Document:

EXHIBIT 10.10

                       MANUFACTURING AND SUPPLY AGREEMENT

     THIS AGREEMENT, dated as of December 26, 2001, is entered into by and
between Spectrum Laboratories, Inc., a Delaware corporation ("SPECTRUM"), and
Arbios Technologies, Inc., a Delaware corporation ("ARBIOS").

                                    RECITALS

     WHEREAS, ARBIOS is the owner and/or licensee of proprietary technology and
expertise in the field of animal cell therapy, and intends to market and sell a
line of artificial liver and other devices for use in liver disease therapy and
other therapy applications in biotechnology and medicine; and

     WHEREAS, SPECTRUM has special expertise in the design and manufacture of
hollow fiber cartridges and their application, and has designed and manufactures
a specific cartridge with fiber-in-fiber technology (Triac) of the type useful
in ARBIOS's devices; and

     WHEREAS, ARBIOS desire SPECTRUM to manufacture for ARBIOS and supply to
ARBIOS cartridges comprising such membrane geometry to ARBIOS's specifications,
solely for use in ARBIOS's liver assist devices, and SPECTRUM is willing to
incorporate design changes and enhancements in the manufacture of such
cartridges for ARBIOS, upon the terms and conditions contained in this
Agreement;

     WHEREAS, ARBIOS and SPECTRUM also desire to negotiate in good faith for
SPECTRUM to manufacture for ARBIOS and supply to ARBIOS cartridges comprising
fiber-in-fiber technology for use in animal cell therapy other than liver assist
applications on a case-by-case basis; and SPECTRUM is also willing to
incorporate design changes and enhancements in the manufacture of such devices
upon the terms and conditions contained in this agreement.

                                    AGREEMENT

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

ARTICLE 1. DEFINITIONS.

     As used herein, the following terms shall have the meanings set forth
below:

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     1.1 "Acceptance Test Procedures" shall mean the written acceptance test
procedures, including testing used to support cGMP validation, pressure and leak
testing, developed by SPECTRUM and approved by ARBIOS pursuant to Article 7, a
copy of which is attached as Appendix C hereto, which shall be conducted by
SPECTRUM prior to transfer of Units to ARBIOS.

     1.2 "Affiliate" of any party means a person or other entity that directly,
or indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, that party. "Control" of a specified entity
means the direct or indirect possession of the power to direct or cause the
direction of the management and policies of such entity, whether through the
ownership of voting securities, by contract, or otherwise, and in any event
shall include, but is not limited to, ownership of voting securities of such
entity having a majority of the voting power of the voting securities of such
entity.

     1.3 "Approved Design Change" shall mean an engineering change described in
a Design Change Request for which SPECTRUM has prepared a Design Change quote
which has been accepted by ARBIOS as provided in Article 6 hereof. All Approved
Design Changes shall be appended to this Agreement as part of the
Specifications.

     1.4 "Bill of Materials" shall mean a list of components and raw materials
comprising the Unit, organized in a hierarchical order.

     1.5 "cGMP" shall mean current Good Manufacturing Practices as defined by
the Food and Drug Administration.

     1.6 "Certification" shall mean the written statement provided by SPECTRUM
for each Lot, certifying that such Lot has successfully completed all testing
required pursuant to the Acceptance Test Procedures. Each Certification is to be
issued according to the procedures of Article 7.

     1.7 "Confidential Information" shall mean all information disclosed by one
party to the other as a consequence of or through performance under this
Agreement, including but not limited to information relating to Liver-Assist
Cartridges, machinery, materials, research activities and plans, direct cost of
production, business, marketing, drawings, Bill of Materials, manufacturing
documents, labels, tools, jigs and fixtures; provided that Confidential
Information shall not include information which:

     (i)  is already known to the receiving party, as shown by written or other
          documentary evidence,

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     (ii) is or becomes generally available to the public or part of the public
          domain through no fault on the part of the receiving party,

     (iii) is obtained by the receiving party from a source, other than the
          disclosing party hereunder, which is properly in possession of such
          information and is legally entitled to disclose it, or

     (iv) is required by law or regulation (e.g., of the FDA) to be disclosed,
          but only after notice to the disclosing party, and under obligations
          of confidentiality to the extent reasonably possible.

     1.8 "Design Change Request" shall mean any written request initiated either
by ARBIOS or SPECTRUM, and delivered to SPECTRUM pursuant to Article 5, for the
modification of some aspect of the Liver-Assist Cartridge.

     1.9 "Design Change Quote" shall mean a binding cost estimate for
implementing both engineering and design changes described in the Design Change
Request, plus the per Unit cost attributable to the change(s), delivered by
SPECTRUM to ARBIOS with respect to a Design Change Request.

     1.10 "Effective Date" shall be __________, 2001, in confirmation of the
understanding of the parties, and their course of conduct with respect to the
subject matter of this Agreement.

     1.11 "Field of Use" shall mean the fields of (a) artificial blood therapy;
and (b) bioprocessing and therapeutic devices. The Field of Use shall include,
without limitation, liver assist systems, artificial gut, bioartificial kidney,
hemodialysis and/or hemofiltration devices, and devices producing biologically
active compounds, including, but not limited to, monoclonal antibodies,
hormones, peptides and vaccines.

     1.12 "License Agreement" means the License Agreement between the parties
that is executed substantially contemporaneously with this Agreement.

     1.13. "Liver-Assist Cartridge" shall mean a cartridge comprised of hollow
fiber membranes in a fiber-in-fiber geometry and housing, designed and
manufactured according to the terms and provisions of this Agreement for use as
a artificial Liver-Assist module or other application. Such Liver-Assist
Cartridge shall include the TRIAC fiber-in-fiber geometry or such other
cartridge as may be identified and mutually agreed on by the parties, and shall
also include any Approved Design Changes as agreed upon by the parties from time
to time (all Approved Design changes existing on the Effective Date are shown in
Appendix A.).

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     1.14 "Liver-Assist System" shall mean a device incorporating a Liver-Assist
Cartridge, for use as an artificial liver in liver disease or other therapy
applications.

     1.15 "Lot" shall mean a collection of Units manufactured together and
treated as a single entity for purpose of processing, application of Acceptance
Test Procedures, and sterilization.

     1.16 "Net Sales" means the actual cash proceeds received by ARBIOS from the
sale of a Liver Assist System containing a Liver-Assist Cartridge manufactured
for ARBIOS or on behalf of ARBIOS by a third party, less the sum of the
following deductions where applicable: (i) sales taxes, use taxes, value-added
taxes, tariffs, import/export duties or other excise taxes imposed upon sales or
transfers; (ii) transportation, insurance, handling charges; and (iii)
allowances, credits or refunds to customers because of rejections, returns,
damage, outdating or retroactive price adjustments. The sale of Liver Assist
Systems (A) among ARBIOS and its Affiliates or sublicensees, or (B) for
preclinical, clinical or regulatory purposes, shall not be included in Net
Sales. In the event a Liver Assist System is sold in combination with other
components ("Combination Product"), Net Sales, for purposes of royalty payments
on the Combination Product, shall be calculated by multiplying the Net Sales of
the Combination Product by the fraction X/(X+Y), where X is the gross selling
price of the Liver Assist System sold separately (i.e., without the other
components) and Y is the gross selling price of the other components.

     1.17 "SPECTRUM Improvements" shall mean ideas, designs, methods,
inventions, improvements and know-how relating to the Triac Liver-Assist
Cartridge, whether patentable or not, which are made, discovered or reduced to
practice by SPECTRUM, its employees, agents, consultants or subcontractors
pursuant to work under this Agreement and made or discovered alone or in
conjunction with others.

     1.18 "Quality Assurance (QA) Procedures" shall mean the procedures
contained in the quality assurance documents prepared by SPECTRUM. Such
documents, which are attached as Appendix B hereto, may be amended from time to
time by mutual written agreement by the parties.

     1.19 "Research Agreement" means the Research Agreement between the parties
that is executed substantially contemporaneously with this Agreement.

     1.20 "Research Program" means the research program as set forth in the
Research Agreement.

     1.21 "Specifications" shall mean the complete specifications, both manually
and computer prepared by SPECTRUM or ARBIOS, necessary for use in connection
with the design and manufacture of each Triac Liver-Assist Cartridge, including,
but not limited to, the following:

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     (i)  Bill of Materials;

     (ii) engineering drawings;

     (iii) equipment lists;

     (iv) detailed drawings of SPECTRUM custom manufactured components used in
          the systems;

     (v)  structural details of a cartridge;

     (vi) detailed design documents and shop drawings as required for shop
          fabrication;

     (vii) design engineering calculations and analyses; and

     (viii) test data and analyses.

A listing of the complete set of Specifications as of the Effective Date is
attached and incorporated hereto as Appendix A. Any change in or addition to the
Specifications shall be agreed to by the parties in writing (as one or more
Approved Design Changes) and shall become a supplement to Appendix A.

     1.22 "Stock Purchase Agreement" means the Stock Purchase Agreement between
the parties that is executed substantially contemporaneously with this
Agreement.

     1.23 "Units" shall mean the Liver-Assist Cartridges to be manufactured by
SPECTRUM hereunder.

     1.24 "Work Results" shall mean any and all drawings, designs, equipment
lists, specification sheets, data and other documentation, including computer
records, regarding the Liver-Assist Cartridge which are created by employees of
SPECTRUM, or its agents, consultants or subcontractors, either alone or in
conjunction with employees, agents or consultants of ARBIOS.

ARTICLE 2. MANUFACTURE OF UNITS.

     2.1 SPECTRUM agrees to manufacture, test, qualify per Specifications and
Quality Assurance Procedures, and deliver to ARBIOS Units qualifying for
Certification by SPECTRUM, as requested by ARBIOS via separate purchase orders.
ARBIOS agrees to pay SPECTRUM for such Units, subject to the terms and
conditions contained in this Agreement.

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     2.2 ARBIOS shall provide SPECTRUM with a twelve (12) month rolling forecast
of its anticipated need for Units, beginning ten (10) days following the
signature of the last party to sign this Agreement. This forecast shall be
updated quarterly by ARBIOS. ARBIOS shall provide to SPECTRUM a purchase order
for each Lot, at least three (3) months prior to the desired date of shipment of
such Lot to ARBIOS. SPECTRUM shall be responsible for the procurement of all
materials and components needed for the manufacture of the Units.

     2.3 All Units shipped by SPECTRUM to ARBIOS shall conform to the
Specifications in every respect, and shall be manufactured pursuant to current
cGMP standards and QA Procedures. Each Lot shipped to ARBIOS shall first have
passed all testing requirements of the Acceptance Test Procedures, and shall be
subject to good faith determination by SPECTRUM that Certification is fully
appropriate for all Units in such Lot.

     2.4 ARBIOS covenants not to manufacture Liver-Assist Cartridges or have
Liver-Assist Cartridges manufactured on its behalf by Third Parties, except in
connection with the Research Program, unless SPECTRUM is unable or unwilling to
supply to ARBIOS Units which meet the requirements of Section 2.3 (as defined
below). If SPECTRUM is unwilling or unable to supply the necessary ARBIOS Units,
then ARBIOS shall have the right to manufacture Liver-Assist Cartridges itself
or to have a third party manufacture Liver-Assist Cartridges on ARBIOS's behalf,
utilizing Acceptance Test Procedures, Approved Design Changes, Bill of
Materials, Confidential Information, SPECTRUM's Improvements, QA Procedures,
Specifications, and/or Work results as may be necessary, in ARBIOS's sole
discretion, to manufacture such Liver-Assist Cartridges, notwithstanding any
provisions to the contrary which may be contained elsewhere in this Agreement.
In such event, ARBIOS shall have a royalty bearing license under any SPECTRUM
patents, copyrights or other intellectual property to manufacture, use and sell
a cartridge which is the same as or substantially identical to the SPECTRUM
TRIAC cartridge (identified in Appendix A) with respect to the geometry, surface
area, length, and material of the membranes, as well as the number of fibers
contained in the cartridge, said royalty to be paid as specified in Section 3.2.
If ARBIOS sells cartridges which are not the same as or substantially identical
to the SPECTRUM TRIAC cartridge, no royalties shall be due to SPECTRUM. For the
purposes of this Section 2.4,

     (a) SPECTRUM will be deemed unwilling to supply Units if it notifies ARBIOS
in writing, pursuant to the notice provisions of Paragraph 16.7, of such
unwillingness.

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     (b) SPECTRUM will be deemed unable to supply Units if:

     (i)  such Units are not delivered within five (5) days of the expected
          delivery date;

     (ii) if any delivered Units do not meet the requirements of Section 2.3
          and, after thirty (30) calendar days notice to SPECTRUM (pursuant to
          the provisions of Paragraph 16.7), with both parties working together
          in good faith, SPECTRUM has not delivered the number of Units ordered
          which meet the requirements of Section 2.3; ARBIOS, in its sole
          discretion, then may determine that SPECTRUM will continue to be
          unable to supply the number of Units ordered which meet the
          Specifications of Section 2.3; or

     (iii) the parties, after good faith negotiation, are unable to agree upon a
          price for the Units, pursuant to Section 3.1.

     (c) In the event that (i) ARBIOS has provided capital for or has otherwise
enabled SPECTRUM to increase its production capacity and (ii) ARBIOS has the
rights described in Section 2.4(a), then ARBIOS also shall have the right to
lease such increased production capacity from SPECTRUM, and shall have the right
of first refusal to purchase SPECTRUM's production facility if SPECTRUM offers
it for sale. Terms of any lease or sale shall be negotiated by the parties in
good faith, with due consideration and credit given to the capital provided by
ARBIOS to SPECTRUM for the purpose of acquiring such increased production
capacity.

     2.5 SPECTRUM shall ship all Units F.O.B. from Rancho Dominguez, CA 90220.

     2.6 At ARBIOS's expense, SPECTRUM shall arrange for all transportation,
handling, transit insurance, duties, governmental inspections and other
requirements for delivery of the Units in accordance with this Agreement. . From
time to time, ARBIOS may request that SPECTRUM drop-ship Units directly to
customers of ARBIOS, and ARBIOS will pay any costs of transportation, handling,
crating, packaging, transit insurance, duties, governmental inspection and other
requirements for such delivery of the Units to customers in accordance with this
Agreement.

     2.7 SPECTRUM shall properly package the Units for protection against damage
or deterioration that may result from shipment and handling

     2.8 Unless otherwise agreed in writing between the parties, risk of loss to
all Units shall pass to ARBIOS upon shipment to ARBIOS or its designee, FOB
Rancho Dominguez, CA 90220. SPECTRUM shall be responsible for all costs of
insuring the Units prior to delivery. The Parties shall fully cooperate with
each other in acquiring appropriate property insurance protection for the Units
identified to this Agreement.

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     2.9 ARBIOS or ARBIOS's customer shall have the right to reject any Unit
produced by SPECTRUM which does not comply with the Specifications or which fail
to meet SPECTRUM's performance or quality requirements defined in this
Agreement. ARBIOS or ARBIOS's customer shall notify SPECTRUM in writing of
rejection of any Units which are deficient within five (5) working days after
ARBIOS or ARBIOS's customer receives such Units for inspection and testing, and
such notice shall identify the reasons for rejection. If ARBIOS or ARBIOS's
customer fails to notify SPECTRUM of rejection of a Unit within five (5) working
days after receipt, ARBIOS shall be deemed to have accepted the same. In
addition to other remedies, if the Units does not conform to Specifications,
ARBIOS shall return such Units to SPECTRUM, and SPECTRUM shall accept all such
Units for a full refund of the price paid to SPECTRUM.

     2.10 The terms and conditions of this Agreement shall govern, control and
take precedence over any conflicting terms on any purchase order, with the
exception of (i) price, and (ii) quantity.

ARTICLE 3. PRICING

     3.1 The price of Units sold by SPECTRUM to ARBIOS shall be negotiated in
good faith by the parties, but in any event shall be agreed upon by the parties
in advance in a written purchase order and shall be based upon the direct cost
of production for each specific Unit size.

     3.2 Royalties

     In the event that ARBIOS exercises its rights under subparagraph 2.4(a)
hereunder, ARBIOS shall pay SPECTRUM a royalty of three percent (3%) of that
portion of Net Sales attributable solely to the Liver-Assist Cartridge. The
portion of Net Sales attributable solely to the Liver-Assist Cartridge shall be
determined by multiplying Net Sales of the Liver-Assist System by the fraction
(A/B), where A is the invoice price of the Liver-Assist Cartridge and B is the
cost of goods sold (including the invoice price of the Liver-Assist Cartridge)
related to the Liver-Assist System.

ARTICLE 4. PAYMENT.

     4.1 During the term of this Agreement, ARBIOS agrees to pay SPECTRUM within
30 days following receipt of each Lot of Units ordered by ARBIOS and shipped per
ARBIOS's specific purchase order instructions.

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     4.2 ARBIOS shall pay any royalties under Section 3.2 on a quarterly basis,
with any amounts due during the quarter payable within thirty (30) days of the
close of the applicable quarter.

ARTICLE 5. CHANGES IN DESIGN OR ENGINEERING.

     5.1 (a) ARBIOS may, from time to time, submit to SPECTRUM a written Design
Change Request for quote from SPECTRUM. SPECTRUM will promptly evaluate each
such Design Change Request and prepare a Design Change Quote for submission to
ARBIOS for approval. No work shall proceed in implementing the change until an
Approved Design Change is issued by ARBIOS as provided in part (b) to this
Section. At ARBIOS's option, either manufacture of Units shall be halted until
the design change(s) can be approved and implemented, or SPECTRUM shall continue
to manufacture Units according to existing Specifications (i.e., without the
design change(s)) until the Approved Design Change is issued.

     (b) A Design Change Request shall become an Approved Design Change upon
ARBIOS notice to SPECTRUM in writing of its approval of the Design change
Request and Design Change Quote, which approval shall be in ARBIOS's sole
discretion. Approved Design Changes shall constitute amendments to Exhibit A of
this Agreement.

     5.2 (a) Upon receipt of an Approved Design Change, SPECTRUM will proceed
with the design and engineering changes and supporting documentation required to
implement the Approved Design change. SPECTRUM will prepare all documentation
necessary and appropriate to implement the Approved Design Change. such
documentation will, if appropriate, including the following, and shall be
submitted to ARBIOS for approval:

     (i)  revised Bill of Materials;

     (ii) new and revised drawings;

     (iii) equipment lists;

     (iv) detailed drawings of SPECTRUM custom manufactured components used in
          the systems;

     (v)  structural details of module;

     (vi) detailed design documents and shop drawings as required for shop or
          fabrication;

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     (vii) design engineering calculations and analyses; and

     (viii) test data and analyses.

Upon ARBIOS approval, such documentation shall become part of the
Specifications.

     (b) Promptly upon receipt by SPECTRUM of the written Approval Design Change
from ARBIOS, SPECTRUM will proceed to implement the required changes.

     5.3 (a) ARBIOS shall pay SPECTRUM for reasonable expenses incurred and for
services rendered by employees, agents, consultants, subcontractors or suppliers
of SPECTRUM in implementing each Approved Design Change in accordance with the
corresponding Design Change Quote.

     (b) SPECTRUM agrees to revise, recalculate, or to restate at its own
expense, any errors in the advice, data, designs, and/or other information
supplied to ARBIOS by SPECTRUM or by any other person authorized to act on
SPECTRUM's behalf hereunder with respect to any activities undertaken pursuant
to Article 5.

ARTICLE 6. QUALITY ASSURANCE.

     6.1 It is understood that ARBIOS has selected SPECTRUM to manufacture the
Units in significant part due to SPECTRUM's reputation for membrane production
skills of the highest quality, specifically in the medical device industry.
SPECTRUM represents that it has a thorough understanding of the pertinent
aspects of FDA regulations, specifically as regard to:

     (a)  compliance with cGMPs;

     (b)  control of hollow fiber membrane production; and

     (c)  bio-compatibility of materials.

     6.2 SPECTRUM shall implement the Quality Assurance Procedures ("QA
Procedures") as outlined in Appendix B. SPECTRUM recognizes that it is of utmost
importance that the QA Procedures be supportive of cGMP Guidelines and shall
insure that the defined QA Procedures are adhered to in every respect.

     6.3 SPECTRUM shall cooperate fully with ARBIOS in all aspects of design and
quality assurance in order to comply with cGMPs and assist ARBIOS in gaining
product approvals from the Food and Drug Administration. For instances in which
more than incidental time and effort would be sought from SPECTRUM, the parties
shall agree in advance as to the extent of effort and the associated cost , to
be evidenced by a purchase order submitted by ARBIOS and accepted by SPECTRUM.

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ARTICLE 7. ACCEPTANCE TEST PROCEDURES AND CONFORMITY TO SPECIFICATIONS.

     7.1 SPECTRUM has developed Acceptance Test Procedures to be performed
during and upon completion of each Lot to ensure that each Unit of the Lot
conforms to the Specifications. A copy of the Acceptance Test Procedures is
attached to this Agreement as Appendix C.

     7.2 Each Lot completed by SPECTRUM shall be subjected to the Acceptance
Test Procedures, and ARBIOS shall be given an opportunity to observe such
testing procedures and examine all test data. Prior to the shipment of each Lot,
SPECTRUM shall provide ARBIOS with a written certificate for each such Lot
signed by the Quality Assurance Manager or an officer of SPECTRUM, stating that
such Lot has successfully completed the Acceptance Test Procedures. The date of
such certification shall constitute the date of Certification of such Lot.

     7.3 SPECTRUM represents that the Acceptance Test Procedures are
sufficiently complete and rigorous and that Certification of a Lot is a reliable
indicator that each Unit of that Lot conforms to all Specifications. Each Unit
of each certified Lot shipped to ARBIOS will conform to all Specifications.
SPECTRUM agrees to refund or credit all payments made to SPECTRUM by ARBIOS for
Units which do not conform to all Specifications.

     7.4 SPECTRUM warrants that:

     (a) each Unit conforms to the Specifications and is free of defects in
materials and workmanship; and

     (b) each Unit was produced according to the QA/Manufacturing Procedures,
and each Lot was subject to, and certified pursuant to, the Acceptance Test
Procedures.

     7.5 In the event of any claim by ARBIOS that a Unit does not conform to the
foregoing warranty in any respect which is reported in writing by ARBIOS to
SPECTRUM, SPECTRUM will promptly investigate the claim and consult with ARBIOS
concerning the action to be taken. Both parties shall work together in good
faith to determine whether the claim is proper and should be covered by the
foregoing warranty. Should the parties agree that the claim is covered by the
foregoing warranty, SPECTRUM will promptly refund ARBIOS for the cost of the
Unit.

     7.6 In the event the parties cannot agree whether the claim is proper and
should be covered by the foregoing warranty, either party may elect to submit
the issue to arbitration according to the procedures of Article 14.

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ARTICLE 8. TITLE; WARRANTY OF TITLE.

     8.1 Title to completed Units, and risk of loss, shall pass to ARBIOS upon
shipment, and SPECTRUM warrants that upon payment, ARBIOS shall have good and
clear title to each Unit, free and clear of any liens or encumbrances at the
time of shipment.

     8.2 As provided in Section 9.1, title to all Work Results and SPECTRUM
Improvements generated pursuant to this Agreement or used in connection with the
fabrication and production of the Units shall be exclusively in ARBIOS;
provided, however, that ARBIOS shall use all SPECTRUM Improvements solely for
(i) the development, distribution, sale and manufacture of Liver Assist Systems,
and not for other applications or products in the Field of Use, or (ii) as
otherwise negotiated in good faith by the parties, except to the extent that any
information contained therein is already in the public domain or is known to
ARBIOS independently of work conducted by SPECTRUM pursuant to this Agreement.
All materials and Work Results shall be identified to this Agreement and shall
be segregated by SPECTRUM from other work it may be doing for other parties.

     8.3 SPECTRUM shall have the right to use SPECTRUM improvements for the
development, manufacture, sale and/or use of products which are not in direct
competition with ARBIOS Liver Assist Systems or any other ARBIOS product using
fiber-in-fiber technology and licensed from SPECTRUM on a case-by-case basis.
ARBIOS hereby grants to SPECTRUM a royalty-free, exclusive right to use the
SPECTRUM Improvements for these purposes.

ARTICLE 9. PROPRIETARY RIGHTS.

     9.1 SPECTRUM acknowledges that ARBIOS is, and shall remain, the owner of
all rights, title and interest in and to: (i) all Work Results and, SPECTRUM
Improvements specifically created to the Liver-Assist Cartridges and any other
products utilizing fiber-in-fiber technology licensed from SPECTRUM, (ii) all
Confidential Information, including, but not limited to, that embodied in any
drawings, designs, prototypes or other documentation provided by ARBIOS to
SPECTRUM hereunder, and (iii) all Specifications (except for the specifications
for the SPECTRUM TRIAC cartridge identified in Appendix A, which specifications
are owned by SPECTRUM). SPECTRUM agrees that it will use such Work Results,
Confidential Information and Specifications (except for the specifications for
the SPECTRUM TRIAC cartridge) only as necessary in performing its duties
hereunder, and not for any other purpose. Upon expiration or termination of this
Agreement, and at the request of ARBIOS, SPECTRUM shall forward to ARBIOS all
items provided by ARBIOS or generated for ARBIOS as Work Results produced by or
for SPECTRUM under this Agreement.

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     9.2 SPECTRUM shall promptly inform ARBIOS in writing of any SPECTRUM
Improvements related to the Liver-Assist Cartridge and its manufacture, which
are developed by SPECTRUM during the term of this Agreement, and shall maintain
accurate records thereof. These SPECTRUM Improvements, including any patent
rights therein, shall be the sole property of ARBIOS.

     9.3 SPECTRUM agrees to assign and does hereby assign to ARBIOS all rights
to Work Results, including any SPECTRUM Improvements, including the right to
seek and obtain patent, copyright or other protection therefor. SPECTRUM agrees
to execute, or cause to be executed, at ARBIOS's reasonable request, all
documents, including all patent, copyright or other applications, necessary to
preserve or perfect the rights of ARBIOS in SPECTRUM Improvements of Work
Results. In particular, SPECTRUM agrees to confirm through written employment
agreements, the obligation of all officers and employees to assign to ARBIOS all
rights, title and interest in and to all Work Results and SPECTRUM Improvements.

     9.4 (a) Each party acknowledges that during the term of this Agreement, it
may disclose to the other certain Confidential Information. Each party shall
protect the other's Confidential Information as if it was its own during the
term of this Agreement, and for a period of three (3) years following the
expiration or termination of this Agreement. The party receiving Confidential
Information shall not disclose or employ such Confidential Information for its
own benefit or for the benefit of third parties other than as contemplated by
this Agreement. (b) The parties agree that they will not discuss the existence
or subject matter of this Agreement or the business of each other with third
parties except as necessary for the performance of the work under this
Agreement, and that any third party to whom such disclosure is necessary (as
determined by each party) shall have agreed in writing, to be bound by the
provisions of this Section 9.4. Notwithstanding the preceding, no written
agreement will be required for disclosures to government regulatory agencies
regarding the Liver-Assist Cartridge or Liver-Assist System, provided, that
Confidential Information is designated as such in any disclosures to government
regulatory agencies. All drawings and other materials regarding the Liver-Assist
Cartridge which are furnished by SPECTRUM to outside contractors, consultants
and vendors will carry appropriate notification relevant to confidentiality and
to its return to SPECTRUM. SPECTRUM will keep adequate logs of such material
delivered to outside parties for work under this Agreement, and shall be
responsible for recovering said materials. SPECTRUM will be responsible for the
confidentiality of said materials.

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ARTICLE 10. PUBLICITY.

     10.1 No use of ARBIOS's name will be made in advertisements or press
releases made for publication in any media, except as authorized by ARBIOS, or
as required to satisfy any governmental reporting requirements.

     10.2 ARBIOS, at its option, is hereby authorized to use SPECTRUM's name to
indicate SPECTRUM as the manufacturer of the Units. However, no additional use
of SPECTRUM's name will be made in advertisements or press releases made for
publication in any media, except as authorized by SPECTRUM, or as required to
satisfy any governmental reporting requirements.

ARTICLE 11. NONCOMPETITION.

     11.1 In order to protect ARBIOS's rights in Work Results, Improvements and
Confidential Information, SPECTRUM agrees that from the Effective Date until the
expiration of twelve (12) months after the date of expiration or termination of
this Agreement, SPECTRUM will not engage, directly or indirectly, in competition
with ARBIOS in the Field of Use. Specifically, but without limitation, SPECTRUM
agrees that it shall not fabricate, use or sell Triac Liver-Assist Cartridges
Notwithstanding this prohibition, SPECTRUM shall continue to have the right to
fabricate, use and sell the SPECTRUM fiber-in-fiber cartridge for any purpose
outside the Field of Use. Furthermore, SPECTRUM shall have the right to continue
to supply existing customers liver assist devices of customer's proprietary
designs under existing supply agreements.

     11.2 SPECTRUM acknowledges and agrees that during the clinical evaluation
of the ARBIOS Liver-Assist System ARBIOS reserves the right to develop, make,
purchase and/or evaluate other Liver-Assist technologies from a source other
than SPECTRUM.

ARTICLE 12. INDEMNITY.

     12.1 SPECTRUM agrees to indemnify and hold ARBIOS harmless from and against
any expense, loss, damage or judgments, including reasonable attorney's fees,
arising out of or resulting from personal injury or property damage attributable
to a construction defect or failure of SPECTRUM to fulfill its responsibilities
under this Agreement, including claims based on material or workmanship defects,
breach of the confidentiality provisions set forth in Section 9.4, quality
assurance, failure to conform to Specifications, and other matters within the
scope of SPECTRUM's responsibilities hereunder. SPECTRUM represents that it
maintains comprehensive general liability insurance which includes, but is not
limited to, products liability coverage and contractual liability coverage (but
only to the extent covered under the comprehensive general liability insurance)
insuring the indemnity of this Agreement, in an amount of at least
$______________ combined single limit per occurrence for bodily injury and
property damage, and with an aggregate of $___________ for products liability
claims and a general aggregate of $___________.

                                       14

<PAGE>

     12.2 ARBIOS agrees to indemnify and hold SPECTRUM harmless from and against
any expense, loss, damage or judgment, including reasonable attorney's fees,
arising out of or resulting from personal injury, property damage, breach of the
confidentiality provisions set forth in Section 9.4, infringement of
intellectual property rights or performance of any Unit to the extent that any
such cause of action is not attributable to a construction defect or failure of
SPECTRUM to fulfill its responsibilities under this Agreement, including claims
based on material or workmanship defects, quality assurance, failure to conform
to Specifications, and other matters within the scope of SPECTRUM's
responsibilities hereunder or under the License Agreement. ARBIOS represents
that it maintains comprehensive general liability insurance which includes, but
is not limited to, products liability coverage and contractual liability
coverage (but only to the extent covered under the comprehensive general
liability insurance) insuring the indemnity of this Agreement, in an amount of
at least $______________ combined single limit per occurrence for bodily injury
and property damage, and with an aggregate of $_____________ for products
liability claims and a general aggregate of $_________________.

     12.3 Each party shall indemnify and hold the other party harmless from any
and all claims, costs or liability for any loss, damage, injuries or loss of
life incurred in the indemnifying party's own performance of activities that are
conducted on the indemnifying party's own premises; provided, however, that such
indemnification shall not apply for any loss, damage, injuries, or loss of life
attributable in whole or in part to the other party's fault or negligence.

     12.4 (a) Upon written request by ARBIOS or its designated insurance broker,
SPECTRUM shall deliver to ARBIOS a certificate of insurance describing the
insurance required herein. The insurer shall endeavor to mail to ARBIOS, at a
minimum, thirty (30) days prior written notice of cancellation.

     (b) Upon written request by SPECTRUM or its designated insurance broker,
ARBIOS shall deliver to SPECTRUM a certificate of insurance describing the
insurance required herein. The insurer shall endeavor to mail to SPECTRUM, at a
minimum, thirty (30) days prior written notice of cancellation.

                                       15

<PAGE>

ARTICLE 13. LIMITATION OF LIABILITY.

     13.1 Except the parties' confidentiality obligations under Section 9.4 and
as otherwise provided in Article 12, the liability of either party to the other
for any claim arising out of or in connection with this Agreement shall not
exceed the other party's actual damages and in no event shall either party be
liable to the other for consequential damages. ARBIOS shall be entitled to
recover as actual damages the amount of its actual costs of obtaining and
installing replacement parts, components, or complete Units in SPECTRUM fails to
fulfill its warranty obligations under Article 7.

ARTICLE 14. ARBITRATION.

     14.1 In the event of any controversy or claim arising out of or relating to
Article 7, the parties shall try to settle those conflicts amicably between
themselves. Should the parties fail to agree, the matter in dispute shall be
settled through arbitration. If a party hereto determines to submit a dispute to
arbitration pursuant to this Article 14, it shall furnish the other party with a
written notice indicating (i) its intent to commence arbitration proceedings
pursuant to this Article 14, (ii) the nature, with reasonable detail, of the
dispute, and (iii) the remedy to be sought.

     14.2 The arbitration shall be conducted at a neutral site mutually
agreeable to the parties, provided that it shall be conducted at a neutral site
in or near Bel Air, California if the arbitration is at the request of SPECTRUM,
or at a neutral site in or near Rancho Dominguez, California if the arbitration
is at the request of ARBIOS.

     14.3 Except as specified herein, the arbitration shall be conducted in
accordance with the rules of the American Arbitration Association. Reasonable
discovery as determined by the arbitrators shall apply to the arbitration
proceeding. The laws of the State of California shall apply.

     14.4 A panel of three arbitrators shall be used, with each arbitrator
having appropriate engineering experience and background in the design and
manufacture of medical equipment or devices. No arbitrator may be a current or
former employee, agent, consultant or representative of either party. The panel
of arbitrators shall be selected as follows:

     (a) Within twenty one (21) days after the notice of Paragraph 14.1, the
parties shall simultaneously exchange lists identifying seven (7) persons
believed to be acceptable arbitrators, who shall not have been contacted by
either party regarding serving as an arbitrator hereunder.

                                       16

<PAGE>

     (b) If three or fewer names are common to both lists, those persons shall
be contacted to serve as arbitrators. If a panel of three is not designated in
this manner, the parties shall attempt in good faith to agree on the
arbitrators. In the absence of agreement within ten (10) days after the exchange
of lists:

     (i)  If there were more than three common names, three shall be chosen
          randomly from the common names.

     (ii) If there were two common names, they shall be selected as arbitrators.
          Each party then shall identify one name from the other party's
          remaining list, with the third arbitrator selected randomly from the
          two identified names.

     (iii) If there was one common name, that person shall be selected as an
          arbitrator. Each party then shall identify one name from the other
          party's list, which shall become the second and third arbitrators
          selected.

     (iv) If there were no common names, each party shall identify one name from
          the other party's list, which shall be the first and second
          arbitrators selected. Then each party shall identify one additional
          name from the other party's remaining list, with the third arbitrator
          chosen randomly from the two identified names.

     (c) The parties shall jointly contact the three selected arbitrators to
confirm that each can serve as a neutral arbitrator and conduct the arbitration
expeditiously. The parties shall repeat step (b)(ii) as necessary to fill the
panel of three. If necessary, the parties shall exchange lists of five (5)
additional qualified potential arbitrators from which to select.

     14.5 In addition to all other relief provided, the successful party shall
be entitled to an award of all reasonable costs and expenses, including all fees
and expenses of the arbitrators and all out-of-pocket expenses of the successful
party, including attorneys' costs.

     14.6 The decision of the panel shall be final and binding and shall be
enforceable at law. Judgement upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof.

     14.7 Notwithstanding the foregoing, this Article 14 shall not apply to any
breach of either party's confidentiality obligations under Section 9.4 or
preclude any suit for injunctive relief for breach hereunder.

                                       17

<PAGE>

ARTICLE 15. TERM AND TERMINATION.

     15.1 This Agreement shall commence as of the Effective Date first written
above and, unless sooner terminated, shall continue in effect until terminated
pursuant to this Article.

     15.2 In the event of a material breach by either party, the nonbreaching
party may terminate this Agreement upon thirty (30) days written notice unless
the breach is cured prior to the expiration of such period.

     15.3 Either party may terminate this Agreement for any reason, upon written
notice to the other party as follows:

     (a) SPECTRUM may terminate upon 180 days notice to ARBIOS in writing.

     (b) ARBIOS may terminate upon 180 days notice to SPECTRUM in writing.

     The provisions of Paragraph 15.4 shall apply during the termination notice
period.

     15.4 Activities During Termination Notice Period -

     (a) ARBIOS shall be entitled to submit additional purchase orders for
manufacture of Units totaling up to fifty percent (50%) of the twelve month
forecast of Paragraph 2.2, and SPECTRUM agrees to fill such orders pursuant to
the terms of this Agreement.

     (b) SPECTRUM shall discontinue all procurement and production activity upon
receipt of such termination notice from ARBIOS, other than that required to
fulfill its obligations to ARBIOS under any outstanding purchase orders
previously submitted by ARBIOS and accepted by SPECTRUM or new purchase orders
submitted by ARBIOS pursuant to subparagraph (a).

     (c) Products scheduled for delivery during the notice period pursuant to
outstanding purchase orders previously submitted by ARBIOS and accepted by
SPECTRUM, or new purchase orders submitted by ARBIOS pursuant to subparagraph
(a), shall be completed and delivered to ARBIOS as scheduled. ARBIOS shall pay
SPECTRUM for all Units delivered pursuant to the termination provisions of this
Article.

                                       18

<PAGE>

     (d) During the applicable notice period of this Paragraph, ARBIOS shall
have the right to disclose and transfer all information, data, drawings and the
like, as they are contained in the Acceptance Test Procedures, Approved Design
Changes, Bill of Materials, Confidential Information, SPECTRUM Improvements, QA
Procedures, Specifications, and/or Work Results to an alternative supplier as
may be necessary, in ARBIOS's reasonable discretion, for purposes of seeking FDA
approval for such supplier, assisting the supplier in acquiring necessary
equipment, etc.

     15.5 In the event that ARBIOS terminates this Agreement due to a decision
to cease marketing and sale of the Liver-Assist System after the first purchase
order has been accepted by SPECTRUM for production of commercial Units (that is,
Units for commercial use as opposed to use in clinical trials), the additional
provisions of this Paragraph shall apply. If, within six (6) months following
termination, a decision is made by ARBIOS to reinstate marketing and sale of the
Liver-Assist System, a new Agreement shall be negotiated and shall continue in
full force and effect from the date the new Agreement is signed by the parties
or otherwise made effective.

     15.6 Obligations Under Termination.

     ARBIOS also will reimburse SPECTRUM for any expenses incurred due to any
non-cancelable commitments made by SPECTRUM on ARBIOS's behalf which are based
on firm purchase orders. SPECTRUM shall use its best efforts to minimize such
termination expenses.

     15.7 The provisions of Articles 1, 8, 9, 10, 11, 12, 13, 14, 15 and 16, and
Sections 7.3, 7.4, 7.5 shall survive any termination of this Agreement.
Additionally, if ARBIOS terminates the Agreement pursuant to Section 15.3(b),
then the royalty obligation under Section 3.2 shall survive termination of the
Agreement.

ARTICLE 16. MISCELLANEOUS.

     16.1 This Agreement shall inure to the benefit of and bind the parties
hereto, any business entity controlling, controlled by or under common control
with the parties, and their respective successors and permitted assigns. It is
specifically agreed, however, that neither party may assign its rights or duties
pursuant to this Agreement without the written consent of the other party;
provided, however, that:

     (a) No consent shall be needed for any assignment of all of the business of
ARBIOS to which the subject matter of this Agreement relates; and

     (b) No consent shall be needed for any assignment of all of the business of
SPECTRUM to which the subject matter of this Agreement relates.

                                       19

<PAGE>

     16.2 This Agreement shall be interpreted in accordance with the laws of the
State of California, and the parties hereby submit to the jurisdiction of the
courts of that state.

     16.3 The parties to this Agreement are independent business entities.
Neither party shall be deemed to be an agent of the other party as a result of
any transaction under or related to this Agreement, and shall not in any way
pledge the other party's credit or incur any obligation on behalf of the other
party.

     16.4 The waiver of either party hereto of any right hereunder or of the
failure to perform or of a breach by the other party shall not be deemed a
wavier of any other right hereunder or of any other breach or failure by said
other party whether of a similar nature or otherwise.

     16.5 The invalidity or unenforceability of any provision hereof shall in no
way reflect the validity or enforceability of any other provision. Any provision
declared invalid or unenforceable by a court of law shall be deleted and the
remaining terms and conditions of this Agreement shall remain in full force and
effect.

     16.6 This instrument, together with the Research Agreement, the License
Agreement and the Stock Purchase Agreement contain the full and entire
understanding between the parties with regard to the subject matter hereof and
supersedes any and all prior negotiations, correspondence, understandings and
agreements whether oral or written between the parties. This Agreement may only
be changed by a subsequent written agreement executed by both parties hereto.

     16.7 Any notices required by this Agreement shall be sent by certified mail
postage prepaid, return receipt requested, or by pre-paid courier delivery, and
shall be forwarded to the respective addresses set forth below unless
subsequently changed by written notice to the other party.

For ARBIOS:                  98 Santa Monica Blvd., #252
                             Beverly Hills, CA 90212
                             Attn:  President

For SPECTRUM:                SPECTRUM LABORATORIES, INC.
                             18617 Broadwick Street
                             Rancho Dominguez, California  90220-6435
                             Attn:  President

                                       20

<PAGE>

     16.8 Neither party hereto shall be responsible to the other for failure to
perform any of the obligations imposed by this Agreement, provided such failure
shall be occasioned by fire, flood, explosion, lightning, windstorm, earthquake,
subsidence of soil, failure or destruction, in whole or in part, of machinery of
equipment or failure to supply of materials, discontinuity in the supply of
power, governmental interference, civil commotion, riot, war, strikes, labor
disturbance, transportation difficulties, labor shortage, or any cause beyond
the reasonable control of the party in question. It is incumbent upon each party
to inform the other within a reasonable period of time of such an occurrence.
Should performance of any obligation be delayed or prevented because such force
majeure conditions apply, the parties shall consult with each other regarding
the future implementation of the Agreement.

     16.9 SPECTRUM and ARBIOS hereby warrant that each carries sufficient
Worker's Compensation insurance to comply with the laws of the State of
California with respect to its employees.

     16.10 SPECTRUM and ARBIOS agree that in the performance of the
manufacturing operations hereunder, as well as in the disposal of any waste
material resulting from said operations, it will comply with all applicable
governmental laws, rules, and regulations for protecting health, safety and the
environment. SPECTRUM and ARBIOS agree to cooperate with any governmental
agency(ies) to monitor compliance with such laws, rules and regulations.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized representatives.

ARBIOS, INC.

_____Dec. 26______________________, 2001    By: Jacek Rozga, M.D., PhD

                                            Title: President & CSO

SPECTRUM LABORATORIES, INC.

______Dec. 26________________, 2001         By:F. Jesus Martinez

                                            Title: President & COO

APPENDIX A - SPECIFICATIONS

APPENDIX B - QUALITY ASSURANCE PROCEDURES

                                       21

<PAGE>

APPENDIX C - ACCEPTANCE TEST PROCEDURE

APPENDIX D - COMPENSATION SCHEDULE

                                       22

<PAGE>EXHIBIT 10.11

                               RESEARCH AGREEMENT

     THIS AGREEMENT, dated as of December 26, 2001, is entered into by and
between Spectrum Laboratories, Inc., a Delaware corporation ("Spectrum"), and
Arbios Technologies, Inc., a Delaware corporation ("Arbios").

                                    RECITALS

     A. Arbios and Spectrum desire to combine their expertise and their
respective technologies to enable Arbios to develop Liver Assist Systems (LAS),
conduct pre-clinical and Phase I-III clinical testing, obtain regulatory
approval(s), and commercialize LAS(s).

     B. Under the terms of this Agreement, Spectrum will perform certain
research on LAS devices for Arbios during product development, pre-clinical and
clinical testing and regulatory approval(s) at no cost to Arbios in partial
consideration for the issuance of Common Stock of Arbios as set forth in the
Stock Purchase Agreement.

                                    AGREEMENT

     NOW, THEREFORE, the Parties hereto agree as follows:

SECTION 1. DEFINITIONS

     All capitalized terms, unless otherwise defined herein, have the
definitions as set forth below:

     "AFFILIATE" means any corporation or other business entity which controls,
is controlled by or is under common control with a Party to this Agreement,
without regard to 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...

     "CONFIDENTIAL INFORMATION" means the information that is confidential or
proprietary to a Party or that the Party is otherwise obligated to keep
confidential (e.g., pursuant to a contractual or other obligation owing to a
Third Party), including, but not limited to, the Licensed Patents, the Spectrum
Technology, and any Proprietary Rights related thereto. Confidential Information
does not include any information that (a) was known to the Recipient prior to
receiving the same from the discloser in connection with this Agreement; (b) is
independently developed by the Recipient; (c) is acquired by the Recipient from
another source without restriction as to Use or Distribution; or (d) is or
becomes publicly available or part of the public domain through no fault or
action of the Recipient.

<PAGE>

     "CONFIDENTIAL MATERIAL" means any document, diskette, tape, writing,
prototype, or other tangible item (whether handwritten, printed, coded,
magnetic, electronic, or other form or media) which contains, displays,
embodies, or manifests any Confidential Information.

     "DEVELOP" means to engineer, prepare, write, invent, create, reduce to
practice, conceive, discover, formulate, design, test, or otherwise develop.

     "DISCLOSER" means a Party that discloses Confidential Information to the
other Party.

     "DISTRIBUTE" means to market, sell, have sold, offer for sale, rent, lease,
license, sublicense, assign, transfer, allow to use, import, export, disclose,
publish, provide, distribute or otherwise dispose of.

     "EFFECTIVE DATE" means the date upon which the last of the following
documents is executed and delivered by all of the Parties hereto and thereto (a)
this Agreement; (b) the Stock Purchase Agreement; (c) the License Agreement; and
(d) the Manufacturing Agreement.

     "FIELD OF USE" means the fields of (a) artificial blood therapy; and (b)
bioprocessing and therapeutic devices. The Field of Use shall include, without
limitation, liver assist systems, artificial gut, bioartificial kidney,
hemodialysis and/or hemofiltration devices, and devices producing biologically
active compounds, including, but not limited to, monoclonal antibodies,
hormones, peptides and vaccines.

     "INVESTIGATOR" means the Principal Investigator set forth in Section 3.2
and any other Spectrum employee or position identified in the attached Exhibit
D.

     "IMPROVEMENTS" means any and all processes, uses, designs, applications,
methods and compositions of matter, indications, improvements, enhancements and
modifications.

     "LAS" means liver assist system.

     "LICENSE" means the rights granted under Section 2.1 of the License
Agreement.

     "LICENSE AGREEMENT" means the License Agreement between the Parties that is
executed substantially contemporaneously with this Agreement.

     "MAKE" means manufacture, fabricate, assemble, produce, reproduce, make or
have made.

     "MANUFACTURING AGREEMENT" means the Manufacturing and Supply Agreement
between the Parties that is executed substantially contemporaneously with this
Agreement.

     "MILESTONE" means one of the research milestones as set forth on the
attached Exhibit C.

     "PARTY" means Spectrum and/or Arbios, as the context requires.

     "PERSON" means any individual, corporation, limited liability company,
partnership, trust, association, governmental authority, or other entity.

                                       2

<PAGE>

     "PROPRIETARY RIGHT" means any patent, copyright, trade secret, or other
intellectual property right (including, but not limited to, any moral right)
under the laws of any jurisdiction, whether registered, unregistered, statutory,
common law, or otherwise (including, but not limited to, any rights to sue,
recover damages or obtain other relief for any past or future infringement, and
any rights under any application, assignment, license, legal opinion, or
search); provided, however, that the term "Proprietary Right" does not include
any trademark, service mark or trade name.

     "RECIPIENT" means a Party that receives any Confidential Information from
the other Party.

     "SPECTRUM TECHNOLOGY" means any existing or future Technology owned,
licensed or otherwise possessed or known to Spectrum.

     "STLAS" means a LAS or other Technology in the Field of Use that
incorporates or is based upon Spectrum Technology.

     "STOCK PURCHASE AGREEMENT" means an agreement providing for the issuance of
certain shares of Arbios Common Stock to Spectrum that is executed by the
Parties substantially contemporaneously with this Agreement.

     "TECHNOLOGY" means all inventions, discoveries and Improvements, whether or
not patentable, trade secrets, data, information, copyrights and know-how,
including, but not limited to, biological and chemical materials, technical and
nontechnical data, the results of tests, assays, methods, unpublished patent
applications, unpatented technology and preclinical and clinical information.

     "THIRD PARTY" means any Person that is not a Party.

     "UNAUTHORIZED USE" means any Development, Distribution, Making or Use of
the Confidential Information or Confidential Materials not authorized by this
Agreement.

     "USE" means to consume, copy, display, duplicate, disclose, employ,
incorporate, manipulate, operate, perform, practice, publish or otherwise use.

     "YEAR" means the period of time beginning on the Effective Date or any
anniversary thereof, and ending on the following anniversary of the Effective
Date.

SECTION 2. RESEARCH PROGRAM

     2.1 RESEARCH PLAN AND BUDGET PLAN

     The Parties shall conduct research and development (the "Research Program")
regarding applications of the Spectrum Technology in the Field of Use as set
forth in the research plan attached hereto as Exhibit A (the "Research Plan"),
according to the budget attached hereto as Exhibit B (the "Budget Plan") and
subject to the terms and conditions of this Agreement. Spectrum's obligations
under the research agreement may be terminated by Spectrum on 30 days written
notice to Arbios with or without cause.

                                       3
<PAGE>

     2.2 UPDATES OF THE RESEARCH PLAN AND BUDGET PLAN

     No later than ninety (90) days before the end of each Year, the Parties
shall confer and agree upon the Research Plan and Budget Plan that shall govern
the Research Program during following Year. In addition, the Research Plan and
Budget Plan may be amended from time to time in writing by mutual agreement of
the Parties. If the Parties are unable to agree upon the Research Plan and
Budget Plan for the next Year, then the current Research Plan and Budget Plan
shall apply for the following Year.

SECTION 3. SPECTRUM RESPONSIBILITIES

     3.1 RESEARCH

     Spectrum shall make a good faith effort to conduct research and product
development according to the Research Plan during a period of four (4) years,
however, Spectrum makes no representation or warranty that particular technical
goals will be successfully achieved. Evidence of a good faith effort includes,
but is not limited to, the following activities, if undertaken by Spectrum:

     (a) staffing the Research Program with Investigators as set forth in the
Research Plan, or as otherwise agreed by Arbios and Spectrum;

     (b) conducting research and product development according to the guidelines
of the Research Plan; and

     (c) completing Milestones in a timely manner.

     3.2 PRINCIPAL INVESTIGATOR

     F. Jesus Martinez shall act as principal investigator with respect to the
Research Project, unless replaced as provided below (the "Principal
Investigator"). The Principal Investigator shall be responsible for the conduct
of the Research Project and shall supervise the work performed by Spectrum
pursuant to the Research Plan and this Agreement. In the event that the
Principal Investigator becomes unavailable or is unable to complete his duties
for any reason, Spectrum shall appoint a successor with the written consent of
Arbios, such consent not to be unreasonably withheld.

     3.3 INVESTIGATORS

     The Principal Investigator and all other Investigators shall assign to
Arbios all of their Proprietary Rights in any Improvements or other Technology
Developed or Made in connection with the Research Program, whether or not such
Improvement or Technology is patentable.

     3.4 MODIFICATION OF SPECTRUM TECHNOLOGY

     Spectrum shall make all good faith efforts to modify the Spectrum
Technology and create Improvements according to the Research Plan or as
otherwise indicated by Arbios from time to time in writing (including, but not
limited to, specifications intended to achieve a desired function, improve
performance or biosafety, allow the attachment of ancillary components or
features, to improve STLAS functionality or to obtain regulatory approval).

                                       4
<PAGE>

     3.5 REPORTING

     The Principal Investigator, on behalf of Spectrum, shall prepare an annual
report of its progress toward achieving the Milestones, to be delivered to
Arbios within ninety (90) days after the end of each calendar year. In addition
to the annual report, upon achieving any Milestone, Spectrum shall promptly
notify Arbios of such achievement.

     3.6 DISCLOSURE

     Spectrum shall promptly disclose and make available to Arbios applicable
Spectrum Technology and applicable Improvements thereto for use in connection
with the Research Program.

     3.7 ASSISTANCE IN OBTAINING REGULATORY APPROVAL

     The Principal Investigator, on behalf of Spectrum, shall consult with and
assist Arbios in Arbios' efforts to obtain regulatory approval for the STLAS
pursuant to Section 4.1.

     3.8 THIRD  PARTIES

     In the performance of the Research Program, Spectrum shall not use the
services or technology of, or collaborate with, any Third Party without the
prior written consent of Arbios.

SECTION 4. ARBIOS RESPONSIBILITIES

     4.1 REGULATORY APPROVAL

     Arbios shall use good faith efforts to seek regulatory approval for the
STLAS, including, but not limited to:

     (a) preparing an Investigational New Drug ("IND") application to conduct
human studies for joint submission to the FDA, following up on IND procedural
requirements, attending meetings with the FDA and preparing and filing a
Pre-Market Approval and a Product and Establishment Licensing application with
the FDA; and

     (b) coordinating clinical trials for the STLAS.

     4.2 COMMERCIALIZATION

     Arbios shall use good faith efforts to commercialize the STLAS, including,
but not limited to:

     (a) producing or procuring liver cells in sufficient quality and quantities
for clinical trials;

                                       5
<PAGE>

     (b) engineering and making available prototype facilities for the
production of the STLAS, including facilities for device and hepatocyte
processing and, if necessary, production of devices;

     (c) undertaking all associated marketing, sales, and distribution
activities.

     4.3 MARKETING

     Arbios shall make a good faith effort to market the STLAS, but makes no
representation or warranty that regulatory approval can be obtained for any of
the STLAS systems under consideration or that any of the STLAS systems under
consideration can be marketed. Evidence of a good faith effort includes, but is
not limited to, the following activities, if undertaken by Arbios or an Arbios
Affiliate or sublicensee:

     (a) completing Milestones in a timely manner;

     (b) conducting pre-clinical and clinical testing as may be necessary to
provide proof of feasibility and/or to secure regulatory approval;

     (c) applying for and reasonably pursuing such regulatory approval;

     (d) promptly marketing any STLAS for which regulatory approval has been
obtained.

     4.4 REPORTING

     Arbios shall prepare an annual report of its progress toward achieving the
Milestones, to be delivered to Spectrum within ninety (90) days after the end of
each calendar year. In addition to the annual report, upon achieving any
Milestone, Arbios shall notify Spectrum of such achievement.

SECTION 5. FUNDING

     5.1 RESEARCH EXPENSES

     Spectrum shall pay for all costs and expenses in connection with the
Research Program, as set forth in the Budget Plan, subject to the following:

     (a) Spectrum shall allocate one hundred thirty seven thousand five hundred
dollars ($137,500) per Year solely to the Research Program (the "Annual
Budget");

     (b) any unused portion of an Annual Budget at Year's end (the "Carry-Over")
will be added to the full Annual Budget for the next Year;

     (c) Spectrum shall allocate a total of five hundred and fifty thousand
dollars ($550,000) (the "Total Budget") solely to the Research Program;
provided, that this Research Agreement lasts at least four (4) Years as provided
in Section 3.1; and

                                       6

<PAGE>

     (d) Spectrum shall be permitted to exceed the individual category budgets
set forth in the Budget Plan by up to twenty percent (20%); provided, that the
total Annual Budget plus any Carry-Over from the previous Year, are not
exceeded.

     5.2 REPORTING

     Spectrum shall deliver to Arbios within sixty (60) days after the end of
each Quarter, a quarterly report (the "Quarterly Report") prepared according to
its customary accounting practices, which reflects costs incurred by Spectrum
pursuant to this Agreement. These costs shall include: (i) salaries, wages and
established employee benefits; (ii) costs of any purchased equipment, materials
and supplies; and (iii) other costs and expenses for the Research Project.
Additionally, Spectrum shall:

     (a) exercise its best effort to ensure that all financial statements and
financial reports to Arbios accurately reflect all activities and transactions
handled in connection with the Research Project and that such data may be relied
upon in any further recording and reporting by Arbios for whatever purpose;

     (b) any piece of equipment purchased at a cost in excess of twenty-five
hundred dollars ($2,500) shall be specifically identified by Spectrum in an
attachment to its Quarterly Report;

     (c) during the Term and for a period of three (3) years thereafter,
Spectrum shall keep or cause to be kept, in accordance with generally accepted
accounting practices, books, records and accounts covering all information
necessary for the accurate accounting of funds spent by Spectrum in connection
with the Research Program; and

     (d) within ninety (90) days after expiration or termination of the Term,
furnish to Arbios a final reporting (the "Final Report") of all costs and
expenses incurred in performing its obligations under this Agreement. Such
reporting shall be prepared according to Spectrum's customary accounting
practices, and shall be itemized in reasonable detail.

     5.3 REPURCHASE RIGHT

     In consideration of Spectrum's obligations hereunder, under the License
Agreement and under the Manufacturing Agreement, Arbios will issue to Spectrum
certain shares of Arbios Common Stock (the "Shares") as set forth in the Stock
Purchase Agreement. The Shares shall be subject to a limited right of repurchase
by Arbios as follows:

     (a) Arbios or its assignees shall have the option to repurchase all or a
portion of the Unvested Shares (as defined below) on the terms and conditions
set forth in this Section (the "Repurchase Option") upon (i) termination or
expiration of this Agreement, the License Agreement or the Manufacturing
Agreement for any reason, (ii) upon material breach of Spectrum's obligations
under Section 5.1 or 5.2 above or (iii) material breach of Spectrum's
obligations under the License Agreement or Manufacturing Agreement.

     (b) Shares that are vested pursuant to the schedule set forth herein are
"Vested Shares". Shares that are not vested pursuant to the schedule set forth
herein are "Unvested Shares". Unvested Shares may not be sold or otherwise
transferred by Purchaser without the Company's prior written consent, which may
be given or withheld in its sole and absolute discretion. On the Effective Date
all of the Shares will be Unvested Shares. On each successive anniversary of the
Effective Date (each a "Vesting Date"), twenty five percent (25%) of the
aggregate Shares shall become Vested Shares provided that Spectrum has spent at
least one hundred thirty seven thousand five hundred dollars ($137,500) in
actual aggregate expenditures for the Research Program in the preceding twelve
(12) month period; provided, however, that if Spectrum spends more than $137,500
for the Research Program in any twelve (12) month period, such excess amount may
be carried forward to the following year for purposes of calculating the Vested
Shares for such following year. All vesting shall cease on the Termination Date
or any exercise of the Repurchase Option under Section 5.3(a)(i) or (iii). In
addition, all vesting shall cease as to any repurchased Shares upon exercise of
the Repurchase Option. If the application of the vesting percentage results in a
fractional share, such share shall be rounded down to the nearest whole share
for each Vesting Date except for the last Vesting Date for which such share
shall be rounded up to the nearest whole share. Unless and until the exercise of
the Repurchase Option with respect to any Shares, Spectrum shall have the right
to vote such Shares.

                                       7
<PAGE>

     (c) The number of Shares that are Vested Shares or Unvested Shares will be
proportionally adjusted to reflect any stock dividend, stock split, reverse
stock split or recapitalization of the common stock of Arbios occurring after
the Effective Date.

     (d) At any time within ninety (90) days after the event triggering the
Repurchase Option, Arbios may elect to repurchase any or all of the Unvested
Shares by giving Spectrum written notice of exercise of the Repurchase Option.
Arbios and/or its assignee(s) will then have the option to repurchase from
Spectrum any or all of the Unvested Shares at the par value of the Shares
($.00001 per share) (the "Repurchase Option Price").

     (e) The Repurchase Option Price will be payable, at the option of Arbios or
its assignee(s), by check, wire transfer or by cancellation of all or a portion
of any outstanding indebtedness owed by Spectrum to Arbios (or its assignee) or
by any combination thereof. The Repurchase Option Price will be paid without
interest within ninety (90) days after Arbios gives Spectrum written notice of
the exercise of its Repurchase Option.

     (f) Nothing in this Agreement will be construed to limit or otherwise
affect in any manner whatsoever the right or power of Arbios (or any parent,
subsidiary or affiliate thereof) to terminate this Agreement in accordance with
Section 9 hereof.

5.4 AUDIT

     The Parties or its assignee (the "Auditing Party") may examine and audit
each other's records and processes relating to its obligations under this
Agreement, at the Auditing Party's expense, for the purpose of ensuring accurate
accounting and reporting of its obligations under this Agreement. Any audit will
be conducted by an authorized representative of the Auditing Party, during
regular business hours at the audited Party's offices, and will not interfere
unreasonably with the audited party's business activities. Audits will be made
no more frequently than once annually, and the Auditing Party will give the
other Party at least thirty (30) days' prior written notice of the date of each
such audit and the name of the Auditing Party's audit representative. The audit
representative will give the Auditing Party and the Audited Party an audit
report containing the information necessary to indicate compliance or material
noncompliance with the Agreement. If the audit report indicates noncompliance
with the Agreement, Audited Party shall take appropriate actions to correct such
noncompliance and reimburse the Auditing Party for the cost of such audit, and
the Auditing Party may conduct subsequent audits semi-annually in accordance
with the provisions above.

                                       8
<PAGE>

SECTION 6. PATENT PROSECUTION, MAINTENANCE AND DEFENSE

     The ownership, filing, prosecution, maintenance and defense of any patent
rights with respect to Improvements or other Technology resulting from the
Research Program shall be governed by Sections 2, 3, 4 and 5 of the License
Agreement.

SECTION 7. REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION

     7.1 OTHER AGREEMENTS

     Spectrum represents and warrants that it does not have any agreements or
obligations that would prevent or interfere with the performance of the
obligations hereunder except that Spectrum shall have the right under this
Agreement to continue to develop and supply existing customer's liver assist
devices using customer's proprietary designs under existing Product Development
and/or Supply Agreements.

     7.2 INDEMNIFICATION

     Each Party (the "Indemnifying Party") shall indemnify and hold harmless the
other Party (the "Indemnified Party") and its officers, directors, employees,
agents and representatives from any liability for damage to or loss of property
or injury to or death of any persons arising out of the activities of the
Indemnifying Party under this Agreement, except to the extent such damage, loss,
injury or death results from the gross negligence or willful misconduct of the
Indemnified Party. Upon receipt of any claim or suit with respect to which the
Indemnifying Party is required to provide indemnification hereunder, the
Indemnified Party shall promptly notify the Indemnifying Party and permit the
Indemnifying Party to handle and control the defense of such claim or suit. The
Indemnifying Party shall have the sole right to settle such claim or suit, but
no settlement shall be made that does not include an unconditional release of
all such claims against the Indemnified Party without the Indemnified Party's
prior written consent. Without limiting the generality of the foregoing, the
Indemnifying Party shall pay or reimburse any and all costs and expenses
(including, but not limited to, court costs, expert fees, witness fees and
attorney fees) reasonably incurred by the Indemnified Party in connection with
the defense, settlement or satisfaction of any such claim (including, but not
limited to, any damages, liabilities, penalties, settlements, awards or
judgments based upon any such claim)

SECTION 8. CONFIDENTIALITY

     8.1 CONFIDENTIAL INFORMATION

     The Recipient shall protect the Confidential Information and Confidential
Materials of the Discloser against any Unauthorized Use to the same extent that
the Recipient protects its own Confidential Information and Confidential
Materials of a similar nature against Unauthorized Use, but in any event shall
use at least a reasonable standard of care; provided that the Confidential
Information and Confidential Materials of the Discloser are conspicuously marked
or otherwise identified as confidential or proprietary upon receipt by the
Recipient or the Recipient otherwise knows or has reason to know that the same
is Confidential Information or Confidential Materials of the Discloser. Each
Party reserves ownership of its own Confidential Information and Confidential
Materials. The Recipient shall use any Confidential Information and Confidential
Materials of the Discloser solely for the purposes for which it is provided by
the Discloser. This section shall not be interpreted or construed to prohibit:

                                       9

<PAGE>

     (a) any Development, Making, Distribution or Use which is necessary or
appropriate in connection with the Recipient's performance of its obligations or
exercise of its rights under this Agreement (e.g., pursuant to the Research
Program) or any other agreement between the Parties;

     (b) any Use, Development, Making or Distribution required by applicable law
(e.g., pursuant to applicable securities laws or legal process), provided that
the Recipient uses reasonable efforts to give the Discloser reasonable advance
notice thereof (e.g., so as to afford the Discloser an opportunity to intervene
and seek an order or other appropriate relief for the protection of its
Confidential Information from any Unauthorized Use or disclosure); or

     (c) any Use or disclosure made with the consent of the Discloser.

     8.2 RETURN OF CONFIDENTIAL INFORMATION

     Upon expiration or termination of the Term, the Receiving Party shall
promptly return or certify destruction of all Confidential Information and any
copies made thereto previously made available to the Receiving Party by the
Disclosing Party under this Agreement.

SECTION 9. TERM AND TERMINATION

     9.1 TERM

     The term shall commence on the Effective Date and, unless sooner terminated
pursuant to Sections 9.2 or 9.3, shall continue until the four (4) year
anniversary of the Effective Date, unless extended by written agreement of the
Parties (the "Term").

     9.2 TERMINATION FOR MATERIAL BREACH OR MATERIAL DEFAULT

     If either Party commits a material breach of or material default under this
Agreement (the "Defaulting Party"), then the other Party may give such
Defaulting Party written notice of the breach or default (including, but not
necessarily limited to, a statement of the facts relating to the breach or
default, the provisions of this Agreement that are in breach or default, and the
action required to cure the breach or default) and that the Term shall terminate
pursuant to this section if the breach or default is not cured within thirty
(30) days after receipt of notice (or such later date as may be specified in
such notice). If the Defaulting Party fails to cure the specified breach or
default within thirty (30) days after receipt of such notice (or such later date
as may be specified in such notice), then the Term shall terminate.

                                       10

<PAGE>

     9.3 FAILURE TO AGREE UPON REPLACEMENT PRINCIPAL INVESTIGATOR

     If the Parties after good faith efforts are unable to agree upon a
replacement for the Principal Investigator pursuant to Section 3.2, Arbios may
terminate the Term upon thirty (30) days' written notice to Spectrum.

     9.4 EFFECT OF TERMINATION

     In the event of a termination or expiration of the Term, then (a) Spectrum
shall use its best efforts to provide for an orderly, gradual phase-out of
research, development and manufacturing conducted under this Agreement; and (b)
Sections 1, 5.3, 5.4, 6, 7, 9 and 10 shall survive the termination of the Term.

SECTION 10. MISCELLANEOUS

     10.1 REMEDIES

     Both Parties acknowledge and agree that it would be difficult to measure
damages for breach by either Party of the covenants and obligations under this
Agreement, 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.

     10.2 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.

     10.3 WAIVER

     It is agreed that no waiver by either Party hereto of any breach or default
of any of the covenants or agreements herein set forth shall be deemed a waiver
as to any subsequent or similar breach or default.

     10.4 ASSIGNMENT

     Neither Party may assign, delegate or otherwise transfer any of its rights
or obligations under this Agreement without the prior written consent of the
other Party, except that either Party may sublicense its license rights
hereunder and may assign, delegate or otherwise transfer its rights or
obligations in connection with a merger, consolidation or reorganization of such
Party or to an Affiliate or a purchaser of all or substantially all of its
assets that relate to the subject matter of this Agreement.

                                       11

<PAGE>

     10.5 NOTICES

     Any payment, notice or other communication required or permitted to be
given to either Party hereto shall be in writing and shall be deemed to have
been properly given and effective (a) on the date of delivery if delivered in
person, by professional courier or by telecopy; or (b) on the third day after
mailing if mailed by first-class certified mail, postage paid, to the respective
address given below, or to such other address as either Party shall designate by
written notice given to the other Party as follows, 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 11.5:

     In the case of Spectrum to:
     ---------------------------

     c/o F. Jesus Martinez                       c/o Gallo & Associates
     18617 Broadwick Street                      5757 Century Blvd., 7th Floor
     Rancho Dominguez, California 90220          Los Angeles, CA 90045
     Fax: (310) 885-3400                         Attn: Ray E. Gallo

     c/o Roy T. Eddleman
     18617 Broadwick Street
     Rancho Dominguez, California 90220
     Fax: (310) 885-3400

     or in the case of Licensee to:
     ------------------------------

     c/o Jacek Rozga, MD, PhD
     President & CSO
     Arbios Technologies, Inc.
     Cedars-Sinai Medical Center
     Research Pavilion, Room 4089,
     110 George Burns Road,
     Los Angeles, California  90048
     Fax: (310) 423 - 7434

     10.6 JURISDICTION AND VENUE

     Each Party hereby irrevocably consents to the jurisdiction and venue of the
state or federal courts located in Los Angeles County, State of California, in
connection with any action, suit, proceeding or claim to enforce the provisions
of this Agreement, to recover damages for breach of or default under this
Agreement, or otherwise arising under or by reason of this Agreement.

     10.7 GOVERNING LAW

     THIS AGREEMENT SHALL BE INTERPRETED, CONSTRUED AND ENFORCED IN ALL RESPECTS
IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, U.S.A., WITHOUT
REFERENCE TO ITS CHOICE OF LAW PRINCIPLES TO THE CONTRARY.

                                       12

<PAGE>

     10.8 COUNTERPARTS

     This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

     10.9 MODIFICATION

     No amendment or modification hereof shall be valid or binding upon the
Parties unless made in writing and signed by authorized representatives of the
Parties.

     10.10 ENTIRE AGREEMENT

     This Agreement, together with the Stock Purchase Agreement, the License
Agreement and the Manufacturing Agreement, embodies the entire understanding of
the Parties and shall supersede all previous communications, representations or
understandings, either oral or written, between the Parties relating to the
subject matter hereof.

     10.11 SEVERABILITY

     Should one or more of the provisions contained in this Agreement for any
reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions
hereof and this Agreement shall be construed as if such invalid or illegal or
unenforceable provisions had never been contained herein.

     10.12 INDEPENDENT CONTRACTORS

     Nothing in this Agreement shall constitute or be deemed to constitute a
partnership or agency between the Parties hereto.

     10.13 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.

     10.14 HEADINGS

     The headings of this Agreement are inserted for convenience only and shall
not be used in the interpretation of this Agreement.

     IN WITNESS WHEREOF, Spectrum and Arbios have executed this Agreement as of
the date first above written.

                                       13

<PAGE>

                                             SPECTRUM LABORATORIES, INC.

                                             By: /s/  F. JESUS MARTINEZ

                                             Its:______________________________

                                             ARBIOS TECHNOLOGIES, INC.

                                             By: /s/  JACEK ROZGA, MD, PHD

                                             Its:______________________________

                                       14

<PAGE>

                                    EXHIBIT A

                              TO RESEARCH AGREEMENT

                                  RESEARCH PLAN

     The principal goal of the proposed Research Plan is to develop and
manufacture three-compartment hollow fiber modules to enable ARBIOS to develop
multifunctional liver assist system (LAS), conduct pre-clinical and Phase I-III
clinical testing, obtain regulatory approval(s), and commercialize LAS.

     The three-compartment hollow fiber module under development is based on
SPECTRUM's proprietary hollow fiber-in-fiber technology (TRIAC(TM)).

     According to this Research Plan, SPECTRUM's efforts will be focused on
achieving the following objectives:

     (a) Development of LAS modules that accommodate at least 200 g of primary
hepatocytes (porcine, human) and are suitable for at least 12-hour-long blood
perfusion in human patients.

     (b) The effective dose of heparin and/or other FDA-approved anticoagulant
used to prevent blood clotting within the perfused LAS module must be within the
range established for conventional methods of blood therapy (e.g., hemodialysis,
hemofiltration).

     (c) Blood compatibility of the LAS module must allow for at least
12-hour-long hemoperfusion with minimal, FDA acceptable negative effects on
blood composition (blood cell loss including platelets, loss of plasma proteins
including albumin and clotting factors).

     (d) To achieve objectives (a), (b) and (c), the width of an annular space
between the inner and outer fibers will be optimized and semipermeable membranes
with specific anti-thrombotic and anti-fouling surface properties will be used
and/or developed, if deemed necessary.

     (e) LAS modules will be built with inner and outer fibers having specific
molecular weight (MW) cut-off. In particular, modules with macroporous outer
fibers and "tight" ultrafiltration inner fibers will be developed to facilitate
integration of liver cell therapy with oxygenation, liver cell therapy with
blood ultrafiltration, liver cell therapy with hemodialysis, liver cell therapy
with hemodiafiltration, and two different forms of blood purification therapy
(e.g., hemodialysis with hemo(dia)filtration).

     (f) LAS modules for use in all pre-clinical and clinical trials will be
built and made available to ARBIOS.

<PAGE>

     According to this Research Plan, ARBIOS's efforts will be focused on:

     (a) Helping SPECTRUM develop clinically useful LAS modules through personal
interaction, intellectual input, trouble-shooting and execution of pilot studies
to optimize specific LAS module parameters.

     (b) Testing LAS modules in vitro and in vivo in animals with experimentally
induced liver failure.

     (c) Making clinical-grade LAS modules and associated components (e.g.,
tubings, fittings, sample ports, oxygenator, etc.) conform to commercially
available kidney dialysis unit(s).

     (d) Developing full-scale, functional prototype of the LAS system for
clinical testing.

<PAGE>

                                   EXHIBIT B

                              TO RESEARCH AGREEMENT

                                   BUDGET PLAN

                           TO BE PROVIDED BY SPECTRUM

<PAGE>

                                    EXHIBIT C

                              TO RESEARCH AGREEMENT

                                   MILESTONES

     1. SPECTRUM shall expend at least the amounts listed below (in the
aggregate) annually toward the development of hollow fiber-in-fiber modules for
ARBIOS' multifunctional liver assist system (LAS), commencing from the Effective
Date and continuing to November 30, 2005. Such amounts shall be directed by
SPECTRUM exclusively to research and development and manufacturing of LAS
modules to enable ARBIOS to develop LAS systems, conduct pre-clinical and Phase
I-III clinical testing, obtain regulatory approval(s), and commercialize LAS(s).

       Year (from Effective Date)              Annual Dollars Expended
-------------------------------------    --------------------------------------

                   1                                     $137,500

                   2                                     $137,500

                   3                                     $137,500

                   4                                     $137,500

     In the event that in any year, SPECTRUM expends sums in excess of the
amount specified for such year, the excess shall be carried forward for purpose
of satisfying the expenditure requirements for subsequent years.

     2. SPECTRUM shall develop and manufacture clinical-grade first-generation
LAS modules for pre-clinical testing within one (1) year after the Effective
Date.

     3. SPECTRUM shall develop and manufacture clinical-grade first-generation
LAS modules for clinical testing within two (2) years after the Effective Date.

     4. SPECTRUM shall develop and manufacture clinical-grade second-generation
LAS modules for pre-clinical testing within three (3) years after the Effective
Date.

     5. SPECTRUM shall develop and manufacture clinical-grade second-generation
LAS modules for clinical testing within four (4) years after the Effective Date.

<PAGE>

                                    EXHIBIT D

                              TO RESEARCH AGREEMENT

                                  INVESTIGATORS

     1. SPECTRUM shall designate the following persons as Investigators:

     F. Jesus Martinez shall be the Principal Investigator. He will be
responsible for the overall design, data acquisition and analysis, as well as
the day-to-day execution and supervision of the proposed research. He will be
also responsible for development of areas for future research projects and
problem solving in collaboration with other SPECTRUM's investigators and ARBIOS'
scientists, when deemed necessary.

     2. ARBIOS shall designate Jacek Rozga, M.D., Ph.D. as the Principal
Investigator of all projects related to the development of LAS(s) using
SPECTRUM's fiber-in-fiber membrane technology. He will be responsible for
helping SPECTRUM develop clinically useful LAS modules through personal
interaction, intellectual input, trouble-shooting and execution of pilot studies
to optimize specific LAS module parameters.

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