available clinicaltrials.gov website.

The clinical trial process can potentially take several years to complete. Also, FDA may prevent clinical trials from beginning. or may place clinical trials on hold at any point in this process if, among other reasons, it concludes that study subjects are being exposed to an unacceptable health risk. Trials in the U.S. involving human subjects are also subject to advance approval and oversight by Institutional Review Boards (IRBs), and IRBs have the authority to request modifications to a clinical trial protocol and to suspend or terminate its approval of a protocol if a clinical trial is not being conducted in accordance with the IRB’s requirements or where there is unexpected serious harm to subjects. Side effects or adverse events that are reported during clinical trials can potentially delay or impede, or prevent continued research and development.

Also, FDA places certain restrictions on the use of foreign clinical data that are intended to be relied on as the sole basis for approval. A marketing application based solely on foreign clinical data meeting U.S. criteria for marketing approval may be approved only if (1) the foreign data are applicable to the U.S. population and U.S. medical practice; (2) the studies have been performed by clinical investigators of recognized competence; and (3) the data may be considered valid without the need for an on-site inspection by FDA or, if FDA considers such an inspection to be necessary, FDA is able to validate the data through an on-site inspection or other appropriate means.

Following the completion of the clinical trial program for the product a Biologic License Application (BLA) must be submitted by the applicant, and approved by FDA, before commercial marketing of the product may begin in the United States. The BLA must include a substantial amount of data and other information concerning the safety and effectiveness of the product from laboratory, animal, and clinical testing, as well as data and information on manufacturing, product quality and stability, and proposed product labeling. Also, each domestic and foreign manufacturing establishment, including any contract manufacturers we may decide to use, must be listed in the BLA and must be registered with the FDA. The BLA must usually be accompanied by an application fee, although certain deferral, waivers, and reductions may be available, e.g., for a small business submitting its first BLA. For fiscal year 2010, a BLA application fee was $1,405,500.

There are regulatory mechanisms which might potentially be speed the development and approval process certain kinds of products. These mechanisms are Fast Track, Accelerated Approval, and Priority Review.

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.

We cannot know for sure whether FDA would allow the company to take advantage of any of these mechanisms in developing its products.

Each BLA submitted for FDA approval is usually reviewed for administrative completeness and reviewability within 45 to 60 days following submission of the application. If deemed complete, the FDA will “file” the BLA, and do its substantive review of the application. The FDA can refuse to file a BLA that it deems incomplete or not properly reviewable. An applicant can then either request that the BLA be filed over FDA’s protest, amend the application to address the deficiencies FDA has alleged and resubmit it, or not pursue the application.

The FDA’s performance goals for reviewing of BLAs are six months from submission for BLAs that FDA designates as priority applications and 10 months from submission for standard applications.. However, the FDA is not legally required to complete its review within these periods and these performance goals may change over time. Moreover, the outcome of the review, even if generally favorable, can often be a “complete response” letter that describes additional work that must be done before the application can be approved. This work can sometimes be substantial. Also, even if the FDA approves a product, it may limit the approved therapeutic uses for the product through indications and usage statements it allows to be approved in the product labeling, require that warning statements be included in the product labeling, require that additional studies be conducted following approval as a condition of the approval, impose restrictions and conditions on product distribution, prescribing, or dispensing in the form of a risk evaluation and mitigation strategy (REMS), or otherwise limit the scope of any approval. Also, before any approval, facilities which are manufacturing the product must generally pass an FDA inspection.

Overall research, development, and approval times depend on a number of factors, including the period of review at FDA, the number of questions posed by the FDA during review, how long it takes to respond to the FDA’s questions, the severity or life threatening nature of the disease in question, the availability of alternative treatments, the ability to take advantage of mechanisms that might facilitate development and FDA review of a product, the availability of clinical investigators and eligible patients, the rate of enrollment of patients in clinical trials, and the risks and benefits demonstrated in the clinical trials.

In addition there are some other issues regarding our products which might be important to the research, development, and approval. Manufacturing issues regarding biological products can be particularly complex. Also the Biopump Platform Technology presents a somewhat different situation than those FDA of deals with, i.e., a situation in which a biological therapeutic is manufactured at one or a few sites. Also, because the product will probably be considered a combination product with a device product component, there are potentially device-related manufacturing and other compliance issues (e.g., adverse event reporting) which might be implicated by the product. These issues may increase the complexity of circumstances the company faces with FDA.

Post-Approval Requirements

Any products for which we receive FDA approvals will be subject to continuing regulation by the FDA, including, among other things, record-keeping requirements, reporting of adverse experiences with the product, providing the FDA with updated safety and efficacy information, product sampling and distribution requirements, complying with certain electronic records and signature requirements and complying with FDA promotion and advertising requirements. The FDA strictly regulates labeling, advertising, promotion and other types of information on products that are placed on the market. Products may be promoted only for the approved indications and in accordance with the provisions of the approved label. Furthermore, product manufacturers must continue to comply with cGMP requirements, which are extensive and require considerable time, resources and ongoing investment to ensure compliance. In addition, changes to the manufacturing process generally require prior FDA approval before being implemented and other types of changes to the approved product, such as adding new indications and additional labeling claims, are also subject to further FDA review and approval.

Manufacturers and other entities involved in the manufacturing and distribution of an approved biological or medical device product are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP and other laws. The cGMP requirements apply to all stages of the manufacturing process, including the production, processing, sterilization, packaging, labeling, storage and shipment of the product. Manufacturers must establish validated systems to ensure that products meet specifications and regulatory standards, and test each product batch or lot prior to its release.

Manufacturers of biological products must also report to the FDA any deviations from cGMP that may affect the safety, purity or potency of a distributed product; or any unexpected or unforeseeable event that may affect the safety, purity or potency of a distributed product. The regulations also require investigation and correction of any deviations from cGMP and impose documentation requirements.

We might rely on third parties for the production of our products. Future FDA and state inspections may identify compliance issues at the facilities of contract manufacturers may disrupt production or distribution or may require substantial resources to correct.

The FDA may withdraw a product approval if compliance with regulatory standards is not maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with a product may result in restrictions on the product or even complete withdrawal of the product from the market. Furthermore, the failure to maintain compliance with regulatory requirements may result in administrative or judicial actions, such as fines, warning letters, holds on clinical studies, product recalls or seizures, product detention or refusal to permit the import or export of products, refusal to approve pending applications or supplements, restrictions on marketing or manufacturing, injunctions or civil or criminal penalties.

In addition, from time to time, new legislation is enacted that c an significantly change the statutory provisions governing the approval, manufacturing and marketing of products regulated by the FDA. In addition to new legislation, FDA regulations and policies are often revised or reinterpreted by the agency in ways that may significantly affect our business and our products. It is impossible to predict whether further legislative or FDA regulation or policy changes will be enacted or implemented and what the impact of such changes, if any, may be.

Orphan Drugs

Under the Orphan Drug Act, special incentives exist for companies to develop products for rare diseases or conditions, which are defined to include those diseases or conditions that affect fewer than 200,000 people in the United States. Companies may request that the FDA grant an orphan drug designation prior to approval. Products designated as orphan drugs are eligible for special grant funding for research and development, FDA assistance with the review of clinical trial protocols, potential tax credits for research, reduced filing fees for marketing applications, and a special seven-year period of market exclusivity after marketing approval. Orphan Drug exclusivity prevents FDA approval of applications by others for the same drug and the designated orphan disease or condition. The FDA may approve a subsequent application from another entity if the FDA determines that the application is for a different drug or different use, or if the FDA determines that the subsequent product is clinically superior, or that the holder of the initial orphan drug approval cannot assure the availability of sufficient quantities of the drug to meet the public’s need. A grant of an orphan designation is not a guarantee that a product will be approved. If a sponsor receives orphan drug exclusivity upon approval, there can be no assurance that the exclusivity will prevent another entity or a similar product from receiving approval for the same or other uses.

Biosimilars

The Biologics Price Competition and Innovation Act (BPCIA) was enacted in 2010 as part of the Patient Protection and Affordable Care Act of 2009. The BPCIA authorizes the U.S. Food and Drug Administration ("FDA") to approve applications for products that can demonstrate that they are "biosimilar" to reference products previously approved under Biologic License Applications (BLAs). However, the FDA may not approve an application for a biosimilar product until at least twelve (12) years after the date on which the BLA for the reference product was approved.

United States Fraud and Abuse Laws

Anti-Kickback Statute and HIPAA Criminal Laws

We are subject to various federal and state laws pertaining to health care "fraud and abuse." The federal Anti-Kickback Statute makes it illegal for any person, including a pharmaceutical, biologic, or medical device company (or a party acting on its behalf), to knowingly and willfully solicit, offer, receive or pay any remuneration, directly or indirectly, in exchange for, or to induce, the referral of business, including the purchase, order or prescription of a particular item or service, or arranging for the purchase, ordering, or prescription of a particular item or service for which payment may be made under federal healthcare programs such as Medicare and Medicaid. In 1996, under the Health Insurance Portability and Accountability Act (HIPAA), the Anti-Kickback Statute was expanded to be made applicable to most federal and state-funded health care programs. The definition of "remuneration" has been broadly interpreted to include any item or service of value, including but not limited to gifts, discounts, the furnishing of free supplies or equipment, commercially unreasonable credit arrangements, cash payments, waivers of payments or providing anything at less than its fair market value. Several courts have interpreted the Anti-Kickback Statute's intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of business reimbursable by a federal healthcare program, the statute has been violated. Penalties for violations include criminal penalties, civil sanctions and administrative actions such as fines, imprisonment and possible exclusion from Medicare, Medicaid and other federally-funded healthcare programs. In addition, some kickback allegations have been held to violate the federal False Claims Act, which is discussed in more detail below.

The federal Anti-Kickback Statute is broad and prohibits many arrangements and practices that may be lawful in businesses outside of the healthcare industry. Recognizing that the Anti-Kickback Statute is broad and may technically prohibit many innocuous and beneficial arrangements, Congress created several exceptions in the Social Security Act and has authorized the U.S. Department of Health and Human Services (HHS) to publish regulatory “safe harbors” that exempt certain practices from enforcement action under the Anti-Kickback Statute prohibitions. For example, there are safe harbors available for certain discounts to purchasers, personal services arrangements and various other types of arrangements. However, safe harbor protection is only available for transactions that satisfy all of the narrowly defined safe harbor provisions applicable to the particular remunerative relationship. We seek to comply with such safe harbors whenever possible. Conduct and business arrangements that do not strictly comply with all the provisions of an applicable safe harbor, while not necessarily illegal, face an increased risk of scrutiny by government enforcement authorities and an ongoing risk of prosecution.

In addition, many states have adopted laws similar to the federal Anti-Kickback Statute. Some of these state prohibitions apply to referral of patients for healthcare services reimbursed by any third-party payor, not only the Medicare and Medicaid programs or other governmental payors. At least one state, California, also has adopted a law requiring pharmaceutical companies to implement compliance programs to prevent and deter conduct that may violate fraud and abuse laws that comply with the voluntary industry guidelines and the Office of Inspector General (OIG) compliance guidance. While we believe we have structured our business arrangements to comply with these laws, it is possible that the government could find that such arrangements violate these laws, which could have a material adverse effect on our business, results of operations and financial condition.

HIPAA created two new federal crimes: health care fraud and false statements relating to health care matters. The health care fraud statute prohibits knowingly and willfully executing a scheme to defraud any health care benefit program, including private payors. A violation of this statute is a felony and may result in fines, imprisonment or exclusion from federal and state health care programs such as Medicare and Medicaid. The false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for health care benefits, items or services. A violation of this statute is a felony and may result in fines or imprisonment. Additionally, HIPAA granted expanded enforcement authority to HHS and the U.S. Department of Justice (DOJ) and provided enhanced resources to support the activities and responsibilities of the OIG and DOJ by authorizing large increases in funding for investigating fraud and abuse violations relating to health care delivery and payment.

False Claims Laws

Pursuant to various federal and state false claims laws, the submission of false or fraudulent claims for payment may lead to civil money penalties, criminal fines and imprisonment, and/or exclusion from participation in Medicare, Medicaid and other federally funded health care programs. These false claims statutes include the federal False Claims Act, which allows the federal government or private individuals to bring suit alleging that an entity or person knowingly submitted (or caused another person or entity to submit or conspired to submit) a false or fraudulent claim for payment to the federal government or knowingly used (or caused to be used) a false record or statement to obtain payment from the federal government. The federal False Claims Act may also be violated if a person files a false statement in order to reduce, avoid, or conceal an obligation to pay money to the federal government, or engages in conduct that may violate the Anti-Kickback Statute. Several pharmaceutical and medical device companies have settled claims based on the federal False Claims Act for conduct involving, among other examples, providing free product to purchasers with the exception that federally-funded health programs would be billed for the product, or instances in which a manufacturer has marketed its product for unapproved and non-reimbursable purposes. A person who files suit may be able to share in amounts recovered by the government in connection with such suits. Such suits, known as qui tam actions, have increased significantly in recent years and have increased the risk that a health care company will have to defend a false claims action, enter into settlements that may include corporate integrity agreements requiring disclosures to the federal government, pay fines or be excluded from the Medicare and/or Medicaid programs as a result of an investigation arising out of such an action. The scope of the federal false Claims Act was significantly expanded in both the Fraud Enforcement and Recovery Act of 2009, Pub. L. No. 111-21 (2009), and in the Patient Protection and Affordable Care Act of 2010, Pub. L. No. 111-148 (2010). In addition, a number of states have enacted similar laws prohibiting the submission of false or fraudulent claims to a state government. We are not aware of any qui tam actions pending against us. However, no assurance can be given that such actions may not be filed against us in the future, or that any non-compliance with such laws would not have a material adverse effect on our business, results of operations and financial condition.

The foregoing description of laws and regulations affecting health care companies is not meant to be an all-inclusive discussion of aspects of federal and state fraud and abuse laws that may affect our business, results of operations and financial condition. Health care companies operate in a complicated regulatory environment. These or other statutory or regulatory initiatives may affect our revenues or operations. No assurance can be given that our practices, if reviewed, would be found to be in compliance with applicable fraud and abuse laws (including false claims laws and anti-kickback prohibitions), as such laws ultimately may be interpreted, or that any non-compliance with such laws or government investigations of alleged non-compliance with such laws would not have a material adverse effect on our business, results of operations and financial condition.

Other United States Regulatory Requirements

In the United States, the research, manufacturing, distribution, sale, and promotion of drug and biological products are subject to regulation by various federal, state, and local authorities in addition to the FDA, including the Centers for Medicare and Medicaid Services (formerly the Health Care Financing Administration), other divisions of the United States Department of Health and Human Services (e.g., the Office of Inspector General), the United States Department of Justice and individual United States Attorney offices within the Department of Justice, and state and local governments. Pricing and rebate programs must comply with the Medicaid rebate requirements of the Omnibus Budget Reconciliation Act of 1990 and the Veterans Health Care Act of 1992, each as amended. If products are made available to authorized users of the Federal Supply Schedule of the General Services Administration, additional laws and requirements apply. All of these activities are also potentially subject to federal and state consumer protection, unfair competition, and other laws. In addition, we may be subject to federal and state laws requiring the disclosure of financial arrangements with health care professionals.

Moreover, we may become subject to additional federal, state, and local laws, regulations, and policies relating to safe working conditions, laboratory practices, the experimental use of animals, and/or the use, storage, handling, transportation, and disposal of human tissue, waste, and hazardous substances, including radioactive and toxic materials and infectious disease agents used in conjunction with our research work.

Foreign Regulatory Requirements

We may be subject to widely varying foreign regulations, which may be quite different from those of the FDA, governing clinical trials, manufacture, product registration and approval, and pharmaceutical sales. Whether or not FDA approval has been obtained, we must obtain a separate approval for a product by the comparable regulatory authorities of foreign countries prior to the commencement of product marketing in these countries. In certain countries, regulatory authorities also establish pricing and reimbursement criteria. The approval process varies from country to country, and the time may be longer or shorter than that required for FDA approval.

Reimbursement and Pricing Controls

In many of the markets where we or our collaborative partners would commercialize a product following regulatory approval, the prices of pharmaceutical products are subject, by law, to direct price controls and to drug reimbursement programs with varying price control mechanisms. Public and private health care payors control costs and influence drug pricing through a variety of mechanisms, including the setting of reimbursement amounts for drugs and biological products covered by Medicare Part B based on their Average Sales Prices calculated by manufacturers in accordance with the Medicare Prescription Drug, Improvement, and Modernization Act, as amended, through negotiating discounts with the manufacturers, and through the use of tiered formularies and other mechanisms that provide preferential access to certain drugs over others within a therapeutic class. Payors also set other criteria to govern the uses of a drug that will be deemed medically appropriate and therefore reimbursed or otherwise covered. In particular, many public and private health care payors limit reimbursement and coverage to the uses of a drug that are either approved by the FDA or that are supported by other appropriate evidence (for example, published medical literature) and appear in a recognized drug compendium. Drug compendia are publications that summarize the available medical evidence for particular drug products and identify which uses of a drug are supported or not supported by the available evidence, whether or not such uses have been approved by the FDA. For example, in the case of Medicare coverage for physician-administered oncology drugs, the Omnibus Budget Reconciliation Act of 1993, with certain exceptions, prohibits Medicare carriers from refusing to cover unapproved uses of an FDA-approved drug if the unapproved use is supposed by one or more citations in the American Hospital Formulary Service Drug Information the American Medical Association Drug Evaluations, or the United States Pharmacopoeia Drug Information. Another commonly cited compendium, for example under Medicaid, is the DRUGDEX Information System.

Employees

We currently employ 18 full-time and 3 part-time employees. None of our employees is represented by a labor union and we have not experienced any strikes or work stoppages. While none of our employees are party to any collective bargaining agreements, certain provisions of the collective bargaining agreements between the Histadrut (General Federation of Labor in Israel) and the Coordination Bureau of Economic Organizations (including the Industrialists’ Associations) are applicable to our employees by order the Israel Ministry of Labor. Such orders are part of the employment related laws and regulations which apply to our employees and set certain mandatory terms of employment. Such mandatory terms of employment primarily concern the length of the workday, minimum daily wages, pension plan benefits for all employees, insurance for work-related accidents, procedures for dismissal of employees, severance pay and other conditions of employment. We generally provide our employees with benefits and working conditions beyond the required minimums. We believe our relations with our employees are good.

Facilities

All of the work carried out by our employees (excluding Directors) is undertaken in Israel, in leased space of 6700 sq. ft. located at Turag House, Misgav Business Center (Teradion), D.N. Misgav, Israel.

In addition, we enjoy the non-exclusive use of certain office and related facilities at 8000 Towers Crescent Drive, Suite 1300, Vienna, Virginia 22182. These offices are leased by Windy City, Inc. a Delaware corporation in which Joel Kanter (one of our Directors) is interested and of which he is a director. We do not currently pay any rent for such use but, from time to time, reimburse Windy City, Inc. for any costs or expenses incurred by Windy City, Inc. on behalf of our company (primarily postage and telephone conference call services). We may enter into a formal lease or services agreement with Windy City, Inc. on third party, arms length, commercial terms if the use of such offices increases. We believe that these facilities, as well as our facilities in Israel, are adequate to meet our current needs. We believe that if additional or alternative space is needed in the future, such space will be available on commercially reasonable terms as necessary.

MANAGEMENT

Executive Officers and Directors

The following table sets forth the name, age and position of each of our directors and executive officers.

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

The business experience for the past five years (and, in some instances, for prior years) of each of our executive officers and directors are as follows:

Directors

Eugene Andrew Bauer, M.D., Executive Chairman of the Board of Directors

Dr. Bauer has been a member of Medgenics’ Board since March 2001 and has been our Chairman of the Board since July 2005. In October 2010, Dr. Bauer assumed the role of Executive Chairman of the Board. He is a Lucy Becker Emeritus Professor in the School of Medicine at Stanford University. Dr. Bauer served as dean of the Stanford University School of Medicine from 1995-2001 and as chair of the Department of Dermatology at the Stanford University School of Medicine from 1988-1995. He is currently chairman of the board of directors of Vyteris, Inc., a public company and the maker of the first FDA-approved ready-to-use drug delivery patch. He also serves as a director of a number of other life science and development stage biopharmaceutical companies and medical services companies, including privately held MediSync Bioservices and Dr. Tattoff, Inc. He was a co-founder and emeritus member of the board of directors of Connetics Corporation, a publicly traded, dermatology-focused therapeutics company which was acquired by Steifel Laboratories and sold to GlaxoSmithKline, Inc. He also served as a director of Protalex, Inc., Peplin Biotech, Ltd. and Modigene Inc., a life sciences company that is developing te chnology to lengthen the life of various proteins, including EPO and IFN-α. Dr. Bauer was an NIH-funded investigator for 25 years and has served on review groups for the NIH. Dr. Bauer has been elected to several societies including the Institute of Medicine of the National Academy of Sciences. He received an M.D. from Northwestern University.

Andrew Leonard Pearlman, Ph.D. , Chief Executive Officer, President and Director

Dr. Pearlman was appointed to the Board on February 1, 2000 and is the founder and CEO of Medgenics. Dr. Pearlman has over 25 years experience founding and managing biotechnology and medical device companies, as well as inventing and developing biomedical technology. Prior to founding our company, Dr. Pearlman founded and served as CEO and chief scientist for TransScan Research & Development Co., Limited, under whose leadership the company’s product, the T-scan 2000 breast impedance scanner, was the first new medical imaging method for cancer detection to receive FDA pre-market approval in over 20 years. He has also founded or co-founded several other companies in the fields of diagnosis and patient monitoring. Dr. Pearlman holds a Ph.D. in biophysics from the University of California, Berkley, where he completed his doctoral thesis under Nobel Laureates – Professors Melvin Calvin and Donald Glaser.

Joel Stephen Kanter, Director

Mr. Kanter has been a member of our Board since August 2000. Since 1986 he has served as president of Windy City, Inc., a privately held investment company specializing in early stage venture capital. Mr. Kanter serves on the board of directors of several public companies, including Magna-Labs, Inc., formerly involved in the development of a cardiac MRI device; Pet DRx Corporation, an owner and operator of veterinary hospitals; Vyteris, Inc., a drug delivery company that manufactures the first FDA approved ready-to-use drug delivery patch; and WaferGen, Inc., which develops, manufactures and sells systems for gene expression and genotyping. Mr. Kanter is also on the board of a number of private concerns including DTS America, Inc., a medical imaging company; First Wave Technologies, providing business expertise to seed stage companies and projects; MediSync Bioservices, an owner and operator of Clinical Research Organizations.; Pacific Biosciences, Inc., the manufacturer of the Clarisonic dermatological product; and Prescient Medical, Inc., a cardiology products company that has developed a methodology for identifying and treating vulnerable plaque. He is a trustee and past president of the board of trustees of The Langley School in McLean, Virginia, and a trustee of Union Institute & University. Mr. Kanter is also the current board chair of the Black Student Fund and a vice-chair of the Kennedy Center’s National Committee on the Performing Arts.

Gary Allan Brukardt, MBA, Director

Mr. Brukardt has over 30 years of experience in the healthcare industry and was appointed to the Board in September 2006. He was a founder of Specialty Care Services Group LLC, and currently serves as its chairman and chief executive officer. He is also a member of the board of directors of MediSync Bioservices. From 1991 to 1996, he was executive vice president of Baptist Health Care Affiliates, a company that provides occupational medical centers/programs, urgent care, home healthcare, managed care, corporate health services, management of hospitals and hospital joint ventures and an ambulatory surgery center. During the same period, Mr. Brukardt was chairman of HealthNet Management, Inc., a managed care services company. From 1996 to 2003, he was executive vice president and chief operating officer of Renal Care Group, after which time he served as its president and chief executive officer. Mr. Brukardt led Renal Care Group’s $3.5 billion acquisition by Fresenius Medical Care in March 2006, which resulted in the creation of the world’s largest integrated provider of dialysis services. After the close of the transaction, Mr. Brukardt held the position of vice chairman, Fresenius North America and chief executive officer, Global Disease Management/Ambulatory Services until September 2006. Mr. Brukardt received a Bachelor of Arts at the University of Wisconsin at Oshkosh and his MBA in International Management from Thunderbird School of Global Management.

Stephen Devon McMurray, M.D., Director

Dr. McMurray was appointed to the Board in December 2005. Dr. McMurray was one of the founders of Renal Care Group, Inc., a company that provided chronic dialysis services. He served on the Board of Renal Care Group until its US $3.5 billion acquisition by Fresenius in March 2006. He is a past member of the Renal Physicians Association Board and has authored a myriad of articles on renal-related topics published in professional medical journals. Dr. McMurray is active in developing processes to improve patient care and outcomes. Dr. McMurray served as the medical director of the Fresenius Medical Care Health Plan from May 2006 to July 2010 and as Medical Director of Integrated Care for Fresenius Medical Care – North America from March 2006 to July 2010. Dr. McMurray received an M.D. from Indiana University Medical School in 1972, followed by medicine residency and nephrology fellowship at Indiana University Medical Center.

Alastair Clemow, Ph.D., Director

Dr. Clemow was appointed to the Board in August 2010. Dr. Clemow serves as President and Chief Executive Officer of Regentis Biomaterials., a private company developing an innovative material for cartilage repair. Previously he held the position of President & Chief Executive Officer in a number of companies that he helped found including Nexgen Spine which developed an artificial spinal disc, Gelifex Inc which developed an innovative spinal nucleus replacement implant and which was acquired by Synthes Spine in 2004 and also Minimally Invasive Surgical Technologies which developed a novel series of implants for minimally invasive total knee replacement and which was acquired by MAKO in 2005. From 2000 to 2004, Dr. Clemow served as Principal of Tanton Technologies, an organization that provided strategic and technical assessment of new medical device opportunities for large, mid-cap and early stage development companies. Prior to that, Dr. Clemow served in numerous positions with Johnson & Johnson from 1981 to 2000, including Vice President of Worldwide Business Development for Ethicon Endo-Surgery Inc., Vice President of New Business Development for Johnson & Johnson Professional Inc. and Director of Research and Development of Johnson & Johnson Orthopedics. In those capacities, Dr. Clemow was responsible for acquiring or developing what today represents billions of dollars of Johnson & Johnson revenue. Dr. Clemow serves or has served on the boards of numerous private and public companies including Encore Medical, Echo Healthcare Acquisition Corp., BioMedical Enterprises, Inc. and Kinetic Muscles Inc.. Dr. Clemow holds an M.B.A. in Finance from Columbia University and a Ph.D. in Metallurgy from University of Surrey, Guildford, U.K.

Management team

In addition to Dr. Pearlman, key members of the management team include:

Stephen Bellomo, MSc, Chief Operating Officer

Mr. Bellomo has over ten years of experience in management roles in medical device and biotech industries. Prior to rejoining Medgenics in March 2007, he was the chief technology officer for Allium Medical, a urinary and gastrointestinal stent company, where he was responsible for all development and production activities. From March 2005 to July 2006, Mr. Bellomo was the Director of Special Projects for Glucon Medical, where he led the development of an automated glucose reader to support intensive insulin therapy in critical care applications. Mr. Bellomo held application development and marketing positions at Galil Medical, a cryosurgical device company. From January 2001 to August 2004, Mr. Bellomo was the Director of Device Development for Medgenics. Mr. Bellomo received an MSc in Mechanical Engineering from the Technion Israel Institute of Technology, and a BE in Mechanical Engineering from The Cooper Union for the Advancement of Science and Art.

Baruch Stern, Ph.D., Chief Scientific Officer

Dr. Stern joined our company in May 2006. He received a Ph.D. in molecular biology and biotechnology from Tel Aviv University in 1994 and completed a postdoctoral fellowship at the NIH. Dr. Stern has extensive academic and industry experience in cell and tissue engineering, as well as a wide range of applied molecular and cellular biology technologies. From 2001 to 2004, he was group development leader of the microbiology section at our company, where he spearheaded tissue engineering and development of the Biopump Platform Technology, including viral vector and assay development. Dr. Stern was also instrumental in creating and implementing GMP production and standard operating procedures for our phase I clinical trial, as well as assisting the development of our skin harvesting, handling and implantation devices. From 2004 to 2006, he served as tissue engineering project manager at ProChon Biotech Limited, a company developing cell therapy solutions to damaged cartilage.

Phyllis Bellin, MBA, Director of Finance and Administration, Treasurer and Secretary

Ms. Bellin joined our company in November 2005. She received an MBA from Columbia University. Since 1980, Ms. Bellin has managed finance and administration for several early stage high-tech ventures in Israel. Most recently, she was a founder and vice president of Gintec Active Safety Limited and was responsible for finance and administration of its subsidiaries including RoadEye Limited.

Strategic Advisory Board

We are guided by an expert Strategic Advisory Board including the past Presidents of three major U.S. clinical organizations of direct relevance to the Biopump Platform Technology and applications. The Strategic Advisory Board is made up of the Directors Dr. Bauer, Dr. McMurray and:

Allen R. Nissenson, M.D., F.A.C.P. , a world-renowed nephrologist and a leader in kidney medicine and EPO development. Dr. Nissenson is Emeritus Professor of Medicine at the David Geffen School of Medicine at University of California at Los Angeles where he served as Director of the Dialysis Program and Associate Dean. Dr. Nissenson is the former president of the Renal Physicians Association and is the immediate Past President of the National Anemia Action Council (NAAC), a multidisciplinary organization to raise awareness of professionals and the public about the prevalence, consequences and treatment of anemia. In 1994-5, he served as a Robert Wood Johnson Health Policy Fellow, working in the office of Senator Paul Wellstone. He is currently Chief Medical Officer of DaVita Inc. and has over 600 publications in the field of nephrology, dialysis, anemia management and health care delivery and policy, the latter including a seminal paper in Health Affairs on the end-stage renal disease (ESRD) program. Among his numerous honors is the President's Award of the National Kidney Foundation. In addition, in 2007, he received the Lifetime Achievement Award in Hemodialysis presented by the University of Missouri on behalf of the Annual Dialysis Conference.

Bruce Bacon, M.D., a former president of the American Association for the Study of Liver Diseases (AASLD) and a recognized world expert on hepatitis. Dr. Bacon is the James F. King, MD Endowed Chair in Gastroenterology, Professor of Internal Medicine, and Director of the Division of Gastroenterology and Hepatology at Saint Louis University School of Medicine in St. Louis, Missouri.

Mark Kay, M.D., Ph.D., the past president of the American Society of Gene Therapy. He is also a professor of pediatrics and genetics at Stanford University.

Amos Panet, Ph.D., professor of virology at the Hadassah School of Medicine, Hebrew University, Jerusalem, the former chief scientific officer of Biotechnology General and a co-developer of the underlying technology to the Biopump (the MO, currently licensed by Yissum).

Anatole Besarab , M.D. , Director of Clinical Research in the Division of Nephrology and Hypertension at Henry Ford Hospital in Detroit, Michigan. Dr. Besarab is board certified in internal medicine with a subspecialty in nephrology. He is a Fellow of the American College of Physicians and is an active member of several professional organizations including the American Society of Nephrology; International Society of Nephrology; National Kidney Foundation, where he is currently Co-Chairman of the National Kidney Foundation Work Group on Vascular Access; and the Renal Physicians Association.

Stephen Ettinger , D.V.M., world renowned expert in veterinary medicine. Dr. Ettinger sits on the Board of Trustees at Cornell University and holds memberships at the American College of Cardiology as well as several branches of the Veterinary Medical Association. He is a member and serves on the Council of the American Heart Association. He is President of Vetcorp, Inc. a veterinary consulting and publishing company, and Chairman of the Medical Advisory Board of PetDRx Corporation.

Burt Rosen, Vice President of Federal Government Relations for Purdue Pharmaceuticals, and Chairman of its Communications and External Affairs Committee. Prior to its sale to Johnson & Johnson in 2009, Mr. Rosen served on the Board of Directors of Mentor Corporation, an NYSE listed medical device company. He has been active in the government relations and communications industries since 1978, developing and implementing strategies for major pharmaceutical and consumer product companies, including SmithKline Beecham (now GlaxoSmithKline), Bristol-Myers Squibb and Novartis.

Regulatory Adviser

Our primary regulatory adviser is Andra E. Miller, Ph.D., a former expert microbiologist and gene-therapy group leader at the CBER’s Cellular and Gene Therapies Division. Dr. Miller is now a leading consultant in regulatory affairs for Biologics Consulting Group, Inc., and has provided key guidance to our regulatory and clinical planning, assisting in our coordination with the FDA and in our efforts to seek approval of our clinical protocols.

Director Independence

Our Board of Directors has determined that each of our directors and nominees, with the exception of Dr. Bauer and Dr. Pearlman, qualify as “independent” under the listing standards of NYSE Amex (for which we are applying for listing), federal securities laws and SEC rules with respect to members of boards of directors and members of all board committees on which he serves.

Board Committees

Our Board of Directors currently has three standing committees: the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. The composition and responsibilities of each committee are described below. Members will serve on these committees until their resignation or until otherwise determined by our Board of Directors. From time to time, the Board may form additional committees to address specific issues or tasks.

Audit Committee

Our Audit Committee has primary responsibility for monitoring the quality of internal financial controls and ensuring that the financial performance of our company is properly measured and reported on. It receives and reviews reports from management and auditors relating to the interim and annual accounts and the accounting and internal control systems in use throughout our company.

Our Audit Committee also consults with our management and our independent registered public accounting firm prior to the presentation of financial statements to stockholders and, as appropriate, initiates inquiries into aspects of our financial affairs. Our Audit Committee is responsible for establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters, and for the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters. The Audit Committee meets not less than quarterly and has unrestricted access to our auditors.

Members of the Audit Committee are Gary Brukardt (as Chairman), Joel Kanter and Alastair Clemow. Mr. Kanter will qualify as an “audit committee financial expert” as that term is defined in the rules and regulations of the SEC. The designation of Mr. Kanter as an “audit committee financial expert” will not impose on him any duties, obligations or liability that are greater than those that are generally imposed on him as a member of our Audit Committee and our Board of Directors, and his designation as an “audit committee financial expert” pursuant to this SEC requirement will not affect the duties, obligations or liability of any other member of our Audit Committee or Board of Directors.

Compensation Committee

Our Compensation Committee reviews the performance of the executive directors, officers and certain employees and make recommendations to the Board on matters relating to their compensation and terms of employment. Our Compensation Committee also makes recommendations to the Board on proposals for the granting of share options and other equity incentives pursuant to any share option scheme or equity incentive scheme in operation from time to time. The Compensation Committee meets at least three times each fiscal year and at such other times as the chairman of the committee shall require.

Members of the Compensation Committee are Stephen McMurray (as Chairman), Joel Kanter and Alastair Clemow, each of whom satisfies the independence requirements of NYSE Amex and SEC rules and regulations. Each member of our Compensation Committee is a non-employee director, as defined pursuant to Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended, and an outside director, as defined pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee is responsible for leading the process for considering future appointments to the Board and make recommendations to the Board of candidates for appointment and annual election. The Nominating and Corporate Governance Committee will meet at least once during each fiscal year and at such other times as the chairman of the committee shall require.

Members of the Governance Committee are Joel Kanter (as Chairman), Stephen McMurray and Gary Brukardt, each of whom satisfies the independence requirements of NYSE Amex and SEC rules and regulations.

Family Relationships

There are no family relationships between, or among any of our directors or executive officers.

EXECUTIVE COMPENSATION

Summary Compensation Table

The following Summary Compensation Table shows the compensation awarded to or earned by our President and Chief Executive Officer and other two most highly-compensated executive officers for fiscal 2008 and 2009. The persons listed in the following Summary Compensation Table are referred to herein as the “Named Executive Officers.”

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.

Employment Agreements and Consulting Arrangements

Dr. Andrew L. Pearlman, President and Chief Executive Officer

We entered into an agreement with Dr. Pearlman on June 1, 2007, amending and restating a previous agreement dated July 7, 2005, and providing that Dr. Pearlman will continue to serve as our President and Chief Executive Officer. The agreement was subsequently amended in 2008 to increase the compensation. The term of the agreement is perpetual unless terminated for disability, death or cause. In addition, either party may terminate the agreement without cause by providing three months prior written notice to the other party. In the event we terminate the agreement, we may determine that Dr. Pearlman’s employment should cease immediately upon written notice (without a prior notice period), and in such an event we are required to pay Dr. Pearlman a lump sum payment equal in amount to three months of his then-current salary and other benefits that would otherwise be payable to him during the prior notice period. In the event we terminate the agreement without cause, Dr. Pearlman is entitled to the payment of his full salary, including insurance and social benefits, during a period of fifteen months following the effective date of such termination.

The agreement provides for a monthly gross salary of NIS equal to $250,000 per year ($20,833 per month) calculated at the representative rate of the US dollar published by the Bank of Israel and known at the time of payment. Dr. Pearlman is eligible for adjustments in salary and additional benefits, including bonuses, in the Board’s discretion. Dr. Pearlman is eligible to receive an annual cash bonus in the sole discretion of the Board of up to $125,000 per year based upon the achievement of individual goals and corporate milestones to be agreed between the Employee and the Board. Dr. Pearlman is entitled to participate in or receive benefits under the Company’s social insurance and benefits plans, including but not limited to managers insurance (“bituach minahlim”), disability insurance and an advanced study fund (“keren hishtalmut ”). These are customary benefits provided to all employees based in Israel (other than those in very junior positions). A management insurance fund is a combination of severance savings (in accordance with Israeli law), defined contribution tax-qualified pension savings and disability insurance premiums. An advanced study fund is a savings fund of pre-tax contributions to be used after a specified period of time for educational or other permitted purposes. We pay certain percentages of Dr. Pearlman’s salary towards these insurance and benefits plans, including 5% to managers insurance, up to 2.5% percent to disability insurance, 8.33% to severance compensation and 7.5% to the advanced study fund.

In March 2009, Dr. Pearlman agreed to a 37.5% voluntary salary reduction to $13,021 per month to ease cash concerns at the time. Dr. Pearlman’s salary reverted to $20,833 per month in October 2009. Although we were under no formal obligation to do so, in 2010 we repaid Dr. Pearlman the $54,684 in foregone salary. We have not, but we may in the future, repay the benefits (pension, education fund and the like) associated with such foregone salary.

In 2006 we granted options to Dr. Pearlman to purchase 6,398,216 shares of common stock at an exercise price of $0.071 per share, all of which are currently vested. We recently extended the expiration date of such options to March 31, 2016. We agreed in the 2007 agreement to grant Dr. Pearlman additional options to purchase 3,199,097 shares of common stock at an exercise price of $0.210, which was equal to the share price upon admission to AIM. These options were set to vest over a four year period, and will fully vest pursuant to the terms and conditions of the Incentive Stock Plan and pursuant to our standard form of option agreement.

Dr. Pearlman has also agreed in the agreement to a one-year post-termination covenant-not-to-compete.

Dr. Eugene Bauer, Executive Chairman of the Board

We intend to enter into a consulting agreement with Dr. Bauer under which he will provide financial, strategic, business development, investor relations and clinical and regulatory consulting services to us. We will pay an annual consulting fee of $180,000 and will also agree to issue to him 2,000,000 shares of restricted common stock. The restrictions on such common stock will lapse with respect to 25% of the shares in October 2012, with respect to an additional 25% of the shares in October 2013 and with respect to the remainder in October 2014. We will not provide any bonus, profit sharing, insurance, health or similar benefits to Mr. Bauer.

Stephen Bellomo, Chief Operating Officer

Our wholly-owned subsidiary MMI entered into an agreement with Mr. Bellomo on March 18, 2007, providing that Mr. Bellomo will serve as Vice President Program Management and Product Development of MMI. Mr. Bellomo was appointed Chief Operating Officer of our company in December 2009. The term of the agreement is perpetual unless terminated for disability, death or cause. In addition, either party may terminate the agreement without cause upon two months prior written notice to the other party. In the event we terminate the agreement, we may determine that Mr. Bellomo’s employment cease immediately or at any time prior to the expiration of the prior notice period, and in such an event the Company will pay Mr. Bellomo an amount equal to the salary which would have been paid during the remaining prior notice period. If we terminate the agreement without cause, we must continue to pay an amount equal to his monthly salary, including insurance and social benefits, for a period of four months plus an additional month for each 12 months of employment after completion of his first 12 months of employment after the effective date.

The agreement provides for a monthly gross salary of NIS 40,200 ($10,600), with a discretionary bonus and additional benefits subject to review by the Chief Executive Officer and approval of the Board. Mr. Bellomo is eligible to receive an annual cash bonus in the sole discretion of the Board of up to $20,000 per year based upon corporate and personal performance criteria as established by the Chief Executive Officer and the Board. Mr. Bellomo is also eligible to receive an annual cash bonus in the sole discretion of the Board of up to $15,000 per year based upon personal and team leadership performance criteria as established by the Chief Executive Officer and the Board.

Mr. Bellomo is entitled to participate in or receive benefits under the Company’s social insurance and benefits plans, including but not limited to managers insurance (“bituach minahlim”), disability insurance and an advanced study fund (“keren hishtalmut ”). We pay certain percentages of Mr. Bellomo’s salary towards these insurance and benefits plans, including 5% to managers insurance, up to 2.5% percent to disability insurance, 8.33% to severance compensation and 7.5% to the advanced study fund. Mr. Bellomo is entitled to the use of a company car.

In March 2009, Mr. Bellomo agreed to a 35% voluntary salary reduction to $6,900 per month to ease cash concerns at the time. Mr. Bellomo’s salary reverted to $10,600 per month in October 2009. Although we were under no formal obligation to do so, in 2010 we repaid Mr. Bellomo the $25,900 in foregone salary. We have not, but we may in the future, repay the benefits (pension, education fund and the like) associated with such foregone salary.

Under the 2007 agreement, we granted options to Mr. Bellomo to purchase up to 1,497,404 shares of common stock pursuant to the Incentive Stock Plan, of which 52,500 have vested. The final of four equal installments will vest March 18, 2011. The options have a five year term and an exercise price of $0.117 per share. In addition, Mr. Bellomo was subsequently granted options in November 2007 to purchase an additional 31,189 shares having a five year term and an exercise price of $0.210 per share expiring November 14, 2012.

Mr. Bellomo has also agreed in the agreement to a one-year post-termination covenant not to compete.

Dr. Baruch Stern, Chief Scientific Officer

MMI entered into an employment agreement on April 20, 2006 to employ Dr. Stern as Bioscience Director of MMI. We promoted Dr. Stern to Chief Scientific Officer of our company in December 2009. The term of Dr. Stern’s employment agreement continues until either we or he decides to voluntarily terminate upon three months’ notice. We also have certain rights to terminate for cause, death or disability. If we terminate the agreement without cause, we must continue to pay an amount equal to his monthly salary, including insurance and social benefits, for a period of six months plus an additional month for each 12 months of employment after completion of his first 12 months of employment after the effective date.

The employment agreement provides for current monthly gross salary of NIS 37,500 ($9,900). Dr. Stern is eligible to receive an annual cash bonus based on the achievement of performance criteria established by the Chief Executive Officer and the Board of up to $20,000 and an annual cash bonus based on personal and team leadership performance criteria established by the Board of up to $10,000. We pay an amount equal to 5% of Dr. Stern’s salary towards to managers insurance (“bituach minahlim”), up to 2.5% towards disability insurance, 8.33% towards a severance fund and 7.5% to the advanced study fund (“keren hishtalmut ”). Dr. Stern is entitled to the use of a company car.

In March 2009, Dr. Stern agreed to a 30% voluntary salary reduction to $6,900 per month to ease cash concerns at the time. Dr. Stern's salary reverted to $9,900 per month in October 2009. Although we were under no formal obligation to do so, in 2010 we repaid Dr. Stern the $26,250 in foregoing salary. We have not, but we may in the future, repay the benefits (pension, education fund and the like) associated with such foregone salary.

On November 5, 2006, Dr. Stern was granted options to purchase 1,711,319 shares at an exercise price of $0.071 per share. These options vested over 4 years and are fully vested. In addition, he was granted additional options to purchase 570,447 shares at an exercise price $0.21 per share on November 14, 2007. These options vest in equal installments over three years.

Dr. Stern has agreed that, for so long as he is employed and for 12 months following termination for any reason, he will not complete with us or employ or seek to hire any of our employees.

Phyllis Bellin, Director of Finance and Administration

We entered into an agreement with Ms. Bellin on July 1, 2007 providing that Ms. Bellin will serve as our Director of Finance and Administration. The term of the agreement is perpetual unless terminated for disability, death or cause. In addition, either party may terminate the agreement without cause upon three months prior written notice to the other party. In the event we terminate the agreement, we may determine that Ms. Bellin’s employment cease immediately or at any time prior to the expiration of the prior notice period, and in such an event we will pay Ms. Bellin an amount equal to the salary which would have been paid during the remaining notice period. If we terminate the agreement without cause, we must continue to pay an amount equal to her monthly salary, including insurance and social benefits, for a period of six months plus an additional month for each 12 months of employment after completion of her first 12 months of employment after the effective date.

The agreement provides for a monthly gross salary of $108,000 per year ($9,000 per month), with a discretionary bonus and additional benefits subject to review by the Chief Executive Officer on an annual basis. Ms. Bellin is eligible to receive an annual cash bonus in the sole discretion of the Board of up to $10,000 per year based upon corporate and personal performance criteria as established by the Chief Executive Officer and the Board. Ms. Bellin is also eligible to receive an annual cash bonus in the sole discretion of the Board of up to $15,000 per year based upon personal and team leadership performance criteria as established by the Chief Executive Officer and the Board.

Ms. Bellin is entitled to participate in or receive benefits under the Company’s social insurance and benefits plans, including but not limited to managers insurance (“bituach minahlim”), disability insurance and an advanced study fund (“keren hishtalmut ”). We pay certain percentages of Ms. Bellin’s salary towards these insurance and benefits plans, including 5% to managers insurance, up to 2.5% percent to disability insurance, 8.33% to severance compensation and 7.5% to the advanced study fund. Ms. Bellin is entitled to the use of a company car.

In March 2009, Ms. Bellin agreed to a 30% voluntary salary reduction to $6,300 per month to ease cash concerns at the time. Ms. Bellin’s salary reverted to $9,000 per month in October 2009. Although we were under to formal obligation to do so, in 2010 we repaid Ms. Bellin the $18,900 in foregone salary. We have not, but we may in the future, repay the benefits (pension, education fund and the like) associated with such foregone salary.

In 2006 previously granted Ms. Bellin options to purchase 1,066,366 shares of common stock at an exercise price of $0.071 per shares. Under the agreement, in November 2007, we granted Ms. Bellin additional options to purchase 488,753 shares of common stock at an exercise price of $0.210, which was equal to the share price upon admission to AIM. These options are set to vest over a four year period, and will fully vest pursuant to the terms and conditions of the Incentive Stock Plan and pursuant to our standard form of option agreement.

Ms. Bellin’s agreement also stipulates a one-year post-termination covenant-not-to-compete.

Outstanding Equity Awards at Fiscal Year-End Table

The following table set forth certain information, on an award-by-award basis, concerning unexercised options to purchase common stock and common stock that has not yet vested for each Named Executive Officer and outstanding as of June 30, 2010.

		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

* On 09/13/10, the expiration date was extended to 03/30/2016.

Employee Benefit and Stock Plans

2006 Stock Incentive Plan

We initially adopted the 2006 Stock Plan in March 2006 and, with stockholder approval, subsequently amended it in 2007 and 2010. The following is a summary of its principal terms:

Purpose

The purpose of the 2006 Stock Plan is to provide us with the means to offer incentives to our employees, directors and consultants in order to attract, retain and motivate them by allowing them to share in the benefits of future growth in our company’s value through the acquisition of common stock. These incentives may constitute incentive share options (each an “ISO”), non-qualified share options (each an “NSO”) stock appreciation rights, restricted share awards, share unit awards or other forms of share-based incentives. ISOs have a more favourable tax treatment under US law for the option holder than an NSO. Awards under the 2006 Stock Plan are intended to be exempt from the securities qualification requirements of US securities laws.

Administration

The 2006 Stock Plan is administered by the Compensation Committee of the Board (the “Committee”). Subject to the provisions of the 2006 Stock Plan, the Committee has full authority and discretion to take any actions it deems necessary or advisable for the administration of the 2006 Stock Plan.

Eligibility

Only employees of our company selected for the receipt of awards under the 2006 Stock Plan shall be eligible for the grant of ISOs. Only employees, directors and consultants to our company selected for the receipt of awards under the 2006 Stock Plan shall be eligible for the grant of NSOs or the award or sale of common stock.

Common Stock available under the 2006 Stock Plan

The maximum aggregate number of shares of common stock reserved and available for issuance under the 2006 Stock Plan, as amended, and under the Israeli Share Option Plan, is limited to 60,500,000 shares provided that, for so long as our common stock is admitted to trading on AIM or the Official List, we shall not, after the date of admission, issue awards under the Share Option Plans for a number of shares that shall (excluding all options granted prior to admission) in aggregate exceed 12% of the number of shares outstanding on the relevant date of grant. In the event that any outstanding option or other award under the 2006 Stock Plan expires or is cancelled or forfeited for any reason or any award under the 2006 Stock Plan is settled in cash without the issuance of shares of common stock, the shares allocated to the unexercised portion of such option or other award shall remain available for issue pursuant to the 2006 Stock Plan.

Award agreements and restrictions on transferability

Each award or sale of shares of common stock under the 2006 Stock Plan shall be evidenced by an award agreement between us and the recipient, though signature by the recipient may not always be required. Except as may be expressly stated in an award agreement, the rights awarded under the 2006 Stock Plan are non-transferable other than by will or the intestacy laws applying to the estate of a deceased award holder.

Stock Options

Award agreements

The award agreement shall specify the number of shares of common stock that are subject to the option and whether the option is intended to be an ISO or an NSO.

Conditions

An award agreement may contain conditions or restrictions as determined by the Committee at the time of grant.

Exercise price

To the extent required by applicable law, the exercise price per share of an option shall not be less than the fair market value, as determined by the Board. If the option holder holds more than 10% of the combined voting power of all classes of shares in our company at the date of grant (a “materially interested participant”), the exercise price per share of an ISO or an NSO must be at least 110% of fair market value. Subject to the foregoing, the exercise price under any option shall be determined by the Committee.

Term

The term of an option shall in no event exceed 10 years from the date of grant. The term of an ISO granted to a materially interested participant shall not exceed five years from the date of grant. Subject to the foregoing, the Committee in its sole discretion shall determine when an option shall expire.

Rights of exercise on termination of service

The option holder will have the right to exercise any subsisting options held by him following the termination of his service during the option term, to the extent that the option was exercisable and vested at the date of termination of service:

(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;

provided that the Committee may, in its sole discretion, extend such periods.

To the extent that the right to exercise the option has not vested at the date of termination of service, the option shall terminate when the option holder’s service terminates.

For the purposes of the 2006 Stock Plan, termination of service means the termination of a person’s status as an employee or director of our company or (where the person is not an employee or director of our company) the termination of the person’s business relationship with our company.

Rights in respect of Common Stock

An option holder or a transferee of an option shall have no rights as a shareholder with respect to any common stock covered by the option until such person becomes the holder of record of such shares of common stock.

Exercise

Options are to be exercised under the procedures established or approved by the Committee from time to time. The exercise price payable on exercise of an option should be paid in full in cash by the option holder, provided that we may permit payment to be made in whole or in part by delivery of shares of common stock that have been held by the participant for at least six months prior to the date of exercise. The value attributable to common stock transferred to us in such fashion shall be determined by reference to the fair market value of a share of common stock at the date of exercise of the option.

Early exercise

The Committee may permit, at its sole discretion, the exercise of any option prior to the time when the option would otherwise have become exercisable under the relative award agreement.

Further, an award agreement may provide for the option holder to exercise the option, in whole or in part, prior to the date when the option becomes fully vested. This may either be stipulated at the time of grant of as subsequently amended. In the event of any early exercise of an option, we shall have the right to repurchase the common stock that had been so acquired by the option holder on terms specified by the Committee. Further, in such circumstances, the Committee shall determine the time and/or event that shall cause such repurchase right to terminate and the common stock to vest fully in the option holder.

Stock appreciation rights

The 2006 Stock Plan allows the Committee to grant stock appreciation rights (“SARs”) to eligible participants in the 2006 Stock Plan. SARs may be granted either independently or in tandem with or by reference to options granted prior to or simultaneously with the grant of SARs to the same participant. Where granted in tandem or by reference to a related option, the participant may elect to either exercise the option or the SARs (but not both). Upon exercise of an SAR, the participant is entitled to receive an amount equal to the excess (if any) of the fair market value of a share of common stock on the date of exercise over the amount of the exercise price for such SAR stipulated in the award agreement. The exercise price for the SAR will be determined by the Committee but, in the case of SARs granted in tandem with options granted the 2006 Stock Plan, shall not be less than the exercise price of such option.

Any payment, which may become due from us following an exercise of an SAR, may be paid (at the election of the Committee) to the participant either in cash and/or through the issuance of shares of common stock. Where any shares shall be issued in satisfaction of the payment due to the participant, the number of shares of common stock will be determined by dividing the amount of the payment entitlement by the fair market value of a share of common stock on the exercise date.

The provisions as to the ability to impose conditions to exercise on grant, the duration of the SARs, the exercise procedures (including upon termination of service) and, the procedure for early exercise that apply to options granted under the 2006 Stock Plan apply in the same fashion to SARs.

Currently, no SARs have been issued and are outstanding.

Restricted stock awards

The Committee may grant to any person eligible under the 2006 Stock Plan an award of a number of shares of common stock, subject to terms, conditions and restrictions as determined by the Committee. Until lapsed or release of all forfeiture restrictions applicable to a restricted share award, either the share certificates representing the same may be retained by or on behalf of the Company or, if the certificate for the same bears a restrictive legend, can be held by the participant.

The recipient of a restrictive share award shall have all the rights associated with ownership of a share of common stock, including the right to receive dividends and to vote, provided that any common stock or other securities distributed as a dividend or otherwise as a right associated with ownership of common stock which are subject to a restriction which has not yet lapsed, shall be subject to the same restrictions as such restricted common stock.

Common stock, which is subject to a restricted share award, may not be assigned, transferred or otherwise dealt with, prior to the lapse of the restrictions applicable to them.

Upon expiration or termination of the forfeiture restrictions and the release or satisfaction of any other conditions applying to the restricted share award, the restricted status of the shares of common stock shall cease and the shares of common stock shall be delivered to the relevant restricted share award holder free of the restrictions imposed under the restricted share awards. All rights of a restricted share award holder shall cease and terminate in the event of a termination of service occurring prior to the expiration of the forfeiture period applicable to the award and satisfaction of all other applicable conditions.

The forfeiture period and/or any conditions set out in the restricted share award may be waived by the Committee in its absolute discretion.

Currently, there are no restricted stock awards outstanding.

Change of control

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.

All outstanding options and/or SAR’s that have not previously vested or been terminated shall immediately vest and become exercisable or (as appropriate) the participant shall immediately have the right to delivery of the share certificates for the restricted shares. The change of control provisions contained in the 2006 Stock Plan do not apply if the relevant participant is associated with the party/ies gaining control of us, to the extent prescribed by the 2006 Stock Plan.

Other share-based awards

Other share-based awards, consisting of share purchase rights, awards of common stock or awards valued in whole or in part by reference to or otherwise based on common stock, may be granted either alone or in addition to or in conjunction with other awards under the 2006 Stock Plan. The terms of any such award shall be determined in the sole discretion of the Committee.

Unless otherwise determined in the relative award agreement, such other share-based awards shall be subject to the following:

(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.

Adjustments to reflect capital changes

The number and kind of shares subject to outstanding awards, the exercise price for such shares and the number and kind of shares available for awards to be granted under the 2006 Stock Plan shall automatically be adjusted to reflect any share dividend, sub-division, consolidation, exchange of shares, merger or other change in capitalisation with a similar substantive effect upon the 2006 Stock Plan or the awards granted under the 2006 Stock Plan. The Committee shall have the power and sole discretion to determine the amount of the adjustment to be made in each case. If we shall enter into a merger, outstanding awards shall be subject to the terms of the merger agreement or applicable re-organisation arrangements and may give rise to the substitution of new awards for awards received under the 2006 Stock Plan, acceleration of vesting or expiration or settlement in cash or cash equivalents.

Withholding tax

The Company shall be entitled to withhold the amount of any withholding or other tax required by law to be withheld or paid by the Company in relation to the amount payable and/or shares issuable to an award holder and the Company may defer payment of cash or issuance of shares upon exercise or vesting of an award unless indemnified to its satisfaction against any liability for any taxes. Subject to approval by the Committee, an award holder may elect to meet his or her withholding liability (in whole or in part) by having withheld from the award, at the appropriate time, a number of shares of common stock, the fair value of which is equal to the amount of the taxes due.

General

(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.

Israeli Stock Option Plan

Our first Israeli Stock Option Plan (“ISOP”) was adopted in October 2002 and subsequently amended. In November, 2007, the ISOP was terminated. On March 30, 2008, a new ISOP was adopted by the Board as an appendix to, and operates as part of, the 2006 Stock Plan. The establishment of the new ISOP in this fashion allows for options to be granted to directors, employees, consultants and advisers to MMI in a manner that facilitates the obtaining by the relevant grantee of certain tax benefits under Israeli laws. The following is a summary of the principal terms of the ISOP.

The 2006 Stock Plan applies to all options granted under the ISOP, save to the extent modified by the provisions of the ISOP. The following provisions of the ISOP vary the application of the provisions of the 2006 Stock Plan to options granted under the ISOP.

Types of options

The options granted under the ISOP may be either options that contain provisions that qualify them for special tax treatment under the applicable Israeli tax ordinance (102 Options), which may be designated by us to be either capital gain options (CGOs) or ordinary income options (OIOs), unapproved 102 Options (being options that are issued in accordance with the applicable Israeli tax ordinance but not held by the ISOP trustee) or options that do not qualify for such special tax treatment.

If an option granted under the ISOP is intended to be an approved 102 Option, it may not be granted until we have made an election as to whether the option shall be a CGO or an OIO. Such election must be filed with the Israeli tax authority before it may take effect. Once the election is made and for the duration of such election, we may only grant the type of approved 102 Option elected for to all prospective grantees of approved options under the ISOP.

In order for 102 Options to be treated as approved under the applicable Israeli tax ordinance, all options granted under the ISOP and/or shares allocated or issued on exercise of options and/or other shares received subsequently following realisation of rights (including bonus issues) shall be allocated or issued to a trustee nominated by a committee and approved in accordance with the provisions of such shares, subject to any appropriate deduction for taxation on distribution of dividends and, as applicable, the provisions of the Israeli tax ordinance.

Compliance with laws

The rules of the ISOP provide that we shall obtain all necessary approvals under all applicable laws, for the ISOP, including U.S. securities laws and regulations.

Rights in respect of Common Stock

Options and any rights thereunder may not be assigned, transferred or given as collateral. During the period that approved 102 Options are or shares of common stock issued thereunder are held by the trustee of the ISOP, all rights are personal and cannot be transferred, assigned, pledged or mortgaged, other than by will or laws of decent and distribution.

Tax consequences and indemnity

Any tax consequences arising from the grant or exercise of any option or otherwise any event or act of the company, trustee or the option holder, shall be borne solely by the option holder and the option holder is bound to indemnify the company and the trustee accordingly. Upon receipt of any approved 102 Option, an Israeli participant will be required to sign an undertaking to release the trustee from any liability in respect of any action or decision duly taken and bona fide executed in relation to the ISOP or any approved 102 Option or share of common stock granted to him/her thereunder. Furthermore, Israeli participants will be required to agree to indemnify us and/or the ISOP trustee and hold them harmless against and from any and all liability for any 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 such Israeli participant. With respect to any unapproved 102 Option, if the relevant Israeli participant ceases to be employed by our company, he shall be obliged to give us security or guarantee for the payment of tax due at the time of sale of any shares of common stock available under the option.

General

	(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.

Director Compensation

Our Directors did not receive compensation for their service on our Board of Directors in 2009. In March 2010, the Compensation Committee of the Board, in consultation with its outside compensation consultant, recommended a comprehensive compensation policy for directors, which the Board adopted. Under this policy, non-executive directors will receive a $5,000 annual retainer fee, as well as meeting fees that range between $750-$2,000 per meeting based on location and type. The Chairmen of Board committees shall receive an annual retainer of $1,500. In addition, upon recommendation of the Compensation Committee, the Board determined to award to each of Dr. Bauer, Mr. Kanter, Dr. McMurray and Mr. Brukardt a one-time option grant of 1,000,000 shares of common stock each to reflect the fact that these directors had not received any compensation or equity awards since 2007. The Board further established an annual option grant program for non-executive directors in the amount of 450,000 shares each. Such options will have a 10-year term, vest in equal installments over three years and have an exercise price equal to the average closing price on the applicable exchange for the 10-day trading period prior to the date of issuance. Such annual grant will be made each January 2 nd or as soon as practical thereafter.

Indemnification of Officers and Directors

Our amended and restated certificate of incorporation limits the personal liability of directors for breach of fiduciary duty to the maximum extent permitted by the General Corporation Law of the State of Delaware, referred to herein as the DGCL. Our amended and restated certificate of incorporation provides that no director will have personal liability to us or to our stockholders for monetary damages for breach of fiduciary duty or other duty as a director. However, these provisions do not eliminate or limit the liability of any of our directors for any of the following:

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.

Any amendment to or repeal of these provisions will not eliminate or reduce the effect of these provisions in respect to any act or failure to act, or any cause of action, suit or claim that would accrue or arise prior to any amendment or repeal or adoption of an inconsistent provision. If the DGCL is amended to provide for further limitations on the personal liability of directors of corporations, then the personal liability of our directors will be further limited in accordance with the DGCL.

In addition, our amended and restated certificate of incorporation provides that we must indemnify our directors and officers and we must advance expenses, including attorneys’ fees, to our directors and officers in connection with legal proceedings, subject to very limited exceptions.

We intend to enter into, separate indemnification agreements with each of our officers and directors. These agreements, among other things, will require us to indemnify our officers and directors for certain expenses, including attorney’s fees, judgments, fines and settlement amounts incurred by an officer or director in any action or proceeding which the person provides services at our request, to the fullest extent permitted by Delaware law. We will not indemnify an officer or director, however, unless he or she acted in good faith, reasonably believed his or her conduct was in, and not opposed, to our best interests, and, with respect to any criminal action or proceeding, had no reason to believe his or her conduct was unlawful.

We maintain directors and officers liability insurance coverage for the benefit of our directors and officers. Such insurance is generally designed to respond to claims against company officers and directors alleging breach of duty. Subject to their terms, conditions, and exclusions, these policies respond to civil and criminal matters, including securities-related matters. Our company’s program structure consists of “standard” coverage, as well as “A-side difference in conditions” coverage. Standard coverage includes coverage for non-indemnifiable claims against individuals (“A-side claims”), indemnifiable claims against individuals (“B-side claims”), and securities claims (including securities claims against the corporate entity) (“C-side claims”). The separate A-side difference in conditions coverage responds only for non-indemnifiable claims. Subject to its terms, conditions, and exclusions, the A-side coverage responds when the underlying standard coverage fails to respond in certain situations. We believe our coverage is consistent with industry standards.

Equity Compensation Plan Information

The following table provides information as of December 31, 2009, about the common stock that may be issued upon exercise of options, warrants and rights under all of our equity compensation plans.

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

1 The number of shares is subject to adjustment in the event of stock splits and other similar events.

CERTAIN RELATIONSHIPS AND

RELATED TRANSACTIONS

Letter of Credit Arrangements and Related Party Disclosure

In November 2007, we obtained a $500,000 irrevocable letter of credit, available (subject to certain conditions) for drawdown at sight at any time during the 18-month period from the date of issue, in whole or in any part in installments of $100,000 or multiples of that amount. The Letter of Credit facility was extended by Canadian Imperial Bank of Commerce and has been procured for our benefit by CIBC Trust Company (Bahamas) Limited, as trustee for a trust (the CIBC Trust). At such time, the CIBC Trust beneficially owned more than 5% of common stock.

In consideration of the CIBC Trust procuring the issue of the Letter of Credit, we entered into an agreement with the CIBC Trust and paid to the CIBC Trust fees totaling $12,500 and issued to the CIBC Trust 76,389 shares of common stock. Any drawdown by us under the Letter of Credit would constitute a loan from the CIBC Trust to us from the date of drawdown and interest shall be payable to the CIBC Trust on the loan amount at a rate of 11% per annum until payment in full of the amount of the loan. We never made any drawdowns on the letter of credit which expired on May 28, 2009.

Director and Officer Positions

Our directors have received stock option grants and reimbursement of certain expenses. See “Executive Compensation — Director Compensation” and “Executive Compensation—Employee Benefit and Stock Plans.” Two of our directors, Dr. Pearlman and Dr. Bauer, are also executive officers of our company. Each of Dr. Pearlman and Dr. Bauer has entered into an agreement with us and receives compensation thereunder. See “Executive Compensation—Employment Agreements and Consulting Arrangements.”

Lease of Property

Through an oral arrangement, we use corporate headquarters space in Vienna, Virginia leased by Chicago Investments, Inc. (CII). Joshua S. Kanter, Joel Kanter’s brother, is the President and is a director of CII. We reimburse CII for certain costs related to our use of the space, such as postage, phone services and the like. We do not pay any rent to CII.

Sales of Securities

Directors and their related parties have from time to time purchased our unregistered shares of common stock or unregistered convertible notes on the same terms and at the same per security prices as offered to third parties.

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding the beneficial ownership of our common stock as of September 30, 2010, and as adjusted to reflect the sale of the shares of common stock in this offering and the other adjustments discussed below, by the following:

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.

Beneficial ownership is determined in accordance with SEC rules and generally includes voting or investment power with respect to securities. Unless otherwise indicated, the stockholders listed in the table have sole voting and investment power with respect to the shares indicated.

The table below lists the number of shares and percentage of shares beneficially owned prior to this offering based on 180,155,206 common stock issued and outstanding as of September 30, 2010 (including shares represented by depositing interests held by Capita Registrars). The table also lists the number of shares and percentage of shares beneficially owned after this offering based on shares of common stock outstanding upon completion of this offering, assuming no exercise by the underwriters of their over-allotment option and after giving effect to the following:

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.

For purposes of the table below, we treat shares of common stock subject to options or warrants that are currently exercisable or exercisable within 60 days after September 30, 2010 to be outstanding and to be beneficially owned by the person holding the options or warrants for the purpose of computing the percentage ownership of the person, but we do not treat the shares as outstanding for the purpose of computing the percentage ownership of any other stockholder.

Except as otherwise set forth below, the address of each of the persons or entities listed in the table is c/o Medgenics, Inc., 8000 Towers Crescent Drive, Suite 1300, Vienna, Virginia 22182.

	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.

DESCRIPTION OF CAPITAL STOCK

The following description of the material terms of our capital includes a summary of specified provisions of our Amended and Restated Certificate of Incorporation and Amended and Restated By-laws. This description also summarizes relevant provisions of the General Corporation Law of the State of Delaware, which we refer to as the DGCL. The terms of our Amended and Restated Certificate of Incorporation and Amended and Restated By-laws and the terms of the DGCL are more detailed than the general information provided below. Therefore, please carefully consider the actual provisions of these documents, which have been filed with the SEC as exhibits to the registration statement of which this prospectus forms a part, and the DGCL.

General

Our authorized capital stock consists of 500,000,000 shares of common stock, par value $0.0001 per share. We do not have any preferred stock outstanding or authorized.

Description of Common Stock

As of September 30, 2010, there were 180,155,206 shares of common stock issued and outstanding held of record by 392 stockholders.

Holders of common stock are entitled to one vote per share on matters on which our stockholders vote. There are no cumulative voting rights. Holders of common stock are entitled to receive dividends, if declared by our Board of Directors, out of funds that we may legally use to pay dividends. If we liquidate or dissolve, holders of common stock are entitled to share ratably in our assets once our debts are paid. Our Amended and Restated Certificate of Incorporation does not provide the common stock with any redemption, conversion or preemptive rights. All shares of common stock that are outstanding as of the date of this prospectus and, upon issuance and sale, all shares we are selling in this offering and all shares into which the 2009 Debentures and the 2010 Debentures will convert, will be fully-paid and nonassessable.

We will effect a -for- reverse stock split prior to the consummation of this offering.

Underwriters’ Warrants

As more fully described in “Underwriting – Underwriters’ Warrants,” we have agreed to issue to the underwriters warrants to purchase a number of shares of our common stock equal to an aggregate of 10% of the number of shares of common stock sold in this offering (excluding any over-allotment). The warrants will have an exercise price equal to 110% of the offering price of the common stock sold in this offering and may be exercised on a cashless basis. The warrants are exercisable commencing six months after the effective date of the registration statement related to this offering, and will be exercisable for four and a half years thereafter. The warrants are not redeemable by us.

Anti-Takeover Effects of Delaware Law and Our Corporate Charter Documents

A number of provisions of Delaware law, our Amended and Restated Certificate of Incorporation and our Amended and Restated By-Laws contain provisions that could have the effect of delaying, deferring and discouraging another party from acquiring control of us. These provisions, which are summarized below, are expected to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with our board of directors. We believe that the benefits of increased protection of our potential ability to negotiate with an unfriendly or unsolicited acquiror outweigh the disadvantages of discouraging a proposal to acquire us because negotiation of these proposals could result in an improvement of their terms.

Delaware Law

We are subject to the provisions of Section 203 of the DGCL. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a three-year period following the time that this stockholder becomes an interested stockholder, unless the business combination is approved in a prescribed manner. A “business combination” includes, among other things, a merger, asset or stock sale or other transaction resulting in a financial benefit to the interested stockholder. An “interested stockholder” is a person who, together with affiliates and associates, owns, or did own within three years prior to the determination of interested stockholder status, 15% or more of the corporation’s voting stock. Under Section 203, a business combination between a corporation and an interested stockholder is prohibited unless it satisfies one of the following conditions:

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.

Our Corporate Charter Documents

Our Amended and Restated Certificate of Incorporation and Amended and Restated By-Laws will include provisions that are intended to enhance the likelihood of continuity and stability in our Board of Directors and in its policies, including:

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.

These provisions might have the effect of delaying or preventing a change in control and may make the removal of incumbent management more difficult even if such transactions could beneficial to the interests of stockholders.

Transfer Agent and Registrar

Upon the completion of this offering, the transfer agent and registrar for our common stock will be __________.

Listing

We intend to apply for listing our common stock on the NYSE Amex. If we are admitted to listing on the NYSE Amex our common stock will begin trading on or promptly after the effective date. Our common stock remains listed on the AIM Market, under the symbols MEDU and MEDG.

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market in the United States for our common stock, and we cannot assure you that a significant public market for our common stock will develop or be sustained after this offering. As described below, shares currently outstanding will not be available for sale immediately after this offering due to certain contractual and securities law restrictions on resale. Sales of substantial amounts of our common stock in the public market after these restrictions lapse could cause the prevailing market price to decline and limit our ability to raise equity capital in the future.

Upon completion of this offering, we will have outstanding an aggregate of shares of common stock ( shares if the underwriters’ over-allotment option is exercised in full). In addition, we have reserved:

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.

Of these shares, the shares sold in this offering ( shares if the underwriters’ over-allotment option is exercised in full) will be freely transferable without restriction or further registration under the Securities Act, except for any shares that are acquired by affiliates as that term is defined in Rule 144 under the Securities Act, or Rule 144. Shares of common stock held by our affiliates and our officers and directors are “restricted securities” as that term is defined in Rule 144. Restricted securities may be sold in the public market only if registered or if an exemption from registration is available, including the exemption provided by Rule 144 or Rule 701 under the Securities Act, each of which is summarized below. Upon the completion of this offering and the concurrent transactions, shares of our common stock will be “restricted securities,” as that term is defined in Rule 144 under the Securities Act.

Rule 144

In general, under Rule 144 as currently in effect, once we have been subject to the reporting requirements under the Exchange Act for at least 90 days a person (or persons whose shares are aggregated) who is not deemed to have been an affiliate of ours at any time during the three months preceding a sale, and who has beneficially owned restricted securities within the meaning of Rule 144 for at least six months, would be entitled to sell those shares, subject only to the availability of current public information about us. A non-affiliated person who has beneficially owned restricted securities within the meaning of Rule 144 for at least one year would be entitled to sell those shares without regard to the provisions of Rule 144.

An affiliate of ours who has beneficially owned restricted shares of our common stock for at least twelve months (or six months, provided that such sale occurs after we have been subject to the reporting requirements under the Exchange Act for at least 90 days) would be entitled to sell, within any three-month period, a number of shares that does not exceed the greater of:

•

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.

Sales under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to manner of sale provisions, notice requirements and the availability of current public information about us.

Rule 701

Under Rule 701, common stock acquired upon the exercise of certain currently outstanding options or pursuant to other rights granted under our stock plans may be resold, to the extent not subject to lock-up agreements, (a) by persons other than affiliates, beginning 90 days after the effective date of this offering, subject only to the manner-of-sale provisions of Rule 144, and (b) by affiliates, subject to the manner-of-sale, current public information and filing requirements of Rule 144, in each case, without compliance with the holding period requirement of Rule 144. Approximately Rule 701 shares are, however, subject to lock-up agreements and will only become eligible for sale upon the expiration of the contractual lock-up agreements. The underwriters may release all or any portion of the securities subject to lock-up agreements.

Convertible Notes

2009 Debentures

During the period June 2009 through September 5, 2009, we issued a series of convertible promissory notes in the aggregate principal amount of $570,000, which we refer to as the 2009 Debentures. The 2009 Debentures are unsecured obligations of our company 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 our common stock at the closing of this offering. Upon such conversion, we will issue the holders five-year warrants to purchase shares of common stock in the aggregate at an exercise price of $ per share. In addition, Newbridge Securities Corporation, the placement agent in connection with the 2009 Debentures, has the right to receive, as partial compensation for its services in connection with the offering of the 2009 Debentures and their consequent conversion, a warrant exercisable for such number of shares of common stock equal to 10% of the number of shares into which the 2009 Debentures will convert upon the closing of this offering.

2010 Debentures

On September 22, 2010, we issued a series of convertible promissory notes in the aggregate principal amount of $4,000,000, which we refer to as the 2010 Debentures. The 2010 Debentures are unsecured obligations of our company 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, we issued to the purchasers of such 2010 Debentures warrants to purchase 15,000,000 shares of common stock in the aggregate, referred to below as the A Warrants.

The 2010 Debentures (including any accrued interest) will automatically convert into 20,000,000 shares of our common stock at the closing of this offering.

Registration Rights

Holders of shares, after giving effect to the conversion of our outstanding 2009 Debentures and 2010 Debentures upon completion of this offering, have rights, under the terms of the purchase agreements between us and these holders, to require us to file registration statements under the Securities Act, subject to limitations and restrictions, or request that their shares be covered by a registration statement that we are otherwise filing, subject to specified exceptions.

Certain holders of our common stock have also been granted “piggyback” registration rights. These rights entitle the holders who so elect to be included in registration statements to be filed by us. The underwriters of any underwritten offering will have the right to limit the number of shares having registration rights to be included in the registration statement, and piggyback registration rights are also subject to the priority rights of stockholders having demand registration rights in any demand registration.

The warrants issued to the underwriters in connection with this offering also provide one demand registration of the shares of common stock underlying the warrants at our expense, an additional demand at the warrant holder’s expense and for unlimited piggyback registration rights at our expense with respect to the underlying shares of common stock during the five year period commencing the effective date of this offering.

Expenses of Registration

We will pay all registration expenses related to any demand or piggyback registration, other than underwriting discounts and commissions and any professional fees or costs of accounting, financial or legal advisors to any of the holders of registrable securities.

Indemnification

The outstanding registration right agreements contain customary cross-indemnification provisions, under which we are obligated to indemnify the selling stockholders in the event of material misstatements or omissions in the registration statement attributable to us, and each selling stockholder is obligated to indemnify us for material misstatements or omissions in the registration statement due to information provided by such stockholder provided that such information was not changed or altered by us.

Form S-8 Registration Statements

Prior to the expiration of the lock-up period, we intend to file one or more registration statements on Form S-8 under the Securities Act to register the shares of our common stock that are issuable pursuant to our 2006 Stock Incentive Plan. See “Executive Compensation – Equity Compensation Plan Information” for additional information. Subject to the lock-up agreements described below and any applicable vesting restrictions, shares registered under these registration statements will be available for resale in the public market immediately upon the effectiveness of these registration statements, except with respect to Rule 144 volume limitations that apply to our affiliates.

UNDERWRITING

We have entered into an underwriting agreement with Roth Capital Partners, LLC, acting as the representative of the underwriters named below, with respect to the shares of common stock subject to this offering. Subject to certain conditions, we have agreed to sell to the underwriters, and the underwriters have agreed to purchase, the number of shares of common stock provided below opposite their respective names.

Underwriters		Number of Shares
Roth Capital Partners, LLC

Maxim Group LLC

Total

The underwriters are offering the shares of common stock subject to their acceptance of the shares of common stock from us and subject to prior sale. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the shares of common stock offered by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for all of the shares of common stock if any such shares are taken. However, the underwriters are not required to take or pay for the shares of common stock covered by the underwriters’ over-allotment option described below.

Over-Allotment Option

We have granted the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to an aggregate of additional shares of common stock to cover over-allotments, if any, at the public offering price set forth on the cover page of this prospectus, less underwriting discounts and commissions. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering of the shares of common stock offered by this prospectus. If the underwriters exercise this option, each underwriter will be obligated, subject to certain conditions, to purchase a number of additional shares proportionate to that underwriter’s initial purchase commitment as indicated in the table above.

Commission and Expenses

The underwriters have advised us that they propose to offer the shares of common stock to the public at the initial public offering price set forth on the cover page of this prospectus and to certain dealers at that price less a concession not in excess of $ per share. The underwriters may allow, and certain dealers may reallow, a discount from the concession not in excess of $ per share to certain brokers and dealers. After this offering, the initial public offering price, concession and reallowance to dealers may be reduced by the representatives. No such reduction shall change the amount of proceeds to be received by us as set forth on the cover page of this prospectus. The shares of common stock are offered by the underwriters as stated herein, subject to receipt and acceptance by them and subject to their right to reject any order in whole or in part. The underwriters have informed us that they do not intend to confirm sales to any accounts over which they exercise discretionary authority.

The following table shows the underwriting discounts and commissions payable to the underwriters by us in connection with this offering. Such amounts are shown assuming both no exercise and full exercise of the underwriters’ over-allotment option to purchase shares.

Fee per share 1

Total Without

Exercise of

Over-Allotment

Total With

Exercise of Over-

Allotment

Public offering price

Discount

1 The fees do not include the over-allotment option granted to the underwriters, the corporate finance fee in the amount of 3.0% of the gross proceeds, or the warrants to purchase shares of common stock equal to 10% of the number of shares sold in the offering issuance to the underwriters at the closing.

We estimate that expenses payable by us in connection with the offering of our common stock, other than the underwriting discounts and commissions referred to above, will be approximately $ , which includes $75,000 that we have agreed to reimburse the underwriters for the legal fees incurred by them in connection with the offering.

Underwriters’ Warrants

We have also agreed to issue to the underwriters warrants to purchase a number of our shares of common stock equal to an aggregate of 10% of the shares of common stock sold in this offering (excluding any overallotment). The warrants will have an exercise price equal to 110% of the offering price of the shares of common stock sold in this offering and may be exercised on a cashless basis. The warrants are exercisable commencing six months after the effective date of the registration statement related to this offering, and will be exercisable for four and a half years thereafter. The warrants are not redeemable by us. The warrants also provide for one demand registration of the shares of common stock underlying the warrants at our expense, an additional demand at the warrant holder’s expense and unlimited “piggyback” registration rights at our expense with respect to the underlying shares of common stock during the five year period commencing six months after the date of this prospectus. The warrants and the underlying shares of common stock have been deemed compensation by FINRA and are therefore subject to a 180-day lock-up pursuant to Rule 5110(g)(1) of FINRA. The underwriters (or permitted assignees under the Rule) may not sell, transfer, assign, pledge, or hypothecate the warrants or the securities underlying the warrants, nor will they engage in any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of the warrants or the underlying securities for a period of 180 days from the date of this prospectus. The warrants will provide for adjustment in the number and price of such warrants (and the shares of common stock underlying such warrants) in the event of recapitalization, merger or other structural transaction to prevent mechanical dilution.

Indemnification

We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended, or the Securities Act, and liabilities arising from breaches of representations and warranties contained in the underwriting agreement, or to contribute to payments that the underwriters may be required to make in respect of those liabilities.

Listing

We intend to apply to list our common stock on the NYSE Amex under the trading symbol “____”.

Electronic Distribution

A prospectus in electronic format may be made available on websites or through other online services maintained by one or more of the underwriters of this offering, or by their affiliates. Other than the prospectus in electronic format, the information on any underwriter’s website and any information contained in any other website maintained by an underwriter is not part of this prospectus or the registration statement of which this prospectus forms a part, has not been approved and/or endorsed by us or any underwriter in its capacity as underwriter, and should not be relied upon by investors.

Price Stabilization, Short Positions and Penalty Bids

In connection with the offering the underwriters may engage in stabilizing transactions, over-allotment transactions, syndicate covering transactions and penalty bids in accordance with Regulation M under the Exchange Act:

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.

These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of the common stock. As a result, the price of our common stock may be higher than the price that might otherwise exist in the open market. Neither we nor the underwriters makes any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the common stock. In addition, neither we nor the underwriters makes any representations that the underwriters will engage in these stabilizing transactions or that any transaction, once commenced, will not be discontinued without notice.

No Public Market

Prior to this offering, there has not been a public market for our common stock in the United States and the public offering price for our common stock will be determined through negotiations between us and the underwriters. Among the factors to be considered in these negotiations will be prevailing market conditions, our financial information, market valuations of other companies that we and the underwriters believe to be comparable to us, estimates of our business potential, the present state of our development and other factors deemed relevant.

We offer no assurances that the initial public offering price will correspond to the price at which our common stock will trade in the public market subsequent to this offering or that an active trading market for our common stock will develop and continue after this offering.

Prior and Subsequent Engagements

In connection with our private placement of our 2010 Debentures, we paid Maxim Group LLC $172,000 in cash commissions and issued 5-year warrant to purchase 1,612,500 shares of our common stock at an initial exercise price per share of £0.16.

We may enter into additional agreements with any or all of the underwriters for the provision of services in the future, including in connection with future offerings of our securities.

LEGAL MATTERS

The validity of the shares of our common stock offered hereby will be passed upon for us by Barack Ferrazzano Kirschbaum & Nagelberg LLP. Joshua Kanter, who exercises sole investment or voting control over more than 5% of our outstanding common stock, is of counsel to such firm. In connection with the offering of the common stock, Lowenstein Sandler PC advised the underwriters with respect to certain United States securities law matters.

EXPERTS

Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global, our independent registered public accounting firm, has audited our balance sheets as of December 31, 2009 and 2008, and the related statements of operations, changes in stockholders’ deficiency and cash flows for the years ended December 31, 2009 and 2008, as set forth in their report, which includes an explanatory paragraph relating to our ability to continue as a going concern. We have included our financial statements in this prospectus and in this registration statement in reliance on Kost Forer Gabbay & Kasierer’s report given on their authority as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form S-1, including exhibits and schedules, under the Securities Act with respect to the securities to be sold in this offering. This prospectus does not contain all the information contained in the registration statement. For further information with respect to us and the securities to be sold in this offering, we refer you to the registration statement and the exhibits and schedules attached to the registration statement. Statements contained in this prospectus as to the contents of any contract, agreement or other document referred to are not necessarily complete. When we make such statements, we refer you to the copies of the contracts or documents that are filed as exhibits to the registration statement because those statements are qualified in all respects by reference to those exhibits.

Upon the closing of this offering, we will be subject to the informational requirements of the Exchange Act and we intend to file annual, quarterly and current reports, proxy statements and other information with the SEC. You can read our SEC filings, including the registration statement, at the SEC’s website at www.sec.gov . You may also read and copy any document we file with the SEC at its public reference facility at 100 F Street, N.E., Washington, D.C. 20549, on official business days during the hours of 10:00 a.m. to 3:00 p.m.

You may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facility.

Our website address is www.medgenics.com . The information on, or accessible through, our website is not part of this prospectus.

GLOSSARY

The following is an explanation of technical terms used throughout this prospectus:

“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

100

“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

101

“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

102

“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

103

INDEX TO FINANCIAL STATEMENTS

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

F-1

Kost Forer Gabbay & Kasierer

2 Pal-Yam Ave.

Haifa 33095, Israel
Tel: 972 (4)8654000

Fax: 972 (3)5633434

www.ey.com/il

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the board of directors and stockholders of

MEDGENICS, INC.

(A Development Stage Company)

We have audited the accompanying consolidated balance sheets of Medgenics, Inc. (a development stage company) ("the Company") and its subsidiary as of December 31, 2008 and 2009, and the related consolidated statements of operations, stockholders' equity (deficit) and cash flows for each of the two years in the period ended December 31, 2009. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company and its subsidiary as of December 31, 2008 and 2009 and the consolidated results of their operations and their cash flows for each of the two years in the period ended December 31, 2009, in conformity with accounting principles generally accepted in the United States.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1b, the Company is in the development stage, has not yet generated revenues from the sale of the Company's products and is dependent on external sources for financing its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are described in Note 1b. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

	/s/ KOST FORER GABBAY & KASIERER
	KOST FORER GABBAY & KASIERER
	A Member of Ernst & Young Global

Haifa, Israel

November 4, 2010

F-2

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

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

F-3

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

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

F-4

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

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

F-5

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

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

(*) Represents an amount lower than $1

F-6

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

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

(*) Represents an amount lower than $1

F-7

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

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

(*) Represents an amount lower than $1

F-8

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

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	)

(*) Represents an amount lower than $1

F-9

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

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

(*) Represents an amount lower than $1

F-10

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

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

(*) Represents an amount lower than $1

F-11

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

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	)

(*) Represents an amount lower than $1

F-12

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

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	)

(*) Represents an amount lower than $1

F-13

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

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 OPERATING ACTIVITIES:
Loss	$	(4,992	)	$	(4,440	)	$	(2,226	)	$	(548	)	$	(35,739	)
Adjustments to reconcile loss to net cash used in operating activities:
Depreciation		97			119			60			59			924
Loss from disposal of property and equipment		-			3			3			1			329
Issuance of shares as consideration for providing security for letter of credit		-			-			-			-			16
Stock based compensation related to options and warrants granted to employees and consultants		436			520			231			200			5,133
Interest and amortization of beneficial conversion feature of Convertible note		-			-			-			-			759
Change in fair value of convertible debentures		-			443			8			(21	)		422
Accrued severance pay, net		77			83			54			18			748
Exchange differences on a restricted lease deposit		-			(2	)		-			3			1
Exchange differences on a long term loan		-			-			-			-			3
Increase (decrease) in trade payables		439			66			89			(123	)		824
Decrease (increase) in accounts receivable, prepaid expenses and prepaid issuance expenses		261			111			5			(310	)		(321	)
Increase (decrease) in other accounts payable, accrued expenses and advance payment		564			1,405			329			(457	)		2,113

Net cash used in operating activities		(3,118	)		(1,692	)		(1,447	)		(1,178	)		(24,788	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from disposal of property and equipment		-			-			-			-			173
Decrease (increase) in restricted lease deposit and prepaid lease payments		(34	)		8			-			4			(33	)
Purchase of property and equipment		(372	)		(34	)		(24	)		(10	)		(1,679	)

Net cash used in investing activities		(406	)		(26	)		(24	)		(6	)		(1,539	)

F-14

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

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			-		-

F-15

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 1:-

GENERAL

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").

On December 4, 2007 the Company's Common shares were admitted for trading on the AIM market of the London Stock Exchange (see note 9d (21)).

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.

The Company and its subsidiary have not yet generated revenues from product sale. The Company has begun generating income from partnering on development programs and expects to continue to expand its partnering activity.

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.

Under the terms of the Agreement, the Company will receive up to $4.1 million to work exclusively with the Healthcare company for one year ended October 22, 2010 ("Standstill period") to develop a Biopump to test the feasibility of continuous production and delivery of this clotting protein. The Standstill period may be extended for one to six months in certain circumstances.

The Company recognizes income in its Statements of Operations 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 for that agreement, is recognized as other income within operating income.

Funding for the Company's operations related to the development is based on an agreed amount for each Full Time Equivalent ("FTE"). FTE was agreed to be measured, by the parties, as 162 development hours. The amount to be paid for each FTE is not subject to actual costs incurred by the Company.

F-16

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 1:-

GENERAL (CONT.)

(cont.)

Additional payments totaling $3 million are payable upon the Company's achievement of certain milestones ($0.5 million) and upon the Healthcare company’s exercise of an option to extend the exclusivity through an additional period to negotiate terms to commercialize the Biopump technology for FVIII ($2.5 million).

If the two parties choose not to proceed to a full commercial agreement, the Company will receive all rights to the jointly developed intellectual property and will pay royalties to the Healthcare company at the rates between 5% and 10% of any future income arising from such intellectual property up to a maximum of ten times the total funds paid by the Healthcare company to the Company.

The Company estimated the value of the option to negotiate a future definitive agreement for the continuation of the development or for a sale, license or other transfer of the FVIII Biopump technology, at the transaction date as immaterial.

Through June 30, 2010, payments totaling $2.8 million (unaudited) were received from the Healthcare company.

Subsequent to the balance sheet date, on October 22, 2010, the Agreement expired. The Company is in advanced discussions with the Healthcare company regarding continuation of collaboration.

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.

The approval allows for a grant of up to approximately $1.3 million based on research and development expenses, not funded by others, of up to $2.1 million.

In November 2010, the Company was notified that it will receive a cash grant of $0.2 million under the U.S. government’s Qualifying Therapeutic Discovery Project (QTDP) to further its Biopump research and development program. The QTDP program was created by Congress as part of the Patient Protection and Affordable Care Act. The funds are immediately available and the Company intends to record the full award during the forth quarter 2010

F-17

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 2:-

SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements are prepared in accordance with United States Generally Accepted Accounting Principles ("U.S. GAAP").

Use of estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. The Company's management believes that the estimates and assumptions used are reasonable based upon information available at the time they are made. These estimates and assumptions can affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Financial statements in U.S. dollars

The majority of the Company and its subsidiary's operations are currently conducted in Israel; however, it is anticipated that the majority of the company's revenues will be generated outside Israel and will be denominated in U.S. dollars ("dollars"), and financing activities including loans, equity transactions and cash investments, are made mainly in dollars. The Company’s management believes that the dollar is the primary currency of the economic environment in which the Company and its subsidiary operate. Thus, the functional and reporting currency of the Company and its subsidiary is the dollar.

Accordingly, transactions and balances denominated in dollars are presented at their original amounts. Non-dollar transactions and balances have been re-measured to dollars, in accordance with ASC 830, "Foreign Currency Matters" of the Financial Accounting Standards Board ("FASB") (originally issued as FAS 52). All exchange gains and losses from re-measurement of monetary balance sheet items denominated in non-dollar currencies are reflected in the statements of operations as financial income or expenses, as appropriate.

Unaudited Interim financial information:

The consolidated balance sheet as of June 30, 2010 and the related consolidated statements of operations for the six and three months periods ended June 30, 2009 and 2010, and the statements of cash flows and changes in stockholders' equity (deficit) for the six months ended June 30, 2010 are unaudited. This unaudited information has been prepared by the Company on the same basis as the audited annual consolidated financial statements and, in management’s opinion, reflects all adjustments necessary for a fair presentation of the financial information, in accordance with generally accepted accounting principles, for interim financial reporting for the period presented and accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for audited financial statements. Results for interim periods are not necessarily indicative of the results to be expected for the entire year.

Principles of consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. Intercompany transactions and balances have been eliminated upon consolidation.

F-18

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 2:-

SIGNIFICANT ACCOUNTING POLICIES (CONT.)

Cash equivalents

The Company and its subsidiary consider all highly liquid investments originally purchased with maturities of three months or less to be cash equivalents.

Property and equipment

Property and equipment are stated at cost net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets.

The annual rates of depreciation are as follows:

	%
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

Impairment of long-lived assets

Long-lived assets are reviewed for impairment in accordance with ASC 360, "Property, Plant, and Equipment" ("ASC 360") (originally issued as FAS 144), whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of the asset to the future undiscounted cash flows expected to be generated by the asset. If such an asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. During the years ended December 31, 2007, 2008 and 2009, no impairment losses have been identified.

Severance pay

The Subsidiary’s liability for severance pay is calculated pursuant to the Israeli severance pay law based on the most recent salary for the employees multiplied by the number of years of employment, as of the balance sheet date. Employees are entitled to one month salary for each year of employment or a portion thereof. In addition, several employees are entitled to additional severance compensation as per their employment agreement. The Subsidiary’s liability for all of its employees is fully provided by an accrual and is mainly funded by monthly deposits with insurance policies. The value of these policies is recorded as an asset in the Company’s balance sheet.

The deposited funds may be withdrawn only upon the fulfillment of the obligation pursuant to Israeli severance pay law or labor agreements. The value of the deposited funds is based on the cash surrender value of these policies and includes profits or losses as appropriate.

F-19

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 2:-

SIGNIFICANT ACCOUNTING POLICIES (CONT.)

Severance pay (cont.)

As part of employment agreements, the Company and certain of its employees agreed to the terms set forth in Section 14 of the Israeli Severance Pay Law, according to which amounts deposited in severance pay funds by the Company's subsidiary shall be the only severance payments released to the employee upon termination of employment, voluntarily or involuntarily. Accordingly, no additional severance pay accrual is provided in the Company's financial statements in connection with the severance liability of these employees.

Severance expenses for the years ended December 31, 2008 and 2009 and for the period from March 27, 2000 (inception) through June 30, 2010 (unaudited), amounted to $155, $172 and $1,419, respectively.

Income taxes

The Company accounts for income taxes in accordance with ASC 740, "Income Taxes" ("ASC 740") (originally issued as FAS 109). ASC 740 prescribes the use of the liability method whereby deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value. As of December 31, 2009 a full valuation allowance was provided by the Company.

The Company also accounts for income taxes in accordance with ASC 740-10, "Accounting for Uncertainty in Income Taxes" ("ASC 740-10") (originally issued as "FIN 48"). ASC 740-10 contains a two-step approach for recognizing and measuring uncertain tax positions accounted for in accordance with ASC 740. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. No liability has been recorded as a result of the adoption of ASC 740-10 in 2007.

Accounting for stock based compensation

On January 1, 2006, the Company adopted ASC 718, "Compensation-Stock Compensation" ("ASC 718") (originally issued as FAS 123(R)) which requires the measurement and recognition of compensation expense based on estimated fair values for all share-based payment awards made to employees and directors.

ASC 718 requires companies to estimate the fair value of equity-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company's consolidated statement of operations. Prior to the adoption of ASC 718, the Company accounted for equity-based awards to employees and directors using the intrinsic value method in accordance with APB 25.

F-20

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (CONT.)

Accounting for stock based compensation (cont.)

The Company adopted ASC 718 using the modified prospective transition method, which requires the application of the accounting standard starting from January 1, 2006, the first day of the Company's fiscal year 2006. Under that transition method, compensation cost recognized in the years ended December 31, 2008 and 2009 includes compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of ASC 718. Results for prior periods have not been restated.

The Company recognized compensation expenses for awards granted subsequent to January 1, 2006 based on the straight line method over the requisite service period of each of the grants, net of estimated forfeitures. The Company estimated the fair value of stock options granted to employees and directors using the Binomial option pricing model.

During 2009 and 2010, no options were granted to employees or directors of the Company. In 2008, the Company estimated the fair value of stock options granted to employees and directors using the Binominal options pricing model with the following assumptions:

		2008

Dividend yield		0%
Expected volatility		78%
Risk-free interest rate		3.5%
Suboptimal exercise factor		2.2-2.4
Contractual life (years)		5

The Company uses historical data of traded companies to estimate pre and post vesting exit rate within the valuation model; separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes.

The suboptimal exercise factor represents the value of the underlying stock as a multiple of the exercise price of the option which, if achieved, results in exercise of the option.

The risk-free interest rate assumption is based on observed interest rates appropriate for the term of the Company's employee stock options.

The Company has historically not paid dividends and has no foreseeable plans to pay dividends.

The Company applies ASC 718 and ASC 505-50, "Equity-Based Payments to Non-Employees" ("ASC 505-50") (originally issued as EITF 96-18), with respect to options issued to non-employees. ASC 718 requires the use of option valuation models to measure the fair value of the options. The fair value of these options was estimated at grant date and at the end of each reporting period, using the Binomial option pricing model with the following assumptions:

F-21

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 2:-

SIGNIFICANT ACCOUNTING POLICIES (CONT.)

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

Loss per share

Basic loss per share is computed based on the weighted average number of Common shares outstanding during each year. Diluted loss per share is computed based on the weighted average number of Common shares outstanding during each year, plus the dilutive effect of options considered to be outstanding during each year, in accordance with ASC 260, "Earnings Per Share" ("ASC 260") (originally issued as "FAS 128").

In 2008 and 2009, all outstanding stock options and warrants have been excluded from the calculation of the diluted loss per Common share because all such securities were anti-dilutive for the periods presented.

Research and development expenses

All research and development expenses, net of grants from the OCS, are charged to the Statements of Operations as incurred.

Grants and participation

Royalty-bearing grants from the OCS for funding approved research and development projects are recognized at the time the Subsidiary is entitled to such grants, on the basis of the costs incurred and are presented as a deduction from research and development expenses.

Participation from third parties in the Company's research and development operations relating to the FVIII Biopump is recognized at the time the Company is entitled to such participation from the third parties, and is presented as a deduction from the Company's research and development expenses.

The Company will recognize income in its statements of operation as follows:

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.

F-22

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 2:-

SIGNIFICANT ACCOUNTING POLICIES (CONT.)

Concentrations of credit risks

Financial instruments that potentially subject the Company and its subsidiary to concentrations of credit risk consist principally of cash and cash equivalents.

Cash and cash equivalents are invested in major banks in Israel, the United Kingdom and the United States. Such deposits in the United States may be in excess of insured limits and are not insured in other jurisdictions. Management believes that the financial institutions that hold the Company’s and its subsidiary’s investments are institution with high credit standing and accordingly, minimal credit risk exists with respect to these investments.

The Company has no off-balance-sheet concentrations of credit risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements.

Fair value of financial instruments

The carrying amount of cash and cash equivalents, accounts receivable, short term bank credit, accounts payable and accrued liabilities are generally considered to be representative of their respective fair values because of the short-term nature of those instruments. The convertible debentures are presented at fair value.

Effective January 1, 2008, the Company adopted ASC 820, "Fair Value Measurements and disclosures" ("ASC 820") (originally issued as FAS 157), and effective October 10, 2008, adopted FSP 157-3, "Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active". ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

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.

F-23

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 2:-

SIGNIFICANT ACCOUNTING POLICIES (CONT.)

Fair value of financial instruments (cont.)

The financial instruments carried at fair value on the Company’s balance sheet as of December 31, 2009 are convertible debentures and cash equivalents. Currently, the convertible debentures are valued using level 3 inputs. The fair value of these convertible debentures was estimated at the measurement date at December 31, 2009 and June 30, 2010 using the Binomial pricing model with the following assumptions:

	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

Initial adoption of new accounting standards

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.

In May 2009, the FASB issued ASC 855 "Subsequent Events" ("ASC 855") (originally issued as "FAS 165").

ASC 855 establishes general standards of accounting for, and disclosure of, events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In particular, this statement sets forth: (1) the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, (2) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements and (3) the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. ASC 855 is effective for the interim or annual financial periods ending after June 15, 2009.

The adoption of this standard did not have any impact on the consolidated results of operations or financial position of the Company.

F-24

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 2:-

SIGNIFICANT ACCOUNTING POLICIES (CONT.)

Impact of recently issued Accounting Standards

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.

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

F-25

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

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

Composition of property and equipment is as follows:

	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

Depreciation expense for the years ended December 31, 2008 and 2009 and for the period from January 27, 2000 (inception) through June 30, 2010 (unaudited) amounted to $97, $119 and $924, respectively.

F-26

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

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

License agreements

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.

F-27

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 8:-

COMMITMENTS AND CONTINGENCIES (CONT.)

License agreements (cont.)

The 1 st installment of $50 to Yissum was paid on June 5, 2007. As of December 31, 2009 the Company has a full accrual for the 2 nd installment of $150 which was paid in the second quarter of 2010. Payments to Yissum are recorded as research and development expenses.

(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.

The total aggregate payment of royalties and Sub-license fees by the Company to Yissum shall not exceed $10,000.

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").

The license gives the Company a non-exclusive right to use, market, sell, lease and import the Subject Technology by way of any product process or service that incorporates, utilizes or is made with the use of the Subject Technology.

In consideration the Company agreed to pay the following amounts:

a one time, non-refundable license fee of $25 which was paid in 2007;

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

an installment of $25 upon executing any sub-licenses that the Company executes in respect of the Subject Technology.

All payments to BCM are recorded as research and development expenses. The license agreement shall expire (unless terminated earlier for default or by the Company at its discretion) on the first day following the tenth anniversary of the first commercial sale of licensed products by the Company, following which the Company shall have a perpetual, royalty free license to the Subject Technology.

Letter of credit

Under the terms of an irrevocable Letter of Credit issued on November 26, 2007 an amount of up to $500 was available (subject to certain conditions) for drawdown at any time during an 18-month period which expired on May 28, 2009. The Letter of Credit facility was provided by the Canadian Imperial Bank of Commerce and was procured by CIBC Trust Company (Bahamas) Limited (the "Trust"), one of the Company’s shareholders, for the benefit of the Company. One of the beneficiaries of the Trust is a director of the Company.

F-28

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 8:-

COMMITMENTS AND CONTINGENCIES (CONT.)

Letter of credit (cont.)

In consideration of the Trust arranging the issue of the Letter of Credit, the Company paid as follows: (i) $12.5 in cash in 2007 and (ii) issuance of 76,389 Common shares with a market value of $16. At the 12 month anniversary of the date of issue, the Company should have paid to the Trust an additional fee of $6. This amount is paid in July 2010.

Chief Scientist

Under agreements with the Office of the Chief Scientist in Israel regarding research and development projects, the Subsidiary is committed to pay royalties to the Office of the Chief Scientist at rates between 3.5% and 5% of the income resulting from this research and development, at an amount not to exceed the amount of the grants received by the Subsidiary as participation in the research and development program, plus interest at LIBOR. The obligation to pay these royalties is contingent on actual income and in the absence of such income no payment is required. As of December 31, 2009, the aggregate contingent liability amounted to approximately $3.7 million.

Clinical trials

On July 30, 2008 approval was received from the Israel Ministry of Health to conduct a Phase I/II safety and efficacy trial of the EPODURE Biopump for providing sustained treatment of anemia in patients with chronic kidney disease. The Subsidiary had agreements with physicians, consultants and Hadasit Medical Research and Development Ltd. ("Hadasit") to operate the trial. The major agreements were entered into in April 2008, with Hadasit to conduct the clinical trial at Hadassah Medical Center ("Hadassah"). The Subsidiary paid Hadasit approximately $8.4 per month through September 2009 to conduct the trial in addition to an estimated cost of $9 per patient in the trial. The Subsidiary also used the lab facilities at a cost of approximately $33 per month through March 2009.

On April 15, 2010, approval was received from the Israel Ministry of Health to continue the clinical trial at Tel Aviv Medical Center. The Subsidiary resumed the use of the lab facilities at Hadassah on May 1, 2010 at the same cost.

Lease Agreement

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.

As of December 31, 2009 the Subsidiary pledged a bank deposit which is used as a bank guarantee at an amount of $24 to secure its payments under the lease agreement.

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:

F-29

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 8:-

COMMITMENTS AND CONTINGENCIES (CONT.)

Lease Agreement (cont.)

Year
2010	$	44
2011		25
2012		4
	$	73

The Subsidiary paid the last three months lease installments in advance which amounted to $11.

NOTE 9:-

STOCKHOLDERS’ EQUITY

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

Common stock

The Common stock confers upon the holders the right to receive notice to participate and vote in general and special meetings of the stockholders of the Company and the right to receive dividends, if declared.

Recapitalization of equity capital

According to a recapitalization agreement signed on March 30, 2006 with the requisite number of the Company's stockholders and Note providers, the convertible note and the outstanding Old Common shares, Series A Preferred shares and Series B Preferred shares were converted into Common shares. The conversion rates were as follows:

A total of 11,982,914 Common shares were issued to the holders of the convertible Note upon conversion of the Note.

One Common stock was issued for 10,578.95 Old Common shares.

One Common stock was issued for 404.51 Series A Preferred shares.

One Common stock was issued for 345.69 Series B Preferred shares.

As a result of the recapitalization of the equity, the Company issued a total of 9,885,842 Common shares.

Pursuant to ASC 260-10 "Earnings Per Share" (originally issued as EITF D-42), the Company added the excess of the fair value of the Common stock that would have been issued pursuant to the original conversion terms of the Preferred stock over the fair value of the Common stock issued to the holders of the Preferred stock in the recapitalization in the amount of $437,197 to deficit accumulated during the development stage with a corresponding reduction in share capital and additional paid in capital.

F-30

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 9:-

SHAREHOLDERS’ EQUITY (CONT.)

Issuance of shares and warrants to investors

In January and March 2000, the Company issued a total of 2,069,677 Old Common shares at par value.

In August 2000, the Company issued 437,936 Old Common shares in consideration of $500.

In August 2000, in respect of the earlier license agreement with Yissum, the Company issued 940,950 Old Common shares at par value.

In January 2001, the Company issued 138,502 Series A Preferred shares in consideration of $200. The issuance costs amounted to $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.

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.

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.

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.

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.

F-31

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 9:-

SHAREHOLDERS’ EQUITY (CONT.)

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.

F-32

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 9:-

SHAREHOLDERS’ EQUITY (CONT.)

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:

Reduced Exercise Price: $0.0375/share (2.5 pence/share) or the current exercise price, whichever is lower;

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.

The exercise price of any warrants that were not exercised before the expiration of the program revert to the original price as stated in the warrant prior to this program.

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.

F-33

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 9:-

SHAREHOLDERS’ EQUITY (CONT.)

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.

Stock options and warrants to employees and directors

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.

On August 23, 2007, the shareholders approved an amendment to the stock option plan increasing the share reserve under the Plan by 27,167,192 Common shares to a total of 48,494,572 Common shares.

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.

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.

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.

A summary of the Company’s activity for options and warrants granted to employees and directors is as follows:

F-34

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 9:-

SHAREHOLDERS’ EQUITY (CONT.)

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

As of December 31, 2009, there was $435 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted to employees. That cost is expected to be recognized over a weighted-average period of 0.8 years.

The aggregate intrinsic value represents the total intrinsic value (the difference between the Company’s Common stock fair value as of December 31, 2009 and June 30, 2010 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2009 and June 30, 2010.

F-35

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 9:-

SHAREHOLDERS’ EQUITY (CONT.)

Stock options and warrants to employees and directors (cont.)

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) and June 30, 2010 ($0.1202/0.08 GBP, per share).

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

Warrants and options to-non-employees

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.

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.

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.

F-36

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 9:-

SHAREHOLDERS’ EQUITY (CONT.)

Warrants and options to-non-employees (cont.)

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

F-37

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 9:-

SHAREHOLDERS’ EQUITY (CONT.)

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).

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

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

F-38

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

Events Subsequent to December 31, 2009 (unaudited)

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.

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).

In May 2010, the Company issued 16,727,698 Common shares in consideration of $1,202. The issuance costs amounted to $87.

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.

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.

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.

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.

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.

F-39

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 9:-

SHAREHOLDERS’ EQUITY (CONT.)

Events Subsequent to December 31, 2009 (unaudited) (cont.)

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.

F-40

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 10:-

CONVERTIBLE DEBENTURES

In May 2009, the Company offered to accredited investors only, through a private placement, convertible debentures (the "Debentures"), together with warrants (the "Warrants") to purchase a number of Common shares, par value $0.0001 per share, of the Company (the "Common Share"), equal to 35% of the number of Common shares issued upon conversion of the Debentures. Warrants shall not be issued unless and until the conversion of the Debentures. The Debentures will mature two years after the date of issuance and will bear interest at an annual rate of 10%, paid on a quarterly basis. The Debentures will automatically be converted into Common shares upon the closing of a Qualified Transaction, as defined henceforth.

Qualified Transaction shall mean any of: (i) an underwritten public offering of the Company's common stock on U.S. Stock Market resulting in gross proceeds to the Company of not less than $5,000,000, (ii) a merger or reverse merger between the Company and a public company which is traded on a U.S. Stock Market or on the OTC Bulletin Board, the survivor of which is a public company having available cash of not less than $5,000 after giving effect to such merger and any capital-raising transaction completed prior to or at the time of such merger, or (iii) the acquisition of all of the issued and outstanding common stock of the Company by a public company the common stock of which is traded on a U.S. Stock Market or on the OTC Bulletin Board in a transaction where the holders of the common stock of the Company receive, in exchange for such common stock, common stock of such public company and, after giving effect to such transaction and any capital-raising transaction completed prior to or at the time of such transaction, such public company has available cash of not less than $5,000.

In a series of closings from June 16 through September 15, 2009, the Company raised $570 in gross proceeds through the issuance of Debentures.

In the event of default, the interest rate shall increase 2% per month for every month the Debentures are in default to a maximum of 18% per annum paid on a quarterly basis. The Company shall repay the principal and any accrued interest at the two-year anniversary of the date the Debentures were issued. The Debentures are unsecured and the Company has no right to redeem the Debentures. If the Company is liquidated, the holders of the Debentures will participate pari passu with all general creditors of the Company with no seniority or preference.

Until such time the Debentures are repaid, the Debentures (including any accrued interest) shall automatically convert into Common shares at the closing of a Qualified Transaction at the following valuation:

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.

F-41

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 10:-

CONVERTIBLE DEBENTURES (CONT.)

The share prices referenced above shall be adjusted to reflect any stock splits, stock combinations, stock dividends, reorganizations and the like.

The Warrants are exercisable for a number of Common shares equal to 35% of the number of Common shares issued upon the conversion of the Debentures. The Warrants shall be immediately exercisable upon issuance and shall expire five years from the date of issuance. The exercise price shall be 110% of the Qualified Transaction Price.

The Company irrevocably elected to initially and subsequently measure the Debentures entirely at fair value (with changes in fair value recognized in earnings) in accordance with ASC 825-10 thus the Company will not separate the embedded derivative instrument from the host contract and account for it as a derivative instrument pursuant to ASC 825.

This election was made only in respect to the Debentures, as permitted by ASC 825-10, which states that this election may be made on an instrument-by-instrument basis.

As of the December 31, 2009, the fair value of the Debentures amounted to $1,013. In 2009, the Company recorded financial expenses in the amount of $443 as a result of the change in fair value of the Debentures.

As of June 30, 2010, the fair value of the Debentures amounted to $992. In the first six months of 2010, the Company recorded financial income in the amount of $21 as a result of the change in fair value of the Debentures (unaudited).

The interest payable at June 30, 2010 in the amount of $96 has been paid in full subsequent to the balance sheet date (unaudited).

Events Subsequent to December 31, 2009 (unaudited)

In September, 2010 the Company issued $4 million of new convertible debentures The new convertible debentures are unsecured obligations of the Company, accrue interest at 4% per annum and mature and become repayable 12 months from the date of issuance. Holders of such debentures may convert them anytime into Common Shares, at an initial conversion price of GBP 0.13 per Common Share. The debentures will automatically convert upon an underwritten public offering of Common Shares raising at least $6 million and resulting in the Common Shares being listed on a U.S. national securities exchange or automated quotation system (a “US Listing”), at a conversion price equal to the lesser of GBP 0.13 per Common Share and 75% of the public offering price of the Common Shares in such underwritten public offering. Purchasers of these new convertible debentures received warrants to purchase a number of Common Shares equal to 75% of the number of Common Shares into which the debentures could convert on the date of issuance. Such warrants are immediately exercisable, have a 5 year term and have an initial exercise price of GBP 0.16. If a further issuance of securities is made by the Company at a lower price, both the conversion price of the debentures and the exercise price of the warrants will be subject to downward adjustment to such lower issue price and, if such issuance takes place prior to a US Listing occurring, the number of warrants held by each warrantholder will be increased to maintain the aggregate exercise price of his original warrants. Any Common Shares issued upon conversion of the debentures and exercise of the warrants will be deemed restricted stock under U.S. securities laws and cannot be sold or transferred unless subsequently registered under such laws or an exemption from the registration requirements is available.

F-42

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 11:-

TAXES ON INCOME

Tax laws applicable to the companies:

The Company is taxed under U.S. tax laws.

The Subsidiary is taxed under the Israeli income Tax Ordinance and the Income Tax (Inflationary Adjustments) Law, 1985: ("the law").

Results of the Subsidiary for tax purposes are measured and reflected in real terms in accordance with the changes in the Israeli Consumer Price Index ("CPI"). The financial statements are presented in U.S. dollars.

The difference between the rate of change in Israeli CPI and the rate of change in the NIS/U.S. dollar exchange rate causes a difference between taxable income or loss and the income or loss before taxes reflected in the financial statements. In accordance with ASC 740-10 (or paragraph 9(f) of FAS 109), the Company has not provided deferred income taxes on this difference between the reporting currency and the tax bases of assets and liabilities.

In February 2008, the "Knesset" (Israeli parliament) passed an amendment to the Income Tax (Inflationary Adjustments) Law, 1985, which limits the scope of the law starting 2008 and thereafter. Starting 2008, the results for tax purposes are measured in nominal values, excluding certain adjustments for changes in the Israeli CPI carried out in the period up to December 31, 2007. The amendment to the law includes, inter alia, the elimination of the inflationary additions and deductions and the additional deduction for depreciation starting 2008.

Tax assessments:

The Company files income tax returns in the U.S. federal jurisdiction and state jurisdiction. The U.S. tax authorities have not conducted an examination in respect of the Company’s U.S. federal income tax returns since inception. The Israeli subsidiary has not yet received final tax assessments since its inception. The Subsidiary has tax assessments, deemed final under the law, up to and including the year 2004.

Tax rates applicable to the Company and the Subsidiary:

The Subsidiary:

The rate of the Israeli corporate tax is as follows: 2008 - 27%, 2009 - 26%, 2010 - 25%. In July 2009, the "Knesset" (Israeli Parliament) passed the Law for Economic Efficiency (Amended Legislation for Implementing the Economic Plan for 2009 and 2010), 2009, which prescribes, among others, an additional gradual reduction in the rates of the Israeli corporate tax and real capital gains tax starting 2011 to the following tax rates: 2011 - 24%, 2012 - 23%, 2013 - 22%, 2014 - 21%, 2015 - 20%, 2016 and thereafter - 18%. The effect of the abovementioned change on the financial statements is immaterial.

Israeli companies are generally subject to capital gains tax at rate of 25% for capital gains (other than gains deriving from the sale of listed securities) derived after January 1, 2003.

F-43

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

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.

F-44

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 11:-

TAXES ON INCOME (CONT.)

Carryforward losses for tax purposes:

As of December 31, 2009, the Company had U.S. federal net operating loss carryforward for income tax purposes in the amount of approximately $23.1 million. Net operating loss carryforward arising in taxable years beginning after January 2000 (inception date) can be carried forward and offset against taxable income for 20 years and expiring between 2020 and 2029. As of December 31, 200 9 the Company had net operating loss carryforward for state franchise tax purposes of approximately $21.6 million which will begin to expire in 2011.

Utilization of U.S. net operating losses may be subject to substantial annual limitations due to the "change in ownership" provisions of the Internal Revenue Code of 1986 and similar state provisions. The annual limitation may result in the expiration of net operating losses before utilization.

The Company's subsidiary in Israel has accumulated losses for tax purposes as of December 31, 2009, in the amount of approximately $5 million, which may be carried forward and offset against taxable income and capital gain in the future for an indefinite period.

Deferred income taxes:

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets are as follows:

	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	$	-		$	-

As of December 31, 2009, the Company and its subsidiary have provided valuation allowances in respect of deferred tax assets resulting from tax loss carryforward and other temporary differences, since they have a history of operating losses and current uncertainty concerning its ability to realize these deferred tax assets in the future. Management currently believes that it is more likely than not that the deferred tax regarding the loss carryforward and other temporary differences will not be realized in the foreseeable future.

In 2008 and 2009, the main reconciling item of the statutory tax rate of the Company and its subsidiary (27% to 35% in 2008 and 26% to 35% in 2009) to the effective tax rate (0%) is tax loss carryforwards and other deferred tax assets for which a full valuation allowance was provided.

F-45

MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

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

*********************

F-46

PROSPECTUS

ROTH CAPITAL PARTNERS

MAXIM GROUP LLC

, 2010

Through and including 2010 (the 25 th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. The obligation is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

The following table set forth the various expenses (other than selling commissions and other fees to be paid to the underwriters) which will be paid by the Registrant in connection with the issuance and distribution of the securities being registered. With the exception of the SEC registration fee and the NASD filing feel, all amounts shown are estimates.

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	$	*

* To be provided by amendment.

Item 14. Indemnification of Directors and Officers.

The amended and restated certificate of incorporation of the Registrant described in the prospectus filed herewith provides that the Registrant will indemnify, to the extent permitted by the DGCL, any person whom it may indemnify thereunder, including directors, officers, employees and agents of the Registrant. In addition, the Registrant’s amended and restated certificate of incorporation will eliminate to the extent permitted by the DGCL, personal liability of directors to the Registrant and its stockholders for monetary damages for breach of fiduciary duty.

The Registrant’s authority to indemnify its directors and officers is governed by the provisions of Section 145 of the DGCL, as follows:

(a) A corporation shall have power to indemnify 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 (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officers, employee or agent of the corporation, or 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 expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the person’s conduct was unlawful.

(b) A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or 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 expenses (including attorneys’ fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

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(c) To the extent that a present or former director or officer of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections 9a) and (b) of this section, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith.

(d) Any indemnification under subsections (a) and (b) of this section (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because the person has met the applicable standard of conduct set forth in subsections (a) and (b) of this section. Such determination shall be made, with respect to a person who is a director or officer at the time of such determination, (1) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (2) by a committee of such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (4) by the stockholders.

(e) Expenses (including attorneys’ fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the corporation as authorized in this section. Such expenses (including attorneys’ fees) incurred by former directors and officers or other employees and agents may be so paid upon such terms and conditions, if any, as the corporation deems appropriate.

(f) The indemnification and advancement of expenses provided by, or granted pursuant to, the other subsections of this section shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office. A right to indemnification or to advancement of expenses arising under a provision of the certificate of incorporation or a bylaw shall not be eliminated or impaired by an amendment to such provision after the occurrence of the act or omission that is the subject of the civil, criminal, administrative or investigative action, suit or proceeding for which indemnification or advancement of expenses is sought, unless the provision in effect at the time of such act or omission explicitly authorized such elimination or impairment after such action or omission has occurred.

(g) A corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or 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 such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the corporation would have the power to indemnify such person against such liability under this section.

(h) for purposes of this section, references to “the corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this section with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued.

(i) For purposes of this section, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to “serving at the request of the corporation” shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by such director, officer, employee, or agent with respect to an employee benefit plan, its participants or beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the corporation” as referred to in this section.

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(j) The indemnification and advancement of expenses provided by, or granted pursuant to, this section shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

(k) The Court of Chancery is hereby vested with exclusive jurisdiction to hear and determine all actions for advancement of expenses or indemnification brought under this section or under any bylaw, agreement, vote of stockholders or disinterested directors, or otherwise. The Court of Chancery may summarily determine a corporation’s obligation to advance expenses (including attorneys’ fees).

Pursuant to the Underwriting Agreement to be filed as Exhibit 1.1 to this Registration Statement, the Registrant will agree to indemnify the Underwriters and the Underwriters will agree to indemnify the Registrant and its directors, officers and controlling persons against certain civil liabilities that may be incurred in connection with the offering, including certain liabilities under the Securities Act.

The Registrant intends to enter into indemnification agreements with each of its directors after the completion of the offering, whereby it will agree to indemnify each director and officer from and against any and all judgments, fines, penalties, excise taxes and amounts paid in settlement or incurred by such director or officer for or as a result of action taken or not taken while such director was acting in his capacity as a director or executive officer of the Registrant.

Item 15. Recent Sales of Unregistered Securities.

During the past three years, the following securities were sold by the Registrant without registration under the Securities Act. The securities described below were deemed exempt from registration under the Securities Act in reliance upon Section 4(2), Regulation D or Regulation S of the Securities Act. Except as set forth below, there were no underwriters employed in connection with any of the transactions set forth in this Item 15. All of these securities, to the extent not included in this registration statement, are deemed restricted securities for purposes of the Securities Act. Unless otherwise specified below, proceeds from these equity financings were spent on general and administrative expensive, including salaries and other related costs, and research and development expenses.

Common Stock Issued Directly

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.

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.

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.

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.

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.

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.

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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.

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.

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.

Common Stock Issued Upon Exercise of Outstanding Warrants

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.

Convertible Debentures and Warrants Issued

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.

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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

* Subsequently replaced by warrants with exercise price of US $.0164

** Subsequently replaced by warrants with exercise price of US $.0194

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

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Item 16. Exhibits and Financial Statements

(a) Exhibits

The list of exhibits filed with or incorporated by reference in this registration statement is set forth below.

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

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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

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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)

* To be filed by amendment.

(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.

Item 17. Undertakings.

The undersigned Registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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SIGNATURES

Pursuant to the requirement of the Securities Act, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Misgav, Israel, on the 5th day of November, 2010.

MEDGENICS, INC.

By:	/s/ Andrew L. Pearlman
Andrew L. Pearlman
President and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Andrew L. Pearlman, Phyllis Bellin and Eugene A. Bauer, and each of them, his or her true and lawful agent, proxy and attorney-in-fact, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to (i) act on, sign and file with the Securities and Exchange Commission any and all amendments (including post-effective amendments) to this registration statement together with all schedules and exhibits thereto and any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, together with all schedules and exhibits thereto, (ii) act on, sign and file such certificates, instruments, agreements and other documents as may be necessary or appropriate in connection therewith, (iii) act on and file any supplement to any prospectus included in this registration statement or any such amendment or any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and (iv) take any and all actions which may be necessary or appropriate to be done, as fully for all intents and purposes as he or she might or could do in person, hereby approving, ratifying and confirming all that such agent, proxy and attorney-in-fact or any of his substitute may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

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

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EXHIBIT 3.1

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

MEDGENICS, INC.

The Certificate of Incorporation of Medgenics, Inc. was duly filed with the Delaware Secretary of State on January 27, 2000 and Amended and Restated Certificates of Incorporation of Medgenics, Inc. were duly filed with the Delaware Secretary of State respectively on February 9, 2000, May 4, 2000, March 22, 2001, October 3, 2002 and March 31, 2006. This Amended and Restated Certificate of Incorporation of Medgenics, Inc. was duly adopted in accordance with Sections 242 and 245 and by the written consent of the holders of issued shares of capital stock in the corporation (“Stockholders”) in accordance with Section 228 of the General Corporation Law of the State of Delaware. The Amended and Restated Certificate of Incorporation of the corporation is hereby amended and restated to read in its entirety as follows:

ARTICLE I

NAME

The name of the corporation is: Medgenics, Inc.

ARTICLE II

REGISTERED OFFICE AND AGENT

The address of the corporation’s registered office in the State of Delaware is 2711 Centerville Road, Suite 400, in the City of Wilmington, 19808, County of New Castle. The name of the corporation’s registered agent at such address is Corporation Service Company.

ARTICLE III

PURPOSE

The nature of the business or purposes to be conducted or promoted by the corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware, as amended from time to time, or any successor thereto (the “DGCL”).

ARTICLE IV

AUTHORIZED STOCK

The total number of shares of all classes of stock which the corporation shall have authority to issue is 500,000,000 all of which shall be shares of common stock, $0.0001 par value per share.

ARTICLE V

BY-LAWS

(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.

ARTICLE VI

WRITTEN BALLOTS

Election of directors need not be by written ballot unless the by-laws of the corporation so provide.

ARTICLE VII

AMENDMENTS

The corporation reserves the right to amend, alter, change, or repeal any provision of this Amended and Restated Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights at any time conferred upon the Stockholders by this Amended and Restated Certificate of Incorporation are granted subject to the provisions of this Article VII provided that no amendment, alteration, change or repeal may be made to Article XI or this Article VII without 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 proposing such amendment, alteration, change or repeal.

ARTICLE VIII

INDEMNIFICATION

(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.

ARTICLE IX

PERSONAL LIABILITY OF DIRECTORS

To the fullest extent permitted by the DGCL, a director of the corporation shall not be liable to the corporation or its Stockholders for monetary damages for breach of fiduciary duty as a director. Notwithstanding anything else in this Amended and Restated Certificate of Incorporation, any repeal or modification of this Article IX by the Stockholders shall be prospective only and shall not adversely affect any limitation on the personal liability of a director of the corporation existing at the time of such repeal or modification. Nothing herein shall limit or otherwise affect the obligation or right of the corporation to indemnify its directors pursuant to the provisions of this Amended and Restated Certificate of Incorporation, the by-laws of the corporation, or as may be permitted by the DGCL.

ARTICLE X

CERTAIN ARRANGEMENTS

Whenever a compromise or arrangement is proposed between the corporation and its creditors or any class of them and/or between the corporation and its Stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of the corporation or of any creditor or Stockholder thereof or on the application of any receiver or receivers appointed for the corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for the corporation under the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the Stockholders or class of Stockholders, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the Stockholder or class of Stockholders, as the case may be, agree to any compromise or arrangement and to any reorganization of the corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all of the creditors or class of creditors, and/or on all of the Stockholders or class of Stockholders, as the case may be, and also on the corporation.

ARTICLE XI

DISCLOSURE OF INTERESTS AND MANDATORY OFFERS

(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.

In addition, the board of directors of the corporation shall determine that the Voting Power Reduction shall cease to apply to a holder if the corporation receives an executed and, if necessary, duly stamped instrument of transfer with respect to the capital stock of the corporation of any such holder who is subject to a Voting Power Reduction, that demonstrates a sale or other transfer that the board of directors of the corporation determines to be a bona fide sale or transfer of the whole of the beneficial interest in such capital stock to a person who is not acting in concert with the person or with the person appearing to beneficially own the capital stock of the corporation. If the board of directors of the corporation makes a determination under this Article XI(c)(iv), it shall notify the transferee as soon as practicable including whether such transfer is also subject to an additional Disclosure Notice.

To the fullest extent permitted by law, neither the corporation nor the board of directors of the corporation shall be liable to any person as a result of the application of the Voting Power Reduction with respect to any capital stock of the corporation or person, or a failure to determine that the Voting Power Reduction shall cease to apply to any capital stock of the corporation or person, if the board of directors of the corporation has acted in good faith.

(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,

he shall notify the corporation of that fact within 2 days of such knowledge being acquired or such awareness being obtained.

(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

then such person and any person acting in concert with such person (each such person referred to as “the Offeror”) shall extend an Offer, in accordance with this Article XI(e), to the holders of all issued and outstanding capital stock of the corporation; provided, however, that the obligation to make an Offer pursuant to this Article XI(e) shall not apply to (i) any underwriter or (ii) any person(s) in relation to whom the obligation to make an Offer pursuant to this Article XI(e) would not have arisen but for the exercise by any such person of an entitlement to acquire shares of capital stock of the corporation pursuant to an option or warrant granted to such person by the corporation prior to the effective date of this Amended and Re-stated Certificate of Incorporation or pursuant to an option or warrant granted to such person by the corporation after the effective date of this Amended and Re-stated Certificate of Incorporation pursuant to a pre-existing contractual commitment of the corporation to issue such warrant or option. Such Offer must be conditional only upon the Offeror having received acceptances in respect of shares of capital stock of the corporation that, together with all of the shares of capital stock of the corporation beneficially owned by such Offeror or any person acting in concert with it, will result in the Offeror and any person acting in concert with it beneficially owning shares of capital stock of the corporation representing more than 50% of the Voting Power.

The grant of an option to acquire existing issued shares of capital stock of the corporation will be deemed to constitute the acquisition by the grantee of the option of securities giving rise to the obligation to make an Offer under this Article XI(e) where the relationship and arrangements between the parties concerned is such that effective Control of the shares of capital stock of the corporation has passed to the grantee of the option.

(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.

ARTICLE XII

PREEMPTIVE RIGHTS

(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.

Dated as of: December 3, 2007

MEDGENlCS, INC.

By:	/s/ Andrew L. Pearlman
Name:	Andrew L. Pearlman
Title:	President

EXHIBIT 3.2

CERTIFICATE OF AMENDMENT

TO THE AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

MEDGENICS, INC.

It is hereby certified that:

1. The name of the corporation (hereinafter called the "corporation") is Medgenics, Inc.

2. The corporation's Amended and Restated Certificate of Incorporation, which was previously filed with the Secretary of State of the State of Delaware on December 3, 2007, is hereby amended by deleting ARTICLE XII thereof in its entirety.

3. The amendment of the Certificate of Incorporation herein certified has been duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware and by the written consent of the holders of issued shares of capital stock of the corporation in accordance with Section 228 of the General Corporation Law of the State of Delaware.

Dated as of the 4 th day of June, 2009

Medgenics, Inc.

/s/ Andrew L. Pearlman
Andrew L. Pearlman, President

EXHIBIT 4.2

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT (this “ Agreement ”) is made as of May 25, 2009 by and among MEDGENICS, INC., (the “Company”) and each of the individuals and entities listed on Exhibit A attached hereto (collectively, the “ Investors ” and each an “ Investor ”).

WHEREAS, the Investors desire to purchase from the Company, and the Company desires to issue and sell to the Investors, certain convertible debentures (the “ Debentures ”) convertible, under certain circumstances, into shares of common stock, $0.0001 par value per share, of the Company (the “ Common Stock ”), and warrants to purchase shares of Common Stock ("Warrants"), all upon the terms set forth in that certain Securities Purchase Agreement of even date herewith by and between the Company and the Investors (the “ Securities Purchase Agreement ”);

WHEREAS, to induce the Investors to purchase Debentures, the Company has undertaken to register if, as and when requested hereunder, the Common Stock issuable upon conversion of the Debentures and exercise of the Warrants pursuant to the terms set forth herein.

NOW, THEREFORE, the Company and the Investors as follows:

1. Definitions . As used herein, the following terms shall have the following respective meanings:

“ Affiliate ” shall mean, with respect to any non-individual, any person or entity that, directly or indirectly, controls, is controlled by or is under common control with such non-individual. As used in this definition “control” shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other interests, by contract or otherwise).

“ Common Stock ” shall mean the Common Stock, par value $0.001 per share, of the Company, as constituted as of the date of this Agreement.

“ Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the time.

“ Holder” or “ Holders ” shall mean any Investor or Investors to whom Registrable Securities were originally issued or qualifying transferees of an Investor or Investors under Section 2.9 hereof who hold Registrable Securities for purposes of any registration under Sections 2.2.

“ Register ,” “ registered” and “ registration ” each shall refer to a registration effected by preparing and filing a registration statement or statements or similar documents in compliance with the Securities Act and the declaration or ordering of effectiveness of such registration statement or document by the SEC.

“ Registrable Securities ” means (a) the shares of Common Stock issuable upon conversion of the Debentures (b) the shares of Common Stock issuable upon exercise of the Warrants, (c) the shares of Common Stock issuable upon exercise of the warrants issued to Newbridge Securities Corporation, and (d) any other shares of Common Stock issued in respect of such shares (because of stock splits, stock dividends, reclassifications, recapitalizations or similar events); provided , however , that shares of Common Stock which are Registrable Securities shall cease to be Registrable Securities (i) upon any sale pursuant to a Registration Statement or Rule 144 under the Securities Act, (ii) upon any sale in any manner to a person or entity which is not entitled to the rights under this Agreement or (iii) at such time as they become eligible for sale pursuant to Rule 144 under the Securities Act without restriction.

“ Requisite Period ” shall mean, with respect to a firm commitment underwritten public offering, the period commencing on the effective date of the registration statement and ending on the date each underwriter has completed the distribution of all securities purchased by it and, with respect to any other registration, the period commencing on the effective date of the registration statement and ending on the earlier of (i) the date on which the sale of all Registrable Securities covered thereby is completed and (ii) 180 days after such effective date.

“ Securities Act ” shall mean the Securities Act of 1933, as amended, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the applicable time.

“ SEC ” shall mean the U.S. Securities and Exchange Commission, or any other Federal agency at the time administering the Securities Act.

2.2 Piggyback Registration . If, at any time commencing after the date hereof, the Company proposes to register any of its securities under the Securities Act (other than in connection with a merger or on Forms S-8, S-4 or comparable registration statements), including, without limitation any Registration Statement relating to its initial public offering, it will give written notice, at least twenty (20) business days prior to the filing of each such registration statement, to the Holders holding Registrable Securities of its intention to do so. If any Holder notifies the Company in writing within fifteen (15) days after receipt of any Company notice of the Holder’s desire to include any Registrable Securities in such proposed registration statement, the Company shall afford such Holder the opportunity to have any such Registrable Securities registered under such registration statement. If the Registration Statement is being filed for an underwritten public offering, such Holder must timely execute and deliver the usual and customary agreement among the Company, such Holder and the underwriters relating to this registration.

Notwithstanding the provisions of this Section 2.2, (i) the Company shall have the right any time after it shall have given written notice pursuant to this Section 2.2 (irrespective of whether a written request for inclusion of any such securities shall have been made) to elect to postpone or not to file any such proposed registration statement, or to withdraw the same after filing but prior to the effective date thereof and (ii) if the underwriter or underwriters, if any, of any such proposed public offering shall be of the reasonable opinion that the total amount or kind of securities held by the Holders and any other persons or entities entitled to be included in such public offering would adversely affect the success of such public offering, then the underwriter or underwriters may exclude shares (including Registrable Securities) from the registration and the underwriting. In no event shall the Company be required pursuant to this Section 2.2 to reduce the amount of securities to be registered by it. Notwithstanding the foregoing, the Company may withdraw any registration statement referred to in this Section 2.2 without thereby incurring any liability to the Holders.

2.3. Holdback Agreements .

(a) In connection with an initial public offering or any registration of Registrable Securities in connection with an underwritten public offering, each Holder agrees, if so requested by the underwriter or underwriters, not to effect any public sale or distribution (including any sale pursuant to Rule 144 under the Securities Act) of any Registrable Securities, and not to effect any such public sale or distribution of any other equity security of the Company or of any security convertible into or exchangeable or exercisable for any equity security of the Company (in each case other than as part of such underwritten public offering), during the 180-day period or such other period agreed to by the Attorney-in-fact (as hereinafter defined) on behalf of the Holders, beginning on the effective date of such registration statement, provided that (i) the Company’s officers and directors and Affiliates of the Company’s officers and directors enter into similar agreements not to dispose of their shares during the same time period, (ii) such Holder has received written notice of such registration at least 15 days prior to such effective date and (iii) with respect to any offering other than pursuant to a firm commitment underwriting, the underwriters continue to actively market the Registrable Securities until the earlier of the end of such lock-up period and the closing with respect to the sale of all, or the final portion of, the Registrable Securities offered by the holders thereof. The periods described in this Section 2.3 are in addition to, but may overlap with, any “lock-up” periods set forth in the Securities Purchase Agreement or other agreements entered into by the Holder in connection with the purchase of the Debentures.

(b) If any registration of Registrable Securities shall be in connection with an underwritten public offering, the Company agrees (i) if requested by the underwriter or underwriters, not to effect any public sale or distribution of any of its equity securities or of any security convertible into or exchangeable or exercisable for any equity security of the Company (other than in connection with any employee stock option or other benefit plan which has been duly adopted by the Company and which provides for the distribution to participants in the plan of equity securities of the Company or securities convertible or exchangeable or exercisable for equity securities of the Company, or in connection with a merger or acquisition approved by the Board of Directors of the Company) during the seven days prior to, and during the 180-day period, or such other period as the managing underwriter of such offering shall reasonably require, beginning on the effective date of such registration statement (except as part of such registration) and (ii) that any agreement entered into after the date of this Agreement pursuant to which the Company issues or agrees to issue any privately placed equity securities shall contain a provision under which holders of such securities agree that, if required by the underwriter or underwriters, they will not effect any public sale or distribution of any such securities during the period referred to in the foregoing clause (i), including any sale pursuant to Rule 144 under the Securities Act (except as part of such registration, if permitted), if such holder is participating in the offering pursuant to such registration.

2.4 Expenses of Registration . All expenses incurred in connection with any registration, qualification or compliance pursuant to Section 2, including without limitation, all registration, filing and qualification fees, printing expenses, fees and disbursements of counsel for the Company and expenses of any special audits incidental to or required by such registration, shall be borne by the Company (including the reasonable fees and disbursements of one legal counsel representing the Holders, but shall exclude the underwriters’ fees, discounts or commissions relating to Registrable Securities).

All expenses of any registered offering not otherwise borne by the Company shall be borne pro rata among the Holders participating in the offering on the basis of the number of shares registered.

2.5 Registration Procedures . If and whenever the Company is required by the provisions hereof to use its reasonable best efforts to effect the registration of any Registrable Securities under the Securities Act, the Company will, as expeditiously as possible:

(a) to use its reasonable best efforts to prepare and file with the SEC a registration statement with respect to such securities and use its reasonable best efforts to cause such registration statement to become effective not later than 120 days from the date of its filing and to remain effective for the Requisite Period;

(b) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for the Requisite Period and comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such registration statement in accordance with the intended method of disposition set forth in such registration statement for such period;

(c) furnish to each seller of Registrable Securities and to each underwriter such number of copies of the registration statement and the prospectus included therein (including each preliminary prospectus) as such persons reasonably may request in order to facilitate the intended disposition of the Registrable Securities covered by such registration statement;

(d) use its reasonable best efforts (i) to register or qualify the Registrable Securities covered by such registration statement under the securities or “blue sky” laws of such jurisdictions as the sellers of Registrable Securities or, in the case of an underwritten public offering, the managing underwriter, reasonably shall request, (ii) to prepare and file in those jurisdictions such amendments (including post-effective amendments) and supplements, and take such other actions, as may be necessary to maintain such registration and qualification in effect at all times for the period of distribution contemplated thereby and (iii) to take such further action as may be necessary or advisable to enable the disposition of the Registrable Securities in such jurisdictions, provided , that the Company shall not for any such purpose be required to qualify generally to transact business as a foreign corporation in any jurisdiction where it is not so qualified or to consent to general service of process in any such jurisdiction;

(e) use its reasonable best efforts to list the Registrable Securities covered by such registration statement with any securities exchange or national quotation service on which the Common Stock of the Company is then listed or eligible for quotation;

(f) immediately notify each seller of Registrable Securities and each underwriter under such registration statement, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event of which the Company has knowledge as a result of which the prospectus contained in such registration statement, as then in effect, includes any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing and promptly amend or supplement such registration statement to correct any such untrue statement or omission;

(g) notify each seller of Registrable Securities of the issuance by the SEC of any stop order suspending the effectiveness of the registration statement or the initiation of any proceedings for that purpose and make every reasonable effort to prevent the issuance of any stop order and, if any stop order is issued, to obtain the lifting thereof at the earliest possible time;

(h) permit a single firm of counsel designated as selling stockholders’ counsel by the holders of a majority in interest of the Registrable Securities being registered to review the registration statement and all amendments and supplements thereto for a reasonable period of time prior to their filing (provided , however , that in no event shall the Company be required to reimburse legal fees pursuant to this Section 2.5(h)) and the Company shall not file any document in a form to which such counsel reasonably objects;

(i) if the offering is an underwritten offering, enter into a written agreement with the managing underwriter selected in the manner herein provided in such form and containing such provisions as are usual and customary in the securities business for such an arrangement between such underwriter and companies of the Company’s size and investment stature, including, without limitation, customary indemnification and contribution provisions;

(j) if the offering is an underwritten offering, at the request of any seller of Registrable Securities, use its reasonable best efforts to furnish to such seller on the date that Registrable Securities are delivered to the underwriters for sale pursuant to such registration a copy of an opinion dated such date of counsel representing the Company for the purposes of such registration, addressed to the underwriters, stating that such registration statement has become effective under the Securities Act and that (A) to the best knowledge of such counsel, no stop order suspending the effectiveness thereof has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the Securities Act, (B) the registration statement, the related prospectus and each amendment or supplement thereof comply as to form in all material respects with the requirements of the Securities Act (except that such counsel need not express any opinion as to financial statements or other financial or statistical information contained therein) and (C) to such other effects as reasonably may be requested by counsel for the underwriters;

(k) take all actions reasonably necessary to facilitate the timely preparation and delivery of certificates (not bearing any legend restricting the sale or transfer of such securities) representing the Registrable Securities to be sold pursuant to the registration statement and to enable such certificates to be in such denominations and registered in such names as the Holders or any underwriters may reasonably request; and

(1) take all other reasonable actions necessary to expedite and facilitate the registration of the Registrable Securities pursuant to the registration statement.

In connection with each registration hereunder, the sellers of Registrable Securities will furnish to the Company in writing such information with respect to themselves and the proposed distribution by them as reasonably shall be necessary in order to assure compliance with Federal and applicable state securities laws.

2.6 Indemnification and Contribution

(a) The Company will indemnify each Holder of Registrable Securities, each of its officers, directors, members, managers and partners, and each person controlling such Holder, with respect to which such registration, qualification or compliance has been effected pursuant to Section 2, and each underwriter, if any, and each person who controls any underwriter of the Registrable Securities held by or issuable to such Holder from and against all claims, losses, expenses, damages and liabilities (or actions in respect thereto) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any prospectus, offering circular or other document (including any related registration statement, notification or the like) incident to any such registration qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of any rule or regulation promulgated under the Securities Act or any state securities law applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, qualification or compliance, and will reimburse each such Holder, each of its officers, directors, members, managers and partners, and each person controlling such Holder, each such underwriter and each person who controls any such underwriter, for any reasonable legal and any other expenses incurred in connection with investigating, defending or settling any such claim, loss, damage, liability or action; provided , however , that the indemnity agreement contained in this Section 2.6 shall not apply to amounts paid in settlement of any such claim, loss, damage, liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld); and provided , further , that the Company will not be liable in any such case if and to the extent that any such loss, claim, damage or liability arises out of or is based upon the Company’s reliance on an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by any such Holder, any such underwriter or any such controlling person in writing specifically for use in such registration statement or prospectus and the Company shall not be liable in any such case to the extent that any such loss, claim, damage or liability (or action in respect thereof) arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission in such registration statement, which untrue statement or alleged untrue statement or omission or alleged omission is completely corrected in an amendment or supplement to the registration statement and any such Holder, any such underwriter or any such controlling person thereafter fail to deliver or cause to be delivered such registration statement as so amended or supplemented prior to or concurrently with the sale of the Registrable Securities to the person asserting such loss, claim, damage or liability (or actions in respect thereof) or expense after the Company has furnished the undersigned with the same.

(b) Each Holder will, severally and not jointly, if Registrable Securities held by or issuable to such Holder are included in the securities as to which such registration, qualification or compliance is being effected, indemnify the Company, each of its directors and officers, each underwriter, if any, of the Company’s securities covered by such a registration statement, each person who controls the Company within the meaning of the Securities Act, and each other such Holder, each of its officers, directors, members, managers and partners and each person controlling such Holder, against all claims, losses, expenses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company, such Holders, such directors, officers, members, managers, partners, persons or underwriters for any reasonable legal or any other expenses incurred in connection with investigating, defending or settling any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by such Holder specifically for use therein; provided , however , the total amount for which any Holder shall be liable under this Section 2.6 shall not in any event exceed the aggregate proceeds received by such Holder from the sale of Registrable Securities held by such Holder in such registration.

(c) Each party entitled to indemnification under this Section 2.6 (the “ Indemnified Party” ) shall give notice to the party required to provide indemnification (the “ Indemnifying Party” ) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld), and the Indemnified Party may participate in such defense at such party’s expense, and provided , further , that the failure of any Indemnified Party to give notice as provided herein, shall not relieve the Indemnifying Party of its obligations hereunder, unless such failure resulted in actual detriment to the Indemnifying Party. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation.

(d) In order to provide for just and equitable contribution to joint liability under the Securities Act in any case in which either (i) any Holder of Registrable Securities exercising rights under this Agreement, or any controlling person of any such Holder, makes a claim for indemnification pursuant to this Section 2.6 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this Section 2.6 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any such Holder or any such controlling person in circumstances for which indemnification is provided under this Section 2.6; then, and in each such case, the Company and such Holder will contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after contribution from others) in such proportion so that such Holder is responsible for the portion represented by the percentage that the public offering price of its Registrable Securities offered by the registration statement bears to the public offering price of all securities offered by such registration statement, and the Company is responsible for the remaining portion; provided , that, in any such case, (A) no such Holder will be required to contribute any amount in excess of the public offering price of all such Registrable Securities offered by it pursuant to such registration statement and (B) no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation.

2.7 Participation in Registrations .

(a) No Holder may participate in any registration hereunder unless such Holder (i) cooperates with the Company as reasonably requested by the Company in the connection with the preparation of the registration statement, and for so long as the Company is obligated to file and keep effective the registration statement, provides to the Company, in writing, for use in the registration statement, all such information regarding such Holder and its plan of distribution of the Registrable Securities reasonably necessary to enable the Company to prepare the registration statement and prospectus covering the Registrable Securities, to maintain the currency of and effectiveness thereof and otherwise to comply with all applicable requirements of law in connection therewith; (ii) agrees to sell such Holder’s securities on the basis provided in any underwriting arrangements with any underwriter for such registration selected by the Holder or Holders entitled hereunder to approve such arrangements (including, without limitation, pursuant to the terms of any over-allotment or “green shoe” option requested by the managing underwriter(s)), except that no holder of Registrable Securities will be required to sell more than the number of Registrable Securities that such holder has requested the Company to include in any registration; and (iii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements, and other documents reasonably requested by the Company under the terms of such underwriting arrangements; provided that no holder of Registrable Securities included in any underwritten registration shall be required to make any representations or warranties to the Company or the underwriters other than representations and warranties regarding such holder and such holder’s intended method of distribution.

(b) Each Holder that is participating in any registration hereunder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 2.5(f) above, such Holder will immediately discontinue the disposition of its Registrable Securities pursuant to the registration statement until such Holder’s receipt of the copies of a supplemented or amended prospectus as contemplated by such Section 2.5(f).

(c) Each Holder participating in any registration hereunder shall comply, and cause its underwriters, brokers, dealers, representatives and agents to comply, in all material respects with the applicable prospectus delivery requirements of the Securities Act in connection with any sale pursuant to such registration.

2.8 Rule 144 Reporting . With a view to making available to Holders the benefits of certain rules and regulations of the SEC which may permit the sale of the Registrable Securities to the public without registration, the Company agrees at all times after 90 days after the effective date of the first registration filed by the Company for an offering of its securities to the general public to:

(a) Make and keep public information available, as those terms are understood and defined in SEC Rule 144;

(b) Use its best efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act;

(c) So long as a Holder owns any Registrable Securities, to furnish to such Holder forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of said Rule 144 (at any time after 90 days after the effective date of the first registration statement filed by the Company for an offering of its securities to the general public), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed by the Company as the Holder may reasonably request in complying with any rule or regulation of the SEC allowing the Holder to sell any such securities without registration.

2.9 Assignment of Registration Rights . The rights to have the Company register Registrable Securities pursuant to this Agreement may be assigned by the Holders to transferees or assignees permitted under the Debenture; provided that the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being assigned and provided , further , that the transferee or assignee of such rights agrees with the Company in writing the obligations of such Holder under this Agreement. The term “Holder(s)” as used in this Agreement shall include such permitted assigns.

2.10 Termination of Registration Rights . The registration rights contained in Sections 2.2 shall terminate at the earlier of (i) five years after the closing of the Company’s initial public offering or (ii) as to each Holder, at such time as such Holder is eligible to sell its shares then held under Rule 144 under the Securities Act without restriction.

2.11 Waivers and Amendments . With the written consent of the record or beneficial holders of more than 50% of the Registrable Securities then outstanding, the obligations of the Company and the rights of the holders of the Registrable Securities under Section 2 may be waived (either generally or in a particular instance, either retroactively or prospectively and either for a specified period of time or indefinitely), and with the same consent the Company, when authorized by resolution of its Board of Directors, may enter into a supplementary agreement for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of Section 2. Upon the effectuation of each such waiver, consent, agreement of amendment or modification, the Company shall promptly give written notice thereof to the record holders of the Registrable Securities who have not previously consented thereto in writing.

3. Changes in Capital Stock . If, and as often as, there is any change in the capital stock of the Company by way of a stock split, stock dividend, combination or reclassification, or through a merger, consolidation, reorganization or recapitalization, or by any other means, appropriate adjustment shall be made in the provisions hereof so that the rights and privileges granted hereby shall continue as so changed.

4. Miscellaneous .

(a) Notices . Any notice required or permitted by any provision of this Agreement shall be given in writing, and shall be delivered either personally or by registered or certified mail, postage prepaid, addressed (i) in the case of the Company, to its principal office, (ii) in the case of any Holder which or who is an original party to this Agreement at the address of such Holder as set forth in the records of the Company or such other address for such Holder as shall be designated in writing from time to time by such Holder; and (iii) in the case of any permitted transferee of a party to this Agreement or its transferee, to such transferee at its address as designated in writing by such transferee to the Company from time to time.

(b) Binding Effect . This Agreement and each and every term, covenant and condition thereof, including all restrictions herein contained upon the sale, transfer, assignment or other disposition or encumbrance of stock, shall be binding upon and inure to the benefit of the transferees, legatees, donees, heirs, executors, administrators, personal representatives, successors and assigns of each of the parties.

(c) Entire Agreement . This instrument contains the entire understanding of the parties with respect to the subject matter hereof and supersedes any prior agreements with respect to such subject matter.

(d) Governing Law . This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware applicable to contracts made and to be performed entirely within that state.

(e) Severability . The invalidity or unenforceability of any provision hereof shall not in any way affect the validity or enforceability of any other provision.

(f) Successors . Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefits of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.

(g) Multiple Counterparts . This Agreement may be executed in a number of identical counterparts, each of which for all purposes is to be deemed an original, and all of which constitute collectively one Agreement; but in making proof of this Agreement, it shall not be necessary to produce or account for more than one such counterpart. It is not necessary that each Holder execute the same counterpart, so long as identical counterparts are executed by the Company and each Holder.

(h) Omnibus Signature Page . With respect to the Holders, this Agreement is intended to be read and construed in conjunction with the Securities Purchase Agreement. Accordingly, pursuant to the terms and conditions of this Agreement and such related agreements, it is hereby agreed that the execution by the Holders of the Securities Purchase Agreement, in the place set forth therein, shall constitute their agreement to be bound by the terms and conditions hereof and the terms and conditions of the Subscription Agreement and this Agreement, with the same effect as if each of such separate but related agreements were separately signed.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the parties hereto have executed this Registration Rights Agreement effective as of the day and year first above written.

COMPANY:

MEDGENICS, INC.

By:
	Name: Andrew L. Pearlman
	Title: President

INVESTOR:

If Entity:		If Individual:


[Name of Entity]		[Signature]

By:
	Name:	[Print Name]
	Title:

-OR-

See Signature Page to Securities Purchase Agreement for Investor’s Signature

EXHIBIT A

LIST OF INVESTORS

EXHIBIT 4.3

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT (this “ Agreement ”) is made as of September 15, 2010 by and among MEDGENICS, INC., (the “Company”) and each of the individuals and entities listed on Exhibit A attached hereto (collectively, the “ Investors ” and each an “ Investor ”).

WHEREAS, the Investors desire to purchase from the Company, and the Company desires to issue and sell to the Investors, certain convertible debentures (the “ Debentures ”) convertible, under certain circumstances, into shares of common stock, $0.0001 par value per share, of the Company (the “ Common Stock ”), and warrants to purchase shares of Common Stock (“ Warrants ”), all upon the terms set forth in that certain Securities Purchase Agreement of even date herewith by and between the Company and the Investors (the “ Securities Purchase Agreement ”);

NOW, THEREFORE, the Company and the Investors as follows:

1. Definitions . As used herein, the following terms shall have the following respective meanings:

“ Common Stock ” shall mean the Common Stock, par value $0.0001 per share, of the Company, as constituted as of the date of this Agreement.

“ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the time.

“ Holder ” or “ Holders ” shall mean any Investor or Investors to whom Registrable Securities were originally issued or qualifying transferees of an Investor or Investors under Section 2.9 hereof who hold Registrable Securities for purposes of any registration under Sections 2.2.

“ Register ," " registered " and " registration " each shall refer to a registration effected by preparing and filing a registration statement or statements or similar documents in compliance with the Securities Act and the declaration or ordering of effectiveness of such registration statement or document by the SEC.

" Registrable Securities " means (a) the shares of Common Stock issuable upon conversion of the Debentures (b) the shares of Common Stock issuable upon exercise of the Warrants, (c) the shares of Common Stock issuable upon exercise of the warrants issued to Newbridge Securities Corporation, and (d) any other shares of Common Stock issued in respect of such shares (because of stock splits, stock dividends, reclassifications, recapitalizations or similar events); provided , however , that shares of Common Stock which are Registrable Securities shall cease to be Registrable Securities (i) upon any sale pursuant to a Registration Statement or Rule 144 under the Securities Act, (ii) upon any sale in any manner to a person or entity which is not entitled to the rights under this Agreement or (iii) at such time as they become eligible for sale pursuant to Rule 144 under the Securities Act without restriction.

" Requisite Period " shall mean, with respect to a firm commitment underwritten public offering, the period commencing on the effective date of the registration statement and ending on the date each underwriter has completed the distribution of all securities purchased by it and, with respect to any other registration, the period commencing on the effective date of the registration statement and ending on the earlier of (i) the date on which the sale of all Registrable Securities covered thereby is completed and (ii) 180 days after such effective date.

“ Securities Act ” shall mean the Securities Act of 1933, as amended, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the applicable time.

“ SEC ” shall mean the U.S. Securities and Exchange Commission, or any other Federal agency at the time administering the Securities Act.

2.3. Holdback Agreements.

All expenses of any registered offering not otherwise borne by the Company shall be borne pro rata among the Holders participating in the offering on the basis of the number of shares registered.

(d) use its reasonable best efforts (i) to register or qualify the Registrable Securities covered by such registration statement under the securities or "blue sky" laws of such jurisdictions as the sellers of Registrable Securities or, in the case of an underwritten public offering, the managing underwriter, reasonably shall request, (ii) to prepare and file in those jurisdictions such amendments (including post-effective amendments) and supplements, and take such other actions, as may be necessary to maintain such registration and qualification in effect at all times for the period of distribution contemplated thereby and (iii) to take such further action as may be necessary or advisable to enable the disposition of the Registrable Securities in such jurisdictions, provided , that the Company shall not for any such purpose be required to qualify generally to transact business as a foreign corporation in any jurisdiction where it is not so qualified or to consent to general service of process in any such jurisdiction;

(h) permit a single firm of counsel designated as selling stockholders' counsel by the holders of a majority in interest of the Registrable Securities being registered to review the registration statement and all amendments and supplements thereto for a reasonable period of time prior to their filing ( provided , however , that in no event shall the Company be required to reimburse legal fees pursuant to this Section 2.5(h)) and the Company shall not file any document in a form to which such counsel reasonably objects;

(i) if the offering is an underwritten offering, enter into a written agreement with the managing underwriter selected in the manner herein provided in such form and containing such provisions as are usual and customary in the securities business for such an arrangement between such underwriter and companies of the Company's size and investment stature, including, without limitation, customary indemnification and contribution provisions;

(l) take all other reasonable actions necessary to expedite and facilitate the registration of the Registrable Securities pursuant to the registration statement.

2.6 Indemnification and Contribution

(c) Each party entitled to indemnification under this Section 2.6 (the “ Indemnified Party ”) shall give notice to the party required to provide indemnification (the “ Indemnifying Party ”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld), and the Indemnified Party may participate in such defense at such party’s expense, and provided , further , that the failure of any Indemnified Party to give notice as provided herein, shall not relieve the Indemnifying Party of its obligations hereunder, unless such failure resulted in actual detriment to the Indemnifying Party. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation.

2.7 Participation in Registrations .

(a) No Holder may participate in any registration hereunder unless such Holder (i) cooperates with the Company as reasonably requested by the Company in the connection with the preparation of the registration statement, and for so long as the Company is obligated to file and keep effective the registration statement, provides to the Company, in writing, for use in the registration statement, all such information regarding such H older and its plan of distribution of the Registrable Securities reasonably necessary to enable the Company to prepare the registration statement and prospectus covering the Registrable Securities, to maintain the currency of and effectiveness thereof and otherwise to comply with all applicable requirements of law in connection therewith; (ii) agrees to sell such Holder’s securities on the basis provided in any underwriting arrangements with any underwriter for such registration selected by the Holder or Holders entitled hereunder to approve such arrangements (including, without limitation, pursuant to the terms of any over-allotment or “green shoe” option requested by the managing underwriter(s)), except that no holder of Registrable Securities will be required to sell more than the number of Registrable Securities that such holder has requested the Company to include in any registration; and (iii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements, and other documents reasonably re quested by the Company under the terms of such underwriting arrangements; provided that no holder of Registrable Securities included in any underwritten registration shall be required to make any representations or warranties to the Company or the underwriters other than representations and warranties regarding such holder and such holder’s intended method of distribution.

(c) Each Holder participating in any registration hereunder shall comply, and cause its underwriters, brokers, dealers, representatives and agents to comply , in all material respects with the applicable prospectus delivery requirements of the Securities Act in connection with any sale pursuant to such registration.

(a) Make and keep public information available, as those terms are understood and defined in SEC Rule 144;

(b) Use its best efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act;

4. Miscellaneous .

(e) Severability . The invalidity or unenforceability of any provision hereof shall not in any way affect the validity or enforceability of any other provision.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the parties hereto have executed this Registration Rights Agreement effective as of the day and year first above written.

	COMPANY:


	MEDGENICS, INC.


	By:	/s/ Andrew L. Pearlman
		Name: Andrew L. Pearlman
		Title: President

INVESTOR :

If Entity:		If Individual:


[Name of Entity]		[Signature]


By:
	Name:	[Print Name]
	Title:

-OR-

See Signature Page to Securities Purchase Agreement dated as of September 15, 2010 for Investor’s Signature

__________________________________________

EXHIBIT 10.1

MEDGENICS INC.

THE 2001 ISRAELI STOCK OPTION PLAN

(Amended as of July 7, 2003 in compliance with Amendment No. 132 of the

Israeli Tax Ordinance, 2002)

ISRAELI STOCK OPTION PLAN

TABLE OF CONTENTS

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

This stock option plan, as amended from time to time, shall be known as the Medgenics Inc. 2001 Israeli Stock Option Plan Amended as of March, 6, 2003 (hereafter the “ ISOP ”).

1.	PURPOSE OF THE ISOP

The ISOP is intended to provide an incentive to retain, in the employ of the Company and its Subsidiaries, persons of training, experience, and ability; to attract new employees, and other service providers whose services the committee shall decide are valuable to the Company; to encourage the sense of proprietorship of such persons, and to stimulate the active interest of such persons in the development and financial success of the Company, by providing them with opportunities to purchase shares in the Company, pursuant to the ISOP approved by the Board. Options granted under the ISOP may be 3(i) Options or 102 Options, as provided herein.

2.	DEFINITIONS

For purposes of interpreting the ISOP and related documents (including the Option Agreement and its appendixes), the following definitions shall apply:

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.

ISRAELI STOCK OPTION PLAN

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.

ISRAELI STOCK OPTION PLAN

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.

ISRAELI STOCK OPTION PLAN

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.

ISRAELI STOCK OPTION PLAN

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.

ISRAELI STOCK OPTION PLAN

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.

ISRAELI STOCK OPTION PLAN

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.

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.

ISRAELI STOCK OPTION PLAN

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.

ISRAELI STOCK OPTION PLAN

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

Upon the occurrence of any of the following described events, Optionee’s rights to purchase Shares under an Option granted under the ISOP shall be adjusted as hereafter provided:

ISRAELI STOCK OPTION PLAN

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.

For purposes of this Section 9.1, an Option shall be considered assumed, without limitation, it at the time of issuance of the stock or other consideration upon a Transaction, each holder of an Option would be entitled to receive upon exercise of the Option the same number and kind of shares of stock or the same amount of property, cash or securities as such holder would have been entitled to receive upon the occurrence of the Transaction if the holder had been, immediately prior to such transaction, the holder of the number of Shares of Common Stock covered by the Option at such time (after giving effect to any adjustments in the number of Shares covered by the Option as provided for in this Section 9); provided that if such consideration received in the transaction is not solely common stock of the Successor Corporation, the Administrator may, with the consent of the Successor Corporation, provide for the consideration to be received upon exercise of the Option to be solely common stock of the Successor Corporation equal to the Fair Market Value of the per Share consideration received by holders of Common Stock in the transaction, and provided further that the Administrator may determine, in its discretion, that in lieu of such assumption or substitution of Options for options of the Successor Company or its parent or subsidiary, such Options will be substituted for any other type of asset or property including cash which is fair under the circumstances.

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.

ISRAELI STOCK OPTION PLAN

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.

ISRAELI STOCK OPTION PLAN

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.

ISRAELI STOCK OPTION PLAN

With respect to Unapproved 102 Option, if the Optionee ceases to be employed by the Company or any Affiliate, the Optionee shall extend to the Company and/or its Affiliate a security or guarantee for the payment of tax due at the time of sale of Shares, all in accordance with the provisions of Section 102 and the rules, regulation or orders promulgated thereunder.

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.

ISRAELI STOCK OPTION PLAN

12.	PURCHASE FOR INVESTMENT

Notwithstanding any other provision of the ISOP or any agreement entered into by the Company pursuant to the ISOP, the Company shall not be obligated, and shall have no liability for failure, to issue or deliver any Shares under the ISOP unless such issuance or delivery would comply with the Applicable Laws, with such compliance determined by the Company in consultation with its legal counsel. The Company’s obligation to issue or allocate Shares upon exercise of an Option granted under the ISOP is expressly conditioned upon: (a) the Company’s completion of any registration or other qualifications of such Shares under any state and/or federal law, rulings or regulations or (b) representations and undertakings by the Optionee (or his legal representative, heir or legatee, in the event of the Optionee’s death) to assure that the sale of the Shares complies with any registration exemption requirements which the Company in its sole discretion shall deem necessary or advisable. Such required representations and undertakings may include representations and agreements that such Optionee (or his legal representative, heir, or legatee): (a) is purchasing such Shares for investment and not with any present intention of selling or otherwise disposing thereof, and (b) agrees to have placed upon the face and reverse of any certificates, evidencing such Shares a legend setting forth (i) any representations and undertakings which such Optionee has given to the Company or a reference thereto and (ii) that, prior to effecting any sale or other disposition of any such Shares, the Optionee must furnish to the Company an opinion of counsel, satisfactory to the Company, that such sale or disposition will not violate the applicable requirements of State and federal laws and regulatory agencies.

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.

ISRAELI STOCK OPTION PLAN

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

With respect to all Shares (but excluding, for avoidance of any doubt any exercised Options) issued upon the exercise of Options by the Optionee and held by the Trustee, and subject to the Company’s By Laws and Certificates of Incorporation as amended from time to lime, as well as to Section 10.8 above, the Option shall be entitled to receive, dividends and other distributions in accordance with the quantity of such Shares, and subject to any applicable taxation on distribution of dividends and when applicable according to the provisions of Section 102.

15.	RESTRICTIONS ON ASSIGNABILITY AND SALE OF OPTIONS

Except as set forth in this Section 15, Options may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent or distribution. The designation of a beneficiary by an Optionee will not constitute a transfer. An Option may be exercised, during the lifetime of the holder of an Option, only by such holder or a transferee permitted by this Section 15.

Notwithstanding the above, the Administrator may in its discretion grant 3(i) Options that may be transferred by instrument to an inter vivos or testamentary trust in which the Options are to be passed to beneficiaries upon the death of the trustor (settlor) or by gift to family member, on such terms and conditions as the Administrator deems appropriate; provided however that the provisions in the case of termination of Continuous Service State under Section 10.8 above shall continue to be applied with respect to the original Optionee, following which the Option shall be exercisable by the transferee only to the extent and for the periods specified in Section 10.7.

16.	EFFECTIVE DATE AND DURATION OF THE ISOP

The ISOP shall be effective as of the date it was adopted by the Board and shall terminate at the end of ten (10) years from such date of adoption by the Board.

ISRAELI STOCK OPTION PLAN

17.	AMENDMENTS OR TERMINATION

The Board may at any time, but after consultation with the Trustee, amend, alter, suspend or terminate the ISOP. No amendment, alteration, suspension or termination of the ISOP shall impair the rights of any Optionee, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Company. Termination of the ISOP shall not affect the Committee’s ability to exercise the powers granted to it hereunder with respect to Options granted under the ISOP prior to the date of such termination.

No Options may be granted under the ISOP while the ISOP is suspended or after it is terminated.

18.	GOVERNMENT REGULATIONS

The ISOP, and the granting and exercise of Options hereunder, and the obligation of the Company to sell and deliver Shares under such Options, shall be subject to the Applicable Laws. Nothing herein shall be deemed to require the Company to register the Shares under the securities laws of any jurisdiction.

19.	CONTINUANCE OF EMPLOYMENT OR HIRED SERVICES

Neither the ISOP, nor the Option Agreement with the Optionee, shall impose any obligation on the Company or a Parent or Affiliate to continue any Optionee in its employ or service; and nothing in the ISOP or in any Option granted pursuant thereto shall confer upon any Optionee any right to continue in the employ or service of the Company or a Parent or Affiliate thereof.

20.	GOVERNING LAW & JURISDICTION

The ISOP shall be governed by and construed and enforced in accordance with the laws of the State of Delaware as applicable to contracts made and to be performed therein, without giving effect to the principles of conflict of laws; provided however that to the extent required under law, the Optionees and any tax matters concerning the Optionees and the grant of Options hereunder, shall be subject to the tax laws of the State of Israel, including, without limitation, the Ordinance, as may be amended from time to time. The competent courts of Tel Aviv-Jaffa shall have sole jurisdiction in any matters pertaining to the ISOP.

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.

ISRAELI STOCK OPTION PLAN

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

The adoption of the ISOP by the Board shall not be construed as amending, modifying or rescinding any previously approved incentive arrangements or as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of Options otherwise than under the ISOP, and such arrangements may be either applicable generally or only in specific cases.

For the avoidance of doubt, prior grant of options to Optionees of the Company under their employment agreements, and not in the framework of any previous option plan, shall not be deemed an approved incentive arrangement for the purpose of this Section.

23.	MULTIPLE AGREEMENTS

The terms of each Option may differ from other Options granted under the ISOP at the same time, or at any other time. The Board may also grant more than one Option to a given Optionee during the term of the ISOP, either in addition to, or in substitution for, one or more Options previously granted to that Optionee.

24.	INFORMATION TO OPTIONEES AND PURCHASERS

The Company shall provide to each Optionee who acquires Shares pursuant to the ISOP, not less frequently than annually during the period such participant has one or more Options outstanding, and, in the case of an individual who acquires Shares pursuant to the ISOP, during the period such individual owns such Shares, copies of annual financial statements for the Company. The Company shall not be required to provide such statements to key employees whose duties in connection with the Company assure their access to equivalent information.

EXHIBIT 10.2

MEDGENICS, INC.

STOCK INCENTIVE PLAN

Effective March 31, 2006

Article I

Purpose and Adoption of the Plan

1.01 Purpose . The Medgenics, Inc. Stock Incentive Plan (the “Incentive Plan”) was adopted by the Company to assist the Company and its Affiliates in attracting and retaining valued employees, directors, consultants and advisors; to act as an incentive in motivating selected employees, directors, consultants and advisors to achieve long-term corporate objectives; and to allow those employees, directors, consultants and advisors to share the benefits of future growth in the value of the Company that they help to create by providing them with the opportunity to acquire shares of Common Stock.

1.02 Adoption and Term . The Incentive Plan has been approved by the Board, to be effective as of March 31, 2006 (the “Effective Date”). No Awards may be granted under the Incentive Plan after the tenth anniversary of the Effective Date, or until terminated by action of the Board, whichever occurs sooner. The Incentive Plan shall remain in effect as long as any Awards are outstanding hereunder.

Article II

Definitions

For the purposes of the Incentive Plan, capitalized terms shall have the following meanings:

2.01 Affiliate . “Affiliate” means any corporation or other entity which would be a subsidiary corporation with respect to the Company as defined in Section 424(f) of the Code.

2.02 Award . “Award” means any award of an Option, Stock Appreciation Rights, Restricted Stock, Stock Unit or other stock-based grant under the Incentive Plan. Any Award under the Incentive Plan may be granted singularly, in combination with another Award (or Awards), or in tandem whereby the exercise or vesting of one Award held by a Participant cancels another Award held by the Participant.

2.03 Award Agreement . “Award Agreement” means a written agreement (in whatever medium prescribed by the Committee) between the Company and a Participant or a written notice from the Company to a Participant specifically setting forth the terms and conditions of an Award granted under the Incentive Plan. Such document is referred to as an agreement regardless of whether any Participant signature is required.

2.04 Beneficiary . “Beneficiary” means an individual, trust, or estate who or which, by a written designation of the Participant filed with the Company or by operation of law, succeeds to the rights and obligations of the Participant under the Incentive Plan and an Award Agreement upon the Participant’s death.

2.05 Board . “Board” means the Board of Directors of the Company.

2.06 Change in Control . “Change in Control” means any one of the following events:

(a) consummation of the acquisition by any person (as such term is defined in Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended from time to time (the “1934 Act”)) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of fifty percent (50%) or more of the combined voting power of the then outstanding voting securities of the Company;

(b) the individuals who, as of the date hereof, are members of the Board cease for any reason to constitute a majority of the Board, unless the election, or nomination for election by the stockholders, of any new director was approved by a vote of a majority of the Board; or

(c) the consummation of: (1) a merger or consolidation to which the Company is a party if the stockholders immediately before such merger or consolidation do not, as a result of such merger or consolidation, own, directly or indirectly, more than fifty percent (50%) of the combined voting power of the then outstanding voting securities of the entity resulting from such merger or consolidation in substantially the same proportion as their ownership of the combined voting power of the Company’s voting securities outstanding immediately before such merger or consolidation or (2) a complete liquidation or dissolution of the Company.

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because fifty percent (50%) or more of the combined voting power of the Company’s then outstanding securities is acquired by: (1) a trustee or other fiduciary holding securities under one or more employee benefit plans maintained for employees of the entity; or (2) any corporation which, immediately after such acquisition is owned directly or indirectly by the stockholders of the Company in substantially the same proportion as their ownership of stock immediately prior to such acquisition.

2.07 Code . “Code” means the Internal Revenue Code of 1986, as amended from time to time. References to a section of the Code include that section and any comparable section or sections of any future legislation that amends, supplements, or supersedes that section.

2.08 Common Stock . “Common Stock” means the common stock, par value $0.001 per share, of the Company.

2.09 Committee . “Committee” means the Committee acting under Section 3.01.

2.10 Company . “Company” means Medgenics, Inc., a Delaware corporation, and any successor company.

2.11 Date of Grant . “Date of Grant” means the date designated by the Board as the date as of which it grants an Award, which shall not be earlier than the date on which the Board approves the granting of the Award.

2.12 Disability . “Disability” means that a Participant: (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months; or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering the Company’s employees.

2.13 Effective Date . “Effective Date” is defined in Section 1.02 of the Incentive Plan.

2.14 Exchange Act . “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.

2.15 Exercise Price . “Exercise Price” means the price established with respect to an Option or Stock Appreciation Right pursuant to Section 6.01(b).

2.16 Fair Market Value . “Fair Market Value” means, as of any applicable date: (i) if the Common Stock is listed on a national securities exchange or is authorized for quotation on the Nasdaq National Market System (“NMS”), the closing sales price of the Common Stock on the exchange or NMS, as the case may be, on that date, or, if no sale of the Common Stock occurred on that date, on the next preceding date on which there was a reported sale; or (ii) if none of the above apply, the closing bid price as reported by the Nasdaq SmallCap Market on that date, or if no price was reported for that date, on the next preceding date for which a price was reported; or (iii) if none of the above apply, the last reported bid price published in the “pink sheets” or displayed on the National Association of Securities Dealers, Inc. (“NASD”), Electronic Bulletin Board, as the case may be; or (iv) if none of the above apply, the fair market value of the Common Stock as determined by the Board on an annual basis.

2.17 Incentive Plan . “Incentive Plan” means the Medgenics, Inc. Stock Incentive Plan described in this document and as it may be amended from time to time.

2.18 Incentive Stock Option . “Incentive Stock Option” means a stock option within the meaning of Section 422 of the Code.

2.19 Merger . “Merger” means any merger, reorganization, consolidation, share exchange, transfer of assets, or other transaction having a similar effect involving the Company.

2.20 Non-Qualified Stock Option . “Non-Qualified Stock Option” means a stock option which is not an Incentive Stock Option.

2.21 Non-Vested Share . “Non-Vested Share” means shares of the Company Common Stock issued to a Participant in respect of the non-vested portion of an Option in the event of the early exercise of such Participant’s Options pursuant to such Participant’s Award Agreement, as permitted in Section 6.06 below.

2.22 Option . “Option” means all Non-Qualified Stock Options and Incentive Stock Options granted at any time under the Incentive Plan.

2.23 Participant . “Participant” means a person designated to receive an Award under the Incentive Plan in accordance with Section 5.01 below.

2.24 Purchase Price . “Purchase Price” means the amount that a Participant is or may be required to pay with respect to an Award of Restricted Stock under Article VII or with respect to an Award of stock purchase rights under Section 6.04.

2.25 Restricted Stock . “Restricted Stock” means an Award consisting of shares of Common Stock subject to the restrictions granted under Article VII below.

2.26 Stock Appreciation Rights . “Stock Appreciation Rights” means Awards granted in accordance with Article VI.

2.27 Stock Unit . “Stock Unit” means a unit of value, equal at any relevant time to the Fair Market Value of a share of Common Stock, established by the Board as a means of measuring the value of a Participant’s Stock Unit Account.

2.28 Stock Unit Account . “Stock Unit Account” means the bookkeeping account maintained by the Committee on behalf of each Participant who is credited with Stock Units and dividend equivalents thereon pursuant to Section 8.02.

2.29 Termination of Service . “Termination of Service” means the termination of a person’s status as a director or an employee, and termination of a business relationship with a consultant, advisor or any other Participant who is neither an employee nor a member of the Board. Subject to the terms of Code Section 409A and the regulations promulgated thereunder, a leave of absence shall not be considered a Termination of Service for purposes of the Incentive Plan.

2.30 409A Award . “409A Award” means Awards that are described in Section 9.05.

Article III

Administration

3.01 Committee . The Incentive Plan shall be administered by the Committee. The Committee shall be selected by the Board. At any time the Common Stock is publicly traded, the Committee shall be comprised of two (2) or more members of the Board, each of whom are both (a) “non-employee director” (within the meaning of Rule 16b-3 promulgated under the Exchange Act) and (b) an “outside director” (within the meaning of Code Section 162(m)). Subject to applicable stock exchange rules, if the Committee does not exist, or for any other reason determined by the Board, the Board may take any action under the Incentive Plan that would otherwise be the responsibility of the Committee.

3.02 Powers of the Committee . The Committee’s administration of the Incentive Plan shall be subject to the following:

(a) Subject to the provisions of the Incentive Plan, the Committee will have the authority and discretion to select from among the employees, directors and service providers of the Company or its Affiliates those persons who shall receive Awards, to determine the time or times of receipt, to determine the types of Awards and the number of shares covered by the Awards, to establish the terms, conditions, performance criteria, restrictions, and other provisions of such Awards, and (subject to the restrictions imposed by Section 9.14) to cancel or suspend Awards.

(b) The Committee will have the authority and discretion to interpret the Incentive Plan, to establish, amend and rescind any rules and regulations relating to the Incentive Plan, and to make all other determinations that may be necessary or advisable for the administration of the Incentive Plan.

(c) Any interpretation of the Incentive Plan by the Committee and any decision made by it under the Incentive Plan are final and binding on all persons.

(d) The Committee shall make decisions by a majority vote of its members.

(e) In controlling and managing the operation and administration of the Incentive Plan, the Committee shall take action in a manner that conforms to the articles and bylaws of the Company and applicable state corporate law.

3.03 Delegation by Committee . Except to the extent prohibited by applicable law, the applicable rules of a stock exchange or the Incentive Plan, or as may be necessary to comply with the exemptive provisions of Rule 16b-3 under the Exchange Act, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it, including: (a) delegating to a committee of one or more members of the Board who are not “outside directors” within the meaning of Code Section 162(m), the authority to grant Awards under the Incentive Plan to eligible persons who are either: (i) not then “covered employees,” within the meaning of Code Section 162(m) and are not expected to be “covered employees” at the time of recognition of income resulting from such Award; or (ii) not persons with respect to whom the Company wishes to comply with Code Section 162(m); and/or (b) delegating to a committee of one or more members of the Board who are not “non-employee directors,” within the meaning of Rule 16b-3, the authority to grant Awards under the Incentive Plan to eligible persons who are not then subject to Section 16 of the Exchange Act. Any such allocation or delegation may be revoked by the Committee at any time. To the extent permitted by applicable law and resolution of the Board, the Committee may delegate all or any part of its responsibilities to any officer of the Company.

3.04 Information to be Furnished to Committee . As may be permitted by applicable law, the Company and its subsidiaries shall furnish the Committee with such data and information as it determines may be required for it to discharge its duties. The records of the Company and its subsidiaries as to an employee’s or Participant’s employment, termination of employment, leave of absence, reemployment and compensation shall be conclusive on all persons unless determined by the Committee to be manifestly incorrect. Subject to applicable law, Participants and other persons entitled to benefits under the Incentive Plan must furnish the Committee such evidence, data or information as the Committee considers desirable to carry out the terms of the Incentive Plan.

Article IV

Stock

4.01 Number of Shares . The maximum number of shares authorized to be issued under the Incentive Plan shall be 997,003 shares of the Company’s Common Stock. The number of shares available for issuance under the Incentive Plan shall be subject to adjustment in accordance with Section 9.06 below. The shares to be offered under the Incentive Plan shall be authorized and unissued shares of Common Stock, or issued shares of Common Stock that have been reacquired by the Company in private or public transactions.

4.02 Reuse of Shares . Shares of Common Stock covered by any unexercised portions of terminated Options (including canceled or forfeited Options) granted under Article VI or any Award settled in cash without the issuance of Shares may be subject to new Awards under the Incentive Plan. Shares of Common Stock used to meet tax withholding requirements may be subject to new Awards under the Incentive Plan.

4.03 Delivery of Shares . Delivery of shares of Common Stock or other amounts under the Incentive Plan shall be subject to the following:

(a) Compliance with Applicable Laws. Notwithstanding any other provision of the Incentive Plan, the Company shall have no obligation to deliver any shares of Common Stock or make any other distribution of benefits under the Incentive Plan unless such delivery or distribution complies with all applicable laws (including, the requirements of the Securities Act of 1933, as amended from time to time), and the applicable requirements of any securities exchange or similar entity.

(b) Certificates. To the extent that the Incentive Plan provides for the issuance of shares of Common Stock, the issuance may be affected on a non-certificated basis, to the extent not prohibited by applicable law or the applicable rules of any securities exchange or similar entity.

Article V

Participation

5.01 Eligible Participants . Participants in the Incentive Plan shall be employees, directors, consultants and advisors of the Company or an Affiliate that the Committee, in its sole discretion, may designate from time to time. The Committee’s designation of a Participant in any year shall not require the Committee to designate the person to receive Awards in any other year. The Committee shall consider those factors it deems pertinent in selecting Participants and in determining the types and amounts of their respective Awards.

Article VI

Stock Options & Stock Appreciation Rights

6.01 Option Awards .

(a) Grant of Options . The Committee may grant, to Participants who the Committee may select, Options entitling the Participants to purchase shares of Common Stock from the Company in the amount, at the price, on the terms, and subject to the conditions, not inconsistent with the terms of the Incentive Plan, that may be established by the Committee. The terms of any Option granted under the Incentive Plan shall be set forth in an Award Agreement.

(b) Exercise Price of Options . Subject to Section 6.01(d) below with respect to Incentive Stock Options, the Exercise Price of each Option for purchase of shares of Common Stock under any Option granted under the Incentive Plan shall be determined by the Committee and shall be set forth in the Award Agreement. To the extent required by applicable law, the Exercise Price will not be less than One Hundred percent (100%) of the Fair Market Value of a share of Common Stock on the Date of Grant.

(c) Designation of Options . Except as otherwise expressly provided in the Incentive Plan, the Committee may designate an Option as an Incentive Stock Option or a Non-Qualified Stock Option at the time the grant is made; provided, however, that an Option may be designated as an Incentive Stock Option only if the applicable Participant is an employee of the Company or an Affiliate on the Date of Grant.

(d) Special Incentive Stock Option Rules . No Participant may be granted Incentive Stock Options under the Incentive Plan (or any other plans of the Company) that would result in Incentive Stock Options to purchase shares of Common Stock with an aggregate Fair Market Value (measured on the Date of Grant) of more than $100,000 first becoming exercisable by the Participant in any one calendar year. Notwithstanding any other provision of the Incentive Plan to the contrary, the Exercise Price of each Incentive Stock Option shall be equal to or greater than the Fair Market Value of the Common Stock as of the Date of Grant of the Incentive Stock Option; provided, however, that no Incentive Stock Option shall be granted to any person who, at the time the Option is granted, owns stock (including stock owned by application of the constructive ownership rules in Section 424(d) of the Code) possessing more than 10% of the total combined voting power of all classes of stock of the Company, unless at the time the Incentive Stock Option is granted the Exercise Price is at least 110% of the Fair Market Value of the Common Stock as of the Date of Grant and the Incentive Stock Option by its terms is not exercisable for more than five years from the Date of Grant. To the extent an Option does not qualify as an Incentive Stock Option, such Option shall be treated for all purposes as a Non-Qualified Stock Option.

(e) Rights as a Stockholder . A Participant or a transferee of an Option pursuant to Section 9.03 below shall have no rights as a stockholder with respect to the shares of Common Stock covered by an Option until that Participant or transferee becomes the holder of record of the shares, and no adjustment shall be made to the shares of Common Stock for dividends in cash or other property or distributions of other rights on the Common Stock for which the record date is prior to the date on which that Participant or transferee became the holder of record of any of the shares covered by the Option; provided, however, that Participants are entitled to share adjustments to reflect capital changes under Section 9.06.

6.02 Stock Appreciation Rights .

(a) Stock Appreciation Right Awards . The Committee is authorized to grant to any Participant one or more Stock Appreciation Rights. Such Stock Appreciation Rights may be granted either independent of or in tandem with or by reference to Options granted prior to or simultaneously with the grant of such rights to the same Participant. Stock Appreciation Rights may be granted in tandem with or by reference to a related Option, in which event the Participant may elect to exercise either the Option or the Stock Appreciation Right, but not both, as to the same share subject to the Option and the Stock Appreciation Right, or the Stock Appreciation Right may be granted independently of a related Option. Upon exercise of a Stock Appreciation Right with respect to a share of Common Stock, the Participant shall be entitled to receive an amount equal to the excess, if any, of (i) the Fair Market Value of a share of Common Stock on the date of exercise over (ii) the Exercise Price of such Stock Appreciation Right established in the Award Agreement, which amount shall be payable as provided in Section 6.02(c).

(b) Exercise Price. The Exercise Price established under any Stock Appreciation Right granted under the Incentive Plan shall be determined by the Committee, but in the case of Stock Appreciation Rights granted in tandem with Options shall not be less than the Exercise Price of such Options.

(c) Payment of Incremental Value. Any payment which may become due from the Company by reason of a Participant’s exercise of a Stock Appreciation Right may be paid to the Participant as determined by the Committee (i) all in cash, (ii) all in Common Stock, or (iii) in any combination of cash and Common Stock, In the event that all or a portion of the payment is made in Common Stock, the number of shares of Common Stock delivered in satisfaction of such payment shall be determined by dividing the amount of such payment or portion thereof by the Fair Market Value on the Exercise Date.

6.03 Terms of Stock Options & Stock Appreciation Rights .

(a) Conditions on Exercise . An Award Agreement with respect to Options and/or Stock Appreciation Rights may contain conditions or restrictions as determined by the Committee at the time of grant.

(b) Duration of Options . Unless otherwise provided in an Award Agreement, Options and/or Stock Appreciation Rights shall terminate after the first to occur of the following events:

(i) termination of the Award as provided in Section 6.03(e), following the applicable Participant’s Termination of Service; and

(ii) ten years from the Date of Grant (five years in certain cases, as described in Section 6.01(d)).

(c) Acceleration of Exercise Time . The Committee, in its sole discretion, shall have the right (but shall not in any case be obligated), exercisable at any time after the Date of Grant, to permit the exercise of any Option and/or Stock Appreciation Right prior to the time the Award would otherwise vest under the terms of the related Award Agreement.

(d) Extension of Exercise Time . In addition to the extensions permitted under Section 6.03(e) below in the event of Termination of Service, the Committee, in its sole discretion, shall have the right (but shall not in any case be obligated), exercisable on or at any time after the Date of Grant, to permit the exercise of any Option and/or Stock Appreciation Right after its expiration date described in Section 6.03(e), subject, however, to the limitations described in Section 6.03(b)(ii) above.

(e) Exercise of Options Upon Termination of Service . Unless otherwise provided in an Award Agreement, the following rules shall govern the treatment of Options and/or Stock Appreciation Rights upon Termination of Service:

(i) Termination of Options and/or Stock Appreciation Rights Upon Termination of Service .

(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.

(ii) Termination of Unvested Options Upon Termination of Service . Subject to Section 6.06 below, to the extent the right to exercise Options and/or Stock Appreciation Rights, or any portion thereof, has not vested as of the date of Termination of Service, the right shall expire on the date of Termination of Service regardless of the reason for the Termination of Service.

6.04 Exercise Procedures . Each Option and Stock Appreciation Right granted under the Incentive Plan shall be exercised under such procedures and by such methods as the Committee may establish or approve from time to time. The Exercise Price of shares purchased upon exercise of an Option granted under the Incentive Plan shall be paid in full in cash by the Participant pursuant to the Award Agreement; provided, however, that the Committee may (but shall not be required to) permit payment to be made by delivery to the Company of either (a) shares of Common Stock held by the Participant for at least six (6) months or (b) any combination of cash and Common Stock held by the Participant for at least six (6) months or (c) any other consideration that the Committee deems appropriate and in compliance with applicable law. In the event that any Common Stock shall be transferred to the Company to satisfy all or any part of the Exercise Price, the part of the Exercise Price deemed to have been satisfied by such transfer of Common Stock shall be equal to the product derived by multiplying the Fair Market Value as of the date of exercise times the number of shares of Common Stock transferred to the Company. The Participant may not transfer to the Company in satisfaction of the Exercise Price any fractional share of Common Stock.

6.05 Change in Control . Unless otherwise stated in the Award Agreement, in the event of a Change in Control, all Options and/or Stock Appreciation Rights outstanding as of the effective date of the Change in Control that have not previously vested or terminated under the terms of the applicable Award Agreement shall be immediately and fully vested and exercisable; provided however, for purposes of this Section 6.05, unless otherwise determined by the Committee, no Change in Control of the Company shall be deemed to have occurred for purposes of determining a Participant’s rights under the Incentive Plan if (i) the Participant is a member of a group that first announces a proposal which, if successful, would result in a Change in Control, which proposal (including any modifications thereof) is ultimately successful, or (ii) the Participant acquires a two percent or more equity interest in the entity that ultimately acquires the Company pursuant to the transaction described in clause (i) of this Section 6.05.

6.06 Early Exercise . An Award Agreement may provide the Participant the right to exercise the Option in whole or in part prior to the date the Option is fully vested. The provision may be included in the Award Agreement at the time of grant of the Option or may be added to the Award Agreement by amendment at a later date. In the event of an early exercise of an Option, any shares of Common Stock received shall be subject to a repurchase right in favor of the Company with terms established by the Committee. The Committee shall determine the time and/or the event that causes the repurchase right to terminate and fully vest the Common Stock in the Participant.

Article VII

Restricted Stock

7.01 Restricted Stock Awards . The Committee may grant to any Participant an Award of a number of shares of Common Stock subject to the terms, conditions, and restrictions as determined by the Committee. Such restrictions may be based on performance standards, periods of service, retention by the Participant of ownership of specified shares of Common Stock, or other criteria, as determined by the Committee. The terms of any Restricted Stock Award granted under the Incentive Plan shall be set forth in an Award Agreement that shall contain provisions determined by the Committee and not inconsistent with the Incentive Plan.

(a) Issuance of Restricted Stock . As soon as practicable after the Date of Grant of a Restricted Stock Award by the Committee, the Company shall cause to be transferred on its books the number of shares of Restricted Stock awarded to the Participant, and the shares shall be issued in the name of the Participant. In the discretion of the Committee, the Restricted Stock may be subject to forfeiture to the Company as of the Date of Grant if an Award Agreement for the Restricted Stock covered by the Award is not signed by the Participant and timely returned to the Company. Until the lapse or release of all forfeiture restrictions applicable to an Award of Restricted Stock, the share certificates representing the Restricted Stock may be held, in the Company’s discretion, in custody by the Company, its designee, or, if the certificates bear a restrictive legend, by the Participant.

(b) Shareholder Rights . Beginning on the Date of Grant of a Restricted Stock Award, subject to execution of the related Award Agreement and the provisions contained therein, the Participant shall become a shareholder of the Company with respect to the shares of Restricted Stock subject to the Award Agreement and shall have all of the rights of a holder of Common Stock, including, but not limited to, the right to vote and to receive dividends; provided, however, that any Common Stock or other securities distributed as a dividend or otherwise related to any Restricted Stock on which the Award Agreement restrictions have not yet lapsed, shall be subject to the same restrictions as such Restricted Stock and held or restricted as provided in Section 7.01(a).

(c) Restriction on Transferability . No Restricted Stock may be assigned or transferred (other than by will or the laws of descent and distribution or to an inter vivos trust under which the Participant is treated as the owner under Sections 671 through 677 of the Code), pledged, or sold prior to the lapse of the restrictions applicable to them.

(d) Delivery of Stock Upon Vesting . Upon expiration or termination of the forfeiture period without a forfeiture and the satisfaction of or release from any other conditions prescribed by the Committee in the Award Agreement, or at any earlier time provided under the provisions of Section 7.03 below, the such restrictions applicable to the Restricted Stock shall lapse. After the lapse of such restrictions, the Company shall, subject to the requirements of Section 9.04, promptly deliver to the Participant or, in case of the Participant’s death, to the Participant’s Beneficiary, one or more share certificates for the appropriate number of shares of Common Stock, free of all forfeiture restrictions (but not free of any transfer restrictions applicable to Common Stock generally or under the terms of an Award Agreement).

7.02

Terms of Restricted Shares .

(a) Forfeiture of Restricted Shares . Subject to Sections 7.02(b) and 7.03 below, Restricted Stock shall be forfeited and returned to the Company and all rights of the Participant with respect to the Restricted Stock shall terminate in the event of a Termination of Service occurring prior to the expiration of the forfeiture period for the Restricted Stock and the Participant satisfies any and all other conditions set forth in the Award Agreement.

(b) Waiver of Forfeiture Period . Notwithstanding anything contained in this Article VII to the contrary, the Committee may, in its sole discretion, waive the forfeiture period and any other conditions set forth in any Award Agreement under appropriate circumstances (including the death or Disability of the Participant or a material change in circumstances arising after the date of an Award) and subject to any terms and conditions (including forfeiture of a proportionate number of shares of Restricted Stock) that the Committee may deem appropriate.

7.03 Change in Control . Unless otherwise stated in the Award Agreement, in the event of a Change in Control, all restrictions applicable to a Restricted Stock Award shall terminate fully (other than the transfer or other restrictions generally applicable to Common Stock) and the Participant shall immediately have the right to the delivery of share certificates for the Restricted Stock in accordance with Section 7.01(d) above. Notwithstanding the foregoing, unless otherwise determined by the Committee, no Change in Control of the Company shall be deemed to have occurred for purposes of determining a Participant’s rights under the Incentive Plan if (i) the Participant is a member of a group that first announces a proposal which, if successful, would result in a Change of Control, which proposal (including any modifications thereof) is ultimately successful, or (ii) the Participant acquires a two percent or more equity interest in the entity that ultimately acquires the Company pursuant to the transaction described in clause (i) of this Section 7.03.

Article VIII

Other Stock-Based Awards

8.01 Grant of Other Stock-Based Awards . Other stock-based Awards, consisting of stock purchase rights, Awards of Common Stock, or Awards valued in whole or in part by reference to, or otherwise based on, Common Stock, may be granted either alone or in addition to or in conjunction with other Awards under the Incentive Plan. Subject to the provisions of the Incentive Plan, the Committee shall have sole and complete authority to determine the persons to whom and the time or times at which such Awards shall be made, the number of shares of Common Stock to be granted pursuant to such Awards, and all other terms and conditions of the Awards. Any such Award shall be confirmed by an Award Agreement executed by the Company and the Participant, which Award Agreement shall contain such provisions as the Committee determines to be necessary or appropriate to carry out the intent of the Incentive Plan with respect to such Award.

8.02 Terms of Other Stock-Based Awards . Unless otherwise provided in the Award Agreement, Awards made pursuant to this Article VIII shall be subject to the following:

(a) Any Common Stock subject to Awards made under this Article VIII may not be sold, assigned, transferred, pledged or otherwise encumbered prior to the date on which the shares are issued, or, if later, the date on which any applicable restriction, performance or deferral period lapses.

(b) The recipient of an Award under this Article VIII shall be entitled to receive interest or dividends or dividend equivalents with respect to the Common Stock or other securities covered by the Award.

(c) If the vesting of an outstanding Award is conditioned upon the achievement of performance measures, then the Award shall be subject to the following:

(i) If, at the time of the Change in Control, the established performance measures are less than fifty percent (50%) attained (as determined in the sole discretion of the Committee, based upon a pro rata determination through the date of the Change in Control), then such Award shall become vested and exercisable on a fractional basis with the numerator being equal to the percentage of attainment and the denominator being fifty percent (50%).

(ii) If at the time of the Change in Control, the established performance measures are at least fifty percent (50%) attained (as determined in the sole discretion of the Committee, based upon a pro rata determination through the date of the Change in Control), then such Award shall become fully vested and exercisable.

Article IX

Terms Applicable to All Awards Granted under the Incentive Plan

9.01 Plan Provisions Control Award Terms . The terms of the Incentive Plan shall govern all Awards granted under the Incentive Plan, and the Committee may not grant any Award under the Incentive Plan that contains terms that are contrary to any of the provisions of the Incentive Plan. In the event any provision of any Award granted under the Incentive Plan conflicts with any term in the Incentive Plan as in effect on the Date of Grant of the Award, the terms of the Incentive Plan shall control. Except as provided in Sections 9.05 and 9.06 below, the terms of any Award granted under the Incentive Plan may not be changed after the Date of Grant of the Award in a manner that would materially decrease the value of the Award without the express written approval of the Participant.

9.02 Award Agreement . No person shall have any rights under any Award granted under the Incentive Plan unless and until the Company and the Participant to whom the Award was granted have executed and delivered an Award Agreement or the Participant has received and acknowledged notice of the Award authorized by the Committee expressly granting the Award to the Participant and containing provisions setting forth the terms of the Award.

9.03 Limitation on Transfer . Except as may be provided in the applicable Award Agreement, a Participant’s rights and interest under the Incentive Plan may not be assigned or transferred other than by will or the laws of descent and distribution and, during the lifetime of a Participant, only the Participant personally (or the Participant’s personal representative) may exercise rights under the Incentive Plan. The Participant’s Beneficiary may exercise the Participant’s rights to the extent they are exercisable under the Incentive Plan following the death of the Participant.

9.04 Taxes . The Company shall be entitled, if the Committee deems it necessary or desirable, to withhold (or secure payment from the Participant in lieu of withholding) the amount of any withholding or other tax required by law to be withheld or paid by the Company regarding any amount payable and/or shares issuable under the Participant’s Award or regarding any income recognized upon a disqualifying disposition (i.e., a disposition prior to the expiration of the required holding periods) of shares received pursuant to the exercise of an Incentive Stock Option, and the Company may defer payment of cash or issuance of shares upon exercise or vesting of an Award unless indemnified to its satisfaction against any liability for any taxes. The amount of the withholding or tax payment shall be determined by the Committee and shall be payable by the Participant in cash at the time the Committee determines; provided, however, that with the approval of the Committee, the Participant may elect to meet his or her withholding requirement, in whole or in part, by having withheld from the Award at the appropriate time that number of shares of Common Stock, rounded down to the next whole share, the Fair Market Value of which is equal to the amount of minimum required withholding taxes due.

9.05 Code Section 409A . Any Options, Stock Appreciation Rights, Restricted Stock Awards, or other stock-based Award, which constitutes “deferred compensation” under Code Section 409A (“409A Award”), and any rules and regulations promulgated thereunder, shall be subject to the following:

(a) All 409A Award documents and agreements, or rules and regulations created by the Committee pertaining to 409A Awards, shall provide for the required procedures under Code Section 409A, including the timing of deferral elections and the timing and method of payment distributions.

(b) With respect to all 409A Awards, the Committee and its delegates shall operate the Incentive Plan at all times in conformity with the known rules, regulations and guidance promulgated under Code Section 409A, and the Committee shall reserve the right (including the right to delegate such right) to unilaterally amend any 409A Award granted under the Incentive Plan, without the consent of the Participant, to maintain compliance with Code Section 409A. A Participant’s acceptance of any Award under the Incentive Plan constitutes acknowledgement and consent to such rights of the Committee.

9.06 Adjustments to Reflect Capital Changes .

(a) Recapitalization . The number and kind of shares subject to outstanding Awards, the Exercise Price for the shares, the number and kind of shares available for Awards to be granted under the Incentive Plan shall be automatically adjusted to reflect any stock dividend, stock split, combination or exchange of shares, Merger, consolidation, or other change in capitalization with a similar substantive effect upon the Incentive Plan or the Awards granted under the Incentive Plan. The Committee shall have the power and sole discretion to determine the amount of the adjustment to be made in each case and shall have the right to prevent such automatic adjustment upon a determination that such adjustment would inappropriately increase or decrease the intended Award to the Participant.

(b) Merger . In the event that the Company is a party to a Merger, outstanding Awards shall be subject to the agreement of merger or reorganization. Such agreement may provide, without limitation, for the continuation of outstanding Awards by the Company (if the Company is a surviving corporation), for their assumption by the surviving corporation or its parent or subsidiary, for the substitution by the surviving corporation or its parent or subsidiary of its own awards for such Awards, for accelerated vesting and accelerated expiration, or for settlement in cash or cash equivalents.

(c) Awards to Replace Awards of Acquired Companies . After any Merger in which the Company or an Affiliate is a surviving corporation, the Board may grant substituted Awards under the provisions of the Incentive Plan, generally consistent with Section 424 of the Code, in replacement of awards granted under a plan of another party to the Merger whose shares of stock to be issued under the old awards may no longer be issued following the Merger. The terms and conditions of such replacement Awards shall be as determined by the Committee in its sole discretion.

9.07 Initial Public Offering . As a condition of participation in the Incentive Plan, each Participant shall be obligated to cooperate with the Company and the underwriters in connection with any public offering of the Company’s securities and any transactions relating to a public offering, and shall execute and deliver any agreements and documents, including, without limitation, a lock-up agreement, that may be requested by the Company or the underwriters. The Participants’ obligations under this Section shall apply to any shares of Common Stock issued under the Incentive Plan as well as to any and all other securities of the Company or its successor for which Common Stock may be exchanged or into which Common Stock may be converted.

9.08 No Implied Rights .

(a) No Rights to Specific Assets . Neither a Participant nor any other person shall by reason of participation in the Incentive Plan acquire any right in or title to any assets, funds or property of the Company or any subsidiary whatsoever, including any specific funds, assets, or other property which the Company or any subsidiary, in its sole discretion, may set aside in anticipation of a liability under the Incentive Plan. A Participant shall have only a contractual right to the Common Stock or amounts, if any, payable or distributable under the Incentive Plan, unsecured by any assets of the Company, and nothing contained in the Incentive Plan shall constitute a guarantee that the assets of the Company or any subsidiary shall be sufficient to pay any benefits to any person.

(b) No Contractual Right to Employment or Future Awards . The Incentive Plan does not constitute a contract of employment, and selection as a Participant will not give any participating employee the right to be retained in the employ of the Company or an Affiliate or any right or claim to any benefit under the Incentive Plan, unless such right or claim has specifically accrued under the terms of the Incentive Plan. Except as otherwise provided in the Incentive Plan, no Award under the Incentive Plan shall confer upon the holder thereof any rights as a stockholder of the Company prior to the date on which the individual fulfills all conditions for receipt of such rights.

9.09 Awards Not Includable for Benefit Purposes . Payments received by a Participant pursuant to the provisions of the Incentive Plan shall not be included in the determination of benefits under any pension, group insurance, or other benefit plan applicable to the Participant that is maintained by the Company, except as may be provided under the terms of those plans or determined by the Committee.

9.10 Governing Law . The Incentive Plan, and all Awards granted hereunder, and all actions taken in connection herewith, except as superseded by applicable federal law, shall be interpreted, construed, and enforced and its construction and performance shall be governed by the internal laws of the State of Delaware.

9.11 No Strict Construction . No rule of strict construction shall be implied against the Company, the Board, the Committee, or any other person in the interpretation of any of the terms of the Incentive Plan, any Award granted under the Incentive Plan, or any rule or procedure established by the Committee that relates to the Incentive Plan.

9.12 Captions . The captions and Section headings used in the Incentive Plan are for convenience only, do not constitute a part of the Incentive Plan, and shall not be deemed to limit, characterize, or affect in any way any provision of the Incentive Plan, and all provisions of the Incentive Plan shall be construed as if no captions or headings had been used in the Incentive Plan.

9.13 Severability . Each part of the Incentive Plan is intended to be several. If any term, covenant, condition, or provision of the Incentive Plan is determined by a court of competent jurisdiction to be illegal, invalid, or unenforceable for any reason whatsoever, that determination shall not affect the legality, validity, or enforceability of the remaining parts of the Incentive Plan, and all remaining parts shall be legal, valid, and enforceable and have full force and effect as if the illegal, invalid, and/or unenforceable part had not been included.

9.14 Amendment and Termination .

(a) Amendment . The Committee shall have complete power and authority to amend the Incentive Plan at any time and for any reason. No termination or amendment of the Incentive Plan may, without the consent of the Participant (or, if the Participant is not then living, the affected Beneficiary) to whom any Award has previously been granted under the Incentive Plan, materially adversely affect the rights of the Participant or Beneficiary under that Award; provided, however, that no amendment may (i) materially increase the aggregate number of securities which may be issued under the Incentive Plan, other than pursuant to Section 9.06(a), or (ii) materially modify the requirements for participation in the Incentive Plan, unless the amendment is approved by a majority of the Company’s stockholders.

(b) Termination . The Committee shall have the right and the power to terminate the Incentive Plan at any time and for any reason. No Award shall be granted under the Incentive Plan after the termination of the Incentive Plan, but the termination of the Incentive Plan shall not affect any Award outstanding at the time of the termination of the Incentive Plan.

9.15 Further Assurances . As a condition to receipt of any Award under the Incentive Plan, a Participant shall agree, upon demand of the Company, to do all acts and execute, deliver and perform all additional documents, instruments and agreements (including, without limitation, any applicable stockholder’s agreement or a joinder to such agreement) which may be reasonably required by the Company, to implement the provisions and purposes of the Incentive Plan.

9.16 Form and Time of Elections . Unless otherwise specified herein, each election required or permitted to be made by any Participant or other person entitled to benefits under the Incentive Plan, and any permitted modification, or revocation thereof, shall be filed with the Company at such times, in such form, and subject to such restrictions and limitations, not inconsistent with the terms of the Incentive Plan, as the Committee shall require.

9.17 Evidence . Evidence required of anyone under the Incentive Plan may be by certificate, affidavit, document or other information which the person acting on it considers pertinent and reliable, and signed, made or presented by the proper party or parties.

9.18 Successors . All obligations of the Company under the Incentive Plan shall be binding upon and inure to the benefit of any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, Merger, consolidation or otherwise, of all or substantially all of the business, stock, and/or assets of the Company,

9.19 Indemnification . The Company shall indemnify members of the Committee and any agent of the Committee who is an employee of the Company against any and all liabilities or expenses to which they may be subjected by reason of any act or failure to act with respect to their duties on behalf of the Incentive Plan, except in circumstances involving such person’s bad faith, gross negligence or willful misconduct.

9.20 No Fractional Shares . Unless otherwise permitted by the Committee, no fractional shares of Common Stock shall be issued or delivered pursuant to the Incentive Plan or any Award. The Committee shall determine whether cash or other property shall be issued or paid in lieu of fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.

9.21 Notice . Unless otherwise provided in an Award Agreement, all written notices and all other written communications to the Company provided for in the Incentive Plan or any Award Agreement shall be delivered personally or sent by registered or certified mail, return receipt requested, postage prepaid (provided that international mail shall be sent via overnight or two-day delivery), or sent by facsimile or prepaid overnight courier to the Company at the address set forth below. Such notices, demands, claims and other communications shall be deemed given:

(a) in the case of delivery by overnight service with guaranteed next day delivery, the next day or the day designated for delivery;

(b) in the case of certified or registered U.S. mail, five (5) days after deposit in the U.S. mail; or

(c) in the case of facsimile, the date upon which the transmitting party received confirmation of receipt by facsimile, telephone or otherwise;

provided, however, that in no event shall any such communications be deemed to be given later than the date they are actually received; provided they are actually received. In the event a communication is not received, it shall only be deemed received upon the showing of an original of the applicable receipt, registration or confirmation from the applicable delivery service provider. Communications that are to be delivered by the U.S. mail or by overnight service to the Company shall be directed to the attention of the Company’s senior human resource officer and Corporate Secretary.

9.22 Use of Term . Unless otherwise provided herein, the term “person” when referred to in the Incentive Plan or any Award Agreement may refer to an individual or an entity.

EXHIBIT 10.3

FIRST AMENDMENT

MEDGENICS, INC.

2006 STOCK INCENTIVE PLAN

WHEREAS, Medgenics, Inc., a Delaware corporation (the “Corporation”), maintains the 2006 Stock Incentive Plan (the “Plan”); and

WHEREAS, the Board of Directors of the Corporation (the “Board”) has determined that it is in the best interest of the Corporation to amend the Plan to, in addition to implementing a number of technical amendments to the existing Plan, increase by 1,270,000 the number of shares of common stock of the Corporation that may be made the subject of options granted under the Plan.

NOW, THEREFORE, by virtue and in exercise of the power reserved to the Board under Section 9.14(a) of the Plan, and pursuant to the authority delegated to the undersigned officer of the Corporation by a resolution adopted by the Board, the Plan be and is hereby amended, effective as of the date that is the later of (i) August 31, 2007 and (ii) the date that the Corporation has obtained the approval of the holders of a majority of the outstanding capital stock of the Corporation to this amendment, as follows:

(1) by substituting for the first sentence of Section 4.01 of the Plan the following new sentence:

“The maximum number of shares authorized to be issued under the Incentive Plan shall be 2,267,003 shares of the Company’s Common Stock.”

(2) by inserting the following new Section 4.04:

“4.04 Limitation on Issuance . Notwithstanding anything to the contrary contained in the Incentive Plan, so long as the Company 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, the market operated by London Stock Exchange plc (“AIM”), the Company shall not issue, after the date of admission of shares of the Company’s Common Stock to trading on AIM, Awards for more than 10% of the then outstanding number of shares of the Company’s Common Stock (excluding for purposes of the calculation of such 10%, all options granted on or prior to the date of admission).”

IN WITNESS WHEREOF, by action of the Board, the Corporation has caused this First Amendment to be executed by its duly authorized officer this 22 nd day of August, 2007.

MEDGENICS, INC.

By:	/s/ Andrew L. Pearlman
Its:	Chief Executive Officer

EXHIBIT 10.4

SECOND AMENDMENT

MEDGENICS, INC.

2006 STOCK INCENTIVE PLAN

WHEREAS, Medgenics, Inc., a Delaware corporation (the “Corporation”), maintains the 2006 Stock Incentive Plan (the “Plan”);

WHEREAS, the Board of Directors of the Corporation (the “Board”), with the approval of the stockholders of the Corporation, amended the Plan in August 2007, increasing by 1,270,000 (on a pre-stock split basis) the number of shares of common stock of the Corporation that may be made the subject of awards granted under the Plan to a total of 2,267,003 (on a pre-stock split basis);

WHEREAS, in December 2007 the Corporation effected a 21.39149 for one stock split, and as a result the total number of shares of common stock of the Corporation that may be the subject of awards under the Plan became 48,494,572; and

WHEREAS, the Board has determined that it is in the best interest of the Corporation to amend the Plan further to increase by 12,005,428 the number of shares of common stock of the Corporation that may be made the subject of awards granted under the Plan such that the total number of shares of common stock of the Corporation that may be made the subject of awards granted under the Plan will be 60,500,000.

NOW, THEREFORE, by virtue and in exercise of the power reserved to the Board under Section 9.14(a) of the Plan, and pursuant to the authority delegated to the undersigned officer of the Corporation by a resolution adopted by the Board, the Plan be and is hereby amended, effective as of the date that the Corporation has obtained the approval of the holders of a majority of the outstanding capital stock of the Corporation to this amendment, as follows:

(1) by deleting Sections 4.01 and 4.04 of the Plan in their entirety and inserting the following new Section 4.01:

“The maximum number of shares authorized to be issued under the Incentive Plan shall be 60,500,000 shares of the Company's Common Stock; provided, however, that for so long as the Company's Common Stock is admitted for trading on the Official List of the United Kingdom Listing Authority or on AIM, the market operated by London Stock Exchange plc, on the date of grant of any Award hereunder (the "Relevant Grant Date"), the aggregate number of shares in respect of which Awards granted on or after December 4, 2007 and which remain outstanding and unexercised shall not exceed 12% of the number of shares of the Company's Common Stock issued and outstanding on the Relevant Grant Date. The number of shares available for issuance under the Incentive Plan shall be subject to adjustment in accordance with Section 9.06 below. The shares to be offered under the Incentive Plan shall be authorized and unissued shares of Common Stock, or issued shares of Common Stock that have been reacquired by the Company in private or public transactions.”

IN WITNESS WHEREOF, by action of the Board, the Corporation has caused this Second Amendment to be executed by its duly authorized officer this 13 th day of September, 2010.

MEDGENICS, INC.

By:	/s/ Andrew L. Pearlman
Its:	Chief Executive Officer

EXHIBIT 10.5

Personal Employment Agreement

This Personal Employment Agreement (the “Agreement” ) is entered as of this 20 th day of April, 2006 (the “Effective Date”), by and between

MEDGENICS MEDICAL ISRAEL LTD.,

a company organized under the laws of the State of Israel, having its principal office at 12 HaNapach St Karmiel, 21653 (the “Company” ) and

Baruch Stern

of 30 Smolenskin St.

Haifa, Israel 34366

(Israeli I.D. No. 069523561)

(the “Employee” ).

WITNESSETH

WHEREAS,

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

WHEREAS,

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.

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

1.	Appointment; Position: Bioscience Director

The Company hereby appoints the Employee as Bioscience Director, and in such capacity he will report to the CEO.

Position

During the term of this Agreement:

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:

Scientific leadership of bioscience development, including preclinical preparations

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.

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

Preparing for, supervising and guiding the implementation of experiments and interpretation of results obtained, within approved schedule and budget

Analysis of experimental results qualitatively and quantitatively, lessons learned, and use in ongoing development

Keeping the company updated on relevant technology developments and opportunities

Establishing and maintaining contacts with world class experts and advisors, together with CTO

Providing key scientific support for partnering, fundraising

Supporting maintenance and strengthening of intellectual property, together with CTO

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

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 his duties hereunder may require domestic or international travel.

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

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 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

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, 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

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 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

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 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.

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 prior 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 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

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

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.

At all times, both during his engagement by the Company and after its termination, the Employee will keep in confidence and trust all Proprietary Information, and the Employee will not use or disclose any Proprietary Information or anything relating to it without the written consent of the Company, except as may be necessary in the ordinary course of performing the Employee’s duties hereunder and in the best interests of the Company.

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

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 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

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 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

(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

Upon termination of this Agreement by the Company for any reason whatsoever other than by justifiable cause, as defined herein, the Employee shall be entitled to the payment of his full salary, including insurance and social benefits as set for in Sections 4-6 above, during a period of 6 months if his employment is terminated with the first 12 months of the effective date, and an additional month for each 12 months of employment thereafter.

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, 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.

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

above written.

/s/ Andrew Pearlman	/s/ Baruch Stern
MEDGENICS MEDICAL ISRAEL, LTD.	Baruch Stern, PhD
By: Dr. Andrew L. Pearlman, CEO

EXHIBIT A

Goal Bonus Criteria Through March 2008

The total Goal Bonus of $20,000 shall be allocated to the achievement of the following through July 2008:

Goal Bonus Criteria through July, 2008 - $20,000, split between two groups of objectives:

Company objectives - $10,000

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:

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...

elevated hematocrit by at least 5 points or to at least 33-36 , for at least 2 weeks and counting...

Personal professional objectives/deliverables - $10,000

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

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

EXHIBIT B

Team Leadership Bonus Criteria for the period through March 2008

The CEO and the Board will evaluate the Employee’s performance after for the period through July 2008 and the Team Leadership Bonus of $10,000 will be awarded based on the overall average score (as determined by the CEO and the Board) earned by Employee in the areas listed below.

Leadership Bonus Criteria through June, 2008 - $10,000

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.

EXHIBIT 10.6

Personal Employment Agreement

This Personal Employment Agreement (the “ Agreement ” ) is entered as of this 18 th day of March, 2007 (the “ Effective Date ” ) , by and between

MEDGENICS MEDICAL ISRAEL LTD .,

a company organized under the laws of the State of Israel, private company number 512919952,

having its principal office at 12 HaNapach St, Karmiel, 21653

(the “ Company ”); and

STEPHEN BELLOMO

of Rechov Itzhak Sadeh 7 Zichron Ya’akov 30900, Israel (Israeli I.D. No. 313669509)

(the “ Employee ”).

WITNESSETH

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.

NOW THEREFORE , in consideration of the mutual promises, covenants, conditions, representations

and warranties set forth herein, and intending to be legally bound hereby, the parties agree as follows:

1.	Appointment

The Company hereby appoints the Employee as Vice President Program Management and Product Development of the Company and, in such capacity, the Employee shall be subject to the direction of the Company ’ s Chief Executive Officer (the “ CEO ”).

Position

During the term of this Agreement:

2.1

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

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.

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

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. The performance criteria for the Goal Bonus for 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 $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

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

options to purchase the first 17,500 shares vesting upon the first anniversary of the Effective Date. Such options shall have a five-year term and an exercise price of $2.50 per share and shall be subject to the terms and conditions of the Company’s Incentive Stock Plan, as the same may be amended, and pursuant to the standard form of option agreement which the Company may use. Upon termination of employment for any reason , all unvested options shall expire.

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

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

purposes. At all times, both during and after the termination of his employment with the Company for any reason, the Employee undertakes to keep and hold all such information in strict confidence and trust, and he will not use, disclose or provide access to 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 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

9.2

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

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: (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

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

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

Upon termination of this Agreement by the Company for any reason whatsoever other than by justifiable cause, as defined herein, the Employee shall be entitled to the payment of his full salary, including insurance and social benefits as set for in Sections 4-6 above, during a period of 4 months if his employment is terminated with the first 12 months of the effective date, and

an additional month for each 12 months of employment thereafter.

12.	Mutual Representations

12.1

12.2

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

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

14.4

14.5

14.6

14.7

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

14.8

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

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

/ s/ Andrew L. Pearlman		/s/ Stephen Bellomo
MEDGENICS, MEDICAL ISRAEL LTD.		Stephen Bellomo
By: Dr. Andrew L. Pearlman, CEO

EXHIBIT A

Goal Bonus Criteria Through March 2008

The total Goal Bonus of $20,000 shall be allocated to the achievement of the following through March 2008:

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

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

25% for Trial-ready set of Devices: Harvester, Implanter Locator/Ablator tested, ready and regulatory approved for trial

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.

40% for actual successful implantation in first patients of EPODURE trial Ql/08

EXHIBIT B

Team Leadership Bonus Criteria for the period through March 2008

The CEO and the Board will evaluate the Employee’s performance after for the period through March 2008 and the Team Leadership Bonus of $15,000 will be awarded based on the overall average score (as determined by the CEO and the Board) earned by Employee in the areas listed below.

5 (exceeds expectations) =	110% bonus
4 (very good) =	100% bonus
3 (OK) =	80% bonus
2 (needs improvement) =	50% bonus
1 (seriously deficient) =	20% bonus

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

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.

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

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

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

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

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

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

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

EXHIBIT 10.7

Amendment to Employment Agreement

Between

MEDGENICS MEDICAL ISRAEL LTD.,

private company number 512919952,

having its principal office at 12 HaNapach St, Karmiel, 21653

(the “Company” ); and

name Stephen Bellomo ,

of Rechov Itzhak Sadeh 7 Zichron Ya’akov 30900
(Israeli I.D. No. 313669509)

(the “Employee” ).

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

[HEBREW TEXT] agreement section 14

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EXHIBIT A

[HEBREW TEXT]

- 3 -

[HEBREW TEXT]

GENERAL APPROVAL REGARDING PAYMENTS BY EMPLOYERS

TO A PENSION FUND AND INSURANCE FUND IN LIEU OF SEVERANCE PAY

UNDER THE SEVERANCE PAY LAW, 5723-1963

By virtue of my power under Section 14 of the Severance Pay Law, 5723-1963 (hereinafter: the “ Law ”), I certify that payments made by an employer commencing from the date of the publication of this approval for the sake of his employee to a comprehensive pension provident fund that is not an insurance fund within the meaning set forth in the Income Tax Regulations (Rules for the Approval and Conduct of Provident Funds), 5724-1964 (hereinafter: the “ Pension Fund ”) or to managers’ insurance which includes the possibility to receive annuity payments under an insurance fund as aforesaid, (hereinafter: the “ Insurance Fund ”), including payments made by the employer by a combination of payments to a Pension Fund and an Insurance Fund (hereinafter: “ Employer’s Payments ”), shall be made in lieu of severance pay due to said employee with respect to the salary from which said payments were made and for the period they were paid (hereinafter: the “ Exempt Salary ”), provided that all the following conditions are fulfilled:

(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.

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(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.

15th Sivan 5758 (June 9th, 1998).

/s/ Stephen Bellomo	/s/ Andrew Pearlman
Employee’s signature	Employer’s signature

EXHIBIT 10.8

Amended and Restated

Personal Employment Agreement

This Amended and Restated Personal Employment Agreement (the " Agreement " ) is entered as of the 1 st day of June, 2007 (herein, "Effective Date"), by and between Medgenics, Inc., a company organized under the laws of the State of Delaware, USA ( " Medgenics " ), its wholly owned Israeli subsidiary, Medgenics Medical Israel, Ltd., a company organized under the laws of the State of Israel ("the Company "), having its principal office at Hanapach 12, Karmiel 20101 Israel, and Dr. Andrew Pearlman, of Moshav Shorashim D.N. Misgav 20164 (Israeli I.D. No. 015255136) (the " Employee " ).

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

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

1.	Appointment: Position

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 .

During the term of this Agreement and unless and until otherwise agreed in writing by the Board:

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

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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

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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,

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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.

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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

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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.

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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

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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.

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

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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.

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

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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,

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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

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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

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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.

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.

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

Medgenics, Inc.

By:

/s/ [illegible]

Its:

Chairman, Board of Directors

Medgenics Medical Israel, Ltd.

By:

Andrew Pearlman

Its:

Chairman

/s/ Andrew Pearlman

Dr. Andrew Pearlman Aug. 29, 2007

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EXHIBIT 10.9

FIRST AMENDMENT TO THE

AMENDED AND RESTATED

PERSONAL EMPLOYMENT AGREEMENT

THIS FIRST AMENDMENT TO THE AMENDED AND RESTATED PERSONAL EMPLOYMENT AGREEMENT (this “ Amendment ”) is entered into this 1 st day of June, 2008, by and between Medgenics, Inc., a Delaware corporation (“ Medgenics ”), its wholly-owned subsidiary, Medgenics Medical Israel, Ltd., a company organized under the laws of the State of Israel (the “ Company ”), and Andrew L. Pearlman (the “ Employee ”).

WITNESSETH:

WHEREAS , the parties entered into that certain Amended and Restated Personal Employment Agreement, effective as of June 1, 2007 (the “ Employment Agreement ”); and

WHEREAS , the parties desire to amend certain provisions of the Agreement;

NOW, THEREFORE , for good and valuable consideration, the sufficiency of which is agreed and acknowledged by the parties hereto, it is hereby agreed as follows:

1. Section 7.1 of the Employment Agreement is amended by deleting the words “US$ 210,000 per annum ($17,500 per month)” and replacing such words with “US$ 250,000 per annum ($20,833 per month).”

2. Section 9.6 of the Employment Agreement is amended by adding the following sentence to the end of such Section 9.6:

“For calendar year 2008, effective commencing January 1, 2008, and each subsequent calendar year during the term of this Agreement, a bonus package of $125,000 shall be available to Employee upon the achievement of individual goals and corporate milestones to be agreed between the Employee and the Board (or the applicable committee thereof) for such calendar year.

3. All references in the Employment Agreement shall be deemed to refer to the Employment Agreement, as amended and modified by this Amendment.

4. In the event of any conflict, inconsistency, or incongruity between the provisions of this Amendment and any of the provisions of the Employment Agreement, the provisions of this Amendment shall govern and control.

5. Except as otherwise expressly amended hereby, the Employment Agreement shall be and remain in full force and effect according to its terms.

6. This Amendment may be executed in any number of counterparts, all of which, when taken together, shall constitute one and the same instrument.

signature page follows

IN WITNESS WHEREOF , this Amendment has been executed as of the date first above written.

MEDGENICS, INC.	/s/ Andrew L. Pearlman
	ANDREW L. PEARLMAN

Medgenics, Inc.

By:	/s/ Eugene Bauer
Its:	Director

MEDGENICS MEDICAL ISRAEL, LTD.

Medgenics Medical Israel, Ltd.

By:	/s/ Andrew L. Pearlman
Its:	Chief Executive Officer

EXHIBIT 10.10

Personal Employment Agreement

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

WITNESSETH

WHEREAS,

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

WHEREAS,

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

WHEREAS,

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

WHEREAS,

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

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

1.	Appointment; Position – Director of Finance and Administration

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

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:

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

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

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

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.

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

5.3

6.	Additional Benefits

6.1

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

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

12.3

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

14.4

14.5

14.6

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

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

/s/ Andrew Pearlman		/s/ Phyllis K. Bellin
MEDGENICS MEDICAL ISRAEL, LTD.		Phyllis K. Bellin
By: Dr. Andrew L. Pearlman, CEO



/s/ Andrew Pearlman
MEDGENICS, INC.
By: Dr. Andrew L. Pearlman, CEO

EXHIBIT A

Goal Bonus Criteria Through June 30, 2008

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

50% for Listing on AIM Exchange

10% for Move to new facilities:

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,

10% for expansion of Staff

EXHIBIT B

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

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

	5 (exceeds expectations) =	110% bonus
	4 (very good) =	100% bonus
	3 (OK) =	80% bonus
	2 (needs improvement) =	50% bonus
	1 (seriously deficient) =	20% bonus

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

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

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

EXHIBIT 10.11

Dr. Andrew L. Pearlman

Moshav Shorashim

D.N. Misgav 20164

Israel

As of June 1, 2007

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

Dear Dr. Pearlman:

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

1	Definitions

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

“AIM”	means the AIM Market of London Stock Exchange plc;

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

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

“Businesses”	means:

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

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

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

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

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

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

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

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

“DGCL”	means Delaware General Corporation Law;

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

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

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

“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.

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;

FEES

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

4	Term of office

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

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

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

5	Confidentiality

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

5.1.1

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

5.1.2

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

5.1.3

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

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

5.2.1

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

5.2.2

before making such disclosure, you must:

(a)

give the Company reasonable written notice of:

(i)

the full circumstances of the requirement for disclosure arising; and

(ii)

the Confidential Business Information which you propose to disclose; and

(b)

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

5.3	By your counter-signature hereto, you acknowledge that:

5.3.1

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

5.3.2

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

5.3.3

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

5.3.4

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

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

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

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

8	Governing law and jurisdiction

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

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

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

Yours sincerely

/s/ Eugene A. Bauer

Dr. Eugene A. Bauer

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

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

SIGNED AS A DEED	)
by Andrew L. Pearlman	)
in the presence of:	)
		Andrew L. Pearlman

Witness Signature:

Name:

Address:





Occupation:

Annex

July 2007

MODEL CODE OF PRACTICE

RELATING TO

SECURITIES DEALINGS

BY COMPANY DIRECTORS AND CERTAIN EMPLOYEES

OF MEDGENICS, INC.

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

(a)

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

(b)

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

(i)

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

(ii)

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

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

(d)

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

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

(f)

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

(g)

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

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

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

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

Definitions

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

“AIM”		means the AIM Market operated by the Exchange;

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

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

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

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

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

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

“Exchange”		means London Stock Exchange Plc;

“Holdings”		means any legal or beneficial interest, direct or indirect;

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

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

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

	(ii)	is specific or precise;

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

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

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

	11	General disclosure of price sensitive information

	12 to 16	Disclosure of corporate transactions

	17	Disclosure of miscellaneous information

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

Dealings by directors and applicable employees

Purpose of dealing

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

Dealing in close periods

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

A close period is:

3.1

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

3.1.1

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

3.1.2

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

3.2

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

3.3

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

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

Clearance to deal

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

Circumstances for refusal

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

A “ prohibited period ” means:

6.1

any close period;

6.2

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

6.3

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

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

Dealing in exceptional circumstances

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

Director acting as trustee

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

9.1

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

9.2

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

Dealings by connected persons and investment managers

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).

Special circumstances

Awards of securities and options

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

12.1

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


	12.2	the terms of such employees' share scheme set out:

12.2.1

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

12.2.1.1

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

12.2.1.2

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

12.2.2

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

12.3

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

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

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

13.1

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

13.2

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

Exercise of options

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.

Qualification shares

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

Saving schemes

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.

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

Guidance on other dealings

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

19.1

dealings between directors and/or applicable employees;

19.2

off-market dealings;

19.3

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

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.

Applicable employees

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

EXHIBIT 10.12

Dr. Eugene A. Bauer

59 Montecito Road

San Rafael, California 94901

November 14, 2007

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

Dear Dr. Bauer:

1	Definitions

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

“ AIM ”

means the AIM Market of London Stock Exchange plc;

“ Biopump ”

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

“ Board ”

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

“ Businesses ”

means:

(a)

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

(b)

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

(i)

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

(ii)

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

“ Confidential Business
Information ”

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

(a)

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

(b)

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

“ Corporate Information ”

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

“DGCL”

means Delaware General Corporation Law;

“ Group ”

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

“ Group Company ”

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

“ Marketing Information ”

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

“ 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.

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

You shall work such hours per week over the term Your Appointment as are necessary for the proper performance of your duties as Chairman and as a non-executive director of the Company.

FEES

You will be entitled to a fee at the rate of ten US Dollars (US$ 10) per annum, if demanded. The fee will be payable (if demanded) in arrears within thirty (30) days of the later of the end of the relevant year and the receipt by the Company of an invoice from you in respect thereof. A year for this purpose shall be a period commencing on the date hereof or on any first anniversary hereof and ending 12 consecutive calendar months thereafter. This fee and the terms prescribing the frequency of payment shall be fixed for a period of one (1) year following admission of the Company ’ s issued common shares to trading on the AIM and thereafter shall be subject to review. On termination of your appointment you will (if applicable) be paid your director ’ s fee on a pro-rata basis, to the extent unpaid up to the Termination Date.

5	Term of office

Your Appointment commenced on March 22, 2001 and shall continue following the date of this letter unless or until your successor is elected and qualified or until your earlier resignation or removal. You agree that you will given not less than sixty (60) days ’ (or such lesser period if agreed by the Board) prior notice in writing to the Company in the event you wish to resign prior to the expiration of your term or in the event you do not wish to stand for re-election at the Company ’ s annual meeting of stockholders.

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

Expenses

The Company shall reimburse you in respect of all reasonable travelling, hotel, entertainment and other out of pocket expenses properly and necessarily incurred by you in or about the performance of your duties under this Agreement, subject to the production (if requested) of any receipts, vouchers and other supporting documentation that the Company shall reasonably require.

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

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

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

and that the obligations of confidentiality assumed under the provisions of this clause 7 are reasonable and necessary for the protection of the Group, the Businesses and the Confidential Business Information.

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

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

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

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

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

10	Governing law and jurisdiction

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

Yours sincerely


Andrew L. Pearlman
Director, duly authorized for and on behalf of the Board

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

SIGNED AS A DEED	)
by Eugene A. Bauer	)
in the presence of:-	)	/s/ Eugene A. Bauer
		Eugene A. Bauer

Witness Signature:	/s/ Clarence L. Dellio

Name:	Clarence L. Dellio

Address:	President & COO
	Neosil, Inc
	5980 Horton St, Emeryville, CA 94608

Occupation:	Businessman

Annex

July 2007

MODEL CODE OF PRACTICE

RELATING TO

SECURITIES DEALINGS

BY COMPANY DIRECTORS AND CERTAIN EMPLOYEES

OF MEDGENICS, INC.

(a)

(b)

(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)

(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)

(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)

(g)

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

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

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

Definitions

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:

General disclosure of price sensitive information

12 to 16

Disclosure of corporate transactions

Disclosure of miscellaneous information

“regulated market”

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

Dealings by directors and applicable employees

Purpose of dealing

Dealing in close periods

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

A close period is:

3.1

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

3.1.1

3.1.2

3.2

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

3.3

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

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

Clearance to deal

Circumstances for refusal

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

A "prohibited period" means:

6.1

any close period;

6.2

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.

Dealing in exceptional circumstances

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

Director acting as trustee

9.1

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

9.2

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

Dealings by connected persons and investment managers

10.1

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

10.2

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

11.4

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

Special circumstances

Awards of securities and options

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

12.1

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

12.2

the terms of such employees' share scheme set out:

12.2.1

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

12.2.1.1

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

12.2.1.2

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

12.2.2

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

12.3

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

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

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

13.1

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

13.2

Exercise of options

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.

Qualification shares

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

Saving schemes

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

17.2

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

Guidance on other dealings

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

19.1

dealings between directors and/or applicable employees;

19.2

off-market dealings;

19.3

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

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.

Applicable employees

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

EXHIBIT 10.13

Mr. Gary A. Brukardt

5618 Hillsboro Road

Nashville, Tennessee 37215

November 14, 2007

RE: Medgenics, Inc. (the “Company”)

Dear Mr. Brukardt:

1	Definitions

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

“AIM”

means the AIM Market of London Stock Exchange plc;

“Biopump”

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

“Board”

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

“Businesses”

means:

(a)

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

(b)

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

(i)

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

(ii)

“Confidential Business Information”

(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”

“DGCL”

means Delaware General Corporation Law;

“Group”

“Group Company”

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

“Marketing Information”

“Material Interest”

means:

(a)

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

(b)

(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”

“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.

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

You shall work such hours per week over the term Your Appointment as are necessary for the proper performance of your duties as a non-executive director of the Company.

FEES

You will be entitled to a fee at the rate of ten US Dollars (US$ 10) per annum, if demanded. The fee will be payable (if demanded) in arrears within thirty (30) days of the later of the end of the relevant year and the receipt by the Company of an invoice from you in respect thereof. A year for this purpose shall be a period commencing on the date hereof or on any first anniversary hereof and ending 12 consecutive calendar months thereafter. This fee and the terms prescribing the frequency of payment shall be fixed for a period of one (1) year following admission of the Company’s issued common shares to trading on the AIM and thereafter shall be subject to review.

On termination of your appointment you will (if applicable) be paid your director’s fee on a pro-rata basis, to the extent unpaid up to the Termination Date.

5	Term of office

Your Appointment commenced on September 18, 2006 and shall continue following the date of this letter unless or until your successor is elected and qualified or until your earlier resignation or removal. You agree that you will given not less than sixty (60) days’ (or such lesser period if agreed by the Board) prior notice in writing to the Company in the event you wish to resign prior to the expiration of your term or in the event you do not wish to stand for re-election at the Company’s annual meeting of stockholders.

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

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

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

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

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

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

8.3.3

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

8.5

8.6

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

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

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

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

SIGNED AS A DEED	)
by Gary A. Brukardt	)
in the presence of:-	)	/s/ Gary A. Brukardt
		Gary A. Brukardt

Witness Signature:	/s/ Linda C. Dixon

Name:	Linda C. Dixon

Address:	411 Southwood Drive

	Nashville, TN 37217


Occupation:	Executive Assistant

Annex

July 2007

MODEL CODE OF PRACTICE

RELATING TO

SECURITIES DEALINGS

BY COMPANY DIRECTORS AND CERTAIN EMPLOYEES

OF MEDGENICS, INC.

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

(a)

(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)

(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)

(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.

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

Definitions

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”

“unpublished price- sensitive information”	means information which:

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

	(ii)	is specific or precise;

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

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

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

	11	General disclosure of price sensitive information

	12 to 16	Disclosure of corporate transactions

	17	Disclosure of miscellaneous information

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

Dealings by directors and applicable employees

Purpose of dealing

Dealing in close periods

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

A close period is:

3.1

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

3.1.1

3.1.2

3.2

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

3.3

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

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

Clearance to deal

Circumstances for refusal

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

A “ prohibited period ” means:

6.1

any close period;

6.2

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

6.3

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

Dealing in exceptional circumstances

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

Director acting as trustee

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

9.1

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

9.2

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

Dealings by connected persons and investment managers

10.1

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

10.2

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

11.4

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

Special circumstances

Awards of securities and options

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

12.1

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

12.2

the terms of such employees’ share scheme set out:

12.2.1

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

12.2.1.1

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

12.2.1.2

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

12.2.2

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

12.3

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

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

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

13.1

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

13.2

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

Exercise of options

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.

Qualification shares

Saving schemes

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

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

Guidance on other dealings

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

19.1

dealings between directors and/or applicable employees;

19.2

off-market dealings;

19.3

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

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

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.

Applicable employees

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

EXHIBIT 10.14

Mr. Joel S. Kanter

913 Douglass Drive

McLean, Virginia 22101

November 14, 2007

RE: Medgenics, Inc. (the “Company”)

Dear Mr. Kanter:

1	Definitions

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

“AIM”	means the AIM Market of London Stock Exchange plc;

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

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

“Businesses”	means:

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

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

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

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

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

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

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

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

“DGCL”	means Delaware General Corporation Law;

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

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

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

“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.

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

You shall work such hours per week over the term Your Appointment as are necessary for the proper performance of your duties as a non-executive director of the Company.

FEES

You will be entitled to a fee at the rate of ten US Dollars (US$ 10) per annum, if demanded. The fee will be payable (if demanded) in arrears within thirty (30) days of the later of the end of the relevant year and the receipt by the Company of an invoice from you in respect thereof. A year for this purpose shall be a period commencing on the date hereof or on any first anniversary hereof and ending 12 consecutive calendar months thereafter. This fee and the terms prescribing the frequency of payment shall be fixed for a period of one (1) year following admission of the Company's issued common shares to trading on the AIM and thereafter shall be subject to review. On termination of your appointment you will (if applicable) be paid your director's fee on a pro-rata basis, to the extent unpaid up to the Termination Date.

5	Term of office

Your Appointment commenced on August 8, 2000 and shall continue following the date of this letter unless or until your successor is elected and qualified or until your earlier resignation or removal. You agree that you will given not less than sixty (60) days' (or such lesser period if agreed by the Board) prior notice in writing to the Company in the event you wish to resign prior to the expiration of your term or in the event you do not wish to stand for re-election at the Company's annual meeting of stockholders.

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

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

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

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

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

8.3.3

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

8.5

8.6

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)

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

SIGNED AS A DEED	)
by Joel Stephen Kanter	)
In the presence of:	)	/s/ Joel S. Kanter
		Joel S. Kanter

Witness Signature:		/s/ Shea Cordell

Name:		Shea Cordell

Address:		8000 Towers Crescent Drive

		Suite 1300

		Vienna, VA 22182

Occupation		Executive Assistant

Annex

July 2007

MODEL CODE OF PRACTICE

RELATING TO

SECURITIES DEALINGS

BY COMPANY DIRECTORS AND CERTAIN EMPLOYEES

OF MEDGENICS, INC.

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

(a)

(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)

(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)

(g)

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

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

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

Definitions

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.

Dealings by directors and applicable employees

Purpose of dealing

Dealing in close periods

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

A close period is:

3.1

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

3.1.1

3.1.2

3.2

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

3.3

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

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

Clearance to deal

Circumstances for refusal

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

A “prohibited period” means:

6.1

any close period;

6.2

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.

Dealing in exceptional circumstances

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

Director acting as trustee

9.1

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

9.2

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

Dealings by connected persons and investment managers

10.1

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

10.2

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

11.4

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

Special circumstances

Awards of securities and options

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

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

	12.2	the terms of such employees' share scheme set out:

12.2.1

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

12.2.1.1

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

12.2.1.2

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

12.2.2

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

12.3

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

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

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

13.1

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

13.2

Exercise of options

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.

Qualification shares

Saving schemes

17.1

17.2

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

Guidance on other dealings

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

19.1

dealings between directors and/or applicable employees;

19.2

off-market dealings;

19.3

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

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

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.

Applicable employees

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

EXHIBIT 10.15

Mr. Stephen D. McMurray

12007 Haddington Court

Fort Wayne, Indiana 46814

November 14, 2007

RE: Medgenics, Inc. (the “Company”)

Dear Mr. McMurray:

1	Definitions

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

“AIM”

means the AIM Market of London Stock Exchange plc;

“Biopump”

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

“Board”

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

“Businesses”

means:

(a)

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

(b)

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

(i)

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

(ii)

“Confidential Business

Information”

(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”

“DGCL”

means Delaware General Corporation Law;

“Group”

“Group Company”

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

“Marketing Information”

“ Material Interest ”

means:

(a)

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

(b)

(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”

“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.

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

You shall work such hours per week over the term Your Appointment as are necessary for the proper performance of your duties as a non-executive director of the Company.

FEES

You will be entitled to a fee at the rate of ten US Dollars (US$ 10) per annum, if demanded. The fee will be payable (if demanded) in arrears within thirty (30) days of the later of the end of the relevant year and the receipt by the Company of an invoice from you in respect thereof. A year for this purpose shall be a period commencing on the date hereof or on any first anniversary hereof and ending 12 consecutive calendar months thereafter. This fee and the terms prescribing the frequency of payment shall be fixed for a period of one (1) year following admission of the Company’s issued common shares to trading on the AIM and thereafter shall be subject to review. On termination of your appointment you will (if applicable) be paid your director’s fee on a pro-rata basis, to the extent unpaid up to the Termination Date.

5	Term of office

Your Appointment commenced on December 21, 2005 and shall continue following the date of this letter unless or until your successor is elected and qualified or until your earlier resignation or removal. You agree that you will given not less than sixty (60) days’ (or such lesser period if agreed by the Board) prior notice in writing to the Company in the event you wish to resign prior to the expiration of your term or in the event you do not wish to stand for re-election at the Company’s annual meeting of stockholders.

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

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

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

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

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

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

8.3.3

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

8.5

8.6

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

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

10	Governing law and jurisdiction

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

Yours sincerely

/s/ Eugene A. Bauer
Dr. Eugene A. Bauer
Chairman, duty authorised for and on behalf of the Board)

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

SIGNED AS A DEED	)
by Stephen D. McMurray	)	/s/ Stephen D. McMurray
in the presence of:-	)	Stephen D. McMurray

Witness Signature:	/s/ Angela R. Gladieux

Name:	Angela R. Gladieux

Address:	8052 Winston Lane

	Fort Wayne, IN 46804

Occupation:	Pharmaceutical Representative

Annex

Juiy 2007

MODEL CODE OF PRACTICE

RELATING TO

SECURITIES DEALINGS

BY COMPANY DIRECTORS AND CERTAIN EMPLOYEES

OF MEDGENICS, INC.

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

(a)

(b)

(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)

(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)

(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.

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

Definitions

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”

“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”

“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”

“unpublished price- sensitive information”

means information which:

(i)

(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”

Dealings by directors and applicable employees

Purpose of dealing

Dealing in close periods

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

A close period is:

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

3.1.2

3.2

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

3.3

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

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

Clearance to deal

Circumstances for refusal

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

A “ prohibited period ” means:

6.1

any close period;

6.2

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.

Dealing in exceptional circumstances

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

Director acting as trustee

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

9.1

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

9.2

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

Dealings by connected persons and investment managers

10.1

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

10.2

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

11.4

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

Special circumstances

Awards of securities and options

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

12.1

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

12.2

the terms of such employees’ share scheme set out:

12.2.1

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

12.2.1.1

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

12.2.1.2

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

12.2.2

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

12.3

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

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

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

13.1

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

13.2

Exercise of options

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.

Qualification shares

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

Saving schemes

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

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

Guidance on other dealings

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

19.1

dealings between directors and/or applicable employees;

19.2

off-market dealings;

19.3

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

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

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.

Applicable employees

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

EXHIBIT 10.16

Consulting Agreement

This Agreement is being made and entered into as of May 1, 2006, by and between Medgenics Medical Israel Ltd. , an Israeli company of Rechov HaNapach 12 Karmiel (the “ Company ”), and Professor Amos Panet , residing at: 1l Shrim St., Apt. 21 Jerusalem (the “ Consultant ”).

The Company engages in the research, development, manufacturing and marketing of products involving certain “bio-pump” technology (the “ Business ”). Consultant has expertise, know how, and skills in the field of biotechnology research and development. This Agreement provides for the terms and conditions whereby the Company will retain the services of the Consultant in connection with the matters described herein.

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.

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:

3.2.1 99,700 options at the restart round share price of $1.5l6 per share. These options will vest over 4 years on a prorated basis.

3.2.1.1 These options are to purchase the same number of shares (the “Options”), in the Company’s parent company, Medgenics Inc., a Delaware corporation ( . the “U.S. Company”) .

3.2.1.2 The Options shall be granted under the terms of the Company’s Stock Option Plan. The Consultant understands that he may be required to execute additional documents in compliance with the applicable tax laws.

3.2.2 Retainer Fee: A retainer of $2,000 per month.. On an interim basis in 2006, the Consultant agrees to defer half of this Fee to be accrued monthly and to be paid as a lump sum to the consultant upon the closing of the next financing round in the Company.

3.3 The Company will reimburse the Consultant for all normal and proper expenses incurred by him relating to the routine performance of the Consulting Services hereunder, but the Consultant will obtain prior written Company consent.

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.

These restrictions shall not apply to such secrets, know-how and processes or other information which:

(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.

For avoidance of doubt, it is confirmed that the Consultant is under no obligation to provide to the Company information which he has learned from other parties and that may relate to the Micro-Organ culture technology without obtaining permission in writing from those parties.

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.

-2-

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.

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.

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.

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.

This Agreement may not be assigned by any of the parties hereto, and may not be amended or modified, except by the written consent of both parties hereto. No failure or delay on the part of any party hereto in exercising any right, power or remedy hereunder shall operate as a waiver thereof. Headings to Sections herein are for the convenience of the parties only, and are not intended to be or to affect the meaning or interpretation of this Agreement. In the event that any covenant, condition or other provision contained in this Agreement is held to be invalid, void or illegal by any court of competent jurisdiction, the same shall be deemed severable from the remainder thereof, and shall in no way affect, impair or invalidate any other covenant, condition or other provision therein contained. If such condition, covenant or other provisions shall be deemed invalid due to its scope or breadth, such covenant, condition or other provision shall be deemed valid to the extent permitted by law. All notices required to be delivered under this Agreement shall be effective only if in writing and shall be deemed given when received by the party to whom notice is required to be given and shall he delivered personally, or by registered mail to the addresses set forth above.

-3-

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

Signatures:

/s/ Andrew L. Pearlman		/s/ Amos Panet
For the Company		The Consultant

Name: Andrew L. Pearlman, PhD

Title: President & CEO

Undertaking:

We undertake to issue the options as to our shares and to take such other actions as may be required to implement the commitments of Medgenics as to our shares, all as referred to in Section 3 of the foregoing Consulting Agreement.

Medgenics, Inc.

By:	/s/ Andrew L. Pearlman
Date:	May 10, 2006
	A.L.P

-4-

Attachment A

1.	Role: Chief Science advisor and member of the Scientific Advisory Board

As vector expert, to provide high level and supportive guidance, critical evaluation and feedback, and proposed solutions, in:

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

Assist/guide preclinical testing, GMP preparations

Other areas of the Consultant’s contribution

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):

1 day per month at Medgenics

3 weekly 2-hour review meetings via email and phone

Brief consults and side projects as needed (1-2 hours/week).

-5-

EXHIBIT 10.17

SCIENTIFIC ADVISORY BOARD AGREEMENT

THIS AGREEMENT (the “ Agreement ”) dated as of May 1 2006 (“ Effective Date ”) is made by and between Medgenics, Inc. located at of 8000 Towers Crescent Drive, Suite 1300, Vienna, VA, 22182. USA

(the “ Company ” ) ; and

Allen Nissenson, MD of Los Angeles, California USA (the “Advisor”).

The Company wishes to retain the Advisor as a member of the Company ’ s Scientific Advisory Board; and the Advisor desires to perform such consulting services. Accordingly, the parties agree as follows:

Services.

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 ” ).

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.

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. =

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.

SAB Advisory Agreement Page 1 of 8

Confidentiality.

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.

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.

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.

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.

Intellectual Property

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.

SAB Advisory Agreement Page 2 of 8

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,

In addition, the Advisor hereby agrees:

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.

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.

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.

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.

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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.

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.

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.

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.

SAB Advisory Agreement Page 4 of 8

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

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.

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.

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:

In the case of the Company:

___________________________

Office ______________________

Fax ________________________

Attention: Dr. Andrew L. Pearlman

Chief Executive Officer

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

Attention: Mark S. Cohen

SAB Advisory Agreement Page 5 of 8

In the case of the Advisor:

___________________________

or to other such address as may have been designated by the Company or the Advisor by notice to the other given as provided herein.

9. 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.

10. 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.

11. 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.

12. Remedies . The Advisor acknowledges that the Company would have no adequate remedy at law to enforce. 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.

13. 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.

SAB Advisory Agreement Page 6 of 8

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

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

SAB Advisory Agreement Page 7 of 8

EXHIBIT 1

Description of Services

Advising the company including:

Participating as a member of the Scientific Advisory Board

Guiding the general scientific, business, laboratory, and medical direction of the company;

Reviewing the goals and plans of the Company and developing strategies for achieving them;

Identifying and developing relationships with potential strategic partners;

Interacting with potential investors, stockholders, and strategic or corporate partners;

Identifying and reviewing promising scientific developments and intellectual property; and

Providing advice and guidance in the Company’s scientific research and product development activities.

SAB Advisory Agreement Page 8 of 8

EXHIBIT 10.18

SCIENTIFIC ADVISORY BOARD AGREEMENT

THIS AGREEMENT (the “Agreement” ) dated as of May 1 2006 ( “Effective Date” ) is made by and between Medgenics, Inc. located at of 8000 Towers Crescent Drive, Suite 1300, Vienna, VA, 22182. USA (the “Company”); and

Mark A. Kay, MD, PhD (the “Advisor”).

The Company wishes to retain the Advisor as a member of the Company’s Scientific Advisory Board; and the Advisor desires to perform such consulting services. Accordingly, the parties agree as follows:

Services .

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” ).

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.

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.

Confidentiality.

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.

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.

Intellectual Property

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.

In addition, the Advisor hereby agrees:

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.

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.

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.

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.

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.

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.

In the case of the Company;

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

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

Attention: Mark S. Cohen

In the case of the Advisor:

__________________________

or to other such address as may have been designated by the Company or the Advisor by notice to the other given as provided herein.

9. 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.

10. 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.

13. 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.

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

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

EXHIBIT 1

Description of Services

Participating in the meetings of the Scientific Advisory Board as a Member, and assisting the Company in the following as the Company may request from time to time:

Guiding the general scientific, business, laboratory, and medical direction of the company;

Reviewing the goals and plans of the Company and developing strategies for achieving them;

Identifying and developing relationships with potential strategic partners;

Interacting with potential investors, stockholders, and strategic or corporate partners;

Identifying and reviewing promising scientific developments and intellectual property; and

Providing advice and guidance in the Company’s scientific research and product development activities.

EXHIBIT 10.19

SCIENTIFIC ADVISORY BOARD AGREEMENT

THIS AGREEMENT (the “ Agreement ” ) dated as of 22 October 2008 ( “ Effective Date ” ) is made by and between Medgenics, Inc. located at 8000 Towers Crescent Drive, Suite 1300, Vienna, VA, 22182, USA ( the “ Company” ); and

Anatole Besarab, MD of Bloomfield, MI 48301, USA (the “ Advisor ” ).

The Company wishes to retain the Advisor as a member of the Company’s Scientific Advisory Board; and the Advisor desires to perform such consulting services. Accordingly, the parties agree as follows:

Services.

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.

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.

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Confidentiality and prohibited dealings.

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.

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.

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;

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(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”.

Intellectual Property

	c.	In addition, the Advisor hereby agrees:

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.

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ii.

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.

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.

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.

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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.

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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:

In the case of the Company:

___________________________

Office ______________________

Fax ________________________

Attention: Dr. Andrew L. Pearlman

Chief Executive Officer

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

Attention: Mark S. Cohen

In the case of the Advisor:

Anatole Besarab MD

6478 Maple Hills Drive

Bloomfield, MI 48301, USA

or to other such address as may have been designated by the Company or the Advisor by notice to the other given as provided herein.

9. 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.

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10. 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.

11. 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.

12. Remedies. The Advisor acknowledges that the Company would have no adequate remedy at law to enforce. 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.

13. 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.

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

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

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EXHIBIT 1

Description of Services

Advising the company including:

Participating as a member of the Scientific Advisory Board

Guiding the general scientific, business, laboratory, and medical direction of the company;

Reviewing the goals and plans of the Company and developing strategies for achieving them;

Identifying and developing relationships with potential strategic partners;

Interacting with potential investors, stockholders, and strategic or corporate partners;

Identifying and reviewing promising scientific developments and intellectual property; and

Providing advice and guidance in the Company’s scientific research and product development activities.

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EXHIBIT 10.20

SCIENTIFIC ADVISORY BOARD AGREEMENT

This AGREEMENT (The “Agreement”) dated as of 11-25-09 (“Effective Date”) is made by and between

Medgenics, Inc. located at 8000 Towers Crescent Drive, Suite 1300, Vienna, VA, 22182. USA (the “Company”); and

Bruce Bacon, MD of St Louis, MO USA (the “Advisor”).

The Company wishes to retain the Advisor as a member of the Company’s Scientific Advisory Board; and the Advisor desires to perform such consulting services. Accordingly, the parties agree as follows:

Services .

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.

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Confidentiality and prohibited dealings.

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.

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)

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(ii)

Intellectual Property

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.

In addition, the Advisor hereby agrees:

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.

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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.

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 .

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.

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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.

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.

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.

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In the case of the Company:



Office
Fax

Attention: Dr. Andrew L. Pearlman
Chief Executive Officer

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

Attention: Mark S. Cohen

In the case of the Advisor:

Bruce R. Bacon, MD

1228 Tammany Lane

St. Louis, MO 63131

or to other such address as may have been designated by the Company or the Advisor by notice to the other given as provided herein.

9. 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.

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12. Remedies . The Advisor acknowledges that the Company would have no adequate remedy at law to enforce the provisions of Sections 4 and 5 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.

13. 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.

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

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

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EXHIBIT 1

Description of Services

Advising the Company including:

Participating as a member of the Scientific Advisory Board

Guiding the general scientific, business, laboratory, and medical direction of the company;

Reviewing the goals and plans of the Company and developing strategies for achieving them;

Identifying and developing relationships with potential strategic partners;

Interacting with potential investors, stockholders, and strategic or corporate partners;

Identifying and reviewing promising scientific developments and intellectual property; and

Providing advice and guidance in the Company’s scientific research and product development activities.

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EXHIBIT 10.21

ADVISORY BOARD AGREEMENT

This AGREEMENT (this “ Agreement”), dated as of June 9 th , 2010, is made by and between Medgenics, Inc., located at 8000 Towers Crescent Drive, Suite 1300, Vienna, VA, 22182 USA (the “Company”); and

Burt Rosen of McLean, Virginia (the “Advisor”).

The Company wishes to retain the Advisor as a member of the Company’s Scientific Advisory Board (to be retitled the Strategic Advisory Board) (the “ SAB ”) and the Advisor desires to perform the advisory and consulting services described below. Accordingly, the parties agree as follows:

Services .

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.

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.

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.

Compensation .

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.

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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.

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.

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.

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.

Confidentiality and prohibited dealings .

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.

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.

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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)

(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”.

Intellectual Property .

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.

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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:

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.

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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.

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Non-Compete; Non-Solicitation.

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.

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.

7. 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.

8. 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.

9. 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:

In the case of the Company:

Medgenics, Inc.

POB 14 Misgav Business Park

Misgav, 20179 ISRAEL

Office +972-4-9028900

Fax +972-4-9990114

Attention: Dr. Andrew L. Pearlman

Chief Executive Officer

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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

Attention: Mark S. Cohen

In the case of the Advisor:

Burt Rosen

6719 Lucy Lane

McLean, Virginia 22101

or to other such address as may have been designated by the Company or the Advisor by notice to the other given as provided herein.

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.

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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.

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

Medgenics, Inc.		ADVISOR:

By:	/s/ Andrew Pearlman	By:	/s/ Burt Rosen
Name: Dr. Andrew L. Pearlman			Burt Rosen
Title: Chief Executive Officer

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EXHIBIT 1

Description of Services

Advising the Company including:

Participating as a member of the SAB;

Guiding the general scientific, business, laboratory, and medical direction of the Company;

Reviewing the goals and plans of the Company and developing strategies for achieving them;

Identifying and developing relationships with potential strategic partners;

Interacting with potential investors, stockholders, and strategic or corporate partners;

Identifying and reviewing promising scientific developments and intellectual property;

Providing advice and guidance in the Company’s scientific research and product development activities; and

Other functions as may be agreed with the Company.

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EXHIBIT 10.22

ADVISORY BOARD AGREEMENT

This AGREEMENT (this “Agreement”), dated as of September 2, 2010, is made by and between Medgenics, Inc., located at 8000 Towers Crescent Drive, Suite 1300, Vienna, VA, 22182 USA (the “Company”); and

Stephen Ettinger, DVM, of Beverly Hills, California (the “Advisor”).

The Company wishes to retain the Advisor as a member of the Company’s Strategic Advisory Board (the “ SAB ” ) and the Advisor desires to perform the advisory and consulting services described below. Accordingly, the parties agree as follows:

Services .

Compensation .

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For in-person meetings, the Advisor will be paid $1,500 for each day of meetings.

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.

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.

Confidentiality and prohibited dealings .

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.

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.

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(i)

(ii)

Intellectual Property .

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.

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In addition, the Advisor hereby agrees:

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.

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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.

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Non-Compete; Non-Solicitation .

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.

7. 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.

8. 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.

9. 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:

In the case of the Company:

Medgenics, Inc.

POB 14 Misgav Business Park

Misgav, 20179 ISRAEL

Office +972-4-9028900

Fax +972-4-9990114

Attention: Dr. Andrew L.Pearlman

Chief Executive Officer

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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

Attention: Mark S. Cohen

In the case of the Advisor:

Stephen Ettinger

9831 Cardigan Place

Beverly Hills, CA 90210

or to other such address as may have been designated by the Company or the Advisor by notice to the other given as provided herein.

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.

12.

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.

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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.

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

Medgenics, Inc.		ADVISOR:

By:	/s/ Andrew L. Pearlman	By:	/s/ Stephen Ettinger
Name: Dr. Andrew L. Pearlman			Stephen Ettinger, DVM
Title: Chief Executive Officer

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EXHIBIT 1

Description of Services

Advising the Company including:

Participating as a member of the SAB;

Guiding the general scientific, business, laboratory, and medical direction of the Company;

Reviewing the goals and plans of the Company and developing strategies for achieving them;

Identifying and developing relationships with potential strategic partners;

Interacting with potential investors, stockholders, and strategic or corporate partners;

Identifying and reviewing promising scientific developments and intellectual property;

Providing advice and guidance in the Company’s scientific research and product development activities; and

Other functions as may be agreed with the Company.

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EXHIBIT 10.23

LICENSE AGREEMENT

Contents

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

Appendices

Appendix A – The Registered Patents and the Scope

Appendix B – License Fee

Appendix C - Consultancy Agreements

Appendix D - Consultancy Fee Payment Schedule

Appendix E - The Development Plan

Appendix F – Exercise Notice

Appendix G – Explanation of the Company’s Expected Investment Rounds

Appendix H – Consultancy Fees

AGREEMENT

Made in Jerusalem this 23 rd day of November, 2005, by and between:

YISSUM RESEARCH DEVELOPMENT COMPANY OF THE HEBREW UNIVERSITY OF JERUSALEM, of Hi Tech Park, Edmond J. Safra Campus, Givat Ram, Jerusalem 91390, Israel, Fax: +972-2-658 6689; email : __________________ (the “ Licensor ”) of the one part; and

Medgenics, Inc. , of Shorashim D.N. Misgav 20164 Israel

fax: 04- 988-2270, email: andy@medgenics.com Attention: Dr. Andrew Pearlman (the “ Company ” ); of the second part

Recitals:

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

NOW THEREFORE THE PARTIES DO HEREBY AGREE AS FOLLOWS:

Interpretation and Definitions

(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.

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(d)

In this agreement the following capitalized terms shall have the meanings appearing alongside them, unless provided otherwise herein:

“ Affiliate ” – means a Related Entity in which the percentage of control is more than 75%.

“ Agreement ” – means this agreement together with all the appendices and annexes hereto.

“ Development Plan ” – As defined in section 7.

“ Development Results ” – means the Development Plan, any information, material, results, devices, know-how, data, which does not form part of the License or Further Research, discovered in the course of performance by the Company of the development work pursuant to section 7, including any regulatory filing or approval, filed or obtained by the Company in relation to the Product.

“ Distributor ” – means any distributor or marketer who engages, inter alia, in any one of the following activities: makes any payment to the Company which is not considered as Net Sales; undertakes to advertise the Product at its own expense; undertakes to obtain relevant authorities’ approval for the sale of the Product and is liable for costs incurred in gaining such approval.

“ First Commercial Sale ” – means the selling of an aggregated amount of the Product by the Company and/or by a Sub-Licensee or sub-sub-licensee in a single transaction or a series of related transactions with a third party whom is not a Related Entity, which commences an ongoing stream of sales subject to payment of Royalties. For the avoidance of doubt sales of the product for the purposes of clinical trials prior to the First Commercial Sale shall not entitle the Licensor to payment of consideration in accordance with this Agreement and shall not be considered a First Commercial Sale.

“ Scope ” – as defined in Appendix A.

“ Indemnitees ” – as defined in Section 13

“ License ” – as defined in Section 2 herein.

“ Net Sales ” - means all amounts in respect whereof invoices are issued by the Company, a Related Entity, and/or Distributors in connection with the sale of Products in an “arm’s length” transaction, after deduction of: (i) all discounts and returns given in respect of such sales; and (ii) sales taxes, including VAT. Such deductions shall be directly related to the sale of Products that were awarded within the regular running of the business of the Company and made at “arms length”. For the sake of clarity, any payment or rebate received by the Company from any governmental agency directly in relation to sales shall be considered as Net Sales.

Sales at discounts between Related Entities and/or where the parties share a significant trading interest – such as preferred customers or suppliers – shall not be considered “arm’s length” transactions. In any transfers of Products between the Company and Related Entities and Related Entities and their respective Related Entities, Net Sales shall be equal to the higher of (i) fair market value of the Products assuming an arm’s length transaction made in the ordinary course of business and (ii) the total amount invoiced by such Related Entity on resale to an independent third party purchaser; in each case after deducting discounts and sales taxes as set forth above.

In the event of sales not made at “arms length”, Net Sales shall be calculated in accordance with arm’s length prices determined by the current market conditions, or in the absence of such conditions, according to the assessment of an independent valuer to be selected by the parties.

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“ Product ” - means any product and/or product component and/or production supplement and/or process directly and/or indirectly based on and/or related to the Registered Patents and/or the Development Results or any part thereof, or any other product not licensed from a third party, which is sold by the Company within the Scope.

“ Registered Patents ” - means all patent applications and/or registered patents detailed in Appendix A (except for Yissum File No. 2610, which Licensor agreed to assign to Company), any patent application that claims priority therefrom; all divisions, continuations, continuations-in-part, re-examinations, reissues, substitutions, or extensions – including European Special Protection Certificates (“SPCs”) – and any and all patents issuing from, and inventions, methods, processes, and other patentable subject matter disclosed or claimed in, any and all of the foregoing.

“ Related Entity ” – means any person or organization controlling, controlled by or under common control with the Company, including any parent, subsidiary or affiliate company. The term “control” shall mean direct or indirect ownership of more than 10% (ten percent) of the outstanding stock or other voting interest, entitled to vote for the election of directors or to direct the management and policies of any party, directly or indirectly.

“ Research ” - means the research related to the Registered Patents carried out and conducted in the University under the supervision of the Researchers between August 1, 2000 and May 31, 2001.

“ Researcher ” - means Professor Ed Mitrani and Professor Amos Panet, or such other person as determined and appointed from time to time by the Licensor to supervise and to perform the Research, if applicable.

“ Research Results ” - means the Research, including any Registered Patents, information, material, results, devices and/or Registered Patents arising therefrom.

“ Royalties ” – means royalties calculated on the basis of Net Sales at the rate set forth in Section 5.

“ Sub-License ” - As defined in section 4.

“ Sub-License Considerations ” – means any proceeds and/or consideration and/or benefit of any kind whatsoever that the Company may receive from a Sub-Licensee or distributor as a direct or indirect result of the grant of an option or a right to sub-license, manufacture, market or distribute the Registered Patents and/or the Product.

“ Sub-License Fees ” - means fees calculated on the basis of Sub-License Considerations at the rates set forth in Section 5.

“ Sub-Licensee ” – means any third party to whom the Company shall transfer any right or option of a right to sub-license, manufacture, market or distribute the Registered Patents and/or the Product, or any other right granted under the License. For the sake of clarity, Sublicensee shall include sub-sub-licensees, if permitted hereunder, and any other third party to whom such rights shall be transferred, assigned, or who may assume control thereof by operation of law or otherwise, but shall not include Subcontractors (as defined below). Sublicensees shall also include Distributors, as defined hereinabove.

“ Subcontractors ” - means any third party, who does not pay any type of consideration to the Company and/or Related Entities and/or Sub-licensees, who is engaged by the Company, to perform services on behalf of the Company and/or its Sub-licensee or and/or sub-sub-licensee and the Company continues to maintain control and responsibility over the performance of the services.

“ Territory ” - means worldwide.

“ University ” - means the Hebrew University of Jerusalem and/or each of its branches.

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The License

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.

Nothing in the above License shall derogate from the Licensor’s right to continue to use the Registered Patents, for non-commercial, academic (research and education) purposes only.

Term of the License

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.

Sub-Licenses

(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.

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(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.

Considerations

(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.

Notwithstanding sub-sections (b) and (c) above, the total aggregate payment of Royalties and Sub-License Fees from the Company to Licensor shall not exceed US $10,000,000.

(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 ” ).

No later than March 31, 2006, the Company shall issue the Licensor shares in the company constituting 5% of the issued and outstanding share capital of the Company, post the initial expected investment in the Company of $750,000 USD (“Initial Investment Round”), all as set forth in the Appendix G for no additional consideration (hereinafter: the “Equity ”), the Company shall forgive the payment of the outstanding License and Patent Fees Debt. The Company warrants that the Licensor and the Licensor’s Equity shall benefit from the same terms provided to the other shareholders in the Company, who shall be investing in the Company in the Initial Investment Round and that shares issued to the Licensor shall be of the same type and class as shares issued to the other shareholders investing in the Initial Investment Round, all as shall be defined and detailed in the Stock Purchase Agreement and the Shareholders Agreement to which the Licensor shall be signatory. The Company shall provide the Licensor with all relevant documentation evidencing such issue, including but not limited to a share certificate in the name of the Licensor.

Upon the issuance of the Equity and provision of documentation in respect of same as set forth herein, the License and Patent Fees Debt shall be deemed to be paid in full and the Licensor to have waived any claim in respect thereof. In the event the Company shall not be able to issue the Equity by March 31, 2006, the Company shall be obligated to pay the Licensor the License and Patent Fees Debt plus all accrued interest until date of actual payment or in the alternative the Licensor shall be entitled to terminate this Agreement in accordance with section 14(b)(3).

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For the sake of clarity, all new patent expenses incurred in relation to the registration or maintenance of the Registered Patents as of May 23, 2005, the date of execution of the Memorandum of Understanding and until date of execution of this Agreement, will be paid by the Company, as follows: (i) $10,000 USD no later than January 31, 2006 upon receipt of Yissum’s invoice and (ii) the remaining balance within 10 days following the closing of the Initial Investment Round, but in any event no later than March 31, 2005.

It is further hereby agreed that upon the date of signature hereof, the Licensor shall be entitled to appoint an observer (hereinafter: the “ Observer ”), at its sole discretion, to the Board of the Company, for a period of three years. The Observer shall be invited to attend the Board of the Company, at no expense to the Company, all meetings of the Board of Directors of the Company, and shall receive copies of all reports distributed to members of the Board of Directors. The Observer shall not have any voting rights. The Company hereby undertakes to take any actions or issue any decisions necessary to enable the appointment of the Observer, in accordance with the terms herein, including but not limited to amendment of the incorporation documents of the Company.

Reports and Accounting

(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.

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(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.

Development and Commercialization

(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.

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Ownership

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.

In addition, all intellectual property, including all know-how and/or patents developed during the course of the Further Research, conducted in accordance with section 7(d), shall solely owned by Yissum and licensed to the Company under the terms and conditions of this Agreement.

The Parties agree that the Development Results (as defined above) developed solely by or on behalf of the Company, without the involvement of the Licensor and/or Prof. Mitrani and/or Prof. Panet or other researcher of the Hebrew University, and which do not form part of the License or Further Research shall belong solely to the Company.

The Company is free at its sole discretion to prepare, file, and otherwise manage any patents related to the Development Results, without any approval or involvement of the Licensor, and for such patents sections 9 (a) – (e) below do not apply.

Patents

(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.

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For the avoidance of doubt, the provisions of this Agreement and of Appendix “A” do not constitute confirmation and/or representation by the Licensor in connection with the validity and/or applicability of any of the patents and/or patent registration applications detailed in Appendix “A”, and the Licensor hereby expresses that it made no representation as to the validity of the patents and/or patent applications as aforesaid before the submission thereof for registration. The Company affirms that it has reviewed the Registered Patents, that it has had the opportunity to acquire independent advice as to Registered Patents, including their protection, validity and coverage in specific geographical areas and that it is satisfied with the information and data it received.

(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.

Patent Rights Protection

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.

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Confidentiality

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.

Publications

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.

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(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.

Liability and Indemnity

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.

The Company acknowledges, declares and represents that nothing in this Agreement may be deemed to be a representation or warranty by Yissum of the validity of any of the Registered Patents detailed herein, or their registrability or of their accuracy, efficacy, or usefulness, safety for any purpose. Other than normal patent maintenance detailed in section 9 hereinabove, Yissum bears no responsibility whatsoever in relation to patent coverage in specific geographical areas, including the patent protection afforded therein. The Company waives all claims and/or demands of Yissum in relation thereto.

(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.

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(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.

Such comprehensive general liability insurance shall provide: (i) product liability coverage; (ii) contractual liability coverage for the Company’s indemnification under this Agreement and in particular as stated above in sub-section (c); and (iii) name the Licensor as an additional insured without any right of subrogation against the Licensor.

(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.

Termination of the Agreement

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.

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(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.

The Company shall return and/or transfer to the Licensor, within 30 days of termination, all material, in soft or hard copy, relating to the Registered Patents and/or results of the Further Research and/or Development Results and/or Product connected with the License, and it may not make any further use thereof. In case of termination as set out herein, the Company will not be entitled to any reimbursement of any amount paid to the Licensor in terms of this Agreement. The Licensor shall be entitled to conduct an audit in order to ascertain compliance with this provision and the Company agrees to allow access to the Licensor and/or its representatives for this purpose.

(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”).

Law

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.

Notwithstanding the above, the Company hereby agrees that, in the event that no treaty exists upholding the enforceability of temporary orders or decisions issued by Israeli courts in the foreign jurisdiction in which the Licensor may require such an order or decision to be upheld, the Licensor may, at its own discretion, elect the place of jurisdiction for the obtaining of writs against the Company. The Company undertakes not to object to the enforcement against it of writs and decisions issued by any aforesaid jurisdiction under such circumstances. The Company hereby waives any immunity it may have against enforcement of any judgment obtained against it by the Licensor.

Arbitration

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.

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Miscellaneous

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.

In the event of assignment in connection with a merger, acquisition or other change of control, the Company undertakes to ensure that it successors shall be bound by the terms and conditions of this Agreement as if they were a party to this Agreement. Failure to do so shall entitle the Licensor to terminate this Agreement under section 14 (a).

(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.

Non-compliance with this sub-section constitutes a fundamental breach of this agreement and the Licensor, at its sole discretion, shall have the right to terminate the Agreement under terms and conditions as stated in section 14.

The Company acknowledges that pursuant to the Consultancy Agreements with the Prof. Ed Mitrani, the Company owes Consultancy Fees to the Prof. Mitrani, in the total amount detailed in Appendix H, (hereinafter : “ Unpaid Consultancy Fees ”). The Company hereby agrees to make full payment of the Unpaid Consultancy Fees, in accordance with the agreed payment Schedule detailed in Appendix H.

(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.

Page 15 of 24

Notices

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:

Yissum Research Development Company

of the Hebrew University of Jerusalem,

P.O. Box 39135,

Jerusalem 91390

Israel

The Company –________________________________

or such other address furnished in writing by one party to the other. Any notice sent as aforesaid shall be deemed to have been received seven days after being posted by registered mail with copy by receipted fax or email with written confirmation.

******

IN WITNESS THE HANDS OF THE PARTIES

THE LICENSOR			THE COMPANY

By:			By:

Name:			Name:

Title:			Title:

Date:			Date:

We the undersigned, Prof. Mitrani and Prof Panet, have reviewed, are familiar with and agree to all of the above terms and conditions. We hereby undertake to fully cooperate with the Licensor in order to ensure its ability to fulfill its obligations hereunder, as set forth herein.


Prof.			Date signed


Prof.			Date signed

Page 16 of 24

Appendix A

The Registered Patents and the Scope

DEFINITIONS OF TECHNOLOGY AND SCOPE :

Yissum has patent/s rights developed by Prof./Dr. Ed Mitrani in the field of exploitation of Micro Organ and the micro-organ technologies (MO) described in the Registered Patents and Patent Applications and know how and technical data developed by Prof./Dr. Ed Mitrani and Prof./Dr. Amos Panet in the field of exploitation of Micro Organ and the micro-organ technologies (MO) (“Technology”) for production and use of:

MO whose genetic material has been modified from its natural state by transfection using any transfection technique (viral or other means), or are derived from transgenic animals altered by genetic engineering methods and are used exclusively in,

a.) In developing or implementing gene therapy, i.e., the introduction to the body of genes (whether foreign or modified autologous) for the purpose of producing recombinant proteins used in the prevention, treatment, diagnosis or curing disease.

b) In the development, in vitro testing and in vivo production of recombinant proteins or nucleic acids including DNA and RNA, whether sense RNA or antisense RNA.

c) Using MOs whose genetic material has not been modified or that are derived from non transgenic animals, solely and exclusively for testing the safety, efficacy and quality assurance of the MOs whose genetic material has been modified or that are derived from transgenic animals, as aforesaid, whether in vitro or in vivo, whether in the recipient or in another body. (“Scope”)

The Scope will NOT include:

a) Use of liver MO;

b) Use of kidney MO;

c) Use of pancreas MO;

d) Uses of MO for the purpose of inducing angiogenesis, which includes stimulating and/or promoting the growth or formation of new and/or nascent blood vessels, and/or the maintenance of said affected blood vessels.

For the sake of clarity uses of MO as defined in a) through c) above, for the induction of physiological vasoconstriction and vasodilatation and to the extent that they are not for the purpose of inducing angiogenesis as therapeutic, as aforesaid, are not excluded.

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Appendix B

License Fee

The Company hereby undertakes to pay the Licensor a License Fee in the amount of Four Hundred Thousand US Dollars (US$400,000), in the following manner;

(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

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Appendix C

Consultancy Agreements

Page 22 of 24

Appendix D

Consultancy Fee Payment Schedule

Page 23 of 24

Appendix E

The Development Plan

APPENDIX E: Initial Development Plan DRAFT Nov. 23, 2005

Subject to approval by the Company’s Board of Directors, the following summarizes the key elements of the Development plan.

Objectives of the development plan are to achieve a clinical BP-EPO version with protein production profile judged likely to be capable of successfully providing at least 4-6 months’ elevated hematocrit in CKD patients. The key challenge is to demonstrate that at least one of the new, custom vectors (currently comprising varieties of AAV vectors, and gutless Adeno vectors) yield the required quantities of EPO production per Biopump for several months in vitro and in SCID mice. Based on the preliminary results before operations shut down, this appears achievable through optimization work typical of what the company has done to date. This would be followed in the next stage, with further funding, by a proof-of-concept clinical trial similar to the proof-of-principle trial, but one which Medgenics believes has high likelihood to demonstrate clinically useful performance.

Stage 1: the first stage of the restart plan is designed to achieve the key performance milestone within 12 months of new funding: clear in-vitro and in-vivo evidence of the requisite long lasting Biopump performance for EPO, with clear path to clinical trial approval. This will be accomplished using manual biopump preparation, not using the Bioreactor. The Bioreactor is to be operated and tested on a modest scale during the latter part of Stage 1, as a benchmark prior to optimization to proof of concept as part of Stage 2. The new vectors will be tested and optimized using human skin microogans obtained from freshly removed skin slabs in abdominoplasty procedures, as was done previously. Several aspects of the processing protocol, shown to optimize results in previous testing with the original vectors, will be tested for best results using the new vectors in Biopumps. Steps towards key milestone include:

Demonstration of significant EPO secretion from each of the new, completed vectors

Demonstration of requisite sustained levels for at least 2 months, without signs of imminent decline, from at least one of the vectors

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

In parallel:

Key patents will be maintained and national phase filings pursued

Preparations for potential GMP production of the selected vector.

In addition, the selected vector will also be prepared with the gene for an additional, commercially attractive protein, with feasibility demonstrated in vitro and in mice by month 15.

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EXHIBIT 10.24

NON-EXCLUSIVE LICENSE AGREEMENT

Re: BLG# 03-037 , “Large Scale Production of Helper-Dependent Adenoviral Vectors”

and

BLG# 01-064 , “Bacterial Recombination for Generation of Helper-Dependent Adenoviral Vector”

This Non-Exclusive License Agreement (hereinafter called “Agreement”), to be effective as of the 25 th day of January, 2007 (hereinafter called “Agreement Date”), is by and between Baylor College of Medicine (hereinafter called “BAYLOR”), a Texas nonprofit corporation having its principal place of business at One Baylor Plaza, Houston, Texas 77030, and Medgenics, Inc., a corporation organized under the laws of Delaware and having a principal place of business at Hanapach 12, Karmiel 20101, Israel, and its Affiliates (hereinafter, collectively referred to as “MEDGENICS”).

WITNESSETH:

WHEREAS, BAYLOR is the owner of the Subject Technology as defined below; and

WHEREAS, BAYLOR is willing to grant a royalty bearing, worldwide, non-exclusive license to the Subject Technology to MEDGENICS on the terms set forth herein; and

WHEREAS, MEDGENICS desires to obtain said non-exclusive license under the Subject Technology.

WHEREAS BAYLOR has created modifications of Subject Technology for MEDGENICS pursuant to two (2) collaboration agreements dated January 25, 2006 and April 6, 2006 (the “Collaboration Agreements”) copies attached in Appendix C.

NOW, THEREFORE, for and in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto expressly agree as follows:

1.	DEFINITIONS AS USED HEREIN

1.1 The term “Affiliates” shall mean any corporation, partnership, joint venture or other entity of which the common stock or other equity ownership thereof is twenty five percent (25%) or more owned by MEDGENICS.

1.2 The term “Developers” shall mean Philip Ng, Brendan Lee, Arthur Beaudet and Gabriele Toietta employees of BAYLOR.

1.3 The term “Licensed Product(s)” shall mean any product, process or service that incorporates, utilizes or is made with the use of the Subject Technology.

l.4 The term “MEDGENICS Technology” shall mean technology, owned or controlled by MEDGENICS, including, but not limited to, expression constructs provided to BAYLOR by MEDGENICS under the Collaboration Agreements and other technology generally relating to use of a living tissue sample as a production unit for proteins or other therapeutics.

-1-

1.5 The term “Party” shall mean either MEDGENICS or BAYLOR, and “Parties” shall mean MEDGENICS and BAYLOR.

1.6 The term “Subject Technology” shall mean: (i) Helper Dependent Adenovirus pHD Δ 28E4, Helper Virus AdNG163 and Producer Cell Line 116, developed as of the Agreement Date and supplied by BAYLOR together with any progeny, mutants or modifications thereof created and supplied by BAYLOR under the Collaboration Agreements or created by MEDGENICS; even if MEDGENICS ’ expression constructs are inserted into pHDΔ28E4 as combined under separate collaboration agreements with Baylor or with third parties, the pHDΔ28E4 (but not the expression constructs) remains Subject Technology, (ii) a protocol for production of the Helper Dependent Adenovirus using the Producer Cell Line 116 and the Helper Virus AdNG163 as conducted at BAYLOR and as requested by Medgenics.

MEDGENICS is hereby notified that the subject Technology is considered a “Created Cre-Lox Material”, as defined in Appendix A, and therefore the provisions of Appendix A shall apply.

2.	GRANT OF L1CENSE

2.1 Subject to the limitations in 2.2 below, BAYLOR hereby grants to MEDGENICS a non-exclusive, worldwide, sublicensable license under the Subject Technology, to make, have made, use, market, sell, offer to sell, lease and import Licensed Products.

2.2 Grant limitations include (i) the right to market, sell or offer to sell the Subject Technology only in the context of a use with MEDGENICS Technology, (ii) sublicense of the Subject Technology only in conjunction with a license or sublicense of MEDGENICS Technology which use depends on Subject Technology, (iii) no other transfers except as provided for in 2.4 below are allowed without BAYLOR’s permission which shall in be BAYLOR’s sole discretion, (iii) the grant does not include right to file patent applications on the Subject Technology or for the use of the Subject Technology without BAYLOR’s prior written approval, which approval shall be in BAYLOR’s sole discretion. Such right and license shall include, but not be limited to, the right to generate modifications of the Subject Technology, for example modifications of expression construct or placement of an expression construct within the vector. Any modifications created within the context of the Subject Technology supplied by Baylor are considered Subject Technology and subject to this Agreement.

2.3 Government Reservation. Rights under this Agreement are subject to rights required to be granted to the Government of the United States of America pursuant to 35 USC Section 200-212, including a non-exclusive, nontransferable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States the subject inventions throughout the world.

2.4 In addition to the rights granted in Paragraph 2.1, MEDGENICS shall have the right under the license granted in this Agreement to transfer the Subject Technology to third party contract service providers (“Service Provider”) for the sole purpose of propagating and producing Licensed Products and/or Subject Technology for MEDGENICS. MEDGENICS warrants that it has, or will enter into prior to transfer of Subject Technology, agreements with the Service Provider binding the Service Provider to obligations of confidentiality and non-use consistent with the provisions of this Agreement. Such agreement with Service Provider shall also prohibit transfer of the Subject Technology to third parties.

PAYMENTS

3.1 As partial consideration for the rights conveyed by BAYLOR under this Agreement, MEDGENICS shall pay BAYLOR a one-time non refundable license fee of twenty five thousand dollars ($25,000) upon receipt of invoice as described in Paragraph 3.9. For purposes of clarification. this is a one-time fee only and is intended to cover the license of all Subject Technology, including the “Combined MateriaIs ” as defined in and provided under the Collaboration Agreements, or the production of equivalent combined materials with the same or different expression cassettes under future collaboration agreements.

-2-

3.2 In addition to the foregoing license execution fee, MEDGENICS agrees to pay to BAYLOR an annual non refundable maintenance fee of twenty thousand dollars ($20,000), which shall be due and payable on the first anniversary and on each subsequent anniversary of the Agreement Date and upon receipt of invoice as described in Paragraph 3.9. For purposes of clarification, this annual maintenance fee is intended to cover the license of all Subject Technology, including the “Combined Materials” as defined in and provided under the Collaboration Agreements, or the production of equivalent combined materials with the same or different expression cassettes under future collaboration agreements.

3.3 MEDGENICS shall also pay BAYLOR the following milestone payments set forth below:

(i) a one-time, seventy five thousand dollar ($75,000) payment upon FDA clearance or non-US equivalent of clearance for therapeutic use.

(ii) twenty five thousand dollars ($25,000) upon execution of any sublicenses that MEDGENICS executes for the Subject Technology.

MEDGENICS shall notify BAYLOR in writing within thirty (30) days upon the achievement of such milestone, such notice to be accompanied by payment of the appropriate milestone payment. Milestones are to be paid regardless of whether MEDGENICS or MEDGENICS’ sublicensee attains such milestone. The FDA clearance milestone in 3.3 (i) shall be paid only once upon the first FDA or foreign equivalent approved indication, it being understood and agreed that no further clearance milestone payments shall be due by MEDGENICS in connection any future FDA or foreign equivalent approvals.

3.4 MEDGENICS shall also provide to BAYLOR the following materials and documentation, subject to the agreement of any third parties whose intellectual property or other rights may be involved:

(i) one quarter (1/4) of the Master Cell Bank for the Producer Cell Line 116 as generated by MEDGENICS or a contractor thereof, and;

(ii) one quarter (1/4) of the Master Virus Bank for the Helper Virus AdNG163 as generated by MEDGENICS or a contractor thereof and

(iii) copies of documentation on the processes used for creating the clinical grade Licensed Products.

If MEDGENICS no longer requires use of MEDGENICS’ portion of the Master Cell Bank and/or Master Virus Bank created, any unused portion of these will be provided to BAYLOR.

3.5 Should MEDGENICS fail to make any payment or obligation whatsoever due and payable to BAYLOR hereunder, after due provision of notice by BAYLOR and failure to cure by MEDGENICS pursuant to Section 8, BAYLOR may, at its sole option, terminate this Agreement as provided in Section 8.

3.6 All payments due hereunder shall be deemed received when funds are credited to BAYLOR’s bank account and shall be payable by check or wire transfer in United States dollars. For sales of Licensed Products in currencies other than the United States, MEDGENICS shall use exchange rates published in The Wall Street Journal on the last business day of the calendar quarter that such payment is due. No transfer, exchange, collection or other charges, including any wire transfer fees, shall be deducted from such payments.

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3.7 Late payments shall be subject to a charge of one and one-half percent (1.5%) per month, the interest being compounded annually, or two hundred fifty dollars ($250.00), whichever is greater. MEDGENICS shall calculate the correct late payment charge, and shall add it to each such late payment. Said late payment charge and the payment and acceptance thereof shall not negate or waive the right of BAYLOR to seek any other remedy, legal or equitable, to which it may be entitled because of the delinquency of any payment.

3.8 If payments are sent by check, they shall be sent to the address listed in Paragraph 12.1. If payments are sent by wire transfer, they shall be sent using the wiring instructions sent by BAYLOR.

3.9 Any amounts payable to BAYLOR hereunder shall be made in full within thirty (30) days after receipt by MEDGENICS of an invoice covering such payment. The Parties understand and agree that one (1) invoice will be sent to MEDGENICS by BAYLOR for each fee due. The invoice shall be in the form in Appendix B. Any additional fees, such as taxes, wire or transfer fees, will not be included in the invoice, but payment of such fees shall remain the responsibility of MEDGENICS and shall not be deducted from the payment due BAYLOR. Subsequent invoices, if requested by MEDGENICS, shall be subject to an administrative fee of five hundred dollars ($500), in addition to the original payment due to BAYLOR plus any interest charges incurred due to delays in payment, if applicable. The calculation and payment of such interest payments shall not be invoiced and shall be the sole responsibility of the MEDGENICS. Invoices shall be sent via facsimile to the address listed in Paragraph 12.2. If MEDGENICS requires an original invoice, such invoice shall be sent via overnight courier using MEDGENICS’ courier Fedex (Name Courier) account number 242068602.

3.10. The parties agree that the amounts and materials indicated in this Section 3 constitute the total consideration and payment due by MEDGENICS to BAYLOR for all rights granted and materials provided under this Agreement. For clarity if MEDGENICS requests further work of BAYLOR such as production of vectors or generation of combined materials, such work shall be conducted under a collaboration agreement and BAYLOR shall charge Medgenics for the cost of such work. However, as long as no additional BAYLOR technology, other than the Subject Technology, are required by MEDGENICS, no further license or payments are required of MEDGENICS.

REPORTING

4.1 No later than sixty (60) days after December 31 of each calendar year, MEDGENICS shall provide to BAYLOR a written annual progress report describing progress on research and development, regulatory approvals, during the most recent twelve (12) month period ending December 31.

4.2 MEDGENICS shall report to BAYLOR the date of first sale of Licensed Products within thirty (30) days of occurrence.

4.3 In the event of acquisition, merger, change of corporate name, or change of make-up, organization, or identity, MEDGENICS shall notify BAYLOR in writing within thirty (30) days of such event.

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5.	TRANSFER OF SUBJECT TECHNOLOGY

5.1 Subject to its receipt of the license fee described in Paragraph 3.1 BAYLOR shall provide MEDGENICS with Subject Technology within thirty (30) days following MEDGENIC’S written request as follows: 1 (one) 1ml vial of Producer Cell Line 116 at approximately 3 X 10 6 cells/vial.; one vial at 10e10 vp of Helper Virus AdNG163; 10 micrograms of Helper Dependent Adenovirus pHD Δ 28E4 plasmid DNA and a protocol for production of the Helper Dependent Adenovirus using the Producer Cell Line 116 and the Helper Virus AdNG163 as conducted at BAYLOR..

In addition to the Subject Technology described above, BAYLOR will also provide MEDGENICS with 10 micrograms each of the following Combined Materials as generated under the Collaboration Agreernents:

CAG-EPO and CMV-EPO

CAG-codon optimized hINFalpha,

CMV-codon optimized hINFalpha,

CAG-codon optimized hEPO

CMV-codon optimized hEPO

5.2 Such Subject Technology shall be sent to MEDGENICS at MEDGENICS’ expense and only upon receipt by BAYLOR of the necessary address and courier account information specified by MEDGENICS in its written request per Section 5.1.

6.	SUBLICENSES

All sublicenses granted by MEDGENICS of its rights hereunder shall be subject to the terms of this Agreement. MEDGENICS shall be responsible for its sublicensees and shall not grant any rights which are inconsistent with the rights granted to and obligations of MEDGENICS hereunder. Any act or omission of a sublicensee which would be a breach of this Agreement if performed by MEDGENICS shall be deemed to be a breach by MEDGENICS of this Agreement. No such sublicense agreement shall contain any provision which would cause it to extend beyond the term of this Agreement. MEDGENICS shall give BAYLOR prompt notification of the identity and address of each sublicensee with whom it concludes a sublicense agreement and shall supply BAYLOR with a copy of each such sublicense agreement.

7.	TERM AND EXPIRAT1ON

Unless sooner terminated as otherwise provided in Section 8, the license to employ Subject Technology granted herein as part of Section 2 shall expire on the first date following the tenth (10 th ) anniversary of the first commercial sale of Licensed Products by MEDGENICS. After such expiration, MEDGENICS shall have a perpetual, paid-in-full (i.e., royalty free) license to the Subject Technology.

8.	T ERMINATION

8.1 In the event of default or failure by either party to perform any of the terms, covenants or provisions of this Agreement, the other party shall have thirty (30) days after the giving of written notice of such default by the non-defaulting party to correct such default. If such default is not corrected within the said thirty (30) day period, the non-defaulting party shall have the right, at its option, to cancel and terminate this Agreement. The failure of BAYLOR to exercise such right of termination, for non-payment of royalties/ fees or otherwise, shall not be deemed to be a waiver of any right BAYLOR might have, nor shall such failure preclude BAYLOR from exercising or enforcing said right upon any subsequent failure by MEDGENICS.

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8.2 BAYLOR shall have the right, at its option, to cancel and terminate this Agreement in the event that MEDGENICS shall (i) become involved in insolvency, dissolution, bankruptcy or receivership proceedings affecting the operation of its business or (ii) make an assignment of all or substantially all of its assets for the benefit of creditors, or in the event that (iii) a receiver or trustee is appointed for MEDGENICS and MEDGENICS shall, after the expiration of thirty (30) days following any of the events enumerated above, have been unable to secure a dismissal, stay or other suspension of such proceedings.

8.3 MEDGENICS shall have the right in its sole discretion to terminate this Agreement upon sixty (60) days’ written notice to BAYLOR.

8.4 1n the event of termination of this Agreement, all rights to the Subject Technology shall revert to BAYLOR, it being understood and agreed that any Medgenics Technology shall not revert to BAYLOR. At the date of any termination of this Agreement, MEDGENICS shall immediately cease using any of the Subject Technology and MEDGENICS shall immediately destroy the Subject Technology and send to BAYLOR a written affirmation of such destruction signed by an officer of MEDGENICS; provided, however, that MEDGENICS may sell any Licensed Products actually in the possession of MEDGENICS on the date of termination, provided that MEDGENICS otherwise complies with the terms of this Agreement.

8.5 MEDGENICS shall provide, in all sublicenses granted by it under this Agreement, that MEDGENICS’ interest in such sublicenses shall, at BAYLOR’s option, terminate or be assigned to BAYLOR upon termination of this Agreement under Section 8.

8.6 In the event this Agreement is terminated pursuant to this Section 8, or expires as provided for in Section 7, BAYLOR is under no obligation to refund any payments made by MEDGENICS to BAYLOR prior to the effective date of such termination or expiration.

8.7 No termination of this Agreement shall constitute a termination or a waiver of any rights of either Party against the other Party accruing at or prior to the time of such termination. The obligations of Sections 11, 13 and 14 shall survive termination of this Agreement.

9.	ASSIGNABILITY

Without the prior written approval of BAYLOR, which will not be unreasonably withheld, neither this Agreement nor the rights granted hereunder shall be transferred or assigned in whole or in part by MEDGENICS to any person or entity whether voluntarily or involuntarily, by operation of law or otherwise. BAYLOR’s consent to assignment is dependent in part on; MEDGENICS providing to BAYLOR prompt notice of such action and documentation that the successor entity or Affiliate, as the case may be, acknowledges its consent and agreement to the terms of this Agreement in writing before such assignment; and so long as such action is not entered into solely to satisfy creditors of MEDGENICS. This Agreement shall be binding upon and shall inure to the benefit of the respective successors, legal representatives and assignees of BAYLOR and MEDGENICS.

10.	GOVERNMENT COMPLAINCE

10.1 MEDGENICS shall at all times during the term of this Agreement and for so long as it shall use the Subject Technology or sell Licensed Products, comply and cause its sublicensees to comply with all laws that may control the import, export, manufacture, use, sale, marketing, distribution and other commercial exploitation of the Subject Technology or Licensed Products or any other activity undertaken pursuant to this Agreement.

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11.	ARBITRATION

11.1 Amicable Resolution. The Parties shall attempt to settle any controversy between them amicably. To this end, a senior executive from each Party shall consult and negotiate to reach a solution. The Parties agree that the period of amicable resolution shall toll any otherwise applicable statute of limitations. However, nothing in this clause shall preclude any Party from commencing mediation if said negotiations do not result in a signed written settlement agreement within thirty (30) days after written notice that these amicable resolution negotiations have commenced.

11.2. Mediation. If a controversy arises out of or relates to this agreement, or the breach thereof, and if the controversy cannot be settled through amicable resolution, the Parties agree to try in good faith to settle the controversy by mediation before resorting to final and binding arbitration. The Party seeking mediation shall propose five mediators, each of whom shall be a lawyer licensed to practice by the state of Texas, having practiced actively in the field of commercial law for at least fifteen (15) years, to the other Party who shall select the mediator from the list. The Parties shall split the cost of the mediator equally. The Parties agree that the period of mediation shall toll any otherwise applicable statute of limitations. However, nothing in this clause shall preclude any Party from commencing arbitration if said negotiations do not result in a signed written settlement agreement within sixty (60) days after written notice that amicable resolution negotiations have commenced.

11.3 Arbitration. Any dispute, controversy, or claim arising out of or relating to this Agreement, or the breach, termination or invalidity thereof, including claims for tortious interference or other tortious or statutory claims arising before, during or after termination, providing only that such claim touches upon matters covered by this Agreement shall be finally settled by arbitration administered by the American Arbitration Association pursuant to the Commercial Arbitration Rules in force at the time of the commencement of the arbitration, except as modified by the specific provisions of this Agreement. It is the specific intent of the Parties that this arbitration provision is intended to be the broadest form allowed by law.

11.4 Parties to Arbitration. This agreement to arbitrate is intended to be binding upon the signatories hereto, their principals, successors, assigns, subsidiaries and affiliates. This agreement to arbitrate is also intended to include any disputes, controversy or claims against any Party’s employees, agents, representatives, or outside legal counsel arising out of or relating to matters covered by this Agreement or any agreement in which this Agreement is incorporated.

11.5 Consolidation Permitted. The Parties expressly agree that any court with jurisdiction may order the consolidation of any arbitrable controversy under this Agreement with any related arbitrable controversy not arising under this Agreement, as the court may deem necessary in the interests of justice or effeciency or on such other grounds as the court may deem appropriate.

11.6 Entry of Judgement. The Parties agree that a final judgment on the arbitration award may be entered by any court having jurisdiction thereof.

11.7 Appointing Arbitrators. The American Arbitration Association shall appoint the arbitrator(s) from its Large, Complex Claims Panel. If such appointment cannot be made from the Large, Complex Claims Panel, then from its Commercial Panel. The Parties hereby agree to and acquiesce in any appointment of an arbitrator or arbitrators that may be made by such appointing authority.

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11.8. Qualifications of the Arbitrator(s). The arbitrator(s) must be a lawyer, having practiced actively in the field of commercial law for at least fifteen (15) years.

11.9. Governing Substantive Law. The arbitrator(s) shall determine the rights and obligations of the Parties according to the substantive laws of the State of Texas (excluding conflicts of law principles) as though acting as a court of the State of Texas.

11.10 Governing Arbitration Law. The law applicable to the validity of the arbitration clause, the conduct of the arbitration, including any resort to a court for provisional remedies, the enforcement of any award and any other question of arbitration law or procedure shall be the Federal Arbitration Act.

11.11 Governing Convention. The Parties elect to have the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958 (instead of the Inter-American New York Convention on International Commercial Arbitration of August 15, 1990) govern any and all disputes that may be the subject of arbitration pursuant to this Agreement.

11.12 Preliminary Issues of Law. The arbitrator(s) shall hear and determine any preliminary issue of law asserted by a Party to be dispositive of any claim, in whole or part, in the manner of a court hearing a motion to dismiss for failure to state a claim or for summary judgment, pursuant to such terms and procedures as the arbitrator(s) deems appropriate.

11.13 Confidentiality. The Parties and the arbitrator(s) shall treat all aspects of the arbitration proceedings, including without limitation discovery, testimony and other evidence, briefs and the award, as strictly confidential. Further, except as may be required by law, neither Party nor the arbitrator(s) may disclose the existence, content, or results of any arbitration hereunder without the prior written consent of both Parties.

11.14 Place of Arbitration. The seat of arbitration shall be Houston, Texas, USA.

11.15 Language. The arbitration shall be conducted in the English language. All submissions shall be made in English or with an English translation. Witnesses may provide testimony in a language other than English, provided that a simultaneous English translation is provided. Each Party shall bear its own translation costs.

11.16. Punitive Damages Prohibited. The Parties hereby waive any claim to any damages in the nature of punitive, exemplary, or statutory damages in excess of compensatory damages, or any form of damages in excess of compensatory damages, and the arbitrator(s) is/are specially divested of any power to award any damages in the nature of punitive, exemplary, or statutory damages in excess of compensatory damages, or any form of damages in excess of compensatory damages.

11.17 Costs. The Party prevailing on substantially all of its claims shall be entitled to recover its costs, including attorneys’ fees, for the arbitration proceedings, as well as for any ancillary proceeding, including a proceeding to compel or enjoin arbitration, to request interim measures or to confirm or set aside an award.

11.18 Survive. The provisions of this Section 11 shall survive expiration or termination of this Agreement.

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12.

ADDRESSES

12.1 All payments shall be made payable to “Baylor College of Medicine” and shall be sent to the address below, and shall reference the applicable BLG numbers listed on the front page of the Agreement.

BAYLOR Tax ID #: 74-1613878

Director, Baylor Licensing Group

Baylor College of Medicine

One Baylor Plaza, BCM210-600D

Houston, TX 77030

Telephone No.

713-798-6821

Facsimile No.

713-798-1252

E-mail

blg@bcm.tmc.edu

12.2 For questions about payments, BAYLOR can contact MEDGENICS at the address below:

Title Ms.

Name Phyllis Bellin

Address 12 Hanapach St. POB 6314 Karmiel 21653 ISRAEL

Telephone No.

+972-4-958-8555

Facsimile No.

+972-4-990-5683

E-Mail

Phyllis@medgenics.com

12.3 All notices, reports or other communication pursuant to this Agreement shall be sent to such Party via (i) United States Postal Service postage prepaid, (ii) overnight courier, or (iii) facsimile transmission, addressed to it at its address set forth below or as it shall designate by written notice given to the other Party. Notice shall be sufficiently made, or given and received (a) on the date of mailing or (b) when a facsimile printer reflects transmission.

In the case of BAYLOR:

Patrick Turley

Associate General Counsel

Baylor College of Medicine

One Baylor Plaza, BCM210-600D

Houston, TX 77030

Telephone No.

713-798-6821

Facsimile No.

713-798-1252

E-Mail

blg@bcm.tmc.edu

In the case of MEDGENICS:

Title Dr.

Name Andrew L. Pearlman

Address 12 Hanapach St. POB 6314 Karmiel 21653 ISRAEL

Telephone No.

+972-4-958-8555

Facsimile No.

+972-4-990-5683

E-Mail

andy@medgenics.com

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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@pczl aw.com

Attention: Mark Cohen

12.4 Each such report, notice or other communication shall include the applicable BLG numbers listed on the front page of the Agreement.

13.	INDEMNITY, INSURANCE & WARRANTIES

13.1

INDEMNITY.

(i) EACH PARTY SHALL NOTIFY THE OTHER OF ANY CLAIM, LAWSUIT OR OTHER PROCEEDING RELATED TO THE SUBJECT TECHNOLOGY. MEDGENICS AGREES THAT IT WILL DEFEND, INDEMNIFY AND HOLD HARMLESS BAYLOR, ITS FACULTY MEMBERS, SCIENTISTS, RESEARCHERS, EMPLOYEES, STUDENTS, OFFICERS, TRUSTEES AND AGENTS AND EACH OF THEM (THE “INDEMNIFIED PARTIES”), FROM AND AGAINST ANY AND ALL CLAIMS, CAUSES OF ACTION, LAWSUITS OR OTHER PROCEEDINGS (THE “BAYLOR CLAIMS”) FILED OR OTHERWISE INSTITUTED AGAINST ANY OF THE INDEMNIFIED PARTIES RELATED DIRECTLY OR INDIRECTLY TO OR ARISING OUT OF THE DESIGN, PROCESS, MANUFACTURE OR USE BY MEDGENICS OF THE SUBJECT TECHNOLOGY, LICENSED PRODUCTS OR ANY OTHER EMBODIMENT OF THE SUBJECT TECHNOLOGY, OR ANY PERSON OR ENTITY (OTHER THAN BAYLOR OR AN ENTITY ACCESSING THE SUBJECT TECHNOLOGY THROUGH BAYLOR THAT IS NOT UNDER CONTRACT WITH MEDGENICS (FOR EXAMPLE, SERVICE PROVIDERS)) ACCESSING THE SUBJECT TECHNOLOGY THROUGH MEDGENICS EVEN THOUGH SUCH BAYLOR CLAIMS AND THE COSTS (INCLUDING, BUT NOT LIMITED TO, THE PAYMENT OF ALL REASONABLE ATTORNEYS’ FEES AND COSTS OF LITIGATION OR OTHER DEFENSE) RELATED THERETO RESULT IN WHOLE OR IN PART FROM THE NEGLIGENCE OF ANY OF THE INDEMNIFIED PARTIES OR ARE BASED UPON DOCTRINES OF STRICT LIABILITY OR PRODUCT LIABILITY; PROVIDED, HOWEVER, THAT SUCH INDEMNITY SHALL NOT APPLY TO ANY BAYLOR CLAIMS ARISING FROM THE GROSS NEGLIGENCE OR INTENTIONAL MISCONDUCT OF ANY INDEMNIFIED PARTY. MEDGENICS WILL ALSO ASSUME RESPONSIBILITY FOR ALL COSTS AND EXPENSES RELATED TO SUCH BAYLOR CLAIMS FOR WHICH IT IS OBLIGATED TO INDEMNIFY THE INDEMNIFIED PARTIES PURSUANT TO THIS PARAGRAPH 13.1, INCLUDING, BUT NOT LIMITED TO, THE PAYMENT OF ALL REASONABLE ATTORNEYS’ FEES AND COSTS OF LITIGATION OR OTHER DEFENSE.

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(ii) M EDGENICS FURTHER AGREES NOT TO SETTLE ANY CLAIM AGAINST AN INDEMNIFIED PARTY WITHOUT THE INDEMNIFIED PARTY’S WRITTEN CONSENT WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD. MEDGENICS FURTHER AGREES TO KEEP THE INDEMNIFIED PARTIES FULLY APPRISED OF THE BAYLOR CLAIMS.

13.2 Insurance.

(i) MEDGENICS shall for so long as MEDGENICS manufactures, uses or sells any Licensed Product(s) in animals or in a Phase I Clinical Trial (or non-United States equivalent) or in a Phase II clinical trail (or non-United States equivalent) conducted solely in the State of Israel , maintain in full force and effect policies of (a) worker’s compensation insurance within statutory limits prescribed by the applicable State or country where Medgenics has its facilities, (b) employers’ liability insurance with limits of not less than three million dollars ($3,000,000) per occurrence, (c) general liability insurance (with Broad Form General Liability endorsement) with limits of not less than five million dollars ($5,000,000) per occurrence with an annual aggregate of ten million dollars ($10,000,000) and (d) products liability insurance, with limits of not less than five million dollars ($5,000,000) per occurrence with an annual aggregate of ten million dollars ($10,000000).

(ii) MEDGENICS shall for so long as MEDGENICS manufactures, uses or sells any Licensed Product(s) in any Phase II (or non-United States equivalent) Clinical Trials outside the State of Israel, any Phase III Clinical Trials (or non-United States equivalent) or commercially, maintain in full force and effect policies of (a) worker’s compensation insurance within statutory limits prescribed by the applicable State or country where Medgenics has its facilities , (b) employers’ liability insurance with limits of not less than three million dollars ($3,000,000) per occurrence, (c) general liability insurance (with Broad Form General Liability endorsement) with limits of not less than twenty million dollars ($20,000,000) per occurrence with an annual aggregate of forty million dollars ($40,000,000) and (d) products liability insurance, with limits of not less than twenty million dollars ($20,000,000) per occurrence with an annual aggregate of forty million dollars ($40,000000).

(iii) Such coverage(s) shall be purchased from a carrier or carriers having an A. M. Best rating of at least A- (A minus) and shall name BAYLOR as an additional insured. MEDGENICS shall provide to BAYLOR copies of certificates of insurance within thirty (30) days after execution of this Agreement. Upon request by BAYLOR, MEDGENICS shall provide to BAYLOR copies of said policies of insurance. It is the intention of the Parties hereto that MEDGENICS shall, throughout the term of this Agreement, continuously and without interruption, maintain in force the required insurance coverages set forth in this Paragraph 13.2. Failure of MEDGENICS to comply with this requirement shall constitute a default of MEDGENICS allowing BAYLOR, at its option, to immediately terminate this Agreement.

(iv) BAYLOR reserves the right to request additional policies of insurance where appropriate and reasonable in light of MEDGENICS’ business operations and availability of coverage.

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13.3 DISCLAIMER OF WARRANTY. BAYLOR MAKES NO WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO , WARRANTIES OF FITNESS OR MERCHANTABILITY, REGARDING OR WITH RESPECT TO T HE SUBJECT TECHNOLO GY OR LICENSED PRODUCTS AND BAYLOR MAKES NO WARRANTIES OR REPRESENTIONS, EXPRESS OR IMPLIED, OF THE PATENTABILITY OF THE SUBJECT TECHNOLOGY OR LICENSED PRODUCTS OR OF THE ENFORCEABILITY OF ANY PATENTS ISSUING THEREUPON, IF ANY, OR THAT THE SUBJECT TECHNOLOGY, OR LICE NSED PRODUCTS ARE OR SHALL BE FREE FROM INFRINGEMENT OF ANY PATENT OR OTHER RIGHTS OF THIRD PARTIES. NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS CONFERRING BY IMPLICATION, ESTOPPEL OR OTHERWISE ANY LICENSE OR RIGHTS UNDER ANY PATENTS OF BAYLOR, REGARDLESS OF WHETHER SUCH PATENTS ARE DOMINANT OR SUBORDINATE TO THE PATENT RIGHTS. BAYLOR SHALL NOT BE LIABLE FOR ANY LOSSES INCURRED AS THE RESULT OF AN ACTION FOR INFRINGEMENT BROUGHT A GAINST MEDGENICS AS THE RESULT OF MEDGENICS’ EXERCISE OF ANY RIGHT GRANTED UNDER THIS AGREEMENT. THE DECISION TO DEFEND OR NOT DEFEND SHALL BE IN MEDGENICS’ SOLE DISCRETION.

14.	ADDITIONAL PROVISIONS

14.1 Use of BAYLOR Name . MEDGENICS agrees that it shall not use in any way the name of “Baylor College of Medicine” or any logotypes or symbols associated with BAYLOR or the names of any of the scientists or other researchers at BAYLOR without the prior written consent of BAYLOR.

14.2 Confidentiality . Each party agrees to maintain any written, confidential information associated with Subject Technology and marked as “Confidential” in confidence, and to use the same only in accordance with this Agreement. Such obligation of confidentiality shall not apply to information which the receiving party can demonstrate: (i) was at the time of disclosure in the public domain; (ii) has come into the public domain after disclosure through no fault of MEDGENICS; (iii) was known to MEDGENICS prior to disclosure thereof by BAYLOR; (iv) was lawfully disclosed to MEDGENICS by a third party which was not under an obligation of confidence to BAYLOR with respect thereto; (v) which MEDGENICS can reasonably demonstrate was independently developed by MEDGENICS without use of the Subject Technology; or (vi) which MEDGENICS shall be compelled to disclose by law or legal process.

14.3 BAYLOR’s Disclaimers. Neither BAYLOR, nor any of its faculty members, scientists, researchers, employees, students, officers, trustees or agents assume any responsibility for the manufacture, product specifications, sale or use of the Subject Technology or Licensed Products which are manufactured by or sold by MEDGENICS.

14.4 Independent Contractors . The Parties hereby acknowledge and agree that each is an independent contractor and that neither Party shall be considered to be the agent, representative, master or servant of the other Party for any purpose whatsoever, and that neither Party has any authority to enter into a contract, to assume any obligation or to give warranties or representations on behalf of the other Party. Nothing in this relationship shall be construed to create a relationship of joint venture, partnership, fiduciary or other similar relationship between the Parties.

14.5 Non-Waiver . The Parties covenant and agree that if a Party fails or neglects for any reason to take advantage of any of the terms provided for the termination of this Agreement or if a Party, having the right to declare this Agreement terminated shall fail to do so, any such failure or neglect by such Party shall not be a waiver or be deemed or be construed to be a waiver of any cause for the termination of this Agreement subsequently arising, or as a waiver of any of the terms, covenants or conditions of this Agreement or of the performance thereof. None of the terms, covenants and conditions of this Agreement may be waived by a Party except by its written consent.

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14.6 Reformation . The Parties hereby agree that neither Party intends to violate any public policy, statutory or common law, rule, regulation, treaty or decision of any government agency or executive body thereof of any country or community or association of countries, and that if any word, sentence, paragraph or clause or combination thereof of this Agreement is found, by a court or executive body with judicial powers having jurisdiction over this Agreement or any of the Parties hereto, in a final, unappealable order to be in violation of any such provision in any country or community or association of countries, such words, sentences, paragraphs or clauses or combination shall be inoperative in such country or community or association of countries, and the remainder of this Agreement shall remain binding upon the Parties hereto.

14.7 Force Majeure . No liability hereunder shall result to a Party by reason of delay in performance caused by force majeure, that is circumstances beyond the reasonable control of the Party, including, without limitation, acts of God, fire, flood, war, terrorism, civil unrest, labor unrest, or shortage of or inability to obtain material or equipment.

14.8 Entire Agreement . The terms and conditions herein constitute the entire agreement between the Parties and shall supersede all previous agreements, either oral or Written, between the Parties hereto with respect to the subject matter hereof. No agreement of understanding bearing on this Agreement shall be binding upon either Party hereto unless it shall be in writing and signed by the duly authorized officer or representative of each of the Parties and shall expresly refer to this Agreement.

IN WITNESS WHEREOF, the Parties hereto have executed and delivered this Agreement in multiple originals by their duly authorized officers and representatives on the respective dates shown below, but effective as of the Agreement Date.

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

10/9/06 MEDGENICS BLG # 03-037, 01-064

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Appendix A

1- The Subject Technology transferred under this Agreement was created with Cre-Lox Technology and therefore is considered a “Created Cre-Lox Material”.

2- Cre-Lox Technology is subject of United States Patent No. 4,959,317, to which BAYLOR has a non-commercial research license from Bristol-Myers Squibb Company (“BMS”).

3- Use of the Created Cre-Lox Material, and any progeny or derivatives containing cre DNA and/or lox DNA derived directly or indirectly therefrom, requires a license from BMS and a fee (in addition to any fee paid to BAYLOR under this Agreement) will be payable to BMS by MEDGENICS in consideration for transfer of the Created Cre-Lox Material to MEDGENICS (except as may be otherwise permitted under a separate written agreement between MEDGENICS and BMS).

4- No license is granted either express or implied to MEDGENICS by BAYLOR to United States Patent No. 4,959,317 under this Agreement.

5- For inquiries regarding license rights under U.S. Patent Number 4,959,317, contact:

Manager, External Science, Technology & Licensing

Bristol-Myers Squibb Company

Route 206 and Province Line Road

Princeton, NJ 08543-4000

6- As required by BMS, BAYLOR will be providing to BMS the name of MEDGENICS and the identification of the Subject Technology to be transferred to MEDGENICS under this Agreement.

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APPENDIX B

INVOICE

DATE

RECIPIENT

ADDRESS

RE: XXXXXXXXXX Fee

BLG #XX-XXX TITLE

Please let this letter serve as an INVOICE for the license execution fee of $XXXXXX for the above-referenced technology, as stated in the license Agreement dated _________, between _________________ and Baylor College of Medicine.

Please make the check payable to Baylor College of Medicine and send it directly to me for processing at our address listed above.

I appreciate your attention to this matter.

Best regards,

Nellie Villarreal

Administrative Coordinator III

/nv

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APPENDIX C

COLLABORATION AGREEMENTS

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EXHIBIT 10.25

PRODUCTION SERVICE AGREEMENT

THIS PRODUCTION SERVICE AGREEMENT (the “Agreement”), entered into and effective this 12 th day of March, 2007 (the “Effective Date”), is by and between MOLECULAR MEDICINE BIOSERVICES, INC., located at 1890 Rutherford Road, Carlsbad, CA 92008 and MEDGENICS, INC. and MEDGENICS MEDICAL ISRAEL LTD. (“SPONSOR”) located at 8000 Towers Crescent Drive, Suite 1300, Vienna, VA 22182, USA and 12 HaNapach St. Karmiel, 21553 ISRAEL, respectively.

INTENDING TO BE LEGALLY BOUND, the parties agree as follows:

Projects.

MOLECULAR MEDICINE will perform development and manufacturing services for SPONSOR under one or more projects (each, a “ Project ” ) . Each Project shall be governed by this Agreement, together with the following documentation:

the “ Scope of Work ” for such Project, attached as Exhibit A;

the “ Price and Payment Schedule ” for such Project, attached as Exhibit B;

the “ Work Schedule ” for such Project, attached as Exhibit C;

together with all other exhibits and attachments hereto, all as may be amended from time to time.

The parties acknowledge that from time to time SPONSOR may request MOLECULAR MEDICINE to undertake additional projects involving production services. In such event, the parties shall agree upon new Exhibits A, B, and C for each project, with such exhibits to reference this Agreement. Except as set forth in such revised exhibits, all other terms and conditions of this Agreement, together with all other exhibits, shall apply to subsequent projects.

MOLECULAR MEDICINE will perform each Project with due care, and in accordance with current Good Manufacturing Practices as set forth in US 21 CFR Parts 210 and 211 applicable to pilot scale facilities and 21 CFR Part 600 applicable to biologics, and shall not use any personnel who have been debarred, suspended or proposed for debarment, it being understood that an insubstantial or immaterial incident or deviation from such standards shall not by itself be deemed a breach of MOLECULAR MEDICINE’s obligations hereunder and that the parties will work in good faith to resolve any such incident or deviation pursuant to the Quality Agreement under Section 3.5 below. MOLECULAR MEDICINE shall maintain all required regulatory records relating to the Project and shall provide a cross reference letter with respect to such records upon request.

2.	Definitions. As used herein, the following capitalized terms shall have the meanings set forth below:

2.1 Certificate of Compliance: Certificate issued by MOLECULAR MEDICINE upon completion of the Project, reporting the Technical Specifications measured by MOLECULAR MEDICINE for the specific Product produced under the Project. The Certificate of Compliance will be in the form attached as Exhibit D, or in such other form as may be agreed to between SPONSOR and MOLECULAR MEDICINE.

2.2 MMB Technology: All of MOLECULAR MEDICINE’s confidential and proprietary know-how, techniques, processes and other technology, whether or not patentable or copyrightable, and associated intellectual property relating to the manufacture of viral vector product. MMB Technology does not include Product or Product Production Records.

2.3 Product: Shall mean either the finished product to be produced by MOLECULAR MEDICINE as described in the Scope of Work, or variations of the same HDAd vector with different expression cassettes as provided by the Sponsor; or developed under the Project.

2.4 Product Production Records: All documentation, information, records, required retain samples, batch records, specifications, databases or other work product generated by MOLECULAR MEDICINE during and in connection with the Project including any Drug Master Files, whether recorded in writing, electronically, or otherwise.

2.5 MMB Production Records: All documentation, information, records, required retain samples, batch records, specifications, databases or other work product generated by MOLECULAR MEDICINE relating to batch records of MMB including its Biologic (Type II) Master Files and Facility (Type V) Drug Master Files.

2.6 Project Completion: Has the meaning set forth in Section 4.1.

2.7 Project Run: Actual performance of activities by MOLECULAR MEDICINE in order to complete the Project.

2.8 Project Equipment: All equipment necessary to perform the Project and deliver the finished Product. Project Equipment that is specified in the Scope of Work as to be supplied by SPONSOR or that SPONSOR requires MOLECULAR MEDICINE to obtain for the Project is referred to as “ Sponsor Equipment . ”

2.9 Project Materials: All cell lines, viral seed stock, compounds, materials, supplies or other substances necessary to perform the Project and deliver the finished Product. Those Project Materials that are specified in the Scope of Work as to be supplied by SPONSOR, or that SPONSOR requires MOLECULAR MEDICINE to obtain for the Project pursuant to Section 3.1.1, are referred to as “ Sponsor Materials . ”

2.10 Quality A greement: The quality agreement between MOLECULAR MEDICINE and SPONSOR in the form attached hereto as Exhibit G, as it may be amended from time to time.

2.11 Sponsor Technology: All of SPONSOR’s confidential and proprietary information, know-how, techniques, processes and other technology, whether or not patentable or copyrightable, and associated intellectual property that relate to the Product.

2.12 Standard Terms and Conditions of Storage: MOLECULAR MEDICINE’s Standard Terms and Conditions of Storage, attached as Exhibit F, as they may be amended from time to time.

2.13 Start Order: written authorization from SPONSOR for MOLECULAR MEDICINE to commence Project Run, in the form attached hereto as Exhibit E.

2.14 Technical Specifications : Technical Specifications for the finished Product as measured by MOLECULAR MEDICINE and reported by it in the Certificate of Compliance.

3.	Project Procedures.

3.1 Project Materials and Equipment.

3.1.1 SPONSOR shall provide MOLECULAR MEDICINE with sufficient quantities of Sponsor Materials (and, if applicable, Sponsor Equipment) necessary to perform the Project and deliver the Product, including sufficient and comprehensive data as may be required by MOLECULAR MEDICINE concerning handling, stability, storage and safety requirements. If SPONSOR requires MOLECULAR MEDICINE to acquire special Project Materials or Project Equipment, such materials and equipment shall be considered Sponsor Materials and Sponsor Equipment, and shall be charged to the account of SPONSOR, in addition to the fees set forth in the Price and Payment Schedule.

3.1.2 Unless otherwise specified and provided by SPONSOR (or obtained at the behest of SPONSOR), MOLECULAR MEDICINE will use the standard Project Materials and Project Equipment that it uses in the ordinary course of its business to perform the Project.

3.1.3 Except as specifically agreed by the parties, or unless prohibited by law or regulation, any remaining supplies of Sponsor Materials or any Sponsor Equipment shall be returned to SPONSOR upon completion of the Project. Any Sponsor Materials or Sponsor Equipment that is not returned to the SPONSOR shall be held, subject to the Standard Terms and Conditions of Storage, and subject to MOLECULAR MEDICINE’s standard storage fees.

3.2 Timetable.

3.2.1 Work Schedule. MOLECULAR MEDICINE will commence the Project Run only upon receipt of a Start Order duly signed by an authorized officer of SPONSOR. Once MOLECULAR MEDICINE receives the Start Order, it will make a good faith effort to complete the Project in accordance with the Work Schedule, it being understood that as long as MOLECULAR MEDICINE makes such good faith efforts, MOLECULAR MEDICINE’s failure to meet the Work Schedule shall not constitute a default by MOLECULAR MEDICINE of its obligations hereunder. MOLECULAR MEDICINE will notify SPONSOR if it determines there are likely to be substantial changes in the proposed start or completion dates of the Project.

3.2.2 Sponsor’s Cancellation or Delay. SPONSOR acknowledges that in order to undertake the Project, MOLECULAR MEDICINE will reserve for the benefit of SPONSOR certain resources, including Project Materials, Project Equipment, personnel availability, facility capacity and storage space. Accordingly, in the event that SPONSOR cancels or delays the Project, then as long as MOLECULAR MEDICINE is in compliance with the Work Schedule, SPONSOR will be obligated to pay the applicable cancellation or delay fees set forth in the Price and Payment Schedule. In addition, the Project will be subject to the termination provisions set forth in Section 23.4.

3.2.3 Changes. SPONSOR may request reasonable changes in the Scope of Work and/or the targeted Technical Specifications prior to Project Completion (as defined in Section 4.1). To be effective, all such proposed changes, including changes in the price and projected completion date of the Project, shall be described in writing by authorized representatives of both MOLECULAR MEDICINE and SPONSOR and signed by both parties. Unless otherwise agreed to by MOLECULAR MEDICINE and SPONSOR, changes that cause any delay in the Project will subject SPONSOR to the applicable delay fees set forth in the Price and Payment Schedule.

3.3 Regulatory Testing Requirements. Should, during the course of conducting this Project, regulatory testing requirements covering the Product change such that additional expense would be incurred by MOLECULAR MEDICINE to satisfy the terms of this Agreement, those expenses will be the responsibility of the SPONSOR.

3.4 Facility Visits. MOLECULAR MEDICINE shall permit SPONSOR’S representatives to visit MOLECULAR MEDICINE’s facilities during normal working hours, upon reasonable notice and with reasonable frequency to observe the Project’s progress, to discuss the Project with appropriate officials of MOLECULAR MEDICINE, and to inspect records and Product Production Records and MMB Production Records relevant to the Project. Facility visits shall also be permitted during the Production Records retention period described in Section 5.5.

3.5 Quality Agreement. During the Project, MOLECULAR MEDICINE and SPONSOR shall follow the quality control procedures set forth in the Quality Agreement attached hereto as Exhibit G.

3.6 Reports. MOLECULAR MEDICINE shall advise SPONSOR at least once in every two-week period during the term of this Agreement via teleconference and provide SPONSOR with written minutes concerning the details of the progress of the Project and the Products. A final written report setting forth the results achieved under and pursuant to the Project, including the Products, shall be submitted to Sponsor within 21 working days of the completion of the Project or the termination of this Agreement. Such final report shall include, but may not be limited to, a complete summary of the activities carried out, testing protocols and detailed results of the Project.

4.	Project Completion.

4.1 Notice and Delivery. The Project is deemed completed (“ Project Completion ”) when MOLECULAR MEDICINE gives a notice under the Scope of Work consisting of (a) notice to SPONSOR that quality assurance review of Product has been completed by MOLECULAR MEDICINE and (b) issuance of a Certificate of Compliance. In the case of work performed in the Process Development Laboratory, project completion will consist of issuance of a Development Report which will contain the process summary and data resulting from the production or characterization studies. Such notice shall be delivered by overnight courier. Risk of loss for the Product shall be the responsibility of SPONSOR upon release of Product from MOLECULAR MEDICINE’S premises (FOB shipping point) to a shipper selected and approved by SPONSOR. SPONSOR acknowledges and agrees that it is SPONSOR’s sole responsibility to determine for itself that such shipper is commercially reliable and that it carries insurance in accordance with standards that are acceptable to SPONSOR. SPONSOR must acknowledge receipt of notice of Project Completion to an authorized representative of MOLECULAR MEDICINE within ten (10) business days of formal notification by MOLECULAR MEDICINE. If MOLECULAR MEDICINE does not receive an acknowledgement of notice of Project Completion with such period, then Product will be subject to MOLECULAR MEDICINE’s then current Standard Terms and Conditions of Storage and its standard group storage fees.

4.2 Product Storage. MOLECULAR MEDICINE agrees to hold SPONSOR’s Product for up to 90 days after MOLECULAR MEDICINE’s notice to SPONSOR of Project Completion. Product held at MOLECULAR MEDICINE beyond the first 90 days from receipt of Notice by SPONSOR of Project Completion shall be subject to MOLECULAR MEDICINE’s then current Standard Terms and Conditions of Storage and its standard group storage fees.

5.	Technology Transfer; Inventions; Ownership of Product Production Records.

5.1 Technology Transfer by Sponsor and Limited License . In order to enable MOLECULAR MEDICINE to perform the Project, SPONSOR will disclose to MOLECULAR MEDICINE the Sponsor Technology and hereby grants to MOLECULAR MEDICINE a limited, non-exclusive license in and to Sponsor Technology that is disclosed to MOLECULAR MEDICINE, for the sole purpose of performing the Project and for no other purpose whatsoever. MOLECULAR MEDICINE shall not disclose such Sponsor Technology to any third party without the prior written consent of SPONSOR, it being understood and agreed that all Sponsor Technology shall be considered proprietary information of SPONSOR. Except to the extent set forth in the foregoing, this Agreement confers no license or intellectual property rights to MOLECULAR MEDICINE by SPONSOR for any SPONSOR-related intellectual property.

5.2 Inventions.

5.2.1 Inventions from Sponsor Technology. In performing the Project and in applying Sponsor Technology to the development and manufacture of the Product, MOLECULAR MEDICINE may develop ideas, know-how, inventions, techniques, improvements and other technology, whether or not patentable or copyrightable, and associated intellectual property (collectively “ Inventions ”) relating to Sponsor Technology. All such Inventions that arise under the Project for the Product, including but not limited to purification schemes, or solely from the application of Sponsor’s Technology are referred to as “ Sponsor Inventions .” MOLECULAR MEDICINE agrees that all Sponsor Inventions are the sole and exclusive property of SPONSOR and constitute Proprietary Information of SPONSOR.

5.2.2 Inventions from MMB Technology. From time to time, with the approval of SPONSOR as set out in the Scope of Work or as otherwise agreed to during the Project Run, MOLECULAR MEDICINE may apply some of the MMB Technology to the development and manufacture of the Product. In doing so, MOLECULAR MEDICINE may develop Inventions that relate to the MMB Technology. All such Inventions that are directly related to MMB Technology and not for the Product are referred to as “ MMB Inventions .” SPONSOR agrees that all MMB Inventions are the exclusive property of MOLECULAR MEDICINE and constitute Propriety Information of MOLECULAR MEDICINE.

5.3 Grant Backs by MOLECULAR MEDICINE. In order to enable SPONSOR to utilize both Sponsor Inventions and MMB Inventions resulting from MOLECULAR MEDICINE’s performance of the Project:

5.3.1.1 MOLECULAR MEDICINE hereby assigns to SPONSOR all right, title and interest in and to any and all Sponsor Inventions.

5.3.1.2 MOLECULAR MEDICINE hereby agrees to grant to SPONSOR a non-exclusive license, worldwide, perpetual, irrevocable, royalty-free, fully paid up right and license with the limited right to sub-license as described below, to any and all MMB Inventions made, conceived and/or reduced to practice by MOLECULAR MEDICINE during the course of, and/or resulting from, the performance of the Project, provided that SPONSOR’s use of such MMB Inventions relates directly and exclusively to the manufacture of the Product. SPONSOR’s license right under this clause shall not extend to inventions, processes or technology that are developed by MOLECULAR MEDICINE prior to its undertaking the Project or that is not related directly and exclusively to the manufacture of the Product. Upon providing MOLECULAR MEDICINE with prior written notice of the name and address of the sublicensee and subject to such sublicensee’s written agreement to be bound by the confidentiality provisions of Section 6 below, SPONSOR may sublicense its rights under this clause only to identified users of the Product.

5.4 Other Applicable Law. Except as expressly set forth herein to the contrary, with respect to any Inventions arising from the Project, US patent laws will be followed.

5.5 Production Records. All Product Production Records generated by MOLECULAR MEDICINE in the course of the Project shall be the property of SPONSOR and constitute Proprietary Information of SPONSOR. All MMB Production Records shall be the property of MOLECULAR MEDICINE and constitute Proprietary Information of MOLECULAR MEDICINE. All Product Production Records shall be maintained by MOLECULAR MEDICINE for the benefit of SPONSOR during the term of this Agreement. SPONSOR shall have access to Product Production Records produced in connection with the Project in order to review the data relating to the production of the Product. Unless otherwise agreed between the parties, upon completion of the Project, MOLECULAR MEDICINE shall i) forward to SPONSOR such Product Production Records; ii) store and maintain all Product Production Records and MMB Production Records in accordance with all applicable legal and regulatory requirements for a period of five (5) years (or such shorter period as may be permitted by law). After the expiration of the applicable retention period, SPONSOR will pay MOLECULAR MEDICINE, in advance, its then-current standard annual storage fee for the retention of such MMB Production Records. If for any reason the fee is not paid (e.g. SPONSOR cannot be located, SPONSOR has not responded, etc.), MOLECULAR MEDICINE may dispose of the Product Production Records as it sees fit. It shall be SPONSOR’s responsibility to ensure that MOLECULAR MEDICINE has a current address for SPONSOR. Molecular Medicine shall provide SPONSOR with cross reference letters for such MMB Production Records for any regulatory purpose or filing for the Product.

5.6 Ownership of Product and Project Material. The parties agree that SPONSOR shall own all Product, Sponsor Inventions, and Project Material. MOLECULAR MEDICINE shall assign and hereby assigns to SPONSOR all right, title and interest in and to any and all Product, Sponsor Inventions, and Project Material. To the extent possible, MOLECULAR MEDICINE shall not co-mingle any of SPONSOR’s Product, Sponsor Inventions, or Project Material with that of any third party.

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.

Notwithstanding any other provision of this Agreement, the Receiving Party shall have no liability or obligation to the Disclosing Party for, nor be in any way restricted in, its disclosure of or use of any information that:

is already known to the Receiving Party at the time of the Disclosing Party’s disclosure;

is or becomes publicly known by any means other than through a wrongful act or omission of the Receiving Party, its employees or agents;

is received from a third party entitled to make such a transfer without violating an obligation of confidentiality;

is independently developed by or for the Receiving Party;

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.

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.

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.

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.

10.1 Indemnification by SPONSOR. SPONSOR shall defend, indemnify and hold harmless MOLECULAR MEDICINE, its directors, officers, employees and agents (collectively the “ Molecular Medicine Indemnitees ”) from and against any and all liability, loss, expense (including reasonable attorneys’ fees), or third party claims for injury or damages (collectively, “ Liabilities ”) arising out of the manufacture, sale or use of the Product, provided that SPONSOR shall have no obligation to indemnify the Molecular Medicine Indemnitees for any portion of a Liability that arises from a material deviation from the Scope of Work that has not been agreed to by SPONSOR, or the negligence or willful misconduct of the Molecular Medicine Indemnitees.

10.2 Indemnification by MOLECULAR MEDICINE. Except as limited by Section 9 above, MOLECULAR MEDICINE shall defend, indemnify and hold harmless SPONSOR, its officers, directors, employees and agents (collectively the “ Sponsor’s Indemnitees ”) from and against any and all Liabilities arising solely out of the negligence or willful misconduct of the MOLECULAR MEDICINE Indemnitees, provided that MOLECULAR MEDICINE shall have no obligation to indemnify the Sponsor’s Indemnitees for any portion of a Liability that arises from the negligence or willful misconduct of the Sponsor’s Indemnitees.

10.3 Notification. The obligation of either party to indemnify the other pursuant to this Agreement shall be contingent upon timely notification by the indemnitee to the indemnitor of any claims, suit or service of process; control by the indemnitor over the conduct and disposition of any claim, demand or suit; and cooperation by the indemnitee in the defense of the demand or suit.

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.

23.1 Termination by SPONSOR. SPONSOR may terminate this AGREEMENT at any time for any reason, or no reason, upon sixty (60) days written notice. Upon receipt of notice of termination from SPONSOR, MOLECULAR MEDICINE shall use its best efforts to limit or terminate any outstanding financial commitments for which SPONSOR shall be held responsible. SPONSOR shall reimburse MOLECULAR MEDICINE for all costs incurred by it for services set forth in the Work Schedule performed by MOLECULAR MEDICINE prior to the effective date of termination, including all noncancellable obligations. If SPONSOR terminates the Agreement under this Section 23.1, then in addition to any reimbursable expenses provided for above, SPONSOR shall pay all cancellation fees for all outstanding Projects in the amounts set forth in the relevant Price and Payment Schedules.

23.2 Termination by MOLECULAR MEDICINE. MOLECULAR MEDICINE may terminate this AGREEMENT at any time for any reason, or no reason, upon one hundred eighty (180) days’ written notice. Upon giving notice of such termination, MOLECULAR MEDICINE shall use its best efforts to limit or terminate any outstanding financial commitments for which SPONSOR shall be held responsible. SPONSOR shall reimburse MOLECULAR MEDICINE for all costs incurred by it for services set forth in Exhibit A performed by MOLECULAR MEDICINE prior to the effective date of termination, including all noncancellable obligations.

23.3 Termination for Material Breach. Either party shall have the right to terminate this Agreement upon written notice to the other party if, after receiving written notice of a material breach of this Agreement, the other party fails to cure such breach within (i) ten (10) days from the date of such notice concerning a breach of any payment obligation, or (ii) thirty (30) days from the date of such notice pertaining to all other breaches. If any party breaches the same provision of this Agreement more than two (2) times during any twelve (12) month period, the final such breach shall constitute grounds for termination and no cure period shall apply. If MOLECULAR MEDICINE terminates this Agreement pursuant to this Section 23.3 due to SPONSOR’s breach, then (i) SPONSOR shall reimburse MOLECULAR MEDICINE for all costs incurred by it for services set forth in the Work Schedule performed by MOLECULAR MEDICINE prior to the effective date of termination, including all noncancellable obligations, and (ii) SPONSOR shall pay all cancellation fees for all outstanding Projects in the amounts set forth in the relevant Price and Payment Schedules. If SPONSOR terminates this Agreement pursuant to this Section 23.3 due to MOLECULAR MEDICINE’s breach, it shall not be obligated for payment of cancellation fees, but shall remain obligated for all reimbursable expenses described above.

23.4 Termination of a Project for Delay. MOLECULAR MEDICINE may terminate a specific Project at any time upon thirty (30) days notice if Project Completion has not occurred by the date that is two (2) years from the date of this Agreement (or, as applicable, from the date of the Scope of Work for the Project), for whatever reason; provided, that if the sole cause of the delay is MOLECULAR MEDICINE’s action or inaction, then the two-year period referred to above shall be extended for the period of the delay caused by MOLECULAR MEDICINE. Upon giving notice of such termination, MOLECULAR MEDICINE shall use its best efforts to limit or terminate any outstanding financial commitments for which SPONSOR shall be held responsible. SPONSOR shall reimburse MOLECULAR MEDICINE for all costs incurred by it for services set forth in Exhibit A performed by MOLECULAR MEDICINE prior to the effective date of termination, including all noncancellable obligations. In addition, SPONSOR will be obligated to pay any applicable cancellation or delay fees required to be paid for that Project in the amounts set forth in the Price and Payment Schedule.

23.5 Return of Sponsor’s Property. Upon any such termination as provided in Section 23, MOLECULAR MEDICNE shall promptly return all of Sponsor’s Technology, including, without limitation, all of Sponsor’s Product, Sponsor Inventions, Product Production Records, and Project Material, and Sponsor Technology.

23.6 Surviving Obligations. Termination or expiration of this Agreement shall not affect any accrued rights of either party. The terms of Sections 2, 3.1, 3.2.2, 3.2.3, 3.3, 3.4, 4, 5, 6, 7, 8, 9, 10, 11, 12, 17, 18, 19, 21, 22, 23 and 24 of this Agreement shall survive termination of this Agreement.

23.7 Notice. Notice of termination shall be in writing, delivered to the terminated party by registered mail or by overnight delivery service as provided in Section 24.

23.8 Right of Set-off. Upon either (i) the occurrence and during the continuance of any material default by SPONSOR or (ii) the termination of this Agreement for any reason, MOLECULAR MEDICINE is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits held at any time by MOLECULAR MEDICINE for the credit or account of SPONSOR for any and all Projects (as well as any indebtedness at any time owing by MOLECULAR MEDICINE to SPONSOR) against any and all of the obligations of SPONSOR for any and all Projects now or hereafter existing under this Agreement. MOLECULAR MEDICINE agrees to notify SPONSOR promptly after any such set-off and application, provided, that the failure to give such notice shall not affect the validity of such set-off and application. The rights of MOLECULAR MEDICINE under this Section are in addition to other rights and remedies that MOLECULAR MEDICINE may have.

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

[Signature page follows.]

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

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

MOLECULAR MEDICINE BIOSERVICES, INC.

PRODUCTION SERVICE AGREEMENT

EXHIBITS

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

Exhibit A

Process Development and cGMP Production of 116 Master

Cell Bank for Medgenics HDAd-EPO Vector Product

SCOPE OF WORK

The elements of this proposal include Definitions, Process Development and cGMP Production of a Master Cell Bank (116 Cells).

DEFINITIONS

Process Development: Process Development will perform Cell Line Feasibility (on 116 cells), Vector Characterization (HDAd-EPO in 116 cells and Helper Virus in Molecular Medicine's AC2 Cells) and a Production Run at the 5L Scale using the Wave Bioreactor, the Molecular Medicine proprietary adenoviral production process, a single step column purification and Cesium Chloride Ultracentrifugation.

Master Cell Bank (MCB): SPONSOR will provide the necessary quantity of 116 cells to use as starting material for the Master Cell Bank. A Certificate of Analysis showing acceptable results for sterility, Mycoplasma and Endotoxin will be required.

PROCESS DEVELOPMENT

Project 1: Cell Line Feasibility Study of SPONSOR-Provided 116 Cells and Research Bank:

Molecular Medicine will expand the SPONSOR-provided 116 suspension cells in commercially available media to determine the viability, doubling time and growth characteristics of the cell line. The expansion project will produce a research bank of approximately 20 vials at 1 x10e7 cells/vial/mL. At the completion of the Cell Line Feasibility Study, a Summary Table Report will be issued to SPONSOR by Molecular Medicine.

Project 1 Cost: $12,000

Project 2: Vector Characterization of Helper Virus in AC2 Cells and Research Bank:

Molecular Medicine will expand the Helper Virus Viral Seed Stock in AC2 cells and perform titer analysis (by Plaque Assay). Characterization studies will then be performed to include particles (by HPLC), MOI, Day of Harvest and Titer (by Plaque Assay). A research bank of approximately 20 vials at 10x the concentration of the crude harvest material will be created. At the completion of Project 2, a Development Report will be issued to SPONSOR by Molecular Medicine.

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

Exhibit A

Project 3: Vector Characterization of HDAd-EPO and Ratio Assessment in 116 Cells and Research Bank:

Molecular Medicine will expand the HDAd-EPO Viral Seed Stock in 116 cells and perform particle analysis by HPLC. Characterization studies will then be performed to identify critical parameters such as seed density and MOI (of HDAd-EPO as well as the Helper Virus concentration) for ratio assessment. Response measurement will include particle analysis by HPLC assay. A research bank will of approximately 20 vials with a target range of 1e10 to 5e11 vp/vial will be created. At the completion of Project 3, a Development Report will be issued to SPONSOR by Molecular Medicine.

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 4: 5L Wave Process Development Production

The goal is to produce viral material using the Wave Bioreactor at the 5L scale for the purpose of optimization of the critical production parameters. This run will utilize MOLECULAR MEDICINE ’ s proprietary adenoviral production process, a single-step column purification and Cesium Chloride Ultracentrifugation. Cells from the Research Bank of 116 Cells produced in Project 1 will be used. This Production Run will serve to confirm the production parameters, including yield and scale for subsequent productions. This Production Run will take place in the Process Development Lab Facility located at 1890 Rutherford Road in Carlsbad, CA and will utilize Draft Batch Records in the Molecular Medicine format or notebooks for documentation of the run. Testing will be performed at Molecular Medicine to determine titer (Plaque Assay) and particles (HPLC). Samples will be shipped to SPONSOR for expression and potency assays.

At the conclusion of this 5L Production Run, a Development Report will be provided to SPONSOR.

Project 4 Cost: $40,000

cGMP PRODUCTION

Project 5: Production of 116 Master Cell Bank

Molecular Medicine will manufacture under cGMP conditions at least 200 vials of a Master Cell Bank, utilizing a vial of SPONSOR’s 116 cells. SPONSOR’s cells will be accompanied by a Certificate of Analysis providing acceptable results for Sterility, Mycoplamsa and Endotoxin. This production will occur in Molecular Medicine’s cGMP facility located at 6219 El Camino Real, Carlsbad, CA. The bank will be filled into standard 1.5mL sterile cryovials and the expected number of cells per vial will be lx10e7 cells in 1.0mL. Upon completion of the production, receipt of acceptable third-party testing of Mycoplasma, Sterility and Endotoxin, and batch record review, MOLECULAR MEDICINE will issue a Certificate of Compliance to SPONSOR.

Project 5 Cost	Production of MCB:	$	55,000
	Documentation Fee	$	7,500
	Total:	$	62,500

Exhibit A

DIAGRAM 1: PROJECT FLOW

Exhibit A

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.

Exhibit A

IN-PROCESS TESTING

MOLECULAR MEDICINE performs in-process testing throughout the various manufacturing stages for the purpose of monitoring the production. These tests are performed in accordance with defined SOPs and are reviewed on a real-time basis. These test results are not for final release and may not be reported as such. The following tests are performed in Quality Control for monitoring purposes:

-Cell Count per Vial (MCB)

-Volume (MCB)

-Total Quantity (MCB)

-Particles (HPLC) (PD)

-Titer (Plaque Assay) (PD)

FINAL PRODUCT RELEASE TESTING

Molecular Medicine will assist Sponsor with Final Release Testing activities as defined below.

Sponsor commits to and is responsible for:

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.

Molecular Medicine commits to and is responsible for:

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.

SHIPPING

SPONSOR will supply an account number of a reputable shipper to MOLECULAR MEDICINE upon initiation of this project for the purpose of shipping samples to third-party test facilities and shipment of samples to SPONSOR for the duration of this contract. All shipments (beyond three per production lot) originating from MOLECULAR MEDICINE shall be subject to a handling fee of $300.00 per box for shipments of volumes 50mL and below and $500.00 per shipment for volumes over 50mL when a cargo shipper must be used.

Exhibit B

PRICE AND PAYMENT SCHEDULE

***Note: This Price and Payment Schedule expires on March 31, 2007***

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

Exhibit B

Additional Terms and Conditions to Price and Payment Schedule:

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.

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.

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

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.

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.

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.

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.

Exhibit C

ESTIMATED WORK SCHEDULE

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:

MOLECULAR MEDICINE is responsible for project extensions or delay due to their manufacturing equipment.

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.

SPONSOR is responsible for project extensions or delay due to their manufacturing equipment.

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.

SPONSOR is responsible for project extensions or delays caused by variable performance of raw materials specified in advance.

SPONSOR is responsible for project extensions or delays caused by variable performance of critical production parameters previously defined by SPONSOR.

ESTIMATED TIMELINES (SUBJECT TO CHANGE)

Project 1: Cell Line Feasibility Study

Exhibit C

Projects 2 and 3: Vector Characterization of Helper Virus (in AC2) and HDAd-EPO (in 116)

Project 4: 5L Wave Process Development Run

Project 5: cGMP Production of 116 Master Cell Bank

Exhibit D

CERTIFICATE OF COMPLIANCE (Sample)

SPONSOR:

Date:

SPONSOR Contact:

Client Code: MM-077

Product:

MOLECULAR MEDICINE Manufacturing and Quality Assurance have reviewed the following Batch Production Records documenting the manufacture of the above product:

Part Number	Version	Name	Lot Number
TBD
TBD
TBD

The following criteria have been met based on the review of the Batch Production Records and related Facility and Quality Control Records.

¨	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.

Exhibit D

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.

MOLECULAR MEDICINE certifies that the (Product) was made according to Good Manufacturing Practice

Regulations as applicable to pilot scale facilities.


(Name)		Date
Quality Assurance
Molecular Medicine BioServices, Inc.

Exhibit E

STANDARD TERMS & CONDITIONS OF STORAGE

1. Storage Services. Molecular Medicine BioServices, Inc. (“ MMB ” or the “ Company ”) will provide storage services to the “ Sponsor ” referenced above under the following Terms and Conditions of Storage (the “ Terms & Conditions ”). These Terms & Conditions are the Standard Terms and Conditions of Storage that are referred to in the Production Service Agreement referenced above between MMB and such Sponsor (together with all exhibits thereto, the “ PSA ”). These Terms & Conditions are an exhibit to and form part of the PSA. By entering into the PSA, the Sponsor agrees to be bound by these Terms & Conditions, including any future modifications to the Terms & Conditions that are adopted and communicated to Sponsor by MMB.

2. Delivery of Stored Materials. Sponsor will deliver (or, as applicable, hereby directs MMB to store) all materials, supplies and products intended to be stored with MMB under the PSA (collectively, the “ Stored Materials ”) at the times and in accordance with the procedures set forth in the Scope of Work that is attached to the PSA (the “ PSA Scope of Work ”). All Stored Materials will be delivered in containers that are customary in the industry, that are adequately designed to maintain the viability of the materials contained therein and to prevent cross-contamination, and that meet any other specifications that may be agreed to in writing by MMB and Sponsor, whether in the PSA Scope of Work or otherwise. All Stored Materials delivered to MMB will be accompanied by a completed deposit form in the form attached hereto, together with any other information relevant to the storage of the Stored Materials, such as source of Stored Materials, lot number, grade and/or such other specifications as may be required in the Scope of Work or by written mutual agreement of MMB and Sponsor. MMB shall have the right, in its sole discretion, to refuse to store any Stored Materials that do not meet the foregoing requirements. In no event will MMB be responsible for any loss or contamination resulting from Sponsor’s failure to meet such delivery requirements, nothwithstanding the fact that MMB may have accepted Stored Materials that do not meet the foregoing requirements.

Sponsor understands and agrees that MMB cannot assume responsiblity for the safety or quality of any Stored Materials that were not originally processed by MMB or that have been removed from MMB’s control and later returned by MMB. Sponsor acknowledges and agrees in that either of such events, the sole responsibility of MMB is limited to the storage of such Stored Materials under conditions specified in the relevant deposit order.

3. Storage Conditions. MMB will store the Stored Materials in the containers specified in the relevant deposit form, and at the temperature and under the other conditions that are specified in the deposit form and that are agreed to by MMB. MMB will store the Stored Materials in accordance with current Good Manufacturing Practices as set forth in US 21CFR Parts 210 and 211 applicable to pilot scale facilities and 21 CFR Part 600 applicable to biological products.

4. Term. MMB’s obligation to provide storage services under these Terms and Conditions shall take effect on the effective date of the PSA and shall remain effective until the earlier of the Termination Date set forth in Section 6 and the termination date of the PSA. Upon the termination of the PSA, Sponsor may renew MMB’s storage services for successive annual periods by providing written notice of such renewal to MMB no later than thirty (30) days prior to the termination of the PSA. Each annual renewal period shall renew automatically, commencing on January 1 and ending on December 31 of each year, except that the initial renewal period will commence on the termination date of the PSA and end on December 31 of that year, with storage fees for the initial period prorated accordingly. . The initial term and subsequent renewal periods are each referred to herein as a “ Storage Period .”

5. Storage Fees. During the effective period of the PSA, Sponsor shall pay all storage fees in the amounts and at the times set forth in the Price and Payment Schedule of the PSA. Thereafter, Sponsor shall pay in advance the fee for each annual Storage Period in amounts set forth in MMB’s then current standard storage fee schedule. All invoices are payable in United States dollars. All payments must be made via cash or check. Sponsor shall be responsible for costs associated with MMB’s collection of sums due and owing to it pursuant to these Terms & Conditions including, without limitation, reasonable attorneys’ fees and expenses, collection agency fees, and court costs.

6. Termination. Notwithstanding any other provisions herein, MMB’s obligations to provide storage services to Sponsor shall terminate upon the happening of any of the following events (each, a “ Termination Event ”):

(a) Termination or expiration of the PSA for any reason without the Sponsor having elected to renew for an annual storage term;

(b) Written instruction of Sponsor directing MMB to transfer all Stored Materials to another storage facility;

(d) Failure of Sponsor to pay any storage fee within ten (10) days after the date of any notice of delinquency from MMB to Sponsor, it being understood that termination for such non-payment shall not excuse Sponsor of its obligation to pay delinquent fees;

(e) Termination by Sponsor of MMB’s storage services after thirty (30) days written notice of termination to MMB;

(f) Termination by MMB of MMB’s storage services after thirty (30) days written notice of termination to Sponsor.

Upon the occurrence of any Termination Event, all obligations of MMB for storage of Sponsor’s Stored Materials shall cease. Sponsor shall make arrangements for release, destruction or other disposition of any remaining Stored Materials within thirty (30) days. IF SPONSOR FAILS TO MAKE SUCH ARRANGEMENTS WITHIN SUCH TIME PERIOD, THE STORED MATERIALS WILL BE DEEMED ABANDONED AND MMB MAY, AT ITS SOLE DISCRETION, DESTROY ALL STORED MATERIALS REMAINING IN STORAGE WITH MMB. MMB ACCEPTS NO RESPONSIBILITY FOR LOSS OF STORED MATERIALS DESTROYED BY MMB BECAUSE OF SPONSOR’S ABANDONMENT. There shall be no refund of storage fees upon termination of MMB’s storage services pursuant to paragraphs (a) – (e) above. A pro-rata refund of storage fees shall be paid by MMB to Sponsor if MMB terminates its storage services pursuant to paragraph (f) of this Section 6.

7. Delivery of Stored Materials. In the event that MMB is directed by Sponsor to deliver any Stored Materials to any person, risk of loss for the Stored Materials shall be the responsibility of Sponsor upon release of the Stored Materials from MMB’s premises (FOB shipping point) to a shipper that has been selected and approved by Sponsor. Sponsor shall have the obligation and the sole responsiblity to ensure to its own satisfaction that such carrier carries adequate insurance.

8. Excused Performance. MMB shall not be responsible for any damage or destruction of the Stored Materials 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 communications, failure of suppliers or subcontractors, or natural disasters.

9. Limitation of Liability. SPONSOR ACKNOWLEDGES THAT THERE ARE INHERENT RISKS IN THE PROCESS OF FREEZING AND THAWING THE STORED MATERIALS AND AGREES THAT MMB SHALL NOT BE LIABLE FOR ANY LOSS, DAMAGE, OR DESTRUCTION OF THE STORED MATERIALS AS LONG AS MMB HAS COMPLIED WITH THE STORAGE CONDITIONS SET FORTH IN SECTION 3. THE PARTIES ACKNOWLEDGE AND AGREE THAT IN THE EVENT OF LOSS, DAMAGE OR DESTRUCTION OF THE STORED MATERIALS FOR ANY REASON WHATSOEVER, INCLUDING, WITHOUT LIMITATION, AS A RESULT OF MMB’S NEGLIGENCE OR ITS BREACH OF THESE TERMS & CONDITIONS, SPONSOR’S REMEDY SHALL BE LIMITED TO THE STORAGE FEE PAID BY SPONSOR FOR THE STORAGE PERIOD IN WHICH SUCH LOSS, DAMAGE OR DESTRUCTION OCCURRED. IN NO EVENT SHALL MMB BE LIABLE FOR ANY INCIDENTAL, SPECIAL, OR CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT LIMITATION, ANY LOST PROFITS OR LOSS OF BUSINESS, WHETHER FORESEEABLE OR NOT), OCCASIONED BY ANY BREACH UNDER THESE TERMS & CONDITIONS OR ANY OTHER CAUSE OR CLAIM WHATSOEVER, WHETHER BASED ON NEGLIGENCE OR OTHERWISE. SPONSOR’S FAILURE TO ASSERT A CLAIM IN WRITING WITHIN THIRTY (30) DAYS OF MMB’S NOTICE TO SPONSOR OF THE LOSS, DAMAGE OR DESTRUCTION OF STORED MATERIALS SHALL BE DEEMED TO BE SPONSOR’S ABSOLUTE AND UNEQUIVOCAL WAIVER OF ANY AND ALL CLAIMS RELATING TO SUCH LOSS, DAMAGE OR DESTRUCTION. SPONSOR WARRANTS THAT IT CARRIES PROPERTY INSURANCE FOR THE FULL REPLACEMENT VALUE OF THE STORED MATERIALS.

10. Indemnification. Sponsor shall defend, indemnify and hold harmless MMB, its directors, officers, employees and agents (collectively the “ MMB Indemnitees ”) from and against any and all liability, loss, expense (including reasonable attorneys’ fees), or third party claims for injury or damages (collectively, “ Liabilities ”) arising out of the MMB’s storage of the Stored Materials, provided that Sponsor shall have no obligation to indemnify the MMB Indemnitees for any portion of a Liability that arises from the negligence or willful misconduct of the MMB Indemnitees or from their breach of these Terms & Conditions.

11. Assignment. Except in connection with a permitted assignment under the PSA, Sponsor may not assign its rights or obligations under these Terms & Conditions, whether in whole or in part, to any third party without MMB’s prior written approval, which approval may be withheld by MMB in its sole discretion.

12. General. These Terms & Conditions shall be construed in accordance with the laws of the State of California without regard to conflict of laws principles. These Terms & Conditions and the applicable provisions of the PSA set forth the entire agreement of the parties with respect to the providing of storage services by MMB. Sponsor’s execution of the PSA constitutes Sponsor’s acceptance of and agreement to these Terms & Conditions in their entirety. In the event of a conflict between the PSA and these Terms & Conditions, the terms herein shall govern. Each provision of these Terms & Conditions shall be construed as separable and divisible from every other provision and that the enforceability of any one provision shall not limit the enforceability of any other provision(s) hereof. The section headings contained in these Terms & Conditions are for reference purposes only and shall not affect the meaning or interpretation hereof. No waiver by MMB or Sponsor of any default of the other hereunder shall be deemed to be a waiver of any subsequent default. These Terms & Conditions shall remain in effect until modified by MMB, which modifications shall take effect when communicated by MMB to Sponsor.

Exhibit F

Project Start Order

(Sample)

Client		Contract Name
Client Code	MM-077	Project Name
Client Contact		LN or DEV no.

1. Project Type (circle appropriate Type)

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

2. Materials

¨ All materials necessary are in-house

¨ The following critical materials still need to be received (attached)

3. Equipment

¨ All equipment necessary is in-house

¨ The following critical pieces of equipment still need to be received (attached)

4. Timeline*

Thaw date: week of _____/_____/200___

Harvest date: week of _____/_____/200___

Fill date: week of _____/_____/200___

* All scheduling dates are based on information provided above in collaboration with Sponsor and the known capacity available at Molecular Medicine BioServices. SPONSOR acknowledges that project delays by SPONSOR after signature of this Project Start Order will result in delay fees as provided in the Contract. SPONSOR acknowledges that project cancellations by SPONSOR after signature of this Project Start Order will result in cancellation fees as provided in the Contract.

I hereby direct Molecular Medicine BioServices to hard schedule the project described above.

SPONSOR

By:	(Sample)
	Name:	Date
	Title

EXHIBIT 10.26

AGREEMENT

Made on this 16 day of April 2007 (“Effective Date”)

by and between

MEDGENICS MEDICAL ISRAEL, LTD.

A company organized and existing under the laws of Israel

with offices at 12 HaNapach St. Karmiel, Israel

(“MMI”)

and

MEDGENICS, INC.

A company organized and existing under the laws of Delaware, USA,

with principal place of business at 8000 T owers Crescent Dr.

Suite 1300

Vienna, Va. 22182 USA

(“Medgenics”)

WHEREAS MMI has applied for funding from the OCS (as defined below ) under the Law (as defined below) for an approved budget for the period commencing on June 1, 2006 and ending May 31, 2007 for the research and development projects titled Biopump: Medical device for preparation of autologous skin implants (OCS file Numbers 37503 and 37679) (the “ Grants ”); and

WHEREAS The Grants have been approved by the research committee of the O CS (the “ Approved Programs ” ) and the parties hereto wish to enter into a development and license agreement, pursuant to the terms and conditions set forth herein;

NOW THEREFOR the parties hereto agree as follows:

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

MMI is and shall remain the Sole owner of the Technology and Technology IP created in the course of the Approved Programs supported by the OCS or deriving therefrom and any utilization of such Technology and Technology IP and the results of the Approved Programs and any other rights deriving from the Approved Programs or their execution, is subject to the provisions of the Law.

License

Subject to obtaining the required prior approvals from the OCS and compliance with the provisions of the Law, MMI may grant Medgenics licenses for manufacturing, marketing and distributing of products incorporating or based on the Technology and/or the Technology IP.

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

Each of MMI and Medgenics, recognize that (i) the Technology and Technology IP was developed with financial support of the Government of the State of Israel through the OCS under the L aw, and that (ii) the Law places strict restrictions on the transfer of know-how and/or manufacturing right, making all such transfers subject to the absolute discretion of the Research Committee of the OCS (the “ Research Co mmittee ” ) , acting in accordance with the aims of the Law, and requiring that any such transfer receive the prior written approval of the Research Committee. Each of MMI and Medgenics hereby undertake: (i) to observe strictly the requirements of the Law including those relating to the prohibition on transfer of know-how and/or production rights, and those relating to payment royalties; (ii) to notify the OCS in any event of a procedure taken by or against MMI in respect of a liquidation of MMI, or an appointment of a trustee, liquidator or receiver for MMI, or similar legal procedures.

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:

Pearl, Cohen Zedek Latzer LLP

7 Shenkar Street, 2 nd Gav-Yam Building,

Herzelia, 46733, Israel

Fax: 972-9-972-8001

Att: Attorney Mark Cohen

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.

IN WITNESS WHEREOF the parties have signed this Agreement as of the date first above written.

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

EXHIBIT 10.28

Agreement for Clinical Trials

(without CRO)

This Agreement for Clinical Trials (without CRO) (hereinafter, this “Agreement”) is made this 18 day of March 2 010 by and between Medgenics Medical Israel, Ltd., a company organized and existing under the laws of the State of Israel with offices at Misgav Business Park, Misgav, Israel (hereinafter - the Company), and The Medical Research, Infrastructure, and Health Services Fund of the Tel Aviv Medical Center, a ____________ organized and existing under the laws of the State of Israel with offices at _____________________ (hereinafter - the Fund), and Dr. Doron Schwartz, an individual residing at _________________________, and having Israeli I.D. No.: 5556763-0 (hereinafter - the Principal Investigator). Each of the Company, the Fund, and the Principal Investigator may be referred to herein as a “Party” and collectively as the “Parties”.

Whereas: -

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

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

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

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.

NOW, THEREFORE, in consideration of the Parties’ mutual covenants and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:

1 .	Preamble and Appendices

The preamble to this Agreement and the representations contained therein constitute an integral part of the Agreement.

The appendices appended to this Agreement, as specified hereunder, constitute an integral part of the Agreement: -

Appendix A - Trial Protocol

Appendix B - List of Trial Personnel

Appendix C - Trial Budget and Schedule of Payments

Appendix D - Directives of Ministry of Health

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

In this Agreement, the following terms when capitalized shall have the following meanings set forth below:

“Ministry of Health Approval”	Approval of the Director General of the Israeli Ministry of Health, or to whomever he/she delegated the authority for this purpose, for the performance of the Trial by the Fund according to the National Health Regulations.

“Hospital”	The Tel-Aviv Sourasky Medical Center.

this “Agreement”	This Agreement and its appendices.

the “Product(s)”	BIOPUMP implanted tissue platform for sustained production and delivery of erythropoietin (EPODURE)

the “Trial”	as defined in Preamble clause “a”, i.e., the Clinical Trial, which shall be performed under this Agreement and the Trial Protocol, as each may be modified or updated from time to time subject to the consent of Fund and Company in writing and in advance.

the “Helsinki Declaration”	the Declaration containing the recommendations guiding investigators in biomedical trials involving human beings, Helsinki 1964, as amended in Tokyo 1975, and a draft of which appears in the attachment to the National Health Regulations.

“Trial Protocol”	as defined in Preamble clause “a”, and appended hereto as Appendix “A” to this Agreement, as may be modified or updated from time to time subject to the consent of the Fund and the Company in writing and in advance.

the “IRB”	the Internal Review Board appointed pursuant to the National Health Regulations, the role of which is to approve any medical experiment on human subjects that will be conducted by the Fund.

“Trial Personnel”	the team that shall be employed by the Hospital or the Fund for conducting the Trial, including the Principal Investigator.

“Participants in the Trial”	A group of persons chosen by the Principal Investigator according to criteria established in the Trial Protocol.

“GCP”	Ethical and scientific quality standards for designing, conducting, recording, and reporting trials that involve the participation of human subjects, as customized by the Fund.

“National Health Regulations”	National Health Regulations (Medical Trials on Humans), 5741-1980.

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.

For the removal of any doubt, it is agreed that the Principal Investigator may not terminate this Agreement under this section.

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.

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.

To avoid any doubt, it is clarified that this sub-section and any provision of this Agreement shall not be deemed as providing management and/or supervision authority to the Company or to anyone on its behalf over the Trial and/or the Principal Investigator and/or whomever of the Trial Personnel.

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.

To avoid any doubt, it is hereby clarified that this obligation of the Company shall remain in effect even in the event that the Agreement has been terminated or is voided for any reason, but only for so long as it shall be required under the guidelines of the Ministry of Health.

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.

This indemnity is subject to the following conditions:

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:

Type of insurance – one of the followings:

No Fault Insurance for Clinical Trial with a specific sub-limit for not less than $3,000,000 any one Occurrence and in the aggregate;

Liability Insurance including coverage for Clinical Trials with a specific sub-limit for not less than $3,000,000 any one Occurrence and in the aggregate.

The policy shall include as additional insured the Fund, the Tel Aviv Sourasky Medical Centre and/or their employees and/or the Principal Investigator and/or Sub Investigators and/or the Ethics Committee and/or any medical personnel involved in performing the Clinical Trial.

The insurance coverage shall be in force until the Trail and the discovery period shall be of 7 years.

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

All rights and title to and/or interests in the data, information, conceptions, and results derived from the Trial and/or the Product as well as any inventions or discoveries invented, patent applications, or discovered in connection therewith, including without limitation, any materials, compositions, treatments or methods which may be developed based thereon (hereinafter, collectively the “IP”) are and shall be owned by and are and will be the sole and exclusive property of the Company.

The Fund and the Principal Investigator hereby assign and transfer and shall make efforts to cause all Trial Personnel to assign and transfer to the Company all right, title and interest to the IP and to any invention or other proprietary rights relating to or deriving from the conduct of the Trial which are conceived, reduced into practice or developed by them under or as a result of this Agreement or the performance of the Trial and agree to take all further acts reasonably required, at the Company’s expense, to convey title in such IP or other proprietary rights to the Company and/or to assist the Company, at the Company’s cost and expense, to perfect and protect such rights including by way of preparation, filing, and prosecution of any patent application, copyrights, or other rights on such proprietary rights and to maintain the same in any and all countries.

11.	Exploitation of the Trial Results

It is hereby agreed that the Company has and shall have the sole and absolute right, without limitation of time or place, worldwide (i.e., in Israel or abroad), subject only to limitations under the law and the regulations of the Ministry of Health, to make any and all uses of the IP, including without limitation to manufacture and/or market and/or sell and/or grant a right of use in the production and/or marketing rights of the Product and/or accompanying products which shall derive from the Trial, directly or indirectly, and rights to perform research and development on said IP, including any modifications and/or improvements of the same.

The Fund, the Principal Investigator, the Trial Personnel and all other employees of the Fund involved in conducting the Trial shall not have any claim or demand against the Company for any payment, royalties or compensation of whatever type deriving from the development or sale of any such medicine, medical devices, treatments or methods or any other rights pertaining to the data, information and/or results derived from conducting the Trial.

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

This Agreement shall not create relations of agency and/or partnership and/or employer-employee relations between the Company and the Fund and/or Hospital and/or the Principal Investigator and/or the Trial Personnel.

15.	Suspending Conditions

The Parties hereby agree and undertake that the Agreement shall not enter into effect before the three (3) following cumulative approvals shall have been granted with regard to the Trial; provided, however, that the rights and obligations provided in Section 11 above shall be effective from the date of execution of this Agreement:

15.1

Approval of the Trial Protocol by the IRB and/or by the Ministry of Health, if required by the National Health Regulations.

The Principal Investigator shall submit the Trial Protocol to the IRB to obtain approval for conducting the Trial and/or to 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

A Party to this Agreement shall not be considered as waiving its rights which it has acquired pursuant to the same and by virtue thereof because it has failed to ensure the immediate enforcement of any right or because it has granted another Party an extension or delay, and a waiver or extension granted in one case shall not be considered or regarded as a waiver or extension in another, whether in the same matter or in another matter.

18.	Endorsement, Assignment and Transfer

A Party to this Agreement shall not transfer, endorse or assign its debts, obligations or rights pursuant to and by virtue of this Agreement, or a part thereof (each, an “Assignment”), all as the case may be (hereinafter - the Transferor) to any third party, unless the prior written consent of the other Parties has been obtained. Notwithstanding the foregoing, the Fund shall not, without reasonable ground, withhold its consent to any Assignment by the Company if such Assignment is being made (a) to any entity that acquires fifty percent (50%) or more of that Company’s shares or voting securities or all or substantially all of its assets, or (b) as part of a reorganization, re-incorporation or merger of the Company. Subject to the foregoing, this Agreement will benefit and bind the parties’ successors and assigns.

19.	Cooperation between the Parties

The Parties shall take all actions necessary to execute the provisions of this Agreement, and shall cause that at each one of them all the decisions required by this Agreement will be made and all the acts performed. The Parties shall cooperate with each other and shall act in good faith in all things relating to their engagement in this Agreement and all matters derived therefrom.

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: -

The Company – Misgav Business Par, P.O. Box 14, Misgav 20179

The Fund - 6 Weizmann Street, Tel-Aviv

The Principal Investigator – at the Fund.

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.

In witness whereof the parties set their hands

on the date and at the location set forth above: -

/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

Appendix A - Trial Protocol

Appendix B - List of Trial Personnel

Dr. Doron Swartz – Principle Investigator

Dr. Gil Tzarnin – sub Principle Investigator

Prof. Don Silverberg – sub Principle Investigator

Ofer Rap – Site Study Coordinator

Appendix C - Trial Budget and Schedule of Payments

	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

Notes:

Central lab (AML), travel expenses, shipments - are paid directly by Medgenics to the subcontractors.

Patient travel expenses will be paid to the taxi service directly by Medgenics.

Payment Terms:

On receipt of invoice, Net +30 days

For each patient recruited into the trial, the Company will be invoiced:

60% at patient enrollment

40% at patient termination (or completion of 6 months of follow-up)

Extended follow-up: invoiced on a quarterly basis

Patient reimbursement will be charged to the Company without overhead, invoiced on a quarterly basis

EXHIBIT 10.29

AGREEMENT

THIS AGREEMENT, made and entered into as of May 1, 2010, is by and between Hadasit Medical Research Services & Development Co. Ltd. (“Hadasit”), P.O. Box 12000, Jerusalem Israel 91120 and Medgenics Medical Israel, Ltd., a company with an address at Teradion Business Park, Misgav Israel 20179 (the “Company” ).

WITNESSETH

WHEREAS, Hadassah Medical Organization (“ HMO ”) owns and operates the Hadassah National Facility at the Ein Kerem Hospital (the “LAB” ) according to GMP Standards, and

WHEREAS, Hadasit is authorized to promote the services of the LAB and HMO’s employees and to enter into agreements to provide the services of the LAB by HMO employees to researchers and developers of Bio-Technologies, and

WHEREAS, Company engages in research and development in the field of tissue and genetic engineering and has developed a Process as defined herein ( “the Process” ); and

WHEREAS, as part of the development of the Product (as hereinafter defined) for the purpose of conducting clinical trials, the Company is interested to execute, in coordination with Hadasit in the LAB the Work Plan annexed as Schedule A hereto by conducting the Process and using the Materials at the LAB (all of which shall jointly be referred to herein as “the Work” )

WHEREAS, Hadasit is interested in providing the Company with the services of the LAB and HMO employees under the terms and conditions set forth herein;

WHEREAS, the parties herein are willing and able to perform their respective obligations with respect to the Work (as further described herein) under the terms set forth below.

NOW, THEREFORE, it is hereby agreed between the parties as follows:

1. Preamble, Schedules and interpretation:

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

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so as to derogate from the Company’s responsibilities hereunder. The current Work Sheet is attached hereto as Schedule B to this Agreement.

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.

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Any change in the Company's SOPs shall be subject to the prior approval of the SOG, which shall not be unreasonably withheld. The SOG's approvals under this section shall not be construed so as to derogate from the Company's responsibilities. In any contradiction between the Company's SOPs and the SOPs, the SOPs shall govern.

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.

2. Substance of this Agreement:

2.1 The Work will be carried out by the Company employees and LAB Assistant subject to their availability, under the supervision of the Company's Supervisor at the Dedicated Lab and under the supervision of the SOG during the Work Period according to the GMP Standards, the SOPs, the Work Sheet and the Work Plan at the LAB, and as is further described in Section 4 hereto. The SOG's contribution to the project shall be as set forth in Section 4.2 hereto.

2.2 The Company's Supervisor shall participate in the Work as set forth in Section 4.4 hereto, provided he or she has completed the Training as set forth in Section 4.4 hereto.

2.3 A prior condition for the Work to commence shall be the completion of the Company's Training for the SOG and the LAB Assistant (or other HMO Employees) as set forth in Section 4.3 hereto.

2.4 Hadasit shall provide the Dedicated Lab and the Common Areas of the LAB according to the terms specified herein for purpose of the Work.

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2.5 The Company shall be responsible for the sterility of any materials brought by the Company into the LAB for purposes of the Work prior to their insertion thereto and shall examine such materials and any tissues provided to it after the completion of the Work prior to any further use thereof at its own responsibility. The aforementioned notwithstanding, the Company does not warrant that Tissues brought to the LAB will be sterile at the time of insertion to the LAB

2.6 The Company shall pay to Hadasit the Payment specified in Section 12 hereto and shall be the sole owner of the Propriety Data as set forth in Section 13.

3. Parties Representations

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;

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and that the Company is not aware of any outstanding claim(s) of infringement of any intellectual property rights including without limitation any patent, copyright, or trade secret related to the Process, the Product or the Work made or pending against the Company.

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. Scope of Work

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.

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4.4

Hadasit's Training - Prior to the involvement of the Company's Supervisor(s) with the conduct of the Work in the LAB, the SOG shall train the Company's Supervisor(s) in the LAB (the “ Training ” ). After such Training is completed, the SOG shall test the Company's Supervisor's knowledge in this respect and approve his or her participation in the Work. The SOG may determine at her sole discretion that the Company's Supervisor or any of them have failed to gain sufficient knowledge, retest them or demand their replacement by others. It is clarified, however, that although the SOG shall be responsible to include in the Training sufficient information, the Training shall not cast on Hadasit, HMO or the SOG any responsibility as to the actual knowledge acquired by the Company's Supervisor that has not been expressly tested or as to their future use of any such knowledge, and is only meant for Hadasit's internal procedures. Nor shall such Training derogate from the Company's responsibilities and liabilities hereunder.

The Company's Supervisor(s) may observe and participate in the conduct of the Work subject to the SOG's approval which shall not be unreasonably withheld. In any aspect related to this Agreement and the Work, the Company's Supervisor(s) shall act in compliance with the SOPs, the Work Sheet, the Company's SOPs and the Work Plan, the GMP Standards, the provisions of this Agreement and HMO's procedures and regulations, as may be communicated to him during the Training or subsequent thereto. The Company represents and acknowledges that any deviation from the aforementioned might cause severe damages to Hadasit, to the LAB and to the other parties who use the LAB. Upon any breach by the Company of the above undertakings resulting in any contamination of the LAB, Hadasit shall be entitled to liquidated damages in the amount of US$100,000 from the Company, all without derogating from its other remedies under this Agreement and any law.

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

After the Work at the LAB is completed, the Tissues shall be returned to the Company for further use, however the Company shall be solely responsible to test the sterility of such Tissues after the completion of the Work with respect thereof or for any use thereof, and Hadasit disclaims any representations in this respect. Hadasit shall not be deemed liable if after the completion of the Work the Tissues are not sterile, and in any event the Company must ensure the condition of the Tissues for any further use after the completion of the Work.

4.7

The Company shall be solely and exclusively responsible for the Work Plan, the Product and the release of batch(es) (beyond such procedures included in the SOPs which must be complied with in any event), acceptance or rejection of the Product at its different phases, and for complying with all relevant written standards and instructions as set forth herein. As specified in the Company SOPs, the SOG, and a second person designed by the Company to serve as backup in

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case of lack of availability of the SOG, will review the results of the release criteria testing and will sign on the release of the Product if all tests meet the specified release criteria.

4.8	The Company shall provide Hadasit with the equipment detailed in Schedule G hereto and shall be responsible for its maintenance so that it is kept in good condition suitable for the conduct of the Work throughout this entire Agreement.

4.9

The LAB Assistant and the Company's Supervisor(s) involved in the work shall report to the SOG as set forth in the SOPs and the Work Sheet. The Company's Supervisor(s) shall execute the instructions of the SOG. None of the above shall cast on Hadasit or the SOG any responsibilities not expressly mentioned herein and shall not derogate from the Company's responsibilities and undertakings under this Agreement.

4.10

The Company shall provide Hadasit, promptly upon Hadasit's request or without such request, with any and all of the information that is necessary at Hadasit's sole discretion or that is reasonably required in the opinion of the Company for the efficient conduct of the Work in accordance with GMP Standards and the SOPs as set forth herein.

4.11

Notwithstanding anything to the contrary herein, Hadasit and the SOG may at any time during the Work and without prior notice freeze the conduct of the Work or evacuate the LAB from any materials provided hereunder if in their professional discretion the continuation of the Work may damage the LAB or other persons using it. The SOG and Hadasit shall promptly notify the Company of such event.

5. Coordination and communication .

5.1

Each party shall assign to the Work a contact person. The current contact persons are the Company's Contact Person and the SOG. Such contact persons shall be responsible to any coordination and communication between the Company and Hadasit under this Agreement and any communication with a contact person shall be deemed to be a communication with the party represented by such contact person.

5.2

Access to the Dedicated Lab :

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.

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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

Hadasit and the SOG shall in good faith assist and cooperate with the Company's employees or representatives or with representatives of relevant authorities (including FDA) in any audit to be held in the LAB whether during the Work or subsequent thereto (at the Company's expense), subject to prior coordination with the SOG and instructions of the SOPs with respect to such procedures. The Company shall receive immediate notification of any pending or current audit.

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. Maintenance of the LAB :

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.

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7. Amendments and changes :

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. Records and Reports:

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.

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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.

9. Quality Control and Efficacy of the Product, Use of Work Products :

The Company is solely responsible for quality control and for the efficacy of the Product. In addition and notwithstanding anything to the contrary herein, the Company shall be solely liable and responsible for any use of the Work's products (including the Tissues) provided to it by Hadasit according to this Agreement.

10. Materials and Items :

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.

1 1. No Employer-Employee Relations

Nothing contained in this Agreement shall be construed as employee-employer relations between the Company's Supervisor(s) (or other representatives of the Company) and Hadasit and/or HMO and/or Hadasit's or HMO's personnel and the Company or vise versa.

12. Consideration

In consideration of the fulfillment of Hadasit's obligations pursuant to this Agreement, the Company agrees to pay to Hadasit the total sum indicated in Schedule I hereto on such dates and manner as set forth therein (the “ Payment ” ).

13. Proprietary Data, Company Confidential Information, Confidentiality

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

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including, without limitation, ideas, inventions, techniques, improvements, know-how or other technology or associated intellectual property relating to the Work, whether or not patentable (the “ Proprietary Data ” ) including any right to use it shall be the exclusive property of the Company.

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.

In the event the Company is unable, after reasonable effort, to secure the signature of Hadasit, HMO any of their employees on any document needed to apply for, or prosecute or enforce any patent, copyright, or other right or protection relating to Proprietary Data, such individuals and HMO hereby designate and appoint the Company and its duly authorized officers and agents to act as agent and attorney-in-fact for and on their behalf to execute, verify and file any documents and to do all other lawfully permitted acts with the same legal force and effect as if executed by them. Such appointment shall be irrevocable, for the benefit of a third party to which the Company assigned any of its rights hereof, and coupled with an interest.

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.

Hadasit shall maintain in strict confidence any and all of the Company's Confidential Information and shall use it solely for the purpose of this Agreement. 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 Hadasit or its employees of this obligation of confidentiality or (iii) is disclosed to Hadasit and/or the SOG and/or the LAB Assistant by a third party through no violation of any confidential obligation to the Company.

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

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Company or its employees of this obligation of confidentiality or (iii) is disclosed to the Company or the Company's employees by a third party through no violation of any confidential obligation to Hadasit.

14. Publications

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. Liability, Indemnification and Insurance

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

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and/or related to this agreement, even if such party is advised of the possibility of such damages.

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. Term and Termination

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

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prior to the end of the Term and upon at least 25 days prior written notice during the Extended Term, provided however that such Extended Term shall not exceed 5 months in the aggregate.

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. Miscellaneous

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,

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heretofore made between the parties. Any amendment hereto must be in writing and signed both parties.

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.

18. Notices

All notices and communications provided for hereunder shall be in writing and shall be delivered by registered mail or facsimile or delivered by hand to the addresses listed in the caption to this Agreement or to such other address or facsimile number as either party shall designate in writing to the other party. Notices and communications sent by registered mail shall be deemed to have been received by the addressee on the date of delivery or 4 days after dispatch, whichever is the earlier. Notices and communications delivered by hand or sent by facsimile shall be deemed delivered within 1 business day of delivery or transmission.

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IN WITNESS WHEREOF the parties have signed this Agreement on the date first hereinbefore written.

/s/ Andrew L. Pearlman		/s/ ILLEGIBLE
Company		Hadasit

By : ANDREW L. PEARLMAN		By : ILLEGIBLE

Title : CEO		Title :

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Schedule A

The Work Plan

Timetables and stages of the Work:

For each patient, the work flow for the duration of the ex-vivo processing is specified completely by the SOPs. Estimated durations for each step are shown in the table below.

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

Details as to the start of ex-vivo treatment for each patient will be given at least two days prior to the start of ex-vivo processing.

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Schedule B

Work Sheet

Company SOPs can be found in Schedule F.

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Schedule C

Company's Contact Person:

Name :	Dr. Baruch Stern

Phone :	(054) 227-4826

E-mail :	baruch@medgenics.com

Name :	Avi Rimler

Phone :	(050) 440-9611

E-mail :	avi@medgenics.com

Company's Supervisor

Name :	Dr. Baruch Stern

Phone :	(054) 227-4826

E-mail :	baruch@medgenics.com

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Schedule D

Medgenics ’ Dedicated Lab is Room 23 and 25 shown below.

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Schedule D-l

Equipment

Within Class 10,000 GMP Lab

1. Laminar flow hood

2. Water bath

3. Refrigerator/Freezer (-20 frost free)

4. Laser particle counter, type Lasair - dedicated unit and backup

5. Biotest Air Sampler + extra battery and charger - dedicated unit and backup

Within Class 100,000

6. Validated autoclave

Within analytic Lab

7. Vortex

8. Shaker for ELISA reader

9. ELISA Reader (540 nm filter) - need for recalibration within analytic lab before start of Work

10. Computer connected to ELISA reader and internet

11. Refrigerator/Freezer (-20 frost free)

12. Freezer (-20 frost free)

13. -80 freezer

14. Bacteria incubator

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Schedule E and Schedule F

The SOP ’ s

Company SOPs:

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

Hadasit SOPs:

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Schedule G

Within Class 10,000 GMP LAB

1. Shaker for viral transduction x2

2. Electric Pipette -aid (x2) + chargers

3. Heating plate

4. Pipettors - P-5000, P-1000, P-200, P-20, P-10

5. Tissue culture incubators (5% C02) x2 - Hadasit to connect to their general GMP alarm system and be responsible for periodic calibration.

6. Eppendorf centrifuge

Within analytic Lab

7. Elisa washer

8. Multi 8-channel pipettes - 2x 5-50ul

9. Multi 8-channel pipettes - 2x 50-300ul

10. Electric Pipette-aid + charger

11. Pipettors - P-1000, P-200, P-20, P-10

12. Glucometer

13. Stopwatch

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Schedule H

Materials

Materials to be provided by the Company:

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

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Schedule I

Payment Schedule

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.

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.

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.

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Schedule J

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EXHIBIT 10.30

SERVICE AGREEMENT

THIS AGREEMENT is entered into on April 26, 2010 (‘Effective Date”) by and between

Medgenics, Inc., which is located at Teradion Business Park, P.O. Box 14, Misgav 20179 Israel (hereinafter “Company”), and

Roei-Zohar Liad, which is located at 60 Hameri Street Givatayim 53331, Israel ________________________, (hereinafter “RL”).

WHEREAS, Company and RL wish to enter into a contract and agreement whereby RL will render certain work and services to and for the benefit of Company.

NOW, THEREFORE, for and in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Company and RL do hereby contract, covenant and agree as follows in connection therewith:

1. Services. RL agrees to render and provide work, services, labor and/or materials in accordance with the specifications contained in Exhibit A, attached hereto and incorporated herein by reference, provided that the compensation terms herein shall apply to cash or other consideration received by the Company that in aggregate shall not exceed $10 million. It is additionally noted that the parties hereby agree to work together to conclude terms in an expeditious manner regarding investments, strategic partnering or other agreements whose aggregate cash or consideration to the Company is larger than $10 million.

2. Compensation. Company agrees to compensate RL for the Services performed as described in detail in Exhibit C.

3. Term. RL and Company agree that this contract represents an “at will” engagement and may be terminated by either party in writing upon 30 days notice, or will automatically terminate 12 months from the Effective Date. RL agrees to promptly provide to Company all completed work and other materials rendered as of the date of termination.

4. Limitation of Liability. RL does not warrant or represent that its services will be successful or result in any material benefit to Company. Company acknowledges that no such warranty exists. In no event shall either party be liable to the other party for any indirect, incidental, special, exemplary or consequential damages arising out of this Agreement. This Section shall survive termination of this Agreement.

5. Independent RL. RL is, and will continue to be an independent contractor and is not to be considered in any way subject to control by Company. RL is not, and is never to be, an agent or employee of Company and RL shall have no power or authority to pledge or attempt to pledge or bind or obligate the Company in any manner or for any purpose. RL’s relationship with Company will be that of an independent contractor and nothing in this Agreement should be construed to create a partnership, joint venture, or employer-employee relationship. RL is not an agent of Company and is not authorized to make any representation, contract or commitment on behalf of Company.

6. Governing Law. This Agreement shall be governed by and shall be construed in accordance with the laws of the Israel. This Section shall survive termination of this Agreement.

7. Non-Circumvention. Company agrees not to use any information gathered from RL representatives, partners, customers, and channels or any other sources introduced by or referred by the same, in place of the other services as contemplated herein or in any manner which would preclude RL from receiving its commission for providing Services. For a period ending one year after termination of this Agreement, Company also agrees that it will not, by itself or on behalf of any other person, firm, partnership or corporation divert or take away or attempt to divert or take away, call on or solicit or attempt to solicit the business or patronage of any person or entity who is known to the Company to by an RL customer, channel, contact, referral, acquaintance, agent, employee, investor, partner, representative, or affiliate, including, but not limited to, those with whom Company become acquainted with as a result of Company’s relationship with RL. This Section shall survive termination of the Agreement.

8. Assignment. Company agrees that the Warrants pursuant to the compensation sections in Exhibit C may be transferred by and between RL and its employees, affiliates, debt owners, share holders, subsidiaries or third parties, subject to compliance with any applicable securities laws.

This Agreement constitutes the entire agreement between the parties pertaining to its subject matter and it supersedes all prior or contemporaneous agreements, representations and understandings of the parties. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by the party to be charged.

WITNESS THE SIGNATURES of the parties hereto on this 26 day of April, 2010.

/s/ Andrew Pearlman
Medgenics, Inc.		Roei-Zohar Liad

EXHIBIT A: Services

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.

EXHIBIT B: Approved Investor Candidates

1.	TEVA PHARMACEUTICAL INDUSTRIES LTD
2.	Dr Ilan Cohen and associates; and/or Servotronix, LTD.
3.	Fachagentur Nachwachsende Rohstoffe (FNR) – Germany

EXHIBIT C: Compensation

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:

Said participation occurs within 12 months of the termination or expiration of this Agreement; or

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.

SERVICE AGREEMENT

THIS AGREEMENT is entered into on April 26, 2010 (‘Effective Date”) by and between

Medgenics, Inc., which is located at Teradion Business Park, P.O. Box 14, Misgav 20179 Israel (hereinafter “Company”), and

Roei-Zohar Liad, which is located at 60 Hameri Street Givatayim 53331, Israel ____________________, (hereinafter “RL”).

WHEREAS, Company and RL wish to enter into a contract and agreement whereby RL will render certain work and services to and for the benefit of Company.

1. Services . RL agrees to render and provide work, services, labor and/or materials in accordance with the specifications contained in Exhibit A, attached hereto and incorporated herein by reference, provided that the compensation terms herein shall apply to cash or other consideration received by the Company that in aggregate shall not exceed $10 million. It is additionally noted that the parties hereby agree to work together to conclude terms in an expeditious manner regarding investments, strategic partnering or other agreements whose aggregate cash or consideration to the Company is larger than $10 million.

2. Compensation . Company agrees to compensate RL for the Services performed as described in detail in Exhibit C.

3. Term . RL and Company agree that this contract represents an “at will” engagement and may be terminated by either party in writing upon 30 days notice, or will automatically terminate 12 months from the Effective Date. RL agrees to promptly provide to Company all completed work and other materials rendered as of the date of termination.

4. Limitation of Liability . RL does not warrant or represent that its services will be successful or result in any material benefit to Company. Company acknowledges that no such warranty exists. In no event shall either party be liable to the other party for any indirect, incidental, special, exemplary or consequential damages arising out of this Agreement. This Section shall survive termination of this Agreement.

5. Independent RL . RL is, and will continue to be an independent contractor and is not to be considered in any way subject to control by Company. RL is not, and is never to be, an agent or employee of Company and RL shall have no power or authority to pledge or attempt to pledge or bind or obligate the Company in any manner or for any purpose. RL’s relationship with Company will be that of an independent contractor and nothing in this Agreement should be construed to create a partnership, joint venture, or employer-employee relationship. RL is not an agent of Company and is not authorized to make any representation, contract or commitment on behalf of Company.

6. Governing Law . This Agreement shall be governed by and shall be construed in accordance with the laws of the Israel. This Section shall survive termination of this Agreement.

7. Non-Circumvention . Company agrees not to use any information gathered from RL representatives, partners, customers, and channels or any other sources introduced by or referred by the same, in place of the other services as contemplated herein or in any manner which would preclude RL from receiving its commission for providing Services. For a period ending one year after termination of this Agreement, Company also agrees that it will not, by itself or on behalf of any other person, firm, partnership or corporation divert or take away or attempt to divert or take away, call on or solicit or attempt to solicit the business or patronage of any person or entity who is known to the Company to by an RL customer, channel, contact, referral, acquaintance, agent, employee, investor, partner, representative, or affiliate, including, but not limited to, those with whom Company become acquainted with as a result of Company’s relationship with RL. This Section shall survive termination of the Agreement.

8. Assignment . Company agrees that the Warrants pursuant to the compensation sections in Exhibit C may be transferred by and between RL and its employees, affiliates, debt owners, share holders, subsidiaries or third parties, subject to compliance with any applicable securities laws.

WITNESS THE SIGNATURES of the parties hereto on this 26 day of April, 2010.

/s/ Andrew Pearlman		/s/ Roei-Zohar Liad
Medgenics, Inc.		Roei-Zohar Liad

EXHIBIT A: Services

2.	Assisting Company throughout the process of negotiation with Investors as requested by the Company.

EXHIBIT B: Approved Investor Candidates

1.	TEVA PHARMACEUTICAL INDUSTRIES LTD
2.	Dr Ilan Cohen and associates; and/or Servotronix, LTD.
3.	Fachagentur Nachwachsende Rohstoffe (FNR) – Germany

EXHIBIT C: Compensation

Said participation occurs within 12 months of the termination or expiration of this Agreement; or

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.

EXHIBIT 10.31

STRINGER SAUL

DATED 19 th June 2007

(1) PROPHARMA PARTNERS LIMITED

and

(2) MEDGENICS, INC.

and

(3) MEDGENICS MEDICAL ISRAEL, LTD.

AGREEMENT

17 Hanover Square London W1S 1HU

Tel: 020 7917 8500 Fax: 020 7917 8555

THIS AGREEMENT is made the 19 th day of June 2007

BETWEEN:

(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

MEDGENICS MEDICAL ISRAEL, LTD. a company having a place of business at Hanapach 12 Karmiel, Israel (hereinafter separately or together referred to as “the Company”).

WHEREAS:

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

THE PARTIES AGREE as follows:

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.

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.

IN WITNESS whereof, the parties have executed this agreement the day and year first above written.

Signed by:	/s/ Peter J. Cozens	Signed by:	/s/ Andrew L. Pearlman

Name:	Peter J. Cozens	Name:	Andrew L. Pearlman

Position:	Principal	Position:	CEO
duly authorised for and on behalf		duly authorised for and on behalf
of PROPHARMA PARTNERS		of MEDGENICS, INC. and MEDGENICS
LIMITED		MEDICAL ISRAEL, LTD.

EXHIBIT 10.32

CONSULTING SERVICES AGREEMENT

This agreement (“Agreement”) is entered into as of January 31st, 2008 Medgenics, Inc. a corporation organized under the laws of Delaware (“Client”) and Biomondo Consulting, Inc., a corporation organized under the laws of the State of California (“Consultant”).

WHEREAS, Client wishes Consultant to perform the services described in Schedule A hereto (“Services”), which shall be performed in accordance therewith and in accordance with the terms hereof, and

WHEREAS, Consultant wishes to perform Services subject to the terms and conditions set forth herein,

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE 1

Basic Obligations of the Parties

1.1 Services. Subject to the terms and conditions provided for herein,

(a) Consultant, in consideration of the Contract Price (as defined in Section 2.1), agrees to perform Services, and

(b) Client agrees to pay for Services as set forth in Section 2.1.

1.2 Employees/Subcontractors. All personnel assigned by Consultant to perform Services will be either employees of Consultant or subcontractors with which Consultant has contracted and which have been approved in advance by Client (“Subcontractors”). Consultant will pay all salaries, fees and expenses of its employees and Subcontractors, and all federal, social security, federal and state unemployment taxes, and any other payroll or withholding taxes relating to its employees. Consultant (and its Subcontractors) will be considered, for all purposes, an independent contractor, and it will not, directly or indirectly, act as an agent, servant or employee of Client, or make any commitments or incur any liabilities on behalf of Client without its prior written consent.

ARTICLE 2

Terms of Payment and Volumes

2.1 Contract Price. In consideration for performance of Services, Client shall make payment to Consultant for Services rendered hereunder at the rates and in the amounts as in Schedule B hereto (the “Contract Price”). The Contract Price includes all amounts to be paid by Client under this Agreement, other than as specifically set forth herein, and shall be payable as set forth in Schedule B hereto.

2.2 Indemnity . Consultant shall indemnify and hold harmless Client from and against any liability and costs, including attorney fees, arising out of any failure to make payment to its employees and its Subcontractors for Services rendered pursuant to this Agreement.

ARTICLE 3

Term of Agreement

3.1 Term. This Agreement shall be effective from the date hereof and shall terminate on completion of Phase 3, at which time this Agreement shall terminate, unless otherwise renewed, extended, or modified by a written agreement signed by both parties hereto; provided, however, that either party shall have the right to terminate this Agreement prior to such date, at any time upon not less than 30 days’ notice to the other party specifying the effective date for termination.

3.2 Survival of Certain Articles. Consultant agrees that notwithstanding the termination of this Agreement pursuant to Section 3.1 hereof, Section 2.2 and Articles 6, 8, and 9 shall survive any such termination and remain in full force and effect.

ARTICLE 4

Risk of Loss; Laws

4.1 Risk. Consultant will provide for all proper safeguards and shall assume all risks of loss to Consultant and its employees and Subcontractors incurred in performing Services hereunder.

4.2 Laws . Consultant, its employees and Subcontractors shall comply with all federal, state and local laws and regulations applicable to the Services, including but not limited to laws governing payment of its employees assigned to perform Services.

ARTICLE 5

Performance of Services

5.1 Conduct of Personnel. Without limiting the responsibility of Consultant for the proper conduct of its personnel and Subcontractors in the performance of Services, the conduct of the personnel performing Services is to be guided by any rules and regulations as set forth in a Schedule C hereto and any additional special written instructions as may be agreed to by Client and Consultant.

5.2 Supervision. Consultant is responsible for the direct management and supervision of its personnel and Subcontractors through its designated representative, and such representative will, in turn, be available at all reasonable times to report and confer with the designated agents or representatives of Client with respect to Services being rendered.

5.3 Qualifications and Removal. Consultant agrees that Services to be provided will be performed by qualified, careful and efficient employees or Subcontractors in strict conformity with the best practices and highest applicable standards. Consultant further agrees that upon request of Client it will remove from the performance of Services hereunder any of its employees or Subcontractors who, in the reasonable opinion of Client, are guilty of improper conduct or are not qualified to perform assigned work.

ARTICLE 6

Confidential Information

6.1 Restriction. Consultant agrees not to use or disclose to anyone, other than such disclosure to employees or Subcontractors of Consultant as may be necessary to provide the Services, any Confidential Information (as hereinafter defined). If requested by Client, Consultant shall require its employees and Subcontractors performing Services hereunder to execute confidentiality agreements prohibiting use or disclosure of Confidential Information. For purposes of this Agreement, “Confidential Information” is (a) information contained in any materials delivered to Consultant pursuant to this Agreement and (b) information which relates to Client’s technology, financial or business affairs, product development and business plans and prospects or that of any of its customers or affiliates. Consultant acknowledges that money damages would be both incalculable and an insufficient remedy for any breach of this Article 6 by Consultant, its employees or its Subcontractors and that any such breach would cause Client irreparable harm. Accordingly, Consultant agrees that in the event of any breach or threatened breach of this Article 6, Client shall be entitled, without the requirement of posting a bond or other security, to equitable relief, including injunctive relief and specific performance. Such remedy shall not be the exclusive remedy for any breach of this letter agreement, but shall be in addition to all other remedies available at law or equity to Client.

6.2 Delivery. Upon termination pursuant to Article 3, Consultant shall deliver or cause to be delivered to Client all Confidential Information and other material which has been prepared by Consultant or its Subcontractors in connection with the performance of the Services or in which Client has exclusive rights.

ARTICLE 7

Excuse for Nonperformance

7.1 Delays. Consultant’s obligation to perform Services hereunder shall be excused without liability when prevented by strike, act of God, governmental action, accident or any other condition beyond its reasonable control. Consultant agrees to resume performance of Services as soon as practicable following cessation of such condition.

ARTICLE 8

Disclaimer of Consequential Damages

8.1 Except in connection with a breach of the obligations under Article 6, neither party shall not in any action or proceeding, or otherwise, assert any claim for consequential, special or punitive damages against the other party (or the party’s employees or agents) on account of any loss, cost, damage or expense which the first party may suffer or incur because of any act or omission of the second party.

ARTICLE 9

Hiring of Employees/Subcontractors

9.1 Client agrees that, during the term of this Agreement and for one hundred eighty (180) days immediately following the termination of this Agreement, it shall not, directly or indirectly, hire any employees of Consultant or Subcontractors who were employed by Consultant or provided Services at any time during the term of this Agreement.

9.2 Consultant agrees that, during the term of this Agreement and for one hundred eighty (180) days immediately following the termination of this Agreement, it shall not, directly or indirectly, hire any employees of Client.

ARTICLE 10

General

10.1 Assignment. This Agreement may not be assigned by either party without the prior written consent of the other party.

10.2 Governing Law. This Agreement will be governed in all respects by the law of the State of California.

10.3 Amendment. This Agreement, including the Schedules hereto, may be amended only by an instrument in writing executed by the parties or their permitted assignees.

10.4 Section Headings . Section and Article headings are for reference purposes only and shall not affect the interpretation or meaning of this Agreement.

10. 5 Notices. All notices pursuant to this Agreement shall be in writing, except as provided herein. Notices in writing shall be sufficient if hand delivered or mailed by first class mail, postage prepaid, or sent by telecommunications to the attention of the person listed below and to the party intended as the recipient thereof at the address of such party set forth below, or at such other address or to the attention of such other person as such party shall have designated for such purpose in a written notice complying as to delivery with the terms of this Section.

Consultant:	870 Paseo Santa Cruz Thousand
	Oaks, Ca 91320
	Attn: Ray Chow, PhD
	Medgenics, Inc.
Client:	12 Hanapach St, P.O. Box 6314
	Karmiel, Israel 21653
	Attn: Andrew Pearlman, MD

10.6 No Waiver of Performance. Failure by either party at any time to require performance by the other party or to claim a breach of any provision of this Agreement will not be construed as a waiver of any right accruing under this Agreement, nor affect any subsequent breach, nor affect the effectiveness of this Agreement or any part hereof, nor prejudice either party as regards any subsequent action.

10.7 Entire Agreement; Conflicting Provisions. This Agreement together with the Schedules hereto constitutes the entire agreement between Client and Consultant with respect to the subject matter hereof and no representation or statement not contained in the main body of this Agreement or such Schedules shall be binding upon Consultant or Client as a warranty or otherwise. In the event of any conflict between the terms of the main body of this Agreement and any of the Schedules hereto, the terms of the main body of this Agreement shall govern.

IN WITNESS WHEREOF, the parties hereto have respectively caused this Agreement to be executed by their duly authorized officers as of the day and year first written above.

CONSULTANT

By	/s/ Ray Chow
	RAY CHOW
Title:	PRESIDENT

CLIENT

By	/s/ Andrew Pearlman
Title:	CEO

SCHEDULE A Services

Phase 1 Deliverable:

A PowerPoint Presentation (approximately 20 slides). A draft would be sent to you in advance and then edits/refinement can be made subsequent to final delivery.

Purpose/Rationale:

The presentation will serve as a frame of reference and working document for internal strategic discussions. It will incorporate existing company information blended with addition strategic perspectives for consideration or dismissal. In essence, it will allow the Board to align around a strategy, or strategies, and proactively manipulate the choices the company will have to make in order to maximize the chances for success. The successful future will be all about simultaneous prediction and feedback.

Phase 1. There will be 4 components for the content to develop corporate strategy and the strategic choices.

Opportunity:

1. List of companies who may be interested in a platform technology including rationale

2. List of companies and/or product(s) where Medgenics bio-pump technology may be ideal for life cycle management. Regional Markets will be factored in as appropriate.

3. Medgenics as a commercial entity. The US nephrology market will be used as the potential example using Epodure. What would it take to be a serious commercial player.

Promise:

1. What Medgenics could deliver - therapeutically and by value.

2. Conversely, how Medgenics may be perceived by Pharma companies, particularly from a Business Development perspective. This is to be a mini “pressure test” on your assumptions and proof of concept from a business and NOT a scientific perspective.

Proof:

1. A list of the Medgenics’ assets from the perspective of an outsider, namely me. This in turn will form the basis of the company storyboard for future business development opportunities

Conviction and/or Exit Strategy:

1. What is the end in mind? What would be a successful outcome?

The presentation would be summarized with a series of action steps and recommendations.

SCHEDULE B Contract Price

Phase 1: $20,000 (the “Phase 1 Fee”), plus reasonable out-of-pocket expenses; provided, however, that all expenses in excess of $_____ individually, and $_____ in the aggregate, shall be approved in advance in writing by Client. The Phase 1 Fee shall be payable only after delivery of the PowerPoint Presentation described on Schedule A.

Phase 2: To be mutually agreed between Client and Consultant

Phase 3: To be mutually agreed between Client and Consultant

Invoices to be paid within 30 days of invoice date.

SCHEDULE C Rules of Engagement

[Spell out any special rules of conduct (e.g. compliance with security requirements of Client’s customers)]

EXHIBIT 10.33

1317 King Street

Alexandria, VA 22314

P 703-739-5695

F 703-548-7457

Email: bcg@bcg-usa.com

www.biologicsconsulting.com

CONSULTING AGREEMENT

BETWEEN

BIOLOGICS CONSULTING GROUP, INC. (Hereinafter “BCG”)

Address:

1317 King Street

Alexandria, Virginia 22314

TAX I.D.#:

84-1693476

AND

MEDGENICS, INC. (Hereinafter “COMPANY”)

Address:

P.O.Box 14

Teradion Business Park

D.N. Misgav 20179

Israel

DATED : June 18, 2008

Term of Consulting Service:

From: January 1, 2008

Through: December 31, 2009

COMPANY and BCG (the “Parties”) hereby agree as follows:

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

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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

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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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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.

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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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.

Signature page follows

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly

authorized representatives.

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:

Please fill-in the requested information in the “Billing Procedures” section of

“Exhibit 1” of this agreement.

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EXHIBIT 1

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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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

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EXHIBIT 10.34

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

AMENDMENT NO. 1

CONSULTING AGREEMENT BETWEEN

BIOLOGICS CONSULTING GROUP, INC. (Hereinafter "BCG")

Address:

400 N. Washington Street

Suite 100

Alexandria, Virginia 22314

TAX I. D. #:

84-1693476

AND

MEDGENICS, INC. (Hereinafter "COMPANY")

Address:

PO Box l4

Teradion Business Park

D.N. Misgav 20179

Israel

Original Agreement effective as of June 18, 2008 (the "Agreement").

Now, THEREFORE, in consideration of the mutual promises contained in this Amendment No. 1 , the parties agree as follows:

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:

Invoices are to be addressed to:

	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

EXHIBIT 10.35

Sudbrook Associates LLP

Healthcare Corporate Advisors

Russett House

6 The Drive

Cobham

KT11 2JQ

Strictly Private and Confidential

Dear Sirs,

1. Engagement

We write this engagement letter agreement (this “Agreement”) to confirm the terms on which Sudbrook Associates LLP (“Sudbrook” or “us”) has been engaged (“the Engagement”) by Medgenics, Inc. (the “Company” or “you”) to act as its sole corporate finance advisor in order to provide the services described herein during the period of the Engagement.

2. Scope of Work

Sudbrook will provide the services detailed in Part 1 of Schedule 1 to the Company in regard to the Company’s proposed transaction with Shire Plc (the “Transaction”):

3. Exclusive Engagement

3.1 During the period of the Engagement (“the Engagement Period”), the Company will not appoint any third party as an additional corporate finance advisor in relation to the Transaction.

3.2 If the Company does not wish to proceed with a Transaction during the Engagement Period and within 6 months of the date of termination or expiration of this Engagement it or any of its affiliates enters into or completes a transaction having similar terms and effect to the Transaction, the Company will pay Sudbrook the fees as and when provided in Part 2 of Schedule 1 after the successful closing of that transaction.

4. Remuneration

4.1 Following the successful closing of a Transaction, the Company agrees to pay Sudbrook the fees as and when provided in Part 2 of Schedule 1 and to pay the reasonable expenses incurred by Sudbrook in accordance with paragraph 4.2.

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.

5. Authorities

5.1 Sudbrook is authorised by the Company to do all reasonable things which are necessary or desirable to carry out the Engagement (including acting as the Company’s agent or through agents, which may include Sudbrook’s officers, partners or employees provided the Company has given its prior written approval in relation to such actions as agents) or to comply with applicable law. The Company agrees to ratify and confirm everything lawfully done in the exercise of this authority. Notwithstanding anything to the contrary contained herein, Sudbrook shall have no authority to enter into any agreements, documents or consents related to the Transaction on behalf of the Company. The Company shall have the sole right to approve, accept or reject any and all terms related to the Transaction.

5.2 Sudbrook can assume that instructions have been properly authorised by the Company if they are given in writing by the Company’s Chairman or CEO.

6. Confidentiality

6.1 All material non-public information that is furnished to Sudbrook by or on behalf of the Company during the term of the Engagement will be used by Sudbrook solely for the purposes of the Engagement and will be treated confidentially and will be subject to the confidentiality provisions set forth on Schedule 3 attached hereto.

6.2 Sudbrook’s obligations under this Paragraph 6 relating to other information, other than technical information (as set out below), shall remain in effect throughout the term of this Agreement and any renewal hereof and for a period of three years after the termination of this Agreement. For technical information related to the development, design and manufacture of the Company’s products, this Section 6 shall remain in effect

throughout the term of this Agreement and any renewal hereof and for a period of six years after the termination of this Agreement.

7. Information provided by the Company

Sudbrook shall be entitled to rely upon the accuracy and completeness of all information provided by the Company and is not required to conduct a physical inspection or audit of any of the properties, assets or liabilities of the Company or anyone else. Sudbrook shall be entitled to assume that any forecasts and projections made available by the Company (or on their behalf) to Sudbrook have been prepared reflecting the best available estimates and judgements of die Company and that these estimates and judgements are reasonable. If during the course of the Engagement the Company subsequently discovers any such information, in whole or in part, to be or likely to be untrue, inaccurate or misleading, it shall notify Sudbrook promptly.

8. Liability

The Company agrees to indemnify Sudbrook and certain others on the terms of Schedule 2.

9. Expiration and Termination of Engagement

The Engagement Period and this Agreement shall expire twelve (12)months after the date of this Agreement, unless the parties mutually agree in writing to extend the term. Sudbrook has the right to terminate the Engagement Period and this Agreement at any time upon giving at least one month’s written notice to the Company and not be liable for any losses, costs or damages which the Company may incur as a result of such termination except for as a result of Sudbrook’s fraud or negligence. The Company has the right to terminate the Engagement Period and this Agreement at any time upon giving one month’s written notice to Sudbrook and not be liable for any losses, costs or damages which the Company may incur as a result of such termination except as provided in the following two sentences of this Paragraph 9 and except for as a result of the Company’s fraud or negligence. Subject to the terms of this Paragraph 9, termination by either party will not affect any accrued rights or obligations and Sudbrook will remain entitled to receive, in full, all fees and expenses for which the Company is liable under the terms of this Agreement up to the date of such termination. Upon any termination or expiration of the Engagement and this Agreement, Schedule 2 and Paragraphs 3.2, 6, 7, 8, and 10 -12 of this Agreement shall remain in full force and effect notwithstanding any such termination or expiration.

10. Entire Agreement

This Agreement sets out the entire agreement and understanding between the Company and Sudbrook in connection with the Engagement and shall be effective from the date last written on the signature page hereto. Schedules 1, 2 and 3 attached hereto are deemed to be integral parts of this Agreement.

11. Complaints

Any formal complaints relating to Sudbrook and in connection with the Engagement should be made in the first instance in writing to Sudbrook’s compliance officer, who has initial responsibility for complaints procedures.

12. Governing Law

This Agreement shall be governed by and construed in accordance with English law and the Company irrevocably submits to the exclusion jurisdiction of the English Courts in connection with any matter arising from it.

13. General

Please sign and return to us the duplicate of this Agreement as an acknowledgement of your acceptance of its terms.

The signature below hereby confirms your acceptance of the terms of this Agreement.

Yours faithfully,

/s/ James Culverwell

James Culverwell, Partner

For and on behalf of Sudbrook Associates LLP

Date: 5th May 2010

/s/ Andrew L. Pearlman

Andrew L. Pearlman

For and on behalf of Medgenics, Inc.

Date: 5th May 2010

SCHEDULE 1: SERVICES AND FEES

PART 1: SERVICES

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.

Part 2: Fees for the Transaction

2.0 Fees

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.

SCHEDULE 2: INDEMNITY

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.

SCHEDULE 3: CONFIDENTIALITY

The parties agree that, in the course of the Engagement it may be necessary or desirable for the Company to disclose to Sudbrook certain confidential and proprietary information regarding the Company and its business, properties and assets, including, without limitation, the Company’s (i) inventions, processes, and specifications, (ii) trade secrets, unpublished patent applications and any and all other proprietary information whether embodied in the Company’s products, processes or otherwise, (iii) past, present and future research, (iv) compilations of information (including without limitation studies, records, reports, drawings, memoranda, drafts and any other related information), (v) business, development and marketing plans and/or proposals, (vi) training methods, and (vii) any and all other ideas, concepts, strategies, suggestions and recommendations relating, without limitation, to any of the foregoing or to any devices, products, processes or services offered or developed, or to be developed or proposed to be developed by the Company, in each case with respect to (i) - (vii) above, which concerns the Subject Matter (such information and materials, and any derivatives thereof, the “Confidential Information”). Sudbrook agrees as follows with respect to all Confidential Information:

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).

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.

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.

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.

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.

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:

(i) use Confidential Information to deal or encourage any other person to deal in securities of Medgenics. Sudbrook will ensure that each of its employees, consultants and advisers to whom any of the Confidential Information is imparted expressly acknowledges the said status or potential status of the Confidential Information and will agree in writing to becoming “an insider” in relation to such Confidential Information prior to such disclosure being made to him or her. For the purposes of the foregoing the term “deal” is to be construed in accordance with the said Criminal Justice Act 1993;

(ii) (and will procure that each of Sudbrook’s affiliates and subsidiaries will and will use its best efforts to procure that none of their respective related, connected or associated parties will) without Medgenics’ 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 Medgenics (or otherwise act in concert with any person who so acquires, offers to acquire or agrees to acquire) within twelve months from the date of the Agreement.

EXHIBIT 10.36

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

Strictly Private & Confidential

Medgenics Inc.

8000 Towers Crescent Dr.

Suite 1300

Vienna, Va. 22182

U.S.A.

FAO: Andrew L. Pearlman, Ph.D., CEO, President, and Director

12 May 2010

Dear Sir

Terms of our engagement as your joint broker

This letter agreement (“the Agreement”) sets out the terms on which Medgenics Inc. (“Medgenics” or “the Company”), on behalf of itself and its subsidiaries has retained Nomura Code Securities Limited (“Nomura Code”) as its joint corporate broker. Such retention will be upon the terms and conditions set out in the Agreement and which include Nomura Code’s standard terms and conditions attached at Schedule 1 to this letter (“the Terms and Conditions”).

RETENTION

This Agreement will become effective on the announcement, by means of an RIS, that the Company is appointing Nomura Code as its joint broker (the “Effective Date”). Subject to this announcement being published, the Company retains Nomura Code as its joint corporate broker and to provide corporate broking services on an on-going basis.

Duties of Broker

Until such time as Nomura Code’s appointment under this Agreement is terminated, Nomura Code shall (subject to the Company complying with its obligations under this Agreement) provide the services set out in Schedule 2 and such other services which may be required of it. Nomura Code acknowledges that SVS Securities plc (“SVS”) is the existing, and will remain joint, broker to the Company with Nomura Code following the Effective Date. Nomura Code will use all reasonable endeavours to work in willing cooperation with and assist and liaise with SVS in the performance of the services hereunder and in the discharge of the duties and responsibilities of the role of broker to the Company.

In its capacity as broker, Nomura Code will, in accordance with Rule 35 of the AIM Rules for Companies (the “AIM Rules”), be responsible to the London Stock Exchange for fulfilling the responsibilities set out in the AIM Rules applicable to a broker to an AIM company which include using best endeavours to find matching business if there is no market maker in the Company’s shares.

Nomura Code will not be responsible for providing advice in connection with the AIM Rules or those matters for which the Company has agreed to seek or arrange, or a company would usually seek or arrange, advice (such as, for example, legal, regulatory, technical, accounting or taxation matters) elsewhere and Nomura Code will not have any liability in respect of any services or advice provided to the Company by persons other than Nomura Code, its associated companies and their directors, officers and employees. Nomura Code shall not be under any obligation to provide any fairness opinions to be used in connection with any transaction undertaken by the Company.

The Company acknowledges that all the services as joint corporate broker provided by Nomura Code pursuant to this Agreement are subject to the Financial Services Authority (“FSA”) Handbook and the Rules of the London Stock Exchange.

2.	REMUNERATION

In consideration of the services to be provided by Nomura Code under this letter, the Company shall pay to Nomura Code a retainer fee of £50,000 (fifty thousand pounds sterling) per annum plus VAT, where applicable, which fees shall start to accrue on a daily basis over 12 months from the Effective Date until the date of termination of the Agreement constituted by this letter and shall be paid quarterly in advance within 30 days of the invoice date. If the Company requires specific transaction advice on, for example, but not limited to, acquisitions, disposals and fundraising, a separate transaction fee for such work shall be agreed in advance by Nomura Code and the Company.

3.	REIMBURSEMENT OF EXPENSES

The Company agrees to reimburse Nomura Code promptly for all reasonable out-of-pocket expenses incurred in connection with the Agreement or the provision of any of its services (including, but not limited to, reasonable travel expenses and the reasonable fees and expenses of Nomura Code’s legal advisers, and any other professional advisers retained, with the Company’s prior written consent, on either the Company’s or Nomura Code’s behalf) and any VAT incurred thereon by Nomura Code (provided that such fees and charges have been agreed with the Company prior to their being incurred save in respect of de minimis amounts of up to £1000 per item).

4.	THE COMPANY’S OBLIGATIONS

In consideration of Nomura Code agreeing to act joint corporate broker to the Company, the Company agrees and where appropriate confirms that:

(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;

Provided that the Company shall not be obliged to perform any act or comply with any requirement if and to the extent that such performance or compliance shall give rise to a breach of any obligation or duty owed by the Company to a third person or otherwise infringe or breach any legal regulatory or equitable rights of any third parties or any law or regulation applicable to the Company, whether in the UK or in any other jurisdiction.

5.	ACKNOWLEDGEMENTS

The Company acknowledges and confirms that:-

(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

The effective date of appointment of Nomura Code as the Company’s joint corporate broker is the date of the announcement, by means of an RIS, confirming the appointment of Nomura Code as joint corporate broker.

7.	FSA RULES AND STATUS

Nomura Code is authorised to perform regulated activities in the UK and is regulated by the Financial Services Authority and the Company acknowledges that all services provided by Nomura Code under this Agreement are subject to the FSA Rules.

Nomura Code aims to offer the Company an efficient and effective service but is required by the FSA Rules to inform the Company that, if it should feel unhappy with any aspect of the service it receives from Nomura Code, it should not hesitate to contact the Compliance Officer, Phil Dixon, Nomura Code Securities, 1 Carey Lane, London EC2V 8AE.

Classification

Nomura Code proposes to treat you as a Professional Client in respect of the investment services we provide to you under MiFID. We will accord you the relevant protections associated with your categorisation. Under MiFID, you are entitled to request a different classification (i.e. as a Retail Client or Eligible Counterparty). However, you should be aware that Nomura Code is unable to provide services directly to Retail Clients. Should you request Eligible Counterparty status, you would lose certain regulatory protections. If you wish to discuss your classification, please contact the Compliance Officer at kvb@nomuracode.com .

Conflicts of Interests

(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

Please confirm the Company’s acceptance of the terms of this Agreement by signing below and returning one executed copy to us.

Yours sincerely

NOMURA CODE SECURITIES LIMITED

By:	/s/ Chris Collins

Chris Collins

Chief Executive Officer

Nomura Code Securities Limited

Accepted and Agreed:

Medgenics Inc.

for itself and all of its affiliates

By:	/s/ Andrew L. Pearlman

Andrew L. Pearlman, Ph.D.

CEO, President, and Director

Medgenics Inc.

SCHEDULE 1

TERMS AND CONDITIONS

1.	Application

These Terms and Conditions (the “Terms”) will apply to the services which Nomura Code Securities Limited (“Nomura Code”) will provide to the Company pursuant to the letter of engagement (the “Agreement”) to which the Terms are attached (the “Engagement”).

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

Any reports or papers produced by Nomura Code for the Company, in either draft or final form, will be exclusively for the use of the Company and will not be available for distribution to other persons unless otherwise agreed by Nomura Code. Notwithstanding any consent granted by Nomura Code, it shall not under any circumstances have any responsibility whatsoever to any third party to which any advice or report is disclosed or otherwise provided. No reference to Nomura Code or to its advice is to be made in any publication made by the Company or any holding company of the Company or by any subsidiary or associated company of any such holding company or on their behalf, without the prior consent of Nomura Code unless such reference is required by any legal or regulatory obligation. All correspondence and papers in Nomura Code’s possession or control relating to this Agreement or the Engagement shall be the sole property of Nomura Code, save for original contracts, share certificates and other original documents held to the Company’s order.

5.	Confidentiality

Nomura Code agrees not to use any information obtained from the Company for any unlawful purpose and to keep confidential and not to disclose any material non-public information to any person, except that:

(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)

(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)

(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

The rights of each party to this Agreement are personal to it and may not be assigned without the prior written consent of the other party.

Indemnity

Neither the Company nor any of its affiliates shall make any claim against Nomura Code, its affiliates, legal and other professional advisers, the respective directors, officers, agents and employees of each of the foregoing and any person controlling Nomura Code or any of its affiliates (together with Nomura Code referred to herein as the “Nomura Code Persons”) to recover any loss or damage which the Company, the directors of the Company, any investor in, guarantor of, any lender of debt finance to the Company, or any subscriber/purchaser of any of the securities issued/transferred in connection with the activities contemplated by this Agreement or any subsequent purchaser or transferee thereof or any other person may suffer or incur by reason of the proper fulfilment of its duties under this Agreement, save and to the extent that such loss or damage arises from the judicially determined negligence or wilful default, fraud or material breach by Nomura Code or any other Nomura Code Person of its obligations under this Agreement or its failure to comply with the provisions of the Financial Services and Markets Act 2000 or a material breach of the Nomad Rules (together “Regulatory Requirements”).

The Company hereby undertakes to indemnify and to hold Nomura Code and each and every other Nomura Code Person harmless from and against all or any losses, claims, actions, liabilities, expenses, demands, charges or proceedings (together “Proceedings”) whatsoever in any jurisdiction brought or established against Nomura Code or any other Nomura Code Person by any company (including the Company), person, partnership, governmental agency or regulatory body whatsoever (including, without limitation, all such costs, charges and expenses as are reasonably paid or incurred by Nomura Code or any other Nomura Code Person in responding to, disputing or considering any such actual or potential actions, claims or demands or in enforcing its or their rights under this indemnity) by reason of the proper performance by Nomura Code of its duties under the Engagement and in particular but without limitation, against all or any Proceedings brought or established against Nomura Code or any other Nomura Code Person or which Nomura Code or any other Nomura Code Person may suffer or incur in connection with or arising out of or related to:

(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,

save and to the extent that in any such case, such loss or other matter as aforesaid arises as a result of the judicially determined negligence or wilful default or fraud of Nomura Code or the material breach by it of its obligations under this Agreement or imposed on it under the Regulatory Requirements PROVIDED THAT any such breach or contravention by any one Nomura Code Person shall not of itself obviate this indemnity in favour of any other Nomura Code Person and the provisions of this paragraph 8 shall be read and construed accordingly.

If the HMRC in the United Kingdom or any other taxing authority in any jurisdiction brings into any charge to taxation (or into any computation of income or profits for the purposes of any charge to taxation) any sum payable under this indemnity, then the amount so payable shall be grossed up by such amount as will ensure that after deduction of the taxation so chargeable there shall remain a sum equal to the amount that would otherwise be payable under such indemnity (such additional payments as are necessary to achieve this purpose being made by the Company on demand from Nomura Code from time to time).

This indemnity shall extend to include all reasonable costs and expenses including legal fees and expenses (together with any value added or equivalent tax thereon) suffered or reasonably incurred by Nomura Code or any Nomura Code Person in connection with claiming and/or enforcing its or their rights under this indemnity.

If at any time any one or more of the provisions of this indemnity or any part of the indemnity is or becomes invalid, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining provisions of this indemnity shall not in any way be affected or impaired thereby.

This indemnity confers benefits on any Nomura Code Person and, subject as set out below, is intended to be enforceable by each Nomura Code Person by virtue of the Contracts (Rights of Third Parties) Act 1999. No other party is intended to have any other rights under the Agreement pursuant to that Act.

The terms of this Agreement may be rescinded or varied in any way without the consent of any Nomura Code Person other than Nomura Code and no Nomura Code Person (other than Nomura Code) may enforce, or take any step to enforce, any of the provisions of this Agreement without Nomura Code’s prior written consent (at Nomura Code’s absolute discretion), which may, if given, be given on and subject to such terms and conditions as Nomura Code may determine.

If, as a result of any exclusion or limitation of liability agreed by the Company with any other person, the amount for which Nomura Code is able to claim contribution against such other person in connection with any claim by the Company against Nomura Code arising out of or in connection with the Engagement is reduced, the liability of Nomura Code to the Company in respect of such claim shall be reduced by the amount by which the amount for which Nomura Code is entitled to claim from such other person is reduced and the Company shall indemnify Nomura Code in respect of any increased liability to any third party which would not have arisen but for such exclusion or limitation.

9.	Billing arrangements

Payment of any bill presented to the Company by Nomura Code is due within 30 days from receipt of the invoice. If the Company does not pay any such bill within 30 days of receipt, Nomura Code reserve the right to charge the Company interest on the amount outstanding on a daily basis from the date payment is due. Interest will be calculated at an annual rate which is the lower of (a) 2% per year above the base rate from time to time of Lloyds TSB Bank pic and (b) the applicable rate for payment of interest on judgment debts.

10.	Legal and regulatory requirements

The Company confirms and undertakes that it possesses all necessary powers and has obtained all necessary authorisations, consents and approvals validly and lawfully to enter into the Engagement.

The Company undertakes that (save as expressly disclosed to Nomura Code in writing) it has and undertakes that it shall maintain all necessary consents and authorisations which are necessary in relation to the Engagement. The Company agrees that it will comply and will procure that all of its subsidiaries will comply with all relevant laws and regulations applicable to it in any jurisdiction including inter alia, in relation to the United States, all relevant provisions of Delaware law and in relation to the United Kingdom, the Companies Act 1985 and the Companies Act 2006 (if applicable), the Financial Services and Markets Act 2000, the Nomad Rules, the AIM Rules for Companies, the Prospectus Rules and the Disclosure and Transparency Rules published by the FSA, the Criminal Justice Act 1993 and the rules of the London Stock Exchange and any and all successors thereto and re-enactments thereof. In performing the Engagement, Nomura Code is also subject to (as well as the range of applicable laws) several rules and regulations and the requirements of various regulators. The Company agrees that the duties of Nomura Code to it will not restrict the freedom of Nomura Code to take all steps that it deems necessary in order for it to comply with any applicable laws, rules and regulations.

The Company undertakes to obtain appropriate advice (including legal advice) in respect of all laws and regulations which may be applicable to it in the UK or any other jurisdiction in connection with any engagement and without incurring any duty of care to Nomura Code and to communicate such advice to Nomura Code if it is or may be relevant to the Engagement.

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

The failure or delay by Nomura Code in exercising any right under the Engagement shall not operate as a waiver of such right. The single or partial exercise of any right under the Engagement by Nomura Code shall not prevent any other or further exercise of such right or the exercise of any other right. No breach of any provision of the Engagement by the Company will be waived except with the express written consent of Nomura Code.

13.	Governing Law

This Agreement shall be governed by, and construed in accordance with, the laws of England. Any suits, claims, causes of action or disputes arising under this Agreement shall be brought in the courts of England and the Company hereby consents to such jurisdiction.

Information about Nomura Code Securities Limited:

Registered office:

1 Carey Lane

London, EC2V 8AE

(Registered No. 4778512, England)

Telephone:

020 7776 1200

Facsimile:

020 7776 1201

Nomura Code Securities Limited is authorised and regulated by The Financial Services Authority and is a member of the London Stock Exchange.

Schedule 2

Services

■	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.

For the avoidance of doubt, Nomura Code shall not be responsible for any due diligence or advice provided to the Company by any other advisers and any appointment of Nomura Code in relation to specific transaction of the Company shall be provided for in a separate letter or agreement and the Company acknowledges that this is neither an express nor an implied commitment by Nomura Code to act in any such capacity in any transaction.

EXHIBIT 10.37

CONSULTING AGREEMENT

THIS CONSULTING AGREEMENT (this “ Agreement ” ) is made and entered into as of June 1, 2010 (the “ Effective Date ” ), by and between MEDGENICS, INC., a Delaware corporation (the “ Company ” ), and THE NYBOR GROUP, INC. ( “ NGI ” ).

RECITALS

WHEREAS, the Company desires the expertise that NGI can provide in organizing efforts to secure financing and provide advice regarding financing and investment issues; and

WHEREAS , NGI has agreed to provide services to the Company on the terms and conditions hereinafter set forth;

NOW, THEREFORE, the Company and NGI hereby agree as follows:

AGREEMENTS

1. Engagement, Period of Engagement. The Company offers to engage NGI, and NGI hereby accepts such engagement, to provide services to the Company as a consultant for a period commencing as of the Effective Date and ending December 31, 2010 (the “Term” ).

2. Services. During the Term, NGI shall assist and advise the Company’s management in connection with the Company’s efforts to secure financing and will provide advice and consultantion with respect to financing and investment issues and concerns raised by the Company. NGI shall also make itself available to advise the Chief Executive Officer (the “ CEO ”) as to other matters relating to the Company.

3. Compensation. In consideration for the services to be provided under Section 2, the Company agrees to issue to NGI (and its permitted assigns), subject to compliance with all applicable securities and other laws, an aggregate 150,000 unregistered restricted shares of the Company’s common stock (the “ Shares ”). In connection with the issuance of the Shares, NGI (and its permitted assigns) hereby makes the representations and warranties set forth on Exhibit A attached hereto.

4. Confidential Information. NGI shall maintain Confidential Information (as defined below) in strict confidence and secrecy and shall not at any time, directly or indirectly, use, publish, make lists of, communicate, divulge or disclose to any person or business entity or use for any purpose any Confidential Information or assist any third parties in doing so, except on behalf of and for the benefit of the Company. NGI agrees, upon demand by the Company, to promptly return all Confidential Information (including any copies, extracts thereof or materials reflecting any such information) which is in NGI’s possession.

For purposes of this Agreement, “Confidential Information” shall include, but not be limited to, materials, records, data or trade secrets regarding the assets, condition, business, financial information, business affairs, business matters or other matters related to the Company and to its direct and indirect subsidiaries and affiliates which NGI has knowledge of as a result of NGI’s services for the Company. Confidential Information shall not include information that becomes generally available to the public other than as a result of disclosure by NGI. Nothing in this Agreement modifies or reduces NGl’s obligations to comply with applicable laws related to trade secrets, confidential information or unfair competition.

5. Successors and Assigns . This Agreement will inure to the benefit of and be binding upon NGI and the Company, and their respective successors and assigns, including, any successor by merger or consolidation or a statutory receiver or any other person or firm or corporation to which all or substantially all of the respective assets and business of such party may be sold or otherwise transferred. NGI may not assign any of its rights under this Agreement without the prior written consent of the Company, except that, by written notice to the Company, NGI may direct the issuance of all or a portion of the Shares to its employees, members or other representatives provided such assignee makes the representations set forth on Exhibit A for the benefit of the Company. Except as expressly provided herein, nothing in this Agreement shall be construed to give any person other than the parties to this Agreement any legal or equitable right, remedy or claim under or with respect to this Agreement or any provision of this Agreement.

6. Waiver . The rights and remedies of the parties to this Agreement are cumulative and not alternative. Neither the failure nor any delay by any party in exercising any right, power or privilege under this Agreement or the documents referred to in this Agreement will operate as a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege will preclude any other or further exercise of such right, power or privilege or the exercise of any other right, power or privilege.

7. Modification . This Agreement may only be amended by a written agreement executed by both parties.

8. Notices . All notices and other communications under this Agreement must be in writing and will be deemed to have been duly given if delivered by hand or by nationally recognized overnight delivery service (receipt requested) or mailed by certified mail (return receipt requested) with first class postage prepaid:

( a ) if to the Company, to:

Medgenics, Inc.

8000 Towers Crescent Drive, Suite 1300

Vienna, Virginia 22182

Attention: Andrew Pearlman, CEO

( b ) if to NGI, to:

The Nybor Group, Inc.

64 Shelter Lane

Roslyn Heights NY 11577

or to such other person or place as either party shall furnish to the other in writing. Except as otherwise provided herein, all such notices and other communications shall be effective: (x) if delivered by hand, when delivered; (y) if mailed in the manner provided in this Section, five (5) business days after deposit with the United States Postal Service; or (z) if delivered by overnight express delivery service, on the next business day after deposit with such service.

10. Severability . Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. Without limiting the generality of the foregoing, if the scope of any provision contained in this Agreement is too broad to permit enforcement to its full extent, but may be made enforceable by limitations thereon, such provision shall be enforced to the maximum extent permitted by law, and the Consultant hereby agrees that such scope maybe judicially modified accordingly.

11. Counterparts . This Agreement and any amendments hereto may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement.

IN WITNESS WHEREOF, each of the Company and NGI has caused this Agreement to be executed as of the day and year first above written.

MEDGENICS, INC.		THE NYBOR GROUP, INC.

By:	/s/ Andrew Pearlman	By:	/s/ Warren Schreiber
	Andrew Pearlman		Warren Schreiber
Its:	Chief Executive Officer	Its:	President

Exhibit A

Investment Representations

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:

(a) “THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND HAVE BEEN ISSUED IN RELIANCE UPON EXEMPTIONS AFFORDED UNDER APPLICABLE LAWS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED, SOLD, HYPOTHECATED, TRANSFERRED OR OTHERWISE ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, OR AN APPLICABLE EXEMPTION (AS TO WHICH THE ISSUER SHALL BE REASONABLY SATISFIED, INCLUDING RECEIPT OF AN ACCEPTABLE LEGAL OPINION) FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS.”

(b) If required by the authorities of any state in connection with the issuance of sale of the Shares, the legend required by such state authority.

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.

EXHIBIT 10.38

CONSULTING AGREEMENT

THIS CONSULTING AGREEMENT (this “ Agreement ”) is made and entered into as of August 17, 2010 (the “ Effective Date ”), by and between MEDGENICS, INC., a Delaware corporation (the “ Company ”), and EQUITY SOURCE PARTNERS, LLC (“ ESP ”).

RECITALS

WHEREAS, the Company desires the expertise that ESP can provide in organizing efforts to secure financing and coordinate all of those potential funding sources who have been contacted by the Company or its representatives; and

WHEREAS, ESP has agreed to provide services to the Company on the terms and conditions hereinafter set forth;

NOW, THEREFORE, the Company and ESP hereby agree as follows:

AGREEMENTS

1. Engagement, Period of Engagement . The Company offers to engage ESP, and ESP hereby accepts such engagement, to provide services to the Company as a consultant for a period commencing as of the Effective Date and ending December 31, 2010 (the “ Term ”). The parties agree and acknowledge that the previous Consulting Agreement dated as of May 1 , 2009 among the parties (the “2009 Consulting Agreement”) has expired.

2. Services . During the Term, ESP shall assist and advise the Company’s management in connection with the Company’s efforts to secure financing and will work with the Company specifically with respect to its current list of potential investors and will represent the Company in the United States and to the extent helpful in Europe and Israel. ESP will contact each of the broker dealers or funds on the Company's list, monitor their interest and report back to the Company. ESP shall also make itself available to advise the Chief Executive Officer (the “ CEO ”) as to other matters relating to the Company.

3. Compensation . In consideration for the services to be provided under Section 2 as well as services provided by ESP to the Company in 2010 prior to the commencement of the Term, the Company agrees to issue to ESP (and its permitted assigns) promptly after the full execution of this Agreement, subject to compliance with all applicable securities and other laws, an aggregate 975,000 unregistered restricted shares of the Company’s common stock (the “ Shares ”). In addition, the parties agree and acknowledge that the 2009 Consulting Agreement stated that the total compensation to ESP under the 2009 Consulting Agreement was 1,275,000 Shares; however, the Company issued only 1,125,000 Shares to ESP (or its assigns) in connection therewith. Accordingly, the Company shall promptly issue to ESP 150,000 Shares representing the difference between the number of Shares provided for in the 2009 Consulting Agreement and the number of Shares actually issued. In connection with the issuance of all of the Shares provided hereunder, ESP (and its permitted assigns) hereby makes the representations and warranties set forth on Exhibit A attached hereto.

4. Confidential Information . ESP shall maintain Confidential Information (as defined below) in strict confidence and secrecy and shall not at any time, directly or indirectly, use, publish, make lists of, communicate, divulge or disclose to any person or business entity or use for any purpose any Confidential Information or assist any third parties in doing so, except on behalf of and for the benefit of the Company. ESP agrees, upon demand by the Company, to promptly return all Confidential Information (including any copies, extracts thereof or materials reflecting any such information) which is in ESP’s possession.

For purposes of this Agreement, “ Confidential Information ” shall include, but not be limited to, materials, records, data or trade secrets regarding the assets, condition, business, financial information, business affairs, business matters or other matters related to the Company and to its direct and indirect subsidiaries and affiliates which ESP has knowledge of as a result of ESP’s services for the Company. Confidential Information shall not include information that becomes generally available to the public other than as a result of disclosure by ESP. Nothing in this Agreement modifies or reduces ESP’S obligations to comply with applicable laws related to trade secrets, confidential information or unfair competition.

5. Successors and Assigns . This Agreement will inure to the benefit of and be binding upon ESP and the Company, and their respective successors and assigns, including, any successor by merger or consolidation or a statutory receiver or any other person or firm or corporation to which all or substantially all of the respective assets and business of such party may be sold or otherwise transferred. ESP may not assign any of its rights under this Agreement without the prior written consent of the Company, except that, by written notice to the Company, ESP may direct the issuance of all or a portion of the Shares to its employees, members or other representatives provided such assignee makes the representations set forth on Exhibit A for the benefit of the Company. Except as expressly provided herein, nothing in this Agreement shall be construed to give any person other than the parties to this Agreement any legal or equitable right, remedy or claim under or with respect to this Agreement or any provision of this Agreement.

7. Modification . This Agreement may only be amended by a written agreement executed by both parties.

(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

9. Entire Agreement . This Agreement and any documents executed by the parties pursuant to this Agreement and referred to herein constitute a complete and exclusive statement of the entire understanding and agreement of the parties hereto with respect to their subject matter and supersede all other prior agreements and understandings, written or oral, relating to such subject matter between the parties. Without limiting the foregoing, the parties agree that this Agreement supersedes in its entirety that certain letter Agreement dated January 28, 2009 and that certain consulting agreement dated May 1, 2009 by and between ESP and the Company and that neither party shall have any rights or obligations under said Agreements.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed and the Consultant has hereunto set his hand, all as of the day and year first above written.

MEDGENICS, lNC.		EQUITY SOURCE PARTNERS, LLC

By:	/s/ Andrew Pearlman	By:	/s/ Cary Sucoff
	Andrew Pearlman, CEO		Cary Sucoff

Exhibit A

Investment Representations

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:

(b) If required by the authorities of any state in connection with the issuance of sale of the Shares, the legend required by such state authority.

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.

EXHIBIT 10.39

Equity Source Partners, LLC

7 East Carver Street

Huntington, New York 11743

September 15, 2010

Medgenics, Inc.

8000 Towers Crescent Drive

Suite 1070

Vienna, Va. 22182

Attention: Dr. Andrew Pearlman, President

Dear Andy:

As per our earlier discussions I am writing to confirm the agreement between Medgenics, Inc. (“Medgenics”) and Equity Source Partners (“ESP”) regarding our introduction to Medgenics of certain investors in Medgenics’ current private placement of convertible notes and related warrants (the “Private Offering”).

Medgenics has asked that we have introduced you to, or facilitated the introduction of, certain individuals and their entities listed below, and that, in consideration for such introductions, the Company has agreed to pay ESP a cash finder’s fee equal to an agreed percentage (as set forth below) of the aggregate original principal amount of the Notes purchased by each such investor in the Private Offering.

Isaac Blech (or his entities)	2%
Iroquois Capital	5%
Chestnut Ridge	5%
Kingsbrook Partners	5%

Payment of the finder’s fees shall be made promptly after the closing of the Private Offering. Your signature below indicates your agreement to these terms as of the date above.

Best regards,		Agreed to:

/s/ Cary Sucoff		/s/ Andrew Pearlman
Cary Sucoff		Andrew Pearlman
Equity Source Partners LLC		Medgenics, Inc.

EXHIBIT 10.41

, 2007

Medgenics, Inc.

AND

Capita Registrars (Jersey) Limited

OFFSHORE REGISTRAR AGREEMENT

AN AGREEMENT made on , 2007 BETWEEN: -

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”):

WHEREAS: -

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”)

The Shares will from the date hereof at all times be registered on the register of members (the “Offshore Register”) kept in Jersey.

NOW IT IS HEREBY AGREED AND DECLARED AS FOLLOWS: -

1.	Appointment of Registrar

The Company hereby appoints the Registrar to act as the registrar of the Offshore Registers in respect of the Shares on the terms and conditions hereof and the Registrar hereby accepts such appointment.

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

No prospectus, explanatory memorandum, application form, sales literature, advertisement, circular or other similar document shall be issued by or on behalf of the Company to prospective shareholders without the prior approval of the Registrar in respect of any references made therein to the Registrar or any transfer agent in the United Kingdom appointed by the Registrar or any other delegate or agent appointed by the Registrar, provided that the Registrar hereby gives its consent to being named as registrar to the Company in the admission document to be published by the Company in accordance with the AIM Rules for Companies (the “AIM Rules”) of London Stock Exchange plc (“LSE”) in connection with the Company’s proposed application for admission of the shares to the AIM market of LSE to be made within three months of the date hereof and, whilst this agreement shall continue in force, in its published annual report and audited accounts and at its website maintained in accordance with the requirements of the AIM Rules.

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

The Company hereby represents and warrants to the Registrar that:

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

This Agreement constitutes the entire agreement relating to the provision of services by the Registrar to the Company and shall supersede and extinguish all prior agreements and understandings between the parties relating to such matters.

17.	Governing Law and Jurisdiction

This Agreement shall be governed by and construed in accordance with the laws of the Island of Jersey and the parties hereto irrevocably submit to the exclusive jurisdiction of the Courts of the Island of Jersey as regards any matter or claim relating to this Agreement.

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).

IN WITNESS whereof this Agreement has been entered into the day and year first above written.

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]

Appendix 1 - Registration Services

The Registrar will in Jersey keep the Offshore Register and where applicable registers of loan stock and debenture holders.

In addition The Registrar will in the Island of Jersey or through its Transfer Agent in the United Kingdom as appropriate: -

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.

Additional name and address labels will be provided as and when required by the Company at a fee agreed between the Registrar and the Company.

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.

Appendix 2 – Initial Fee Structure

Set up fee	£2,000 one off payment.

Annual Maintenance Fee	£2.00 per shareholder account per annum

The above Annual Maintenance fees are subject to an annual minimum charge of £4,500

Transfers

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

In the event that transfers involving representation letters do not exceed 60 per quarter a fixed fee of £500 will be charged on a quarterly basis. Over & above 60 transfers the charging will revert to the fee structure stipulated above.

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

Abort Fee

In the event that either:

(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,

then the Company shall pay an abort fee of £750 plus VAT and Disbursements incurred up to the date of termination of this Agreement (the “ Abort Fee ”) to Capita Registrars (Jersey) Limited.

Disbursements

Capita IRG (offshore) Limited would seek to recover all reasonable disbursement costs incurred as a result of the proper execution of our duties. These costs would include, but would not be restricted to, postage, printing, telephone, fax, stationery, Syntegra and CREST transaction costs.

Storage would be charged at the rate of £150.00 per year.

Forged Transfer Insurance will be charged at the rate of £0.05 per shareholder account subject to an annual minimum charge of £280.00 and a maximum level of cover of £5,000,000.

Listings / Reports / Register Extracts

Listings, labels and analyses, in addition to those mentioned under the basic service, will be charged at our current rates. These are presently 3p per account/label printed out, with a minimum charge of £80.

Additional Services

We are able to offer a range of supplementary services including register analysis, nominee account analysis, Section 793 register maintenance, share scheme administration services and savings plan administration services. Our fees for these services are;

£7.00 for each S793/808 letter despatched.

Our Fund Manager Analysis for up to 200 accounts reported on costs £350.00 per report.

Remote Computer Access

We would charge a fee of £1,200 per annum for a web based access to your registrar via our corporate portal. This fee does include any reports or listings you may choose to process over the link.

Appendix 3 – procedures to be applied by the Registrar

in relation to Shares subject to Regulation S restrictions

Transfers in the Company’s securities are restricted under US federal securities laws until such times as the Company advises otherwise.

The following rules and procedures for transfers of the Company’s shares apply until further notice from the Company.

Documentation Required.

A transfer can be processed only if all of the documentation below is submitted and correctly completed.


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

Transfer set is complete:

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.

Transfer set NOT complete:

Reject back to the broker with covering letter stating what is required.

SELLER (HOLDER) CERTIFICATION

Capita Registrars (Jersey) Limited

Victoria Chambers

Liberation Square

1/3, The Esplanade

St Hellier

Jersey JE2 3QA

[DATE]

Dear Sirs

Seller (Holder) Certification

We refer to the ( insert number ) shares of common stock, of par value of US $0.0001 each, represented by certificate number(s) , in Medgenics, Inc. (the “ Shares ”) currently held for the account or benefit of the undersigned.

We intend to transfer the Shares and understand that the Shares have not been registered under the US Securities Act of 1933, as amended (the “ Securities Act ”) and may not be offered, sold, pledged or otherwise transferred except if such transfer is effected: (i) in a transaction meeting the requirements of Regulation S under the Securities Act (“ Regulation S ”); (ii) pursuant to an effective registration statement under the Securities Act; or (iii) pursuant to an available exemption from the registration requirements of the Securities Act, in each case in accordance with all applicable securities laws.

Accordingly, in connection with any transfer of these Shares, the undersigned holder certifies that ( check one ):

(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.

In addition, in connection with any transfer of these Shares or, the undersigned holder certifies that ( check one ):

(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.

The Transfer Agent shall not be obligated to register the Shares in the name of any person other than the holder thereof unless and until the conditions to any such transfer of registration set forth herein and on the face hereof shall have been satisfied.

	By:

	Name:
	Title:

Terms used in this certificate have the meanings set forth in Regulation S. The transferee and the Issuer are entitled to rely upon this certification and are irrevocably authorized to produce this certification or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.

Schedule A

“US Person” means:

(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.

The following are not “US Persons”:

(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.

PURCHASER (TRANSFEREE) CERTIFICATION

Capita Registrars (Jersey) Limited

Victoria Chambers

Liberation Square

1/3, The Esplanade

St Helier

Jersey JE2 3QA

[DATE]

Dear Sirs

Purchaser (Transferee) Certification

We refer to the purchase of ( insert number ) shares of common stock, of par value of US $0.0001 each, represented by certificate number(s) in Medgenics, Inc. (the “ Shares ”) by the undersigned.

We intend to purchase the Shares and understand that the Shares have not been registered under the US Securities Act of 1933, as amended (the “ Securities Act ”) and may not be offered, sold, pledged or otherwise transferred except if such transfer is effected: (i) in a transaction meeting the requirements of Regulation S under the Securities Act; (ii) pursuant to an effective registration statement under the Securities Act; or (iii) pursuant to an available exemption from the registration requirements of the Securities Act, in each case in accordance with all applicable securities laws.

Accordingly, for the purpose of ensuring compliance with the provisions of the Securities Act, we hereby certify and agree as set forth below. The term “US Person” used in this letter is defined in Schedule A attached hereto.

(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:

Schedule A

“US Person” means:

(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)

The following are not “US Persons”:

(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)

(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)

EXHIBIT 10.42

June 16, 2010

Newbridge Securities Corporation

1230 Avenue of the Americas

7 th Floor

New York, New York 10020

Dear Ladies and Gentlemen:

Reference is made to (i) that certain letter agreement between Medgenics, Inc., a Delaware corporation with its U.S. offices located at 8000 Towers Crescent Drive, Suite 1300, Vienna, VA 22182 (separately or together with its subsidiaries and affiliates referred to hereto as “Medgenics” or the “Company” ) and Newbridge Securities Corporation, incorporated in the state of Virginia and headquarters at 1451 West Cypress Creek Road, Ft. Lauderdale, FL 33309 ( “Newbridge” ) dated February 26, 2009 relating to the private placement of Company securities (the “Private Placement Engagement Letter” ) and (ii) that certain letter agreement between the Company and Newbridge dated February 26, 2009 relating to the proposed secondary public offering of Company common stock (the “Prior Secondary Engagement Letter” and together with the Private Placement Engagement Letter, the “Prior Agreements” ). Newbridge and Medgenics acknowledge and agree that the rights and obligations under each of the Prior Agreements terminated and that neither party shall have any liability to the other under the Prior Agreements. In connection with the termination of the Prior Agreements, the parties are entering into a new engagement letter (the “New Engagement Letter” ) outlining their agreement in principle pursuant to which Newbridge will act as the lead underwriter and sole bookrunner in connection with the proposed U.S. initial public offering (the “IPO” ) of common stock, $0.0001 par value per share (the “Common Stock” ), of Medgenics. As a condition to the parties’ entering into the New Engagement Letter, the parties wish to clarify Medgenics’ obligation to issue warrants to Newbridge upon the conversion of the Debentures issued by Medgenics pursuant to that certain Securities Purchase Agreement dated May __, 2009 by and between Medgenics and the investors signatory thereto (the “Securities Purchase Agreement” ).

Medgenics agrees that upon the conversion of the Debentures Medgenics shall promptly issue to Newbridge or its designees warrants to purchase a number of shares of Common Stock as set forth below. Such warrants will have identical terms as the warrants that are issued to the holders of Debentures upon conversion of the Debentures and shall be in the form referenced in the Securities Purchase Agreement. The warrants to be issued upon conversion of the Debentures originally issued to the following investors shall be for an aggregate number of shares of Common Stock equal to 5% of the number of shares of Common Stock issued to such holders upon conversion of the Debentures:

	Leonard Steinberg
	CIBC Trust Company (Bahamas) Limit as Trustee of T-555
	Chicago Investments, Inc.
	Kanter Family Foundation

Newbridge Securities Corporation

June 16, 2010

Page 2

	Andrew O’Shaughnessey
	Stephen D. McMurray

The warrants to be issued upon conversion of the Debentures originally issued to the following investors shall be for an aggregate number of shares of Common Stock equal to 6% of the number of shares of Common Stock issued to such holders upon conversion of the Debentures:

	George Warburton
	Donald A. Sands and Martha P. Sands DAS Family Trust, Donald A. Sands, Trustee Scott M. Gingras

In the event that any of the Debentures are not converted into Common Stock, no warrants will be issued to Newbridge with respect to such Debenture.

Please execute below to evidence your agreement with the foregoing.

Very truly yours,

Medgenics, Inc.

By:

/s/ Andrew L. Pearlman

Dr. Andrew L. Pearlman, President and

Chief Executive Officer

AGREED AND ACCEPTED

this 16 day of June, 2010

Newbridge Securities Corporation

By:	/s/ Anthony J. Sarkis

Its:

Head of Investment Banking

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Newbridge Securities Corporation

7600 Jericho Tpk., Suite 202, Woodbury, NY 11797

June 17, 2010

Dr. Andrew Pearlman

President and CEO

Medgenics, Inc.

Teradion Business Park

P.O. Box 14

Misgav 20179 Israel

Re:

Medgenics, Inc. Public Offering of Common Stock

Dear Dr. Pearlman:

Reference is made to (i) that certain letter agreement between Medgenics, Inc., a Delaware corporation with its U.S. offices located at 8000 Towers Crescent Drive, Suite 1300, Vienna, VA 22182 (separately or together with its subsidiaries and affiliates referred to herein as “Medgenics” or the “Company” ) and Newbridge Securities Corporation, incorporated in the state of Virginia and headquarters at 1451 West Cypress Creek Road, Ft. Lauderdale, FL 33309 ( “Newbridge” ) dated February 26, 2009 relating to the private placement of Company securities (the “Private Placement Engagement Letter” ) and (ii) that certain letter agreement between the Company and Newbridge dated February 26, 2009 relating to the proposed secondary public offering of Company common stock (the “Prior Secondary Engagement Letter” and together with the Private Placement Engagement Letter, the “Prior Agreements” ). Newbridge and Medgenics acknowledge and agree that the rights and obligations under each of the Prior Agreements terminated and that neither party shall have any liability to the other under the Prior Agreements. The purpose of this engagement letter is to outline our agreement in principle pursuant to which Newbridge will act as the lead underwriter and sole bookrunner in connection with the proposed U.S. initial public offering (the “IPO” ) of common stock, $0.0001 par value per share (the “Common Stock” ), of Medgenics. This engagement letter agreement (the “Agreement” ) will confirm Newbridge’s acceptance of such retention and set forth the terms of our engagement and completely supersedes the Prior Secondary Engagement Letter in all respects.

The terms of this Agreement in principle are as follows:

1. Engagement . The Company hereby engages Newbridge to act as the Company’s exclusive lead underwriter and sole bookrunner for the IPO beginning the date hereof and ending on the five (5) month anniversary of the date the Registration Statement (as defined below) is initially filed with the Securities and Exchange Commission (the “Commission” ) (the “Exclusivity Date” ). Newbridge will be retained for the IPO during such period unless terminated earlier pursuant to the terms of this Agreement or an additional extension upon mutual consent of the Company and Newbridge (the “Engagement Period” ). During the Engagement Period and provided Newbridge is proceeding in good faith with the IPO, the Company agrees not to enter into any agreement in connection with a public offering of the Company’s securities by the Company in the United States with any underwriter, potential underwriter, placement agent, financial advisor.

2. IPO . Depending upon, among other factors, demand from investors as well as market and general economic conditions at the time of the IPO, the IPO shall consist of the sale of approximately $3,000,000 to $5,000,000 of the Company’s Common Stock (the shares of Common Stock to be sold in IPO are hereinafter referred to collectively as the “Shares” ). Newbridge will act as the lead and sole bookrunner subject to, among other things, completion of Newbridge’s due diligence examination of the Company, the Company’s subsidiaries and its affiliates and the execution of a definitive underwriting agreement between the Company and Newbridge in connection with the IPO (the “Underwriting Agreement” ) as well as other conditions stated in Section 10 of this Agreement. The precise offering price per Share shall be subject to continuing discussions between the Company and Newbridge and will depend upon, among other factors, demand from investors as well as market and general economic conditions at the time of the IPO.

Members FINRA & SIPC

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Medgenics - Newbridge IPO Letter of Engagement

June 17, 2010

Page 2

a. Overallotment . The Underwriting Agreement will provide that the Company will grant to Newbridge an option that is exercisable within 45 days after the closing of the IPO (the “IPO Closing” ), to acquire up to an additional 15% of the total number of Shares to be offered by the Company in the IPO, solely for the purpose of covering over-allotments (the “Over-allotment Shares” ).

b. Syndicate . As lead underwriter and sole bookrunner for the IPO, Newbridge shall organize a syndicate and underwriting syndicate with registered broker dealers that are mutually acceptable to both Newbridge and the Company. Furthermore, upon the mutual agreement of Newbridge and the Company, Newbridge may relinquish the lead position to another registered broker dealer.

3. Compensation . In connection with the IPO, an underwriting discount of 10.0% (the “Underwriting Discount” ) of the public offering price shall be provided to Newbridge. Upon completion of the IPO, Newbridge shall also be entitled to a corporate finance fee equal to 2.0% (the “Corporate Finance Fee” ) of the gross proceeds of the IPO. Newbridge acknowledges that the Company has previously paid to Newbridge pursuant to the Prior Secondary Engagement Letter a non refundable retainer of $16,500 (the “Original Retainer” ). The Company agrees further to pay Newbridge an additional non-refundable retainer of $16,500 (the “Second Retainer” ) upon the date this Agreement is fully executed (the Original Retainer and the Second Retainer shall be collectively referred to as the “Retainer” ). The Second Retainer shall be credited toward the Corporate Finance Fee.

a. Underwriter’s warrant . The Underwriting Agreement shall also provide that, at the IPO Closing, the Company shall grant to Newbridge (or its designated affiliates) share purchase warrants (the “Underwriter’s Warrants” ) covering a number of shares of Common Stock equal to 10.0% of the total number of Shares being sold in the IPO (not including the Over-allotment Shares). The Underwriter’s Warrants will not be exercisable for six (6) months after the date of the IPO Closing and will expire five years after the IPO Closing. The Underwriter’s Warrants will be exercisable at a price equal to 110.0% of the public offering price in connection with the IPO. The Underwriter’s Warrants shall not be redeemable. The Underwriter’s Warrants may not be transferred, assigned or hypothecated for a period of six (6) months following the IPO Closing, except that they may be assigned, in whole or in part, to any successor, officer, manager or member of Newbridge (or to officers, managers or members of any such successor or member), and to members of this underwriting syndicate or selling group, subject to compliance with applicable securities laws. The Underwriter’s Warrants may be exercised in full or as a lesser number of shares of Common Stock, will provide for cashless exercise, and will contain provisions for one demand registration of the sale of the underlying shares of Common Stock for a period of five years after the IPO Closing at the Company’s expense, an additional demand registration at the warrant holders’ expense, and “piggyback” registration rights for a period of five years after the IPO Closing at the Company’s expense, subject to customary undertakings and conditions.

4. Registration Statement . As soon as practicable after the execution of this Agreement and provided that the Company’s Board of Directors has determined that the Company has raised sufficient funds to incur the related costs, the Company shall prepare and file with the Commission and the appropriate state securities authorities, a Registration Statement on the appropriate Form (the “Registration Statement” ) under the Securities Act of 1933, as amended (the “Act” ), and a prospectus included therein (the “Prospectus” ) covering the Shares to be sold in the IPO and the Over-allotment Shares. The Registration Statement (including the Prospectus), and all amendments and supplements thereto, will be in form reasonably satisfactory to Newbridge and counsel to Newbridge and will contain audited financial statements and such interim and other financial statements and schedules as may be required by the Act and rules and regulations of the Commission thereunder. Newbridge and its counsel shall be given the opportunity to make such review and investigation in connection with the Registration Statement as they deem reasonably necessary. Newbridge and the Company shall mutually agree on the use of proceeds of the IPO, which shall be described in detail within the Prospectus.

5. Underwriting Agreement . The Registration Statement filing will include as an exhibit a proposed form of Underwriting Agreement. The final Underwriting Agreement will be in the form satisfactory to the Company and Newbridge and will include indemnification provisions and other terms and conditions customarily found in underwriting agreements for initial public offerings. Without limiting the generality of the

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[NEWBRIDGE LOGO]

Medgenics - Newbridge IPO Letter of Engagement

June 17, 2010

Page 3

foregoing, the Underwriting Agreement shall contain customary representations and warranties of the Company and shall further provide that: (i) the Company’s directors and officers and any other holder of 5% of the outstanding shares of Common Stock as of the effective date of the Registration Statement shall enter into customary “lock-up” agreements pursuant to which such persons and entities shall agree, for a period of twelve (12) months from the IPO Closing, that they shall neither offer, issue, sell, contract to sell, encumber, grant any option for the sale of or otherwise dispose of any securities of the Company without Newbridge’s prior written consent, which consent shall not be unreasonably withheld, (ii) the Company will not, for a period of twelve (12) months following the IPO Closing, offer, sell or distribute any of its securities, without the prior written consent of Newbridge, which consent shall not be unreasonably withheld, other than pursuant to (x) the Company’s employee or director stock option or other compensation plans, (y) the terms of any securities exercisable or convertible into shares of the Company’s capital stock that are outstanding at the IPO Closing or (z) contractual agreements entered into prior to the IPO Closing; and (iii) the Company will not, for a period of twelve (12) months following the IPO Closing, offer, sell or distribute any convertible securities convertible at a price that may, at the time of conversion, be less than the Fair Market Value of the Common Stock on the date of the original sale, without the consent of Newbridge, which consent shall not be unreasonably withheld. For purposes of this Section 5, the term “Fair Market Value” shall mean the greater of: (i) the average of the volume weighted average price of the Company’s Common Stock for each of the 30 trading days prior to the date of the original sale; and (ii) the last sale price of the Common Stock, during normal operating hours, as reported on the NASDAQ Global or Global Select Market or the NASDAQ Capital Market or AMEX, or OTC Bulletin Board or any other exchange or electronic quotation system on which the Common Stock is then listed.

6. Blue-Sky Registration . Concurrently with or as soon as practicable after the filing of the Registration Statement with the Commission, the Company shall make all necessary state “blue sky” securities law filings with respect to the Shares to be sold in the IPO (including the Over-allotment Shares). The Company and Newbridge will cooperate in obtaining the necessary approvals and qualifications in such states as Newbridge deems necessary and/or desirable. It is agreed that Newbridge’s counsel will act as “blue sky” counsel with respect to the IPO.

7. Expenses . The Company shall be responsible for and pay all expenses directly and necessarily incurred in connection with the IPO, including, without limitation, all filing fees and communication expenses relating to the registration of the Shares to be sold in the IPO (including the Over-allotment Shares) with the Commission and the filing of the offering materials with Financial Industry Regulatory Authority ( “FINRA” ); all fees and expenses relating to the listing (if applicable) of such Shares on the NASDAQ Global or Global Select Market or the NASDAQ Capital Market or NYSE, AMEX or OTC Bulletin Board and on such stock exchanges as the Company and Newbridge together determine; all fees, expenses and disbursements relating to background checks of the Company’s officers and directors; all fees, expenses and disbursements relating to the registration or qualification of such Shares under the “blue sky” securities laws of such states and other jurisdictions as Newbridge may reasonably designate (including, without limitation, all filing, registration fees and counsel fees related to “blue sky”); the reasonable fees and disbursements of Newbridge’s counsel (up to a maximum of $58,500 for Newbridge counsel’s legal fees); the costs of all mailing and printing of the Registration Statements, Prospectuses and all amendments, supplements and exhibits thereto and as many preliminary and final Prospectuses as Newbridge may reasonably deem necessary; the costs of preparing, printing and delivering certificates representing such Shares; fees and expenses of the transfer agent for such Shares; stock transfer taxes, if any, payable upon the transfer of securities from the Company to Newbridge; the fees and expenses of the Company’s accountants; and the fees and expenses of the Company’s legal counsel and other agents and representatives. Additionally, the Company shall supply Newbridge and its counsel, at the Company’s cost, with bound volumes (or CDs) of the public offering materials and closing documents within a reasonable time after the IPO Closing. Any expenses (other than Newbridge’s legal expenses) in excess of $25,000, individually or in the aggregate, shall be subject to the prior approval by the Company, which approval shall not be unreasonably withheld or delayed.

8. Roadshow . Newbridge may plan and arrange one or more “road show” marketing trips for the Company’s management to meet with prospective investors. Such trips may include visits to a number of

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1451 West Cypress Creek Blvd. Ft. Lauderdale, FL 33309 * phone (954) 334-3450 * fax (954) 337-2910 * www.NewbridgeSecurities.com

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[NEWBRIDGE LOGO]

Medgenics - Newbridge IPO Letter of Engagement

June 17, 2010

Page 4

prospective institutional and retail investors. The Company shall pay for its own expenses, including, without limitation, travel and lodging expenses, associated with such trips.

9. Registration Statement Effectiveness . At such time as the Company and Newbridge are mutually satisfied that it is appropriate to commence the IPO, the final terms of the Underwriting Agreement will be negotiated and the Company and Newbridge will request the Commission to make the Registration Statement effective.

10. Certain Conditions . The IPO shall be conditioned upon, among other things, the following:

a. Satisfactory completion by Newbridge of its due diligence investigation and analysis of: (i) the Company’s arrangements with its officers, directors, employees, affiliates, customers and suppliers, (ii) the audited historical financial statements of the Company as may be required by the Act and rules and regulations of the Commission thereunder for inclusion in the Registration Statement, and (iii) the Company’s projected financial results and projections for the fiscal years ending December 31, 2009 and 2010;

b. The execution by the Company and Newbridge of a definitive Underwriting Agreement containing all applicable terms and conditions provided for in this Agreement;

c. The Company meeting the criteria necessary for inclusion of the Common Stock on the NASDAQ Global or Global Select Market or the NASDAQ Capital Market or NYSE, AMEX or the OTC Bulletin Board and agreeing to use its commercially reasonable efforts to maintain such listing (if applicable) for a period of at least three (3) years after the IPO Closing;

d. The Company’s registration of the Common Stock under the provisions of Section 12(b) or (g), as applicable, of the Securities Exchange Act of 1934, as amended, on or prior to the effective date of the IPO;

e. The Company retaining an independent certified public accounting firm reasonably acceptable to Newbridge, which will have responsibility for the preparation of the financial statements and the financial exhibits, if any, to be included in the Registration Statement. Newbridge consents to the retention of Ernst & Young;

f. The Company retaining a financial printer reasonably acceptable to Newbridge to handle the printing and related aspects of the IPO;

g. The Company retaining a transfer agent for the Company’s Common Stock reasonably acceptable to Newbridge and agreeing to continue to retain such transfer agent for a period of three years after the IPO Closing. Newbridge consents to the retention of Corporate Stock Transfer and/or Capita Depository (provided that it can provide services in the United States);

h. The Company engaging a financial public relations firm reasonably acceptable to Newbridge, which firm shall be experienced in assisting issuers in public offerings of securities and in their relations with their security holders, and agreeing to continue to retain such firm or another firm reasonably acceptable to Newbridge for a period of no less than one (1) years after the IPO Closing. Newbridge consents to the retention of Citigate-Global Consulting Group and DeFacto IRPR; and

i. The Company registering with the Corporation Records Service (including annual report information) published by Standard & Poor’s Corporation and covenanting to maintain such registration for a period of three (3) years from the IPO Closing.

11. Termination and Survival of Provisions . This Agreement will terminate at the end of the Engagement Period. Except as provided in Section 1 hereof, this Section 11 and Sections 7, 17, 18, and 20 –

Members FINRA & SIPC

1451 West Cypress Creek Blvd. Ft. Lauderdale, FL 33309 * phone (954) 334-3450 * fax (954) 337-2910 * www.NewbridgeSecurities.com

New York, NY * Long Island, NY * Red Bank, NJ * West Palm Beach, FL * Boca Raton, FL

[NEWBRIDGE LOGO]

Medgenics - Newbridge IPO Letter of Engagement

June 17, 2010

Page 5

25 as well as payment of the Retainer as provided in Section 3 and the Indemnification Provisions attached to this Agreement as Exhibit A and incorporated herein by reference (which Sections and Exhibit are intended to be legally binding and enforceable on and against the Company and Newbridge), this engagement letter is not intended to be a binding legal document, as the agreement between the parties hereto on these matters will be embodied in the Underwriting Agreement for the IPO. Until the Underwriting Agreement has been finally negotiated and signed, the Company or Newbridge may at any time terminate its further participation in the proposed IPO and the party so terminating shall have no liability to the other on account of any matters provided for herein, except that regardless of which party elects to terminate, the Company shall only be responsible for Newbridge’s expenses in an amount up to the Retainer for its accountable out-of-pocket expenses actually incurred by Newbridge under this Agreement.

12. Finder’s Fees . The Company represents to Newbridge that the Company is not liable for any finder’s fees to third parties in connection with the introduction of the Company to Newbridge. The Company represents and warrants to Newbridge that the entry into this Agreement or any other action of the Company in connection with the proposed IPO will not violate any agreement between the Company and any other placement agent, underwriter, or financial advisor.

13. Reduction of Compensation . Newbridge reserves the right to reduce any item of its compensation or adjust the terms thereof as specified herein in the event that a determination and/or suggestion shall be made by FINRA to the effect that the underwriters’ aggregate compensation is in excess of FINRA rules or that the terms thereof require adjustment; provided, however, the aggregate compensation otherwise to be paid to the underwriters by the Company may not be increased above the amounts stated herein without the approval of the Company.

14. Integration . Neither the Company nor any of its affiliates has either prior to the initial filing or the effective date of the Registration Statement made any offer or sale of any securities which are required to be “integrated” pursuant to the Act or the regulations thereunder with the offer and sale of the Shares pursuant to the Registration Statement.

15. Gun Jumping . The Company agrees that it will not issue press releases or engage in any other publicity, without Newbridge’s prior written consent, commencing on the date hereof and continuing for a period of forty (40) days from the IPO Closing other than normal and customary releases issued in the ordinary course of the Company’s business or otherwise required under the rule and regulations applicable to companies with securities listed on the ATM Market. The Company covenants to adhere to all “gun jumping” and “quiet period” rules and regulations of the Commission prior to, during and following the filing of the Registration Statement and the consummation of the IPO.

16. Information and Due Diligence Review . In connection with Newbridge’s engagement for the IPO during the Engagement Period, Newbridge will perform a due diligence review. The Company agrees to cooperate with Newbridge and to furnish or cause to be furnished to Newbridge upon Newbridge’s request any and all information and data concerning the Company, its subsidiaries, businesses, operations, properties, financial condition, management and prospects of the Company (all such information so furnished being the “Information” ) which Newbridge deems appropriate. The Company will provide Newbridge with reasonable access during normal business hours of the Engagement Period to all of the Company’s and its subsidiaries assets, properties, books, contracts, commitments and records and to the Company’s and its subsidiaries officers, directors, employees, appraisers, independent accountants, legal counsel and other consultants and advisors. The Company represents and warrants to Newbridge that all Information: (i) made available by the Company to Newbridge or its agents, representatives and any potential syndicate or selling group member, (ii) contained in any preliminary or final Prospectus prepared by the Company in connection with the IPO, and (iii) contained in any filing by the Company with any court or governmental regulatory agency, commission or instrumentality, will be complete and correct in all material respects and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading in the light of the circumstances under which such Statements are made. The Company further represents and warrants to Newbridge that all such Information including financial projections and other forward-looking information will have been prepared by the

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1451 West Cypress Creek Blvd. Ft. Lauderdale, FL 33309 * phone (954) 334-3450 * fax (954) 337-2910 * www.NewbridgeSecurities.com

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Medgenics - Newbridge IPO Letter of Engagement

June 17, 2010

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Company in good faith and will be based upon assumptions which, in light of the circumstances under which they were made, are reasonable. The Company acknowledges and agrees that Newbridge: (i) will use and rely primarily on the Information and on information available from generally recognized public sources, if any, in performing the services contemplated by this Agreement without having independently verified the same; (ii) does not assume responsibility for the accuracy or completeness of the Information and such other information; (iii) will not make an appraisal of any assets of the Company; and (iv) retains the right to continue to perform due diligence during the course of the Engagement Period.

Any advice rendered by Newbridge pursuant to this Agreement may not be disclosed publicly without Newbridge’s prior written consent, which consent shall not be unreasonably withheld, except as otherwise required by applicable law. Newbridge and the Company have previously entered into a Confidentiality and Non-Disclosure Agreement dated February 5, 2009 (the “Confidentiality Agreement” ). The parties confirm that the Confidentiality Agreement remains in full force and effect,

17. Jurisdiction . This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of Florida. Any dispute or controversy which arises between the parties hereto in connection with this Agreement shall be brought exclusively in a court of competent jurisdiction in Broward County, Florida, and the parties hereby waive any objection they may have to the laying of exclusive venue in such place.

18. Notices . All notices provided hereunder shall be given in writing and either delivered personally or by overnight courier service or sent by certified mail, return receipt requested, if to Newbridge, to Newbridge Securities Corp, Inc., 1230 Avenue of the Americas, 7 th Floor, New York, NY 10020, Attention: Anthony J. Sarkis, Sr. Managing Director, and if to the Company, to the address, set forth on the first page of this Agreement, Attention: Dr. Andrew Pearlman. Any notice delivered personally shall be deemed given upon receipt (with confirmation of receipt required in the case of fax transmissions); any notice given by overnight courier shall be deemed given on the next business day after delivery by the overnight courier; and any notice given by certified mail shall be deemed given upon the second business day after certification thereof.

19. Press Announcements . The Company agrees that Newbridge shall have the right to place advertisements in financial and other newspapers and journals at its own expense describing its services to the Company hereunder, provided that Newbridge shall submit a copy of any such advertisement to the Company for its approval, such approval will not to be unreasonably withheld by the Company.

20. Successors and Assigns . The benefits of this Agreement shall inure to the parties hereto, their respective successors and assigns and to the indemnified parties hereunder and their respective successors and assigns, and the obligations and liabilities assumed in this Agreement shall be binding upon the parties hereto and their respective successors and assigns. Notwithstanding anything contained herein to the contrary, neither Newbridge nor the Company shall assign any of its obligations hereunder without the prior written consent of the other party.

21. No Third Party Beneficiaries . This Agreement does not create, and shall not be construed as creating, any rights enforceable by any person or entity not a party hereto, except those entitled to the benefits of the Indemnification Provisions.

22. No Commitment . It is expressly understood and acknowledged that Newbridge’s engagement with respect to capital raising activities does not constitute any commitment, express or implied, on the part of Newbridge or of any of its affiliates to purchase or place the Company’s securities or to provide any type of financing and that the IPO will be conducted by Newbridge on a firm commitment basis.

23. Waiver . Any waiver or any breach of any of the terms or conditions of this Agreement shall not operate as a waiver of any other breach of such terms or conditions or of any other term or condition, nor shall any failure to insist upon strict performance or to enforce any provision hereof on any one occasion operate as

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1451 West Cypress Creek Blvd. Ft. Lauderdale, FL 33309 * phone (954) 334-3450 * fax (954) 337-2910 * www.NewbridgeSecurities.com

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Medgenics - Newbridge IPO Letter of Engagement

June 17, 2010

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a waiver of such provision or of any other provision hereof or a waiver of the right to insist upon strict performance or to enforce such provision or any other provision on any subsequent occasion. Any waiver must be in writing.

24. Counterparts . This Agreement may be executed in any number of counterparts and by email or facsimile transmission, each of which shall be deemed to be an original instrument but all of which taken together shall constitute one and the same agreement. Facsimile or email signatures shall be deemed to be original signatures for all purposes,

25. Independent Contractor . Newbridge will act under this Agreement as an independent contractor with duties to the Company and nothing in this Agreement or the nature of Newbridge’s services shall be deemed to create a fiduciary or agency relationship between the Company and Newbridge. The advice, written or oral, rendered by Newbridge pursuant to this Agreement is intended solely for the benefit and use of the Company in considering the matters to which this Agreement relates, and the Company agrees that such advice may not be relied upon by any other person, used for any other purpose, reproduced, disseminated, or referred to at any time, in any manner or for any purpose, nor shall any public references to Newbridge be made by the Company, without the prior written consent of Newbridge, which consent shall not be unreasonably withheld, except as otherwise required by applicable law. Notwithstanding any provision of this Agreement to the contrary, the Company agrees that neither Newbridge nor its affiliates, and the respective officers, directors, employees, agents and representatives of Newbridge, its affiliates and each other person, if any, controlling Newbridge or any of its affiliates, shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company for or in connection with the engagement and transaction described herein except for any such liability for losses, claims, damages or liabilities incurred by us that are finally judicially determined to have resulted from the bad faith or gross negligence or willful misconduct of such individuals or entities. Because Newbridge will be acting on the Company’s behalf in this capacity, it is Newbridge’s practice to receive indemnification. A copy of Newbridge’s standard indemnification form is attached to this engagement letter as Exhibit A .

[ Signature Page Follows ]

Members FINRA & SIPC

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Medgenics - Newbridge IPO Letter of Engagement

June 17, 2010

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We are delighted to work with you and your management team and look forward to a successful IPO. If you are in agreement with the foregoing, please execute and return two copies of this engagement letter to the undersigned.

Yours truly,

Newbridge Securities Corporation

By: /s/ Francis J. Argenziano

Francis J. Argenziano

Managing Director, Investment Banking

By: /s/ Anthony J. Sarkis

Anthony J. Sarkis

Head of Investment Banking

ACCEPTED AND AGREED TO AS OF THE DATE FIRST ABOVE WRITTEN:

Medgenics, Inc.

By: /s/ Andrew Pearlman

Dr. Andrew Pearlman

President and CEO

[ Signature Page to the Engagement Letter ]

[ Indemnification Exhibit to the Engagement Letter Begins on the Next Page ]

Members FINRA & SIPC

1451 West Cypress Creek Blvd. Ft. Lauderdale, FL 33309 * phone (954) 334-3450 * fax (954) 337-2910 * www.NewbridgeSecurities.com

New York, NY * Long Island, NY * Red Bank, NJ * West Palm Beach, FL * Boca Raton, FL

EXHIBIT 10.43

The Directors

Medgenics, Inc

2711 Centreville Road

Suite 400

Wilmington, 19808

New Castle

Delaware, USA

Strictly Private & Confidential

28 November 2007

Dear Sirs

BROKER ENGAGEMENT LETTER

Our engagement (the “Engagement”) will begin on the date of this letter and will continue for an indefinite period, unless terminated in accordance with paragraph 2.1 or 2.2 of Schedule One to this letter. The terms and conditions relating to the Engagement are set out in this letter and in Schedule One and Schedule Two (which also includes additional definitions used in this letter). Schedule One and Schedule Two form part of this letter as if incorporated in it.

Please indicate your acceptance of these terms and conditions by signing and dating the enclosed copy of this letter and returning it to us. Please also provide us with the information and documents requested in Appendix One as soon as possible.

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.


SVS Securities PLC is authorised and regulated by the Financial Services Authority, is a member of the London Stock Exchange and a PLUS Markets Corporate Advisor. Registered in England and Wales. Company Number 4402606 VAT Number: 796 3591 72 Registered Office: 2 London Wall Buildings, London Wall, London EC2M 5PP.	SVS Securities plc Tel: +44 (0)20 7638 5600 Fax: +44 10)20 7638 5601 Web: www.svssecurities.com Email: info@svssecurities .com

		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.

We very much look forward to working with you.

Yours faithfully


/s/ Robert Kretowicz
Robert Kretowicz, Director
for and on behalf of

SVS Securities plc

We hereby agree to the above terms and conditions.


Signed:	/s/ Andrew Pearlman

Duly authorised by Medgenics, Inc

Name: Andrew Pearlman

Position: CEO

Date: 28 Nov. 2007

SCHEDULE ONE

TERMS AND CONDITIONS

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.

9.	INDEMNITY

9.1	You agree to indemnify and hold harmless (and keep indemnified and held harmless) each Indemnified Person on demand against each loss which the Indemnified Person suffers or incurs because of or in relation to:

9.1.1	the due performance of obligations, or the provision of services, by us or on our behalf under or in relation to this letter, the Engagement or otherwise;

9.1.2	a breach by you of a provision of this letter;

9.1.3	investigating, defending or settling an actual or potential claim for which you may be liable under this paragraph 9.1.

9.2	You are not liable under paragraph 9.1 if and to the extent that an Indemnified Person is finally determined to have suffered or incurred a particular loss because:

9.2.1	of 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;

9.2.2	we subscribe or buy shares (pursuant to an express written agreement which we enter into and which obliges or entitles us to subscribe for or to buy shares) unless and to the extent that an Indemnified Person suffers or incurs the loss because of or in connection with a breach by you of a provision of this letter or any such other agreement.

9.3	If either you or we become aware of any third party claim or potential claim against you or us or of any matter that might give rise to such a claim (“third party claim”) and that might lead to a claim against an Indemnified Person, you or (as appropriate) we shall:

9.3.1	give written notice to the other of the third party claim as soon as is reasonably practicable;

9.3.2	not, and shall procure that no member of your Group or (as appropriate) no Indemnified Person shall, without the other’s prior written consent, which will not be unreasonably withheld or delayed, settle or compromise or in any way admit liability for, that third party claim.

9.4	In relation to paragraphs 7.2, 8.3, 8.4 and 8.5 above, and this paragraph 9, we act for ourselves and as trustee for each other Indemnified Person (and we declare ourselves to be a trustee accordingly). Each other Indemnified Person may also enforce its rights against you under paragraphs 8.2, 9.3, 9.4 and 9.5 above, and this paragraph 9 pursuant to the Contracts (Rights of Third Parties) Act 1999, subject to paragraph 11.10 below, notwithstanding that such Indemnified Person is not a party to this letter.

10.	NOTICES AND COMMUNICATIONS

10.1	A notice under or in connection with this letter must be in writing, in English, and must be delivered personally or sent by first class post (or air courier if overseas) or by fax to the party due to receive the notice or communication at its address set out in this letter (or, if to us, to our fax number set out in this letter) or at another address or to a fax number (in our case, to another fax number) specified by that party by written notice to the other. In the absence of evidence of earlier receipt, a notice is deemed given: if delivered personally, when left at such an address; or if sent by first class post, two days after posting it; or if sent by air courier, three days after posting it; or if sent by fax, on receipt by the sender of a sender’s confirmation of transmission.

10.2	You agree that, in the course of advising you day to day, we may communicate with you and other persons involved in any transaction with you by any means, including in meetings, over the telephone and by electronic mail (unless, until and to the extent that you notify us in writing that we must not communicate by a specified means). You acknowledge and accept that oral communications may be recorded and that postal, courier, telephone, fax or electronic communications may not be secure and may be subject to unauthorised interception, delay or data corruption. Accordingly, we do not accept any liability whatsoever in relation to the use or attempted use of these or any other means of communication and you agree not to make (and you waive) any such claim accordingly. Any recordings of oral communications that we make will belong to us and will constitute confidential information to be protected in accordance with paragraph 6 above. You agree that recordings may be used in helping to settle or determine any disputes that arise as to what has and has not been said.

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).

11.9	This letter is governed by English law. In connection with all proceedings and disputes arising out of or in relation to this letter, you agree that we shall both submit to the exclusive jurisdiction of the English courts and we each waive any claim that the English court’s are an inconvenient or inappropriate forum.

11.10	Save to the extent that third party rights are conferred in this letter on a person by express reference to the Contracts (Rights of Third Parties) Act 1999, a person who is not a party to this letter has no right to enforce any of its terms under that Act. Where by reason of that Act, a third party is entitled to enforce any term of this letter, all provisions of this letter which would assist that third party in connection with the enforcement of a right conferred upon him also apply to him. However, this letter may be varied or terminated as provided in this letter, without the consent of or notice to any person who may have a right under this letter to enforce any term of it pursuant to that Act.

11.11	In the event of a conflict between the provisions of this Schedule One and the terms of the letter to which it is Schedule One, the terms of that letter shall prevail.

SCHEDULE TWO

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;

	person	Includes natural persons, firms, partnerships, companies, corporations, bodies corporate, associations, organisations, governments, states, governmental or state agencies, foundations and trusts (in each case whether or not having separate legal personality and irrespective of the jurisdiction in or under the law of which it was incorporated or exists);

	SVS	SVS Securities plc;

	Takeover Code	The City Code on Takeovers and Mergers;

	Transaction	The proposed placing by the Company and admission to trading on AIM;

	we	SVS Securities plc and “our” and “us” must be construed accordingly;

	you	Medgenics, Inc. and “your” must be construed accordingly.

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.

APPENDIX ONE

INFORMATION REQUIRED

A copy, certified by a director or the company secretary of the Company as a true copy, of a resolution of the Board approving the terms of the attached engagement letter and authorising it to be signed and delivered on behalf of the Company to SVS Securities plc.

Restated Certificate of Incorporation and By-laws of the Company

Copies of the last three Annual Reports and Accounts of the Company, where applicable

Copies of any independent research written on the Company or any other member of the Group in the past 2 years, where applicable

Copies of any significant press coverage relating to the Company or any other member of the Group in the past 2 years, if available

An analysed list of holders of all classes of shares and securities in the Company (and holders of options or warrants to subscribe) showing the names of beneficial holders holding in excess of 1 per cent of the issued and to be issued capital and details of all directors’ (and connected persons) shareholdings

Details of any significant outstanding or potential litigation affecting any member of the Group

Circulars to shareholders issued by the Company in the past 3 years, where applicable

A selection of product brochures issued by members of the Group, where available

EXHIBIT 10.44

Dated 28 November 2007

(1)

MEDGENICS, INC.

and

(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

THIS AGREEMENT is made the 28 November 2007 and is subject to admission of Medgenics, Inc. common shares to trading on the AIM market of the London Stock Exchange.

BETWEEN:

(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 ”).

INTRODUCTION:

(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.

IT IS AGREED as follows:

1.	Definitions and Interpretation

The definitions and interpretation provisions set out in the Appendix apply in this Agreement.

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;

Page 2 of 17

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.

This fee shall be reviewed on the anniversary of Admission and annually thereafter.

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;

Page 3 of 17

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:

Page 4 of 17

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;

Page 5 of 17

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.

Page 6 of 17

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.

Page 7 of 17

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

The Company undertakes to BCF that neither any advice rendered by BCF nor any communication from BCF in connection with the services performed by BCF pursuant to this Agreement shall be quoted, or referred to, in any public report, document, release or other communication by the Company or by any related party (within the meaning of the AIM Rules) without the prior written consent of BCF, such consent not to be unr easonably withheld or delayed, unless the Company comes under a legal or regulatory obligation to disclose it in which event the Company shall so far as possible consult with BCF as to the nature and extent of the disclosure and shall only make any disclosure to the extent required by law or regulation.

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.

Page 8 of 17

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.

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;

Page 9 of 17

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;

and which does not in any such case 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 Relevant Person of the FSMA, or the FSA Rules or The Prospectus Regulations or the result of the breach by BCF of any material provision of 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

The Company authorises BCF to take all such actions on the Company’s behalf which are reasonably necessary for, or reasonably incidental to, the carrying out of BCF’s responsibilities as the Company’s nominated adviser and the Company agrees, on demand in writing given by BCF to the Company, to ratify and confirm everything which BCF shall reasonably and lawfully do in the exercise of such authority. BCF agrees to keep the Company informed as to any actions which it proposes to take in its capacity as nominated adviser to the Company.

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

Page 10 of 17

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.

Page 11 of 17

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:

Page 12 of 17

(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

The BCF qualified staff listed above shall be the Company’s primary corporate finance contacts, at least one of whom is a “Qualified Executive” (as defined by the AIM Rules). The staff allocated to the Company may change from time to time.

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.

Page 13 of 17

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.

Executed by the parties on the date specified at the beginning of this Agreement.

Page 14 of 17

APPENDIX - Definitions and Interpretation

1.	Definitions

The following definitions apply in this Agreement:

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;

Page 15 of 17

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;

Page 16 of 17

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.

If the above correctly sets out the agreement between us, please sign, date and return the enclosed copy, whereupon it will constitute a binding agreement between us.

Yours faithfully

for and on behalf of

BLOMFIELD CORPORATE FINANCE LIMITED

/s/ Alan MacKenzie

Alan MacKenzie

Chief Executive Officer

Signed by for and on behalf of

MEDGENICS, INC.

and the Directors

/s/ Andrew Pearlman

Andrew Pearlman

President and CEO

Page 17 of 17

EXHIBIT 10.45

CAPITA

DATED	2008


DEPOSITORY AGREEMENT MEDGENICS, INC . and CAPITA IRG TRUSTEES LIMITED

Capita IRG Trustees Ltd

The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU. Registered in England No. 2729260

Capita IRG Trustees Ltd is authorised and regulated by the Financial Services Authority

Depository Interest Facility
Depository Agreement

Version 1.1
Document A1

CONTENTS

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

THIS DEED is made on 2008

BETWEEN:

MEDGENICS, INC. (File No. 3166521) a company incorporated and registered in the State of Delaware, United States of America, whose registered office is at 2711 Centreville Road, Suite 400, in the City of Wilmington, 19808, County of New Castle, Delaware, United States of America (the "Company" ); and

CAPITA IRG TRUSTEES LIMITED (Registered No. 2729260) whose registered office is at The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU (the "Depository").

RECITALS

(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.

THE PARTIES AGREE AS FOLLOWS:

1.	DEFINITIONS AND INTERPRETATION

1.1	The following words and expressions shall, unless the context otherwise requires, have the following meanings:

"Agreement" means this Depository Agreement as amended from time to time;

"Business Day" means a day (excluding Saturdays) on which banks generally are open in London for the transaction of normal banking business;

"Corporate Action" has the meaning given to it in the Crest Manual published by Euroclear UK & Ireland Limited;

"Deed Poll" the trust deed poll (substantially in the form of the draft appended to this Agreement) executed by the Depository on or about the date of this Agreement, as amended or supplemented from time to time in accordance with its terms;

"Event of Default" means, in relation to any party:-

(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,

or any analogous procedure or step is taken in any jurisdiction; or

(d)

that party ceasing to carry on its business for any reason;

"Group" means, in relation to any party, that party together with all of its holding companies from time to time and all subsidiaries and subsidiary undertakings from time to time of that party or any holding company of it from time to time, all of them and each of them as the context admits;

"Index Figure" means the monthly figure given by the Retail Prices Index;

"Registrar Agreement" means the registrar agreement between Capita Registrars (Jersey) Limited and the Company dated on or about the date of this Agreement.

"Relevant Date" means in the case of the first review referred to in clause 4.4 the date of this Agreement and for each subsequent review the date of the most recent previous review;

"Retail Prices Index" means the General Index of Retail Prices for all items which is published in the United Kingdom in the Monthly Digest of Statistics by the Office for National Statistics or any replacement of it; and

"Shares" means the shares in the Company from which Depository Interests are issued.

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

The Company hereby appoints the Depository to constitute and issue from time to time, upon the terms of the Deed Poll, Depository Interests, each such depository interest representing a Share in the Company, and to provide certain other services in connection with the Depository Interests on the terms of, and subject to the conditions set out in, this Agreement.

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.	FEES, CHARGES AND EXPENSES

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.	DIVIDENDS AND DISTRIBUTIONS

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

Nothing in this Agreement and no action taken by the parties pursuant to this Agreement shall constitute, or be deemed to constitute, a partnership, association, joint venture or other co-operative entity.

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):

In the case of the Depository to:

The Registry

34 Beckenham Road

Beckenham

Kent BR3 4TU

Fax: + 44 (0)20 8639 2267

Attention: Heidi Waring – Relationship Manager

In the case of the Company to:

Company Secretary

Teradion Business Park

PO Box 14

Misgav, 20179 Israel

+ 972 4 988 2270

Attention: Phyllis Bellin

With a copy in each case to:

Barack Ferrazzano Kirschbaum & Nagelberg LLP (attn. Gretchen Trofa)

200 West Madison Street Suite 3900

Chicago, IL 60606-3465

United States of America

Fax: 1-312-984 3150

and shall be deemed to have been duly given or made as follows:

(a) if personally delivered, upon delivery at the address of the relevant party;

(b) if sent by first class post, two Business Days after the date of posting;

(d) if sent by fax, when despatched;

provided that if, in accordance with the above provision, any notice, demand or other communication under paragraphs (a) or (d) would otherwise be deemed to be given or made after 5.00 p.m. on a Business Day or at any time on a day which is not a Business Day such notice, demand or other communication shall be deemed to be given or made at 9.00 a.m. on the next Business Day.

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

The Contracts (Rights of Third Parties) Act 1999 shall not apply to this Agreement and no person other than the parties to this Agreement shall have any rights under it, nor shall it be enforceable under that Act by any person other than the parties to it.

20.	COUNTERPARTS

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.

IN WITNESS of which this Agreement has been duly executed as a deed on the date written at the top of page 1.

Schedule 1

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	)

Director


Director/Secretary

Annex

CAPITA

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

Capita IRG Trustees Ltd

The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU. Registered in England No. 2729260

Capita IRG Trustees Ltd is authorised and regulated by the Financial Services Authority

Depository Interest Facility	© 2008 Capita Registrars Limited
Deed Poll	Document C1
	Version 1.1

CONTENTS

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

THIS DEED POLL is made on 2008

BY CAPITA IRG TRUSTEES LIMITED an English company, number 2729260, whose registered office is at The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU (the "Depository" ), which expression shall, unless the context otherwise requires, include any successor depository appointed in accordance with clause 13.2 of this Deed, in favour of the holders of Depository Interests as hereinafter defined.

WHEREAS:

(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.

NOW IT IS WITNESSED AND DECLARED as follows:-

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.

Other definitions are set out in the Schedule.

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;

shall by virtue of the Board Resolution constitute an instrument of transfer of such Company Securities in favour of the Custodian as transferee and by virtue of this clause but subject to the provisions of this Deed, be deemed to constitute:

(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;

and accordingly, immediately upon completion of the same the Depository shall, subject to the provisions of this Deed:

(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;

and, accordingly, immediately upon the issue of such Company Securities, the Depository shall, subject to the provisions of this Deed:

(a)

(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	In respect of any transfer to the 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;

in each case as soon as practicable following receipt if the same have not been received by the Depository by the time of receipt of the relevant Stock Withdrawal Transaction whether into Own Name or into New Name.

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.	COMPULSORY WITHDRAWAL

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,

then the Holder shall be deemed to have requested the cancellation of his Depository Interests and the withdrawal of the Deposited Company Securities represented by his Depository Interests and the provisions of clause 762 shall then apply as if the Holder had submitted a Stock Withdrawal Transaction into Own Name.

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.

In deciding what action to take the Depository will start from the presumption that all Holders should have their Depository Interests cancelled proportionally, but this presumption may be departed from in any particular case if, in the Depository's view, the circumstances make it appropriate to do so.

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.

The Depository shall be entitled to deduct such fees, costs, duties, taxes and charges as may be applicable and any other sums owing to the Depository in accordance with the provisions of this Deed from the Deposited Property or from the net proceeds thereof before delivering the same to the Holder. If any official consents need to be obtained prior to the delivery of the Deposited Property or the net proceeds thereof to the Holder, the Depository shall make such arrangements with respect to the Deposited Property or the net proceeds thereof as it shall see fit.

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.

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,

and the performance by it or any other person of any act or thing which is required or permitted or contemplated to be done or performed by or pursuant to this Deed shall thereby be prevented or delayed or required to be effected in some manner or to an extent which is different in any respect from that provided for or contemplated by this Deed.

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.

If the Depository becomes entitled to take or cause to be taken action as aforesaid, it will in its sole discretion consider whether it may directly or indirectly transfer or make available to any Holder adversely affected, in whole or in part, the benefit of any rights, claims or other assets which may be available to the Depository and which pertain to the matter(s) giving rise to the relevant event or circumstance.

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.	FURTHER ACKNOWLEDGEMENTS BY THE HOLDER

16.1	The Holder acknowledges and agrees that:-

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

Any notice shall be in writing and signed by or on behalf of the person giving it. Except in the case of personal service, any such notice shall be sent or delivered to the party to be served, in the case of the Depository, at the address set out above and marked for the attention of the Company Secretary and, in the case of a Holder, at the address set out in the Depository Interest Register. Any alteration in the details of the party to be served shall, to have effect, be notified to the other party in accordance with this clause. Service of a notice must be effected by one of the following methods:-

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

If at any time any provision of this Deed is or becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction, that shall not affect or impair the legality, validity or enforceability under the law of any other jurisdiction of that or any other provision of this Deed.

22.	COPIES OF DEED

A Holder shall be entitled to one copy of this Deed upon payment of a reasonable copying charge upon written request made to the Depository.

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.

SCHEDULE

TO THE TRUST DEED POLL BY CAPITA IRG TRUSTEES LIMITED

in respect of securities in relation to

Medgenics, Inc.

Unless the context otherwise requires, in this Deed the following expressions shall have the meanings ascribed below:-

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.

IN WITNESS whereof this Deed has been duly entered into the day and year first above written.

The Common Seal of	)
CAPITA IRG TRUSTEES LIMITED	)
was hereunto affixed in	)
the presence of:	)

EXHIBIT 10.46

SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (“Agreement”) is made as of the 13th day of May, 2009 by and among Medgenics, Inc. a Delaware corporation (the “Company”), and the Investors set forth on the signature pages affixed hereto (each an “Investor” and collectively the “Investors”).

Recitals

A. The Company and the Investors are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by the provisions of Regulation D (“Regulation D”), as promulgated by the U.S. Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended; and

B. The Investors wish to purchase from the Company, and the Company wishes to sell and issue to the Investors, upon the terms and conditions stated in this Agreement, (i) up to $5,000,000 of convertible debentures (the “Debentures”) in the form attached as Annex A to the PPM (as hereinafter defined), convertible under certain circumstances into shares of the Company’s Common Stock, par value $0.0001 per share (together with any securities into which such shares may be reclassified the “Common Stock”), such maximum amount may be increased up to $7,000,000 by the mutual agreement of the Company and the Placement Agent (as hereinafter defined) and (ii) warrants (the “Warrants”) to purchase additional shares of Common Stock (subject to adjustment) at an exercise price equal to 110% of the Qualified Transaction Price (as hereinafter defined) in the form attached as Annex C to the PPM; and

C. Contemporaneous with the sale of the Debentures and Warrants, the parties hereto will execute and deliver a Registration Rights Agreement (the “Registration Rights Agreement”) in the form attached as Annex D to the PPM, pursuant to which the Company will agree to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, and applicable state securities laws.

D. The Company has engaged Newbridge Securities Corporation as its non-exclusive placement agent (the “Placement Agent”) for the offering of the Debentures and the Warrants on a “best efforts” basis.

In consideration of the mutual promises made herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Definitions . In addition to those terms defined above and elsewhere in this Agreement, for the purposes of this Agreement, the following terms shall have the meanings set forth below:

“ Affiliate ” means, with respect to any Person, any other Person which directly or indirectly through one or more intermediaries Controls, is controlled by, or is under common control with, such Person.

“ AIM Filings ” means the regulatory and other filings made by the Company with AIM pursuant to the AIM Rules.

“ AIM Rules ” means the AIM Rules for Companies, governing admission to and the operation of AIM, as published by the London Stock Exchange plc.

“ Business Day ” means a day, other than a Saturday or Sunday, on which banks in both New York City and Israel are open for the general transaction of business.

“ Company’s Knowledge ” means the actual knowledge of the executive officers (as defined in Rule 405 under the 1933 Act) of the Company after due inquiry.

“ Confidential Information ” means trade secrets, confidential information and know-how (including but not limited to ideas, formulae, compositions, processes, procedures and techniques, research and development information, computer program code, works of authorship, performance specifications, support documentation, drawings, technical data, specifications, designs, business and marketing plans, and customer and supplier lists and related information).

“ Control ” (including the terms “controlling”, “controlled by” or “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“ Debenture Shares ” means the shares of Common Stock issuable upon conversion of the Debentures.

“ Intellectual Property ” means all of the following: (i) patents, patent applications, patent disclosures and inventions (whether or not patentable and whether or not reduced to practice); (ii) trademarks, service marks, trade dress, trade names, corporate names, logos, slogans and Internet domain names, together with all goodwill associated with each of the foregoing; (iii) copyrights and copyrightable works; (iv) registrations, applications and renewals for any of the foregoing; and (v) proprietary computer software (including but not limited to data, data bases and documentation).

“ Material Adverse Effect ” means a material adverse effect on (i) the assets, liabilities, results of operations, condition (financial or otherwise), business, or prospects of the Company and its Subsidiaries taken as a whole, or (ii) the ability of the Company to perform its obligations under the Transaction Documents.

“ Person ” means an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein.

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“ PPM ” means the confidential private placement memorandum dated May 13, 2009, including the exhibits thereto, delivered to Investors in connection with the offering of the Debentures, as the same may be supplemented or amended.

“ Press Releases ” means the press releases released by the Company through a regulatory information service approved by London Stock Exchange plc for the distribution to the public of announcements by companies admitted to AIM.

“ Proposals ” has the meaning set forth in Section 7.9.

“ Purchase Price ” means the original principal amount of Debentures being purchased hereunder.

“ Qualified Acquisition ” has the meaning set forth in Section 7.6.

“ Qualified Merger ” has the meaning set forth in Section 7.6.

“ Qualified Transaction ” has the meaning set forth in Section 7.6.

“ Qualified Transaction Price ” shall mean the per share price paid in the Qualified Transaction (or per share value of merger consideration in a Qualified Merger).

“ Registration Statement ” has the meaning set forth in the Registration Rights Agreement.

“ Securities ” means the Debentures, the Debenture Shares, the Warrants and the Warrant Shares.

“ Subsidiary ” of any Person means another Person, an amount of the voting securities, other voting ownership or voting partnership interests of which is sufficient to elect at least a majority of its Board of Directors or other governing body (or, if there are no such voting interests, 50% or more of the equity interests of which) is owned directly or indirectly by such first Person.

“ Transaction Documents ” means this Agreement, the Debentures, the Warrants and the Registration Rights Agreement.

“ Warrant Shares ” means the shares of Common Stock issuable upon the exercise of the Warrants.

“ 1933 Act ” means the Securities Act of 1933, as amended, or any successor statute, and the rules and regulations promulgated thereunder.

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“ 1934 Act ” means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations promulgated thereunder.

2. Purchase and Sale of the Debentures and Warrants. Subject to the terms and conditions of this Agreement, on the applicable Closing Date, each of the Investors shall severally, and not jointly, purchase, and the Company shall sell and issue to the Investors, the Debentures in the respective amounts set forth opposite the Investors’ names on the signature pages attached hereto in exchange for the Purchase Price as specified in Section 3 below. Upon conversion of the Debentures, each Investor shall also be entitled to receive, and the Company shall issue to such Investor, Warrants to purchase a number of shares equal to the product of (x) the number of Debenture Shares issued upon conversion of such Investor’s Debenture, multiplied by (y) 0.35; subject to the following sentence. In the event that the Qualified Transaction Price is less than $0.07, then the number of shares for which the Warrants shall be exercisable as set forth in the previous sentence shall be doubled.

3. Closing.

3.1 Upon confirmation that the other conditions to closing specified herein have been satisfied or duly waived by the Investors of the Company, as may be applicable, the initial purchase and sale of the Debentures (the “First Closing”) shall take place upon the receipt by the Company of at least $250,000 in Purchase Price. Additional closings of purchases and sales of the Debentures shall take place, as and when the Company and the Placement Agent may determine, upon receipt by the Company of additional Purchase Price up to the maximum amount of the offering; provided that the last Closing Date shall occur on or before July 15, 2009, or at such later date as the Company and the Placement Agent mutually agree not to exceed September 15, 2009. Each of the First Closing and such additional closings shall be sometimes be referred to as a “Closing” or collectively as the “Closings”. The date on which a Closing occurs shall sometimes be referred to as a “Closing Date”.

3.2 All payments of Purchase Price shall be held by U.S. Bank National Association, a national banking association (“Escrow Agent”), in escrow pursuant an escrow agreement of even date herewith between the Escrow Agent, the Placement Agent and the Company (the “Escrow Agreement”), pending the applicable Closing. At each applicable Closing, upon presentation of the required notices under the Escrow Agreement, the Company shall arrange for overnight/courier delivery to the Investors in such Closing, at the addresses set forth on the signature pages to this Agreement, certificate representing the Debentures in applicable original principal amount, registered in such name or names as the applicable Investors may designate, upon release by the Escrow Agent to the Company of an amount representing the original principal amount of the Debentures being purchased by such Investors as set forth on the signature pages to this Agreement. The Closings shall take place at the offices of Lowenstein Sandler PC, 1251 Avenue of the Americas, 18th Floor, New York, New York 10020, or at such other location and on such other date as the Company and the Investors shall mutually agree.

4. Representations and Warranties of the Company. The Company makes no other representations and warranties to the Investors except as expressly set forth in this Section 4 and the other Transaction Documents. The Company hereby represents and warrants to the Investors and the Placement Agent that, except as set forth in the schedules delivered herewith (collectively, the “Disclosure Schedules”):

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4.1 Organization, Good Standing and Qualification. Each of the Company and its Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to carry on its business as now conducted and to own its properties. Each of the Company and its Subsidiaries is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property makes such qualification or leasing necessary unless the failure to so qualify has not had and could not reasonably be expected to have a Material Adverse Effect. The Company’s Subsidiaries are listed on Schedule 4.1 hereto.

4.2 Authorization. The Company has full power and authority and, except for approval of the Proposals by its stockholders as contemplated in Section 7.9, has taken all requisite action on the part of the Company, its officers, directors and stockholders necessary for (i) the authorization, execution and delivery of the Transaction Documents, (ii) the authorization of the performance of all obligations of the Company hereunder or thereunder, and (iii) the authorization, issuance (or reservation for issuance) and delivery of the Securities. The Transaction Documents constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, subject to (i) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability, relating to or affecting creditors’ rights generally; (ii) equitable limitations on the availability of specific remedies; (iii) principles of equity (regardless of whether such enforcement is considered in a proceeding in law or in equity); and (iv) to the extent rights to indemnification and contribution may be limited by federal securities laws or the public policy underlying such laws.

4.3 Capitalization. Schedule 4.3 sets forth as of the date hereof (a) the authorized capital stock of the Company; (b) the number of shares of capital stock issued and outstanding; (c) the number of shares of capital stock issuable pursuant to the Company’s stock plans; and (d) the number of shares of capital stock issuable and reserved for issuance pursuant to securities (other than the Debentures and the Warrants) exercisable for, or convertible into or exchangeable for any shares of capital stock of the Company. Except as described on Schedule 4.3 , all of the issued and outstanding shares of the Company’s capital stock have been duly authorized and validly issued and are fully paid, nonassessable and, assuming approval of the Proposals which will be obtained prior to any Closing, free of pre-emptive rights and were issued in full compliance with applicable state and federal securities law and any rights of third parties. Except as described on Schedule 4.3 , all of the issued and outstanding shares of capital stock of each Subsidiary have been duly authorized and validly issued and are fully paid, nonassessable and free of pre-emptive rights, were issued in full compliance with applicable state and federal securities law and any rights of third parties and are owned by the Company, beneficially and of record, subject to no lien, encumbrance or other adverse claim. Except as described on Schedule 4.3 , assuming approval of the Proposals which will be obtained prior to any Closing, no Person is entitled to pre-emptive or similar statutory or contractual rights with respect to any securities of the Company. Except as described on Schedule 4. 3 , there are no outstanding warrants, options, convertible securities or other rights, agreements or arrangements of any character under which the Company or any of its Subsidiaries is or may be obligated to issue any equity securities of any kind and, except as contemplated by this Agreement, neither the Company nor any of its Subsidiaries is currently in negotiations for the issuance of any equity securities of any kind. Except as described on Schedule 4.3 , and except for the Registration Rights Agreement, there are no voting agreements, buy-sell agreements, option or right of first purchase agreements or other agreements of any kind among the Company and any of the securityholders of the Company relating to the securities of the Company held by them. Except as described on Schedule 4.3 and except as provided in the Registration Rights Agreement, no Person has the right to require the Company to register any securities of the Company under the 1933 Act, whether on a demand basis or in connection with the registration of securities of the Company for its own account or for the account of any other Person.

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Except as described on Schedule 4.3 , the issuance and sale of the Securities hereunder will not obligate the Company to issue shares of Common Stock or other securities to any other Person (other than the Investors) and will not result in the adjustment of the exercise, conversion, exchange or reset price of any outstanding security.

Except as provided in Article XI of the Company’s Amended and Restated Certificate of Incorporation or as described on Schedule 4.3 , the Company does not have outstanding stockholder purchase rights or “poison pill” or any similar arrangement in effect giving any Person the right to purchase any equity interest in the Company upon the occurrence of certain events.

4.4 Valid Issuance . The Debentures have been duly and validly authorized and shall be free and clear of all encumbrances and restrictions (other than those created by the Investors), except for restrictions on transfer set forth in the Transaction Documents or imposed by applicable securities laws. The Warrants have been duly and validly authorized. Upon the conversion of the Debentures and the due exercise of the Warrants, the Debenture Shares or the Warrant Shares, as the case may be, will be validly issued, fully paid and non-assessable, free and clear of all encumbrances and restrictions, except for restrictions on transfer set forth in the Transaction Documents or imposed by applicable securities laws and except for those created by the Investors. The Company has reserved a sufficient number of shares of Common Stock for issuance upon the conversion of the Debentures and the exercise of the Warrants.

4.5 Consents . Except for approval of the Proposals by its stockholders as contemplated in Section 7.9, the execution, delivery and performance by the Company of the Transaction Documents and the offer, issuance and sale of the Securities require no consent of, action by or in respect of, or filing with, any Person, governmental body, agency, or official other than filings that have been made pursuant to applicable state securities laws and post-sale filings pursuant to applicable state and federal securities laws which the Company undertakes to file within the applicable time periods. Subject to the accuracy of the representations and warranties of each Investor set forth in Section 5 hereof, the Company has taken all action necessary to exempt (i) the issuance and sale of the Securities, (ii) the issuance of the Warrant Shares upon due exercise of the Warrants, and (iii) the other transactions contemplated by the Transaction Documents from the provisions of any stockholder rights plan or other “poison pill” arrangement, any anti-takeover, business combination or control share law or statute binding on the Company or to which the Company or any of its assets and properties may be subject and any provision of the Company’s Amended and Restated Certificate of Incorporation (other than Article XI set forth therein) or Bylaws that is or could reasonably be expected to become applicable to the Investors as a result of the transactions contemplated hereby, including without limitation, the issuance of the Securities and the ownership, disposition or voting of the Securities by the Investors or the exercise of any right granted to the Investors pursuant to this Agreement or the other Transaction Documents.

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4.6 Delivery of AIM Filings; Compliance with AIM Rules. The Company has made available to the Investors, true and complete copies of the Company’s most recent public filings required to be made by the Company pursuant to the AIM Rules. For so long as the Common Stock has been admitted to trading on the AIM Market operated by London Stock Exchange plc (“AIM”), the Company has complied in all material respects with all relevant laws and resolutions including (i) the Companies Act 1985 (as amended) and the Companies Act 2006, (ii) the AIM Rules, (iii) the Financial Services and Markets Act 2000, (iv) the Code of Market Conduct published by the Financial Services Authority, (v) the Criminal Justice Act 1993 and (vi) any other obligations imposed from time to time by the London Stock Exchange on companies whose securities have been admitted to trading on AIM.

4.7 Use of Proceeds. The net proceeds of the sale of the Debentures hereunder shall be used by the Company for the purposes set forth in the PPM.

4.8 No Material Adverse Change. Since June 30, 2008 except as identified and described in the AIM Filings or the Press Releases or as described on Schedule 4.8, there has not been:

(i) any change in the consolidated assets, liabilities, financial condition or operating results of the Company from that reflected in the financial statements for the six-month period ended June 30, 2008 or when filed pursuant to the AIM Rules, the financial statements for the fiscal year ended December 31, 2008, except for changes in the ordinary course of business which have not had and could not reasonably be expected to have a Material Adverse Effect, individually or in the aggregate;

(ii) any declaration or payment of any dividend, or any authorization or payment of any distribution, on any of the capital stock of the Company, or any redemption or repurchase of any securities of the Company;

(iii) any material damage, destruction or loss, whether or not covered by insurance to any assets or properties of the Company or its Subsidiaries;

(iv) any waiver, not in the ordinary course of business, by the Company or any Subsidiary of a material right or of a material debt owed to it;

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(v) any satisfaction or discharge of any lien, claim or encumbrance or payment of any obligation by the Company or a Subsidiary, except in the ordinary course of business and which is not material to the assets, properties, financial condition, operating results or business of the Company and its Subsidiaries taken as a whole (as such business is presently conducted and as it is proposed to be conducted);

(vi) any change or amendment to the Company’s Amended and Restated Certificate of Incorporation or Amended and Restated Bylaws, except as contemplated by the Proposals, or any material change to any material contract or arrangement by which the Company or any Subsidiary is bound or to which any of their respective assets or properties is subject;

(vii) any material labor difficulties or labor union organizing activities with respect to employees of the Company or any Subsidiary;

(viii) any material transaction entered into by the Company or a Subsidiary other than in the ordinary course of business, other than the transactions contemplated by the Transaction Documents and its agreements with the Placement Agent;

(ix) the loss of the services of any key employee, or material change in the composition or duties of the senior management of the Company or any Subsidiary; or

(x) any other event or condition of any character that has had or could reasonably be expected to have a Material Adverse Effect.

4.9 No Conflict, Breach, Violation or Default . Subject to the approval of the Proposals by its stockholders as contemplated in Section 7.9, the execution, delivery and performance of the Transaction Documents by the Company and the issuance and sale of the Securities will not conflict with or result in a breach or violation of any of the terms and provisions of, or constitute a default under (i) the Company’s Amended and Restated Certificate of Incorporation or the Company’s Amended and Restated Bylaws, both as in effect on the date hereof (copies of which have been made available to the Investors through the Company’s website), or (ii)(a) any statute, rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Company, any Subsidiary or any of their respective assets or properties, or (b) any agreement or instrument to which the Company or any Subsidiary is a party or by which the Company or a Subsidiary is bound or to which any of their respective assets or properties is subject, except with respect to clause (ii) for any violations or breaches as would not, individually or in the aggregate, have a Material Adverse Effect.

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4.10 Tax Matters. Except as set forth on Schedule 4.10, the Company and each Subsidiary has timely prepared and filed all tax returns required to have been filed by the Company or such Subsidiary with all appropriate governmental agencies and timely paid all taxes shown thereon or otherwise owed by it. The charges, accruals and reserves on the books of the Company in respect of taxes for all fiscal periods are adequate in all material respects, and there are no material unpaid assessments against the Company or any Subsidiary nor, to the Company’s Knowledge, any basis for the assessment of any additional taxes, penalties or interest for any fiscal period or audits by any federal, state or local taxing authority except for any assessment which is not material to the Company and its Subsidiaries, taken as a whole. All taxes and other assessments and levies that the Company or any Subsidiary is required to withhold or to collect for payment have been duly withheld and collected and paid to the proper governmental entity or third party when due. There are no tax liens or claims pending or, to the Company’s Knowledge, threatened against the Company or any Subsidiary or any of their respective assets or property. There are no outstanding tax sharing agreements or other such arrangements between the Company and any Subsidiary or other corporation or entity.

4.11 Title to Properties. Except as disclosed in the AIM Filings or the Press Releases, the Company and each Subsidiary has good and marketable title to all real properties and all other properties and assets owned by it, in each case free from liens, encumbrances and defects that would materially affect the value thereof or materially interfere with the use made or currently planned to be made thereof by them; and except as disclosed in the AIM Filings or the Press Releases, the Company and each Subsidiary holds any leased real or personal property under valid and enforceable leases with no exceptions that would materially interfere with the use made or currently planned to be made thereof by them.

4.12 Certificates, Authorities and Permits . The Company and each Subsidiary possess adequate certificates, authorities or permits issued by appropriate governmental agencies or bodies necessary to conduct the business now operated by it, and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit that, if determined adversely to the Company or such Subsidiary, could reasonably be expected to have a Material Adverse Effect, individually or in the aggregate.

4.13 Labor Matters. The Company is not a party to or bound by any collective bargaining agreements or other agreements with labor organizations. There are no labor disputes existing, or to the Company’s Knowledge, threatened, involving strikes, slow-downs, work stoppages, job actions, disputes, lockouts or any other disruptions of or by the Company’s employees. The Company is, and at all times has been, in compliance with all applicable laws respecting employment (including laws relating to classification of employees and independent contractors) and employment practices, terms and conditions of employment, wages and hours, and immigration and naturalization, except for violations that would not, individually or in the aggregate, result in a Material Adverse Effect. Except as described on Schedule 4.13 and except for severance obligations imposed by applicable law, the Company is not a party to, or bound by, any employment or other contract or agreement that contains any severance, termination pay or change of control liability or obligation, including , without limitation, any “excess parachute payment,” as defined in Section 280G(b) of the Internal Revenue Code.

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4.14 Intellectual Property.

(a) All Intellectual Property owned (and not licensed) by the Company or its Subsidiary (the “Owned IP”) is currently in compliance with all material respects with all applicable laws, rules, regulations, orders and decrees of all governmental authorities. Except as set forth on Schedule 4.14 (a), to the Company’s Knowledge, no Owned IP of the Company or its Subsidiary is now involved in any cancellation, dispute or litigation, and, to the Company’s Knowledge, no such notice of such action has been received. No patent owned by the Company or its Subsidiary has been or is now involved in any interference, reissue, re-examination or opposition proceeding.

(b) Intellectual Property in-licensed by the Company or its Subsidiary shall be referred to as “Non-Owned IP” and is listed in Schedule 4.14(b). The Company has entered into an exclusive license agreement with respect to certain Intellectual Property with Yissum Research Development Company of the Hebrew University of Jerusalem (“Yissum”), dated November 23, 2005 (the “Yissum License Agreement”), which constitutes the only Non-Owned IP as of the date of this Agreement. The Yissum License Agreement (together with any amendments thereto) is valid and has binding obligations on the Company or its Subsidiary that are parties thereto, and, to the Company’s Knowledge, is also binding on the other parties thereto, and is enforceable against the Company in accordance with its terms and, to the Company’s Knowledge, the other parties thereto, except to the extent that enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors’ rights generally, and there exists no event or condition which will result in a violation or breach of or constitute (with or without due notice or lapse of time or both) a default by the Company or its Subsidiary and to the Company’s Knowledge by Yissum, under the Yissum License Agreement. In the future, the Company may license additional Non-Owned IP which the Company might need in order to conduct its business as currently contemplated, as set forth in Schedule 4.14(b). As of the date of this Agreement, except as set forth in Schedule 4.14(c), the Company and Subsidiary are not obligated based on any written agreement, nor to the Company’s knowledge is it or any Subsidiary obligated based on any oral agreement, to make any payments by way of royalties or fees to any (i) owner or (ii) licensee of, or (iii) other claimant to, any Intellectual Property, in connection with the conduct of its business as now conducted.

(c) Except as set forth in Schedule 4.14(d), the Company and its Subsidiary own or have the valid right to use, free and clear of all liens, claims and restrictions, all of the Intellectual Property that is necessary for the conduct of the Company’s and its Subsidiary’s respective businesses as currently conducted or to the Company’s Knowledge as currently proposed to be conducted. To the Company’s Knowledge, the Company and its Subsidiary have a valid and enforceable right to use all Non-Owned IP and Confidential Inf ormation used or in the respective businesses of the Company and its Subsidiary.

(d) The consummation of the transactions contemplated hereby and by the other Transaction Documents will not result in the alteration, loss, impairment of or restriction on the Company’s or its Subsidiary’s ownership or right to use any of the Owned IP or Confidential Information which is necessary for the conduct of Company’s and of its Subsidiary’s respective businesses as currently conducted or to the Company’s Knowledge as currently proposed to be conducted or result in a default under the Yissum License Agreement or any other license agreement.

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(e) The Company and the Subsidiary have taken security measures necessary to protect the secrecy, confidentiality and value of all the Intellectual Property, which measures are reasonable and customary in the industry in which the Company or the Subsidiary operates. Each of the Company’s employees and consultants have entered into written agreements with the Company assigning to the Company or Subsidiary, as applicable, all rights in Intellectual Property developed in the course of their service with the Company. Except under confidentiality obligations, there has been no material disclosure of any of the Company’s or its Subsidiary’s Confidential Information to any third party.

(f) The Company has not received any communications alleging that the Company or the Subsidiary has violated or by conducting its business as proposed, would violate, any of the patents, trademarks, service marks, trade names, copyrights or trade secrets or other proprietary rights of any other person or entity.

4.15 Environmental Matters . Neither the Company nor any Subsidiary is in violation of any statute, rule, regulation, decision or order of any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, “Environmental Laws”), owns or operates any real property contaminated with any substance that is subject to any Environmental Laws, is liable for any off-site disposal or contamination pursuant to any Environmental Laws, or is subject to any claim relating to any Environmental Laws, which violation, contamination, liability or claim has had or could reasonably be expected to have a Material Adverse Effect, individually or in the aggregate; and there is no pending or, to the Company’s Knowledge, threatened investigation that might lead to such a claim.

4.16 Litigation . Except as described on Schedule 4.16, there are no pending actions, suits or proceedings against the Company, its Subsidiaries or any of its or their properties; and to the Company’s Knowledge, no such actions, suits or proceedings are threatened or contemplated. Neither the Company nor any Subsidiary, nor any director or officer thereof, is or since January 1, 2007 has been the subject of any action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the Company’s Knowledge, there is not pending or contemplated, any investigation by the SEC involving the Company or any director or officer of the Company.

4.17 Financial Statements . The audited, consolidated US dollar denominated financial statements as of and for the year ended December 31, 2008 which have been or will be delivered to the Investors (the “Financial Statements”) are true and correct in all material respects, are in accordance with the books and records of the Company and fairly and accurately present, in all material respects, the consolidated financial position of the Company as of the dates shown and its consolidated results of operations and cash flows for the periods shown, and such financial statements have been prepared in conformity with United States generally accepted accounting principles applied on a consistent basis (“GAAP”) (except as may be disclosed therein or in the notes thereto or otherwise disclosed on Schedule 4.17 ). The Company and its Subsidiary effectively ceased operations on or about August 1, 2004 and restarted its operations on or about March 31, 2006.

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4.18 Insurance Coverage . The Company and each Subsidiary maintains in full force and effect insurance coverage that is customary for comparably situated companies for the business being conducted and properties owned or leased by the Company and each Subsidiary, there is no claim pending under any of such policies. The Company and its Subsidiaries are current in all premiums or other payments due under each insurance policy and have otherwise performed in all material respects all of its respective obligations thereunder.

4.19 Brokers and Finders . No Person will have, as a result of the transactions contemplated by the Transaction Documents, any valid right, interest or claim against or upon the Company, any Subsidiary or an Investor for any commission, fee or other compensation pursuant to any agreement, arrangement or understanding entered into by or on behalf of the Company, other than as described in Schedule 4.19 .

4.20 No Directed Selling Efforts or General Solicitation . Neither the Company nor any Person acting on its behalf has conducted any general solicitation or general advertising (as those terms are used in Regulation D) in connection with the offer or sale of any of the Securities.

4.21 No Integrated Offering . Neither the Company nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any Company security or solicited any offers to buy any security, under circumstances that would adversely affect reliance by the Company on Section 4(2) for the exemption from registration for the transactions contemplated hereby or would require registration of the Securities under the 1933 Act.

4.22 Private Placement . Assuming the Investors’ representations contained herein are true, correct and complete, the offer and sale of the Securities by the Company to the Investors as contemplated hereby is exempt from the registration requirements of the 1933 Act.

4.23 Questionable Payments . Neither the Company nor any of its Subsidiaries nor, to the Company’s Knowledge, any of their respective current or former stockholders, directors, officers, employees, agents or other Persons acting on behalf of the Company or any Subsidiary, has on behalf of the Company or any Subsidiary or in connection with their respective businesses: (a) used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity; (b) made any direct or indirect unlawful payments to any governmental officials or employees from corporate funds; (c) established or maintained any unlawful or unrecorded fund of corporate monies or other assets; (d) made any false or fictitious entries on the books and records of the Company or any Subsidiary; or (e) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment of any nature.

4.24 Transactions with Affiliates . Except as disclosed in the AIM Filings, the Press Releases or as disclosed on Schedule 4.24, none of the officers or directors of the Company and, to the Company’s Knowledge, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than as holders of stock options and/or warrants, and for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the Company’s Knowledge, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.

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4.25 Disclosures . Neither the Company nor any Person acting on its behalf has provided the Investors or their agents or counsel with any information that constitutes or might constitute material, non-public information, other than the terms of the transactions contemplated hereby. The written materials delivered to the Investors in connection with the transactions contemplated by the Transaction Documents do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading.

5. Representations and Warranties of the Investors . Each of the Investors hereby severally, and not jointly, represents and warrants to the Company that:

5.1. Organization and Existence . Such Investor, if not a natural person, is a validly existing corporation, limited partnership or limited liability company and has all requisite corporate, partnership or limited liability company power and authority to invest in the Securities pursuant to this Agreement.

5.2 Authorization . Such Investor has full power and authority and has taken all requisite action on the part of the Investor necessary for (i) the authorization, execution and delivery of the Transaction Documents, and (ii) the authorization of the performance of all obligations of such Investor hereunder or thereunder. The execution and delivery of this Agreement and each of the other Transaction Documents, as applicable, by such Investor and the consummation by him, her or it of the transactions contemplated hereby and thereby have been duly authorized by such Investor, and if such Investor is not an individual, by its Board of Directors or other appropriate governing body, and no further consent or authorization of such Investor is required. This Agreement and each of the other Transaction Documents have been duly executed and delivered by such Investor. The Transaction Documents constitute the legal, valid and binding obligations of such Investor, enforceable against such Investor in accordance with their terms, subject to (i) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability, relating to or affecting creditors’ rights generally; (ii) equitable limitations on the availability of specific remedies; (iii) principles of equity (regardless of whether such enforcement is considered in a proceeding in law or in equity); and (iv) to the extent rights to indemnification and contribution may be limited by federal securities laws or the public policy underlying such laws.

5.3 Purchase Entirely for Own Account . The Securities to be received by such Investor hereunder will be acquired for such Investor’s own account, not as nominee or agent, and not with a view to the resale or distribution of any part thereof in violation of the 1933 Act, and such Investor has no present intention of selling, granting any participation in, or otherwise distributing the same in violation of the 1933 Act without prejudice, however, to such Investor’s right at all times to sell or otherwise dispose of all or any part of such Securities in compliance with applicable federal and state securities laws. Nothing contained herein shall be deemed a representation or warranty by such Investor to hold the Securities for any period of time. Such Investor is not a broker-dealer registered with the SEC under the 1934 Act or an entity engaged in a business that would require it to be so registered.

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5.4 Investment Experience; Acknowledgement of Risk . Such Investor acknowledges that it can bear the economic risk and complete loss of its investment in the Securities and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment contemplated hereby. Such Investor understands that its investment in the Securities involves a significant degree of risk. Such Investor acknowledges and agrees that, subject to the terms of the Debentures, the Company may issue, sell or agree to sell securities of the Company including Common Stock, warrants, convertible securities and other securities, from time to time (both before the Closing hereunder and after), that such issuances or sales may be at prices and on terms different to the terms set forth in this Agreement, including terms that may be more favorable to the purchaser thereunder, and that any such issuances or sales will cause dilution to such Investor. Such Investor 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 any of the Securities.

5.5 Disclosure of Information . Such Investor has conducted its 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 requested by it and to ask questions of and receive answers from the Company regarding the Company, its business and the terms and conditions of the offering of the Securities. Such Investor acknowledges receipt of copies of the AIM Filings and the Press Releases. Neither such inquiries nor any other due diligence investigation conducted by such Investor shall modify, limit or otherwise affect such Investor’s right to rely on the Company’s representations and warranties contained in this Agreement.

5.6 Restricted Securities . Such Investor understands that the Securities 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 only in certain limited circumstances. Such Investor understands that the Securities are being offered and sold to it in reliance upon specific exemptions from the registration requirements of the Untied States and state securities laws and that the Company is relying upon the truth and accuracy of, and such Investor’s compliance with, the representations, warranties, agreements, acknowledgements and understandings of such Investor set forth herein in order to determine the availability of such exemption and eligibility of such Investor to acquire the Securities.

5.7 Legends . It is understood that, except as provided below, certificates evidencing the Securities may bear the following or any similar legend:

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(a) “THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND HAVE BEEN ISSUED IN RELIANCE UPON EXEMPTIONS AFFORDED UNDER APPLICABLE LAWS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED, SOLD, HYPOTHECATED, TRANSFERRED OR OTHERWISE ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, OR AN APPLI CA BLE EXEMPTION (AS TO WHICH THE ISSUER SHALL BE REASONABLY SATISFIED, INCLUDING RECEIPT OF AN ACCEPTABLE LEGAL OPINION) FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS.”

(b) If required by the authorities of any state in connection with the issuance of sale of the Securities, the legend required by such state authority.

5.8 Accredited Investor . Such Investor is an accredited investor as defined in Rule 501(a) of Regulation D, as amended, under the 1933 Act and remakes herein all of the representations and warranties set forth in such Investor’s Accredited Investor Questionnaire delivered to the Company in connection herewith.

5.9 No General Solicitation . Such Investor did not learn of the investment in the Securities as a result of any general solicitation or general advertising.

5.10 Brokers and Finders . Other than the Company’s separate agreements with the Placement Agent and other co-placement agents, pursuant to which the applicable agent shall receive cash commissions and warrants to purchase Common Stock as agreed between the Company and the applicable agent, no Person will have, as a result of the transactions contemplated by the Transaction Documents, any valid right, interest or claim against or upon the Company, any Subsidiary or an Investor for any commission, fee or other compensation pursuant to any agreement, arrangement or understanding entered into by or on behalf of such Investor.

5.11 UK Investors . If an Investor has received the Transaction Documents or any other materials or information (however imparted) relevant to the investment to be made pursuant hereto or thereto (the “Materials and Information”) in the United Kingdom (the “UK”) or (for whatever reason) any of the subscription made hereunder and/or the Materials and Information are or may be subject to the requirements of the laws and/or regulations of the UK or any part thereof, such Investor hereby represents, warrants and/or (as appropriate) acknowledges and declares to the Company that:

(a) he has duly executed and delivered to the Company a certificate in accordance with either paragraph 48 (certified high net worth individuals) or 50(A) (self-certified sophisticated investors) of the Financial Services and Markets Act (Markets Act (Financial Promotion) Order 2005;

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(b) the content of the Materials and Information has not been approved by an authorised person within the meaning of the UK’s Financial Services and Markets Act 2000 (“FSMA”) and that reliance on the Materials and Information for the purpose of engaging in any investment activity may expose the Investor to a significant risk of losing all of the property or other assets invested; and

(c) no prospectus (within the meaning of FSMA and/or the regulations made pursuant thereto) has been prepared in relation to the investment to be made pursuant hereto meeting with the requirements of the UK’s Prospectus Regulations 2005 and/or approved by the UK’s Financial Services Authority acting in its capacity as the as the competent authority for the purposes of Part VI of FSMA.

6. Conditions to Closing .

6.1 Conditions to the Investors’ Obligations . The obligation of each Investor to purchase the Debentures at the applicable Closing is subject to the fulfillment to such Investor’s satisfaction, on or prior to the date of the applicable Closing, of the following conditions, any of which may be waived by such Investor (as to itself only):

(a) The representations and warranties made by the Company in Section 4 hereof qualified as to materiality shall be true and correct at all times prior to and on the Closing Date, except to the extent any such representation or warranty expressly speaks as of an earlier date, in which case such representation or warranty shall be true and correct as of such earlier date, and, the representations and warranties made by the Company in Section 4 hereof not qualified as to materiality shall be true and correct in all material respects at all times prior to and on the Closing Date, except to the extent any such representation or warranty expressly speaks as of an earlier date, in which case such representation or warranty shall be true and correct in all material respects as of such earlier date. The Company shall have performed in all material respects all obligations and covenants herein required to be performed by it on or prior to the Closing Date.

(b) The Company shall have obtained any and all consents, permits, approvals, registrations and waivers (including, without limitation, approval of the Proposal by its stockholders in accordance with applicable law and the applicable requirements of any stock exchange or market on which the Common Stock is traded or quoted) necessary or appropriate for consummation of the purchase and sale of the Securities and the consummation of the other transactions contemplated by the Transaction Documents, all of which shall be in full force and effect.

(c) The Company shall have executed and delivered to the Escrow Agent, on behalf of the Investors, the Registration Rights Agreement.

(d) No judgment, writ, order, injunction, award or decree of or by any court, or judge, justice or magistrate, including any ba nk ruptcy court or judge, or any order of or by any governmental authority, shall have been issued, and no action or proceeding shall have been instituted by any governmental authority, enjoining or preventing the consummation of the transactions contemplated hereby or in the other Transaction Documents.

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(e) The Company shall have delivered a Certificate, executed on behalf of the Company by its Chief Executive Officer or its Chief Financial Officer, dated as of the applicable Closing Date, certifying to the fulfillment of the conditions specified in subsections (a), (b), (d), and (e) of this Section 6.1.

(f) The Company shall have delivered a Certificate, executed on behalf of the Company by its Secretary, dated as of the applicable Closing Date, certifying the resolutions adopted by the Board of Directors of the Company approving the transactions contemplated by this Agreement and the other Transaction Documents and the issuance of the Securities, certifying the current versions of the Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws of the Company and certifying as to the signatures and authority of persons signing the Transaction Documents and related documents on behalf of the Company.

(h) The Investors and the Placement Agent shall have received an opinion from Barack Ferrazzano Kirschbaum & Nagelberg LLP, the Company’s counsel, dated as of the First Closing Date, in form and substance reasonably acceptable to the Investors and addressing such legal matters as the Investors may reasonably request, together with an update for each subsequent Closing.

6.2 Conditions to Obligations of the Company. The Company’s obligation to sell and issue the Shares and the Warrants at the Closing is subject to the fulfillment to the satisfaction of the Company on or prior to the Closing Date of the following conditions, any of which may be waived by the Company:

(a) The representations and warranties made by the Investors in Section 5 hereof, other than the representations and warranties contained in Sections 5.3, 5.4, 5.5, 5.6, 5.7, 5.8 and 5.9 (the “Investment Representations”), shall be true and correct in all material respects when made, and shall be true and correct in all material respects on the applicable Closing Date with the same force and effect as if they had been made on and as of said date. The Investment Representations shall be true and correct in all respects when made, and shall be true and correct in all respects on the Closing Date with the same force and effect as if they had been made on and as of said date. The Investors shall have performed in all material respects all obligations and covenants herein required to be performed by them on or prior to the Closing Date.

(b) The Investors shall have executed and delivered to the Escrow Agent, on behalf of the Company, the Registration Rights Agreement and Accredited Investor Questionnaires.

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(d) The Company shall have obtained the approval of the Proposals by its stockholders in accordance with applicable law and the applicable requirements of any stock exchange or market on which the Common Stock is traded or quoted.

6.3 Termination of Obligations to Effect Closing; Effects . The obligations of the Company, on the one hand, and the Investors, on the other hand, to effect the Closing shall terminate as follows:

(a) Upon the mutual written consent of the Company and the Investors;

(b) By the Company if any of the conditions set forth in Section 6.2 shall have become incapable of fulfillment, and shall not have been waived by the Company;

(c) By an Investor (with respect to itself only) if any of the conditions set forth in Section 6.1 shall have become incapable of fulfillment, and shall not have been waived by the Investor; or

(d) By either the Company or any Investor (with respect to itself only) if the Closing has not occurred on or prior to September 15, 2009.

provided, however, that, except in the case of clause (i) above, the party seeking to terminate its obligation to effect the Closing shall not then be in breach of any of its representations, warranties, covenants or agreements contained in this Agreement or the other Transaction Documents if such breach has resulted in the circumstances giving rise to such party’s seeking to terminate its obligation to effect the Closing.

7. Covenants and Agreements of the Company .

7.1 Reservation of Common Stock . The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of providing for the conversion of the Debentures and the exercise of the Warrants, such number of shares of Common Stock as shall from time to time equal the number of shares sufficient to permit the conversion of the Debentures and the exercise of the Warrants issued pursuant to this Agreement in accordance with their respective terms.

7.2 Reports . The Company will furnish to the Investors and/or their assignees such information relating to the Company and its Subsidiaries as from time to time may reasonably be requested by the Investors and/or their assignees; provided, however, that the Company shall not disclose material nonpublic information to the Investors, or to advisors to or representatives of the Investors, unless prior to disclosure of such information the Company identifies such information as being material nonpublic information and provides the Investors, such advisors and representatives with the opportunity to accept or refuse to accept such material nonpublic information for review and any Investor wishing to obtain such information enters into an appropriate confidentiality agreement with the Company with respect thereto.

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7.3 No Conflicting Agreements . The Company will not take any action, enter into any agreement or make any commitment that would conflict or interfere in any material respect with the Company’s obligations to the Investors under the Transaction Documents.

7.4 Insurance . The Company shall not materially reduce the insurance coverages described in Section 4.18.

7.5 Compliance with Laws . The Company will comply in all material respects with all applicable laws, rules, regulations, orders and decrees of all governmental authorities.

7.6 Qualified Transaction . Provided that Closings have occurred for at least $2,500,000 of Debentures, the Company will use its commercially reasonable efforts to consummate a Qualified Transaction no later than the date that is 12 months after the date of the Closing in which at least $2,500,000 of Debentures in the aggregate have been sold under this Agreement. For purposes of this Agreement, a “Qualified Transaction” shall mean any of (i) an underwritten public offering of the Company’s Common Stock on the NYSE, NYSE Amex or the Nasdaq Stock Market (a “U.S. Stock Market”) resulting in gross proceeds to the Company of not less than $5,000,000, (ii) a merger or reverse merger between the Company and a public company the common stock of which is traded on a U.S. Stock Market or on the OTC Bulletin Board, the survivor of which is a public company having available cash of not less than $5,000,000 after giving effect to such merger and any capital-raising transaction completed prior to or at the time of such merger (a “Qualified Merger”) or (iii) the acquisition of all of the issued and outstanding common stock of the Company by a public company the common stock of which is traded on a U.S. Stock Market or on the OTC Bulletin Board in a transaction where the holders of the common stock of the Company receive, in exchange for such common stock, common stock of such public company and, after giving effect to such transaction and any capital-raising transaction completed prior to or at the time of such transaction, such public company has available cash of not less than $5,000,000 (a “Qualified Acquisition”). Further, if the Company applies to have its Common Stock or other securities traded on any U.S. Stock Market or market, it shall include in such application the Debentures Shares and the Warrant Shares and will take such other action as is necessary to cause such Common Stock to be so listed.

7.7 Termination of Covenants . The provisions of Sections 7.2 through 7.5 shall terminate and be of no further force and effect on the date on which the Company’s obligations under the Registration Rights Agreement to register or maintain the effectiveness of any registration covering the Registrable Securities (as such term is defined in the Registration Rights Agreement) shall terminate.

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7.8 Removal of Legends . In connection with any sale or disposition of the Securities by an Investor pursuant to Rule 144 or pursuant to any other exemption under the 1933 Act such that the purchaser acquires freely tradable shares and upon compliance by the Investor with the requirements of this Agreement, the Company shall or, in the case of Common Stock, shall cause the transfer agent for the Common Stock (the “Transfer Agent”) to issue replacement certificates representing the Securities sold or disposed of without restrictive legends. Upon the earlier of (i) registration for resale pursuant to the Registration Rights Agreement or (ii) the Shares becoming freely tradable by a non-affiliate pursuant to Rule 144, then, upon the request of an Investor, the Company shall deliver to the Transfer Agent irrevocable instructions that the Transfer Agent shall reissue a certificate representing shares of Common Stock without legends upon receipt by such Transfer Agent of the legended certificates for such shares, together with either (1) a customary representation by the Investor that Rule 144 applies to the shares of Common Stock represented thereby or (2) a statement by the Investor that such Investor has sold the shares of Common Stock represented thereby in accordance with the Plan of Distribution contained in the Registration Statement. From and after the earlier of such dates, upon an Investor’s written request, the Company shall, if permitted by applicable law, promptly cause certificates evidencing the Investor’s Securities to be replaced with certificates which do not bear such restrictive legends, and Warrant Shares subsequently issued upon due exercise of the Warrants shall not bear such restrictive legends provided the provisions of either clause (i) or clause (ii) above, as applicable, are satisfied with respect to such Warrant Shares.

7.9 Proposals .

(a) The Company is in the process of seeking approval of the Company’s stockholders through written consent for (i) the repeal of Article XII of the Company’s Amended and Restated Certificate of Incorporation and (ii) the sanction and approval of borrowings in excess of the borrowing limit imposed by Article VIII of the Company’s Amended and Restated By-Laws (collectively, the “Proposals”).

(b) Subject to their fiduciary obligations under applicable law (as determined in good faith by the Company’s Board of Directors after consultation with the Company’s outside counsel), the Company’s Board of Directors shall recommend to the Company’s stockholders that the stockholders vote in favor of the Proposals (the “Company Board Recommendation”) and take all commercially reasonable action to solicit the written consent of the stockholders for the Proposals unless the Board of Directors shall have modified, amended or withdrawn the Company Board Recommendation pursuant to the provisions of the immediately succeeding sentence. The Company covenants that the Board of Directors of the Company shall not modify, amend or withdraw the Company Board Recommendation unless the Board of Directors (after consultation with the Company’s outside counsel) shall determine in the good faith exercise of its business judgment that maintaining the Company Board Recommendation would violate its fiduciary duty to the Company’s stockholders.

8. Survival and Indemnification .

8.1 Survival . Any covenant or agreement in this Agreement required to be performed following the applicable Closing Date, shall survive such Closing Date. Without limitation of the foregoing, the respective representations and warranties given by the parties hereto shall survive each Closing Date and the consummation of the transactions contemplated herein, but only for a period of the earlier of (i) twenty-four (24) months following the final Closing Date and (ii) the applicable statute of limitations with respect to each representation and warranty, and thereafter shall expire and have no further force and effect (including with respect to the indemnification obligations contained herein).

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8.2 Indemnification . The Company agrees to indemnify and hold harmless each Investor and its Affiliates and their respective directors, officers, employees and agents from and against any and all losses, claims, damages, liabilities and expenses (including, without limitation, reasonable attorney fees and disbursements and other expenses incurred in connection with investigating, preparing or defending any action, claim or proceeding, pending or threatened and the costs of enforcement thereof) (collectively, “Losses”) to which such Person may become subject as a result of any breach of representation, warranty, covenant or agreement made by or to be performed on the part of the Company under the Transaction Documents, and will reimburse any such Person for all such amounts as they are incurred by such Person; provided, however, in no event shall the Company’s indemnification obligations exceed the aggregate Purchase Price received the Company hereunder.

8.3 Conduct of Indemnification Proceedings . Any person entitled to indemnification hereunder shall (i) give prompt notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided that any person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such person unless (a) the indemnifying party has agreed to pay such fees or expenses, or (b) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such person or (c) in the reasonable judgment of any such person, based upon written advice of its counsel, a conflict of interest exists between such person and the indemnifying party with respect to such claims (in which case, if the person notifies the indemnifying party in writing that such person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such person); and provided, further, that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations hereunder, except to the extent that such failure to give notice shall materially adversely affect the indemnifying party in the defense of any such claim or litigation. It is understood that the indemnifying party shall not, in connection with any proceeding in the same jurisdiction, be liable for fees or expenses of more than one separate firm of attorneys at any time for all such indemnified parties. No indemnifying party will, except with the consent of the indemnified party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation. The Company shall not be liable for any settlement of any proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed, but if settled with such consent, or if there be a final judgment for the plaintiff, the Company shall indemnify and hold harmless such indemnified party from and against any loss or liability (to the extent stated above) by reason of such settlement or judgment, subject to the limitation contained in Section 8.2.1.

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9. Miscellaneous .

9.1 Successors and Assigns . This Agreement may not be assigned by a party hereto without the prior written consent of the Company or the Investors, as applicable, provided, however, that an Investor may assign its rights and delegate its duties hereunder in whole or in part to an Affiliate or to a third party acquiring some or all of its Securities in a transaction complying with applicable securities laws without the prior written consent of the Company or the other Investors. The provisions of this Agreement shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

9.2 Counterparts; Faxes . This Agreement may be executed 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. This Agreement may also be executed via facsimile or electronic transmission (e.g. Pdf/email), which shall be deemed an original.

9.3 Titles and Subtitles . The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

9.4 Notices . Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given as hereinafter described (i) if given by personal delivery, then such notice shall be deemed given upon such delivery, (ii) if given by telecopier, then such notice shall be deemed given upon receipt of confirmation of complete transmittal, (iii) if given by mail, then such notice shall be deemed given upon the earlier of (A) receipt of such notice by the recipient or (B) three days after such notice is deposited in first class mail, postage prepaid, and (iv) if given by an internationally recognized overnight air courier, then such notice shall be deemed given one Business Day after delivery to such carrier. All notices shall be addressed to the party to be notified at the address as follows, or at such other address as such party may designate by ten days’ advance written notice to the other party:

If to the Company:

Medgenics, Inc.

8000 Towers Crescent Drive, Suite 1070

Vienna, VA 22182

Attention: Dr. Andrew Pearlman, CEO & President

Fax: (561) 828-6150

And to:

Medgenics, Inc.

Teradion Business Park

P.O. Box 14

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Misgav 20179 Israel

Attention: Ms. Phyllis Bellin

Fax: +972-4-9990114

With a copy (not constituting notice) to:

Barack Ferrazzano Kirschbaum & Nagelberg LLP

200 W. Madison Street, Suite 3900

Chicago, Illinois 60606

Attention: Gretchen Anne Trofa, Esq.

Fax No.: (312) 984-3150

If to the Investor:

To the addresses set forth on the signature pages affixed hereto.

9.5 Expenses . The parties hereto shall pay their own costs and expenses in connection herewith, except that the Company shall pay the reasonable fees and expenses of Lowenstein Sandler PC, counsel to the Placement Agent, not to exceed $35,000, regardless of whether the transactions contemplated hereby are consummated; it being understood that Lowenstein Sandler PC has only rendered legal advice to the Placement Agent and not to the Company or any Investor in connection with the transactions contemplated hereby, and that each of the Company and each Investor has relied for such matters on the advice of its own respective counsel. Such expenses shall be paid upon demand. The Company shall reimburse the Investors upon demand for all reasonable out-of-pocket expenses incurred by the Investors, including without limitation reimbursement of attorneys’ fees and disbursements, in connection with any amendment, modification or waiver of this Agreement or the other Transaction Documents. In the event that legal proceedings are commenced by any party to this Agreement against another party to this Agreement in connection with this Agreement or the other Transaction Documents, the party or parties which do not prevail in such proceedings shall severally, but not jointly, pay their pro rata share of the reasonable attorneys’ fees and other reasonable out-of-pocket costs and expenses incurred by the prevailing party in such proceedings.

9.6 Amendments and Waivers . Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Investors who hold at least a majority of the aggregate outstanding principal amount of Debentures. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each holder of any Securities purchased under this Agreement at the time outstanding, each future holder of all such Securities, and the Company.

9.7 Publicity . The Company shall be entitled to issue public releases or announcements concerning the transactions contemplated hereby, including, if required by the AIM Rules, identifying the Investors. No Investor shall make any public release or announcement concerning the transaction contemplated hereby without the prior consent of the Company (which consent shall not be unreasonably withheld or delayed), except as such release or announcement may be required by applicable law, rule or regulation of any governmental authority or the applicable rules or regulations of any securities exchange or securities market, in which case the such Investor shall allow the Company to the extent reasonably practicable in the circumstances, reasonable time to comment on such release or announcement in advance of such issuance.

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9.8 Severability . Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof but shall be interpreted as if it were written so as to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, the parties hereby waive any provision of law which renders any provision hereof prohibited or unenforceable in any respect.

9.9 Entire Agreement . This Agreement, including the Disclosure Schedules, and the other Transaction Documents constitute the entire agreement among the parties hereof with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter hereof and thereof.

9.10 Further Assurances . The parties shall execute and deliver all such further instruments and documents and take all such other actions as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained.

9.11 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial . This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York without regard to the choice of law principles thereof, other than with respect to corporate matters which shall be governed by the General Corporation Law of the State of Delaware. Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the courts of the State of New York located in New York County and the United States District Court for the Southern District of New York for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Agreement and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court. Each party hereto irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

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9.12 Independent Nature of Investors’ Obligations and Rights. The obligations of each Investor under any Transaction Document are several and not joint with the obligations of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor under any Transaction Document. The decision of each Investor to purchase Securities pursuant to the Transaction Documents has been made by such Investor independently of any other Investor. Nothing contained herein or in any Transaction Document, and no action taken by any Investor pursuant thereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Investor acknowledges that no other Investor has acted as agent for such Investor in connection with making its investment hereunder and that no Investor will be acting as agent of such Investor in connection with monitoring its investment in the Securities or enforcing its rights under the Transaction Documents. Each Investor shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Investor to be joined as an additional party in any proceeding for such purpose. The Company acknowledges that each of the Investors has been provided with the same Transaction Documents for the purpose of closing a transaction with multiple Investors and not because it was required or requested to do so by any Investor.

9.13 No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

9.14 Rights Cumulative. Except as expressly set forth herein, each and all of the various rights, powers and remedies of the parties shall be considered cumulative with and in addition to any other rights, powers and remedies which such parties may have at law or in equity in the event of the breach of any of the terms of this Agreement. The exercise or partial exercise of any right, power or remedy shall neither constitute the exclusive election thereof nor the waiver of any other right, power or remedy available to such party.

9.15 Lock Up. (a) Each Investor hereby severally, and not joingly , agrees, that, without the prior written consent of the Company, it will not (and will cause any spouse or immediate family member of the spouse or such Investor living in such Investor’s household, any partnership, corporation or other entity within such Investor’s control, and any trustee of any trust that holds Common Stock or other securities of the Company for the benefit of such Investor or such spouse or family member not to), during the period commencing on the date a registration statement filed by the Company in connection with a Qualified Transaction is declared effective by the Securities and Exchange Commission and ending on the date that is nine months after the date of the consummation of the Qualified Transaction, (1) offer, sell, contract to sell (including any short sale), pledge, hypothecate, establish an open “put equivalent position” within the meaning of Rule 16a-1(h) under the 1934 Act, grant any option, right or warrant for the sale of, purchase any option or contract to sell, sell any option or contract to purchase, or otherwise encumber, dispose of or transfer, or grant any rights with respect to, directly or indirectly, any shares of Common Stock issued upon conversion of the Debentures or issued or issuable upon the exercise of the Warrants, or (2) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of shares of Common Stock. Notwithstanding the foregoing, Such Investor shall not be restricted from distributing any of the Company’s securities to such Investor’s equity holders provided that prior to and as a condition to the effectiveness of any such distribution such equity holders execute a lock-up agreement substantially in the form hereof in favor of the Company.

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(b) Notwithstanding the provisions of Section 9.15(a) above, such Investor may tr an sfer Common Stock (i) as a bona fide gift or gifts, provided that prior to such transfer the donee or donees thereof agree in writing to be bound by the restrictions set forth herein, (ii) to any trust, partnership, corporation or other entity formed for the direct or indirect benefit of the undersigned or the immediate family of the undersigned, provided that prior to such transfer a duly authorized officer, representative or trustee of such transferee agrees in writing to be bound by the restrictions set forth herein; and provided further that any such transfer shall not involve a disposition for value, or (iii) if such transfer occurs by operation of law, such as rules of descent and distribution, statutes governing the effects of a merger or a qualified domestic order; provided that prior to such transfer the transferee executes an agreement stating that the transferee is receiving and holding the shares subject to the provisions of this Agreement. For purposes hereof, “immediate family” shall mean any relationship by blood, marriage or adoption, not more remote than first cousin.

(c) The Company and its transfer agent and registrar are hereby authorized to (a) decline to make any transfer of shares of Common Stock if such transfer would constitute a violation or breach of this Section 9.15 and (b) place legends and stop transfer instructions on any such shares of Common Stock owned or beneficially owned by such Investor.

[signature pages follow]

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IN WITNESS WHEREOF, the parties have executed this Agreement or caused their duly authorized officers to execute this Agreement as of the date first above written.

The Company:	MEDGENICS, INC.

	By:
	Name:
	Title:

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INVESTOR SIGNATURE PAGE TO

SECURITIES PURCHASE AGREEMENT

DATED AS OF MAY _, 2009

BY AND AMONG

MEDGENICS, INC.

AND

THE INVESTORS SIGNATORY THERETO

IN WITNESS WHEREOF, the parties have executed this Agreement or caused their duly authorized officers to execute this Agreement as of the date first above written.

If an entity:


	(Name of entity Investor)

	By:
	Name:
	Title:

If an individual:


	(Name of individual Investor)


	(Signature of individual Investor)

Aggregate Purchase Price for Debentures Purchased:	$

Address for Notice:

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Disclosure Schedule

to Securities Purchase Agreement dated May ___, 2009

between Medgenics, Inc. and the investors signatory therein

Defined terms used herein are used as defined in the above referenced agreement. Any disclosures made on this Disclosure Schedule shall be deemed a disclosure for all purposes of the representations and warranties set forth in Section 4 of this Agreement, without regard to the section reference numbers listed below. Capitalized terms not defined herein are used herein as defined in this Agreement.

4.1 Medgenics Medical Israel Ltd. a company formed under the laws of the State of Israel (“MMI”), is the Company’s sole Subsidiary. The name of the Subsidiary was changed in March 2006 from Biogenics, Ltd.

4.3 The Company has 500,000,000 authorized common shares. It has 119,282,000 common shares outstanding . It is obligated to issue warrants to various placements agents and finders (see disclosure at 4.19 below). The Company has 120,739,244 warrants outstanding, 17,092,227 of which have a nominal exercise price; 68,316,649 of which have an exercise price of $0.071 per share; 21,040,113 have an exercise price of $0.117 per share; 7,127,452 of which have an exercise price of $0.164 per share; 5,350,484 have an exercise price of $0.194 per share; 1,218,144 have an exercise price of $0.25 per share; and 594,175 have an exercise price of £0.10 per share. In addition, the Company has adopted an employee stock option plan and has reserved 59,996,811 shares of common stock for issuance thereunder. 41,071,753 options under the plan have been granted/issued. In addition the Company has authorized 1,080,784 non plan options at an exercise price of $0.071 per share.

Article XII of the Company’s Amended and Restated Certificate of Amendment provides for pre-emptive rights in certain circumstances, including the issuance of the Debentures, the Warrants, the Debenture Shares and the Warrant Shares. The Company is in the process of seeking shareholder approval to repeal Article XII and the closing under this Agreement are contingent on receiving such approval.

The Company has contractual obligations to issue warrants (in like tenor of the Warrants) to the Placement Agent and the other placement agents described in the PPM, as well as to other finders, brokers and agents that it may engage in connection with the sale of the Debentures. In addition, the Company may be obligated to issue warrants to those finders, brokers and agents with whom the Company has “tail” agreements if investors referenced in those agreements purchase Debentures. Such agreements are described in the AIM Filings.

The Company has provided “piggyback” registration rights to purchasers of its common stock in prior offerings. This registration rights are described in the AIM Filings.

The Debentures will convert automatically upon the consummation of a Qualified Tr an saction. The Conversion Price will be the Qualified Transaction Price. Depending on what the Qualified Transaction Price is, the conversion of the Debentures and the issuance of the Warrants hereunder may result in the adjustment of the exercise price of certain of the Company’s outstanding warrants.

Article XI of the Company’s Amended and Restated Certificate of Incorporation contains provisions requiring shareholders who own beneficially 30% of more of the outstanding stock of the Company to comply with certain notice and offer provisions.

4.8 (i) As of May 13, 2009, the Company has past due account payables of $938,453, of which $677,610 are past due 90 days or more.

4.8(ii) The Company recently instituted a Warrant Repricing Program (in December 2008 through February 2009) which gave warrant holders the opportunity to exercise their warrants for cash at a price less than the exercise price stated in the warrant, and to receive additional “bonus” warrants based on the total amount of exercise price paid. The Warrant Repricing Program ended in mid-February 2009 and all currently outstan din g warrants remain at the exercise price originally stated as may be adjusted in accordance with the terms of the particular warrant.

4.8(vi) In December 2008, the Board of Directors amended Section 6 of Article VI of its Amended and Restated By-Laws.

4.8 (viii) The Company has entered into engagement letters with the Placement Agent and the other placement agents described in the PPM. In October 2008, the Company entered into agreements with Capita IRG Trustees Limited and its affiliates to provide for a system of trading depository interests representing the Common Stock.

4.10 The Company filed 2007 taxes and has timely filed an extension with the Internal Revenue Service with respect to its taxes for the year ended December 31, 2008.

4.13 (none)

4.14(a) (none)

4.14(b) Non-Owned IP comprises those patent applications listed with Yissum as owner, in the Medgenics Patent Portfolio.

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

Title	Application Date/ Number	Owner	File Status

IN VITRO MICRO-	2002-12-17
ORGANS, AND USES	US 10/320,717	Yissum	Pending
RELATED THERETO

IN VITRO MICRO-	29-Oct-01
ORGANS, AND USES	EP 01204125.7	Yissum	Pending
RELATED THERETO

IN VITRO MICRO-	03-Mar-03
ORGANS, AND USES	US 10/376,506	Yissum	Pending
RELATED THERETO

IN VITRO MICRO-	23-Oct-01
ORGANS, AND USES	Israel 161472	Yissum	Pending
RELATED THERETO

IN VITRO MICRO-	23-Oct-01
ORGANS, AND USES	Canada 2,464,460	Yissum	Pending
RELATED THERETO

IN VITRO MICRO-	23-Oct-01
ORGANS, AND USES	Japan 2003-538352	Yissum	Pending
RELATED THERETO

IN VITRO MICRO-	23-Oct-01
ORGANS, AND USES	S. Korea 2004-7006068	Yissum	Pending
RELATED THERETO

IN VITRO MICRO-	23-Oct-01
ORGANS, AND USES	China 01823906.4	Yissum	Pending
RELATED THERETO

IN VITRO MICRO-			31-Jul-2008
ORGANS, AND USES	23-Oct-01	Yissum	Issued
RELATED THERETO	Singapore 200402347-9		103757

IN VITRO MICRO-	23-Oct-01
ORGANS, AND USES	India 834/CHENP/2004	Yissum	Pending
RELATED THERETO

METHOD OF INDUCING	22-Jun-00
ANGIOGENESIS BY MICRO-ORGANS	Canada 2,377,541	Yissum	Pending

METHOD OF INDUCING
ANGIOGENESIS BY	22-Jun-00
MICRO-ORGANS	Europe 00939024.6	Yissum	Pending

METHOD OF INDUCING
ANGIOGENESIS BY	22-Jun-00	Yissum	Pending
MICRO-ORGANS	Japan 2001-506851

METHOD OF INDUCING	22-Jun-00
ANGIOGENESIS BY	Europe 03016266.3	Yissum	Pending
MICRO-ORGANS

METHOD OF INDUCING	22-Jun-00
ANGIOGENESIS BY	Canada 2,435,411	Yissum	Pending
MICRO-ORGANS

IN VITRO MICRO-	22-Jun-00
ORGANS, AND USES	Australia 2003271042	Yissum	Pending
RELATED THERETO

Title		Application Date/ Number		Owner		File Status
EFFICIENT METHODS FOR ASSESSING AND VALIDATING ECANDIDATE PROTEIN- BASED THERAPEUTIC MOLECULES ENCODED BY NUCLEIC ACID SEQUENCES OF INTEREST		07-Ju1-02 US 10/190,754		Yissum and Medgenics, Inc.		Pending

4.14(c) The Company is obligated to pay royalties and fees in connection with IP according to the Yissum License Agreement.

The Subsidiary will be obligated to pay royalties to the Office of the Chief Scientist of the Ministry of Industry, Trade and Labor of Israel. The royalties are 3% of sales for the first three years and 3 1 /2 % of sales thereafter. Such royalties are to be paid up to the total amount of grants received. (The total received as of May 12, 2009 was $3,441,562.)

In addition the Company has a non-exclusive license agreement with Baylor College of Medicine dated January 25, 2007 for the use of its technologies BLG#03-037 “Large Scale Production of Helper-Dependent Adenoviral Vectors” and BLG#01-064, “Bacterial Recombination for Generation of Helper-Dependent Adenoviral Vector”. The Baylor Medical College license obligates the Company to pay an annual maintenance fee of $20,000; a onetime payment of $75,000 upon FDA clearance or non-US equivalent of the Biopump for therapeutic use; and $25,000 upon execution of sublicenses that Medgenics executes for the Subject Technology.

4.14(d) The Yissum License Agreement grants the right to use genetically modified microorg an s to produce proteins except for the purpose to cause angiogenesis, and grants the right to make microorg ans from any tissue except from the pancreas, liver or kidney.

4.16 The Company owes Hadasit Medical Services and Development, Ltd. (“Hadasit”) with which the Company is conducting its current Phase I/II trial, approximately $193,000 under its agreement. Hadasit has threatened to terminate the agreement as a result is the Company’s failure to pay and pursue its other rights. To date, no litigation proceeding has been commenced in this matter.

4.17 (none)

4.19 The Company is obligated to pay the following fees and issue the following securities in connection with the transactions contemplated by this Agreement. We are obligated to pay a cash fee to one or more of the Placement Agents (as defined in the PPM) equal to between 8% and 12% of the gross amount of Debentures sold in this Private Placement and issue to the Placement Agents warrants to purchase shares of Common Stock equal to between 4 % and 8% of the total number of shares of Common Stock into which the Debentures convert.

4.24 The Company uses certain office services provided by affiliates of Joel Kanter, a director of the Company, and reimburses such affiliates for the cost of providing such services. The Company may enter into a lease or services agreement with such affiliates in the future. In addition, the Company currently has obtained a letter of credit (which expires May 28, 2009) from CIBC Trust Company (Bahamas) Limited (“CIBC”). CIBC is the trustee of Settlement T-555 (the “CIBC Trust”). The CIBC Trust was established for the benefit of various descendants of (i) Helen and Henry Krakow, and (ii) Beatrice and Morris Kanter. Joel Kanter, a director of the Company, is a discretionary beneficiary of the CIBC Trust. The CIBC Trust provided security in connection with such letter of credit and received Company securities as compensation therefor.

EXHIBIT 10.47

FORM OF CONVERTIBLE DEBENTURE

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

Medgenics, Inc.

Convertible Debenture

Issuance Date: __________ _, 2009

Original Principal Amount: U.S. $________

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(5) RIGHTS UPON EVENT OF DEFAULT .

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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(10) RESERVATION OF AUTHORIZED SHARES .

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

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

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

(12) COVENANTS .

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

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

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

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

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

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

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

(15) REISSUANCE OF THIS DEBENTURE .

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

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

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

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

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

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

(19) NOTICES; PAYMENTS .

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[Signature Page Follows]

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

MEDGENICS, INC.

By:
	Name:
	Title:

[Signature Page to Convertible Debenture]

EXHIBIT I

MEDGENICS, INC.

CONVERSION NOTICE

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

Date of Conversion:

Aggregate Conversion Amount to be converted:

Please confirm the following information:

Conversion Price:

Number of shares of Common Stock to be issued:

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

Issue to:

Facsimile Number:

Authorization:

By:

Title:

Dated:

Account Number:
(if electronic book entry transfer)

Transaction Code Number:
(if electronic book entry transfer)

ACKNOWLEDGMENT

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

MEDGENICS, INC.

By:
	Name:
	Title:

EXHIBIT 10.48

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (this “ Agreement ” ) is made as of the 5th day of February, 2010 by and among Medgenics, Inc. a Delaware corporation (the “ Company ” ), and Windy City, Inc., a Delaware corporation, Eugene Bauer and Andrew L. Pearlman (individually, a “ Purchaser ” and collectively, the “ Purchasers ” ).

Recitals

A. The Company and the Purchasers are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by the provisions of Regulation D ( “ Regulation D ” ), as promulgated by the U.S. Securities and Exchange Commission (the “ SEC ” ) under the Securities Act of 1933, as amended (the “ 1933 Act ” ).

B. The Purchasers wish to purchase from the Company, and the Company wishes to sell and issue to the Purchasers, upon the terms and conditions stated in this Agreement, the number of unregistered shares (the “ Shares ” ) of the Company’s Common Stock, par value $0.0001 per share (together with any securities into which such shares may be reclassified the “ Common Stock ” ), set opposite such Purchaser’s name on the signature page hereto.

In consideration of the mutual promises made herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Purchase and Sale of Shares. On the terms and subject to the conditions hereinafter set forth, each of the Purchasers, severally and not jointly, agrees to purchase from the Company, and the Company agrees to sell to the Purchasers, the Shares at a purchase price per Share (the “ Purchase Price ” ) at the Closing (as defined below) equal to 6.5 pence. At the option of each Purchaser, payment of the Purchase Price may be made in U.S. dollars, based on the exchange rate applicable to the business day prior to the Closing.

2. Payment; Closing.

2.1 Payment . On the Closing Date each Purchaser shall pay the Purchase Price for the Shares to be issued and sold to him or it at the Closing. The Purchase Price shall be paid by wire transfer of immediately available funds in accordance with the Company’s written instructions. At the Closing, upon payment of the Purchase Price therefor by the applicable Purchaser, the Company will deliver irrevocable written instructions ( “ Transfer Instructions ” ) to the transfer agent for the Company’s Common Stock to issue certificates representing the Shares registered in the name of such Purchaser and to deliver such certificates to or at the direction of such Purchaser. The Company shall not have the power to revoke or amend the Transfer Instructions without the written consent of such Purchaser.

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2.2 Closing Date . Subject to the satisfaction (or written waiver) of the conditions set forth in Sections 5 and 6 below, the closing of the transactions contemplated by this Agreement shall be held on the same date as the consummation of the Company’s placing of shares of Common Stock being conducted through SVS Securities plc on the AIM Market in the U.K., or such other time as may be mutually agreed upon by the parties to this Agreement (the “ Closing Date ” ), at the offices of Barack Ferrazzano Kirschbaum & Nagelberg LLP, 200 W. Madison Street, Suite 3900, Chicago, Illinois 60606 or at such other location or by such other method (including exchange of signed documents) as may be mutually agreed upon by the parties to this Agreement ( “ Closing ” ).

3. Representations and Warranties of Purchasers. Each Purchaser, severally and not jointly, represents and warrants to the Company that:

3.1 Organization and Qualification . If such Purchaser is an entity, such Purchaser represents and warrants that it is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation, with full power and authority to purchase the Shares.

3.2 Authorization; Enforcement . If such Purchaser is an entity, such Purchaser represents and warrants that this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by, and duly executed and delivered on behalf of, such Purchaser. Each of the Purchasers represents and warrants that this Agreement constitutes the valid and binding agreement of such Purchaser enforceable in accordance with its terms, except as such enforceability may be limited by: (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws in effect that limit creditors’ rights generally; (ii) equitable limitations on the availability of specific remedies; and (iii) principles of equity.

3.3 Securities Matters . In connection with the Company’s compliance with applicable securities laws:

a. None of the Shares are registered under the 1933 Act or any state securities laws. Such Purchaser understands that the Shares are being offered and sold to him or 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 such Purchaser’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Purchaser set forth herein in order to determine the availability of such exemption and the eligibility of Such Purchaser to acquire the Shares.

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b. Such Purchaser has no agreement or arrangement, formal or informal, with any person to sell or transfer all or any part of the Shares, and such Purchaser has no plans to enter into any such agreement or arrangement. Such Purchaser is purchasing the Shares for its own account, not as a nominee or agent, for investment purposes and not with a present view towards resale, except pursuant to sales exempted from registration under the 1933 Act, or registered under the 1933 Act. There can be no assurance that there will be any market for resale of the Shares, nor can there be any assurance that such securities will be freely transferable at any time in the foreseeable future.

c. Such Purchaser is an “accredited Purchaser” as that term is defined in Rule 501(a) of Regulation D under the 1933 Act, and has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Shares. Such Purchaser understands that his or its investment in the Shares involves a significant degree of risk. Such Purchaser 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.

3.4 Information . Such Purchaser has conducted its own due diligence examination of the Company’s business, financial condition, results of operations, and prospects. In connection with such investigation, such Purchaser and his or its representatives (i) have reviewed the Company’s regulatory and other filings made by the Company with AIM or posted on the Company’s website pursuant to the AIM Rules for Companies, governing admission to and the operation of AIM, as published by the London Stock Exchange plc, including, without limitation, the Company’s Admission Document, and (ii) have been given an opportunity to ask questions, to the extent such Purchaser considered necessary, and have received answers from, officers of the Company concerning the business, finances and operations of the Company and information relating to the offer and sale of the Shares. In evaluating the suitability of an investment in the Company, such Purchaser has not relied upon any representation or information (oral or written) other than as stated in this Agreement.

3.5 Restrictions on Transfer . Such Purchaser understands that the issuance of the Shares has not been and is not being registered under the 1933 Act or any applicable state securities laws. Such Purchaser may be required to hold the Shares indefinitely and the Shares may not be transferred unless (i) the Shares are sold pursuant to an effective registration statement under the 1933 Act, or (ii) the Purchaser shall have delivered to the Company an opinion of counsel to the effect that the Shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration, which opinion shall be reasonably acceptable to the Company. Such Purchaser understands that until such time as the resale of the Shares has been registered under the 1933 Act or otherwise may be sold pursuant to an exemption from registration, certificates evidencing the Shares may bear a restrictive legend in substantially the following form (and a stoptransfer order may be placed against transfer of the certificates evidencing such Shares):

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND HAVE BEEN ISSUED IN RELIANCE UPON EXEMPTIONS AFFORDED UNDER APPLICABLE LAWS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED, SOLD, HYPOTHECATED, TRANSFERRED OR OTHERWISE ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, OR AN APPLICABLE EXEMPTION (AS TO WHICH THE ISSUER SHALL BE REASONABLY SATISFIED, INCLUDING RECEIPT OF AN ACCEPTABLE LEGAL OPINION) FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS.”

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3.6 No General Solicitation . Such Purchaser is unaware of, is in no way relying on, and did not become aware of the offering of the Shares through or as a result of, any form of general solicitation or general advertising including, without limitation, any article, notice, advertisement or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, in connection with the offering and sale of the Shares and is not subscribing for the Shares and did not become aware of the offering of the Shares through or as a result of any seminar or meeting to which such Purchaser was invited by, or any solicitation of a subscription by, a person not previously known to such Purchaser in connection with investments in securities generally.

3.7 Commission . Such Purchaser has taken no action that would give rise to any claim by any person for brokerage commissions, finders’ fees or the like relating to this Agreement or the transactions contemplated hereby.

3.8 Additional Information . Within five (5) days after receipt of a request from the Company, such Purchaser will provide such information and deliver such documents as may reasonably be necessary to comply with any and all laws and ordinances to which the Company is subject.

3.9 OFAC Representation.

a. Such Purchaser represents that the amounts invested by it in the Shares were not and are not directly or indirectly derived from activities that contravene federal, state or international laws and regulations, including anti-money laundering laws and regulations. Federal regulations and Executive Orders administered by the Officer of Foreign Assets Control ( “ OFAC ” ) prohibit, among other things, the engagement in transactions with, and the provision of services to, certain foreign countries, territories, entities and individuals. The lists of OFAC prohibited countries, territories, persons and entities can be found on the OFAC website at < http://www.treas.gov/ofac >. In addition, the programs administered by OFAC (the “ OFAC Programs ” ) prohibit dealing with individuals or entities in certain countries regardless of whether such individuals or entities appear on the OFAC lists.

b. To the best of such Purchaser’s knowledge, none of: (1) such Purchaser; (2) any person controlling or controlled by such Purchaser; (3) if such Purchaser is a privately-held entity, any person having a beneficial interest in such Purchaser; or (4) any person for whom such Purchaser is acting as agent or nominee in connection with this investment is a country, territory, individual or entity named on an OFAC list, or a person or entity prohibited under the OFAC Programs. Such Purchaser agrees to promptly notify the Company should such Purchaser become aware of any change in the information set forth in these representations. Such Purchaser understands and acknowledges that, by law, the Company may be obligated to “freeze the account” of such Purchaser, either by prohibiting additional subscriptions from such Purchaser, declining any redemption requests and/or segregating the assets in the account in compliance with governmental regulations. Such Purchaser further acknowledges that the Company may, by written notice to such Purchaser, suspend the redemption rights, if any, of such Purchaser if the Company reasonably deems it necessary to do so to comply with anti-money laundering regulations applicable to the Company or any of the Company’s other service providers. These individuals include specially designated nationals, specially designated narcotics traffickers and other parties subject to OFAC sanctions and embargo programs.

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c. To the best of such Purchaser’s knowledge, none of: (1) such Purchaser; (2) any person controlling or controlled by such Purchaser; (3) if such Purchaser is a privately-held entity, any person having a beneficial interest in such Purchaser; or (4) any person for whom such Purchaser is acting as agent or nominee in connection with this investment is a senior official in the executive, legislative, administrative, military or judicial branches of a foreign government (whether elected or not), a senior official of a major foreign political party, or a senior executive of a foreign government-owned corporation, or any corporation, business or other entity that has been formed by, or for the benefit of, a senior foreign political figure, or any immediate family member or close associate of a senior foreign political figure. Such Purchaser is not affiliated with a non-U.S. banking institution (a “ Foreign Bank ” ), and does not receive deposits from, make payments on behalf of, or handle other financial transactions related to a Foreign Bank.

4. Representations and Warranties of the Company. The Company represents and warrants to such Purchaser that:

4.1 Organization, Good Standing and Qualification . Each of the Company and Medgenics Medical (Israel) Limited (the “ Subsidiary ” ) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to carry on its business as now conducted and to own its properties. Each of the Company and the Subsidiary is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property makes such qualification or leasing necessary unless the failure to so qualify has not had and could not reasonably be expected to have a material adverse effect on (i) the assets, liabilities, results of operations, condition (financial or otherwise), business, or prospects of the Company and the Subsidiary taken as a whole, or (ii) the ability of the Company to perform its obligations under this Agreement (a “ Material Adverse Effect ” ). The Company has no subsidiaries other than the Subsidiary.

4.2 Authorization . The Company has full power and authority and has taken all requisite action on the part of the Company, its officers, directors and stockholders necessary for (i) the authorization, execution and delivery of this Agreement, (ii) the authorization of the performance of all obligations of the Company hereunder, and (iii) the authorization, issuance (or reservation for issuance) and delivery of the Shares. This Agreement constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with their terms, subject to (i) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability, relating to or affecting creditors’ rights generally; (ii) equitable limitations on the availability of specific remedies; (iii) principles of equity (regardless of whether such enforcement is considered in a proceeding in law or in equity); and (iv) to the extent rights to indemnification and contribution may be limited by federal securities laws or the public policy underlying such laws.

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4.3 Valid Issuance . The Shares have been duly and validly authorized and, when issued pursuant to the terms of this Agreement, will be validly issued, fully paid and non-assessable, free and clear of all encumbrances and restrictions, except for restrictions on transfer set forth herein or imposed by applicable securities laws and except for those created by the applicable Purchaser.

4.4 Consents . The execution, delivery and performance by the Company of this Agreement and the offer, issuance and sale of the Shares require no consent of, action by or in respect of, or filing with, any person, governmental body, agency, or official other than filings that have been made pursuant to applicable state securities laws and post-sale filings pursuant to applicable state and federal securities laws which the Company undertakes to file within the applicable time periods.

4.5 Delivery of AIM Filings; Compliance with AIM Rules . The Company has made available to the Purchasers, true and complete copies of the Company’s most recent public filings required to be made by the Company pursuant to the AIM Rules. For so long as the Common Stock has been admitted to trading on the AIM Market operated by London Stock Exchange plc (“AIM”), the Company has complied in all material respects with all relevant laws and resolutions including (i) the Companies Act 1985 (as amended) and the Companies Act 2006, (ii) the AIM Rules, (iii) the Financial Services and Markets Act 2000, (iv) the Code of Market Conduct published by the Financial Services Authority, (v) the Criminal Justice Act 1993 and (vi) any other obligations imposed from time to time by the London Stock Exchange on companies whose securities have been admitted to trading on AIM.

5. Conditions to the Company’s Obligations. The obligation of the Company hereunder to issue and sell the Shares to each Purchasers at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions thereto, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion:

5.1 Delivery of Agreement . Such Purchaser shall have executed and delivered this Agreement to the Company.

5.2 Payment of Purchase Price . Such Purchaser shall have delivered the Purchase Price in accordance with Section 2.1 above.

5.3 Representations and Warranties . The representations and warranties of such Purchaser shall be true and correct in all material respects, and such Purchaser shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such Purchaser at or prior to the Closing Date.

5.4 Litigation . No litigation, statute, rule, regulation, executive order, decree, ruling or injunction (an “ Action ” ) shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

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6. Conditions to each Purchaser’s Obligations. The obligation of each Purchaser hereunder to purchase the Shares at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for such Purchaser’s sole benefit and may be waived by such Purchaser at any time in his or its sole discretion:

6.1 Delivery of Agreement; Issuance of Shares . The Company shall have executed and delivered this Agreement to such Purchaser, and shall deliver the Transfer Instructions to the transfer agent for the Company’s Common Stock to issue certificates in the name of such Purchaser representing the Shares being purchased by such Purchaser. The Company shall deliver a copy of the Transfer Instructions to such Purchaser at the Closing.

6.2 Representations and Warranties . The representations and warranties of the Company shall be true and correct in all material respects (provided, however, that such qualification shall only apply to representations or warranties not otherwise qualified by materiality) as of the date when made and as of the Closing Date as though made at such time (except for representations and warranties that speak as of a specific date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date.

6.3 Consents . Any consents or approvals required to be secured by the Company for the consummation of the transactions contemplated by this Agreement shall have been obtained and shall be reasonably satisfactory to such Purchaser.

6.4 Litigation . No Action shall have been enacted, entered, promulgated or endorsed by or in any court or govermnental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

7. Indemnification.

7.1 Indemnification by Purchasers . Each Purchaser, severally and not jointly, agrees to indemnify and hold harmless the Company and its officers, directors, employees, agents, control persons and affiliates from and against all losses, liabilities, claims, damages, costs, fees and expenses whatsoever (including, but not limited to, any and all expenses incurred in investigating, preparing or defending against any litigation commenced or threatened) based upon or arising out of any actual or alleged false acknowledgment, representation or warranty, or misrepresentation or omission to state a material fact, or breach by such Purchaser of any covenant or agreement made by such Purchaser herein or in any other document delivered in connection with this Agreement.

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7.2 Indemnification by the Company . The Company agrees to indemnify the Purchasers and their affiliates and hold the Purchasers and their affiliates harmless from and against any and all liabilities, losses, damages, costs and expenses of any kind (including, without limitation, the reasonable fees and disbursements of the Purchasers’ counsel in connection with any investigative, administrative or judicial proceeding), which may be incurred by the Purchasers or such affiliates as a result of any claims made against the Purchasers, or any of them, or such affiliates by any person that relate to or arise out of (i) any breach by the Company of any of its representations, warranties or covenants contained in this Agreement, or (ii) any litigation, investigation or proceeding instituted by any person with respect to this Agreement or the Shares (excluding, however, any such litigation, investigation or proceeding which arises solely from the acts or omissions of any Purchaser or its affiliates).

7.3 Notification . Any person entitled to indemnification by the Company hereunder will (i) give prompt notice to the Company of any claim with respect to which it seeks indemnification (but omission of such notice shall not relieve the Company from liability hereunder except to the extent it is actually prejudiced by such failure to give notice) and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest may exist between such indemnified party and the Company with respect to such claim, permit the Company to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is not assumed by the Company, the Company will not be subject to any liability for any settlement made without its consent (but such consent will not be unreasonably withheld). The Company will not consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of an unconditional release from all liability in respect to such claim or litigation. If the Company elects not to or is not entitled to assume the defense of a claim, it will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified with respect to such claim, unless an actual conflict of interest exists between such indemnified party and any other of such indemnified parties with respect to such claim, in which event the Company will be obligated to pay the reasonable fees and expenses of such additional counsel or counsels.

7.4 Survival . Any covenant or agreement in this Agreement required to be performed following the Closing Date, shall survive the Closing Date. Without limitation of the foregoing, the respective representations and warranties given by the parties hereto shall survive the Closing Date and the consummation of the transactions contemplated herein, but only for a period of the earlier of (i) twelve (12) months following the Closing Date and (ii) the applicable statute of limitations with respect to each representation and warranty, and thereafter shall expire and have no further force and effect (including with respect to the indemnification obligations contained herein).

8. Miscellaneous.

8.1 Successors and Assigns . This Agreement may not be assigned by a party hereto without the prior written consent of the Company or the Purchasers. The provisions of this Agreement shall inure to the benefit of and be binding upon the respective peimitted successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

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8.2 Counterparts; Faxes . This Agreement may be executed 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. This Agreement may also be executed via facsimile or electronic transmission (e.g. Pdf/email), which shall be deemed an original.

8.3 Titles and Subtitles . The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

8.4 Notices . Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given as hereinafter described (i) if given by personal delivery, then such notice shall be deemed given upon such delivery, (ii) if given by telecopier, then such notice shall be deemed given upon receipt of confirmation of complete transmittal, (iii) if given by mail, then such notice shall be deemed given upon the earlier of (A) receipt of such notice by the recipient or (B) three days after such notice is deposited in first class mail, postage prepaid, and (iv) if given by an internationally recognized overnight air courier, then such notice shall be deemed given one business day after delivery to such carrier. All notices shall be addressed to the party to be notified at the address as follows, or at such other address as such party may designate by ten days’ advance written notice to the other party:

If to the Company:

Medgenics, Inc.

8000 Towers Crescent Drive, Suite 1070

Vienna, VA 22182

Attention: Dr. Andrew Pearlman, CEO & President

Fax: (561) 828-6150

And to:

Medgenics, Inc.

Teradion Business Park

P.O. Box 14

Misgav 20179 Israel

Attention: Ms. Phyllis Bellin

Fax: +972-4-9990114

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With a copy (not constituting notice) to:

Barack Ferrazzano Kirschbaum & Nagelberg LLP

200 W. Madison Street, Suite 3900

Chicago, Illinois 60606

Attention: Gretchen Anne Trofa, Esq.

Fax No.: (312) 984-3150

If to the Purchasers:

To the addresses set forth on the signature page affixed hereto.

8.5 Expenses . The parties hereto shall pay their own costs and expenses in connection herewith. In the event that legal proceedings are commenced by any party to this Agreement against another party to this Agreement in connection with this Agreement, the party or parties which do not prevail in such proceedings shall pay the reasonable attorneys’ fees and other reasonable out-of-pocket costs and expenses incurred by the prevailing party in such proceedings.

8.6 Amendments and Waivers . Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the parties hereto.

8.7 Publicity . The Company shall be entitled to issue public releases or announcements concerning the transactions contemplated hereby, including, if required by the AIM Rules, identifying the Purchasers. The Purchasers agree not to make any public release or announcement concerning the transaction contemplated hereby without the prior consent of the Company (which consent shall not be unreasonably withheld or delayed), except as such release or announcement may be required by applicable law, rule or regulation of any governmental authority or the applicable rules or regulations of any securities exchange or securities market, in which case the Purchasers shall allow the Company to the extent reasonably practicable in the circumstances, reasonable time to comment on such release or announcement in advance of such issuance.

8.8 Severability . Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof but shall be interpreted as if it were written so as to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, the parties hereby waive any provision of law which renders any provision hereof prohibited or unenforceable in any respect.

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8.9 Entire Agreement . This Agreement constitutes the entire agreement among the parties hereof with respect to the subject matter hereof and thereof and supersedes all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter hereof and thereof.

8.10 Further Assurances . The parties shall execute and deliver all such further instruments and documents and take all such other actions as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained.

8.11 Governing Law; Waiver of Jury Trial . This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Delaware without regard to the choice of law principles thereof. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

8.12 No Strict Construction . The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

8.13 Rights Cumulative . Except as expressly set forth herein, each and all of the various rights, powers and remedies of the parties shall be considered cumulative with and in addition to any other rights, powers and remedies which such parties may have at law or in equity in the event of the breach of any of the terms of this Agreement. The exercise or partial exercise of any right, power or remedy shall neither constitute the exclusive election thereof nor the waiver of any other right, power or remedy available to such party.

[signature pages follow]

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IN WITNESS WHEREOF, the parties have executed this Agreement or caused their duly authorized officers to execute this Agreement as of the date first above written.

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:

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EXHIBIT 10.49

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (this “ Agreement ”) is made as of the 1 st day of May, 2010 by and among Medgenics, Inc. a Delaware corporation (the “ Company ”), and _____________________________________ (individually, a “ Purchaser ” and collectively, the “ Purchasers ”).

Recitals

A. The Company and the Purchasers are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by the provisions of Regulation D (“ Regulation D ”), as promulgated by the U.S. Securities and Exchange Commission (the “ SEC ”) under the Securities Act of 1933, as amended (the “ 1933 Act ”).

B. The Purchasers wish to purchase from the Company, and the Company wishes to sell and issue to the Purchasers, upon the terms and conditions stated in this Agreement, the number of unregistered shares (the “ Shares ”) of the Company’s Common Stock, par value $0.0001 per share (together with any securities into which such shares may be reclassified the “ Common Stock ”), set opposite such Purchaser’s name on the signature page hereto.

In consideration of the mutual promises made herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Purchase and Sale of Shares. On the terms and subject to the conditions hereinafter set forth, each of the Purchasers, severally and not jointly, agrees to purchase from the Company, and the Company agrees to sell to the Purchasers, the Shares at a purchase price per Share (the “ Purchase Price ”) at the Closing (as defined below) equal to $0.072359. The aggregate Purchase Price paid at Closing for the Shares purchased by each Purchaser shall be rounded up to the nearest whole cent.

2. Payment; Closing.

2.1 Payment . On the Closing Date each Purchaser shall pay the Purchase Price for the Shares to be issued and sold to him or it at the Closing. The Purchase Price shall be paid by wire transfer of immediately available funds in accordance with the Company’s written instructions. At the Closing, upon payment of the Purchase Price therefor by the applicable Purchaser, the Company will deliver irrevocable written instructions (“ Transfer Instructions ”) to the transfer agent for the Company’s Common Stock to issue certificates representing the Shares registered in the name of such Purchaser and to deliver such certificates to or at the direction of such Purchaser. The Company shall not have the power to revoke or amend the Transfer Instructions without the written consent of such Purchaser.

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2.2 Closing Date . Subject to the satisfaction (or written waiver) of the conditions set forth in Sections 5 and 6 below, the closing of the transactions contemplated by this Agreement shall be held on May 17, 2010, or such other time as may be mutually agreed upon by the parties to this Agreement (the “ Closing Date ”), at the offices of Barack Ferrazzano Kirschbaum & Nagelberg LLP, 200 W. Madison Street, Suite 3900, Chicago, Illinois 60606 or at such other location or by such other method (including exchange of signed documents) as may be mutually agreed upon by the parties to this Agreement (“ Closing ”).

3. Representations and Warranties of Purchasers. Each Purchaser, severally and not jointly, represents and warrants to the Company that:

3.3 Securities Matters . In connection with the Company’s compliance with applicable securities laws:

b. Such Purchaser has no agreement or arrangement, formal or informal, with any person to sell or transfer all or any part of the Shares, and such Purchaser has no plans to enter into any such agreement or arrangement. Such Purchaser is purchasing the Shares for its own account, not as a nominee or agent, for investment purposes and not with a present view towards resale, except pursuant to sales exempted from registration under the 1933 Act, or registered under the 1933 Act. T here can be no assurance that there will be any market for resale of the Shares, nor can there be any assurance that such securities will be freely transferable at any time in the foreseeable future.

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3.5 Restrictions on Transfer . Such Purchaser understands that the issuance of the Shares has not been and is not being registered under the 1933 Act or any applicable state securities laws. Such Purchaser may be required to hold the Shares indefinitely and the Shares may not be transferred unless (i) the Shares are sold pursuant to an effective registration statement under the 1933 Act, or (ii) the Purchaser shall have delivered to the Company an opinion of counsel to the effect that the Shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration, which opinion shall be reasonably acceptable to the Company. Such Purchaser understands that until such time as the resale of the Shares has been registered under the 1933 Act or otherwise may be sold pursuant to an exemption from registration, certificates evidencing the Shares may bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates evidencing such Shares):

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3.7 Commission . Such Purchaser has taken no action that would give rise to any claim by any person for brokerage commissions, finders' fees or the like relating to this Agreement or the transactions contemplated hereby.

3.9 OFAC Representation.

a. Such Purchaser represents that the amounts invested by it in the Shares were not and are not directly or indirectly derived from activities that contravene federal, state or international laws and regulations, including anti-money laundering laws and regulations. Federal regulations and Executive Orders administered by the Officer of Foreign Assets Control (“ OFAC ”) prohibit, among other things, the engagement in transactions with, and the provision of services to, certain foreign countries, territories, entities and individuals. The lists of OFAC prohibited countries, territories, persons and entities can be found on the OFAC website at <http://www.treas.gov/ofac>. In addition, the programs administered by OFAC (the “ OFAC Programs ”) prohibit dealing with individuals or entities in certain countries regardless of whether such individuals or entities appear on the OFAC lists.

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c. To the best of such Purchaser’s knowledge, none of: (1) such Purchaser; (2) any person controlling or controlled by such Purchaser; (3) if such Purchaser is a privately-held entity, any person having a beneficial interest in such Purchaser; or (4) any person for whom such Purchaser is acting as agent or nominee in connection with this investment is a senior official in the executive, legislative, administrative, military or judicial branches of a foreign government (whether elected or not), a senior official of a major foreign political party, or a senior executive of a foreign government-owned corporation, or any corporation, business or other entity that has been formed by, or for the benefit of, a senior foreign political figure, or any immediate family member or close associate of a senior foreign political figure. Such Purchaser is not affiliated with a non-U.S. banking institution (a “ Foreign Bank ”), and does not receive deposits from, make payments on behalf of, or handle other financial transactions related to a Foreign Bank.

4. Representations and Warranties of the Company. The Company represents and warrants to each Purchaser that:

4. 1 Organization, Good Standing and Qualification . Each of the Company and Medgenics Medical (Israel) Limited (the “ Subsidiary ”) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to carry on its business as now conducted and to own its properties. Each of the Company and the Subsidiary is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property makes such qualification or leasing necessary unless the failure to so qualify has not had and could not reasonably be expected to have a material adverse effect on (i) the assets, liabilities, results of operations, condition (financial or otherwise), business, or prospects of the Company and the Subsidiary taken as a whole, or (ii) the ability of the Company to perform its obligations under this Agreement (a “ Material Adverse Effect ”). The Company has no subsidiaries other than the Subsidiary.

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4.5 Delivery of AIM Filings; Compliance with AIM Rules . The Company has made available to the Purchasers, true and complete copies of the Company’s most recent public filings required to be made by the Company pursuant to the AIM Rules. For so long as the Common Stock has been admitted to trading on the AIM Market operated by London Stock Exchange plc (“ AIM ”), the Company has complied in all material respects with all relevant laws and resolutions including (i) the Companies Act 1985 (as amended) and the Companies Act 2006, (ii) the AIM Rules, (iii) the Financial Services and Markets Act 2000, (iv) the Code of Market Conduct published by the Financial Services Authority, (v) the Criminal Justice Act 1993 and (vi) any other obligations imposed from time to time by the London Stock Exchange on companies whose securities have been admitted to trading on AIM.

5.1 Delivery of Agreement . Such Purchaser shall have executed and delivered this Agreement to the Company.

5.2 Payment of Purchase Price . Such Purchaser shall have delivered the Purchase Price in accordance with Section 2.1 above.

5.3 Representations and Warranties . The representations and warranties of such Purchaser shall be true and correct in all material respects., and such Purchaser shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such Purchaser at or prior to the Closing Date.

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5.4 Litigation . No litigation, statute, rule, regulation, executive order, decree, ruling or injunction (an “ Action ”) shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

6.4 Litigation . No Action shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

7. Indemnification.

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8. Miscellaneous .

8.1 Successors and Assigns . This Agreement may not be assigned by a party hereto without the prior written consent of the Company or the Purchasers. The provisions of this Agreement shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

8.3 Titles and Subtitles . The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

If to the Company:

Medgenics, Inc.

8000 Towers Crescent Drive, Suite 1070

Vienna, VA 22182

Attention: Dr. Andrew Pearlman, CEO & President

Fax: (561) 828-6150

And to:

Medgenics, Inc.

Teradion Business Park

P.O. Box 14

Misgav 20179 Israel

Attention: Ms. Phyllis Bellin

Fax: +972-4-9990114

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With a copy (not constituting notice) to:

Barack Ferrazzano Kirschbaum & Nagelberg LLP

200 W. Madison Street, Suite 3900

Chicago, Illinois 60606

Attention: Gretchen Anne Trofa, Esq.

Fax No.: (312) 984-3150

If to the Purchasers:

To the addresses set forth on the signature page affixed hereto.

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[signature pages follow]

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IN WITNESS WHEREOF, the parties have executed this Agreement or caused their duly authorized officers to execute this Agreement as of the date first above written.

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:

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EXHIBIT 10.50

SECURITIES PURCHASE AGREEMENT

This SECURITIES PURCHASE AGREEMENT (the “ Agreement ”), dated as of September 15, 2010, is by and among Medgenics, Inc., a Delaware corporation with offices located at 8000 Towers Crescent Dr., Suite 1300, Vienna, VA 22182 (the ” Company ”), and the investors listed on the Schedule of Buyers attached hereto (individually, a “ Buyer ” and collectively, the “ Buyers ”).

RECITALS

A. The Company and each Buyer is executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “ 1933 Act ”), and Rule 506 of Regulation D (“ Regulation D ”) as promulgated by the United States Securities and Exchange Commission (the “ SEC ”) under the 1933 Act.

B. The Company has authorized the issuance of convertible notes in the aggregate amount of $4,000,000, in the form attached hereto as Exhibit A (the “ Notes ”), which Notes shall be convertible into shares of the Company’s common stock, $0.0001 par value per share (the “ Common Stock ”) (as converted, collectively, the “ Conversion Shares ”), in accordance with the terms of the Notes.

C. Each Buyer wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, (i) the aggregate original principal amount of the Notes set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers and (ii) a warrant to acquire up to that number of additional shares of Common Stock set forth opposite such Buyer’s name in column (4) on the Schedule of Buyers, in the form attached hereto as Exhibit B (the “ Warrants ”) (as exercised, collectively, the “ Warrant Shares ”).

D. The Notes, the Conversion Shares, the Warrants and the Warrant Shares are collectively referred to herein as the “ Securities .”

AGREEMENT

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and each Buyer hereby agree as follows:

1.	PURCHASE AND SALE OF NOTES AND WARRANTS.

(a) Notes and Warrants . Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below, the Company shall issue and sell to each Buyer, and each Buyer severally, but not jointly, shall purchase from the Company on the applicable Closing Date (as defined below), a Note in the original principal amount as is set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers along with Warrants to acquire up to that aggregate number of Warrant Shares as is set forth opposite such Buyer’s name in column (4) on the Schedule of Buyers.

(b) Closing . With respect to each Buyer, the closing (each a “ Closing ”) of such Buyer’s purchase of the Notes and the Warrants shall occur when the Company has received and accepted executed subscription materials, in the form provided by the Company, payment of the applicable Purchase Price from such Buyer, or such later date as is mutually agreed to by the Company and such Buyer. The Company agrees that the last Closing (the “ Final Closing ”) shall occur on or before September 20, 2010, unless such date is extended with the approval of the Board of Directors of the Company.

(c) Purchase Price . The aggregate purchase price for the Notes and the Warrants to be purchased by each Buyer (the “ Purchase Price ”) shall be the amount set forth opposite such Buyer’s name in column (5) on the Schedule of Buyers.

(e) Form of Payment . On the date that a Closing occurs (each a “ Closing Date ”), (i) the applicable Buyer shall pay its respective Purchase Price to the Company for the Note and the Warrants to be issued and sold to such Buyer at such Closing, by wire transfer of immediately available funds in accordance with the Company’s written wire instructions and (ii) the Company shall deliver to such Buyer (A) a Note (in such amount as is set forth opposite such Buyer’s name in column (3) of the Schedule of Buyers) and (B) a Warrant pursuant to which such Buyer shall have the right to acquire up to such number of Warrant Shares as is set forth opposite such Buyer’s name in column (4) of the Schedule of Buyers, in all cases, duly executed on behalf of the Company and registered in the name of such Buyer or its designee.

(f) Allocation to Warrant . The Company and each of the Buyers severally agree, as between the Company and each Buyer, that the fair market value of the right to buy one share of Common Stock under the terms as set forth in the Warrant is equal to $0.0001. The aggregate purchase price for the Warrants to be purchased by each Purchaser is set forth opposite each such Purchaser’s name on Exhibit A attached hereto.

(g) Warrants Not Issued as Compensation . The Company and each Buyer, having adverse interests and as a result of arm’s length bargaining, agree that (i) neither the Buyers nor any of their respective affiliates or associates have rendered or agreed to render any services to the Company in connection with this Agreement or the issuance of the Warrants and (ii) the Warrants are not being issued to the Buyers as compensation for services.

2.	BUYER’S REPRESENTATIONS AND WARRANTIES.

Each Buyer, severally and not jointly, represents and warrants to the Company with respect to only itself that:

(a) Organization; Authority . Such Buyer is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents to which it is a party and otherwise to carry out its obligations hereunder and thereunder. “ Transaction Documents ” means, collectively, this Agreement, the Notes, the Warrants and each of the other agreements and instruments (if any) entered into or delivered by any of the parties hereto in connection with the transactions contemplated hereby and thereby, as may be amended from time to time.

(b) No Public Sale or Distribution . Such Buyer (i) is acquiring its Note and Warrants, (ii) upon conversion of its Note will acquire the Conversion Shares issuable upon conversion thereof, and (iii) upon exercise of its Warrants will acquire the Warrant Shares issuable upon exercise thereof, in each case, for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof in violation of applicable securities laws. Such Buyer does not presently have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities in violation of applicable securities laws.

(c) Accredited Investor Status . Such Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D, 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.

(d) Reliance on Exemptions . Such Buyer understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and such Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of such Buyer to acquire the Securities.

(e) No General Solicitation . Such Buyer did not learn or become aware of the transactions contemplated by the Transaction Documents through any advertisement, press release, website or other general solicitation or general advertising.

(f) I nformation . Such Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by such Buyer. Such Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other due diligence investigations conducted by such Buyer or its advisors, if any, or its representatives shall modify, amend or affect such Buyer’s right to rely on the Company’s representations and warranties contained herein or any representations and warranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transaction contemplated hereby. Such Buyer understands that its investment in the Securities involves a high degree of risk. Such Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities.

(g) No Governmental Review . Such Buyer understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities or the terms of this Agreement or the other Transaction Documents.

(h) Transfer or Resale . Such Buyer understands that: (i) the Securities have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) such Buyer shall have delivered to the Company (if requested by the Company) an opinion of counsel to such Buyer, in a form reasonably acceptable to the Company, to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) such Buyer provides the Company with reasonable assurance that such Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act (or a successor rule thereto) (collectively, “ Rule 144 ”) which assurance may include the delivery of an opinion of counsel to such Buyer, in a form reasonably acceptable to the Company; (ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144, and further, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the Person (as defined below) through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC promulgated thereunder; and (iii) neither the Company nor any other Person is under any obligation to register the Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder.

(i) Validity; Enforcement . This Agreement has been duly and validly authorized, executed and delivered on behalf of such Buyer and constitutes the legal, valid and binding obligations of such Buyer enforceable against such Buyer in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.

(j) No Conflicts . The execution, delivery and performance by such Buyer of this Agreement and the consummation by such Buyer of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational documents of such Buyer or (ii) require the consent or approval of any Person, (iii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such Buyer is a party, or (iv) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to such Buyer, except in the case of clauses (iii) and (iv) above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Buyer to perform its obligations hereunder.

(k) No Additional Agreements . The Buyer does not have any agreement or understanding with the Company with respect to the transactions contemplated by the Transaction Documents other than as specified in the Transaction Documents.

(l) Certain Trading Activities . Such Buyer has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Buyer, engaged in any transactions in the securities of the Company (including, without limitation, any Short Sales (as defined below) involving the Company’s securities) during the period commencing as of the time that such Buyer was first contacted by the Company or representatives of the Company or agents for the Company regarding the specific investment in the Company contemplated by this Agreement and ending immediately prior to the execution of this Agreement by such Buyer. “ Short Sales ” means all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the 1934 Act (as defined below) (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock) .

3.	REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company makes no other representations and warranties to the Buyers except as expressly set forth in this Section 3 and the other Transaction Documents. The Company hereby makes the following representations and warranties to the Buyers. Such representations and warranties are modified in their entirety by the information set forth on the Disclosure Schedule delivered herewith (the “ Disclosure Schedule ”).

(a) Organization, Good Standing and Qualification . Each of the Company and its Subsidiaries (as defined below) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to carry on its business as now conducted and to own its properties. Each of the Company and its Subsidiaries is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property makes such qualification or leasing necessary unless the failure to so qualify has not had and could not reasonably be expected to have a Material Adverse Effect. The Company’s Subsidiaries are listed on Schedule 3(a) hereto. “ Material Adverse Effect ” means a material adverse effect on (i) the assets, liabilities, results of operations, condition (financial or otherwise), business, or prospects of the Company and its Subsidiaries taken as a whole, or (ii) the ability of the Company to perform its obligations under the Transaction Documents. “ Subsidiaries ” of any entity means another entity, an amount of the voting securities, other voting ownership or voting partnership interests of which is sufficient to elect at least a majority of its board of directors or other governing body (or, if there are no such voting interests, 50% or more of the equity interests of which) is owned directly or indirectly by such first entity.

(b) Authorization . The Company has full power and authority and has taken all requisite action on the part of the Company, its officers, directors and stockholders necessary for (i) the authorization, execution and delivery of the Transaction Documents, (ii) the authorization of the performance of all obligations of the Company hereunder or thereunder, and (iii) the authorization, issuance (or reservation for issuance) and delivery of the Securities . The Transaction Documents constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, subject to (i) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability, relating to or affecting creditors’ rights generally; (ii) equitable limitations on the availability of specific remedies; (iii) principles of equity (regardless of whether such enforcement is considered in a proceeding in law or in equity); and (iv) to the extent rights to indemnification and contribution may be limited by federal securities laws or the public policy underlying such laws.

(c) Capitalization . Schedule 3(c) sets forth as of the date hereof (a) the authorized capital stock of the Company; (b) the number of shares of capital stock issued and outstanding; (c) the number of shares of capital stock issuable pursuant to the Company’s stock plans; and (d) the number of shares of capital stock issuable and reserved for issuance pursuant to securities (other than the Notes and the Warrants) exercisable for, or convertible into or exchangeable for any shares of capital stock of the Company. All of the issued and outstanding shares of the Company’s capital stock have been duly authorized and validly issued and are fully paid, nonassessable and free of pre-emptive rights and were issued in full compliance with applicable state and federal securities law and any rights of third parties. All of the issued and outstanding shares of capital stock of each Subsidiary have been duly authorized and validly issued and are fully paid, nonassessable and free of pre-emptive rights, were issued in full compliance with applicable state and federal securities law and any rights of third parties and are owned by the Company, beneficially and of record, subject to no lien, encumbrance or other adverse claim. No Person is entitled to pre-emptive or similar statutory or contractual rights with respect to any securities of the Company. Except as described on Schedule 3(c) , there are no outstanding warrants, options, convertible securities or other rights, agreements or arrangements of any character under which the Company or any of its Subsidiaries is or may be obligated to issue any equity securities of any kind and, except as contemplated by this Agreement, neither the Company nor any of its Subsidiaries is currently in negotiations for the issuance of any equity securities of any kind. Except as described on Schedule 3(c) , there are no voting agreements, buy-sell agreements, option or right of first purchase agreements or other agreements of any kind among the Company and any of the securityholders of the Company relating to the securities of the Company held by them. Except as described on Schedule 3(c) , no Person has the right to require the Company to register any securities of the Company under the 1933 Act, whether on a demand basis or in connection with the registration of securities of the Company for its own account or for the account of any other Person. Except as described on Schedule 3(c) , the issuance and sale of the Securities hereunder will not obligate the Company to issue shares of Common Stock or other securities to any other Person (other than the Buyers) and will not result in the adjustment of the exercise, conversion, exchange or reset price of any outstanding security. Except as provided in Article XI of the Company’s Amended and Restated Certificate of Incorporation or as described on Schedule 3(c) , the Company does not have outstanding stockholder purchase rights or “poison pill” or any similar arrangement in effect giving any Person the right to purchase any equity interest in the Company upon the occurrence of certain events.

(d) Valid Issuance . The Notes have been duly and validly authorized and will be free and clear of all encumbrances and restrictions (other than those created by the Buyers), except for restrictions on transfer set forth in the Transaction Documents or imposed by applicable securities laws. The Warrants have been duly and validly authorized. Upon the conversion of the Notes and the due exercise of the Warrants, the Conversion Shares or the Warrant Shares, as the case may be, will be validly issued, fully paid and non-assessable, free and clear of all encumbrances and restrictions, except for restrictions on transfer set forth in the Transaction Documents or imposed by applicable securities laws and except for those created by the Buyers. The Company has reserved a sufficient number of shares of Common Stock for issuance upon the conversion of the Notes and the exercise of the Warrants.

(e) Consents . The execution, delivery and performance by the Company of the Transaction Documents and the offer, issuance and sale of the Securities require no consent of, action by or in respect of, or filing with, any Person, governmental body, agency, or official other than filings that have been made pursuant to applicable state securities laws and post-sale filings pursuant to applicable state and federal securities laws which the Company undertakes to file within the applicable time periods.

(f) Delivery of AIM Filings; Compliance with AIM Rules . The Company has made available to the Buyers, through its website or otherwise, true and complete copies of the Company’s most recent public filings required to be made by the Company pursuant to the AIM Rules for Companies, governing admission to and the operation of AIM, as published by the London Stock Exchange plc (the “ AIM Rules ”) (the “ AIM Filings ”). For so long as the Common Stock has been admitted to trading on the AIM Market operated by London Stock Exchange plc (“ AIM ”), the Company has complied in all material respects with all relevant laws and resolutions including (i) the Companies Act 1985 (as amended) and the Companies Act 2006, (ii) the AIM Rules, (iii) the Financial Services and Markets Act 2000, (iv) the Code of Market Conduct published by the Financial Services Authority, (v) the Criminal Justice Act 1993 and (vi) any other obligations imposed from time to time by the London Stock Exchange on companies whose securities have been admitted to trading on AIM.

(g) Use of Proceeds . The Company shall use the proceeds from the sale of the Securities to conduct its clinical trials, develop aspects of its proprietary technology, pursue partnering and other strategic agreements and for general working capital purposes (including the payment of salaries and accounts payable).

(h) No Material Adverse Change . Since December 31, 2009 except as identified and described in the AIM Filings or the press releases released by the Company through a regulatory information service approved by London Stock Exchange plc for the distribution to the public of announcements by companies admitted to AIM (the “ Press Releases ”) or as described on Schedule 3(h) , there has not been:

(i) any change in the consolidated assets, liabilities, financial condition or operating results of the Company from that reflected in the financial statements for the fiscal year ended December 31, 2009, except for changes in the ordinary course of business which have not had and could not reasonably be expected to have a Material Adverse Effect, individually or in the aggregate;

(iii) any material damage, destruction or loss, whether or not covered by insurance to any assets or properties of the Company or its Subsidiaries;

(iv) any waiver, not in the ordinary course of business, by the Company or any Subsidiary of a material right or of a material debt owed to it;

(vi) any change or amendment to the Company's Amended and Restated Certificate of Incorporation or Amended and Restated Bylaws, or any material change to any material contract or arrangement by which the Company or any Subsidiary is bound or to which any of their respective assets or properties is subject;

(vii) any material labor difficulties or labor union organizing activities with respect to employees of the Company or any Subsidiary;

(viii) any material transaction entered into by the Company or a Subsidiary other than in the ordinary course of business, other than the transactions contemplated by the Transaction Documents;

(ix) the loss of the services of any key employee, or material change in the composition or duties of the senior management of the Company or any Subsidiary; or

(x) any other event or condition of any character that has had or could reasonably be expected to have a Material Adverse Effect.

(i) No Conflict, Breach, Violation or Default . The execution, delivery and performance of the Transaction Documents by the Company and the issuance and sale of the Securities will not conflict with or result in a breach or violation of any of the terms and provisions of, or constitute a default under (i) the Company’s Amended and Restated Certificate of Incorporation or the Company’s Amended and Restated Bylaws, both as in effect on the date hereof (copies of which have been made available to the Buyers through the Company’s website), or (ii)(a) any statute, rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Company, any Subsidiary or any of their respective assets or properties, or (b) any agreement or instrument to which the Company or any Subsidiary is a party or by which the Company or a Subsidiary is bound or to which any of their respective assets or properties is subject, except with respect to clause (ii) for any violations or breaches as would not, individually or in the aggregate, have a Material Adverse Effect.

(j) Tax Matters . Except as set forth on Schedule 3(j) , the Company and each Subsidiary has timely prepared and filed all tax returns required to have been filed by the Company or such Subsidiary with all appropriate governmental agencies and timely paid all taxes shown thereon or otherwise owed by it. The charges, accruals and reserves on the books of the Company in respect of taxes for all fiscal periods are adequate in all material respects, and there are no material unpaid assessments against the Company or any Subsidiary nor, to the actual knowledge of the executive officers (as defined in Rule 405 under the 1933 Act) of the Company after due inquiry (the “ Company’s Knowledge ”), any basis for the assessment of any additional taxes, penalties or interest for any fiscal period or audits by any federal, state or local taxing authority except for any assessment which is not material to the Company and its Subsidiaries, taken as a whole. All taxes and other assessments and levies that the Company or any Subsidiary is required to withhold or to collect for payment have been duly withheld and collected and paid to the proper governmental entity or third party when due. There are no tax liens or claims pending or, to the Company’s Knowledge, threatened against the Company or any Subsidiary or any of their respective assets or property. There are no outstanding tax sharing agreements or other such arrangements between the Company and any Subsidiary or other corporation or entity.

(k) Title to Properties . Except as disclosed in the AIM Filings or the Press Releases, the Company and each Subsidiary has good and marketable title to all real properties and all other properties and assets owned by it, in each case free from liens, encumbrances and defects that would materially affect the value thereof or materially interfere with the use made or currently planned to be made thereof by them; and except as disclosed in the AIM Filings or the Press Releases, the Company and each Subsidiary holds any leased real or personal property under valid and enforceable leases with no exceptions that would materially interfere with the use made or currently planned to be made thereof by them.

(l) Certificates, Authorities and Permits . The Company and each Subsidiary possess adequate certificates, authorities or permits issued by appropriate governmental agencies or bodies necessary to conduct the business now operated by it, and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit that, if determined adversely to the Company or such Subsidiary, could reasonably be expected to have a Material Adverse Effect, individually or in the aggregate.

(m) Labor Matters . The Company is not a party to or bound by any collective bargaining agreements or other agreements with labor organizations. There are no labor disputes existing, or to the Company's Knowledge, threatened, involving strikes, slow-downs, work stoppages, job actions, disputes, lockouts or any other disruptions of or by the Company's employees. The Company is, and at all times has been, in compliance with all applicable laws respecting employment (including laws relating to classification of employees and independent contractors) and employment practices, terms and conditions of employment, wages and hours, and immigration and naturalization, except for violations that would not, individually or in the aggregate, result in a Material Adverse Effect. Except as described on Schedule 3(m) and except for severance obligations imposed by applicable law, the Company is not a party to, or bound by, any employment or other contract or agreement that contains any severance, termination pay or change of control liability or obligation, including, without limitation, any “excess parachute payment,” as defined in Section 280G(b) of the Internal Revenue Code.

(n) Intellectual Property .

(i) All Intellectual Property owned (and not licensed) by the Company or its Subsidiary (the “ Owned IP ”) is currently in compliance with all material respects with all applicable laws, rules, regulations, orders and decrees of all governmental authorities. Except as set forth on Schedule 3(n)(i) , to the Company’s Knowledge, no Owned IP of the Company or its Subsidiary is now involved in any cancellation, dispute or litigation, and, to the Company’s Knowledge, no such notice of such action has been received. No patent owned by the Company or its Subsidiary has been or is now involved in any interference, reissue, re-examination or opposition proceeding. For purposes of this Section 3(n), “ Intellectual Property ” shall mean means all of the following: (i) patents, patent applications, patent disclosures and inventions (whether or not patentable and whether or not reduced to practice); (ii) trademarks, service marks, trade dress, trade names, corporate names, logos, slogans and Internet domain names, together with all goodwill associated with each of the foregoing; (iii) copyrights and copyrightable works; (iv) registrations, applications and renewals for any of the foregoing; and (v) proprietary computer software (including but not limited to data, data bases and documentation).

(ii) Intellectual Property in-licensed by the Company or its Subsidiary shall be referred to as " Non-Owned IP " and is listed in Schedule 3(n)(ii) . The Company has entered into an exclusive license agreement with respect to certain Intellectual Property with Yissum Research Development Company of the Hebrew University of Jerusalem (“ Yissum ”), dated November 23, 2005 (the " Yissum License Agreement "). The Yissum License Agreement (together with any amendments thereto) is valid and has binding obligations on the Company or its Subsidiary that are parties thereto, and, to the Company's Knowledge, is also binding on the other parties thereto, and is enforceable against the Company in accordance with its terms and, to the Company’s Knowledge, the other parties thereto, except to the extent that enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors' rights generally, and there exists no event or condition which will result in a violation or breach of or constitute (with or without due notice or lapse of time or both) a default by the Company or its Subsidiary and to the Company’s Knowledge by Yissum, under the Yissum License Agreement. In the future, the Company may license additional Non-Owned IP which the Company might need in order to conduct its business as currently contemplated, as set forth in Schedule 3(n)(ii) . As of the date of this Agreement, except as set forth in Schedule 3(n)(ii) , the Company and Subsidiary are not obligated based on any written agreement, nor to the Company's Knowledge is it or any Subsidiary obligated based on any oral agreement, to make any payments by way of royalties or fees to any (i) owner or (ii) licensee of, or (iii) other claimant to, any Intellectual Property, in connection with the conduct of its business as now conducted.

(iii) Except as set forth in Schedule 3(n)(iii) , the Company and its Subsidiary own or have the valid right to use, free and clear of all liens, claims and restrictions, all of the Intellectual Property that is necessary for the conduct of the Company’s and its Subsidiary’s respective businesses as currently conducted or to the Company’s Knowledge as currently proposed to be conducted. To the Company’s Knowledge, the Company and its Subsidiary have a valid and enforceable right to use all Non-Owned IP and Confidential Information used or in the respective businesses of the Company and its Subsidiary.

(iv) The consummation of the transactions contemplated hereby and by the other Transaction Documents will not result in the alteration, loss, impairment of or restriction on the Company’s or its Subsidiary’s ownership or right to use any of the Owned IP or Confidential Information which is necessary for the conduct of Company’s and of its Subsidiary’s respective businesses as currently conducted or to the Company’s Knowledge as currently proposed to be conducted or result in a default under the Yissum License Agreement or any other license agreement.

(v) The Company and the Subsidiary have taken security measures necessary to protect the secrecy, confidentiality and value of all the Intellectual Property, which measures are reasonable and customary in the industry in which the Company or the Subsidiary operates. Each of the Company's employees and consultants have entered into written agreements with the Company assigning to the Company or Subsidiary, as applicable, all rights in Intellectual Property developed in the course of their service with the Company. Except under confidentiality obligations, there has been no material disclosure of any of the Company’s or its Subsidiary’s Confidential Information to any third party.

(vi) The Company has not received any communications alleging that the Company or the Subsidiary has violated or by conducting its business as proposed, would violate, any of the patents, trademarks, service marks, trade names, copyrights or trade secrets or other proprietary rights of any other person or entity.

(o) Environmental Matters . Neither the Company nor any Subsidiary (i) is in violation of any statute, rule, regulation, decision or order of any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, “ Environmental Laws ”), (ii) owns or, to the Company’s Knowledge, operates any real property contaminated with any substance that is subject to any Environmental Laws, (iii) is liable for any off-site disposal or contamination pursuant to any Environmental Laws, or (iv) is subject to any claim relating to any Environmental Laws, which violation, contamination, liability or claim has had or could reasonably be expected to have a Material Adverse Effect, individually or in the aggregate; and there is no pending or, to the Company’s Knowledge, threatened investigation that might lead to such a claim.

(p) Litigation . Except as described on Schedule 3(p) , there are no pending actions, suits or proceedings against the Company, its Subsidiaries or any of its or their properties; and, to the Company’s Knowledge, no such actions, suits or proceedings are threatened or contemplated. Neither the Company nor any Subsidiary, nor any director or officer thereof, is or since January 1, 2007 has been the subject of any action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the Company’s Knowledge, there is not pending or contemplated, any investigation by the SEC involving the Company or any director or officer of the Company.

(q) Financial Statements . The audited, consolidated US dollar denominated financial statements as of and for the year ended December 31, 2009 (the “ Financial Statements ”) are true and correct in all material respects, are in accordance with the books and records of the Company and fairly and accurately present, in all material respects, the consolidated financial position of the Company as of the dates shown and its consolidated results of operations and cash flows for the periods shown, and such financial statements have been prepared in conformity with United States generally accepted accounting principles applied on a consistent basis (except as may be disclosed therein or in the notes thereto or otherwise disclosed on Schedule 3(q) ). The Company and its Subsidiary effectively ceased operations on or about August 1, 2004 and restarted its operations on or about March 31, 2006.

(r) Insurance Coverage . The Company and each Subsidiary maintains in full force and effect insurance coverage that is customary for comparably situated companies for the business being conducted and properties owned or leased by the Company and each Subsidiary, there is no claim pending under any of such policies. The Company and its Subsidiaries are current in all premiums or other payments due under each insurance policy and have otherwise performed in all material respects all of its respective obligations thereunder.

(s) Brokers and Finders . No Person will have, as a result of the transactions contemplated by the Transaction Documents, any valid right, interest or claim against or upon the Company, any Subsidiary or an Buyer for any commission, fee or other compensation pursuant to any agreement, arrangement or understanding entered into by or on behalf of the Company, other than as described in Schedule 3(s) .

(t) No Directed Selling Efforts or General Solicitation . Neither the Company nor any Person acting on its behalf has conducted any general solicitation or general advertising (as those terms are used in Regulation D) in connection with the offer or sale of any of the Securities.

(u) No Integrated Offering . Neither the Company nor any Person acting on its behalf has, directly or indirectly, made any offers or sales of any Company security or solicited any offers to buy any security, under circumstances that would adversely affect reliance by the Company on Section 4(2) for the exemption from registration for the transactions contemplated hereby or would require registration of the Securities under the 1933 Act.

(v) Private Placement . Assuming the Buyers’ representations contained herein are true, correct and complete, the offer and sale of the Securities by the Company to the Buyers as contemplated hereby is exempt from the registration requirements of the 1933 Act.

(w) Questionable Payments . Neither the Company nor any of its Subsidiaries nor, to the Company’s Knowledge, any of their respective current or former directors, officers, employees, agents or other Persons acting on behalf of the Company or any Subsidiary, has on behalf of the Company or any Subsidiary or in connection with their respective businesses: (a) used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity; (b) made any direct or indirect unlawful payments to any governmental officials or employees from corporate funds; (c) established or maintained any unlawful or unrecorded fund of corporate monies or other assets; (d) made any false or fictitious entries on the books and records of the Company or any Subsidiary; or (e) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment of any nature.

(x) Transactions with Affiliates . Except as disclosed in the AIM Filings, the Press Releases or as disclosed on Schedule 3(x) , none of the officers or directors of the Company and, to the Company’s Knowledge, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than as holders of stock options and/or warrants, and for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the Company’s Knowledge, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.

(y) Disclosures . Neither the Company nor any Person acting on its behalf has provided the Buyers or their agents or counsel with any information that constitutes or might constitute material, non-public information, other than the terms of the transactions contemplated hereby. The written materials delivered to the Buyers in connection with the transactions contemplated by the Transaction Documents do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading.

4.	COVENANTS.

(a) Best Efforts . Each Buyer shall use its best efforts to timely satisfy each of the conditions to be satisfied by it as provided in Section 6 of this Agreement. The Company shall use its best efforts to timely satisfy each of the conditions to be satisfied by it as provided in Section 7 of this Agreement.

(b) Form D and Blue Sky . The Company agrees to file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof to each applicable Buyer promptly after such filing. The Company shall, on or before the applicable Closing Date, take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to, qualify the Securities for sale to the Buyers at such Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the applicable Buyer on or prior to such Closing Date. The Company shall make all filings and reports relating to the offer and sale of the Securities required under applicable securities or “Blue Sky” laws of the states of the United States following each Closing Date.

(c) Reporting Status . Until the earlier to occur of (i) the date on which the Buyers shall have sold all of the Conversion Shares and Warrant Shares (the “ Reporting Period End Date ”, and such period commencing on the first Closing Date and ending on the Reporting Period End Date, the “ Reporting Period ”) and (ii) the U.S. Public Company Date (as defined in the Notes), the Company shall timely file all reports and financial information required to be filed pursuant to the AIM Rules and the Company shall not cease to file such reports at such time that the AIM Rules would no longer require or otherwise permit such termination. During the Reporting Period occurring after the U.S. Public Company Date, the Company shall timely file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would no longer require or otherwise permit such termination.

(d) Listing . The Company shall promptly secure the admission, listing or designation for quotation (as the case may be) of all of the Conversion Shares and the Warrant Shares upon AIM or, after the U.S. Public Company Date, such national securities exchange and automated quotation system, if any, upon which the Common Stock is then listed or designated for quotation (as the case may be) (subject to official notice of issuance). The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 4(d).

(e) Fees . The Company shall reimburse each Buyer who purchases a Note having an original principal amount of at least $250,000 for all reasonable out-of-pocket costs and expenses incurred by it or its affiliates in connection with the transactions contemplated by the Transaction Documents (including, without limitation, all legal fees and disbursements in connection therewith, documentation and implementation of the transactions contemplated by the Transaction Documents and due diligence and regulatory filings in connection therewith) in an amount not to exceed $15,000. The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or broker’s commissions (other than for Persons engaged by any Buyer) relating to or arising out of the transactions contemplated hereby. The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, reasonable attorneys’ fees and out-of-pocket expenses) arising in connection with any claim relating to any such payment. Except as otherwise set forth in the Transaction Documents, each party to this Agreement shall bear its own expenses in connection with the sale of the Securities to the Buyers.

(f) Pledge of Securities . Subject to Section 2(h) , the Company acknowledges and agrees that the Securities may be pledged by a Buyer in connection with a bona fide margin agreement or other loan or financing arrangement that is secured by the Securities. The pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and no Buyer affecting a pledge of Securities shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document. The Company hereby agrees to execute and deliver such documentation as a pledgee of the Securities may reasonably request in connection with a pledge of the Securities to such pledgee by a Buyer.

(g) Press Releases . The Company shall be entitled to issue public releases or announcements concerning the transactions contemplated hereby, including, if required by the AIM Rules, identifying the Buyers. No Buyer shall make any public release or announcement concerning the transaction contemplated hereby without the prior consent of the Company (which consent shall not be unreasonably withheld or delayed), except as such release or announcement may be required by applicable law, rule or regulation of any governmental authority or the applicable rules or regulations of any securities exchange or securities market, in which case the such Buyer shall allow the Company to the extent reasonably practicable in the circumstances, reasonable time to comment on such release or announcement in advance of such issuance.

(h) Reservation of Shares . So long as any Notes or Warrants remain outstanding, the Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, no less than 133% of the sum of (i) the maximum number of shares of Common Stock issuable upon conversion of all the Notes and (ii) the maximum number of shares of Common Stock issuable upon exercise of all the Warrants.

(i) Conduct of Business . So long as any Notes or Warrants remain outstanding, the business of the Company and its Subsidiaries shall not be conducted in violation of any law, ordinance or regulation of any governmental entity, except where such violations would not result, either individually or in the aggregate, in a Material Adverse Effect.

(j) Restriction on Redemption and Cash Dividends . So long as any Notes are outstanding, the Company shall not, directly or indirectly, redeem, or declare or pay any cash dividend or distribution on, any securities of the Company without the prior express written consent of the Required Buyers.

(k) Corporate Existence . So long as any Notes or Warrants are outstanding, the Company shall not be party to any Fundamental Transaction (as defined in the Notes) unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the Notes and the Warrants.

(l) Lock Up .

(i) Each Buyer hereby severally, and not jointly, agrees, that, without the prior written consent of the Company, it will not (and will cause any spouse or immediate family member of the spouse or such Buyer living in such Buyer’s household, any partnership, corporation or other entity within such Buyer’s control, and any trustee of any trust that holds Common Stock or other securities of the Company for the benefit of such Buyer or such spouse or family member not to), during the period commencing on the date a registration statement filed by the Company in connection with a Qualified Public Offering (as defined in the Notes) is declared effective by the Securities and Exchange Commission and ending on the date that is six (6) months after the date of the consummation of the Qualified Public Offering, (1) offer, sell, contract to sell (including any short sale), pledge, hypothecate, establish an open “put equivalent position” within the meaning of Rule 16a-1(h) under the 1934 Act, grant any option, right or warrant for the sale of, purchase any option or contract to sell, sell any option or contract to purchase, or otherwise encumber, dispose of or transfer, or grant any rights with respect to, directly or indirectly, any shares of Common Stock issued upon conversion of the Notes or issued or issuable upon the exercise of the Warrants, or (2) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of shares of Common Stock. Notwithstanding the foregoing, such Buyer shall not be restricted from distributing any of the Company’s securities to such Buyer’s equity holders provided that prior to and as a condition to the effectiveness of any such distribution such equity holders execute a lock-up agreement substantially in the form hereof in favor of the Company.

(ii) Notwithstanding the provisions of Section 4(l)(i) above, such Buyer may transfer Common Stock (i) as a bona fide gift or gifts, provided that prior to such transfer the donee or donees thereof agree in writing to be bound by the restrictions set forth herein, (ii) to any trust, partnership, corporation or other entity formed for the direct or indirect benefit of the undersigned or the immediate family of the undersigned, provided that prior to such transfer a duly authorized officer, representative or trustee of such transferee agrees in writing to be bound by the restrictions set forth herein; and provided further that any such transfer shall not involve a disposition for value, or (iii) if such transfer occurs by operation of law, such as rules of descent and distribution, statutes governing the effects of a merger or a qualified domestic order; provided that prior to such transfer the transferee executes an agreement stating that the transferee is receiving and holding the shares subject to the provisions of this Agreement. For purposes hereof, “immediate family” shall mean any relationship by blood, marriage or adoption, not more remote than first cousin.

(iii) The Company and its transfer agent and registrar are hereby authorized to (a) decline to make any transfer of shares of Common Stock if such transfer would constitute a violation or breach of this Section 4(l) and (b) place legends and stop transfer instructions on any such shares of Common Stock owned or beneficially owned by such Buyer.

(m) Registration Rights . As of the Closing, the Company and the Buyers shall enter into a registration rights agreement in the form attached hereto as Exhibit C

5.	REGISTER; LEGEND.

(a) Register . The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice to each holder of Securities), a register for the Notes and the Warrants in which the Company shall record the name and address of the Person in whose name the Notes and the Warrants have been issued (including the name and address of each transferee), the principal amount of the Notes held by such Person, the number of Conversion Shares issuable upon conversion of the Notes and the number of Warrant Shares issuable upon exercise of the Warrants held by such Person.

(b) Legends . Each Buyer understands that the Securities have been issued (or will be issued in the case of the Conversion Shares and the Warrant Shares) pursuant to an exemption from registration or qualification under the 1933 Act and applicable state securities laws, and except as set forth below, the Securities shall bear any legend as required by the “blue sky” laws of any state and a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):

[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE] [EXERCISABLE] HAVE BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

(c) Removal of Legends . Certificates evidencing Securities shall not be required to contain the legend set forth in Section 5 (b) above or any other legend (i) while a registration statement covering the resale of such Securities is effective under the 1933 Act, (ii) following any sale of such Securities pursuant to Rule 144 (assuming the transferor is not an affiliate of the Company), (iii) if such Securities are eligible to be sold, assigned or transferred under Rule 144 (provided that a Buyer provides the Company with reasonable assurances that such Securities are eligible for sale, assignment or transfer under Rule 144 which may include an opinion of counsel if necessary in the reasonable opinion of counsel to the Company and shall provide a representation letter in the form required by the Company’s transfer agent), (iv) in connection with a sale, assignment or other transfer (other than under Rule 144), provided that such Buyer provides the Company with an opinion of counsel to such Buyer, in a generally acceptable form, to the effect that such sale, assignment or transfer of the Securities may be made without registration under the applicable requirements of the 1933 Act or (v) if such legend is not required under applicable requirements of the 1933 Act (including, without limitation, controlling judicial interpretations and pronouncements issued by the SEC). If a legend is not required pursuant to the foregoing, the Company shall promptly following the delivery by a Buyer to the Company or the transfer agent (with written notice to the Company) of a legended certificate representing such Securities (endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to effect the reissuance and/or transfer, if applicable), together with any other deliveries from such Buyer as may be required above in this Section 5 (c) , as directed by such Buyer, either: (A) provided that the Company’s transfer agent is participating in the Depository Trust Company (“ DTC ”) Fast Automated Securities Transfer Program and such Securities are Conversion Shares or Warrant Shares and are eligible to participate in the DTC Fast Automated Securities Transfer Program, credit the aggregate number of shares of Common Stock to which such Buyer shall be entitled to such Buyer’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system or (B) if the Company’s transfer agent is not participating in the DTC Fast Automated Securities Transfer Program or the securities are not eligible to participate in the DTC Fast Automated Securities Transfer Program, issue and deliver (via reputable overnight courier) to such Buyer, a certificate representing such Securities that is free from all restrictive and other legends, registered in the name of such Buyer or its designee.

6.	CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.

(a) The obligation of the Company hereunder to issue and sell the Notes and the related Warrants to each Buyer at the applicable Closing is subject to the satisfaction, at or before such Closing Date, of each of the following conditions, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing the applicable Buyer with prior written notice thereof:

(i) Such Buyer shall have executed each of the other Transaction Documents to which it is a party and delivered the same to the Company.

(ii) Such Buyer and each other Buyer shall have delivered to the Company the Purchase Price for the Note and the related Warrants being purchased by such Buyer at the Closing by wire transfer of immediately available funds pursuant to the wire instructions provided by the Company.

(iii) Each and every representation and warranty of such Buyer shall be true and correct in all material respects as of the date when made and as of the Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct in all material respects as of such date), and such Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such Buyer at or prior to the Closing Date.

(iv) No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents.

7.	CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.

(a) The obligation of each Buyer hereunder to purchase its Note and its related Warrants at the Closing is subject to the satisfaction, at or before the applicable Closing Date, of each of the following conditions, provided that these conditions are for each Buyer’s sole benefit and may be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:

(i) The Company shall have duly executed and delivered to such Buyer each of the Transaction Documents to which it is a party and the Company shall have duly executed and delivered to such Buyer a Note (in such original principal amount as is set forth across from such Buyer’s name in column (3) of the Schedule of Buyers) and the related Warrants (for such aggregate number of Warrant Shares as is set forth across from such Buyer’s name in column (4) of the Schedule of Buyers) being purchased by such Buyer at the Closing pursuant to this Agreement.

(ii) Each and every representation and warranty of the Company shall be true and correct in all material respects as of the date when made and as of the Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct in all material respects as of such date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required to be performed, satisfied or complied with by the Company at or prior to the Closing Date.

(iii) Trading in the Common Stock shall not have been suspended on AIM by the London Stock Exchange and admission of the shares of Common Stock to trading on AIM shall not have been withdrawn, and, at any time in the 30 days prior to the Closing Date, trading in securities generally as reported on AIM shall not have been suspended by the London Stock Exchange, nor shall a banking moratorium have been declared either by the United Kingdom, nor shall there have occurred any material outbreak or escalation of hostilities which, in each case, in the reasonable judgment of such Buyer, makes it impracticable or inadvisable to purchase the Notes and the Warrants.

(iv) The Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale of the Securities, including without limitation, those required by AIM, if any.

(v) No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents.

(vi) If requested by such Buyer in writing prior to such Closing Date, the Company shall have delivered to such Buyer a certificate evidencing the formation and good standing of the Company in Delaware issued by the Delaware Secretary of State as of a date within ten (10) days of the Closing Date.

(vii) If requested by such Buyer in writing prior to such Closing Date, the Company shall have delivered to such Buyer a certificate evidencing the Company’s qualification as a foreign corporation and good standing issued by the Secretary of State (or comparable office) of each jurisdiction in which the Company conducts business and is required to so qualify, as of a date within ten (10) days of such Closing Date.

(viii) If requested by such Buyer in writing prior to such Closing Date, the Company shall have delivered to such Buyer a certified copy of the Amended and Restated Articles of Incorporation as certified by the Delaware Secretary of State within ten (10) days of such Closing Date.

(ix) If requested by such Buyer in writing prior to such Closing Date, the Company shall have delivered to such Buyer a certificate, in the form reasonably acceptable to such Buyer, executed by the Secretary of the Company and dated as of the Closing Date, as to (i) the resolutions approving the execution and delivery of the Transaction Documents, the sale and issuance of the Securities in accordance with the Transaction Documents and the transactions contemplated by the Transaction Documents, as adopted by the Company’s board of directors, (ii) the Amended and Restated Articles of Incorporation of the Company and (iii) the Amended and Restated Bylaws of the Company, each as in effect at the Closing.

8.	TERMINATION.

This Agreement may be terminated by the Company at any time prior to the first Closing Date. After the first Closing Date, this Agreement may be terminated only with the mutual consent of the Company and any Buyer for whom a Closing has occurred; provided, however, that no such termination shall affect any obligation of the Company under this Agreement to reimburse such Buyer for the expenses described in Section 4(e) above. Nothing contained in this Section 8 shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement or the other Transaction Documents or to impair the right of any party to compel specific performance by any other party of its obligations under this Agreement or the other Transaction Documents.

9.	MISCELLANEOUS.

(a) Governing Law; Jurisdiction; Jury Trial . All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

(b) 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.

(c) Headings; Gender . The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision in which they are found.

(d) Severability . If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s). Notwithstanding anything to the contrary contained in this Agreement or any other Transaction Document (and without implication that the following is required or applicable), it is the intention of the parties that in no event shall amounts and value paid by the Company and/or its Subsidiaries (as the case may be), or payable to or received by any of the Buyers, under the Transaction Documents (including without limitation, any amounts that would be characterized as “interest” under applicable law) exceed amounts permitted under any applicable law. Accordingly, if any obligation to pay, payment made to any Buyer, or collection by any Buyer pursuant the Transaction Documents is finally judicially determined to be contrary to any such applicable law, such obligation to pay, payment or collection shall be deemed to have been made by mutual mistake of such Buyer and the Company and such amount shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by the applicable law. Such adjustment shall be effected, to the extent necessary, by reducing or refunding, at the option of such Buyer, the amount of interest or any other amounts which would constitute unlawful amounts required to be paid or actually paid to such Buyer under the Transaction Documents. For greater certainty, to the extent that any interest, charges, fees, expenses or other amounts required to be paid to or received by such Buyer under any of the Transaction Documents or related thereto are held to be within the meaning of “interest” or another applicable term to otherwise be violative of applicable law, such amounts shall be pro-rated over the period of time to which they relate.

(e) Entire Agreement; Amendments . This Agreement, the other Transaction Documents and the schedules and exhibits attached hereto and thereto and the instruments referenced herein and therein supersede all other prior oral or written agreements between the Buyers, the Company, its Subsidiaries, their affiliates and Persons acting on their behalf solely with respect to the matters contained herein and therein, and this Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced herein and therein contain the entire understanding of the parties solely with respect to the matters covered herein and therein; provided, however, nothing contained in this Agreement or any other Transaction Document shall (or shall be deemed to) (i) have any effect on any agreements any Buyer has entered into with the Company or any of its Subsidiaries prior to the date hereof with respect to any prior investment made by such Buyer in the Company or (ii) waive, alter, modify or amend in any respect any obligations of the Company or any of its Subsidiaries, or any rights of or benefits to any Buyer or any other Person, in any agreement entered into prior to the date hereof between or among the Company and/or any of its Subsidiaries and any Buyer and all such agreements shall continue in full force and effect. Except as specifically set forth herein or therein, neither the Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. For clarification purposes, the Recitals are part of this Agreement. No provision of this Agreement, the Notes or the Warrants may be amended other than by an instrument in writing signed by the Company and the Required Buyers (as defined below), and any amendment to any provision of this Agreement, the Notes or the Warrants made in conformity with the provisions of this Section 9 (e) shall be binding on all Buyers and holders of Securities, as applicable, provided that no such amendment shall be effective to the extent that it (1) applies to less than all of the holders of the Securities then outstanding or (2) imposes any obligation or liability on any Buyer without such Buyer’s prior written consent (which may be granted or withheld in such Buyer’s sole discretion). No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party, provided that the Required Buyers may waive any provision of this Agreement, the Notes or the Warrants, and any waiver of any provision of this Agreement, the Notes or the Warrants made in conformity with the provisions of this Section 9 (e) shall be binding on all Buyers and holders of Securities, as applicable, provided that no such waiver shall be effective to the extent that it (1) applies to less than all of the holders of the Securities then outstanding (unless a party gives a waiver as to itself only) or (2) imposes any obligation or liability on any Buyer without such Buyer’s prior written consent (which may be granted or withheld in such Buyer’s sole discretion). No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration also is offered to all of the parties to the Transaction Documents, all holders of the Notes or all holders of the Warrants (as the case may be). The Company has not, directly or indirectly, made any agreements with any Buyers relating to the terms or conditions of the transactions contemplated by the Transaction Documents except as set forth in the Transaction Documents. Without limiting the foregoing, the Company confirms that, except as set forth in this Agreement, no Buyer has made any commitment or promise or has any other obligation to provide any financing to the Company, any Subsidiary or otherwise. As a material inducement for each Buyer to enter into this Agreement, the Company expressly acknowledges and agrees that no due diligence or other investigation conducted by a Buyer, any of its advisors or any of its representatives shall affect such Buyer’s right to rely on, or shall modify or qualify in any manner or be an exception to any of, the Company’s representations and warranties contained in this Agreement or any other Transaction Document. “ Required Buyers ” means Buyers holding at least 51% of the aggregate principal amount of the Notes sold under this Agreement.

(f) Notices . Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) Business Day after deposit with an overnight courier service with next day delivery specified, in each case, properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

If to the Company:

Medgenics, Inc

8000 Towers Crescent Dr.

Suite 1300

Vienna, Va. 22182

Telephone:+972-4-902-8900

Facsimile:+972-4-999-0114

Attention: Chief Executive Officer

With a copy (for informational purposes only) to:

Barack Ferrazzano Kirschbaum & Nagelberg LLP

200 W. Madison Street, Suite 3900

Chicago, Illinois 60606

Telephone: (312) 984-3100

Facsimile: (312) 984-3150

Attention: Gretchen Anne Trofa, Esq.

If to a Buyer, to its address and facsimile number set forth on the Schedule of Buyers, with copies to such Buyer’s representatives (if any) as set forth on the Schedule of Buyers, or to such other address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively. As used herein “ Business Day ” means any day other than a Saturday, Sunday or other day on which commercial banks in New York, New York or Israel are authorized or required by law to remain closed.

(g) Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including any purchasers of any of the Securities. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Required Buyers, including, without limitation, by way of a Fundamental Transaction (as defined in the Warrants) (unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the Warrants) or a Fundamental Transaction (as defined in the Notes) (unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the Notes). A Buyer may assign some or all of its rights hereunder in connection with any permitted transfer of any of its Securities without the consent of the Company but upon prior written notice to the Company, in which event such assignee shall be deemed to be a Buyer hereunder with respect to such assigned rights.

(h) No Third Party Beneficiaries . This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, other than the Indemnitees referred to in Section 9 (k) .

(i) Survival . Any covenant or agreement in this Agreement required to be performed following the Closing Date shall survive such Closing Date. Without limitation of the foregoing, the respective representations and warranties given by the parties hereto shall survive each Closing Date and the consummation of the transactions contemplated herein, but only for a period of the earlier of (i) twenty-four (24) months following the Closing Date and (ii) the applicable statute of limitations with respect to each representation and warranty, and thereafter shall expire and have no further force and effect (including with respect to the indemnification obligations contained herein).

(j) Further Assurances . Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

(k) Indemnification .

(i) In consideration of each Buyer’s execution and delivery of the Transaction Documents and acquiring the Securities thereunder and in addition to all of the Company’s other obligations under the Transaction Documents, the Company shall defend, protect, indemnify and hold harmless each Buyer and each holder of any Securities and all of their stockholders, partners, members, officers, directors, employees and direct or indirect investors and any of the foregoing Persons’ agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “ Indemnitees ”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “ Indemnified Liabilities ”), incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by the Company or any Subsidiary in any of the Transaction Documents, or (b) any breach of any covenant, agreement or obligation of the Company contained in any of the Transaction Documents. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law.

(ii) Promptly after receipt by an Indemnitee under this Section 9(k) of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving an Indemnified Liability, such Indemnitee shall, if a claim in respect thereof is to be made against the Company under this Section 9(k), deliver to the Company a written notice of the commencement thereof, and the Company shall have the right to participate in, and, to the extent the Company so desires, to assume control of the defense thereof with counsel selected by the Company; provided, however, that an Indemnitee shall have the right to retain its own counsel with the reasonable fees and expenses of such counsel to be paid by the Company if: (i) the Company has agreed in writing to pay such fees and expenses; (ii) the Company shall have failed promptly to assume the defense of such Indemnified Liability within twenty (20) days after the Company’s receipt of the Indemnitee’s notice; or (iii) the named parties to any such Indemnified Liability (including any impleaded parties) include both such Indemnitee and the Company, and such Indemnitee shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent such Indemnitee and the Company (in which case, if such Indemnitee notifies the Company in writing that it elects to employ separate counsel at the expense of the Company, then the Company shall not have the right to assume the defense thereof and the reasonable fees and expenses of such counsel shall be the responsibility of the Company), provided further, that in the case of clause (iii) above the Company shall not be responsible for the reasonable fees and expenses of more than one (1) separate legal counsel for such Indemnitee. The Indemnitee shall reasonably cooperate with the Company in connection with any negotiation or defense of any such action or Indemnified Liability by the Company and shall furnish to the Company all information reasonably available to the Indemnitee which relates to such action or Indemnified Liability. The Company shall keep the Indemnitee reasonably apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. The Company shall not be liable for any settlement of any action, claim or proceeding affected without its prior written consent in its sole discretion. The Company shall not, without the prior written consent of the Indemnitee, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnitee of a release from all liability in respect to such Indemnified Liability or litigation, and such settlement shall not include any admission as to fault on the part of the Indemnitee. Following indemnification as provided for hereunder, the Company shall be subrogated to all rights of the Indemnitee with respect to all third Persons relating to the matter for which indemnification has been made. The failure to deliver written notice to the Company within a reasonable time of the commencement of any such action shall not relieve the Company of any liability to the Indemnitee under this Section 9(k), except to the extent that the Company is materially and adversely prejudiced in its ability to defend such action.

(iii) Notwithstanding anything to the contrary contained herein, the Company shall not be liable, in aggregate, to the Indemnitees in excess of the original principal amount of the Notes sold under this Agreement. The indemnification required by this Section 9(k) shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified Liabilities are incurred.

(iv) The indemnity agreement contained herein shall be in addition to (A) any cause of action or similar right of the Indemnitee against the Company or others, and (B) any liabilities the Company may be subject to pursuant to the law.

(l) Construction . The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

(m) Remedies . Each Buyer and each holder of any Securities shall have all rights and remedies set forth in the Transaction Documents and all rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights which such holders have under any law. Any Person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. Furthermore, the Company recognizes that in the event that it fails to perform, observe, or discharge any or all of its obligations under the Transaction Documents, any remedy at law may prove to be inadequate relief to the Buyers. The Company therefore agrees that the Buyers shall be entitled to seek specific performance and/or temporary, preliminary and permanent injunctive or other equitable relief from any court of competent jurisdiction in any such case without the necessity of proving actual damages and without posting a bond or other security. Notwithstanding anything to the contrary contained in this Agreement or the Transaction Documents, the Company shall not be liable for any consequential, incidental, special or punitive damages in connection with any of the Transaction Documents.

(n) Withdrawal Right . Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction Documents, whenever any Buyer exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then such Buyer may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights

(o) Payment Set Aside; Currency . To the extent that the Company makes a payment or payments to any Buyer hereunder or pursuant to any of the other Transaction Documents or any of the Buyers enforce or exercise their rights hereunder or thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, foreign, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred. Unless otherwise expressly indicated, all dollar amounts referred to in this Agreement and the other Transaction Documents are in United States Dollars (“ U.S. Dollars ”), and all amounts owing under this Agreement and all other Transaction Documents shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be converted into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “ Exchange Rate ” means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Agreement, the U.S. Dollar exchange rate as published in the Wall Street Journal on the relevant date of calculation.

(q) Independent Nature of Buyers’ Obligations and Rights . The obligations of each Buyer under the Transaction Documents are several and not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance of the obligations of any other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as, and the Company acknowledges that the Buyers do not so constitute, a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that the Buyers are in any way acting in concert or as a group or entity with respect to such obligations or the transactions contemplated by the Transaction Documents or any matters, and the Company acknowledges that the Buyers are not acting in concert or as a group, and the Company shall not assert any such claim, with respect to such obligations or the transactions contemplated by the Transaction Documents. The decision of each Buyer to purchase Securities pursuant to the Transaction Documents has been made by such Buyer independently of any other Buyer. Each Buyer acknowledges that no other Buyer has acted as agent for such Buyer in connection with such Buyer making its investment hereunder and that no other Buyer will be acting as agent of such Buyer in connection with monitoring such Buyer’s investment in the Securities or enforcing its rights under the Transaction Documents. The Company and each Buyer confirms that each Buyer has independently participated with the Company and its Subsidiaries in the negotiation of the transaction contemplated hereby with the advice of its own counsel and advisors. Each Buyer shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of any other Transaction Documents, and it shall not be necessary for any other Buyer to be joined as an additional party in any proceeding for such purpose. The use of a single agreement to effectuate the purchase and sale of the Securities contemplated hereby was solely in the control of the Company, not the action or decision of any Buyer, and was done solely for the convenience of the Company and not because it was required or requested to do so by any Buyer. It is expressly understood and agreed that each provision contained in this Agreement and in each other Transaction Document is between the Company and a Buyer, solely, and not between the Company and the Buyers collectively and not between and among the Buyers.

[ signature pages follow ]

IN WITNESS WHEREOF, the Company has caused its signature page to this Agreement to be duly executed as of the date first written above.

	COMPANY:

	MEDGENICS, INC


	By:	/s/ Andrew L. Pearlman
		Name: Andrew L. Pearlman
		Title: President

Exhibit 21.1

SUBSIDIARIES OF MEDGENICS, INC.

1. Medgenics Medical (Israel) Limited, a company organized under the laws of the State of Israel

Exhibit 23.1

Medgenics, Inc.

8000 Towers Crescent Drive, Suite 1300

Vienna, Virginia 22182

We consent to the reference to our firm under the caption “Experts” and to the use of our report dated November 4, 2010 in the Registration Statement filed on Form S-1 and related prospectus of Medgenics, Inc. for the registration of shares of its common stock.

/s/ KOST FORER GABBAY & KASIERER

KOST FORER GABBAY & KASIERER

A Member of Ernst & Young Global

Haifa, Israel

November 4, 2010