Unassociated Document


    Exhibit
      10.3

    CONSULTING
      AGREEMENT

    


    Arbios
      Systems, Inc.

    1050
      Winter Street, Suite 1000

    Waltham,
      Massachusetts 02451

    


    
      	 	
              
                November
                  8, 2007

              

            


    

     

    David
      Zeffren

    211
      S.
      Alta Vista Blvd.

    Los
      Angeles, CA 90036

    


    Dear
      David:

    


    This
      letter is to confirm our understanding with respect to (i) your rendering
      services as a consultant to the Company, (ii) your continuing agreement not
      to
      compete with the company in its direct area of business, (iii) your
      continuing agreement to protect and preserve information and property which
      is
      confidential and proprietary to the Company or other parties with whom the
      Company does business, and (iv) your agreement to release the Company from
      potential claims associated with your past employment (the terms and conditions
      agreed to in this letter shall hereinafter be referred to as the “Agreement”).
      Hereinafter, reference to “you” or to “we” includes in each case you and all
      other associates or subcontractors, if any, which you may employ on behalf
      of
      the Company, whom you shall ensure are bound by the terms of this Agreement.
      In
      consideration of the mutual promises and covenants contained in this Agreement,
      and for other good and valuable consideration, the receipt and sufficiency
      of
      which are hereby mutually acknowledged, we have agreed as follows: 

    


    1.
      Services
      of Consultant.
      You
      agree to render services to the Company as an independent contractor to, and
      not
      as an employee of, the Company. Your principal service will be to advise and
      support the Company regarding its FDA and similar regulatory and clinical
      affairs interactions, and to perform related services in the Company’s business,
      each as directed by the Company’s Chief Executive Office (CEO) and each
      occasionally and from time to time. You shall devote your best efforts in the
      performance of the foregoing services. You acknowledge and agree that you will
      be an independent contractor for all purposes including, but not limited to,
      payroll and tax purposes, and that you shall not represent yourself to be an
      employee or officer of the Company unless so designated by a written agreement
      signed by the Company.

    


    2.
      Term
      of Consulting Arrangement.
      Your
      services as a consultant to the Company will begin immediately upon your
      termination of your regular employment with the Company on September 1, 2007.
      You agree that the Company has the right terminate your consulting arrangement
      hereunder at any time, with or without cause, which right shall be exercisable
      by written notice sent to you by the Company and shall be effective immediately
      as of the date of such notice or a later date as the Company may specify.
      Similarly, you have the right to terminate your services to the Company at
      any
      time, which right shall be exercisable by written notice sent to the Company
      by
      you and shall be effective immediately as of the date of such notice or a later
      date as you may specify. In the event such notice is given, you shall use best
      efforts to reduce cost to the Company as a result of such termination. The
      Company’s obligation will be to reimburse you for cost incurred as of final date
      of termination, including any uncancellable legal obligations to third parties
      relating to and permitted under this Agreement, such as purchase orders, which
      were entered into prior to effective termination notice. 

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    3.
      Compensation
      for Services.
      The
      Company shall pay you as your exclusive compensation for your services and
      agreements hereunder at a rate of $10,400 per month commencing October 1, 2007,
      for work which you perform on behalf of the Company and which has been agreed
      in
      advance by the CEO of the Company. For the month of September 2007 you will
      receive a prorated amount in the amount of $8,216. You shall also be reimbursed
      for reasonable and customary expenses (costs) incurred by you on behalf of
      the
      Company. Such expenses include, but are not limited to, costs incurred for
      transportation, travel, lodging, meals, delivery, communications, literature
      search and retrieval. To receive payment of such expenses, you shall provide
      the
      Company with an invoice each month in which work is performed, which reflects
      professional services, the nature of such services, and qualifying expenses
      rendered through the end of the prior month. The Company agrees that all
      invoiced fees and expenses payable under this contract will be paid to you
      within thirty (30) days of receipt of said invoice. Any services to be provided
      by your associates or subcontractors shall be agreed in advance with the
      Company, including compensation to be paid by the Company. 

    


    In
      addition, you may also be eligible for certain cash bonuses upon completion
      of
      key milestones by certain dates (e.g. successful platform testing of the Gen
      II
      cartridge, Filing of the Pivotal IDE, First patient treated in the pivotal
      trial). Such payments would not be made until either the closing of the next
      round of funding or consummation of a strategic partnership that would result
      in
      corporate funding.

    


    4.
      General
      Release and Waiver of Claims.
      In
      consideration of the payments and other agreements set forth in this Agreement,
      you for yourself, and for your heirs, executors, estates, agents,
      representatives, attorneys, insurers, successors and assigns (collectively,
      the
“Releasors”), hereby voluntarily release and forever discharge the Company and
      its subsidiaries (direct and indirect), affiliates, related companies,
      divisions, and predecessor and successor companies, and each of its and their
      present, former and future shareholders, officers, directors, employees, agents,
      representatives, attorneys, insurers and assigns (collectively, the “Releasees”)
      from all actions, causes of action, suits, debts, sums of money, accounts,
      covenants, contracts, agreements, promises, damages, judgments, demands and
      claims which the Releasors ever had, or now have, or hereafter can, shall or
      may
      have, for, upon or by reason of any matter or cause whatsoever arising from
      the
      beginning of the world to the date of the execution of this Release, whether
      known or unknown, in law or equity, whether statutory or common law, whether
      federal, state, local or otherwise, including but not limited to claims arising
      out of or in any way related to your engagement by the Company (including your
      hiring), or the termination of that engagement, or any related matters
      (including but not limited claims, if any, arising under the Age Discrimination
      in Employment Act of 1967, as amended by the Older Workers Benefit Protection
      Act, the Civil Rights Act of 1866, Title VII of the Civil Rights Act of 1964,
      as
      amended, the Civil Rights Act of 1991, as amended, the Americans with
      Disabilities Act of 1990, as amended, the Family and Medical Leave Act of 1993,
      the Immigration Reform and Control Act of 1986, the Employee Retirement Income
      Security Act of 1974, and federal or state statutes governing payment of wages,
      federal or state common law, or any other applicable federal, state or local
      law, statute, regulation or ordinance. Notwithstanding the foregoing, nothing
      contained in this paragraph shall be construed to bar any claim by you to
      enforce the terms of this Agreement or any claim of final biweekly compensation
      under your employment agreement with the Company.

    


    
      
        
        

      

      
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    5.
      Continuing
      Obligations.
      Your
      obligations under this Agreement other than the provisions of Section 1 shall
      not be affected by any termination of your consulting arrangement, including
      termination upon the Company’s initiative. Further, your obligations of the
      Employee Invention Assignment and Confidentiality Agreement which you have
      previously executed with the Company at the outset of your previous employment
      shall continue in effect as if you have remained an employee of the Company
      during the term of this Agreement.

    


    6.
      Prohibited
      Competition.
       

    


    (a)
      We
      have discussed, and you recognize and acknowledge the competitive and
      proprietary nature of the Company’s business operations. You further acknowledge
      and agree that a business will be deemed competitive with the Company if it
      conducts planning or operations or otherwise engages in the Company’s Field of
      Interest. You further acknowledge and agree that, during the course of your
      consultancy as well as having previously performed services for the Company
      as
      an employee, the Company has already and will furnish, disclose or make
      available to you confidential and proprietary information related to the
      Company’s business. You also acknowledge that such confidential information has
      been developed and will be developed by the Company through the expenditure
      by
      the Company of substantial time, effort and money and that all such confidential
      information could be used by you to compete with the Company.

    


    (b)
      You
      acknowledge and agree that, although the Company has retained your consulting
      services on a non-exclusive basis, you currently are not a party to, and during
      the term of this Agreement, and for one year following termination of this
      Agreement, you will not without first advising the Company in writing a) enter
      into any agreement, arrangement, understanding or other relationship pursuant
      to
      which you are obligated to render advice and/or services to a commercial entity
      in the Company’s “Field of Interest,” either as principal, agent, stockholder,
      employee, consultant, representative, or in any other capacity or b) own,
      manage, operate or control, or be concerned, connected or employed by, or
      otherwise associate in any manner with, engage in or have a financial interest
      in any such entity, except that nothing contained herein shall preclude you
      from
      purchasing or owning securities of any such business if such securities are
      publicly traded, and provided that your holdings do not exceed three (3%)
      percent of the issued and outstanding securities of any class of securities
      of
      such business. The term “Field of Interest” with respect to the Company
      currently means the development or commercialization of medical devices or
      cell
      therapies for the treatment of liver disease, viral hepatitis or septic shock.
      The Company may modify the definition of its Field of Interest by written notice
      to you based on the activities in which the Company is then engaged or in which
      the Company then proposes to be engaged.

    


    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

       

    

    (c)
      Further, neither individually nor on behalf of or through any third party,
      shall
      you directly or indirectly, solicit, entice or persuade or attempt to solicit,
      entice or persuade any other employees of or consultants to the Company or
      any
      present or future parent, subsidiary or affiliate of the Company to leave the
      services of the Company or any such parent, subsidiary or affiliate for any
      reason.

    


    (d)
      You
      further recognize and acknowledge that the types of employment which are
      prohibited by this Section 5 are narrow and reasonable in relation to the skills
      which represent your principal salable asset both to the Company and to your
      other prospective employers, and (ii) the specific scope of the provisions
      of
      this Section 5 is reasonable, legitimate and fair to you in light of the
      Company’s need to protect its proprietary information and to make the Company’s
      business profitable and in light of the limited restrictions on the type of
      employment prohibited herein compared to the types of employment for which
      you
      are qualified to earn your livelihood.

    


    (e)
      Your
      acknowledgements and agreements set forth in this Section 5 shall survive the
      expiration or termination of this Agreement and the termination of your
      employment with the Company for any reason.

    


    7.
      Protected
      Information.
      You
      shall at all times, both during and after any termination of the consulting
      arrangement by either the Company or you, maintain in confidence and shall
      not,
      without the prior written consent of the Company, use, except in the course
      of
      performance of your duties for the Company and specifically not for the benefit
      of others outside the Company, disclose or give to others any fact or
      information which was disclosed to or discerned or developed by you during
      the
      course of performing services for, or receiving training from, the Company,
      and
      is not generally available to the public including but not limited to
      information and facts concerning business plans, customers, future customers,
      suppliers, licensors, licensees, partners, investors, affiliates or others,
      training methods and materials, financial information, sales prospects, client
      lists, inventions (as defined in paragraph 7), or any other scientific,
      technical, trade or business secret or confidential or proprietary information
      of the Company or of any third party provided to you in the course of your
      consultancy to the Company. You also agree not to file patents, copyrights
      or
      trademark applications based on the Company’s technology, property or
      confidential information, nor seek to make improvements thereon, without the
      Company’s approval. You agree not to make any copies of such confidential or
      proprietary information of the Company (except when appropriate for the
      furtherance of the business of the Company or duly and specifically authorized
      to do so) and promptly upon request, whether during or after the period of
      the
      consulting arrangement, to return to the Company any and all documentary,
      machine-readable or other elements or evidence of such confidential or
      proprietary information (including all Regulatory and Clinical documentation),
      and any copies that may be in your possession or under your control. In the
      event you are questioned by anyone not employed by the Company or by an employee
      of or a consultant to the Company not authorized to receive such information,
      in
      regard to any such information or any other secret or confidential work of
      the
      Company, or concerning any fact or circumstance relating thereto, you will
      promptly notify the President of the Company.

    


    8.
      Ownership
      of Ideas, Copyrights and Patents.

    


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

       

    

    (a)
      Property
      of the Company.
      You
      agree that all ideas, discoveries, creations, manuscripts and properties,
      innovations, improvements, know-how, inventions, designs, developments,
      apparatus, techniques, methods, biological processes, cell lines, laboratory
      notebooks, and formulae (all of the foregoing being hereinafter referred to
      as
“the inventions”) which may be used in the business of the Company, whether or
      not reduced to practice and whether patentable, copyrightable or not, which
      you
      may conceive, reduce to practice or develop during the Term, alone or in
      conjunction with another, or others, and whether at the request or upon the
      suggestion of the Company, or otherwise, shall be the sole and exclusive
      property of the Company if made or improved during any time during which you
      are
      providing services to the Company or with the assistance of financial or other
      support from the Company, and that you shall not publish any of the inventions
      without the prior written consent of the Company. You hereby assign to the
      Company all of your right, title and interest in and to all of the foregoing.
      You agree to maintain and furnish to the Company complete and current records
      of
      all such inventions and disclose to the Company in writing any such
      inventions.

    


    (b)
      Right
      of First Refusal of the Company.
      In the
      event that you, alone or with others, develop or improve any inventions in
      the
      Field of Interest at times during which you are not providing services to the
      Company and without the financial or other support of the Company, you agree
      to
      provide the Company with a right of first refusal to purchase or license any
      and
      all such inventions.

    


    (c)
      Cooperation.
      At any
      time during or after the Term, you agree that you will fully cooperate with
      the
      Company, its attorneys and agents, in the preparation and filing of all papers
      and other documents as may be required to perfect the Company’s rights in and to
      any of such inventions, including, but not limited to, joining in any proceeding
      to obtain letters patent, copyrights, trademarks or other legal rights of the
      United States and of any and all other countries on such inventions, provided
      that the Company will bear the expense of such proceedings, and that any patent
      or other legal right so issued to you, personally, shall be assigned by you
      to
      the Company without charge by you. You hereby designate the Company as your
      agent, and grant to the Company a power of attorney with full power of
      substitution (which power of attorney shall be deemed coupled with an interest),
      for the purpose of effecting the foregoing assignments from you to the
      Company.

    


    9.
      Records.
      Upon
      termination of your relationship with the Company, you shall deliver to the
      Company any property of the Company which may be in your possession including
      products, materials, memoranda, notes, laboratory notebooks, records, reports,
      all Regulatory and Clinical documentation or other documents or photocopies
      of
      the same.

    


    10.

No
      Conflicting Agreements.
      You
      hereby represent and warrant that you have no commitments or obligations
      inconsistent with this Agreement. You hereby agree to indemnify and hold the
      Company harmless against any loss, damage, liability or expense arising from
      any
      claim based upon circumstances alleged to be inconsistent with such
      representation and warranty. During the term of this Agreement, you will not
      enter into any agreement, either written or oral, which may be in conflict
      with
      this Agreement, and you will arrange to provide your services under this
      Agreement in such a manner and at such times that your services will not
      conflict with your responsibilities under any other agreement, arrangement
      or
      understanding or pursuant to any employment relationship that you may have
      at
      any time with any third party. 

     

    
      
        
        

      

      
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    11.
      No
      Employment Relationship Created.
      This
      Agreement does not constitute, and shall not be construed as constituting,
      an
      undertaking by the Company to hire you as an employee of the Company. You
      acknowledge that you will be working as a consultant only, and not as an
      employee. You will not be entitled to receive any of the benefits provided
      by
      the Company to its employees and you will be solely responsible for the payment
      of all federal, state and local taxes and contributions imposed or required
      on
      income, unemployment insurance, social security and any other law or
      regulation.

    


    12.
      General.

    


    (a)
      Notices.
      All
      notices, requests, consents and other communications hereunder shall be in
      writing, shall be addressed to the receiving party’s address set forth below or
      to such other address as a party may designate by notice hereunder, and shall
      be
      either (i) delivered by hand, (ii) made by telex, telecopy or
      facsimile transmission, (iii) sent by overnight courier, or (iv) sent
      by registered mail, return receipt requested, postage prepaid

    


    If
      to
      Arbios Systems, Inc.: 

    


    Shawn
      P.
      Cain

    Interim
      President and Chief Executive Officer

    Arbios
      Systems, Inc.

    1050
      Winter Street, Suite 1000

    Waltham,
      Massachusetts 02451

    FAX
      1-781-839-7295

    


    If
      to
      you, David Zeffren: 

    


    David
      Zeffren

    211
      S.
      Alta Vista Blvd.

    Los
      Angeles, CA 90036

     

    All
      notices, requests, consents and other communications hereunder shall be deemed
      to have been given either (i) if by hand, at the time of the delivery
      thereof to the receiving party at the address of such party set forth above,
      (ii) if made by telex, telecopy or facsimile transmission, at the time that
      receipt thereof has been acknowledged by electronic confirmation or otherwise,
      (iii) if sent by overnight courier, on the next business day following the
      day such notice is delivered to the courier service, or (iv) if sent by
      registered mail, on the fifth business day following the day such mailing is
      made.

    


    (b)
      Entire
      Agreement.
      This
      Agreement embodies the entire agreement and understanding between the parties
      hereto with respect to the subject matter hereof and supersedes all prior oral
      or written agreements and understandings relating to the subject matter hereof.
      No statement, representation, warranty, covenant or agreement of any kind not
      expressly set forth in this Agreement shall affect, or be used to interpret,
      change or restrict, the express terms and provisions of this Agreement.


    


    
      
        
        

      

      
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    (c)
      Modifications
      and Amendments.
      The
      terms and provisions of this Agreement may be modified or amended only by
      written agreement executed by the parties hereto.

    


    (d)
      Waivers
      and Consents.
      The
      terms and provisions of this Agreement may be waived, or consent for the
      departure therefrom granted, only by written document executed by the party
      entitled to the benefits of such terms or provisions. No such waiver or consent
      shall be deemed to be or shall constitute a waiver or consent with respect
      to
      any other terms or provisions of this Agreement, whether or not similar. Each
      such waiver or consent shall be effective only in the specific instance and
      for
      the purpose for which it was given, and shall not constitute a continuing waiver
      or consent.

    


    (e)
      Assignment.
      The
      Company may assign its rights and obligations hereunder to any person or entity
      who succeeds to all or substantially all of the Company’s business or that
      aspect of the Company’s business in which you are principally involved. Your
      rights and obligations under this Agreement may not be assigned by you without
      the prior written consent of the Company.

    


    (f)
      Benefit.
      All
      statements, representations, warranties, covenants and agreements in this
      Agreement shall be binding on the parties hereto and, in the case of the
      Company, its parents, subsidiaries and other affiliates, and in your case,
      upon
      yours heirs, executors and administrators; and shall inure to the benefit of
      the
      respective successors and permitted assigns of each party hereto. Nothing in
      this Agreement shall be construed to create any rights or obligations except
      among the parties hereto, and no person or entity shall be regarded as a
      third-party beneficiary of this Agreement.

    


    (g)
      Governing
      Law.
      This
      Agreement and the rights and obligations of the parties hereunder shall be
      construed in accordance with and governed by the law of The Commonwealth of Massachusetts,
      without giving effect to the conflict of law principles thereof.

    


    (h)
      Arbitration.
      Except
      with respect to the provisions of Sections 5, 6 and 7 hereof, any controversy,
      dispute or claim arising out of or in connection with this Agreement, or the
      breach, termination or validity hereof, shall be settled by final and binding
      arbitration to be conducted by an arbitration tribunal in Boston, Massachusetts,
      pursuant to the rules of the American Arbitration Association. The arbitration
      tribunal shall consist of three arbitrators. The party initiating arbitration
      shall nominate one arbitrator in the request for arbitration and the other
      party
      shall nominate a second in the answer thereto within thirty (30) days of receipt
      of the request. The two arbitrators so named will then jointly appoint the
      third
      arbitrator. If the answering party fails to nominate its arbitrator within
      the
      thirty (30) day period, or if the arbitrators named by the parties fail to
      agree
      on the third arbitrator within sixty (60) days, the office of the American
      Arbitration Association in Boston, Massachusetts shall make the necessary
      appointments of such arbitrator(s). The decision or award of the arbitration
      tribunal (by a majority determination, or if there is no majority, then by
      the
      determination of the third arbitrator, if any) shall be final, and judgment
      upon
      such decision or award may be entered in any competent court or application
      may
      be made to any competent court for judicial acceptance of such decision or
      award
      and an order of enforcement. In the event of any procedural matter not covered
      by the aforesaid rules, the procedural law of the Commonwealth of Massachusetts
      shall govern.

    


    
      
        
        

      

      
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    (i)
      Jurisdiction
      and Service of Process.
      Except
      as governed by the above paragraph (h), any legal action or proceeding with
      respect to this Agreement shall be brought in the courts of The Commonwealth
      of
      Massachusetts or of the United States of America for the First District of
      Massachusetts. By execution and delivery of this Agreement, each of the parties
      hereto accepts for itself and in respect of its property, generally and
      unconditionally, the jurisdiction of the aforesaid courts. Each of the parties
      hereto irrevocably consents to the service of process of any of the
      aforementioned courts in any such action or proceeding by the mailing of copies
      thereof by certified mail, postage prepaid, to the party at its address set
      forth in Section 12(a) hereof.

    


    (j)
      Severability.
      The
      parties intend this Agreement to be enforced as written. However, (i) if any
      portion or provision of this Agreement shall to any extent be declared illegal
      or unenforceable by a duly authorized court having jurisdiction, then the
      remainder of this Agreement, or the application of such portion or provision
      in
      circumstances other than those as to which it is so declared illegal or
      unenforceable, shall not be affected thereby, and each portion and provision
      of
      this Agreement shall be valid and enforceable to the fullest extent permitted
      by
      law; and (ii) if any provision, or part thereof, is held to be unenforceable
      because of the duration of such provision or the geographic area covered
      thereby, the Company and you agree that the court making such determination
      shall have the power to reduce the duration and/or geographic area of such
      provision, and/or to delete specific words and phrases (“blue-pencilling”), and
      in its reduced or blue-pencilled form such provision shall then be enforceable
      and shall be enforced.

    


    (k)
      Headings
      and Captions.
      The
      headings and captions of the various subdivisions of this Agreement are for
      convenience of reference only and shall in no way modify, or affect the meaning
      or construction of any of the terms or provisions hereof.

    


    (l)
      Injunctive
      Relief.
      You
      hereby expressly acknowledge that any breach or threatened breach of any of
      the
      terms and/or conditions set forth in Section 5, 6 or 7 of this Agreement will
      result in substantial, continuing and irreparable injury to the Company.
      Therefore, you hereby agree that, in addition to any other remedy that may
      be
      available to the Company, the Company shall be entitled to injunctive or other
      equitable relief by a court of appropriate jurisdiction in the event of any
      breach or threatened breach of the terms of Section 5, 6 or 7 of this Agreement.
      

    


    (m)
      No
      Waiver of Rights, Powers and Remedies.
      No
      failure or delay by a party hereto in exercising any right, power or remedy
      under this Agreement, and no course of dealing between the parties hereto,
      shall
      operate as a waiver of any such right, power or remedy of the party. No single
      or partial exercise of any right, power or remedy under this Agreement by a
      party hereto, nor any abandonment or discontinuance of steps to enforce any
      such
      right, power or remedy, shall preclude such party from any other or further
      exercise thereof or the exercise of any other right, power or remedy hereunder.
      The election of any remedy by a party hereto shall not constitute a waiver
      of
      the right of such party to pursue other available remedies. No notice to or
      demand on a party not expressly required under this Agreement shall entitle
      the
      party receiving such notice or demand to any other or further notice or demand
      in similar or other circumstances or constitute a waiver of the rights of the
      party giving such notice or demand to any other or further action in any
      circumstances without such notice or demand.

    


    
      
        
        

      

      
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    (n)
      Expenses.
      Should
      any party breach this Agreement, in addition to all other remedies available
      at
      law or in equity, such party shall pay all of any other party’s costs and
      expenses resulting therefrom and/or incurred in enforcing this Agreement,
      including legal fees and expenses.

    


    (o)
      Counterparts.
      This
      Agreement may be executed in one or more counterparts, and by different parties
      hereto on separate counterparts, each of which shall be deemed an original,
      but
      all of which together shall constitute one and the same instrument.

    


    If
      the
      foregoing accurately sets forth our agreement, please so indicate by signing
      and
      returning to us two original copies of this letter. One of them will then be
      returned signed for your records.

    
      	 	 	 
	 	Very
              truly
              yours,
	 	 
	 	Arbios Systems, Inc.
	 
 	 
 	 
 
	 	By:  	/s/ Shawn
              Cain
	 	
              

              Shawn
                P. Cain

              Interim
                President and Chief Executive Officer

            
	 	 




    
      	Accepted and Approved:	 	 	 
	 	 	 	 
	 	 	 	 
	/s/ David
              Zeffren	 	 	 
	
              
David
              Zeffren	 	 	
            
	 	 	 	 
	 	 	 	 
	Dated:
              _______________________	 	 	 


    

     

    
      
        
        

      

      
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