Unassociated Document


     

    Exhibit 10.40


     

    CONSULTING SERVICES
AGREEMENT

    


    This
Consulting Agreement (“Agreement”)
is made as of October 18, 2010 (“Effective
Date”) by and between Medgenics, Inc., a Delaware corporation (the “Company”),
and Eugene A. Bauer.

     

    The Company desires to have Consultant
perform consulting services for the Company and Consultant desires to perform
such services for the Company, subject to and in accordance with the terms and
conditions of this Agreement.

     

    NOW, THEREFORE, the parties agree as
follows:

     

    1.           SERVICES.  During
the Term (as defined below), Consultant shall provide financial, strategic,
business development, investor relations and clinical and regulatory consulting
services to the Company as may be requested by the Company from time to time and
additional consulting services as may be mutually agreed between the parties
(collectively, the “Services”).  The
Company acknowledges that Consultant lives in and currently maintains an office
in California and therefore the parties anticipate that Consultant shall provide
the Consulting Services both in person and via email and telephone.

     

    2.           COMPENSATION.

     

    2.1           Cash
Compensation.  The Company will pay Consultant an annual
consulting fee equal to $180,000 payable in monthly installments.

     

    2.2           Restricted
Stock.  In consideration for Consultant’s agreements hereunder,
the Company will, as soon as practicable and in compliance with all applicable
securities laws, grant to Consultant 2,000,000 shares of restricted common stock
of the Company.  The restrictions on such restricted common stock
shall lapse as follows:

     

    
      	
              ·  

            	
              restrictions
      with respect to 500,000 shares shall lapse on October 18,
      2012;

            


    

     

    
      	
              ·  

            	
              restrictions
      with respect to 500,000 shares shall lapse on October 18, 2013;
      and

            


    

     

    
      	
              ·  

            	
              restrictions
      with respect to all remaining shares shall lapse on October 18,
      2014.

            


    

     

    All
restrictions shall lapse immediately upon a change of control of the Company or
in the event the Company elects to terminate this Agreement, and shall be set
forth in more detail in a Restricted Stock Award Agreement.  In the
event of any conflict between the Restricted Stock Award Agreement and this
Agreement, the terms of the Restrict Stock Award Agreement shall
control.

     

    2.3          Disbursements by
Consultant.  Any reasonable disbursements or out-of-pocket
expenses incurred by Consultant in connection with performing Services under
this Agreement shall be promptly reimbursed by the Company upon receipt of an
invoice from Consultant detailing and substantiating such expenses.

     

    3.           RELATIONSHIP OF PARTIES.

     

    3.1           Independent Consultant.  Consultant
is an independent Consultant and is not an agent or employee of, and has no
authority to bind, the Company by contract or otherwise, except as otherwise
approved by the Board of Directors of the Company.  Consultant will
perform the Services under the general direction of the Company, but Consultant
will determine, in Consultant’s sole discretion, the manner and means by which
the Services are accomplished, subject to the requirement that Consultant will
at all times comply with applicable law.  The Company has no right or
authority to control the manner or means by which the Services are
accomplished.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    3.2           Employment Taxes and Benefits.  All
taxes on net income and similar assessments, levies and government imposed
obligations with respect to Services shall be the obligation of and be paid by
Consultant.  Consultant will indemnify the Company and hold it
harmless from and against all claims, damages, losses, costs and expenses,
including reasonable fees and expenses of attorneys and other professionals,
relating to any obligation imposed by law on the Company to pay any withholding
taxes, social security, unemployment or disability insurance, or similar items
in connection with compensation received by Consultant pursuant to this
Agreement.  Without limiting the generality of the foregoing, the
Company shall not withhold any taxes or prepare W-2 forms for Consultant, but
shall provide Consultant with a Form 1099, if required by
law.  Consultant will not be entitled to receive any vacation or
illness payments or to participate in any plans, arrangements, or distributions
by the Company pertaining to any bonus, stock option, profit sharing, insurance
or similar benefits for the Company’s employees, if any.

     

    4.           OWNERSHIP
AND INTELLECTUAL PROPERTY RIGHTS.

     

    4.1           Definition of
Innovations.  Consultant agrees to disclose in writing to the
Company all inventions, products, designs, drawings, notes, documents,
information, documentation, improvements, works of authorship, processes,
techniques, know-how, algorithms, technical and business plans, specifications,
hardware, circuits, computer languages, computer programs, databases, user
interfaces, encoding techniques, and other materials or innovations of any kind
that Consultant may make, conceive, develop or reduce to practice during the
term of this Agreement, alone or jointly with others, in connection with
performing Services or that result from such Services, whether or not they are
eligible for patent, copyright, mask work, trade secret, trademark or other
legal protection (collectively, “Innovations”).

     

    4.2           Ownership of
Innovations.  Consultant and the Company agree that, to the
fullest extent legally possible, all Innovations will be works made for hire
owned exclusively by the Company.  Consultant agrees that, regardless
of whether the Innovations are legally works made for hire, all Innovations will
be the sole and exclusive property of the Company.  Consultant hereby
irrevocably transfers and assigns to the Company, and agrees to irrevocably
transfer and assign to the Company, all right, title and interest in and to the
Innovations, including all worldwide patent rights (including patent
applications and disclosures), copyright rights, mask work rights, trade secret
rights, know-how, and any and all other intellectual property or proprietary
rights (collectively, “Intellectual
Property Rights”) therein.  At the Company’s request and
expense, during and after the term of this Agreement, Consultant will assist and
cooperate with the Company in all respects and will execute documents, and,
subject to the reasonable availability of Consultant, give testimony and take
such further acts reasonably requested by the Company to enable the Company to
acquire, transfer, maintain, perfect and enforce its Intellectual Property
Rights and other legal protections for the Innovations.  Consultant
hereby appoints the officers of the Company as Consultant’s attorney-in-fact to
execute documents on behalf of Consultant for this limited purpose.

     

    4.3           Moral
Rights.  Consultant also hereby irrevocably transfers and
assigns to the Company, and agrees to irrevocably transfer and assign to the
Company, and waives and agrees never to assert, any and all Moral Rights (as
defined below) that Consultant may have in or with respect to any Innovation,
during and after the term of this Agreement.  “Moral
Rights” mean any rights to claim authorship of any Innovation, to object
to or prevent the modification or destruction of any Innovation, to withdraw
from circulation or control the publication or distribution of any Innovation,
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
called or generally referred to as a “moral right,” in all cases.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    4.4           Related
Rights.  To the extent that Consultant owns or controls
(presently or in the future) any patent rights, copyright rights, mask work
rights, trade secret rights, or any other intellectual property or proprietary
rights that block or interfere with the rights assigned to the Company under
this Agreement (collectively, “Related
Rights”), Consultant hereby grants or will cause to be granted to the
Company a non-exclusive, royalty-free, irrevocable, perpetual, transferable,
worldwide license (with the right to sublicense) to make, have made, use, offer
to sell, sell, import, copy, modify, create derivative works based upon,
distribute, sublicense, display, perform and transmit any products, software,
hardware, methods or materials of any kind that are covered by such Related
Rights, to the extent necessary to enable the Company to exercise all of the
rights assigned to the Company under this Agreement.

     

    5.           CONFIDENTIAL INFORMATION AND
FIDUCIARY DUTIES.  The parties agree and acknowledge that
Consultant is a director of the Company and as such is subject to certain
fiduciary duties under Delaware law.  In addition, Consultant has
entered into a non-executive director appointment letter which imposes
additional obligations on Consultant with respect to protecting the Company’s
Confidential Business Information (as defined in such appointment letter) and
refraining from competition.  Consultant re-affirms each of those
obligations.

     

    6.           WARRANTIES.

     

    6.1           Compliance with
Laws.  Consultant shall comply with all applicable federal,
state and local laws, regulations and codes in effect as of the date of the
Effective Date, and throughout the duration of performing the
Services.

     

    6.2           Pre-existing 
Obligations of 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.

     

    6.3           Pre-Existing Obligations of
the Company.  The Company represents and warrants to Consultant
that this Agreement has been duly authorized, executed and delivered by the
Company and that the fulfillment of the terms hereof (i) will not constitute a
default under or conflict 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.

     

    6.4           Binding
Agreement.  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).

     

    7.           INDEMNIFICATION.  Consultant
will indemnify and hold harmless the Company from and against all claims,
damages, losses and expenses, including court costs and reasonable attorneys’
fees, arising out of or resulting from, and, at the Company’s option, Consultant
will defend the Company against:

     

    (i)           any
action by a third party against the Company that is based on any negligent act
or omission or willful conduct of Consultant and that results in: (a) bodily
injury, sickness, disease or death; (b) injury or destruction to tangible or
intangible property (including computer programs and data) or any loss of use
resulting therefrom; or (c) the violation of any statute, ordinance, or
regulation; and

     

    
      (ii)           any
action by a third party against the Company based on Consultant’s breach of this
Agreement.

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    8.           TERM
AND TERMINATION.

    


    8.1           Term.  This
Agreement will commence on the Effective Date and, unless terminated earlier in
accordance with the terms of this Agreement, will remain in force and effect for
as long as Consultant is performing Services.

     

    8.2           Termination for
Breach.  Either party may terminate this Agreement if the other
party breaches any material term of this Agreement and fails to cure such breach
within ten (10) days following written notice thereof from the non-breaching
party.

     

    8.3           Termination for
Convenience.  Either party may terminate this Agreement at any
time, for any reason or no reason, upon thirty (30) days advance written notice
to the other party.

     

    8.4           Effect of
Termination.

     

    (a)           Upon
any termination of this Agreement for any reason, Consultant will promptly
deliver to the Company all Innovations, including all work in progress on any
Innovations and all versions and portions thereof.

     

    (b)           Upon
any termination of this Agreement, the Company will pay Consultant any amounts
that are due and payable under Section 2 for the period that Consultant
provided Services to the Company prior to the effective date of
termination.

     

    8.5           Survival.  The
provisions of Sections 3.2, 4, 5, 7, 8.4, 8.5 and 9 will survive the termination
of this Agreement.

     

    9.           GENERAL.

     

    9.1           No Election of Remedies.  Except
as expressly set forth in this Agreement, the exercise by either party of any of
its remedies under this Agreement will be without prejudice to its other
remedies under this Agreement or available at law or in equity.

     

    9.2           Assignment.  Consultant
may not assign or transfer any of Consultant’s rights or delegate any of
Consultant’s obligations under this Agreement, in whole or in part, without the
Company’s express prior written consent.  Any attempted assignment,
transfer or delegation, without such consent, will be void.  Subject
to the foregoing, this Agreement will be binding upon and will inure to the
benefit of the parties permitted successors and assigns.

     

    9.3           Equitable Remedies.  Because
the Services are personal and unique and because Consultant will have access to
Confidential Business Information of the Company, the Company will have the
right to enforce this Agreement and any of its provisions by injunction,
specific performance or other equitable relief, without having to post a bond or
other consideration, in addition to all other remedies that the Company may have
for a breach of this Agreement.

     

    9.4           Attorneys’ Fees.  If
any action is necessary to enforce the terms of this Agreement, the
substantially prevailing party will be entitled to reasonable attorneys’ fees,
costs and expenses in addition to any other relief to which such prevailing
party may be entitled.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    9.5           Governing Law.  This
Agreement will be governed by and construed in accordance with the laws of the
State of California, excluding that body of law pertaining to conflict of
laws.  Any legal action or proceeding arising under this Agreement
will be brought exclusively in the federal or state courts located in the
Northern District of California and the parties hereby irrevocably consent to
the personal jurisdiction and venue therein.

     

    9.6           Severability.  If any provision of
this Agreement is held invalid or unenforceable by a court of competent
jurisdiction, the remaining provisions of the Agreement will remain in full
force and effect, and the provision affected will be construed so as to be
enforceable to the maximum extent permissible by law.

     

    9.7           Notices.  All
notices required or permitted under this Agreement will be in writing and
delivered by confirmed facsimile transmission, by courier or overnight delivery
service, or by certified mail, and in each instance will be deemed given upon
receipt.  All notices will be sent to the addresses set forth below or
to such other address as may be specified by either party to the other in
accordance with this Section.

     

    9.8           Entire
Agreement.  This Agreement, constitutes the complete and
exclusive understanding and agreement of the parties with respect to the subject
matter hereof and supersedes all prior understandings and agreements, whether
written or oral, with respect to the subject matter hereof.  Any
waiver, modification or amendment of any provision of this Agreement will be
effective only if in writing and signed by the parties hereto.

     

    9.9           Waiver.  The
waiver of any breach of any provision of this Agreement will not constitute a
waiver of any subsequent breach of the same other provisions
hereof.

     

    9.10           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 signed this Agreement as of the Effective
Date.

     

    
      
        
          
            
              
                
                  	
                          COMPANY:

                        	 	
                          CONSULTANT:

                        
	
                          By:                                                                  

                        	 	 
      
	
                          Name: 
      Andrew L. Pearlman

                        	 	
                          Eugene
      A. Bauer

                        
	
                          Title:   
      Chief Executive Officer

                        	 	 
      
	 	 	 
	
                          Notice
      Address:

                        	 	
                          Notice
      Address:

                        
	
                          Medgenics
      Medical Israel Ltd.

                          Teradion
      Business Park

                          P.O.
      Box 14

                          Misgav
      Israel 20179

                        	 	
                          Dr.
      Eugene Bauer

                          59
      Montecito Road

                          San
      Rafael,
California  94901

                        


                

              

            

          

        

      

    

    


     

    
      
        
        

      

      
        5