Unassociated Document


    
 

    Offer
      of Employment

    


    


    October
      17, 2005

    


    Walter
      C.
      Ogier

    433
      Main
      Street

    Winchester,
      MA 01890

    


    Dear
      Walter:

    


    Confirming
      our recent discussion, Arbios Systems, Inc. (the Company), is pleased to offer
      you the position of President and Chief Executive Officer in accordance with
      the
      terms set forth below:

    


    	·  	
            Duties
              and Responsibilities
              -
              You will
              report to the Board of Directors and in turn will be responsible for
              managing all aspects of the Company's business. Your major
              responsibilities will include, but not be limited to, managing the
              Company’s relationships with the financial community, charting the course
              of the corporation and pro-viding the strategic concepts, planning
              and
              broad executive management necessary to achieve profitability, growth
              and
              other financial objectives; interpreting and applying the policies
              of the
              Board of Directors; overseeing the development of operating plans and
              controlling the activities and opera-tions of all components of the
              Company, including compliance with all SEC and IRS
              Regulations.

          


    


    	·  	
            Board
              of Directors -
              Upon commencement of your employment, the Board of Directors will elect
              you as a director of the Company, to serve with the other Directors
              until
              the next annual meetings of the
              stockholders.

          


    


    	·  	
            Salary
              - Your
              initial base salary will be $300,000. Your salary will be payable in
              regular installments established by the Company, and the Company will
              make
              appropriate deductions from your salary for Federal, State and Local
              Payroll withholding taxes. Your initial salary will be subject to review
              and adjustment on an annual basis in accordance with the procedures
              established by the Company’s Board of
              Directors.

          


    


    	·  	
            Performance
              Bonus -
              You will be eligible to receive an annual cash bonus equal up to 50%
              of
              your annual base salary based on meeting reasonable performance goals
              mutually established by you and the Board of Directors. We agree to
              pay
              you a bonus of $50,000 on January 31, 2006, which amount will be credited
              against the annual bonus that may be payable to you at the end of your
              first year of employment.

          


     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


    	·  	
            Stock
              Options - Upon
              commencement of employment you will be issued a stock option to purchase
              500,000 shares of the Company’s Common Stock at an exercise price equal to
              the closing price of the Company’s Common Stock on the day prior the date
              you commence employment, which option shall comprise ISO shares to
              the
              maximum extent permissible under law. This option will vest as follows:
              250,000 shares on the one year anniversary of the date your employment
              commences, and 250,000 shares will vest ratably at the end of each
              of the
              twelve months of the second year of your employment. You shall also
              be
              eligible for future, continued option grants consistent with your title
              and position and with past practices of the Company. Notwithstanding
              the
              foregoing, if (a) a Corporate Transaction (as defined in Section 6.1.2(b)
              of the Company’s 2005 Stock Incentive Plan) is consummated, and
              (b) in connection with that Corporate Transaction (including within
              the 12
              month period following) your employment is either terminated by the
              Company (or its successor) for any reason other than Cause (defined
              in
              this letter to mean willful misconduct that is harmful to the Company’s
              business or reputation, criminal acts, acts in bad-faith, intentional
              failure to act in the best interests of the Company, or repeated failure
              to follow a specific direction of the Board), or you are no longer
              the
              President and Chief Executive Officer of this Company (or of the surviving
              company in the event of a merger), then all option shares granted to
              you
              in connection with your Employment will immediately and fully vest
              upon
              such termination. Also, notwithstanding the foregoing, if you elect
              to
              terminate your employment for Good Reason (a material diminution of
              your
              responsibilities or compensation), or if you are terminated in
              anticipation of a potential Corporate Transaction, then all option
              shares
              granted to you in connection with your Employment will immediately
              and
              fully vest upon such termination. 

          


    


    	·  	
            At
              Will Employment - You
              agree and understand that nothing in this offer confers or will confer
              any
              right with respect to continuation of your employment by the Company,
              nor
              will it interfere in any way with your right, or the Company’s right, to
              terminate your employment at any time, with or without cause.
              

          


    


    	·  	
            Severance
              - You
              will be entitled to twelve months of salary continuance, including
              health
              benefits, if you are terminated by the Company without Cause or you
              elect
              to terminate your employment for Good Reason. You may choose to terminate
              your employment and receive the foregoing salary continuance if the
              Board
              of Directors requires you to relocate outside of Massachusetts during
              the
              first 18 months of your employment.

          


    


    	·  	
            Employee
              Benefits -
              You will be entitled to the full range of the Company’s standard employee
              benefits in accordance with established eligibility
              requirements.

          


    


    	·  	
            Vacation
              -
              You will be entitled to four weeks of vacation per year, to accrue
              ratably
              over each month of employment.

          


    


    	·  	
            Proprietary
              Information and Inventions -You
              realize that, as an employee of the Company, you may create, or have
              access to, confidential information, trade secrets, substances and
              inventions, etc. As a condition of commencing employment, you will
              be
              required to sign and deliver the Company’s standard form of Proprietary
              Information and Inventions Agreement.

          


    


    
      
         

      

      
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    	·  	
            Indemnity
              Agreement and D&O Insurance - The
              Company currently maintains a Directors and Officers Insurance policy
              for
              its officers and directors. Upon the commencement of employment, the
              Company will (i) enter into an indemnity agreement with you on mutually
              agreeable terms which will provide you with the maximum protection
              under
              Delaware law from personal liability in connection with your employment
              including provision for personal legal representation, and (ii) will
              add
              you to the Company’s existing Directors and Officers Insurance
              policy.

          


    


    	·  	
            Subject
              to your acceptance of this offer, your employment with the Company
              would
              commence on November 7, 2005.

          


    


    


    Walter,
      all of the Employees and Directors of Arbios Systems Inc. are extremely
      enthusiastic about your decision and look forward to working with you to build
      a
      successful organization.

    


    
      	 	 	 
	 	Sincerely,
	 	 
	 	ARBIOS
              SYSTEMS INC
	 
 	 
 	 
 
	 	By:  	/s/ Amy
              Factor
	 	
              
Amy
              Factor
	
               

            	Chief
              Executive Officer


      	 	 	 	 
	Accepted by:	 	 	 
	
               

               

               

            	 	 	 
	/s/ Walter
              C.
              Ogier	 	 	 
	
              
Walter
              C. Ogier	 	 	
            
	
               

              Date: October 17, 2005

            	 	 	 


    

     

    


    
      
         

      

      
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