EXHIBIT 10.6


                                LICENSE AGREEMENT

      THIS LICENSE AGREEMENT  ("Agreement") is entered into this ___ day of June
2001,  and shall be  effective  as of the date  specified  in Section 2.7 hereof
("Effective  Date") by and between  CEDARS-SINAI  MEDICAL  CENTER,  a California
nonprofit  public  benefit  corporation  ("CSMC"),  with offices at 8700 Beverly
Boulevard, Los Angeles, California 90048-1865, and ARBIOS TECHNOLOGIES,  INC., a
Delaware  corporation  ("Licensee"),  with offices at 2331 Buckingham  Lane, Los
Angeles, California 90077-1339.

                                 R E C I T A L S

      A. CSMC owns and/or is entitled to grant  license  rights with  respect to
certain Patent Rights and Technical  Information  (as defined below) invented or
developed in the course of certain studies in the area of liver cell procurement
and   cryopreservation   for  use  in  cell-based   therapies  like   hepatocyte
transplantation and support of failing liver using  extracorporeal  liver assist
devices (the "Liver Studies  Programs") at CSMC conducted under the direction or
supervision of Achilles A. Demetriou,  M.D., Ph.D., or Jacek Rozga,  M.D., Ph.D.
(hereinafter collectively referred to as the "Inventors").

      B. CSMC desires to have the Patent  Rights and the  Technical  Information
developed,  used and  commercialized  in the Field of Use (as defined  below) by
Licensee,  and Licensee  desires to obtain an  exclusive,  worldwide  license to
conduct research in the Field of Use, and to develop,  manufacture, use and sell
Products  (as defined  below) in the Field of Use,  using the Patent  Rights and
Technical Information in accordance with the terms of this Agreement. Other than
the rights expressly granted by CSMC hereunder within the Field of Use, Licensee
acknowledges  that CSMC shall retain all other rights with respect to the Patent
Rights and the Technical Information.

      C. CSMC and Licensee  intend that the execution,  delivery and performance
of this  Agreement  by each  party,  and the  consummation  of the  transactions
contemplated hereunder,  shall not at any time threaten CSMC's tax-exempt status
under Section  501(c)(3) of the Internal  Revenue Code and Section 23701d of the
California  Revenue and Taxation  Code, or cause CSMC to be in default under any
of CSMC's issued and outstanding tax-exempt bonds.

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

1.    DEFINITIONS

      1.1  "AFFILIATE" or  "AFFILIATES"  shall mean any  corporation,  person or
entity,  which  controls,  is controlled  by, or is under common control with, a
party to this Agreement without regard to stock or other equity  ownership.  For
purposes hereof, the terms "control" and "controls" mean the possession,  direct
or indirect, of the power to direct or cause the direction of the management and
policies of a corporation,  person or entity,  whether  through the ownership of
voting securities, by contract or otherwise.


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<PAGE>

      1.2 "CONFIDENTIAL  INFORMATION" shall mean any confidential or proprietary
information  furnished by one party (the "Disclosing  Party") to the other party
(the "Receiving  Party") in connection with this Agreement,  including,  without
limitation, all specifications,  know-how, trade secrets, technical information,
drawings,   software,  models,  business  information  and  patent  applications
pertaining  to the  Patent  Rights  and  Technical  Information,  and as further
provided in Section 10 hereof.

      1.3 "FDA" shall mean the United  States Food and Drug  Administration,  or
any successor agency thereof.

      1.4 "FIELD OF USE" shall mean any and all  applications and uses of any of
the Licensed Patents or any of the Technical Information.

      1.5 "FUNDING  AGENCIES" shall mean any public or private granting agencies
which have provided  funding to CSMC or the Inventors for the development of any
of the Patent Rights or Technical Information prior to the Effective Date.

      1.6  "FUTURE   PATENT   RIGHTS"  shall  mean  any  patents  and/or  patent
applications  claiming  Inventions invented after the Effective Date through any
use of the Patent Rights or Technical  Information  licensed  hereunder  arising
from work conducted by or under the direction of the Inventors during the course
of their  employment  with CSMC,  and any  patents  and/or  patent  applications
(including  provisional patent applications) in any other country  corresponding
to   any   of    the    foregoing,    and    all    divisions,    continuations,
continuations-in-part,   reissues,   reexaminations,   supplementary  protection
certificates and extensions thereof, whether domestic or foreign, and any patent
that  issues  thereon.  Future  Patent  Rights  do not  include  any  Inventions
conceived  or  reduced  to  practice  solely  during  the  Inventors'  course of
employment, if any, with Licensee.

      1.7 "FUTURE TECHNICAL INFORMATION" shall mean the following information in
the Field of Use  developed  after the  Effective  Date through  practicing  the
Inventions  claimed in or otherwise  arising through any of the Patent Rights or
Technical Information licensed hereunder arising from work conducted by or under
the direction of the Inventors  during the course of their employment with CSMC:
Know-how,   trade   secrets,   unpublished   patent   applications,    software,
bioinformatics,   unpatented  technology,  technical  information,   statistical
information and analyses, biological materials,  chemical reagents,  preclinical
and  clinical  information,   and  any  and  all  confidential  and  proprietary
information  described in the Future Patent Rights or Inventions  invented after
the  Effective   Date  through  any  use  of  the  Patent  Rights  or  Technical
Information.  Future Technical Information does not include any know-how,  trade
secrets, unpublished patent applications,  software, bioinformatics,  unpatented
technology,   technical  information,   statistical  information  and  analyses,
biological materials,  chemical reagents,  pre-clinical and clinical information
conceived  or  reduced  to  practice  solely  during  the  Inventors'  course of
employment, if any, with Licensee.


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<PAGE>


      1.8  "INVENTION"  shall  mean  all  unpatented,  patentable  and  patented
inventions,  discoveries,  designs,  apparatuses,  systems,  machines,  methods,
processes,  uses, devices, models, composition of matter, technical information,
trade secrets, know how, codes, programs or configurations of any kind which are
in the Field of Use.

      1.9  "LICENSEE  IMPROVEMENTS"  shall  mean  any and all  processes,  uses,
designs,   applications,   methods  and   compositions-of-matter,   indications,
improvements, enhancements and modifications in the Field of Use that relate to,
and are directly based upon or directly  created using, the Patent Rights and/or
Technical  Information and which were discovered or developed by or on behalf of
Licensee (exclusive of work performed by CSMC or the Inventors during the course
of their  employment  with CSMC,  but inclusive of work  performed by Licensee's
sublicensees under  circumstances where Licensee has obtained such sublicensees'
prior written consent), during the term of this Agreement.

      1.10 "PATENT  RIGHTS" shall mean the patents  and/or  patent  applications
existing  on the  Effective  Date  which are  described  on  Schedule A attached
hereto, and all patents and/or patent applications (including provisional patent
applications)   existing  as  of  the  Effective   Date  in  any  other  country
corresponding  to  any of  the  foregoing,  and  all  divisions,  continuations,
continuations-in-part,   reissues,   reexaminations,   supplementary  protection
certificates and extensions thereof, whether domestic or foreign, and any patent
that issues thereon. The Patent Rights are all owned by CSMC.

      1.11  "PRODUCT" or  "PRODUCTS"  shall mean any  products or services  that
utilize,  are  derived  from  or  made  from,  or  incorporate,  in  any  manner
whatsoever, any of the Patent Rights or Technical Information.

      1.12  "TECHNICAL  INFORMATION"  shall mean, as of the Effective  Date, any
know-how,   trade   secrets,   unpublished   patent   applications,    software,
bioinformatics,   unpatented  technology,  technical  information,   statistical
information and analyses, biological materials,  chemical reagents,  preclinical
and clinical  information,  in each case which has been  conceived or reduced to
practice  prior to the  Effective  Date,  in the  conduct  by CSMC of the  Liver
Studies  Programs  at CSMC  under the  direction  or  supervision  of any of the
Inventors. The Technical Information shall further include information described
in Schedule B hereto  which is  described  in, or useful in the practice of, the
Patent Rights and which has been  conceived or reduced to practice  prior to the
Effective Date in the conduct of any of the aforementioned  research programs at
CSMC under the direction or supervision  of any of the Inventors.  The Technical
Information is owned by CSMC.

      1.13 "TERRITORY" shall mean the World.

      1.14 "VALID CLAIM" shall mean a claim of (a) a patent application included
within the Patent  Rights,  which  patent  application  has not been pending for
longer  than ten (10)  years  after its first  filing,  or (b) an issued  patent
included within the Patent Rights, which claim has not (i) lapsed, been canceled
or  become  abandoned,   (ii)  been  declared  invalid  or  unenforceable  by  a
non-appealable  decision  or judgment  of a court or other  appropriate  body or
authority of  competent  jurisdiction,  or (iii) been  admitted to be invalid or
unenforceable through reissue, disclaimer or otherwise.



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<PAGE>


2.    LICENSE

      2.1 GRANT OF  EXCLUSIVE  RIGHTS.  Subject to the terms of this  Agreement,
CSMC hereby  grants to Licensee,  and  Licensee  hereby  accepts from CSMC,  the
exclusive,  worldwide license,  with the right to grant sublicenses  (subject to
the terms of Section 2.2 hereof), during the term of this Agreement (as provided
in Section 6 hereof) to  conduct  research  in the Field of Use using the Patent
Rights and the  Technical  Information  and to develop,  use,  make,  have made,
practice,  import, carry out,  manufacture,  have manufactured,  offer for sale,
sell and/or have sold  Products in the Field of Use in the  Territory  using the
Patent Rights and the Technical Information.  The foregoing grant of exclusivity
is made expressly subject to the following:

            (A)  All  applicable  laws  and  regulations,   including,   without
limitation,  the  requirements  of federal law as pertains to the manufacture of
products within the United States;

            (B) All applicable rules of the Funding Agencies which have provided
funding to CSMC or to any of its employees  (including any of the Inventors) for
the development of the Patent Rights and Technical Information; and

            (C) The  following  non-exclusive  rights to the  Patent  Rights and
Technical Information, which are retained by CSMC (and which are transferable by
CSMC solely to its Affiliates for so long as they remain  Affiliates) within the
Field of Use:

                  (I) Subject to  Licensee's  right to prior review to determine
the  patentability  thereof (which shall expire after forty-five (45) days after
Licensee's receipt thereof in complete written form,  including all amendments),
the right to submit  for  publication  the  scientific  findings  from  research
conducted  by or through CSMC or its  investigators  (including  the  Inventors)
related to the Patent Rights and the Technical Information;

                  (II) Except as provided in subparagraph (d) hereof,  the right
(A) to use any tangible or intangible information contained in the Patent Rights
or the Technical  Information  (so long as CSMC shall treat such  information as
Confidential  Information  and maintain its  confidentiality  in accordance with
Section 10 hereof), for CSMC's internal teaching and other educationally-related
and  non-commercial  (except for charges to its own patients) clinical purposes,
where clinical use does not involve a third party funding grant to commercialize
or develop  such  information,  and (B) to obtain  research  funding for further
study  and   development   thereof  from   governmental   and  other   nonprofit
organizations (including grant applications); and

                  (III) Except as provided in subparagraph (d) hereof, the right
to conduct  research using the Patent Rights and Technical  Information,  and to
develop, use, make, practice, carry-out, and otherwise exploit the Patent Rights
and  Technical  Information  for CSMC's  internal  research  and  non-commercial
(except for charges to its own patients) clinical  purposes,  where clinical use
does not involve a third party  funding  grant to  commercialize  or develop any
Product.


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<PAGE>

            (D) CSMC shall not, under any  circumstances,  grant and/or transfer
any rights (i) retained by CSMC under  Section  2.1(c) to any third party (other
than to  Licensee  or,  where  required by  applicable  law,  rule,  regulation,
governmental  policy or  contract,  to any Funding  Agency or the United  States
Government) or (ii) to commercialize  Inventions or information  related thereto
derived  directly  from the Patent Rights or the  Technical  Information  in the
Field of Use as a result of CSMC's  teaching and internal  research and clinical
activities with respect to the Patent Rights and Technical Information otherwise
permitted by Sections 2.1(c)(ii) and (iii) above.

            (E)  There  are no rights to the  Patent  Rights  and the  Technical
Information  outside of the Field of Use to be retained  by CSMC.  All rights to
the Future Patent Rights and Future Technical  Information  shall be governed by
Section 2.3 hereof and, if applicable,  any license  agreement  between CSMC and
Licensee  with  respect  to such  Future  Patent  Rights  and  Future  Technical
Information.

      2.2  RIGHT  TO  SUBLICENSE.   Licensee  shall  have  the  right  to  grant
sublicenses  to any of its rights under  Section 2.1;  provided,  however,  that
Licensee  shall not  sublicense  any such  rights to any  entity  which is not a
recognized biopharmaceutical,  pharmaceutical or bio-diagnostic company which is
either (a) listed on Schedule C hereto,  as amended  from time to time by mutual
agreement of the parties, or (b) generally recognized in such industries and has
a level  of  science,  management  and  investors  of the  quality  as  shall be
acceptable to CSMC (each,  an "Acceptable  Sublicensee")  on the basis of CSMC's
prior written consent (which consent shall not be unreasonably withheld, delayed
or conditioned). In order to preserve and protect the value of the Patent Rights
and Technical  Information,  Licensee shall obtain the prior written  consent of
CSMC prior to entering  into or granting a sublicense to any party who is not an
Acceptable  Sublicensee under subclause (a) above. Licensee also shall keep CSMC
reasonably  informed with respect to the progress of any relations  entered into
with any Acceptable Sublicensees (or any other party for whom CSMC has given its
prior  written  consent)  and shall give due  consideration  to any  comments or
concerns that CSMC has with respect to same.  Any and all  sublicenses  shall be
subject to the terms of this  Agreement.  Licensee shall promptly notify CSMC of
all sublicenses and shall require all sublicensees to perform in accordance with
the  terms  of this  Agreement  (including,  but not  limited  to,  the  royalty
reporting and record  keeping  provisions,  the  indemnification  and inspection
provisions,  and the provisions  pertaining to the use of CSMC's names and marks
and Confidential  Information).  Licensee will be responsible for enforcing each
sublicensee's  obligations  under its  sublicense  and, in  particular,  royalty
payment  obligations due on such  sublicensee's  sales of Products.  If Licensee
shall conduct one or more audits of its  sublicensees  hereunder during the term
hereof,  Licensee shall provide to CSMC, on a timely basis,  copies of all audit
reports;  provided,  however,  that Licensee shall have the right to redact from
such audit  reports any and all  information  which is not related to the Patent
Rights and Technical  Information or the license  granted to Licensee under this
Agreement.  The covenants  pertaining  to the use of CSMC's name and marks,  the
indemnification  of CSMC and the use of CSMC's  Confidential  Information in any
sublicense  shall run for the benefit of CSMC, who shall be expressly  stated as
being a third-party  beneficiary thereof with respect to the covenants set forth
in this  Agreement.  Licensee  understands and agrees that none of its permitted
sublicenses  hereunder  shall  reduce in any manner any of its  obligations  set
forth in this Agreement.


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<PAGE>


      2.3 CERTAIN FUTURE RIGHTS. The following shall pertain to Inventions which
constitute Future Patent Rights or Future Technical Information:  Subject to the
rights and applicable rules of the Funding Agencies,  Licensee shall have, for a
period of ninety  (90) days after  either (a)  receipt  by  Licensee  of written
notice from CSMC  disclosing in adequate detail any such Inventions in the Field
of Use or (b) written  notification  by any of the Inventors to each of Licensee
and CSMC  disclosing in adequate detail any such Inventions in the Field of Use,
the exclusive  first right to negotiate with CSMC to obtain one or more licenses
to the  Future  Patent  Rights  in the  Field  of Use  and/or  Future  Technical
Information  in the Field of Use,  upon such  terms and  conditions  as shall be
agreed  by  the  parties  hereto,  which  terms  and  conditions  shall  include
provisions  for  fair  market  value  consideration  for the  grant  of any such
licenses.  Subject to the rights and applicable rules of the Funding Agencies or
the  United  States  Government,  and to the  extent  it  would  not  impair  or
jeopardize  any efforts of CSMC to obtain  domestic or foreign  rights  thereto,
CSMC shall  provide  Licensee  with prompt  written  disclosure of Future Patent
Rights in the Field of Use and/or Future  Technical  Information in the Field of
Use as may be developed by CSMC or either of the Inventors. If Licensee declines
or fails to  pursue,  or if the  parties  fail to  conclude  negotiations  for a
license  to,  such  Future  Patent  Rights  in the  Field of Use  and/or  Future
Technical  Information  in the Field of Use during  the  ninety  (90) day period
specified above, then CSMC shall have the right to commence discussions with any
other party  concerning  such  Future  Patent  Rights  and/or  Future  Technical
Information.   Subject  to  the   provisions  of  this  Section  2.3,   Licensee
acknowledges  and agrees that CSMC  expressly  retains and  reserves any and all
right,  title  and  interest  in and to the  Future  Patent  Rights  and  Future
Technical Information,  whether or not in the Field of Use and, accordingly,  no
license to any Future Patent Rights or Future  Technical  Information is granted
to Licensee under this  Agreement.  CSMC shall use its reasonable and continuing
efforts during the term of this  Agreement,  in accordance with its policies and
procedures, where appropriate, to file and maintain patent applications claiming
Inventions in the Field of Use.

      2.4  LICENSE  TO USE  IMPROVEMENTS.  Licensee  hereby  grants  to CSMC the
following  license  rights to the Licensee  Improvements,  which rights shall be
nonexclusive,  royalty-free,  fully paid-up  rights and subject to the following
conditions:


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<PAGE>


            (A) Subject to  Licensee's  right to prior review to  determine  the
patentability thereof within forty-five (45) days following receipt by Licensee,
the right and license to publish the scientific findings from research conducted
for  Licensee  by CSMC  with  respect  to  particular  and  identified  Licensee
Improvements;

            (B) Except as  provided  below in this  Section  2.4,  the right and
license to use any tangible or intangible  information contained in the Licensee
Improvements  (so long as CSMC shall  treat  such  information  as  Confidential
Information  and  maintain its  confidentiality  in  accordance  with Section 10
hereof),  for  CSMC's  internal  teaching  and other  educationally-related  and
non-commercial (except for charges to its own patients) clinical purposes, where
clinical use does not involve a third party  funding grant to  commercialize  or
develop such  information  and, with Licensee's prior written consent (not to be
unreasonably withheld, delayed or conditioned),  to obtain research funding from
governmental and other nonprofit  organizations  (including grant applications);
and

            (C) Except as  provided  below in this  Section  2.4,  the right and
license to conduct  research  using the Licensee  Improvements,  and to develop,
use, make, practice and carry out the Licensee  Improvements for CSMC's internal
teaching  and  research  and  non-commercial  (except  for  charges  to its  own
patients) clinical  purposes,  where clinical use does not involve a third party
funding grant to commercialize or develop any Product.

      CSMC shall not, under any circumstances,  grant and/or transfer any rights
(i) granted to CSMC under this  Section  2.4 to any third  party  (other than to
Licensee or, where required by applicable  law, rule,  regulation,  governmental
policy or contract,  to any Funding  Agency or the United States  Government) or
(ii) to  commercialize  or  develop  Inventions  in the  Field of Use  resulting
directly from the Licensee  Improvements as a result of CSMC's internal research
and clinical  activities  with respect to the  Licensee  Improvements  otherwise
permitted by Sections 2.4(b) and (c) above.

      2.5  MILESTONES.  Licensee  acknowledges  that (a) it is important to CSMC
that  Licensee  pursue  the  development,  commercialization  and  marketing  of
Products and otherwise exercise commercially  reasonable efforts to maximize the
value of this Agreement to CSMC and (b) the United States Government under Title
35,  Section 203 of the United  States Code,  has certain  march-in  rights with
respect to the Patent  Rights to the extent  such Patent  Rights were  developed
with funding from the United States Government. Licensee shall be deemed to have
exercised  commercially  reasonable  efforts  to  maximize  the  value  of  this
Agreement to CSMC, and the milestone  requirements  of this Section 2.5 shall be
deemed to have been met, if Licensee meets the respective requirements set forth
on Schedule D hereto,  with each such  requirement  being  deemed a separate and
independent  condition (each, a "Milestone").  Within sixty (60) days after each
anniversary of the Effective Date, Licensee shall prepare and deliver to CSMC an
annual  written  report (to be certified  by an  executive  officer of Licensee)
indicating its  compliance  with the  Milestones.  If Licensee fails to meet any
annual Milestone designated in Schedule D hereto, CSMC may, at its option and as
its sole remedy for  Licensee's  breach of this Section 2.5, upon written notice
to Licensee,  (i) convert the exclusive license granted under Section 2.1 hereof
to a non-exclusive  license or to a co-exclusive  license, or (ii) terminate the
license;  provided,  however,  that CSMC shall in good faith  review  Licensee's
efforts and shall not exercise any of such remedies if Licensee has demonstrated
that (A) it has been exercising reasonable and diligent efforts, consistent with
industry standards,  or (B) it has been subject to events commonly recognized as
"force majeure"  events (i.e.,  events or causes for delay beyond its reasonable
control).  In the event that Licensee does not develop or  commercialize  one or
more Products as a result of legitimate  patent  infringement,  interference  or
other issues relating to the Patent Rights,  all of Licensee's  obligations with
respect to such  Products,  including,  without  limitation,  royalty  and other
payment  obligations,  and milestone and diligence  obligations  related to that
particular  Product in that  jurisdiction,  shall be suspended  unless and until
such patent  infringement,  interference  or other issues are  resolved.  In the
event that any such issues are not resolved during the term of the Agreement, or
in the event that such  issues are  resolved  in a manner  that does not provide
commercially  reasonable  incentive to develop or  commercialize  such Products,
then Licensee shall have no further  obligations  hereunder with respect to such
Products.


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      2.6 PROCEDURE FOR GRANTING ACCESS TO TECHNICAL  INFORMATION.  The grant of
rights by CSMC to Licensee  pursuant to Section 2.1 hereof are expressly subject
to the following provisions:

            (A) RESPONSIBILITY  FOR MONITORING ACCESS TO TECHNICAL  INFORMATION.
During the term of this Agreement,  the  responsibility for monitoring access to
the Technical Information (and any Future Technical Information) in the Field of
Use at CSMC  shall be borne  by the  Inventors  or,  in the  event  that all the
Inventors  shall die, become disabled or otherwise cease to be employees of CSMC
for whatever reason,  the Senior Vice President for Academic Affairs of CSMC (or
his or her  functional  equivalent  at  CSMC)  (the  "Gatekeeper").  Subject  to
Sections  2.1(c),  2.4 and 3.3 hereof,  the Gatekeeper shall not grant access to
the Technical  Information or any Future  Technical  Information in the Field of
Use to any person at CSMC  except as provided in this  Section  2.6,  and CSMC's
sole  responsibility  with  respect to  requests  for the grant of access to the
Technical Information or any Future Technical Information in the Field of Use by
any person at CSMC shall be to refer all such requests to the Gatekeeper.

            (B)  CONDITIONS  OF  ACCESS  TO  THE  TECHNICAL  INFORMATION.  As  a
condition  to  any  use  of  the  Technical   Information  or  Future  Technical
Information  by,  and any grant of access to the  Technical  Information  or any
Future  Technical  Information  to, any  person at CSMC  within the Field of Use
during the term of this  Agreement,  such person shall be required to (i) obtain
the prior  written  consent of the  Gatekeeper to obtain the use of or access to
the Technical  Information or Future Technical  Information  within the Field of
Use, and (ii) after obtaining the Gatekeeper's prior written consent,  execute a
material  transfer  agreement (to be obtained from the  Gatekeeper)  in the form
customarily  employed for such purpose by CSMC. Such material transfer agreement
shall  identify  Licensee's  rights in such  Technical  Information  and/or such
Future  Technical  Information  and specify the  obligations of the  transferee,
which obligations shall not be less than those of CSMC under this Agreement. The
Gatekeeper  shall then  promptly  provide  the  executed  originals  of all such
material transfer  agreements to CSMC, with an executed copy to Licensee for its
records.


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<PAGE>


            (C) SPECIAL  SITUATIONS.  Licensee  shall  obtain the prior  written
consent of CSMC to any proposed transfer of Technical Information (or any Future
Technical  Information) or any proposed  sublicense of any Patent Rights, to any
other  person or entity  for which  special  notice  and for which  commercially
reasonable justification is previously provided by CSMC to Licensee.

      2.7  CONDITIONS  TO  EFFECTIVENESS.   As  a  condition  precedent  to  the
effectiveness of this Agreement,  all of the following documents and instruments
shall have been fully  executed and delivered by each of the parties  hereto and
thereto:  (a) this Agreement,  including applicable Schedules A, B, C and D, (b)
that certain Stock  Purchase  Agreement by and between  Licensee and CSMC in the
form of that attached hereto as Schedule E (the "Stock Purchase Agreement"), (c)
a stock  certificate  or  certificates  in the  name of CSMC for the  Shares  of
Licensee as provided in Section 4.1 hereof, (d) that certain Facilities Lease by
and between  Licensee and CSMC in the form of that attached hereto as Schedule F
(the  "Facilities  Lease"),  (e) that  certain  Equipment  Lease by and  between
Licensee  and  CSMC in the  form of that  attached  hereto  as  Schedule  G (the
"Equipment  Lease"),  and (f) that certain  Employee  Loan-Out  Agreement by and
between Licensee and CSMC in the form of that attached hereto as Schedule H (the
"Loan-Out  Agreement").  For purposes of this  Agreement,  the "Effective  Date"
shall mean, and this Agreement shall become  effective upon, the date upon which
the last of the documents or instruments described in the preceding sentence has
been fully executed and delivered by all of the parties hereto and thereto.

3.    REPRESENTATIONS AND WARRANTIES

      3.1 RIGHTS TO  TECHNOLOGY.  Except for the rights,  if any, of the Funding
Agencies  or the United  States  Government,  CSMC  represents  and  warrants to
Licensee  that,  to the best of its  current  knowledge  (without  investigation
outside of CSMC as to such  representations and warranties) (a) it has the right
to grant the licenses in this Agreement,  (b) it has not granted licenses to the
Patent Rights or Technical  Information  to any other party that would  restrict
the rights granted hereunder except as stated herein, (c) it is the owner of the
Patent Rights and Technical Information,  (d) no other party has any interest in
the  Patent  Rights  or  Technical  Information  and (e)  there  are no  claims,
judgments or  settlements  to be paid by CSMC with respect the Patent  Rights or
Technical  Information  or pending  claims or litigation  relating to the Patent
Rights or Technical  Information.  Except for any  potential or actual rights of
Funding  Agencies or the United  States  Government,  CSMC is not aware that any
additional  rights or licenses  are  necessary  for  Licensee  to  exercise  its
licensed rights granted by CSMC under this Agreement.


                                       9
<PAGE>


      3.2 LIMITED WARRANTY.  CSMC makes no representation or warranty other than
those expressly specified in this Agreement.  Licensee accepts the Patent Rights
and the  Technical  Information  on an "AS-IS"  basis.  CSMC MAKES NO EXPRESS OR
IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR OTHER
ATTRIBUTES OF ANY OF THE PATENT RIGHTS OR TECHNICAL INFORMATION.

      3.3 RIGHTS RETAINED BY FUNDING AGENCIES. Licensee acknowledges that to the
extent that the Patent Rights and Technical  Information  have been developed in
part under one or more funding  agreements  ("Funding  Agreements")  with one or
more  Funding  Agencies,  such  Funding  Agencies  may have  certain  statutory,
non-exclusive rights relative thereto for use for government purposes as well as
regulatory or statutory "march-in rights"  (collectively,  "Statutory  Rights").
Licensee also  acknowledges that to the extent that the Future Patent Rights and
Future Technical  Information may be developed in part under one or more Funding
Agreements  with one or more Funding  Agencies,  such Funding  Agencies may have
certain  Statutory  Rights relative  thereto.  This Agreement is explicitly made
subject to such Statutory  Rights and, to the extent of any conflict between any
such Statutory Rights and this Agreement, such Statutory Rights shall prevail.

4.    CONSIDERATION

      In  consideration of the execution and delivery by CSMC of this Agreement,
Licensee agrees as follows:

      4.1  ISSUANCE OF STOCK.  As of the  Effective  Date,  Licensee  shall have
issued  681,818 shares of the voting  "Junior  Preferred  Stock of Licensee (the
"Shares"). The Shares to be issued to CSMC shall be Junior Preferred Stock, with
the rights,  preferences,  privileges  and  restrictions  set forth in the Stock
Purchase  Agreement and/or in Licensee's  Certificate of Incorporation and other
charter documents  ("Charter  Documents").  Licensee  represents and warrants to
CSMC that,  as of the  Effective  Date,  (a) the total  Shares  issuable to CSMC
hereunder  shall equal twelve  percent  (12%),  in the  aggregate,  of the total
issued  and  outstanding  shares of  Licensee's  capital  stock,  as more  fully
described  in the  capitalization  table  attached as Schedule I, (b) the Shares
shall be  convertible  voting  preferred  stock having the rights,  preferences,
privileges and restrictions as set forth in the Stock Purchase  Agreement and/or
the Charter  Documents),  (c) shall  represent one hundred percent (100%) of the
issued and outstanding  shares of the Junior  Preferred Stock of Licensee),  and
(d) would represent, at the time of issuance, twelve percent (12%) of the issued
and  outstanding  shares  of  Licensee's  common  stock  if it were  convertible
immediately upon Licensee's issuance thereof to CSMC.

      4.2 PAYMENT OF ROYALTIES.  Licensee  shall pay to CSMC certain  royalties,
which shall be determined and paid in accordance with Schedule J hereto. As more
particularly   set  forth  in   Schedule  J  hereto,   Licensee   shall   permit
representatives  of CSMC, upon reasonable prior notice, to audit and inspect its
books and records (including such thereof as shall exist in computer systems and
computer  memories)  in order for CSMC to  determine  that  Licensee  is in full
compliance with its obligations to pay and account for the royalties required by
this Agreement.


                                       10
<PAGE>


      4.3  CONSULTING  GUIDELINES;   SEEKING  RESEARCH  GRANTS.  Notwithstanding
anything  to the  contrary  contained  in CSMC's  "Guidelines  on  Institutional
Acceptance of Equity as Part of Licensing  Transactions",  CSMC expressly agrees
that, at all times during the term of this Agreement,  and subject to compliance
with the "Full Time Faculty Consulting  Guidelines" of CSMC and the terms of any
consulting or similar agreement approved by CSMC, the Inventors (a) may hold one
or  more  management  and/or  consulting  positions  with  Licensee,  (b) may be
appointed  to, and act as members  of, the Board of  Directors  and/or  advisory
boards of  Licensee,  and (c) may be  "loaned-out"  to Licensee  pursuant to the
terms of the Loan-Out Agreement.  In addition,  Licensee  acknowledges that each
Inventor,  in his capacity as an employee of CSMC, may continue to seek research
funding   after  the  Effective   Date  from  Funding   Agencies  and  nonprofit
organizations,  as  appropriate,  in  connection  with the  conduct of the Liver
Studies  Programs and research  programs in liver biology,  pathophysiology  and
therapy,   transplantation  biology  and  minimally-invasive   surgery  at  CSMC
conducted  under the direction or  supervision of the Inventors as the principal
investigators.

      4.4 RIGHT OF FIRST  CONSIDERATION.  With respect to continued  research in
the areas of  bioartificial  liver  devices,  bioartificial  liver  systems  and
associated  technology  related to a bioartificial  human liver ("BAL Area"), if
any, Licensee shall consider CSMC as its external facility of first choice,  for
research  contracts in excess of  Twenty-Five  Thousand  Dollars  ($25,000)  for
research  in the BAL Area  (excluding  therefrom  clinical  trials in which CSMC
would be considered to be an inappropriate choice by reason of its relationships
with the  Inventors).  Licensee  shall  notify CSMC in writing in each such case
where  Licensee  intends to fund such  external  research in the BAL Area.  Such
written notice shall specify the general criteria upon which Licensee intends to
choose the appropriate facility to conduct the proposed research, and CSMC shall
promptly   provide  such  information  to  Licensee  as  shall  be  relevant  in
demonstrating  its ability to meet such criteria.  Upon the presentation of such
information,  CSMC and Licensee shall negotiate in good faith the proposed terms
of a research  agreement,  to be consummated  within  forty-five (45) days after
receipt by CSMC from Licensee of a detailed written  description of the research
to be conducted.

      CSMC  acknowledges  and  agrees  that the  Shares,  royalties,  and  other
obligations of Licensee under this  Agreement  constitute  fair market value for
the  rights  granted to  Licensee  under this  Agreement  based on  arms'-length
negotiations with Licensee and an independent  evaluation made by CSMC's outside
expert(s).


                                       11
<PAGE>


5.    PATENT RIGHTS

      5.1 PROSECUTION.  Commencing on the Effective Date, Licensee shall assume,
in coordination with CSMC, full responsibility for the application, maintenance,
reexamination,  reissue,  opposition and  prosecution of any kind  (collectively
"Prosecution")  relating to the Patent Rights in the Territory,  including,  but
not limited to, payment of all costs, fees and expenses related thereto. Subject
to the  approval of CSMC (which  approval  shall not be  unreasonably  withheld,
delayed or  conditioned),  Licensee  shall have the right to select counsel with
respect to the  responsibility  assumed by Licensee  in this  Section  5.1,  and
Licensee  shall  diligently  pursue the  Prosecution of the Patent Rights to the
benefit of CSMC. For all purposes of the patent  Prosecution,  CSMC shall be the
named "client" of such patent  counsel.  Each party shall provide the other with
copies of any and all material or  communications  with the United States Patent
and Trademark Office,  or any foreign patent office,  and CSMC shall be afforded
the opportunity of prior review and comment on such action or paper.

      5.2 ABANDONMENT, DISCLAIMERS, ETC. Licensee shall obtain the prior written
consent of CSMC (which consent shall not be  unreasonably  withheld,  delayed or
conditioned) prior to abandoning,  disclaiming,  withdrawing, seeking reissue or
allowing  to  lapse  any  material  patent,   patent   application  or  Licensee
Improvements relating to the Patent Rights;  provided,  however, that CSMC shall
not  require  Licensee  to  maintain  any  patent or patent  application  in any
jurisdiction  where such  maintenance  would not be  commercially  reasonable or
economically  feasible;  and, provided further,  that any failure by Licensee to
obtain such prior written consent shall not be deemed a breach of this Agreement
if Licensee has otherwise  complied with the following notice  requirements.  In
the event that Licensee shall elect to abandon the Prosecution or maintenance of
any patent or patent application  included in the Patent Rights,  Licensee shall
notify CSMC of such  election at least  forty-five  (45) days before a final due
date which would result in abandonment or bar of  patentability of the patent or
patent  application.  In such event,  CSMC may, at its sole option and  expense,
continue  Prosecution  or  maintenance  of the  patent  application  or  patent.
Licensee  further  agrees  that  it  shall  not  file  any  continuation-in-part
application  relating to the Patent Rights unless the  additional  disclosure or
material to be included in the continuation-in-part  application is necessary or
appropriate  to  support  the  patentability  of a  claim  recited  in a  parent
application on which the  continuation-in-part  application  is based.  Prior to
filing any continuation-in-part application, Licensee shall consult with CSMC to
discuss the need for filing such an  application.  If CSMC shall  disagree  with
Licensee's  conclusion  that such a  continuation-in-part  application is either
necessary or  appropriate  to support the  patentability  of a claim  recited or
capable of being  recited  in a patent  application,  then the  matter  shall be
submitted for resolution to independent  patent counsel  mutually agreed upon by
the parties,  who will determine whether a  continuation-in-part  application is
necessary or appropriate in accordance  with this Section 5.2. Any decision made
by such  independent  patent  counsel  shall be  conclusive  and  binding on the
parties hereto.

      5.3  EXPENSES.   Licensee  shall  pay  all  expenses  resulting  from  its
obligations  in Section 5.1 hereof.  CSMC shall exercise  reasonable  efforts to
cause the  Inventors  (to the extent they are  available  and on CSMC's staff as
employees) to cooperate  fully with  Licensee  with respect to the  Prosecution,
maintenance  and protection of the Patent  Rights,  and CSMC shall be reimbursed
for all reasonable out-of-pocket expenses as such expenses are incurred.


                                       12
<PAGE>


6.    TERM AND TERMINATION

      6.1 TERM. Unless earlier terminated as provided in Section 6.2 hereof, the
term of this Agreement shall commence on the Effective Date and shall expire, on
a  country-by-country  basis,  on the date upon  which the last to expire of the
patents covering the Patent Rights shall expire.  Upon expiration of the term of
this Agreement,  Licensee shall have a fully paid-up,  royalty-free,  perpetual,
nonexclusive license to use the Technical Information.

      6.2 TERMINATION.  Except as provided by Section 6.3 hereof, this Agreement
shall terminate upon the earliest to occur of the following:

            (A)  Automatically  if  Licensee  shall  enter  into  a  liquidating
bankruptcy, be adjudged insolvent, liquidate, dissolve and/or if the business of
Licensee  shall be placed  in the hands of a  receiver,  assignee,  or  trustee,
whether by voluntary act of Licensee or otherwise;  provided,  however,  that if
any such  action is  involuntary,  termination  shall not take place  unless the
action is not reversed within sixty (60) days. Further, Licensee shall give CSMC
at least  forty-five (45) days' prior written notice before  Licensee  initiates
any  bankruptcy  proceeding,  and CSMC  shall have the right to  terminate  this
Agreement immediately upon receipt of such notice;

            (B) Upon thirty (30) days' written  notice from CSMC if, within such
thirty (30) day  period,  Licensee  shall fail to pay fully any royalty  payment
required by Section 4.3 hereof or Schedule J hereto;

            (C) Upon ninety (90) days' written  notice from CSMC if, within such
ninety (90) day period,  Licensee shall fail to cure fully any breach or default
of any  material  obligation  under this  Agreement as described in such written
notice detailing the facts of such breach with reasonable specificity; provided,
however,  that  Licensee may avoid such  termination  if, before the end of such
90-day period, such breach or default has been cured by Licensee;

            (D) Upon ninety (90) days'  written  notice from Licensee if, within
such ninety (90) day period, CSMC shall fail to cure fully any breach or default
of any  material  obligation  under this  Agreement as described in such written
notice detailing the facts of such breach with reasonable specificity; provided,
however,  that CSMC may avoid such termination if, before the end of such 90-day
period, such breach or default has been cured by CSMC;

            (E) Upon the mutual  written  agreement of the parties  hereto (such
termination to be effective as of the date mutually  agreed upon in such written
agreement); or


                                       13
<PAGE>


            (F) As to the entire Agreement, at Licensee's sole discretion,  upon
sixty (60) days' written notice from Licensee.

      6.3 OBLIGATIONS UPON  TERMINATION.  Upon any termination of this Agreement
pursuant to Section 6.2 hereof, nothing herein shall be construed to release any
party from any liability for any obligation  incurred through the effective date
of termination (e.g., confidentiality, reimbursement of patent expenses incurred
prior to such  date,  etc.) or for any  breach  of this  Agreement  prior to the
effective date of such  termination.  Licensee may, for a period of one (1) year
after  the  effective  date of such  termination,  sell  all  tangible  Products
customarily  classified  as  "inventory"  that  it has on  hand  at the  date of
termination, subject to payment by Licensee to CSMC of the applicable royalty or
royalties, as set forth in Schedule J.

      6.4  EFFECT  OF  TERMINATION.  In the  event  of any  termination  of this
Agreement  pursuant to Section 6.2 hereof,  where such  termination has not been
caused by any action or inaction on the part of any  sublicensee  of Licensee or
by any breach by such  sublicensee of its obligations  under its sublicense from
Licensee,  such termination of this Agreement shall be without  prejudice to the
rights of each  non-breaching  sublicensee  of Licensee  and each  non-breaching
sublicensee shall be deemed to be a licensee of CSMC thereunder,  and CSMC shall
be entitled to all rights,  but shall not be subject to any  obligations  (other
than the grant of license and  appurtenant  obligations  under this Agreement to
the extent provided for in such sublicense) of Licensee thereunder.

      6.5 RIGHT TO INSTITUTE  LEGAL ACTIONS.  Notwithstanding  the provisions of
Section 6.2 hereof, CSMC, on the one hand, and Licensee,  on the other hand, may
institute  any other legal action or pursue any other  remedy  against the other
party permitted by applicable law if the other party does not substantially cure
any breach or default of any material obligation as provided herein.

      6.6  REVERSION  OF RIGHTS.  Notwithstanding  anything to the  contrary set
forth  herein  (including,   but  not  limited  to,  Section  5  hereof),   full
responsibility for Prosecution of the Patent Rights shall, at the option of CSMC
(exercisable in its sole and absolute discretion),  and at its sole expense from
the date of reversion, revert to CSMC upon any termination of this Agreement.


                                       14

<PAGE>

7.    INFRINGEMENT BY THIRD PARTIES

      7.1  ENFORCEMENT.  Licensee  shall have the first right and the obligation
(as more  particularly  set forth in this Section  7.1) to enforce,  at its sole
expense, any Patent Rights to the extent licensed hereunder against infringement
by third  parties  and shall  notify  CSMC in  writing  in  advance  of all such
enforcement  efforts.  Licensee  shall have the  obligation  to make the initial
assessment of any actual or alleged infringement by a third party, to the extent
such actual or alleged  infringement  is known to Licensee,  and Licensee  shall
promptly inform CSMC of the results of such initial assessment.  Upon Licensee's
undertaking  to pay all  expenditures  reasonably  incurred by CSMC,  CSMC shall
reasonably cooperate in any such enforcement and, as necessary,  join as a party
therein.  Licensee shall reimburse CSMC for all expenses,  including  reasonable
attorneys' fees, incurred in connection with any such enforcement.  In the event
that  Licensee  does not file suit against or commence  and conclude  settlement
negotiations  with a  substantial  infringer of Patent Rights within ninety (90)
days of receipt of a written demand from CSMC that Licensee bring suit, then the
parties  will  consult  with one  another  in an effort to  determine  whether a
reasonably prudent licensee would institute  litigation to enforce the patent in
question in light of all relevant business and economic factors (including,  but
not limited to, the projected cost of such litigation, the likelihood of success
on the merits,  the  probable  amount of any damage  award,  the  prospects  for
satisfaction of any judgment against the alleged  infringer,  the possibility of
counterclaims  against the parties  hereto,  the impact of any possible  adverse
outcome on  Licensee  and the effect any  publicity  might have on the  parties'
respective  reputations and goodwill).  If, after such process, it is determined
that a suit  should  be  filed  and  Licensee  does not  file  suit or  commence
settlement  negotiations  forthwith against the infringer,  then CSMC shall have
the right, at its own expense,  to enforce any Patent Rights licensed  hereunder
on behalf  of  itself  and  Licensee,  and  Licensee's  failure  to pursue  such
enforcement shall not be deemed a breach of this Agreement. Any amount recovered
in any such action or suit, whether by judgment or settlement,  shall be paid to
or  retained  entirely by  whichever  party  brought  the action,  or where both
parties  participate in such action or suit, all such amounts shall be allocated
to each party in the ratio of damages incurred,  after first paying each party's
out-of-pocket expenses, including reasonable attorneys' fees.

      7.2 DEFENSE OF PATENT RIGHTS.  In the event that any Patent Rights are the
subject of a legal action seeking  declaratory relief or of any reexamination or
opposition proceeding instituted by a third party, the parties agree to promptly
consult with one another  concerning the defense of such actions or proceedings.
If the parties agree that such defense should be undertaken, then Licensee shall
bear the expenses,  including attorneys' fees,  associated with such defense and
in any recoupment of expenses. If the parties disagree,  then the party desiring
to defend the action or  proceeding  may proceed with such defense and will bear
its own expenses, and be entitled to all sums recovered.


                                       15
<PAGE>

8.    INDEMNIFICATION

      8.1 INDEMNIFICATION BY LICENSEE.  Subject to Section 8.2 hereof,  Licensee
shall  hold  harmless,  defend  and  indemnify  CSMC and  each of its  officers,
directors,  employees  (including  the  Inventors),  agents and  sponsors of the
research (except Licensee) (each, an "Indemnified Party", and collectively,  the
"Indemnified  Parties")  from and against any and all claims,  damages,  losses,
costs and expenses (including  reasonable attorneys' fees and expenses and costs
of investigation)  (collectively,  "Losses")  suffered or incurred by any of the
Indemnified  Parties in any action,  litigation,  arbitration  or dispute of any
kind  ("Action")  arising or resulting  from any  negligence  or willful acts or
omissions on the part of Licensee,  its Affiliates or permitted  sublicensees in
connection with (a) their use the Patent Rights or Technical  Information and/or
(b) the exercise of their rights  hereunder or under any sublicense,  including,
but not  limited to (i) the  preclinical  development  and  clinical  testing of
Products, and (ii) the manufacture,  sale, use, marketing,  or other disposition
of Products developed,  manufactured, sold, marketed, used or otherwise disposed
of  under  this  Agreement;  provided,  however,  that  Licensee  shall  have no
obligation  under this  Section 8.1 with  respect to any Losses in any Action to
the extent such Losses are caused by the gross negligence or willful  misconduct
of an Indemnified  Party. As part of its obligations  hereunder,  Licensee shall
defend any Action brought against any of the Indemnified Parties with counsel of
its own choosing and  reasonably  acceptable  to CSMC,  and neither CSMC nor any
other  Indemnified  Party  shall  enter into any  settlement  of any such Action
without first  obtaining  prior  approval of Licensee.  Should CSMC or any other
Indemnified  Party not afford  Licensee the right to defend any such Action,  or
should CSMC or any other  Indemnified  Party not obtain the approval of Licensee
to such  settlement,  Licensee shall have no obligation to indemnify CSMC or any
other Indemnified Party hereunder. Should Licensee fail to provide a defense for
the  Indemnified  Parties as required  hereunder,  then Licensee shall reimburse
CSMC for its out-of-pocket  expenses (including  reasonable  attorneys' fees and
expenses  and  costs of  investigation)  which are  incurred  as a result of any
investigation,   defense  or  settlement   relating  to  the  foregoing,   which
reimbursement  shall  be made to CSMC  upon  receipt  by  Licensee  of  invoices
reflecting in reasonable detail such expenses  incurred by CSMC.  Licensee shall
obtain and maintain insurance policies (including products liability and general
liability  policies at such time as is  appropriate)  which are  reasonable  and
necessary  to cover  its  activities  and to  comply  with  the  indemnification
obligations set forth above.  Such insurance  policies shall (A) name CSMC as an
additional insured party, (B) provide minimum amounts in coverage per occurrence
that are standard and customary for similarly situated companies in the industry
in which  Licensee  conducts  business,  and (C)  provide  for a thirty (30) day
notice to CSMC of any material  change in such policies.  Upon initiation of any
human  clinical  studies  using a  therapeutic  molecule  covered  by the Patent
Rights,  Licensee shall have first increased its insurance coverage to a minimum
amount in the aggregate  that is standard and  customary for similarly  situated
companies in the industry in which Licensee  conducts  business.  Licensee shall
provide  CSMC  with  Certificates  of  Insurance  upon  request,   and  annually
thereafter,  evidencing  the policies  required in accordance  with this Section
8.1.

      8.2 NOTICE OF CLAIM. CSMC shall promptly notify Licensee in writing of any
claim or Action or material threat thereof brought against any Indemnified Party
in respect of which  indemnification for Losses may be sought and, to the extent
allowed by law, shall reasonably  cooperate with and provide full information to
Licensee in defending or settling any such claim or Action. No settlement of any
claim,  Action or threat thereof  received by CSMC and for which CSMC intends to
seek  indemnification  (for itself or on behalf of any other Indemnified  Party)
for Losses  shall be made without the prior joint  written  approval of Licensee
and CSMC.


                                       16
<PAGE>

9.    USE OF NAMES

      Licensee  shall  not,  unless  as  required  by any  law  or  governmental
regulation,  use the name of CSMC, and/or any of its trademarks,  service marks,
trade names or fictitious  business names without  express prior written consent
of the Vice President for Public Relations and Marketing of CSMC. Further, prior
to any  reference  by  Licensee  to the  names or  marks of CSMC in any  manner,
Licensee shall provide CSMC with a writing  reflecting the proposed reference so
that CSMC can review the reference  within a reasonable  period of time prior to
the proposed  use thereof by  Licensee.  This  limitation  includes,  but is not
limited to, use by  Licensee in any  regulatory  filing,  advertising,  offering
circular,  prospectus,  sales  presentation,  news release or trade publication.
Subject to  compliance  by Licensee  with the  foregoing,  which shall be deemed
conditions  precedent to any use of CSMC's name or marks by  Licensee,  Licensee
shall  ensure that the name of CSMC is used as  scientifically  or  academically
appropriate  in the "byline" of any article,  abstract,  manuscript or any other
publication related to the subject matter hereof.

10.   CONFIDENTIAL INFORMATION

      10.1  NON-DISCLOSURE.  The  parties  hereto  shall  keep the terms of this
Agreement and all business and scientific  discussions  relating to the business
of the parties strictly  confidential.  All patient information to which a party
is given  access by the other  party shall be subject to the  provisions  of the
Confidentiality of Medical  Information Act (Cal. Civ. Code ss.ss.56,  et seq.).
It may,  from time to time, be necessary  for the parties,  in  connection  with
performance  under  this  Agreement,   to  disclose   Confidential   Information
(including  know-how) to each other.  The Receiving Party (as defined in Section
1.2 hereof) shall keep in strictest  confidence the Confidential  Information of
the Disclosing  Party (as defined in Section 1.2 hereof),  using the standard of
care it normally uses for information of like character,  and shall not disclose
the  Confidential  Information  to any third party or use it except as expressly
authorized by the prior written consent of the Disclosing  Party or as otherwise
permitted by this Agreement;  provided, however, that Licensee may disclose, and
will not be  required  to  maintain  as  confidential,  the  Patent  Rights  and
Technical  Information  in  connection  with the exercise of its license  rights
hereunder.  The  Receiving  Party's  obligation  hereunder  shall  not  apply to
Confidential Information that the Receiving Party can show:

            (A) Is or later becomes part of the public  domain  through no fault
or neglect of the Receiving Party;

            (B)  Is  received  in  good  faith  from a  third  party  having  no
obligations  of  confidentiality  to the  Disclosing  Party,  provided  that the
Receiving Party complies with any restrictions imposed by the third party;

            (C) Is independently developed without use of the Disclosing Party's
Confidential Information by the Receiving Party; or

            (D) Is required by law or  regulation  to be  disclosed  (including,
without  limitation,  in  connection  with FDA  filings,  filings  with  another
government  agency or as required  under the  California  Public  Records  Act),
provided that the Receiving Party uses reasonable efforts to restrict disclosure
and to obtain  confidential  treatment  and gives the  Disclosing  Party as much
advance notice as reasonably possible.


                                       17
<PAGE>


      Except as provided in Sections  2.1(c)(i),  2.1(c)(ii) and 2.6, CSMC shall
keep  confidential  and not  disclose  to third  parties  the Patent  Rights and
Technical Information.

      10.2  LIMITS  ON  PERMITTED  DISCLOSURES.   Each  party  agrees  that  any
disclosure or distribution of the other party's Confidential  Information within
its own organization shall be made only as is reasonably  necessary to carry out
the  intent of this  Agreement.  The  parties  further  agree  that all of their
respective officers, employees, agents, representatives or approved sublicensees
to whom any  Confidential  Information  is disclosed or  distributed  shall have
agreed to maintain  its  confidentiality,  upon terms no less  restrictive  than
those set forth in this  Agreement.  In such event,  the  Receiving  Party shall
identify with reasonable  particularity,  upon request by the Disclosing  Party,
each person  within the  Receiving  Party's  organization  to whom the Receiving
Party has disclosed or distributed Confidential Information.

      10.3 LEGALLY  REQUIRED  DISCLOSURES.  If a subpoena or other legal process
concerning  Confidential  Information is served upon any party hereto pertaining
to the subject  matter  hereof,  the party  served  shall notify the other party
immediately, the other party shall cooperate with the party served, at the other
party's expense, in any effort to contest the validity of such subpoena or other
legal process.  This Section 10.3 shall not be construed in any way to limit any
party's  ability to satisfy any  disclosure of its  relationship  with the other
party required by any governmental authority.

      10.4 PATENT  RIGHTS AS  CONFIDENTIAL  INFORMATION.  The Patent  Rights are
understood by Licensee to be the Confidential  Information of CSMC to the extent
"unpublished"  as such term is construed under the United States Patent Laws. As
such, Licensee's and CSMC's confidentiality  obligations hereunder automatically
extend  to  any  and  all  Technical  Information  and  to any  and  all  patent
applications  of CSMC  relating  to any Patent  Rights,  Technical  Information,
Future  Patent  Rights  and  Future  Technical  Information  and to any  and all
communications  with the United States  Patent  Office,  and any foreign  patent
office  relating to any Patent  Rights,  Technical  Information,  Future  Patent
Rights or Future Technical Information.

      10.5 RETURN OF CONFIDENTIAL  INFORMATION.  In the event of any termination
of this Agreement,  the Receiving  Party shall promptly return all  Confidential
Information  and any  copies  made  thereof  previously  made  available  to the
Receiving Party by the Disclosing Party.

      10.6  REMEDIES.  Both  parties  acknowledge  and  agree  that it  would be
difficult  to measure  damages for breach by either party of the  covenants  set
forth in this  Section  10,  and that  injury  from  any  such  breach  would be
incalculable, and that money damages would therefore be an inadequate remedy for
any such breach. Accordingly, either party shall be entitled, in addition to all
other remedies available hereunder or under law or equity, to injunctive or such
other equitable relief as a court may deem appropriate to restrain or remedy any
breach of such covenants.


                                       18
<PAGE>


11.   INFORMATION EXCHANGE

      CSMC shall  promptly  disclose  (or cause the  Inventors  to  disclose) to
Licensee the Patent Rights and Technical  Information.  In addition, the parties
shall  cooperate  to  exchange  such  non-confidential  information  as  may  be
appropriate   and   necessary   to   facilitate   Licensee's   development   and
commercialization  of  Products  incorporating  any Patent  Rights or  Technical
Information.

12.   PATENT MARKING

      In the event any  Product  is the  subject  of a patent  under the  Patent
Rights,  Licensee shall mark all products made, sold or otherwise disposed of by
or on behalf of it or any of its sublicensees with the word "Patented"  followed
by the number of the  licensed  patent.  In such case,  Licensee  shall mark any
Product  made using a process or method  covered by any such Patent  Rights with
the number of each such patent.

13.   MISCELLANEOUS

      13.1 NOTICES. Any notice, request,  instruction or other document required
by this Agreement shall be in writing and shall be deemed to have been given (a)
if mailed  with the United  States  Postal  Service  by  prepaid,  first  class,
certified mail, return receipt requested, at the time of receipt by the intended
recipient,  (b) if sent by Federal Express(R),  Airborne(R),  or other overnight
carrier,  signature of delivery required, at the time of receipt by the intended
recipient,  or (c) if sent by  facsimile  transmission,  when so sent  and  when
receipt has been  acknowledged  by appropriate  telephone or facsimile  receipt,
addressed as follows:

                  In the case of Inventors to:

                  c/o Achilles A. Demetriou, M.D., Ph.D.
                  2331 Buckingham Lane
                  Los Angeles, California  90077
                  Fax:     (310) 471-0765

                  c/o Jacek Rozga, M.D., Ph.D.
                  986 Blue Mountain Circle
                  Westlake Village, California  91362
                  Fax:     (310) 471-0765

                  or in the case of CSMC to:

                  Cedars Sinai Medical Center
                  Room 2009, North Tower
                  8700 Beverly Boulevard
                  Los Angeles, California  90048-1865


                                       19
<PAGE>


                  Attention:  Senior Vice President for Academic Affairs
                  Fax      (310) 423-0119

                  or in the case of Licensee to:

                  Arbios Technologies, Inc.
                  2331 Buckingham Lane
                  Los Angeles, California  90077
                  Attention:  Jacek Rozga, M.D., Ph.D., President
                  Fax:     (310) 471-0765

or to such other address or to such other person(s) as may be given from time to
time under the terms of this Section 13.1.

      13.2  COMPLIANCE  WITH LAWS.  Each party shall comply with all  applicable
federal,  state and local laws and regulations in connection with its activities
pursuant to this Agreement.

      13.3  GOVERNING  LAW.  This  Agreement  shall be construed and enforced in
accordance  with the laws of the United  States of  America  and of the State of
California,  irrespective of choice of laws  provisions.  The parties agree that
Los Angeles,  California shall be the situs of any legal proceeding  arising out
of or relating to this Agreement.

      13.4 WAIVER.  Failure of any party to enforce a right under this Agreement
shall not act as a waiver of that  right or the  ability  to assert  that  right
relative to the particular situation involved.

      13.5 ENFORCEABILITY.  If any provision of this Agreement shall be found by
a court of competent jurisdiction to be void, invalid or unenforceable, the same
shall  be  reformed  to  comply  with  applicable  law  or  stricken  if  not so
conformable, so as not to affect the validity or enforceability of the remainder
of this Agreement.

      13.6 MODIFICATION.  No change,  modification,  or addition or amendment to
this Agreement,  or waiver of any term or condition of this Agreement,  is valid
or enforceable unless in writing and signed and dated by the authorized officers
of the parties to this Agreement.

      13.7 ENTIRE  AGREEMENT.  This Agreement,  the Schedules  hereto (which are
incorporated  herein by this reference as if fully set forth herein),  the Stock
Purchase  Agreement,  the Facilities Lease, the Equipment Lease and the Loan-Out
Agreement constitute the entire agreements among the parties with respect to the
subject  matter  hereof and  thereof,  and replace and  supersede as of the date
hereof and thereof any and all prior agreements and understandings, whether oral
or  written,  between  the parties  with  respect to the subject  matter of such
agreements.


                                       20
<PAGE>


      13.8 SUCCESSORS. Except as otherwise expressly provided in this Agreement,
this  Agreement  shall  be  binding  upon,  inures  to the  benefit  of,  and is
enforceable by, the parties and their respective heirs,  legal  representatives,
successors and permitted assigns.

      13.9 CONSTRUCTION.  This Agreement has been prepared, examined, negotiated
and revised by each party and their  respective  attorneys,  and no  implication
shall be drawn and no  provision  shall be  construed  against any party to this
Agreement by virtue of the purported  identity of the drafter of this  Agreement
or any portion thereof.

      13.10 COUNTERPARTS.  This Agreement may be executed  simultaneously in one
or  more  counterparts,  each  of  which  shall  constitute  one  and  the  same
instrument. This Agreement may be executed by facsimile.

      13.11  ATTORNEYS'  FEES.  In the  event of any  action at law or in equity
between  the  parties  hereto  to  enforce  any of the  provisions  hereof,  the
unsuccessful  party to such  litigation  shall pay to the  successful  party all
reasonable costs and expenses,  including  reasonable  attorneys' fees, incurred
therein by such successful  party;  and if such successful party shall recover a
judgment in any such action or proceeding,  such reasonable costs,  expenses and
attorneys' fees may be included in and as part of such judgment.

      13.12 ASSIGNMENT.  This Agreement shall be binding upon and shall inure to
the benefit of each party and its respective  successors and permitted  assigns.
Neither  party may assign  its rights or  delegate  its  obligations  under this
Agreement without the prior written consent of the other party,  except that (a)
Licensee shall have the right to assign its rights and delegate its  obligations
hereunder to (i) an Acceptable  Sublicensee,  (ii) in connection  with a merger,
consolidation or reorganization  of Licensee,  (iii) to an Affiliate of Licensee
or (iv) to a purchaser of all or  substantially  all of  Licensee's  assets that
relate to the  subject  matter of this  Agreement;  and (b) CSMC  shall have the
right to assign its rights and delegate its obligations hereunder as part of any
reorganization or bond financing. As an express condition of any such assignment
or delegation by Licensee, the assignee shall be required to agree in writing to
be bound by all of the terms and conditions of this Agreement.

      13.13  FURTHER  ASSURANCES.  At any time and from  time to time  after the
Effective Date, each party shall do, execute, acknowledge and deliver, and cause
to be  done,  executed,  acknowledged  or  delivered,  all  such  further  acts,
transfers, conveyances,  assignments or assurances as may be reasonably required
to consummate the transactions contemplated by this Agreement.

      13.14  SURVIVAL.  The following  sections  shall survive any expiration or
earlier  termination of this  Agreement:  Section  2.1(c)  (retention of certain
non-exclusive rights by CSMC), Section 8 ("Indemnification"), Section 9 ("Use of
Name") and Section 10 ("Confidentiality").  The provisions set forth in Schedule
J also shall survive any expiration or earlier termination of this Agreement, to
the extent set forth therein.


                                       21
<PAGE>


      IN  WITNESS  WHEREOF,  the  parties  have  caused  their  duly  authorized
representatives to execute this Agreement as of the date first above written.



                                 "LICENSEE":

                                 ARBIOS TECHNOLOGIES, INC.,
                                 A DELAWARE CORPORATION

                                 By:
                                     -----------------------------------------
                                     Kristin P. Demetriou, Secretary

                                 Date:  June __, 2001



                                 "CSMC":

                                 CEDARS SINAI MEDICAL CENTER, A CALIFORNIA
                                 NONPROFIT PUBLIC BENEFIT CORPORATION


                                 By: /s/ Shlomo Melmed, M.D.
                                     -----------------------------------------
                                     Shlomo Melmed, M.D.
                                     Senior Vice President for
                                     Academic Affairs


                                 Date:  June __, 2001



                                 By: /s/ Edward M. Prunchunas
                                     -----------------------------------------
                                     Edward M. Prunchunas
                                     Senior Vice President for
                                     Finance and CFO

                                     Date:  June __, 2001



                                       22
<PAGE>



ACKNOWLEDGED AND AGREED:

"INVENTORS":


/s/ Achilles A. Demetriou, M.D., Ph.D.
-----------------------------------------
Achilles A. Demetriou, M.D., Ph.D.


/s/ Jacek Rozga, M.D., Ph.D.
-----------------------------------------
Jacek Rozga, M.D., Ph.D.



                                       23