Document:

Exhibit 10.4

EMPLOYMENT AGREEMENT

THIS AGREEMENT is entered into as of the 14th day of September, 1997,
by and between Q. B. I. ENTERPRISES LTD. (the “Company”) and Ms. Smadar
Samirah, Israel I.D. number 022498802 (the “Employee”).

 

	
  WHEREAS:

  	
   

  	
  The Company desires to
  employ the Employee as Financial Manager of the Company and the Employee
  desires to enter into such employment, on the terms and conditions
  hereinafter set forth.

  

NOW, THEREFORE in consideration of
the respective agreements of the parties contained premises and of the mutual
covenants herein contained, the parties hereby agree as follows:

1.                          Term

The term of employment of the Employee under this
Agreement shall commence on 14th September, 1997, and shall continue until
terminated in accordance with the provisions of Section 5 below.

2.                          Employment

(a)                    The Employee
shall be employed as Financial Manager of the Company. The Employee shall
perform the duties, undertake the responsibilities and exercise the authority
as determined from time to time by the Board of Directors and/or the President
& Chief Executive Officer of the Company.

(b)                   The Employee
agrees to devote total attention and full time to the business and affairs of
the Company as required to discharge the responsibilities assigned to the Employee
hereunder. During the term of this Agreement, the Employee 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 Employee’s
duties shall be in the nature of management duties that demand a special level
of loyalty and accordingly the Law of Work Hours and Rest - 1951 shall not
apply to this Agreement. The parties hereto confirm that this is a personal
services contract and that the relationship between the parties hereto shall
not be subject to any general or special collective employment agreement or any
custom or practice of the Company in respect of any of its other employees or
contractors.

(d)                   The Employee’s
regular place of employment is at the Company’s offices in Israel. However, the
Employee acknowledges that the Company may, from time to time, direct that his
work be performed at other locations.

3.                          Remuneration

(a)                    The Company
agrees to pay the Employee during the term of this Agreement a gross salary of
NIS 16,000 (Sixteen Thousand New Israel Shekels) per month. Said salary shall
be paid in arrears by the 5th day of each month in respect to a
preceding month in which the Employee was in employment (hereinafter referred
to as the “Salary”).

(b)                   The Salary
specified in sub-clause 3(a) includes remuneration for working overtime and on
days of rest, and the Employee shall not be entitled to any further
remuneration or payment whatsoever other than the Salary and/or benefits,
unless expressly specified in this Agreement. The Employee acknowledges that
the Salary to which he is entitled pursuant to this Agreement constitutes due
consideration for him working overtime and on the weekly rest.

(c)                    The Salary
will be adjusted from time to time in accordance with the cost of living
increments (Index) which apply to all employees in Israel.

(d)                   The Company
may, in its sole and exclusive discretion, consider awarding he Employee an
annual bonus.

 

21 January 1998

 

 

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(e)                    All sums
mentioned in this Agreement are pre-tax. The Employee shall bear and pay any
and all taxes imposed on his salary and other benefits hereunder.

4.                          Employee Benefits

The Employee shall be entitled to the following
benefits:

(a)                    Manager’s
Insurance. The Company shall effect a Manager’s Insurance Policy (the
“Policy”) for the Employee and shall pay a sum equal to 13.33% of the
Employee’s Salary toward such Policy, (of which 8.33% will be on account of severance
pay and 5% on account of pension fund payments) and a further 2.5% of the
Employee’s Salary on account of disability pension payments. The Company shall
deduct 5% from the Employee’s Salary to be paid on behalf of the Employee
towards such Policy. Payments by the Company towards the Policy under this
Section 4(a) shall be in lieu of any statutory obligations to pay severance
pay, subject to the approval of the Minister of Labor under Section 14 of the
Severance Pay Law 5723-1963.

(b)                   Further
Education Fund Contributions. The Employee is entitled to elect to
participate in a further education fund. Should the Employee so elect to
participate in such a further education fund, The Company shall pay a sum equal
to 7.5% of the Employee’s Salary and shall deduct 2.5% from the Employee’s
Salary to be paid on behalf of the Employee toward a further education fund.
Use of these funds shall be in accordance with the by-laws of the fund.

(c)                    Sick Leave.
The Employee shall be entitled to fully paid sick leave pursuant to the Sick
Pay Law - 1976.

(d)                   Vacation.
The Employee shall be entitled to an annual vacation of 22 working days at full
pay on dates to be coordinated the Company in advance. The Employee shall not
be entitled to receive from the Company any Sabbatical Year Leave.

(e)                    Automobile.
The Company shall pay the Employee, on a monthly basis, an allowance to cover
the cost of:

 

21 January 1998

 

 

 

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(i)                        Comprehensive
car insurance;

(ii)                     Compulsory
insurance;

(iii)                  Annual Ministry
of Transport test;

(iv)                 Travel of 20 km
per working day.

(f)                      Stock
Options The Employee shall be entitled to options to purchase shares of the
Company’s holding company, Quark Biotech Inc. (herein - “Quark”) on the terms
of Quark’s Option Plan for Israeli Employees of the Company to be adopted by
Quark. From the date of commencement, 40,000 options are granted. From 14th
September, 1998, an additional 20,000 options are granted. The exercise price
is US$ 0.4 for all the above options granted.

5.                          Termination

(a)                    The Employee’s
employment hereunder may be terminated under the following circumstances:

(i)                        Termination
for Cause. The Company may terminate the Employee’s employment for Cause.
Such termination shall take immediate effect and the Company is not required to
serve any prior notice upon the Employee. For purposes of this Agreement,
termination for “Cause” shall mean and include: (i) conviction of any felony
involving moral turpitude or affecting the Company; (ii) any refusal to carry
out a reasonable directive of the Board of Directors of the Company which
involves the business of the Company and was capable of being lawfully
performed; and (iii) embezzlement of funds of the Company; (iv) breach of
Section 6 and/or 7 below by the Employee; If the employment of the Employee is
terminated for cause, then the Employee shall not be entitled to any
compensation pursuant to Section 3. The Employee shall be entitled to the
amount of severance pay required by law except in cases in which the dismissal
of an employee would not entitle the employee to severance pay pursuant to the
Severance Pay Law.

(ii)                     Termination
for any other reason. Without derogating from sub-section 5(a)(i) above,
the Company may terminate the Employee’s employment for any reason whatsoever
provided

 

21 January 1998

 

 

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that the Employee is given not less than 60 days
written notice of termination. During such 60 days period the Employee shall be
entitled to compensation pursuant to Section 3. The Employee shall be entitled
to the amount of severance pay required by law (subject to the provisions of
Section 5(c) below). Notwithstanding the above, it is agreed and accepted by
the Employee that during the first six months from the date hereof (herein -
“Trial Period”), each of the Company and the Employee shall be entitled to
bring this Agreement to an end by the service of written notice thereof
carrying immediate effect.

(b)                   The Employee
may terminate this agreement and resign from his employment hereunder, provided
he has given the Company not less than 60 days written notice During such 60
days period, the Employee shall be entitled to compensation pursuant to Section
3. The Company may waive such notice period (in whole or in part) in which
event this Agreement including the Employee’s right to compensation pursuant to
Section 3 shall forthwith terminate. Upon termination by the Employee as above,
the Employee shall be entitled to the amount of severance pay required by law
(subject to the provisions of Section 5(c) below).

(c)                    The Company
and Employee agree and acknowledge that in the event the Company transfers
ownership of any Employee insurance policy to the Employee, that such transfer
shall constitute the payment of any severance pay the Company is required to
pay to the Employee pursuant to the Severance Pay Law (5727-1963). The Company
agrees not to object to releasing all funds in such Employee insurance policy
in the name of the Employee to the Employee except in cases in which the
dismissal of an employee would not entitle the employee to severance pay
pursuant to the Severance Pay Law.

6.                          Confidentiality & Intellectual Property

(a)                    Proprietary
Information. In this Section 6 reference to “Confidential Information” shall
include reference to all information which the Company and/or Quark considers
to be of a confidential nature, including but not limited to

 

21 January 1998

 

 

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trade secrets, know-how, financial data, documentation,
graphs, drawings, diagrams, blueprints, records, specifications, technologies,
analyses of materials and compounds, processes, techniques, research and test
materials, computer programs in human or machine-readable code (including
notes, spread-sheets and flow­charts), business and marketing plans and
projections, details of arrangements and agreements with third parties,
information pertaining to customers and suppliers of the Company and/or Quark,
formulae, ideas whether reduced to a material form or otherwise, designs,
plans, models and any part thereof and, without derogating from the
generality of the foregoing, any material marked or endorsed by or for the
Company and/or Quark as “secret” or “confidential”.

(b)                   Non-Disclosure.
Employee agrees that, except as directed by the Company and/or by Quark, and in
the ordinary course of the business of the Company and/or Quark, Employee will
not during or after the Employee’s employment with the Company disclose to any
person or use, directly or indirectly for Employee’s own benefit or the benefit
of others, the Confidential Information or any part thereof, or permit any
person to examine or make copies of any documents which may contain or be
derived from the Confidential Information. Employee agrees that the provisions
of this Section 6 shall survive the termination of this Agreement and
Employee’s employment by the Company, and shall remain in force and binding
upon him for a further period of five years after such termination of
employment.

(c)                    All
intellectual property developed, originated, conceived, written or made by the
Employee during the term of his employment with the Company which is in any way
connected to the business of the Company and/or Quark shall be wholly-owned by
the Company, and the Company shall be entitled to deal therewith as it desires
and register said intellectual property (if in any registrable form) in its
sole name. The Employee shall assist the Company in everything necessary in
order to register its rights in such intellectual property, both inside and
outside Israel, and shall execute every document required in such connection
even after the termination of his employment with the Company insofar as
necessary. The Employee irrevocably appoints the Company as his attorney in his
name and on his behalf to

 

21 January 1998

 

 

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execute all documents and do all things required in
order to give full effect to the provisions of this Section.

7.                          Competitive Activity

(a)                    During the
term of this Agreement and for a period of one year from the date of
termination of this Agreement for any reason (“the Termination Date”) the
Employee will not directly or indirectly:

(i)                        carry on
or hold an interest in any company, venture, entity or other business which
competes, directly or indirectly, with the Company and/or with Quark (“a
Competing Business”), including, without limitation, as shareholder;

(ii)                     act as a
consultant or employee or officer or in any managerial capacity in a Competing
Business;

(iii)                  solicit,
canvass, approach or endeavor to solicit, canvass or approach any person who,
to his knowledge, was provided with services by the Company and/or by Quark at
any time during the twenty four (24) months immediately prior to the Termination
Date, for the purpose of offering services or products which compete, directly
or indirectly, with the services or products supplied by the Company and/or by
Quark at the Termination Date (“Restricted Services”);

(iv)                 supply in
competition with the Company and/or with Quark Restricted Services to any
person who, to his knowledge, was provided with services by the Company and/or
by Quark at any time during the twenty four (24) months immediately prior to
the Termination Date;

(v)                    solicit or
entice away or endeavor to solicit or entice away from the Company and/or from
Quark any person employed by the Company and/or by Quark at the Termination
Date with a view to inducing that person to leave such employment and to act
for another employer in the same or a similar capacity;

 

21 January 1998

 

 

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8.                          Notice

For the purpose of this Agreement, notice and all
other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when personally delivered or sent by
registered mail, postage prepaid, addressed to the respective addresses set
forth below or last given by each party to the other.

All notices and communications shall be deemed to have
been received on the date of delivery thereof, except that notice of change of
address shall be effective only upon receipt and appropriate acknowledgment.

The initial addresses of the parties for purposes of
this Agreement shall be as follows:

 

	
   

  	
  The Company :

  	
   

  	
  Q.
  B. I. Enterprises Ltd.

  PO Box 741, Nes Ziona 74106

  Attention: Dr. Daniel Zurr

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  TEL:
  08-9408147

  FAX: 08-9406746

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  The Employee:

  	
   

  	
  Ms. Smadar
  Samirah

  Tel Hai Street, 19,

  Rishon LeZion 75277

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  TEL:
  03-9691430

  

9.                          Law and Jurisdiction. This Agreement
shall be governed by and construed and enforced in accordance with the laws of
the State of Israel. The Courts of Tel-Aviv shall have sole jurisdiction in all
matters relating to this Agreement.

10.                    Miscellaneous

(a)                    No provision
of this Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed by the Employee
and the Company. No waiver by either party hereto at any time of any breach by
the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.

 

21 January 1998

 

 

8

 

(b)                   The provisions
of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.

(c)                    This Agreement
constitutes the entire agreement between the parties hereto and accordingly
supersedes all prior agreements, understandings and arrangements, oral or
written, between the parties hereto with respect to the subject matter hereof.
No agreement or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not expressly set forth in this Agreement.

(d)                   This Agreement
shall be binding upon and shall inure to the benefit of the Company, its
successors and assigns and the Company shall require successor or assign to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession or assignment had taken place. The term “successors and assigns” as
used herein shall mean a corporation or other entity acquiring all or
substantially all the assets and business of the Company (including this
Agreement) whether by operation of law or otherwise.

(e)                    Neither this
Agreement nor any right or interest hereunder shall be assignable or
transferable by the Employee, his beneficiaries or legal representatives,
except by will or by the laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the Employee’s legal
representative.

(f)                      The section
headings contained herein are for reference purposes only and shall not in any
way affect the meaning or interpretation of this Agreement.

 

21 January 1998

 

 

9

 

IN WITNESS WHEREOF, the Company has
caused this Agreement to be executed by its duly authorized officer and the
Employee has executed this Agreement as of the day and year first above
written.

 

	
  Q. B.
  I. ENTERPRISES LTD.

  	
   

  	
  Ms.
  Smadar Samirah

  
	
  By: 

  	
  

  /s/ D. Zurr

  	
   

  	
  

  /s/ Smadar

  
	
  Name: 

  	
  D. Zurr

  	
   

  	
   

  	
   

  
	
  Title:

  	
  President

  	
   

  	
   

  	
   

  

 

21 January 1998

 

 

10

 

Appendix to Employment
Agreement

Drafted and executed on January 21, 2007

Between:

Q.B.I Enterprises Ltd. At Nes Ziona, P.O. Box 4071 (the “Company”)

And;

Smadar Shakked (I.D 224988902) at 7 Spinoza St., Tel Aviv (the
“Employee”)

Whereas, the Employee desires to take a “leave of absence;”

Whereas, The Employee received consent from the Company for taking the
“leave of absence” subject to the following terms:

Accordingly, the parties hereto agree as follows:

1.                         Both
parties agree that the Employee shall take the leave of absence from December
1, 2006 until August 1, 2007 (the “leave of absence period”). The leave of
absence period may be extended/shortened as agreed upon between Company and
Employee.

2.                         Both
parties agree that during the leave of absence period the employment
relationship between the two parties shall be put on hold in a way that the
Employee shall not be entitled to receive from the Company during the leave of
absence period any payments and/or other allocations put aside by the Company
for the benefit of the Employee as part of some kind of fund.

IN WITNESS WHEREOF, the parties have executed this Appendix:

 

	
  Q.B.I Enterprises Ltd.

  	
   

  	
   

  	
  Smadar Shakked

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ D. Zurr

  	
   

  	
   

  	
  /s/ SmadarEXHIBIT 4

EXHIBIT 4.1

HEPALIFE TECHNOLOGIES, INC.

PROMISSORY NOTE

$250,000

March 8, 2005

     HepaLife Technologies, Inc., a Florida corporation (the "Company"), for value received, hereby promises to pay to Harmel S. Rayat ("Holder") or order, the principal sum of Two hundred fifty thousand dollars ($250,000) with interest as provided below.

     1.   Payment.

     (a) Payment. Subject to the provisions of Section 3 hereof relating to the revision of this Note, principal and accrued interest hereof shall be payable on March 8, 2006 (the "Maturity Date"). Payment hereunder shall be made by the Company to the Holder, at the address as provided to the Company by the Holder in writing, in lawful money of the United States of America. Interest shall accrue with respect to the unpaid principal amount of the loan from the date of this Note until such principal is paid at a rate of eight and one-half percent (8.50%) per annum (computed on the basis of a 365-day year).

     (b) Prepayment. The Company shall have the right at any time and without penalty to prepay, in whole or in part, the principal outstanding and/or the interest accrued hereunder.

2.   Events of Default. 

The occurrence of any of the following shall constitute an "Event of Default" under this Note:

 

    (a) Failure to Pay. The Company shall fail to pay (i) when due any principal payment on the due date hereunder or (ii) any interest or other payment required under the terms of this Note on the date due and such payment shall not have been made within fifteen (15) days of Company's receipt of Holder's written notice to the Company of such failure to pay; or

     (b) Voluntary Bankruptcy or Insolvency Proceedings. The Company shall (i) apply for or consent to the appointment of a receiver, trustee, liquidate or custodian of itself or of all or a substantial part of its property, (ii) make a general assignment for the benefit of its or any of its creditors, (iii) be dissolved or liquidated in full or in part, (iv) commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such relief or to the appointment of or taking possession of its property by any official in an involuntary case or other proceeding commenced against it, or (v) take any action for the purpose of effecting any of the foregoing; or

     (c) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the appointment of a receiver, trustee, liquidator or custodian of the Company or of all or a substantial part of the property thereof, or an involuntary case or other proceedings seeking liquidation, reorganization or other relief with respect to the Company or the debts thereof under any bankruptcy, insolvency or other similar law or hereafter in effect shall be commenced and an order for relief entered or such proceeding shall not be dismissed or discharged within thirty (30) days of commencement.

3.   Rights of Holder Upon Default. 

Upon the occurrence or existence of any Event of Default (other than an Event of Default referred to in Paragraphs 2(b) and 4(c)) and at any time thereafter during the continuance of such Event of Default, 

Holder may declare all outstanding Obligations payable by Company hereunder to be immediately due and payable without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived. Upon the occurrence or existence of any Event of Default described in Paragraphs 2(b) and 4(c), immediately and without notice, all outstanding Obligations payable by Company hereunder shall automatically become immediately due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived.

     4. Miscellaneous.

     (a) Amendment Provisions. Any provision of this Note other than the principal amount and identity of the Holder may be amended, waived or modified upon the written consent of the Company and the Holder.

     (b) Severability. If any provision of this Note is determined to be invalid, illegal or unenforceable, in whole or in part, the validity, legality and enforceability of any of the remaining provisions or portions of this Note shall not in any way be affected or impaired thereby and this Note shall nevertheless be binding between the Company and the Holder.

     (c) Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Florida.

     (d) Binding Effect. This Note shall be binding upon, and shall inure to the benefit of, the Company and the Holder and their respective successors and assigns; provided, however, that the Company may not assign its obligations hereunder without the Holder's prior written consent.

     (e) Enforcement Costs. The Company agrees to pay all costs and expenses, including, without limitation, reasonable attorneys' fees and expenses, the Holder expends or incurs in connection with the enforcement of this Note, the collection of any sums due hereunder, any actions for declaratory relief in any way related to this Note, or the protection or preservation of any rights of the Holder hereunder.

     (f) Notices. Any notice, request or other communication required or permitted hereunder shall be in writing and shall be duly given upon receipt if personally delivered or mailed by registered or certified mail, postage prepaid, or by recognized overnight courier or personal delivery, addressed (i) if to Holder, at the address or facsimile number of such Holder, or at such other address or number as such Holder shall have furnished to the Company in writing, or (ii) if to Company, at Suite 216, 1628 West 1st Avenue, Vancouver, BC, Canada, V6J 1G1, Attention: Chief Financial Officer or at such other address as Company shall furnish to the Holder in writing.

     (g) Payment. Payment shall be made in lawful tender of the United States.

     (h) Headings. Section headings used in this Note have been set forth herein for convenience of reference only. Unless the contrary is compelled by the context, everything contained in each section hereof applies equally to this entire Note.

     IN WITNESS WHEREOF, the Company has caused this Note to be issued as of the date first written above.

HepaLife Technologies, Inc.

/s/ Arian Soheili

Name: Arian Soheili

Title: President and CEO

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