Unassociated Document


    
      Exhibit
        10.1

      


      July
        28,
        2005 

      


      Jacek
        Rozga, MD PhD

      


      Dear
        Jacek:

      


      We
        are
        pleased to offer you a full-time position, effective July 1, 2005 with Arbios
        Systems, Inc. (“Arbios”) as President and Chief Scientific Officer. You will
        report to the CEO and will perform such tasks as are usually and customarily
        performed by persons holding the titles of President and Chief Scientific
        Officer. The terms of your employment are as follows:

       

      
        	
                1.

              	
                You
                  will be compensated with a salary at an annualized rate of $200,000,
                  which
                  salary will paid twice monthly, subject to withholding of Federal
                  and
                  State income taxes, Social Security, and other customary deductions.
                  

              


      

       

      
        	
                2.

              	
                You
                  will be eligible for an annual bonus of up to 20% of your gross
                  annualized
                  salary, which bonus, if any, will be subject to withholding of
                  Federal and
                  State income taxes, Social Security, and other customary deductions.
                  The
                  amount of the annual bonus will be determined by the Board of Directors
                  (or a committee thereof) in its sole discretion based on conditions
                  and
                  criteria the Board considers to be appropriate. If the Board decides
                  to
                  grant you a bonus it will be paid during the first quarter of each
                  calendar year, commencing in 2006.

              


      

       

      
        	
                3.

              	
                Your
                  performance shall be reviewed annually by the Board of Directors
                  against
                  mutually agreed upon goals. At that time, upward compensation adjustments
                  may be made in the form of increased salary. Your first review
                  shall be in
                  the first quarter of 2006 with any compensation adjustments to
                  be
                  effective in January 1, 2006.

              


      

       

      
        	
                4.

              	
                All
                  requests for vacation time off (other than holidays observed by
                  all of
                  Arbios’ employees) should be approved in advance by the CEO of
                  Arbios.

              


      

       

      
        	
                5.

              	
                You
                  will be reimbursed for your reasonable pre-approved business related
                  expenses in accordance with the expense reimbursement policy in
                  place from
                  time to time.

              


      

       

      
        	
                6.

              	
                You
                  will be entitled to three weeks vacation during each twelve-month
                  period
                  of employment to be taken in accordance with Arbios’ policies in place
                  from time to time. In addition, you will also be entitled to the
                  same paid
                  holidays as are observed by all Arbios employees, which currently
                  include
                  7 paid holidays per year.

              


      

       

      
        	
                7.

              	
                You
                  will be eligible to participate in the Company’s health insurance and
                  disability benefit plans. If at any time during the 18 month period
                  beginning on July 1, 2005 you elect not to participate in these
                  plans (you
                  may not elect to participate in one and not the other) you will
                  receive a
                  monthly allowance of $1,000 to be used for your Cobra
                  payments.

              


      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                8.

              	
                You
                  will also receive term life insurance in the amount of two times
                  your
                  annual salary, up to $500,000. This benefit will be provided to
                  you at no
                  cost and you will be offered the option to purchase more coverage
                  at you
                  own expense.

              


      

       

      
        	
                9.

              	
                You
                  are eligible for participation in Arbios’ 401K plan which currently
                  includes a company match of your
                  contributions.

              


      

       

      
        	
                10.

              	
                You
                  will be employed on an “at will” basis. That is, the terms of your
                  employment shall continue unless terminated by either you or us.
                  Termination by us may be with or without cause, at any time. Further,
                  this
                  offer letter is not a contract of employment guaranteeing you the
                  terms
                  set forth in the letter for any specific period of time, or at
                  all.
                  

              


      

       

      
        	
                11.

              	
                The
                  Company currently does not have a severance plan; however, when
                  and if
                  such a plan is implemented you will receive severance terms consistent
                  with other employees of Arbios holding comparable “grade level” positions.
                  For year beginning July 1, 2005 your severance benefit will be
                  three
                  months notice if Arbios wishes to terminate your employment. If
                  Arbios
                  provides you with less then three-month’s notice, upon your termination we
                  will pay you the salary equivalent of the
                  shortfall.

              


      

       

      
        	
                12.

              	
                All
                  work that you perform for Arbios will be performed in our offices
                  in Los
                  Angeles, California, or as mutually agreed
                  otherwise.

              


      

       

      
        	
                13.

              	
                You
                  agree to work exclusively for Arbios. While you are employed by
                  Arbios,
                  you will not perform services for compensation for any third
                  party.

              


      

       

      
        	
                14.

              	
                Within
                  30-days of this letter agreement, you must deliver to Arbios a
                  release
                  from Cedars-Sinai Medical Center (or any still valid previous employers),
                  from any existing non-compete agreements, if
                  applicable.

              


      

       

      
        	
                15.

              	
                In
                  consideration of your agreeing to this employment offer and as
                  a condition
                  of your reporting for work, we ask that you sign the attached Employee
                  Inventions Assignment and Confidentiality Agreement.
                  

              


      

       

      
        	
                16.

              	
                This
                  agreement is governed by California
                  law.

              


      

       

      If
        the
        terms of this offer are acceptable to you, please indicate your acceptance
        by
        signing and returning one copy of this letter to me. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      


       

      Sincerely,

      


      /s/
        Amy Factor        

      Amy
        Factor, CEO

      


      


      


      Accepted
        and agreed to this 28th Day of July, 2005.

       

      


      /s/
        Jacek Rozga        

      By:
        Jacek
        Rozga, MD PhD