Annex Juiy2007

(a)

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

(b)

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

 

(i)

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

(ii)

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

(c)

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

(d)

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

(e)

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

(f)

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

(g)

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

(h)

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

(i)

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

1

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

means the AIM Market operated by the Exchange;

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;

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;

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

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);

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;

means London Stock Exchange Plc;

means any legal or beneficial interest, direct or indirect;

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

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;

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,

12 to 16

Disclosure of corporate transactions

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

2

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

3

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

3.1

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

 

3.1.1

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

 

3.1.2

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

3.2

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

3.3

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

4

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

5

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

6

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

6.1

any close period;

6.2

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

6.3

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

7

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

8

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

9

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

9.1

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

9.2

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

10

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

10.1

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

10.2

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

11

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

11.1

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

11.3

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

11.4

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

12

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

12.1

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

12.2

the terms of such employees’ share scheme set out:

 

12.2.1

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

 

12.2.1.1

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

 

12.2.1.2

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

 

12.2.2

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

12.3

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

13

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

13.1

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

13.2

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

14

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

15

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

16

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

17

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

17.1

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

17.2

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

17.3

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

17.4

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

18

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

19

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

19.1

dealings between directors and/or applicable employees;

19.2

off-market dealings;

19.3

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

19.4

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

19.5

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

19.6

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

20

For the avoidance of doubt, and notwithstanding the definition of dealing contained in paragraph 1 of this Code, the following dealings are not subject to the provisions of this Code:

20.1

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

20.2

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

20.3

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

20.4

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

20.5

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

20.6

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

20.6.1

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

20.7

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

20.8

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

20.9

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

20.10

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

20.11

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

21

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