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.

    


    
      	
              1.

            	
              Term;
      Termination. The terns of this Agreement shall commence on the date
      hereof, and shall continue until terminated by either party (the “Consulting Term”). Each
      of the parties may terminate this Agreement at any time, at its sole
      discretion, by giving the other a 30-day advance written notice. In the
      event, however, that Consultant breaches any term of this Agreement, or
      performs any of Consultant’s duties hereunder in gross negligence or
      willful misconduct, the Company shall have the right to terminate this
      Agreement immediately, with no prejudice to its rights and remedies
      against the Consultant for any of the
above.

            


    

    


    
      	
              2.

            	
              Consulting
      Services. During the Consulting Term Consultant shall provide to
      the Company advice, knowledge and know-how with respect to the Company’s
      Business, including those services defined in Attachment A hereto (the
      “Consulting Services”). Consultant shall use his best efforts during the
      Consulting Term to provide the Consulting Services as requested by the
      Company from time to time, but the same shall always be coordinated with
      Consultant and take into account Consultant’s other obligations and
      engagements.

            


    

    


    
      	
              3.

            	
              Compensation
      and Reimbursement

            


    

    


    
      	
               
      

            	
              3.1

            	
              In
      consideration of the Consulting Services already rendered by the
      Consultant during the restart period up to May 1, 2006, the Consultant
      shall receive: 56,100 fully vested options at nominal exercise price of
      $0.001 per share.

            


    

    


    
      	
               
      

            	
              3.2

            	
              During
      the Consulting Terms, in consideration for the performance of the
      Consulting Services, the Consultant shall
  receive:

            


    

    


    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.

    


    
      	
              4.

            	
              Non-Disclosure;
      Publications. Consultant covenants and undertakes that, during the
      term of this Agreement and thereafter, absent the Company’s prior written
      consent, all information, written or oral, relating to the Company, its
      Business or condition (actual or planned), disclosed to him by the
      Company, or which otherwise became known to him in connection with the
      performance of the Consulting Services (the “Information”), shall be
      maintained by him in full and absolute confidence. and he shall not use
      such Information, directly or indirectly, in whole or in part, for his own
      benefit or any purpose whatsoever except as specifically and explicitly
      provided hereunder. The Consultant’s undertaking hereunder shall not apply
      to Information which is in, or becomes part of, the public domain, or
      which was known by Consultant before the time of disclosure, as evidenced
      by written records. In addition, and notwithstanding the foregoing, any
      publication by Consultant related in
      whole or in part to Information,
      shall not be in violation of any commitments or contracts with
      Yissum.

            


    

    


    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.

    


    
      	
              5.

            	
              Ownership
      of Intellectual Property Rights. The parties agree that regarding
      any and all patent applications, drawings, specifications, test results,
      techniques, diagrams, charts, plans, statements, assessments, analyses,
      estimates, views, opinions, know-how, processes, machines, practices, in
      inventions, improvements, records, copyrights and any other intellectual
      property rights under law or ideas made, received or invented by or
      originating with (or as otherwise similarly applicable) Consultant in the
      performance of the Consulting Services for the Company, or resulting
      therefrom (collectively, “Inventions”), ownership shall be assigned
      to the Company. As regards all worldwide patents, patent applications,
      copyrights, mask works, trade secrets, moral rights and other intellectual
      property rights in all Inventions pursuant to the Consulting Services
      performed hereunder, the Company shall also have ownership of these
      rights.

            


    

     

    
      
         


      

      
        -2-

        
          

        

      

      
         


      

    


    
      	
              6.

            	
              Non-Competition.
      Consultant agrees and undertakes that he will not, so long as this
      Agreement is in effect and for a period of 18 months following termination
      of this Agreement, for any reason whatsoever, engage in activities which
      compete with the Company’s products or services for which the Consultant
      provided said consulting services, or whose confidential aspects became
      known to the Consultant as a result of said
  services.

            


    

    


    
      	
              7.

            	
              Independent
      Contractor. Consultant is an independent contractor, not an
      employee of the Company, and the manner in which the Consulting Services
      are rendered shall be within his sole control and discretion. The Company
      shall not be responsible for Consultant’s acts while performing the
      Consulting Services hereunder, whether on the Company’s premises or
      elsewhere.

            


    

    


    
      	
              8.

            	
              Duties.
      The consultant duties during the term of this agreement will consist of
      rendering, from time to time, consulting services on matters such as viral
      vectors, their use in connection with Micro-Organ Culture technology and
      genetically engineered Biopumps. The average monthly time to be spent by
      the Consultant in providing such services shall approximate 20 hours per
      month, but may moderately vary from this depending upon the results of the
      Company’s research.

            


    

    


    
      	
              9.

            	
              Representations
      by Consultant. Consultant represents and warrants to the Company
      that the execution and delivery of this Agreement and the fulfillment of
      the terms hereof (i) will not constitute a default under or conflict with
      any agreement or other instrument to which he is a party or by which he is
      bound, and (ii) do not require the consent of any person or entity except
      as disclosed by the Consultant in Appendix
B.

            


    

    


    
      	
              10.

            	
              Miscellaneous.
      This Agreement shall be exclusively governed by the laws of the State of
      Israel. This Agreement constitutes the entire agreement between the
      parties with respect to the matters referred to herein, and supersedes all
      prior agreements, promises, covenants, arrangements, communications,
      representations or warranties, whether oral or written, by any officer,
      employee or representative of the Company or any party thereto; and any
      prior agreement of the parties hereto or of the Consultant and the Company
      in respect of the subject matter contained herein is hereby terminated and
      cancelled. Any modification to the Agreement can only be made in writing,
      signed by the Consultant and an appropriate officer of the
      Company.

            


    

    


    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

              


      

    

    


    
      	
            	
              
                a.

              

            	
              
                As
      vector expert, to provide
      high level and supportive guidance, critical evaluation and feedback, and
      proposed solutions, in:

              

            


    

    


    
      	
            	
              
                i.

              

            	
              
                vector
      development: selection, preparation, production, testing, use of viral
      vectors

              

            


    

    


    
      	
            	
              
                ii.

              

            	
              
                Gene
      construct, related elements for stable, high level
      secretion

              

            


    

    


    
      	
            	
              
                iii.

              

            	
              
                transduction
      optimization

              

            


    

    


    
      	
            	
              
                iv.

              

            	
              
                method
      development, potency assay

              

            


    

    


    
      	
            	
              
                b.

              

            	
              
                Assist/guide
      preclinical testing, GMP
preparations

              

            


    

    


    
      	
            	
              
                c.

              

            	
              
                Other
      areas of the Consultant’s
contribution

              

            


    

    


    
      	
            	
              
                
                  d.

                

              

            	
              
                
                  Possible
      R & D in the Consultant’s lab at Hadassah: Assuming any resulting IP
      is included in the current Yissum license, potentially perform specific
      projects in the Consultant’s lab based on at-cost budget to be
      agreed.

                

              

            


    

    


    
      	
              
                2.

              

            	
              
                Time
      Commitment: (not counting any research performed in the Consultant’s lab):
      about 20/ hrs/month (ca 250
hours/year):

              

            


    

    


    
      	
            	
              
                a.

              

            	
              
                1
      day per month at Medgenics

              

            


    

    


    
      	
            	
              
                b.

              

            	
              
                3
      weekly 2-hour review meetings via email and
  phone

              

            


    

    


    
      	
            	
              
                c.

              

            	
              
                Brief
      consults and side projects as needed (1-2
    hours/week).

              

            


    


    
      
         


      

      
        -5-