Unassociated Document


    Exhibit
10.7

     

    EMPLOYMENT
AGREEMENT

     

    THIS
AGREEMENT, is made on May 10, 2007, by and between, Q.B.I. Enterprises Ltd. (the
“Company”) and Juliana Friedman, Israeli I.D. number 131114871 (the
“Executive”);

     

    WITNESSETH
THAT:

     

    WHEREAS,
the Executive is currently an employee of the Company pursuant to an employment
agreement between the Executive and the Company dated February 1 st , 1998,
as amended form time to time, (the “Prior Agreement”);

     

    WHEREAS,
the Company and the Executive desire to amend and document the terms of
employment of the Executive effective as of January 1, 2007 (the “Effective
Date”);

     

    NOW,
THEREFORE, in consideration of the mutual covenants and agreements set forth
below and other good and valuable consideration, the receipt of which is hereby
acknowledged, the Executive and the Company hereby agree as
follows:

     

    1.  
Performance of
Services . The Executive’s employment with the Company shall be subject
to the following:

     

    (a) 
Subject to the terms of this Agreement, the Company hereby agrees to employ the
Executive in the position of Senior Vice President, Strategy and Planning of the
Company and of its parent company Quark Biotech Inc. (“Quark”) and the Executive
hereby agrees to remain employed by the Company in such position.

     

    (b) 
While the Executive is employed by the Company, the Executive shall devote her
full time and best efforts, energies and talents to serving the Company and
shall not be engaged in any other employment nor engage in any other business
activities for any other person, firm or company without the prior written
consent of the Company.

     

    (c) 
The Executive shall report to the Chief Executive Officer of the Company and of
Quark (the “CEO”) and shall perform the duties, undertake the responsibilities
and exercise the authority customary for an employee in the Executive’s position
and shall perform such additional duties as may be assigned to him by the
CEO.

     

    (d) 
The Executive agrees that she shall perform her duties faithfully and
efficiently subject to the direction of the CEO. The Executive’s duties shall
include providing services for both the Company and its Affiliates (as defined
below) as determined by the Company. For purposes of this Agreement, the term
“Affiliate” shall mean Quark and any corporation, partnership, joint venture or
other entity in which at least a fifty percent interest in such entity is owned,
directly or indirectly, by Quark or the Company.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (e) 
The Executive’s place of employment shall be in Israel, provided that the
Company may require the Executive to travel outside Israel in order to fulfill
her duties with the Company and Quark. The Executive may perform part of her
duties at home.

     

    (f) 
The Executive’s position is a “senior managerial position”, as defined in the
Israeli Work and Rest Hours Law, 1951, and requires a high level of trust.
Accordingly, the provisions of said law shall not apply to the Executive and the
Executive agrees that she may be required to work beyond the regular working
hours of the Company, for no additional compensation other than as specified in
this Agreement.

     

    (g) 
The employment of the Executive under this Agreement shall commence on the
Effective Date and shall continue until terminated in accordance with the
provisions of Section 5 below (the “Employment Period”).

     

    2.  
Compensation and
Benefits. Subject to the terms of this Agreement, during the Employment
Period, the Company shall compensate the Executive for her services as
follows:

     

    (a) 
Base Salary.
The Executive shall receive base salary at a monthly rate of 35,159 New Israeli
Shekel (“NIS”), inclusive of travel expenses to which the Executive is entitled
in accordance with applicable laws. Said salary and travel expenses shall be
paid in arrears by the 9 th day of
each month in respect to a preceding month in which the Executive was in
employment (the “Salary”). The Salary will be adjusted from time to time in
accordance with the cost of living increments (Tossefet Yoker) which apply
to all Employees in Israel.

     

    (b) 
Stock Awards.
If an award in the form of a stock options (“Stock Options”) is granted to the
Executive, it will be made in accordance with the terms and principles detailed
in Quark’s Stock Option Plan for Israeli Employees. The Stock Options will be
granted under Quark’s standard stock option agreement for Company employees to
be entered into between the Executive and Quark.

     

    (c) 
Managers’
Insurance. During the Employment Period, the Company shall take out a
Managers’ Insurance (Bituach
Menahalim) policy and shall contribute thereto, on a monthly basis,
18.33% of the Executive’s monthly Salary, 8.33% of which shall be in respect of
severance compensation (the “Severance Component”), 5% of which shall be in
respect of pension, and 5% of which shall be deducted by the Company from the
monthly payment of the Executive’s Salary as the Executive’s contribution to
said Managers’ Insurance. The parties acknowledge and agree that in accordance
with Section 14 to the Severance Pay Law 5723-1963, the allocation to Managers’
Insurance under this Section 2(c) shall be in lieu of severance pay according to
the Severance Pay Law that Executive may be entitled to.

     

    (d) 
Disability .
During the Employment Period, the Company shall take out Disability Insurance
(Ovdan Kosher Avoda) as
in effect immediately prior to the Effective Date and contribute thereto, on a
monthly basis, 2.5% of the Executive’s monthly Salary.

     

    (e) 
Education Fund
.. During the Employment Period, the Company shall contribute to an Education
Fund (Keren Hishtalmut)
, on a monthly basis, 7.5% of the

     

    
      
         

      

      
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    Executive’s
monthly Salary, subject to the Executive’s contribution of an additional 2.5% of
her monthly Salary. All tax obligations related to the Education Fund shall be
borne by the Executive.

     

    (f) 
Recreation
Funds. During the Employment Period, the Company shall provide and pay
the Executive Recreation Funds (Dmei Havra’ ah) at the rate
required by applicable law and regulations.

     

    (g)
  Vacation. During each
calendar year during the Employment Period, the Executive shall be entitled to
22 working days of vacation (or a pro rata number of days for any partial year
that occurs during the Employment Period) determined in accordance with
applicable employment laws of Israel and Company policies on dates to be
coordinated with the Company in advance. The Executive shall not be entitled to
receive from the Company any Sabbatical Year Leave.

     

    (h) 
Sick Leave. The
Executive shall be entitled to sick leave pursuant to the Sick Pay Law –
1976.

     

    (i)
  Use of Company
Car. During her employment with the Company hereunder, the Executive
shall have the use of a Company car free of charge. Any income tax which may be
assessed on such use of the car shall be for the account of the Company. The
Executive will be responsible for the payment of fines (if any) imposed with
respect to the use of the car by her.

     

    (j)
  Expenses. The Company
will pay or reimburse Executive for reasonable travel or other expenses incurred
by Executive in the furtherance of or in connection with the performance of
Executive’s duties hereunder in accordance with the Company’s established
policies (including reimbursement for telephone expenses). Executive shall
furnish the Company with evidence of the incurrence of such expenses within a
reasonable period of time from the date that they were incurred.

     

    (k)
  Use of Company
Cell Phone. During her employment with the Company hereunder, the
Executive shall have the use of a Company cell phone free of charge. Any income
tax which may be assessed on such use of the cell phone shall be for the account
of the Company.

     

    (l)
  Taxes.
All sums mentioned in this Agreement are pre-tax. The Executive shall bear and
pay any and all taxes imposed on her Salary, the Stock Options and any all
benefits hereunder.

     

    3.  
Termination.
The Executive’s employment with the Company during the Employment Period may be
terminated under the following circumstances:

     

    (a) 
Death. The
Executive’s employment hereunder shall terminate upon her death.

     

    (b) 
Disability. If
the Executive becomes Disabled, the Company may terminate her employment with
the Company. For purposes of this Agreement, the Executive shall be

     

    
      
         

      

      
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    deemed to
be “Disabled” if she has a physical or mental disability which renders her
incapable of performing substantially all of her duties hereunder for a period
of 90 days (which need not be consecutive) in any 12-month period. In the event
of a dispute as to whether the Executive is Disabled, the Company may, at its
expense, refer her to a licensed practicing physician of the Company’s choice
and the Executive agrees to submit to such tests and examination as such
physician shall deem appropriate. The determination of such physician shall be
final and binding on the Company and Executive.

     

    (c) 
Cause. The
Company may terminate the Executive’s employment hereunder immediately and at
any time for Cause by written notice to the Executive detailing the basis for
the Cause termination. For purposes of this Agreement, “Cause” means (i) gross
negligence or willful failure by the Executive to perform her duties as an
employee of the Company (other than any such failure resulting from incapacity
due to physical or mental illness), (ii) willful misconduct by the Executive
which is materially injurious to the Company or its Affiliates, monetarily or
otherwise, (iii) the engaging by the Executive in egregious misconduct involving
moral turpitude to the extent that her creditability and reputation no longer
conforms to the standard of senior executives of the Company and its Affiliates,
(iv) the commission by the Executive of an act of dishonesty or breach of trust;
or (v) a material breach of this Agreement.

     

    (d) 
Termination by
Executive. The Executive may terminate her employment hereunder at any
time for any reason by giving the Company prior written notice not less than 120
days prior to such termination.

     

    (e) 
Mutual
Agreement. This Agreement may be terminated at any time by mutual written
agreement of the parties.

     

    (f) 
Termination by the
Company without Cause. The Company may terminate the Executive’s
employment hereunder at any time for any reason by giving the Executive prior
written notice not less than 120 days prior to such termination. During the
Notice Period, the Executive will continue in the employ of the Company pursuant
to the terms of this agreement and to receive the Salary and other benefits
hereunder. Notwithstanding the above, the Company may, at any time during any
Notice Period, waive at its sole discretion, the Executives obligation to
continue in the employment of the Company and to forthwith terminate her
employment hereunder, by paying the Executive an amount equal to the Executive’s
Salary multiplied by the number of months remaining until the end of the
applicable Notice Period.

     

    (g) 
Date of
Termination. “Date of Termination” means the last day that the Executive
is employed by the Company under the terms of this Agreement under circumstances
in which her employment is terminated in accordance with one of the foregoing
provisions of this paragraph 3.

     

    4.  
Rights Upon
Termination .

     

    (a) 
In the event of Termination for any reason, the Company shall:

     

    (i) 
Pay the Executive’s Salary for the period ending on the Date of

     

    
      
         

      

      
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    Termination.

     

    (ii)
 Transfer to the Executive, within 30 days following Date of Termination,
any and all allocations accrued under her Managers’ Insurance and Educational
Fund.

     

    (b) 
Notwithstanding any provision of this Section 4 to the contrary, the Company
shall have no obligation to transfer or release the Severance Component of the
Managers’ Insurance in circumstances where Israeli laws denies the Executive’s
right to severance payment by pursuant to Sections 17 to the Israeli Severance
Payment Law 5723 – 1963.

     

    (c)
 The Company and Executive agree and acknowledge that in the event the
Company transfers ownership of the Manager’s Insurance to the Executive, that
such transfer shall constitute the payment of any severance pay the Company is
required to pay to the Executive pursuant to the Severance Pay Law
(5727-1963).

     

    5.  
Confidentiality and
Non-competition. In consideration for the payments and benefits
contemplated by Section 2, the Executive acknowledges and agrees that
simultaneous with the execution of this Agreement, she will be required to
execute and comply with the Non-competition and Proprietary Information
Agreement in the form attached to this Agreement as Exhibit B.

     

    6.  
Representations and
Warranties.

     

    (a)
 The Executive represents and warrants that: (i) the execution and delivery
of this Agreement and the fulfillment of the terms hereof will not constitute a
default under or breach of any agreement or other instrument to which she is a
party or by which she is bound, including without limitation, any
confidentiality or non competition agreement, and do not require the consent of
any person or entity; (ii) she shall not utilize, during her employment with the
Company any proprietary information of any of her previous
employers.

     

    (b)
 The Executive shall inform the Company, immediately upon becoming aware of
every matter in which she or a member of her immediate family or affiliate has a
personal interest or which might create a conflict of interests with her duties
to the Company.

     

    7.  
Successors.
This Agreement shall be binding upon, and inure to the benefit of, the Company
and its successors and assigns and upon any person acquiring, whether by merger,
consolidation, purchase of assets or otherwise, all or substantially all of the
Company’s assets and business.

     

    8.  
Notices.
Notices and all other communications provided for in this Agreement shall be in
writing and shall be delivered personally or sent by registered or certified
mail, return receipt requested, postage prepaid, or sent by facsimile or prepaid
overnight courier to the parties at the addresses set forth below (or such other
addresses as shall be specified by the parties by like notice):

     

    
      
         

      

      
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    To the
Company:

     

    Q.B.I.
Enterprises Ltd.

    PO Box
741,

    Nes Ziona
74106

    Israel

    Attn: Dr.
Daniel Zurr

     

    To the
Executive:

     

    Juliana
Friedman, at the most recent address shown in the records of the
Company.

     

    Notices
hereunder shall be deemed to be effective (a) upon receipt if delivered
personally, (b) on the tenth (10 th ) day
following the date of mailing if sent by registered or certified air mail; (c)
on the second (2 nd ) day
following the date of transmission or delivery to the overnight courier if sent
by overnight courier; and (d) on the next day after the date sent by facsimile
(with receipt confirmation). A party may change its address listed above by
sending notice to the other party in accordance with this Section
8.

     

    9.  
Severability.
The invalidity or unenforceability of any provision of this Agreement will not
affect the validity or enforceability of any other provision of this Agreement,
and this Agreement will be construed as if such invalid or unenforceable
provision were omitted (but only to the extent that such provision cannot be
appropriately reformed or modified).

     

    10.
  Waiver of
Breach. No waiver of any party hereto of a breach of any provision of
this Agreement by any other party will operate or be construed as a waiver of
any subsequent breach by such other party. The failure of any party hereto to
take any action by reason of such breach will not deprive such party of the
right to take action at any time while such breach continues.

     

    11.
  Amendment. This
Agreement may not be amended, modified or canceled other than by a written
instrument executed by both Parties, or by their duly authorized
representatives.

     

    12.
  Survival of
Agreement. Except as otherwise expressly provided in this Agreement, the
rights and obligations of the parties to this Agreement shall survive the
termination of the Executive’s employment with the Company.

     

    13.
  Entire
Agreement. This Agreement constitutes the entire agreement between the
parties concerning the subject matter hereof and supersedes all prior and
contemporaneous agreements, if any, between the Executive and the Company or its
Affiliates relating to the subject matter hereof.

     

    
      
         

      

      
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    14.
  Governing
Law. This Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Israel without regard to
principals of conflict of laws. Any proceeding related to or arising out of this
Agreement shall be commenced, prosecuted or continued in Israel.

     

    15.
  Acknowledgement
by Executive. The Executive represents to the Company that she is
knowledgeable and sophisticated as to business matters, including the subject
matter of this Agreement, that she has read this Agreement and that she
understands its terms. The Executive acknowledges that, prior to assenting to
the terms of this Agreement; she has been given a reasonable time to review it,
to consult with counsel of her choice, and to negotiate at arm’s-length with the
Company as to the contents. The Executive and the Company agree that the
language used in this Agreement is the language chosen by the parties to express
their mutual intent, and that no rule of strict construction is to be applied
against any party hereto.

     

    IN
WITNESS WHEREOF, the Executive has hereunto set her hand and the Company has
caused these presents to be executed in its name and on its behalf, as of the
date above first written.

     

     

    


    
      	 
      	 
      	 
      	 
      
	
              EXECUTIVE

            	 
      	
              Q.B.I.
      ENTERPRISES LTD.

            	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
              /s/
      Juliana Friedman

            	 
      	
              By

            	
              /s/
      Daniel Zurr

            	 
      
	
              Juliana
      Friedman

            	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      


    

     

    
      
         

      

      
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    QBI
ENTERPRISES, LTD.

     

    QUARK
BIOTECH, INC.

     

    NON-COMPETITION
AND PROPRIETARY

    INFORMATION
AGREEMENT

     

    This
Non-Competition And Proprietary
Information Agreement, is made as of the 10 th day of
May, 2007, by and between QBI Enterprises, Ltd., a corporation organized under
the laws of Israel ( “QBI” ) and its parent company
Quark Biotech Inc., a California corporation ( “Quark Biotech” ), (together,
the “Company” ), and
Juliana Friedman, an employee of QBI (the “Employee”).

     

    As an
employee of QBI and in consideration of the compensation now and hereafter paid
to me by QBI, I agree to the following:

     

    1.                    
Confidential
Information.

     

    (a) Company
Information. I
agree at all times during the term of my employment and thereafter, to hold in
strictest confidence, and not to use, except for the benefit of the Company, or
to disclose to any person, firm or corporation without written authorization of
the Board of Directors of Quark Biotech (the “Board” ), any trade secrets,
confidential knowledge, data or other proprietary information (collectively
refereed to as the “Confidential Information” )
relating to products, processes, know-how, designs, formulas, development of
experimental work, computer programs, data bases, other original works of
authorship, customer lists, business plans, financial information or other
subject matter pertaining to the business of the Company. I understand that
Confidential Information does not include any of the foregoing items which have
become publicly known and made generally available through no wrongful act of
mine or of others who were under confidentiality obligations as to the item or
items involved.

     

    (b) Former
Employer Information. I agree that I will not, during my employment with
the Company, improperly use or disclose any proprietary information or trade
secrets of any former or concurrent employers or companies, if any and that I
will not bring onto the premises of the Company any unpublished document or
proprietary information belonging to my former or concurrent employers or
companies, if any unless consented to in writing by such employers or
companies.

     

    (c) Third
Party Information. I recognize that the Company has received and in the
future will receive from third parties their confidential or proprietary
information 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. I agree that I owe the Company and such third parties, during the term
of my employment and thereafter, a duty to hold all such confidential or
proprietary information in the strictest confidence and not to disclose it to
any person, firm or corporation (except as necessary in carrying out my work for
the Company consistent with the Company’s agreement with such third party) or
use it for the benefit of anyone other than for

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    the
Company or such third party (consistent with the Company’s agreement with such
third party) without the express written authorization of the
Board.

     

    2.                    
Retaining
and Assigning Inventions and Original Works.

     

    (a) Inventions
and Original Works Retained by Me.  I have attached
hereto, as Exhibit A, a list describing all patents, patent applications,
inventions, improvements, developments, original works of authorship,
trademarks, trademark applications, copyrights, copyright applications, trade
secrets or other proprietary information which were made by me prior to my
employment with the Company, (collectively referred to as “Prior Inventions”)
which belong to me, which relate to the Company’s proposed business, products or
research and development, and which are not assigned to the Company hereunder;
or, if no such list is attached, I represent that there are no such Prior
Inventions. If in the course of my employment with the Company, I incorporate
into a Company product, process or machine a Prior Invention or creation in
which I have an interest, The Company is hereby granted and shall have a
nonexclusive, royalty-free, irrevocable, perpetual, worldwide license to make,
have made, modify, use and sell such invention or creation as part of or in
connection with such product, process or machine.

     

    (b) Inventions
and Original Works Assigned to the Company.  I agree that I will
promptly make full written disclosure to the Company, will hold in trust for the
sole right and benefit of the Company, and hereby assign to the Company, or its
designee, all my right, title, and interest in and to any and all inventions,
discoveries, improvements, technology, trade-secrets, computer programs,
know-how, designs, formulas, original works of authorship, or any other
confidential materials, data, information, or instructions, technical or
otherwise and whether or not patentable or registrable under copyright or
similar laws and whether or not reduced to practice (collectively referred to as
“Inventions”), which I may solely or jointly conceive or develop or reduce to
practice, or cause to be conceived or developed or reduced to practice, during
the period of time I am in the employ of the Company. I recognize, however that
to the extent I am employed in California, Section 2870 of the California Labor
Code exempts from this provision and Inventions that I develop entirely on my
own time, without using the Company’s equipment, supplies, facilities, or trade
secret information except for those Inventions that either relate at the time of
conception or reduction to practice of the Invention to the Company’s business,
or actual or demonstrably anticipated research or development of the Company’s
or results from any work performed by me for the Company.

     

    I
acknowledge that all original works of authorship which are made by me (solely
or jointly with others) within the scope of my employment with the Company and
which are protectable by copyright are “works made for hire,” as that term is
defined in the United States Copyright Act (17 USCA Section 101).

     

    (c) Inventions
Assigned to the United States.  I agree to assign to
the United States government or other third party all my right, title, and
interest in and to any and all Inventions, original works of authorship,
developments, improvements or trade secrets whenever such full title is required
to be in the United States or other third party by a contract between the
Company and the United States or any of its agencies or such third
parties.

     

    
      
         

      

      
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    (d) Maintenance
of Records.
 I agree to keep and maintain adequate and current written records of all
Inventions made by me (solely or jointly with others) during the term of my
employment with the Company. The records will be in the form of notes, sketches,
drawings, and any other format that may be specified by the Company. The records
will be available to and remain the sole property of the Company at all
times.

     

    (e) Obtaining
Letters Patent and Copyright Registrations.  I agree that, whenever
requested by the Company, I shall assist the Company, or its designee, in
obtaining United States or foreign letters patent and copyright registrations as
the case may be, covering Inventions assigned hereunder to the Company, and I
shall execute any patent or copyright applications or such other documents as
the Company, or its counsel, to apply for and obtain such letters patent or
copyrights.

     

    I agree
that my obligation to execute or cause to be executed, when it is in my power to
do so, any such instrument or papers shall continue after the termination of
this Agreement, but the Company shall compensate me at a reasonable rate for
time actually spent by me at the Company’s request on such
assistance.

     

    If the
Company is unable because of my mental or physical incapacity or for any other
reason to secure my signature to apply for or to pursue any application for any
United States or foreign letters patents or copyright registrations, as the case
may be, covering Inventions assigned to the Company as above, then I hereby
irrevocably designate and appoint the Company and its duly authorized officers
and agents as my agent and attorney in fact, to act for and in my behalf and
stead to execute and file any such applications and to do all other lawfully
permitted acts to further the prosecution and issuance of letters patent or
copyright registrations thereon with the same legal force and effect as if
executed by me.

     

    I hereby
waive and quitclaim to the Company and all claims, of any nature whatsoever,
which I now or may hereafter have for infringement of any patents or copyright
resulting from any such application for letters patent or copyright
registrations assigned hereunder to the Company.

     

    (f) Exception
to Assignments.
To the extent that I am employed in California, I understand that the provisions
of this Agreement requiring assignment of Inventions to the Company do not apply
to any invention which qualifies fully under the provisions of California Labor
Code Section 2870 (See Exhibit B). I will advise the Company promptly in writing
of any inventions that I believe meet the criteria in Subparagraph 2(b) above;
and I will at the time provide to the Company all evidence necessary to
substantiate that belief. I understand that that the Company will keep in
confidence and will not disclose to third parties without my consent any
confidential information disclosed in writing to the Company relating to
Inventions that qualify fully under the provisions of Section 2870 of the
California Labor Code.

     

    3. Conflicting
Employment.
 I agree that, during the term of my employment with the Company, I will
not engage in any other employment, occupation, consulting or other business
activity that is directly related to the business in which the Company is now
involved

     

    
      
         

      

      
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    or
becomes involved during the term of my employment, nor will I engage in any
other activities that conflict with my obligations to the Company.

     

    4. Restriction
on Competing Activities.  Beginning on the date
I commence my employment with the Company and ending twelve months after the end
of my employment with the Company (the “Non-Competition Period”), I will not,
directly or indirectly, alone or as a partner, officer, director, owner,
employee, or consultant of any business or other entity, be engaged in any
business or other enterprise that competes, directly or indirectly, in any way
with the Company’s business as currently conducted or as may be conducted on the
date my employment with the Company terminates.

     

    5. Returning
Company Documents.  I agree that, at the
time of leaving the employ of the Company, I will deliver to the Company (and
will not keep in my possession, recreate or deliver to anyone else) any and all
devices, records, data, notes, reports, proposals, lists, correspondence,
specifications, drawings blueprints, sketches, materials, equipment, other
documents or property, or reproductions of any aforementioned items developed by
me pursuant to my employment with the Company or otherwise belonging to the
Company, its successors or assigns, including, without limitation, those records
maintained pursuant to paragraph 3(d). In the event of the termination of my
employment, I agree to sign and deliver the “Termination Certification” attached
hereto as Exhibit
C.

     

    6. Notification
of New Employer.
 In the event that I leave the Company, I hereby grant consent to
notification by the Company to my new employer about my rights and obligations
under this Agreement.

     

    7. Non-Solicitation.  I agree that for a
period of twelve (12) months immediately following the termination of my
relationship with the Company for any reason, whether with or without cause, I
shall not either directly or indirectly solicit, induce, recruit or encourage
any of the Company’s employees to leave their employment, or any customers,
clients, or other entities to terminate their relationship with the Company, or
attempt to solicit, induce, recruit, encourage or take away employees,
customers, or clients of the Company, either for myself or for any other person
or entity.

     

    8. Conflict
of Interest Guidelines.  I agree to diligently
adhere to the Conflict of Interest Guidelines attached as Exhibit D
hereto.

     

    9. Representations.  I agree to execute any
proper oath or verify any proper document required to carry out the terms of
this Agreement. I represent that my performance of all the terms of this
Agreement will not breach any agreement to keep in confidence proprietary
information acquired by me in confidence or in trust prior to my employment by
the Company. I have not entered into, and I agree I will not enter into, any
oral or written agreement in conflict herewith.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    10. General
Provisions.

     

    (a) Governing
Law; Consent to Personal Jurisdiction. This Agreement will be
governed by the laws of the State of Israel. I hereby expressly consent to the
personal and exclusive jurisdiction of the appropriate courts in Israel (as
applicable) for any lawsuit filed by me against the Company or against me by the
Company arising from or relating to this Agreement.

     

    (b) Entire
Agreement. This
Agreement sets forth the entire agreement and understanding between the Company
and me relating to the subject matter herein and all prior representations,
understandings, and agreements concerning the subject matter of this Agreement
have been merged into this Agreement. Any subsequent changes in my duties,
salary, or compensation will not effect the validity or scope of this
Agreement.

     

    (c) Severability. If one or more of the
provisions in this Agreement are deemed void by law, then the remaining
provisions will continue in full force and effect.

     

    (d) Successors
and Assigns. This
Agreement will be binding upon my heirs, executors, administrators and other
legal representatives and will be for the benefit of the Company, its
successors, and its assigns.

     

    


    
      	
              Date:

            	
              10
      May 2007

            	 
      	 
      
	 
      	 
      
	 
      	
              /s/
      Juliana Friedmann

            
	 
      	
              Signature

            
	 
      	 
      
	 
      	
              Juliana
      Friedmann

            
	 
      	
              TYPE
      NAME

            
	
              Witness:

            	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      


    

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    Exhibit
A

     

    LIST
OF PRIOR INVENTIONS

    AND
ORIGINAL WORKS OF AUTHORSHIP

    


    
      	
              Title

            	 
      	
              Date

            	 
      	
              Identifying
      Number or Brief Description

            	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      


    

     

    o  No inventions or
improvements

     

    o  Additional Sheets
Attached

     

    


    
      	
              By:

            	 
      	 
      
	
              TYPE
      NAME

            	 
      
	 
      	 
      
	
              Date:

            	 
      	 
      
	 
      	 
      	 
      	 
      


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Exhibit
B

     

    CALIFORNIA LABOR CODE SECTION
2870

     INVENTION ON OWN TIME – EXEMPTION
FROM AGREEMENT

     

    (a) Any
provision in an employment agreement which provides that an employee shall
assign, or offer to assign, any of his or her rights in an invention to his or
her employer shall not apply to an invention that the employee developed
entirely on his or her own time without using the employer’s equipment,
supplies, facilities, or trade secret information except for those inventions
that either:

     

    (1)
Relate at the time of conception or reduction to practice of the invention to
the employer’s business, or actual or demonstrably anticipated research or
development of the employer; or

     

    (2)
Result from any work performed by the employee for the employer.

     

    (b) To
the extent a provision in an employment agreement purports to require an
employee to assign an invention otherwise excluded from being required to be
assigned under subdivision (a), the provision is against the public policy of
this state and is unenforceable.”

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Exhibit
C

     

    TERMINATION
CERTIFICATION

     

    This is
to certify that I do not have in my possession, nor have I failed to return, any
devices, records, data, notes, reports, proposals, lists, correspondence,
specifications, drawings, blueprints, sketches, materials, equipment, other
documents or property, or reproductions of any aforementioned items belonging to
Quark Biotech, Inc., Q.B.I. Enterprises Ltd. and their subsidiaries, affiliates,
successors or assigns (together, the “Company”).

     

    I further
certify that I have complied with all the terms of the Company’s Employment,
Confidential Information, Invention Assignment and Arbitration Agreement signed
by me, including the reporting of any inventions and original works of
authorship (as defined therein), conceived or made by me (solely or jointly with
others) covered by that agreement.

     

    I further
agree that, in compliance with the Employment and Proprietary Information,
Agreement I will preserve as confidential all trade secrets, confidential
knowledge, data or other proprietary information relating to products,
processes, know-how, designs, formulas, developmental or experimental work,
computer programs, data bases, other original works of authorship, customer
lists, business plans, financial information or other subject matter pertaining
to any business of the Company or any of its employees, clients, consultants or
licensees.

     

    I further
agree that, in compliance with the Employment and Proprietary Information,
Agreement, for twelve (12) months from this date, (i) I will not, directly or
indirectly, be engaged in any business or other enterprise that competes,
directly or indirectly, in any way with the Company’s business (ii) hire any
employees of the Company and I will not solicit, induce, recruit or encourage
any of the Company’s employees to leave their employment.

     

    


    
      	
              Date:

            	 
      
	 
      	 
      
	 
      	
              By:

            	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	
              TYPE
      NAME

            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
       

    

    Exhibit
D

     

    CONFLICT
OF INTEREST GUIDELINES

     

    It is the
policy of Quark to conduct its affairs in strict compliance with the letter and
spirit of the law and to adhere to the highest principles of business ethics.
Accordingly, all officers, employees and independent contractors must avoid
activities which are in conflict, or give the appearance of being in conflict,
with these principles and with the interests of the Company. The following are
potentially compromising situations which must be avoided. Any exceptions must
be reported to the President and written approval for continuation must be
obtained.

     

    1.    Revealing
confidential information to outsiders or misusing confidential information.
Unauthorized divulging of information is a violation of this policy whether or
not for personal gain and whether or not harm to the Company is
intended.

     

    2.    Accepting or
offering substantial gifts, excessive entertainment, favors or payments which
may be deemed to constitute undue influence or otherwise be improper or
embarrassing to the Company.

     

    3.    Participating
in civic or professional organizations that might involve divulging confidential
information of the Company.

     

    4.    Initiating or
approving personnel actions affecting reward or punishment of employees or
applicants where there is a family relationship or is or appears to be a
personal or social involvement.

     

    5.    Initiating or
approving any form of personal or social harassment of employees.

     

    6.    Investing or
holding outside directorship in suppliers, customers, or competing companies,
including financial speculations, where such investment or directorship might
influence in any manner a decision or course of action of the
Company.

     

    
      7.    Borrowing from
or lending to employees, customers or suppliers.

    

     

    
      8.    Acquiring real
estate of interest to the Company.

    

     

    9.    Improperly
using or disclosing to the Company any proprietary information or trade secrets
of any former or concurrent employer or other person or entity with whom
obligations of confidentiality exist.

     

    10.  Unlawfully discussing
prices, costs, customers, sales or markets with competing companies or their
employees.

     

    11.  Making any unlawful
agreement with distributors with respect to prices.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    12.  Improperly using or
authorizing the use of any inventions which are the subject of patent claims of
any other person or entity.

     

    13.  Engaging in any conduct
which is not in the best interest of the Company.

     

    Each
officer, employee and independent contractor must take every necessary action to
ensure compliance with these guidelines and to bring problem areas to the
attention of higher management for review. Violations of this conflict of
interest policy may result in discharge without warning.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      


       

      


    




    [Translated
from Hebrew]

     

    Addendum
and Amendment of Conditions of Employment Agreement of May 10, 2007

    Executed
on _____

    


    
      	
              Between:

            	
              QBI Enterprises Ltd.
      (hereinafter: the “Company”)

            


    

    
      	
              And:

            	
              Mrs. Yuliana Friedman
      (hereinafter: the “Employee”)

            


    

    


    
      	
              Whereas:

            	
              The
      Company and the Employee have executed an employment agreement dated May
      10, 2007, which has been amended by the Parties from time to time
      (hereinafter: the “Employment Agreement”);
      and

            


    

    
      	
              Whereas:

            	
              The
      Parties wish to amend the conditions of the employment
      agreement;

            


    

    


    
      Therefore,
it is agreed between the Parties as follows:

    

    


    
      	
              1.

            	
              Section
      3
      of the Agreement - the Employee's monthly salary, as of September 1,
      2008, shall be in the sum of NIS
      40,000 per month.

            


    

    
      	
              2.

            	
              The
      Parties have agreed that as of September 1,
      2008, they shall adopt the conditions of section 14
      of the Severance Pay Law and the conditions of the General Approval
      regarding employer payments into pension funds and insurance funds in lieu
      of severance pay. For the purposes of the aforesaid, the Parties shall
      execute Appendix
      A attached hereto.  (For the avoidance of doubt it is
      clarified that the salary increase under this Addendum shall be subsequent
      to adoption of the aforesaid conditions, i.e., it shall not apply to
      severance pay obligations owing for the period preceding the adoption of
      the conditions of section 14).

            


    

    
      	
              3.

            	
              Except
      to the extent otherwise provided in this Addendum, the rest of the
      conditions of the employment agreement shall remain unchanged and in full
      force.

            


    

    


    
      In
witness whereof, we have hereunto set our hands:

    

    


    
      	
              The
      Company

            	
              The
      Employee

            


    

    
      	
              /s/
      D. Zurr

            	
              /s/
      Y. Friedman

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Appendix
A

    (Section
14 of the Severance Pay Law, 5723-1963)

    


    
      	
              Between:

            	
              Q. B.I. Enterprises Ltd.
      (hereinafter: the
      “Employer”) 

            


    

    
      	
               
      

            	
              And:Yuliana Friedman
      (hereinafter: the “Employee”)

            


    

    
      	
              Whereas

            	
              The
      Employer and the Employee have agreed to adopt the conditions of the
      General Approval regarding Employer Payments into Pension Funds and
      Insurance Funds in lieu of Severance Pay, published in Yalkut Pirsumim 4659 of
      June 30, 1998 (and amended in Yalkut Pirsumim 4803 of
      August 23, 1999 and in Yalkut Pirsumim 4970 of
      March 12, 2001), the full wording of which is attached to this Agreement
      and constitutes an integral part hereof (hereinafter: the “General Approval”);
      and

            


    

    


    
      	
              Whereas

            	
              Pursuant
      to the conditions of the General Approval, the Employer's payments into a
      pension fund and/or insurance fund in the amounts and on the conditions
      set out in the General Approval shall be in lieu of the severance pay
      owing to the Employee for the salary from out of which the aforesaid
      payments are made, and for the period so paid, all as set out in the
      conditions of the General Approval.

            


    

    


    
      Therefore,
the Parties declare, stipulate and agree as follows:

    

    


    
      	
              1.

            	
              Preamble;
      Interpretation

            


    

    


    
      	
               
      

            	
              1.1

            	
              The
      preamble to this Agreement and the General Approval constitute an integral
      part of this Agreement.

            


    

    


    
      	
               
      

            	
              1.2

            	
              All
      of the terms in this Agreement shall be interpreted as defined in the
      General Approval, unless otherwise defined in the
    Agreement.

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              2.

            	
              Employer's
      Undertaking

            


    

    


    
      	
               
      

            	
              2.1

            	
              The
      Employer shall transfer payments for the Employee into pension funds
      and/or insurance funds and/or provident funds for severance pay, as set
      out below [where necessary, delete whichever is
    inapplicable]:

            


    

    


    
      	
               
      

            	
              2.1.1

            	
              Insurance
      fund of

            	
              Migdal

            	 	
              Insurance
      Company Ltd.

            


    

    


    
      	
               
      

            	
              2.1.2

            	
              Pension
      fund

            	
              Makefet Veteran
      Gift

            	
              and
      supplement for provident fund for severance pay

            	
              Dor Berger
      Migdal

            	 


    

    


    
      	
               
      

            	
              2.2

            	
              In
      the event of amendment of the Employee's salary and/or marital status, the
      Employer's provisions for such payments shall be adjusted without
      requiring the execution of a separate
agreement.

            


    

    


    
      	
               
      

            	
              2.3

            	
              The
      Employer hereby waives, in advance, any right that it may have to refund
      of any monies from its payments unless the Employee withdraws monies from
      the pension fund or insurance fund other than due to an entitling event as
      defined in the General Approval, or if his employment with the Employer is
      terminated under circumstances in which a competent judicial instance has
      denied his entitlement to severance pay under the provisions of the
      Severance Pay Law, 5723-1963.

            


    

    


    
      	
              3.

            	
              Employee’s
      Declarations

            


    

    


    
      	
               
      

            	
              The
      Employee hereby declares and confirms that it is aware and agrees that
      subject to the performance of the Employer's obligations under the
      Agreement and the conditions of the General Approval, the Employer's
      payments as set out in section 2 above shall be in lieu of the severance
      pay owed to the Employee for the salary from which the aforesaid payments
      were made, and for the period in which they were
  made.

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              4.

            	
              General
      Approval

            


    

    


    The
following is the wording of the General Approval as published in Yalkut Pirsumim 4659
of June 30, 1978 (following
amendment in Yalkut
Pirsumim 4803
of August 23,
1999 and
in Yalkut Pirsumim 4970
of March 12, 2001).

    


    By virtue
of my authority pursuant to section 14 of the Severance Pay Law, 5723-1963,
(hereinafter: the “Law”), I certify that payments
made by the Employer as of the date of publication of this Certificate, for the
Employee, into a comprehensive pension in an annuity fund which is not an
insurance fund as defined in the Income Tax (Rules for Approval of and
Management of Pension Funds) Regulations, 5724-1964 (hereinafter: a “Pension Fund”), or into an
executive insurance policy which includes the ability to pay an annuity or a
combination of payments into an annuity plan and a plan which is not an annuity
plan, into such insurance fund (hereinafter: an “Insurance Fund”), including
payments made by combining payments into a Pension Fund and an Insurance Fund,
whether the Insurance Fund contains an annuity plan or not (hereinafter: “Employer Payments”) shall
stand in lieu of the severance pay owing on the Salary out of which the
aforesaid payments are made, and for the period paid (hereinafter: the “Severance Salary”), provided
that all of the above exist:

     

    (1)           Employer's Payments
–

    


    
      	
               
      

            	
              (a)

            	
              Into
      a Pension Fund shall be no less than 14.33% of the Severance Salary or 12%
      of the Severance Salary if the Employer also makes payments for the
      Employee, in addition to the above, for supplementation of severance pay
      into a severance pay pension fund or an Insurance Fund in the Employee’s
      name in the rate of 2.33% of the Severance Salary.  Where the
      Employer has not paid the aforesaid 2.33% in addition to the 12%, the
      Employer’s payments shall stand in lieu of 72% of the Employee’s severance
      pay only.

            


    

    


    
      	
               
      

            	
              (b)

            	
              Into
      an Insurance Fund are no less than one of the
  following:

            


    

    
      	
               
      

            	
              (1)

            	
              13.33%
      of the Severance Salary, if the Employer pays for the Employee, in
      addition to the above, for monthly salary assurance in the event of loss
      of capacity to work, under a plan approved by the Commissioner for Capital
      Markets, Insurance and Savings at the Ministry of Finance, in the rate
      required to assure 75% of the Severance Salary at least, or in the rate of
      2.33% of the Severance Salary, whichever is the lesser (hereinafter: “Payment for Insurance of Loss
      of Capacity to Work”);

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (2)

            	
              11%
      of the Severance Salary if the Employer also makes Payment for
      Insurance of Loss of Capacity to Work, in which case the Employer’s
      payments shall stand in lieu of 72% of the Employee’s severance pay only.
      Where the Employer, in addition to the above, makes payments in
      supplementation of severance pay into a severance pay pension fund or an
      insurance fund in the Employee’s name, in the rate of 2.33% of the
      Severance Salary, the Employer’s payments shall stand in lieu of 100% of
      the Employee’s severance pay.

            


    

    


    
      	
              (2)

            	
              No
      more than three months after the commencement of the Employer’s payments,
      a written agreement is entered into between the Employer and the Employee
      containing –

            


    

    


    
      	
               
      

            	
              (a)

            	
              The
      Employee's consent to an arrangement under this Approval in a form setting
      out the Employer's payments to the Pension Fund or Insurance Fund, as the
      case may be, such agreement to also contain the wording of this
      Approval;

            


    

    


    
      	
               
      

            	
              (b)

            	
              The
      employer's waiver, in advance, of any right that it might have to refund
      of monies from its payments, unless the employee's right to severance pay
      is denied in a judgment under section 16 or 17 of the Law and in the event
      that it is so denied or that the Employee has withdrawn monies from the
      pension fund or insurance fund other than with respect to an entitling
      event: For this purpose, “entitling event” – death, disability or
      retirement at age sixty or above.

            


    

    


    
      	
              (3)

            	
              This
      Approval shall not derogate from an employee’s right to severance pay
      under the Law, under a collective agreement, extension order or employment
      contract, in respect of salary above the exempt
  salary.

            


    

    


    
      	
              5.

            	
              Termination of
      Agreement

            


    

    


    The
Agreement shall apply to the Employer's payments commencing on 9/1/2008 and shall
remain in force for so long as the Employer is making payments in accordance
with section (1) of
the conditions of the General Approval.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    In
witness whereof, we have hereunto set our hands, this

     

    
      	
              Employer

            	
              Employee

            
	/s/
      D. Zurr	/s/
      Y. Friedman