Document:

Unassociated Document

     

    Portions
      of this Exhibit were omitted and have been filed separately with the Secretary
      of the Commission pursuant to the Company’s application requesting confidential
      treatment
      under Rule 24b-2 of the Securities Exchange Act of
      1934.

     Exhibit
      10.1

     

    LICENSE
      AGREEMENT

     

    This
      License Agreement (the “Agreement”) takes effect as of March 29, 2007 (the
“Effective Date”) between Immunocept LLC (“Licensor”), with offices at 6530
      Clearhaven Circle, Dallas, TX 75248, and Arbios Systems, Inc. (“Arbios” or
“Licensee”), with offices at 1050 Winter Street, Suite 1000, Waltham, MA 02451.

     

    BACKGROUND

     

    A. WHEREAS,
      Arbios
      wishes to obtain a license from Licensor under certain Patent Rights (as defined
      below) owned by Licensor and of which James R. Matson M.D. (“Dr. Matson”) is a
      co-inventor. 

     

    B. WHEREAS,
      Licensor
      is willing to grant a license to Arbios under the Patent Rights on the terms
      and
      conditions set forth below.

     

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

     

    ARTICLE
      1

    DEFINITIONS

     

    As
      used
      in this Agreement, the following terms have the meaning set forth in this
      Article 1.

     

    1.1 “Affiliate”
means
      any corporation or other entity that is directly or indirectly controlling,
      controlled by or under the common control with a party hereto. For the purpose
      of this Agreement, “control” includes the direct or indirect ownership of at
      least fifty percent (50%) of the outstanding shares or other voting rights
      of
      the subject entity to elect directors or, in the case of an entity that is
      not a
      corporation, for the election of the corresponding managing
      authority.

     

    1.2 “Arms
      Length Royalty”
means
      a
      patent royalty paid to an unrelated party. Specifically, a royalty is not an
      “Arms Length Royalty” if it is paid by a Licensed Party (which for purposes of
      this definition, includes a Sublicensee) to either (a) another Licensed Party,
      or to any person who is (or was, at the time the transaction was arranged,
      negotiated, or agreed, or was at the time of the invention of the relevant
      patent) an officer, director, employee, or owner of more than 5% of the equity
      ownership of a Licensed Party; or (b) an Affiliate of any party described in
      clause (a); or (c) a party with which the Licensed Party or any party described
      in clauses (a) or (b) has some other relationship relevant to the development
      or
      commercialization of Products or Other Products, whether family or commercial,
      such as joint venture partners.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    
       

      Portions
        of this Exhibit were omitted and have been filed separately with the Secretary
        of the Commission pursuant to the Company’s application requesting confidential
        treatment
        under Rule 24b-2 of the Securities Exchange Act of 1934.

       

    

    1.3 “Arms
      Length Sale”
means
      a
      sale of a Product or an Other Product to an unrelated party. Leasing or renting
      a Product or an Other Product shall be deemed a sale for purpose of this
      definition and for determining royalties payable under this Agreement. Any
      Recovery for carrying out a method covered by a Valid Claim shall be deemed
      a
      sale for purpose of this definition and for determining royalties payable under
      this Agreement. Specifically, a sale, including leasing or renting, is not
      an
“Arms Length Sale” if it is a sale by a Licensed Party (which, for purposes of
      this definition, includes a Sublicensee) to either (a) another Licensed Party,
      or to any person who is (or was, at the time the transaction was arranged,
      negotiated, or agreed) an officer, director, employee, or owner of more than
      5%
      of the equity ownership of a Licensed Party, (b) an Affiliate of any party
      described in clause (a), or (c) a party with which the Licensed Party or any
      party described in clauses (a) or (b) has some other relationship relevant
      to
      the development or commercialization of Products or Other Products, whether
      family or commercial, such as joint venture partners and including without
      limitation any Affiliate or Sublicensee, unless in any such event it is consumed
      by such transferee.

     

    1.4 “Data”
shall
      have the meaning set forth in Section 2.2.

     

    1.5 “Net
      Sales”
means
      gross invoiced amounts due to Arbios, its Affiliates or Sublicensees as Recovery
      on Arms Length Sales of Products or Other Products less: (1) ordinary and
      customary trade discounts actually allowed; (2) credits, rebates,
      allowances for uncollectible amounts and adjustments for rejections, recalls
      and
      returns (including, but not limited to, wholesaler and retailer returns);
      (3) freight, postage, insurance and duties paid for and separately
      identified on the invoice or other documentation maintained in the ordinary
      course of business, (4) excise taxes, other consumption taxes, customs
      duties and compulsory payments to governmental authorities actually paid and
      separately identified on the invoice or other documentation maintained in the
      ordinary course of business, and (5) allowances for actual uncollectible
      accounts determined in accordance with U.S. generally accepted accounting
      practices. 

     

    1.6 “Licensed
      Party”
means
      Arbios and Arbios Affiliates.

     

    1.7 “Other
      Product”
means
      any unit of product which, if manufactured, used or sold in the United States,
      would meet the definition of Product at the time of such manufacture, use,
      or
      sale, but which does not meet such definition in a country where actually
      manufactured, used or sold due to the fact that Patent Rights were not pursued
      or have not issued in such country(ies). For the avoidance of doubt by the
      way
      of example (a) a unit of Product manufactured in a country in which Patent
      Rights were not pursued or have not issued, but sold in a country in which
      Patent Rights covering such sale are issued (whether or not used in such
      country) would be a Product and not an Other Product; (b) a unit of Product
      manufactured in a country in which Patent Rights were not pursued or have not
      issued, but sold in a country in which Patent Rights covering such Product’s use
      or sale are issued would be a Product and not an Other Product; and (c) a unit
      of Product manufactured in a country in which Patent Rights covering such
      manufacture were pursued or have issued, but sold and used in a country in
      which
      Patent Rights were not pursued or issued would be a Product and not an Other
      Product.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
      
         

        Portions
          of this Exhibit were omitted and have been filed separately with the Secretary
          of the Commission pursuant to the Company’s application requesting confidential
          treatment
          under Rule 24b-2 of the Securities Exchange Act of 1934.

         

      

    

    1.8 “Patent
      Rights”
means
      all of Licensor’s right, title and interest in:

     

    1.8.1 all
      patents and patent applications covering inventions relating to blood therapy
      devices and systems for treatment of toxic and inflammatory mediator related
      diseases or organ failures which are owned or controlled by Licensor as of
      the
      Effective Date or within one year thereafter, including without limitation
      those
      listed in Exhibit A hereto (the “Patents”); 

     

    1.8.2 all
      divisionals, continuations, continuations-in-part (CIPs), and foreign
      counterparts of the Patents, and

     

    1.8.3 all
      patents issuing on any preceding applications, and any re-issues,
      re-examinations or extensions of any kind and supplementary protection
      certificates with respect to any of the foregoing.

     

    
      	
            	 	
              For
                the avoidance of doubt, continuations-in-part shall include any
                continuations-in-part resulting from or relating to the services
                to be
                performed under that certain Service Advisory Agreement to be entered
                into
                by and between Arbios and James R. Matson, MD of even date herewith
                (the
                “Matson Service Agreement”).

            

    

     

    1.9 “Product”
means
      a
      product the manufacture, sale or use of which would, but for the license granted
      hereunder, infringe a Valid Claim of a Patent Right in a country where either
      its manufacture, sale or use occurs. 

     

    1.10 “Recovery”
means
      any and all consideration received by a Licensed Party or a Sublicensee for
      an
      Arms Length Sale of a Product or an Other Product or for carrying out a method
      covered by a Valid Claim, including cash, revenue, and non-cash
      consideration.

     

    1.11 “Sublicensee”
means
      any third party who is not an Affiliate and to whom Arbios, or an Affiliate
      of
      Arbios, grants a sublicense under the Patent Rights to make, have made, use,
      have used, sell, offer for sale, have sold, import or have imported Products
      and/or Other Products. 

     

    1.12 “Valid
      Claim”
means
      a
      claim of an issued and unexpired patent included within the Patent Rights which
      has not been held invalid in a final decision of a court or forum of competent
      jurisdiction from which no appeal may be taken, and which has not been
      disclaimed or admitted to be invalid or unenforceable through reissue or
      disclaimer or otherwise.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    
      
         

        Portions
          of this Exhibit were omitted and have been filed separately with the Secretary
          of the Commission pursuant to the Company’s application requesting confidential
          treatment
          under Rule 24b-2 of the Securities Exchange Act of 1934.

         

      

    

    ARTICLE
      2

    LICENSE

     

    2.1 Grant.
      (a)
      Licensor hereby grants Arbios an exclusive worldwide license under the Patent
      Rights and any and all related proprietary information, to research, develop,
      make, import, have made, use, offer for sale, sell and have sold Products and
      Other Products, including a license to research, develop, make, import, have
      made, use, offer for sale, sell and have sold Products and Other Products that
      if used together with other products in a hemofiltration system, a blood
      filtration circuit, or method of treating patients under those systems that
      would infringe the Patent Rights but for this license. 

     

    (b)
      The
      license granted under Section 2.1 includes the right to grant sublicenses
      consistent with the terms of this Agreement, specifically requiring the payment
      by the Sublicensee of royalties at least as great as the royalties that will
      be
      payable to Licensor hereunder on account of sales by the Sublicensee. Provided
      that, such sublicenses must (a) expressly permit such sublicense to either
      terminate (without notice or further action) or to be assigned to Licensor
      or
      its assigns (without notice or further action) in the event of termination
      of
      this Agreement; and (c) expressly permit Licensor to inspect Sublicensee's
      books
      and records in accordance with the terms of Section 4.4. The right to grant
      sublicenses is also conditioned on Arbios’ provision of a copy of any such
      sublicense to Licensor within ten (10) days of its execution.

     

    (c)
      The
      license granted herein includes a fully paid, perpetual, irrevocable license
      under the Patent Rights with respect to all actions of Arbios occurring prior
      to
      the Effective Date of this Agreement. This Section 2.1(c) shall survive any
      termination of this Agreement.

     

    2.2 Related
      Information.
      Within
      thirty (30) days of the Effective Date, Licensor shall also provide to Arbios
      copies of all data and information in its possession relating to large pore
      hemofiltration for use in critical care (“Data”), including all data and
      information relating to preclinical studies performed by Licensor. Arbios shall
      be entitled to use such information in connection with the research,
      development, regulatory approval, clinical development and commercialization
      of
      Products and related projects. 

     

    2.3 Additional
      Research.
      In
      consideration of the rights granted hereunder, Arbios agrees to perform, or
      have
      performed, certain product development and clinical research relating to sepsis
      applications of hemofiltration products as follows: (a) the work shall be
      conducted by Arbios in accordance with a research plan, timeline, budget, and
      clinical protocol as mutually agreed by Dr. Matson and Arbios promptly following
      the Effective Date, (b) the research plan may include the development of
      clinical grade filters having mutually agreed specifications, (c) the total
      budget for such product development and clinical research efforts shall not
      be
      required to exceed [*] unless otherwise agreed by Arbios, which amount shall
      not
      include any amounts paid to Dr. Matson pursuant to the Matson Service Agreement
      nor the cost of up to fifty (50) clinical grade filters which shall be provided
      by Arbios at Arbios’ expense for use with up to twenty (20) patients to be
      enrolled in the mutually agreed clinical study. Arbios shall own all results
      of
      any such work, provided that Dr. Matson shall be permitted to use such results
      in pursuing further clinical studies as reasonably agreed in writing by Arbios.
      Dr. Matson’s efforts related to such research shall be provided pursuant to a
      Service Advisory Agreement between Dr. Matson and Arbios of even date herewith.
      

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    
      
         

        Portions
          of this Exhibit were omitted and have been filed separately with the Secretary
          of the Commission pursuant to the Company’s application requesting confidential
          treatment
          under Rule 24b-2 of the Securities Exchange Act of 1934.

         

      

    

    2.4 Fair
      Dealing.
      Arbios
      agrees to act in good faith in the manufacture, distribution and pricing of
      Products and Other Products and any related systems or components sold by Arbios
      or its Affiliates in conjunction with Products or Other Products so as to not
      intentionally seek to reduce royalties payable to Licensor
      hereunder. 

     

    ARTICLE
      3

    CONSIDERATION

     

    3.1 License
      Fees.
      On the
      Effective Date, Arbios shall pay Licensor an initial non-refundable license
      fee
      of [*]. In addition, on the Effective Date Arbios shall grant warrants to
      Licensor for the purchase of 225,000 shares of Arbios Common Stock according
      to
      the form of warrant attached as Exhibit B hereto. 

    

    Additionally,
      Arbios shall make the following cash payments to Licensor during the term of
      this Agreement:

    

     

    3.1.1 [*]
      on or
      before January 1, 2008;

     

    3.1.2 [*]
      on or
      before January 1, 2009;

     

    3.1.3 [*]
      on or
      before January 1, 2010;

     

    3.1.4 [*]
      within thirty (30) days of the issuance of the first European patent [*];

     

    3.1.5 [*]
      within thirty (30) days of the issuance of the first European patent included
      in
      the Patent Rights [*]; 

     

    3.1.6 [*]
      within thirty (30) days of the first issuance following the Effective Date
      of a
      U. S. patent [*];

     

    3.1.7 [*]
      within thirty (30) days of the first issuance following the Effective Date
      of a
      U. S. patent included in the Patent Rights[*].

     

    Each
      such
      payment shall be due only once and only if the relevant event occurs during
      the
      term of this Agreement.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    
      
         

        Portions
          of this Exhibit were omitted and have been filed separately with the Secretary
          of the Commission pursuant to the Company’s application requesting confidential
          treatment
          under Rule 24b-2 of the Securities Exchange Act of 1934.

         

      

    

    3.2 Royalties. 

     

    3.2.1 Percentage.
      During
      the relevant royalty term as defined in Section 3.2.5 below, Arbios shall pay
      Licensor a royalty of [*%)] on Net Sales of Products and [*%]) on Net Sales
      of
      Other Products. 

     

    3.2.2 One
      Royalty.
      No more
      than one royalty payment shall be due with respect to Net Sales of a particular
      Product or Other Product. No multiple royalties shall be payable because a
      Product or Other Product, or its manufacture, sale or use, is covered by more
      than one Valid Claim. 

     

    3.2.3 Reductions.
      If
      Arbios is also required to pay any Arms Length Royalties with respect to Net
      Sales of a Product under agreements for rights to patent rights covering the
      relevant Product, Arbios shall be entitled to credit 50% of any such payments
      against royalties due hereunder, subject to a maximum reduction of [*]% of
      the
      royalties otherwise due (i.e., a minimum royalty of [*]% on Net Sales of
      Products shall apply). If Arbios is also required to pay Arms Length Royalties
      with respect to Net Sales of an Other Product under agreements for rights to
      patent rights covering the relevant Other Product, Arbios shall be entitled
      to
      credit 50% of any such payments against royalties due hereunder, with no maximum
      reduction of the royalties otherwise due.

     

    3.2.4 Non-commercial
      Transactions.
      In the
      event that a Product or Other Product is provided by a Licensed Party and
      actually used for medical purposes, but no Arms Length Sale has taken place,
      then Net Sales with respect to such Product or Other Product shall be determined
      based upon the price generally charged the trade in Arms Length Sales by the
      Licensee, its Affiliates or Sublicensees, as relevant, at that time. As used
      herein “price generally charged the trade” shall be determined by obtaining the
      average of the net sales price in Arms Length Sales over the prior twelve (12)
      months (or so long as sales have been made, if fewer than twelve (12) months’
information is then unavailable); provided that if no such comparable net sales
      price is available, it shall be based upon a commercially reasonable price
      determined by mutual written agreement of the parties. For clarity and
      notwithstanding the foregoing, provision of Products or Other Products at no
      cost for use in development activities, including clinical trials, or at no
      cost
      for promotional purposes in a manner reasonably consistent with industry
      practices, shall not be subject to the foregoing provision. Arbios agrees that
      it will not sell Products or Other Products in any manner other than to
      Affiliates or Sublicensees, or in an Arms Length Sale, unless otherwise agreed
      by Licensor, such agreement to not be unreasonably withheld.

     

    3.2.5 Royalty
      Term.
      Royalties due under this Article 3 shall be payable on a country-by-country
      and
      product-by-product basis for Products until the expiration of the last-to-expire
      Valid Claim covering such Product in such country and, with respect to Other
      Products, until the expiration of the last-to-expire Valid Claim of relevant
      Patent Rights in the United States.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    
      
         

        Portions
          of this Exhibit were omitted and have been filed separately with the Secretary
          of the Commission pursuant to the Company’s application requesting confidential
          treatment
          under Rule 24b-2 of the Securities Exchange Act of 1934.

         

      

    

    ARTICLE
      4

    PAYMENTS;
      REPORTS AND RECORDS

     

    4.1 Payments;
      Currency.
      Arbios
      shall make all payments due under this Agreement by wire transfer in United
      States dollars in immediately available funds to an account designated by
      Licensor. If any currency conversion is required in connection with the payment
      of any royalties under this Agreement, the conversion shall be made by using
      the
      exchange rate for the purchase of U.S. dollars reported by The Wall Street
      Journal on the last business day of the calendar quarter to which such royalty
      payments relate.

     

    4.2 Taxes.
      Royalty
      amounts required to be paid to Licensor pursuant to this Agreement may be paid
      with deduction for withholding for or on account of any taxes (other than taxes
      imposed on or measured by net income) or similar governmental charge imposed
      by
      a jurisdiction other than the United States (“Withholding Taxes”); provided
      that, Arbios provides Licensor with advance notice of any expected Withholding
      Taxes which may reduce the amounts actually received by Licensor hereunder.
      At
      Licensor’s request, Arbios shall provide Licensor a certificate evidencing
      payment of any Withholding Taxes hereunder and shall reasonably assist Licensor
      to obtain the benefit of any applicable tax treaty or law.

     

    4.3 Royalty
      Reports and Payments.
      After
      the first commercial sale of a Product or Other Product, Arbios shall make
      quarterly written reports to Licensor within forty-five (45) days after the
      end
      of each calendar quarter, stating in each such report, by country, the number,
      description, and aggregate Net Sales of each Product and Other Product sold
      (whether by Arbios, its Affiliates, or its Sublicensees) and sublicensing
      royalties received during the calendar quarter, including detail reasonably
      necessary to substantiate the calculation of royalties. Such information shall
      permit Licensor to calculate royalties based upon direct sales by Arbios and
      each of its Affiliates and Sublicensees, and any distributors and resellers
      to
      whom sales that are not Arms Length Sales are made. Concurrently with the making
      of such reports, Arbios shall pay Licensor the payments specified in
      Section 3.2.

     

    4.4 Records;
      Inspection.
      Arbios
      shall keep complete, true and accurate books of account and records for the
      purpose of determining the royalty amounts payable under this Agreement. Such
      books and records shall be kept at the principal place of business of Arbios
      for
      at least three (3) years following the end of the calendar quarter to which
      they
      pertain and will be open for inspection during such period by a representative
      of Licensor for the purpose of verifying the royalty reports and payments.
      Such
      inspections shall be made during ordinary business hours. The representative
      may
      be obliged to execute a reasonable confidentiality agreement prior to commencing
      any such inspection. Inspections conducted under this Section 4.4 shall be
      at Licensor’s expense, unless an underpayment exceeding five percent (5%) of the
      amount stated for the period covered by the inspection is identified, in which
      case all costs relating to the inspection and any unpaid amounts will be paid
      by
      Arbios.
      Any
      amounts not paid when due (for any reason) shall bear interest at the lesser
      of
      one percent (1%) per month or the maximum interest allowable under the
      law.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    
      
         

        Portions
          of this Exhibit were omitted and have been filed separately with the Secretary
          of the Commission pursuant to the Company’s application requesting confidential
          treatment
          under Rule 24b-2 of the Securities Exchange Act of 1934.

         

      

    

    ARTICLE
      5

    DUE
      DILIGENCE

     

    5.1 Diligence
      Efforts.
      Arbios
      shall use commercially reasonable efforts to develop and bring one or more
      Products to market through a diligent program for the exploitation of the Patent
      Rights. In
      addition, Arbios shall:

     

    
      	 	
              a.

            	
              Submit
                to the United States Food and Drug Administration (“FDA”) by
                [*]
                plans for a pivotal clinical study designed for a Product covered
                by the
                ‘040 family of Patents for liver failure (an “[*] Study”) and, within
                thirty (30) days of such submission, deliver to Licensor a certificate
                stating the product and/or method that is the subject of the study
                is a
                Product covered by this License; 

            

    

     

    
      	 	
              b.

            	
              Within
                90 days after receiving FDA permission to begin an [*] Study, recruit
                at
                least 4 sites for such study, defined as Principal Investigators
                having
                been identified and contracts being under negotiation;
                

            

    

     

    
      	 	
              c.

            	
              Bring
                a commercial Product to market no later than [*]; and
                

            

    

     

    
      	 	
              d.

            	
              Obtain
                aggregate cash equity or debt investments, funding from corporate
                partners, sale of assets, or grants, of at least the following amounts
                on
                or before the designated dates (amounts are cumulative, not additive):
                

            

    

     

    
      	 	
              i.

            	
              $[*]
                by [*];

            

    

     

    
      	 	
              ii.

            	
              $[*]
                by [*]; and

            

    

     

    
      	 	
              iii.

            	
              $[*]
                by [*].

            

    

     

    Material
      failure by Arbios to meet any of the above milestones shall be deemed a material
      breach of this Agreement and shall give Licensor the right to terminate this
      Agreement pursuant to the provisions of Section 9.3 hereof. The certificate
      delivered by Arbios in satisfaction of the requirement stated in Section 5.1(a)
      shall be irrevocably binding on Arbios, Licensed Parties, and Sublicensees
      for
      all purposes of this Agreement.

     

    5.2 Information.
      As
      Licensor may reasonably request from time to time, no more than twice per
      calendar year, Arbios shall keep Licensor informed as to Arbios’ progress in
      developing, marketing and selling the Products under this Agreement.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    
      
         

        Portions
          of this Exhibit were omitted and have been filed separately with the Secretary
          of the Commission pursuant to the Company’s application requesting confidential
          treatment
          under Rule 24b-2 of the Securities Exchange Act of 1934.

         

      

    

    ARTICLE
      6

    CONFIDENTIAL
      INFORMATION

     

    6.1 Definition.  “Confidential
      Information” shall mean trade secrets, know-how, technical, business and market
      information, patent disclosures, patent applications, structures, models,
      techniques, formula processes, compositions, compounds, antigens, antibodies,
      hybridomas, apparatus, designs, sketches, photographs, plans, drawings,
      specifications, samples, reports, customer lists, price lists, studies,
      findings, inventions, business and financial plans, clinical development and
      clinical trial plans/status, and results, devices, device designs, absorbents,
      materials, membranes, intended uses, and ideas) disclosed by one Party to the
      other hereunder, but only to the extent that such information is either
      marked as “CONFIDENTIAL”
      or that, due to the nature of the information, the receiving party should
      reasonably know is confidential.

     

    6.2 Limitations.
      Each
      party
shall:

     

    6.2.1 use
      reasonable commercial
      efforts to maintain the confidentiality of all Confidential
      Information;

     

    6.2.2 not
      use
      or permit the
      use of
      any Confidential Information, except as reasonably required to accomplish the
      purpose of the disclosure of the Confidential Information or to exercise rights
      hereunder; and

     

    6.2.3 not
      disclose
      any
      Confidential Information, other than to employees or agents who reasonably
      require knowledge of such Confidential Information to accomplish the purpose
      of
      the disclosure of the Confidential Information, and who are bound by
      substantially similar written obligations of confidentiality. 

     

    6.3 Property
      of Disclosing Party; Return of Information.
      Confidential Information and all embodiments and expressions of such
      Confidential Information, including,
      without
      limitation, all reports, notes, reprints, descriptions, copies and summaries
      thereof, shall be and remain the property of the disclosing party at all times,
      and, to the extent in the disclosing party’s possession and control, and not
      subject to any continuing licenses hereunder, shall be returned to the
      disclosing party upon request, except for a single copy that may be retained
      in
      the receiving party’s legal files for record keeping purposes only.

     

    6.4 Exclusion.
      Neither
      party shall be liable
      for the
      disclosure or use of any Confidential Information which was: 

     

    6.4.1 at
      the
      time of disclosure, in the possession of receiving party on a non-confidential
      basis as shown
      by
      contemporaneous written records,
      and not
      as a result of any unauthorized act or omission on the part of the receiving
      party or any third party;

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    
      
         

        Portions
          of this Exhibit were omitted and have been filed separately with the Secretary
          of the Commission pursuant to the Company’s application requesting confidential
          treatment
          under Rule 24b-2 of the Securities Exchange Act of 1934.

         

      

    

    6.4.2 independently
      developed by the
      receiving party; or

     

    6.4.3 required
      to be disclosed by law so long as the disclosing party is promptly given prior
      written notice of the required disclosure.

     

    6.5
      Publicity.
      Neither
      party shall, without the prior written consent of the other party, which consent
      shall not be unreasonably withheld or delayed, disclose to third parties, other
      than its attorneys and accountants and other advisors on a need to know basis,
      nor originate any publicity, news release or public announcement, written or
      oral, whether to the public, the press, stockholders or otherwise, referring
      to
      this Agreement, including its existence, the subject matter to which it relates,
      including without limitation the patent numbers, the performance under it or
      any
      of its specific terms and conditions, except such announcements or disclosures
      as, in the opinion of the counsel for the party making such announcement, are
      required by law, including United States securities laws, food, drug and
      cosmetic laws, or patent marking laws. If a party determines that it is required
      by law to make an announcement with respect to this Agreement, it will give
      the
      other party such notice as is reasonably practicable and an opportunity to
      comment upon the announcement and will limit any such announcement to the facts
      that it is advised by counsel are required to be disclosed.

     

    ARTICLE
      7

    REPRESENTATIONS
      AND WARRANTIES

     

    7.1 Representations
      and Warranties.
      Licensor represents and warrants that: (i) it has the full right and authority
      to enter into this Agreement, (ii) it owns the Patent Rights without lien or
      other encumbrance; (iii) it knows of no other party having any claim to
      ownership of any of the Patent Rights or of any prior act or any fact which
      causes it to conclude that any of the Patents identified on Exhibit A is invalid
      or unenforceable in whole or in part; (iv) it is current in the payment of
      all
      maintenance fees (however denominated) with respect to the Patent Rights; and
      (v) it has not previously granted and will not grant any rights or licenses
      in
      conflict with the rights and licenses granted to Arbios in this
      Agreement. 

     

    7.2 Disclaimer.
      Nothing
      in this Agreement is or shall be construed as: 

     

    7.2.1 A
      warranty or representation by Licensor as to the validity or scope of any claim
      within the Patent Rights;

     

    7.2.2 A
      warranty or representation that anything made, used, sold, or otherwise disposed
      of under any license granted in this Agreement is or will be free from
      infringement of any patent rights of any third party;

     

    7.2.3 An
      obligation to bring or prosecute actions or suits against third parties for
      infringement of any of the Patent Rights, subject to reasonable assistance
      pursuant to Section 8.2; or

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    
      
         

        Portions
          of this Exhibit were omitted and have been filed separately with the Secretary
          of the Commission pursuant to the Company’s application requesting confidential
          treatment
          under Rule 24b-2 of the Securities Exchange Act of 1934.

         

      

    

    7.2.4 Granting
      by implication, estoppel, or otherwise any licenses or rights under patents
      or
      other rights of Licensor or third parties, regardless of whether such patents
      or
      other rights are dominant or subordinate to any patent within the Patent
      Rights.

     

    7.3 Additional
      Representations and Warranties.
      Arbios
      represents and warrants that: (a) the clinical trial being conducted at the
      time
      of execution of this Agreement, identified as the SEPETTM Feasibility Trial,
      involves the use of a blood filtration device with an albumin sieving
      coefficient of approximately [*]%,; (b) each product for which it requests
      permission from the FDA for purposes of a clinical study and/or commercial
      marketing in satisfaction of Section 5.1 of this Agreement shall be a Product;
      and (c) prior to the execution of this Agreement, it has not engaged in any
      negotiations for the sublicensing or assignment of this license. Upon written
      request of Licensor, Arbios shall certify that the representation of clause
      (b)
      above applies in connection with any relevant milestone which has been met
      as
      specified in Section 5.1.

     

    7.4 No
      Other Warranties, Liability.
      EXCEPT
      AS EXPRESSLY SET FORTH IN SECTION 7.1, LICENSOR GRANTS NO WARRANTIES WITH
      RESPECT TO THE PATENT RIGHTS, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION
      OF LAW, BY STATUE OR OTHERWISE, AND LICENSOR SPECIFICALLY DISCLAIMS ANY EXPRESS
      OR IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
      VALIDITY OR SCOPE OF THE PATENT RIGHTS, OR NON-INFRINGEMENT OF THE
      INTELLECTUAL-PROPERTY RIGHTS OF ANY THIRD PARTY. IN NO EVENT SHALL EITHER PARTY
      BE LIABLE TO THE OTHER PARTY FOR ECONOMIC DAMAGES OF AN INDIRECT, SPECIAL,
      INCIDENTAL, OR CONSEQUENTIAL NATURE, INCLUDING WITHOUT LIMITATION LOSS OF
      PROFITS, LOSS OF USE, OR OTHER ECONOMIC LOSS.

     

    ARTICLE
      8

    INTELLECTUAL
      PROPERTY

     

    8.1 Patent
      Prosecution.
      From
      and after the Effective Date, Arbios, at its sole expense and using patent
      counsel selected by Arbios, shall
      diligently pursue in a commercially reasonable manner the filing, prosecution,
      maintenance, defense and enforcement of all applications for patents and all
      patents included in Patent Rights. Arbios will provide Licensor a quarterly
      report on the status of all efforts to prosecute, maintain, defend and enforce
      all applications for patent and all patents included in Patent Rights, and
      shall
      respond to all reasonable requests by Licensor for information regarding the
      status of Patent Rights. Arbios shall keep Licensor regularly informed of all
      prosecution activities and the parties shall confer in advance on actions to
      be
      taken in connection with the prosecution of applications for all Patent Rights.
      Licensor shall, and shall use reasonable efforts (without being required to
      incur any cost or expense) to cause its representatives who are inventors of
      the
      Patent Rights to, fully cooperate at the expense of Arbios, and as reasonably
      requested by Arbios, in efforts relating to the filing, prosecution,
      maintenance, defense and/or enforcement of all Patent Rights. Arbios agrees
      to
      execute a letter agreement with David Radunsky in the form attached as Exhibit
      C

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    
      
         

        Portions
          of this Exhibit were omitted and have been filed separately with the Secretary
          of the Commission pursuant to the Company’s application requesting confidential
          treatment
          under Rule 24b-2 of the Securities Exchange Act of 1934.

         

      

    

    8.2 Patent
      Enforcement.
      If
      either party becomes aware that any Patent Rights are being or have been
      infringed by any third party, such party shall promptly notify the other party
      in writing describing the facts relating thereto in reasonable detail. Arbios
      shall have the right, but not the obligation, to institute, prosecute and
      control any action, suit or proceeding (an “Action”) with respect to such
      infringement, including any declaratory judgment action, at its expense, using
      counsel of its choice. Notwithstanding any other provision hereof, if either
      party notifies the other party in writing that an infringement of the Patent
      Rights exists, and Arbios does not take reasonable steps within nine (9) months
      of any such notice by Licensor to cause such infringement to cease, then for
      the
      following nine (9) months only, Licensor and not Arbios shall have the first
      right to prosecute any such infringement, and Arbios shall provide reasonable
      assistance (and shall use reasonable efforts to obtain assistance from the
      inventors) to Licensor with respect to any such action at Licensor’s expense.
      The parties agree that the party filing any action as described above may file
      such action in the name of the other party if reasonably necessary. Any recovery
      from any action brought hereunder shall be first allocated to reimbursing costs
      incurred in such action, and the remainder allocated 90% to the party
      controlling the action and 10% to the other party; provided that, if a
      sublicense is granted under the Patent Rights in the course of any litigation,
      then the royalty obligations of Section 3.2 and Article 4 shall apply to Net
      Sales under any such sublicense agreement with respect to all sales covered
      by
      such sublicense in lieu of the foregoing.

     

    8.3 Existing
      Action.
      This
      Agreement shall not affect [*]. Licensor shall keep Arbios reasonably informed
      of any events related [*]. 

     

    ARTICLE
      9

    TERM
      AND TERMINATION

     

    9.1 Term.
      The
      term of this Agreement will commence on the Effective Date of this Agreement
      and
      remain in full force and effect until the expiration of the last Patent Right,
      unless earlier terminated in accordance with this Article 9.

     

    9.2 Permissive
      Termination.
      Arbios
      may terminate this Agreement at any time by providing Licensor notice in writing
      at least thirty (30) days prior to the effective date of termination.

     

    9.3 Termination
      for Cause.
      Either
      party may terminate this Agreement if the other party has materially breached
      or
      defaulted in the performance of any of its obligations hereunder, and such
      default has continued for forty-five (45) days after written notice thereof
      (ten
      (10) days for payment breaches) was provided to the breaching party by the
      nonbreaching party. Any termination shall become effective at the end of such
      forty-five (45) day period (ten (10) days for payment breaches) unless the
      breaching party has cured or remedied any such breach or default prior to the
      expiration of such period. Notwithstanding
      the foregoing, the period to cure any default to which Section 10.3 (c) is
      applicable (as provided in Section 10.3(c)(i)), shall be extended until the
      first to occur of (A) the mutual agreement of the parties with respect thereto,
      or (B) five business days after the arbitration award with respect thereto
      has
      been issued, and any termination of this Agreement on account of such default
      shall not become effective until such extended cure period has ended without
      the
      breach being cured if, but only if, all payments in controversy are made by
      Arbios into escrow pursuant to Section 10.3 (c) within any original cure period
      for such payments (i.e., the original cure period as stated in the first
      sentence of this paragraph). All such payments made by Arbios in escrow must
      be
      accompanied by a written statement to the escrow agent, with a copy to Licensor,
      identifying the original due date of the payment. The parties acknowledge and
      agree that time is of the essence with respect to the actions specified in
      Sections 5.1(a), (b), (c), and (d), and in making any required payments under
      this Agreement.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    
      
         

        Portions
          of this Exhibit were omitted and have been filed separately with the Secretary
          of the Commission pursuant to the Company’s application requesting confidential
          treatment
          under Rule 24b-2 of the Securities Exchange Act of 1934.

         

      

    

    9.4 Termination
      for Insolvency.
      Either
      party, in addition to any other remedies available to it by law or in equity,
      may terminate this Agreement by providing written notice to the other party
      on
      or after the occurrence of any of the following events with regard to such
      other
      party: (i) becoming insolvent, or admitting in writing its insolvency or
      inability to pay its debts or perform its obligations as they mature; or (ii)
      becoming the subject of any voluntary or involuntary proceeding in bankruptcy,
      liquidation, dissolution, receivership, attachment or composition or general
      assignment for the benefit of creditors that is not dismissed with prejudice
      within thirty (30) days after the institution of such proceeding, attachment
      or
      assignment.

     

    9.5 Effect
      of Termination. 

     

    9.5.1 Accrued
      Rights and Obligations. Termination of this Agreement for any reason does not
      release any party hereto from any liability which, at the time of such
      termination, has already accrued to the other party or which is attributable
      to
      a period prior to such termination nor preclude either party from pursuing
      any
      rights and remedies it may have hereunder or at law or in equity with respect
      to
      any breach of this Agreement. It is understood and agreed that monetary damages
      may not be a sufficient remedy for any breach of this Agreement and that the
      non-breaching party may be entitled to seek injunctive relief as a remedy for
      any such breach. Such remedy shall not be considered to be the exclusive remedy
      for any such breach of this Agreement, but shall be in addition to all other
      remedies available at law or in equity.

     

    9.5.2 Stock
      on
      Hand. If this Agreement is terminated for any reason, Arbios may sell or
      otherwise dispose of the stock of any Product then on hand until one year after
      such termination, subject to Article 3 and Article 4 and the other applicable
      terms of this Agreement.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    
      
         

        Portions
          of this Exhibit were omitted and have been filed separately with the Secretary
          of the Commission pursuant to the Company’s application requesting confidential
          treatment
          under Rule 24b-2 of the Securities Exchange Act of 1934.

         

      

    

    9.5.3 Licenses.
      All licenses granted hereunder (other than the license granted in Section
      2.1(c)) shall terminate upon the termination of this Agreement. Licensor shall
      have the unilateral right to request the assignment of any sublicense granted
      prior to termination or to terminate such sublicense

     

    9.5.4 Survival.
      Sections 9.5 and Section 3.2, and Section 2.1(c), and Articles 4, 6, 8 and
      10 of
      this Agreement, as well as any obligation to pay royalties accruing prior to
      termination, shall survive the expiration or termination of this Agreement
      for
      any reason.

     

    ARTICLE
      10

    MISCELLANEOUS
      PROVISIONS

     

    10.1 Governing
      Law.
      This
      Agreement and any dispute, including without limitation any arbitration, arising
      from the performance or breach hereof shall be governed by and construed and
      enforced in accordance with the laws of the State of New York, without reference
      to the conflicts-of-laws principles thereof. 

     

    10.2 Assignment.
      Neither
      party may transfer or assign this Agreement or any of its rights hereunder
      to
      any party without the written consent of the other party, such consent not
      to be
      unreasonably withheld; provided, however, that (a) either party may assign
      its
      entire interest in this Agreement in connection with a merger or sale of
      substantially all of the assets of such party relating to the subject matter
      of
      this Agreement without any such prior consent and (b) Licensor may assign its
      right to receive royalties hereunder to one or more trusts. Subject to the
      foregoing, this Agreement binds upon and inures to the benefit of the parties
      and their permitted successors and assigns. No such assignment shall be
      permitted unless the assigning party shall promptly notify the other party
      hereto of such assignment, and the assignee shall agree for the benefit of
      the
      continuing party (i.e. the non-assigning party) in writing to be bound by all
      duties and obligations of the assignor hereunder.

     

    10.3 Dispute
      Resolution.
      (a) Any
      dispute, controversy or claim arising out of or relating to this Agreement,
      or
      the breach, termination or invalidity thereof, shall be finally settled by
      binding arbitration conducted in Chicago, Illinois under the commercial
      arbitration rules of the American Arbitration Association (“AAA”). The
      arbitration shall be conducted by a single independent arbitrator jointly
      appointed by the parties; provided,
      however,
      that if
      they cannot agree within thirty (30) days after the initiation of the
      arbitration, then the arbitrator shall be a lawyer or former judge experienced
      in patent litigation appointed by the AAA; provided further, however, that
      if
      the amount in controversy exceeds $[*] with respect to any calendar quarter,
      then a panel of three arbitrators so qualified shall be appointed. Disputes
      about arbitration procedure shall be resolved by the arbitrator(s). The
      arbitrator(s) may proceed to an award notwithstanding the failure of either
      party to participate in the proceedings. It is the goal of the parties that
      any
      arbitration proceeding be completed within twelve months of being initiated.
      The
      parties shall conduct themselves in good faith with the objective of achieving
      that goal and the arbitrator(s) shall be instructed to manage the arbitration
      accordingly. Discovery shall be limited to mutual exchange of documents relevant
      to the dispute, controversy or claim; depositions shall not be permitted unless
      agreed to by both Parties. The arbitrator(s) shall be authorized to grant
      interim relief, including to prevent the destruction of goods or documents
      involved in the dispute, protect trade secrets and provide for security for
      a
      prospective monetary award. The limitations on liability set out in Article
      7
      hereof shall apply to an award of the arbitrator(s). Specifically, but without
      limitation, under no circumstances shall the arbitrator(s) be authorized to
      award punitive or multiple damages. The prevailing party shall be entitled
      to an
      award of reasonable attorney fees incurred in connection with the arbitration
      in
      such amount as may be determined by the arbitrator(s). The award of the
      arbitrator(s) shall be the sole and exclusive remedy of the parties and shall
      be
      enforceable in any court of competent jurisdiction, subject only to revocation
      on grounds of fraud or clear bias on the part of the arbitrator(s).
      Notwithstanding this, application may be made to any court for a judicial
      acceptance of the award or order of enforcement. Notwithstanding anything
      contained in this Section 10.3 to the contrary, each party shall have the right
      to institute judicial proceedings against the other party or anyone acting
      by,
      through or under such other party, in order to enforce the instituting party’s
      rights hereunder through reformation of contract, specific performance,
      injunction or similar equitable relief, and either party may require that any
      question of patent validity, be determined by a court of competent jurisdiction,
      rather than by arbitration hereunder.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    
      
         

        Portions
          of this Exhibit were omitted and have been filed separately with the Secretary
          of the Commission pursuant to the Company’s application requesting confidential
          treatment
          under Rule 24b-2 of the Securities Exchange Act of 1934.

         

      

    

    (b) Section
      10.3(a) does not apply to any claim for patent infringement with respect to
      any
      period of time following termination of this agreement. No arbitration award
      (or
      suit to enforce an arbitration award) shall constitute res judicata or
      collateral estoppel or otherwise be relevant to any proceeding for patent
      infringement with respect to any period of time following termination of this
      agreement.

     

    (c)
      Controversies
      Concerning Product Classification.
      (i) This
      Section 10.3 (c) is applicable to a notice of default given by Licensor only
      in
      the following circumstances: if any Licensed Party or Sublicensee sells a
      product or service that will generate revenue that Arbios believes in good
      faith
      either (A) does not constitute Recovery because the product is neither a Product
      nor an Other Product, or because the method used in the service does not
      infringe a Valid Claim, or (B) is properly subject to a [*]% royalty as the
      sale
      of an Other Product rather than a [*]% royalty as the sale of a Product, and
      Arbios notifies the Licensor of such fact (the “Arbios Notice”) no later than
      the date on which the cure period for such notice of default would have ended
      (without the effect of this Section 10.3 (c)), stating in the notice reasonably
      complete reasons for its belief and currently available support therefor, and
      accompanying such notice with a sample product, if relevant. 

     

    (ii)
      In
      the case of a notice of default to which this Section 10.3 (c) is applicable,
      the parties will consult actively with one another to come to agreement on
      the
      question within fifteen (15) days of the Arbios Notice. 

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    
      
         

        Portions
          of this Exhibit were omitted and have been filed separately with the Secretary
          of the Commission pursuant to the Company’s application requesting confidential
          treatment
          under Rule 24b-2 of the Securities Exchange Act of 1934.

         

      

    

    (iii)
      If
      the parties have failed to come to agreement on the question within the period
      provided above, then either party may request that the matter be resolved by
      arbitration pursuant to Section 10.3(a). 

     

    (iv)
      During the pendency of any dispute resolution process as provided herein, Arbios
      shall pay the relevant royalties into escrow. The royalty rate to be paid into
      escrow shall be [*]% unless Licensor agrees that a [*]% royalty rate would
      apply
      under its interpretation of the facts and the Patent Rights, which
      interpretation shall be made in good faith, in which case the [*]% rate shall
      apply. The escrow agreement pursuant to which Arbios shall make the required
      payments shall be with a mutually agreeable escrow agent, or if Licensor does
      not timely agree to an agent, then with an impartial agent of national
      reputation appointed by Arbios, and the escrow agreement shall contain the
      agent’s normal indemnity provisions and shall provide that the funds shall be
      reasonably invested and shall be paid out by the escrow agent on the first
      to
      occur of the following: (A) receipt by the escrow agent of joint instructions
      from Arbios and Licensor directing such payment; or (B) receipt of and pursuant
      to an arbitration award directing the escrow agent to pay out the money; or
      (C)
      twelve months after the original due date of the payment which was paid into
      escrow, at which time the relevant payment shall be paid to Licensor, along
      with
      any interest earned thereon. 

     

    10.4 Waiver.
      No
      waiver of any rights is effective unless consented to in writing by the party
      to
      be charged and the waiver of any breach of default does not constitute a waiver
      of any other right hereunder or any subsequent breach or default.

     

    10.5 Severability.
      If any
      provisions of this Agreement are determined to be invalid or unenforceable
      by a
      court of competent jurisdiction, the remainder of the Agreement remains in
      full
      force and effect without said provision.

     

    10.6 Notices.
      All
      notices, requests and other communications hereunder shall be in writing and
      shall be personally delivered or sent by telecopy or other electronic facsimile
      transmission or by registered or certified mail, return receipt requested,
      postage prepaid, in each case to the respective address specified below, or
      such
      other address as may be specified in writing to the other parties
      hereto:

    

      
        	
                Arbios:

              	
                Arbios
                  Systems, Inc.

              
	
              	
                1050
                  Winter Street, Suite 1000

              
	
              	
                Waltham,
                  MA 02451

              
	 	
                Facsimile:
                  1-781-839-7294

              
	
              	
                Attn:
                  President

              

      

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

        
          
             

            Portions
              of this Exhibit were omitted and have been filed separately with the
              Secretary
              of the Commission pursuant to the Company’s application requesting confidential
              treatment
              under Rule 24b-2 of the Securities Exchange Act of 1934.

             

          

        

      

      
        	Licensor:	Immunocept
                LLC
	 	
                6530
                  Clearhaven Circle

              
	 	
                Dallas,
                  TX 75248 

              
	 	
                Attn:
                  James R. Matson, MD

              
	 	 
	With a copy
                to:	
                David
                  Radunsky

              
	 	
                12015
                  Excelsior Way

              
	 	
                Dallas,
                  TX 75230

              

      

    

     

    10.7 Independent
      Contractors.
      Both
      parties are independent contractors under this Agreement. Nothing contained
      in
      this Agreement is intended nor is to be construed so as to constitute Licensor
      or Arbios as partners or joint venturers with respect to this Agreement. Neither
      party has any express or implied right or authority to assume or create any
      obligations on behalf of or in the name of the other party or to bind the other
      party to any other contract, agreement, or undertaking with any third
      party.

     

    10.8 Compliance
      with Laws.
      In
      exercising their rights under this license, the parties shall fully comply
      in
      all material respects with the requirements of any and all applicable laws,
      regulations, rules and orders of any governmental body having jurisdiction
      over
      the exercise of rights under this Agreement.

     

    10.9 Use
      of
      Name.
      Neither
      party shall use the name or trademarks of the other party without the prior
      written consent of such other party.

     

    10.10 Entire
      Agreement; Amendment.
      This
      Agreement including all Exhibits and the Matson Service Agreement constitute
      the
      entire and exclusive Agreement between the parties with respect to the subject
      matter hereof and supersedes and cancels all previous discussions, agreements,
      commitments and writings in respect thereof. No amendment or addition to this
      Agreement is effective unless reduced to writing and executed by the authorized
      representatives of the parties.

     

    10.11 Further
      Assurances.
      Each
      party agrees to execute, acknowledge and deliver such further instruments,
      and
      do such other acts, as may be necessary and appropriate in order to carry out
      the purposes and intent of this Agreement.

     

    IN
      WITNESS WHEREOF, the undersigned have entered into this Agreement as of the
      date
      first set forth above.

     

    
      	IMMUNOCEPT LLC	 	ARBIOS SYSTEMS, INC.
	
            	 	 	 	 
	By: 	/s/
              David
              Radunsky	 	By:
	/s/
              Walter
              Ogier 
	 	
              
Print
              Name: David Radunsky	 	 	
              
Print
              Name: Walter Ogier
	 	Title:
              CEO	 	 	
              Title:
                President 

            

    

    

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

          

        

      

       

      Portions
        of this Exhibit were omitted and have been filed separately with the Secretary
        of the Commission pursuant to the Company’s application requesting confidential
        treatment
        under Rule 24b-2 of the Securities Exchange Act of 1934.

       

    

    EXHIBIT
      A

    PATENTS

    
      	
              U.S.
                Appln. No. and 

              File
                Date

            	 	
              Title

            	 	
              Inventors

            
	
              10/796,882*

              3/8/2004

            	 	
              Method
                and System for Colloid Exchange Therapy

            	 	
              Lee,
                Patrice A.

              Matson,
                James R.

              Radunsky,
                David

            
	
              10/826,736

              4/16/2004

            	 	
              Hemofiltration
                Systems, Methods and Devices Used to Treat Inflammatory Mediator
                Related
                Disease

            	 	
              Lee,
                Patrice A.

              Matson,
                James R.

            
	
              10/843,933

              5/12/2004

            	 	
              Hemofiltration
                Systems, Methods, and Devices Used for Treatment of Chronic and Acute
                Diseases

            	 	
              Matson,
                James R.

            
	
              11/387,556*

              3/23/2006

            	 	
              Method
                and System for Colloid Exchange Therapy

            	 	
              Lee,
                Patrice A.

              Matson,
                James R.

              Radunsky,
                David

            

    

     

    
      	
              U.S.
                Patent. No. and 

              Issue
                Date

            	 	
              Title

            	 	
              Inventors

            
	
              5,571,418

              11/5/1996

            	 	
              Hemofiltration
                of Toxic Mediator-Related Diseases

            	 	
              Lee,
                Patrice A.

              Matson,
                James R.

              Pryor,
                Robert W.

            
	
              6,287,516

              9/11/2001

            	 	
              Hemofiltration
                Systems, Methods, and Devices Used to Treat Inflammatory Mediator
                Related
                Diseases

            	 	
              Lee,
                Patrice R.

              Matson,
                James R.

            
	
              6,730,266

              5/4/2004

            	 	
              Hemofiltration
                Systems, Methods, and Devices Used to Treat Inflammatory Mediator
                Related
                Diseases

            	 	
              Lee,
                Patrice A.

              Matson,
                James R.

            
	
              6,736,972

              5/18/2004

            	 	
              Method
                and System for Providing Therapeutic Agents with Hemofiltration for
                Reducing Inflammatory Mediator Related Diseases

            	 	
              Matson,
                James R.

            
	
              6,787,040*

              9/7/2004

            	 	
              Method
                and System for Colloid Exchange Therapy

            	 	
              Lee,
                Patrice A.

              Matson,
                James R.

              Radunsky,
                David

            

    

     

    
      	
              Foreign
                Appln. No.

              and
                File Date

            	 	
              Title

            	 	
              Inventors

            
	
              European

              02750294.7

              7/24/2002

            	 	
              Hemofiltration
                Systems, Methods, and Devices Used to Treat Inflammatory Mediator
                Related
                Diseases

            	 	
              Lee,
                Patrice A.

              Matson,
                James R.

            
	
              European

              03726057.7*

              3/13/2003

            	 	
              Method
                and System for Colloid Exchange Therapy

            	 	
              Lee,
                Patrice A.

              Matson,
                James R.

              Radunsky,
                David

            

    

     

    *
      [*]
      

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    
       

      Portions
        of this Exhibit were omitted and have been filed separately with the Secretary
        of the Commission pursuant to the Company’s application requesting confidential
        treatment
        under Rule 24b-2 of the Securities Exchange Act of 1934.

       

    

    EXHIBIT
      B

    

    FORM
      OF WARRANT

    

    THIS
      WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY
      APPLICABLE STATE LAWS, AND NO INTEREST THEREIN MAY BE SOLD, DISTRIBUTED,
      ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS THERE IS AN EFFECTIVE
      REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS
      COVERING ANY SUCH TRANSACTION, OR SUCH TRANSACTION IS EXEMPT FROM THE
      REGISTRATION REQUIREMENTS OF THE ACT AND SUCH LAWS, SUCH COMPLIANCE, AT THE
      OPTION OF THE CORPORATION, TO BE EVIDENCED BY AN OPINION OF
      THE
      WARRANT HOLDER'S COUNSEL, IN FORM ACCEPTABLE TO THE CORPORATION, THAT NO
      VIOLATION OF SUCH REGISTRATION PROVISIONS WOULD RESULT FROM ANY PROPOSED
      TRANSFER OR ASSIGNMENT.

    

    FORM
      OF COMMON STOCK PURCHASE WARRANT

    

    ARBIOS
      SYSTEMS, INC.

    

    THIS
      CERTIFIES that for good and valuable consideration received, Immunocept LLC,
      or
      a registered assignee (the “Holder”)
      is
      entitled, upon the terms and subject to the conditions hereinafter set forth,
      to
      acquire from Arbios Systems, Inc., a Delaware corporation (the “Corporation”),
      up to
      225,000 (Two hundred twenty-five thousand) fully paid and nonassessable shares
      of common stock, par value $0.001, of the Corporation (“Warrant
      Stock”)
      at a
      purchase price per share (the “Exercise
      Price”)
      of
      $1.50 (the “Warrant”).

    

    ARTICLE
      1 Term
      of
      Warrant

    

    Subject
      to the terms and conditions set forth herein, this Warrant shall be exercisable,
      in whole or in part, at any time on or after the date hereof and at or prior
      to
      11:59 p.m., Pacific Standard Time, on March 29th, 2013 (the “Expiration
      Date”).
      

    

    
      
        ARTICLE
          2
Exercise
          of Warrant.

      

    

    

    The
      purchase rights represented by this Warrant are exercisable by the registered
      Holder hereof, in whole or in part, at any time and from time to time at or
      prior to the Expiration Date by delivery of the following to the office of
      the
      Corporation specified in Section 13:

     

    (a) A
      duly
      executed Notice of Exercise in the form attached hereto;

     

    (b) Payment
      of the Exercise Price for the shares thereby purchased either (i) by cash or
      by
      check or bank draft payable to the order of the Corporation, (ii) by
      cancellation of indebtedness of the Corporation to the Holder hereof, if any,
      at
      the time of exercise in an amount equal to the purchase price of the shares
      thereby purchased, or (iii) by net exercise pursuant to Section 2.1 hereof;
      and

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    
      
         

        Portions
          of this Exhibit were omitted and have been filed separately with the Secretary
          of the Commission pursuant to the Company’s application requesting confidential
          treatment
          under Rule 24b-2 of the Securities Exchange Act of 1934.

         

      

    

    (c) This
      Warrant.

     

    Upon
      the
      exercise of the rights represented by this Warrant, the Holder shall be entitled
      to receive from the Corporation a stock certificate in proper form representing
      the number of shares of Warrant Stock so purchased.

    

    2.1 Net
      Exercise.

    

    Notwithstanding
      any provisions herein to the contrary, in the event of a Change of Control
      the
      Holder may elect, in lieu of exercising this Warrant by payment of cash, to
      receive shares equal to the value (as determined below) of this Warrant (or
      the
      portion hereof being canceled) by surrender of this Warrant at the principal
      office of the Corporation together with the properly endorsed Notice of Exercise
      in which event the Company shall issue to the Holder, upon consummation of
      such
      Change of Control, a number of shares of Warrant Stock computed using the
      following formula:

    X
      =
Y
      (A-B)

    A

    
      	
            	Where
              X =	
              the
                number of shares of Warrant Stock to be issued to the
                Holder

            

    

     

    
      	 	
              Y
                =

            	
              the
                number of shares of Warrant Stock purchasable under the Warrant or,
                if
                only a portion of the Warrant is being exercised, the portion of
                the
                Warrant being canceled (at the date of such
                calculation)

            

    

     

    
      	 	
              A
                =

            	
              the
                fair market value of one share of the Corporation’s Warrant Stock (at the
                date of such calculation)

            

    

     

    
      	 	
              B
                =

            	
              Exercise
                Price (as adjusted to the date of such
                calculation)

            

    

     

    For
      purposes of the above calculation, the fair market value of one share of Warrant
      Stock shall be the
      value
      received in such Change of Control by the holders of the securities as to which
      purchase rights under this Warrant exist.
      

    

    
      
        ARTICLE
          3
Issuance
          of Shares; No Fractional Shares of Scrip.

      

    

     

    Certificates
      for shares purchased hereunder shall be delivered to the Holder hereof by the
      Corporation's transfer agent at the Corporation's expense within a reasonable
      time after the date on which this Warrant shall have been exercised in
      accordance with the terms hereof. Each certificate so delivered shall be in
      such
      denominations as may be requested by the Holder hereof and shall be registered
      in the name of such Holder or, subject to applicable laws, such other name
      as
      shall be requested by the Holder. If, upon exercise of this Warrant, fewer
      than
      all of the shares of Warrant Stock evidenced by this Warrant are purchased
      prior
      to the Expiration Date, one or more new warrants substantially in the form
      of,
      and on the terms in, this Warrant will be issued for the remaining number of
      shares of Warrant Stock not purchased upon exercise of this Warrant. The
      Corporation hereby represents and warrants that all shares of Warrant Stock
      which may be issued upon the exercise of this Warrant will, upon such exercise,
      be duly and validly authorized and issued, fully paid and nonassessable and
      free
      from all taxes, liens and charges in respect of the issuance thereof (other
      than
      liens or charges created by or imposed upon the Holder of the Warrant Stock).
      The Corporation agrees that the shares so issued shall be and will be deemed
      to
      be issued to such Holder as the record owner of such shares as of the close
      of
      business on the date on which this Warrant shall have been surrendered for
      exercise in accordance with the terms hereof. No fractional shares or scrip
      representing fractional shares shall be issued upon the exercise of this
      Warrant. With respect to any fraction of a share called for upon the exercise
      of
      this Warrant, an amount equal to such fraction multiplied by the then current
      price at which each share may be purchased hereunder shall be paid in cash
      to
      the Holder of this Warrant.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    
      
         

        Portions
          of this Exhibit were omitted and have been filed separately with the Secretary
          of the Commission pursuant to the Company’s application requesting confidential
          treatment
          under Rule 24b-2 of the Securities Exchange Act of 1934.

         

      

    

    
      
        ARTICLE
          4
Charges,
          Taxes and Expenses.

      

    

     

    

    Issuance
      of certificates for shares of Warrant Stock upon the exercise of this Warrant
      shall be made without charge to the Holder hereof for any issue or transfer
      tax
      or other incidental expense in respect of the issuance of such certificate,
      all
      of which taxes and expenses shall be paid by the Corporation, and such
      certificates shall be issued in the name of the Holder of this Warrant or in
      such name or names as may be directed by the Holder of this Warrant; provided,
      however, that in the event certificates for shares of Warrant Stock are to
      be
      issued in a name other than the name of the Holder of this Warrant, this Warrant
      when surrendered for exercise shall be accompanied by an Assignment Form to
      be
      provided by the Corporation duly executed by the Holder hereof.

    

    
      
        ARTICLE
          5
No
          Rights as Stockholders.

      

    

     

    This
      Warrant does not entitle the Holder hereof to any voting rights or other rights
      as a stockholder of the Corporation prior to the exercise hereof.

    

    
      
        ARTICLE
          6
Exchange
          and Registry of Warrant.

      

    

     

    This
      Warrant is exchangeable, upon the surrender hereof by the registered Holder
      at
      the above mentioned office or agency of the Corporation, for a new Warrant
      of
      like tenor and dated as of such exchange. The Corporation shall maintain at
      the
      above-mentioned office or agency a registry showing the name and address of
      the
      registered Holder of this Warrant. This Warrant may be surrendered for exchange,
      transfer or exercise, in accordance with its terms, at such office or agency
      of
      the Corporation, and the Corporation shall be entitled to rely in all respects,
      prior to written notice to the contrary, upon such registry.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    
      
         

        Portions
          of this Exhibit were omitted and have been filed separately with the Secretary
          of the Commission pursuant to the Company’s application requesting confidential
          treatment
          under Rule 24b-2 of the Securities Exchange Act of 1934.

         

      

    

    
      
        ARTICLE
          7
Loss,
          Theft, Destruction or Mutilation of Warrant.

      

    

     

    Upon
      receipt by the Corporation of evidence reasonably satisfactory to it of the
      loss, theft, destruction or mutilation of this Warrant and in case of loss,
      theft or destruction of indemnity or security reasonably satisfactory to it,
      and
      upon reimbursement to the Corporation of all reasonable expenses incidental
      thereto, and upon surrender and cancellation of this Warrant, if mutilated,
      the
      Corporation will make and deliver a new Warrant of like tenor and dated as
      of
      such cancellation, in lieu of this Warrant.

    

    
      
        ARTICLE
          8
Saturdays,
          Sundays and Holidays.

      

    

     

    If
      the
      last or appointed day for the taking of any action or the expiration of any
      right required or granted herein shall be a Saturday
      or a Sunday or that is a legal holiday, then such action may be taken or such
      right may be exercised on the next succeeding
      day not a Saturday, Sunday or legal holiday.

    

    
      
        ARTICLE
          9
Merger,
          Sale of Assets, Etc.

      

    

     

    If
      at any
      time prior to the Expiration Date the Corporation proposes to effect an
      acquisition of the Corporation by another entity by means of any transaction
      or
      series of related transactions (including, without limitation, any
      reorganization, merger or consolidation) that results in the transfer of 50%
      or
      more of the outstanding voting power of the Corporation or sell or convey all
      or
      substantially all of the Corporation’s assets to any other entity (each, a
“Change of Control”), then, as a condition of such Change of Control, the
      Corporation or its
      successor, as the case may be, shall enter into a supplemental
      agreement to make lawful and adequate provision whereby the Holder shall have
      the right to receive, upon exercise of the Warrant, the kind and amount of
      equity securities which would have been received upon such Change of Control
      by
      a Holder of a number of shares of common stock equal to the number of shares
      issuable upon exercise of the Warrant immediately prior to such Change of
      Control. If the property to be received upon such Change of Control is not
      equity securities, or in the event of an initial public offering of securities
      of the Corporation registered under the Act (whether or not such public offering
      would be deemed a Change of Control), the Corporation shall give the Holder
      of
      this Warrant twenty (20) business days prior written notice of the proposed
      effective date of such transaction, and if this Warrant has not been exercised
      by or on the effective date of such transaction, it shall terminate.
      Notwithstanding the foregoing, in the event of a public offering or Change
      of
      Control, the Holder shall have the right to deliver a Notice of Exercise to
      the
      Corporation conditioned upon consummation of such public offering or Change
      of
      Control transaction (a “Conditional Notice”). In the event of a Conditional
      Notice, this Warrant shall be exercised only in the event such transaction
      is
      consummated, and shall be deemed so exercised immediately prior to the
      consummation of such public offering or Change of Control transaction (but
      after
      giving effect to any adjustment to the Exercise Price).

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    
      
         

        Portions
          of this Exhibit were omitted and have been filed separately with the Secretary
          of the Commission pursuant to the Company’s application requesting confidential
          treatment
          under Rule 24b-2 of the Securities Exchange Act of 1934.

         

      

    

    
      
        ARTICLE
          10 Subdivision,
          Combination, Reclassification, Conversion, Etc.

      

    

     

    If
      the
      Corporation at any time shall by subdivision, combination, reclassification
      of
      securities or otherwise, change the Warrant Stock into the same or a different
      number of securities of any class or classes, this Warrant shall thereafter
      entitle the Holder to acquire such number and kind of securities as would have
      been issuable in respect of the Warrant Stock (or other securities which were
      subject to the purchase rights under this Warrant immediately prior to such
      subdivision, combination, reclassification or other change) as the result of
      such change if this Warrant had been exercised in full for cash immediately
      prior to such change. The Exercise Price hereunder shall be adjusted if and
      to
      the extent necessary to reflect such change. If the Warrant Stock or other
      securities issuable upon exercise hereof are subdivided or combined into a
      greater or smaller number of shares of such security, the number of shares
      issuable hereunder shall be proportionately increased or decreased, as the
      case
      may be, and the Exercise Price shall be proportionately reduced or increased,
      as
      the case may be, in both cases according to the ratio which the total number
      of
      shares of such security to be outstanding immediately after such event bears
      to
      the total number of shares of such security outstanding immediately prior to
      such event. The Corporation shall give the Holder prompt written notice of
      any
      change in the type of securities issuable hereunder, any adjustment of the
      Exercise Price for the securities issuable hereunder, and any increase or
      decrease in the number of shares issuable hereunder.

    

    
      
        ARTICLE
          11 Transferability;
          Compliance with Securities Laws.

      

    

     

    11.1 This
      Warrant may not be transferred or assigned in whole or in part without
      compliance with all applicable federal and state securities laws by the
      transferor and transferee (including the delivery of investment representation
      letters and legal opinions reasonably satisfactory to the Corporation, if
      requested by the Corporation). Subject to such restrictions, prior to the
      Expiration Date, this Warrant and all rights hereunder are transferable by
      the
      Holder hereof, in whole or in part, at the office or agency of the Corporation
      referred to in Section 2 hereof. Any such transfer shall be made in person
      or by
      the Holder's duly authorized attorney, upon surrender of this Warrant together
      with the Assignment Form attached hereto properly endorsed.

     

    11.2 The
      Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant
      and
      the Warrant Stock issuable upon exercise hereof are being acquired solely for
      the Holder's own account and not as a nominee for any other party, and for
      investment, and that the Holder will not offer, sell or otherwise dispose of
      this Warrant or any shares of Warrant Stock to be issued upon exercise hereof
      except under circumstances that will not result in a violation of the Act,
      or
      any state securities laws. Upon exercise of this Warrant, the Holder shall,
      if
      requested by the Corporation, confirm in writing, in a form satisfactory to
      the
      Corporation, that the shares of Warrant Stock so purchased are being acquired
      solely for Holder's own account and not as a nominee for any other party, for
      investment, and not with a view toward distribution or resale.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    
      
         

        Portions
          of this Exhibit were omitted and have been filed separately with the Secretary
          of the Commission pursuant to the Company’s application requesting confidential
          treatment
          under Rule 24b-2 of the Securities Exchange Act of 1934.

         

      

    

    11.3 The
      Holder understands that the Warrant Stock has not been registered under the
      Act
      on the basis that no distribution or public offering of the stock of the
      Corporation is to be effected. The Holder realizes that the basis for the
      exemption may not be present if, notwithstanding its representations, the Holder
      has a present intention of acquiring the securities for a fixed or determinable
      period in the future, selling (in connection with a distribution or otherwise),
      granting any participation in, or otherwise distributing the securities. The
      Holder has no such present intention.

     

    11.4 Notwithstanding
      the foregoing, no registration statement, no-action letter or opinion of counsel
      shall be necessary for a transfer, pledge or grant of security interest by
      a
      holder of a Warrant (or securities issuable upon exercise thereof) (i) to a
      fund, partnership, limited liability company, trust, or other entity that is
      an
      affiliate of such holder, (ii) to a partner or member (or retired partner or
      member) of such transferring holder, or to the estate of any such partner or
      member (or retired partner or member), (iii) to holder’s spouse, siblings,
      lineal descendants or ancestors by gift, will or intestate succession or (iv)
      in
      compliance with Rule 144(k) (or any successor provision) of the Act so long
      as
      the Corporation is furnished with satisfactory evidence of compliance with
      such
      rule; provided, however, that, in the case of (i), (ii) or (iii), the transferee
      agrees in writing to be subject to the terms of this Warrant to the same extent
      as if he or she were an original holder hereunder. 

     

    11.5 Each
      certificate representing the Warrant Stock or other securities issued in respect
      of the Warrant Stock upon any stock split, stock dividend, recapitalization,
      merger, consolidation or similar event, shall be stamped or otherwise imprinted
      with a legend substantially in the following form (in addition to any legend
      required under applicable securities laws):

     

    THE
      SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED. SUCH SHARES MAY NOT BE SOLD, OFFERED FOR
      SALE, PLEDGED OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
      STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR UNLESS THE SALE OR TRANSFER
      IS
      EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID
      ACT.

    

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    
      
        
          
             

            Portions
              of this Exhibit were omitted and have been filed separately with the
              Secretary
              of the Commission pursuant to the Company’s application requesting confidential
              treatment
              under Rule 24b-2 of the Securities Exchange Act of 1934.

             

          

        

        ARTICLE
          12 Representations
          and Warranties.

      

    

     

    The
      Corporation hereby represents and warrants to the Holder hereof
      that:

    

    12.1 during
      the period that this Warrant is outstanding, the Corporation will reserve from
      its authorized and unissued common stock a sufficient number of shares to
      provide for the issuance of Warrant Stock upon the exercise of this
      Warrant;

     

    12.2 the
      issuance of this Warrant shall constitute full authority to the Corporation's
      officers who are charged with the duty of executing stock certificates to
      execute and issue the necessary certificates for the shares of Warrant Stock
      issuable upon exercise of this Warrant;

     

    12.3 the
      Corporation has all requisite legal and corporate power to execute and deliver
      this Warrant, to sell and issue the Warrant Stock hereunder, and to carry out
      and perform its obligations under the terms of this Warrant; 

     

    12.4 all
      corporate action on the part of the Corporation, its directors and stockholders
      necessary for the authorization, execution, delivery and performance of this
      Warrant by the Corporation, the authorization, sale, issuance and delivery
      of
      the Warrant Stock, the grant of registration rights as provided herein and
      the
      performance of the Corporation's obligations hereunder has been
      taken;

     

    12.5 the
      Warrant Stock, when issued in compliance with the provisions of this Warrant
      and
      the Corporation's Certificate of Incorporation (as they may be amended from
      time
      to time), will be validly issued, fully paid and nonassessable, and free of
      all
      taxes, liens or encumbrances with respect to the issue thereof, and will be
      issued in compliance with all applicable federal and state securities laws;
      

     

    12.6 the
      issuance of the Warrant Stock will not be subject to any preemptive rights,
      rights of first refusal or similar rights;

     

    12.7 Except
      and to the extent as waived or consented to by the Holder, the Corporation
      will
      not, by amendment of its Articles of Incorporation or through any
      reorganization, transfer of assets, consolidation, merger, dissolution, issue
      or
      sale of securities or any other voluntary action, avoid or seek to avoid the
      observance or performance of any of the terms to be observed or performed
      hereunder by the Corporation, but will at all times in good faith assist in
      the
      carrying out of all the provisions of this Warrant and in the taking of all
      such
      action as may be necessary or appropriate in order to protect the exercise
      rights of the Holder against impairment; and

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    
      
         

        Portions
          of this Exhibit were omitted and have been filed separately with the Secretary
          of the Commission pursuant to the Company’s application requesting confidential
          treatment
          under Rule 24b-2 of the Securities Exchange Act of 1934.

         

      

    

    12.8 In
      the
      event of any taking by the Corporation of a record of the holders of any class
      of securities for the purpose of determining the holders thereof who are
      entitled to receive any dividend (other than a cash dividend which is the same
      as cash dividends paid in previous quarters) or other distribution, the Company
      shall mail to the Holder, at least ten (10) days prior to the date the
      Corporation plans to take a record of any class of securities for the purpose
      of
      determining the holders thereof who are entitled to receive any dividend, a
      notice specifying the date on which any such record is to be taken for the
      purpose of such dividend or distribution.

     

    
      
        ARTICLE
          13 Notices.

      

    

     

    All
      notices required or permitted hereunder shall be in writing and shall be deemed
      effectively given: (a) upon personal delivery to the party to be notified,
      (b)
      when sent by confirmed facsimile if sent during normal business hours of the
      recipient, if not, then on the next business day, (c) five (5) days after having
      been sent by registered or certified mail, return receipt requested, postage
      prepaid, or (d) one (1) business day after deposit with a nationally recognized
      overnight courier, specifying next day delivery, with written verification
      of
      receipt. 

    

    All
      communications to the Corporation shall be sent to the following
      address:

    

    Arbios
      Systems, Inc.

    1050
      Winter Street, Suite 1000

    Waltham,
      MA 02451

    Facsimile:
      1-781-839-7294

    Attn:
      President

    

    and
      all
      communications to the Holder shall be sent to the following
      address:

    

    Immunocept
      LLC

    6530
      Clearhaven Circle

    Dallas,
      TX 75248

    Attn:
      James R. Matson, MD

    

    or
      such
      other address as the Corporation or Holder may designate by ten (10) days
      advance written notice to the other parties hereto.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    
      
         

        Portions
          of this Exhibit were omitted and have been filed separately with the Secretary
          of the Commission pursuant to the Company’s application requesting confidential
          treatment
          under Rule 24b-2 of the Securities Exchange Act of 1934.

         

      

    

    
      
        ARTICLE
          14 Governing
          Law.

      

    

     

    This
      Warrant shall be governed by and construed in accordance with the laws of the
      State of New York.

    

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    
       

      Portions
        of this Exhibit were omitted and have been filed separately with the Secretary
        of the Commission pursuant to the Company’s application requesting confidential
        treatment
        under Rule 24b-2 of the Securities Exchange Act of 1934.

       

    

    IN
      WITNESS WHEREOF, the Corporation has caused this Warrant to be executed by
      its
      duly authorized officers.

    
       

      Dated:
        March 29, 2007

       

    

    
      	
              ARBIOS
                SYSTEMS, INC.

            	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	By:	 
	 	 	
            
	 	
              
Walter
              C. Ogier	 	 	
            
	 	
              President
                and Chief Executive Officer

            	 	 	
            

    

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

    
      
         

        Portions
          of this Exhibit were omitted and have been filed separately with the Secretary
          of the Commission pursuant to the Company’s application requesting confidential
          treatment
          under Rule 24b-2 of the Securities Exchange Act of 1934.

         

      

    

    NOTICE
      OF EXERCISE

    

    To: Arbios
      Systems, Inc.

    (1) □ The
      undersigned hereby elects to purchase _______ shares of common stock of Arbios
      Systems, Inc. pursuant to the terms of the attached Warrant and tenders herewith
      payment of the exercise price in full, together with all applicable transfer
      taxes, if any.

    

    □ The
      undersigned hereby elects to purchase _______ shares of common stock of Arbios
      Systems, Inc. pursuant to the terms of the net exercise provisions set forth
      in
      Section 2.1 of the attached Warrant, and shall tender payment of all applicable
      transfer taxes, if any.

    

    (2) Please
      issue a certificate or certificates representing said shares of common stock
      in
      the name of the undersigned or in such other name as is specified
      below:

    

    ______________________________________

    (Name)

    

    

    ______________________________________

    (Address)

    

    (3) The
      undersigned represents that (i) the aforesaid shares of common stock are being
      acquired for the account of the undersigned for investment and not with a view
      to, or for resale in connection with, the distribution thereof and that the
      undersigned has no present intention of distributing or reselling such shares;
      (ii) the undersigned is experienced in making investments of this type and
      has
      such knowledge and background in financial and business matters that the
      undersigned is capable of evaluating the merits and risks of this investment
      and
      protecting the undersigned’s own interests; and (iii) the undersigned
      understands that the shares of common stock issuable upon exercise of this
      Warrant have not been registered under the Securities Act of 1933, as amended
      (the “Securities Act”), by reason of a specific exemption from the registration
      provisions of the Securities Act, which exemption depends upon, among other
      things, the bona fide nature of the investment intent as expressed herein,
      and,
      because such securities have not been registered under the Securities Act,
      they
      must be held indefinitely unless subsequently registered under the Securities
      Act or an exemption from such registration is available.

    

    Date:__________________________

    

    

    ______________________________

    (Signature)

    

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

    
       

      Portions
        of this Exhibit were omitted and have been filed separately with the Secretary
        of the Commission pursuant to the Company’s application requesting confidential
        treatment
        under Rule 24b-2 of the Securities Exchange Act of 1934.

       

    

    EXHIBIT
      C

    

    RADUNSKY
      AGREEMENT

    

    Arbios
      Systems, Inc. 

    1050
      Winter Street, Suite 1000

    Waltham,
      MA 02451

     

    March
      29,
      2007

    

    David
      Radunsky

    12015
      Excelsior Way

    Dallas,
      TX 75230

    

    

    Dear
      Mr.
      Radunsky:

    

    This
      letter agreement is entered into ancillary to that certain License Agreement
      dated March 29th, 2007, by and between Arbios Systems, Inc. and Immunocept,
      LLC.

    

    Arbios
      hereby engages you to act as a consultant, without any compensation, but with
      reimbursement of reasonable expenses that are approved in advance by Arbios,
      in
      connection with the prosecution of Patent Rights (as defined in the License
      Agreement). In this regard:

    

    
      	
              1.

            	
              You
                will have the right (along with other representatives of Arbios),
                to
                participate in consultations with Arbios attorneys that are advising
                on
                the prosecution of various patent applications included in the Patent
                Rights, but you will not have authority to direct the patent prosecutions
                nor make decisions about the prosecution of patent applications.
                You are
                not being engaged as an attorney, but rather as a business
                consultant.

            

    

    

    
      	
              2.

            	
              Arbios
                will use all reasonable efforts to not make significant decisions
                nor
                instruct its patent prosecution attorneys to take significant actions
                regarding Patent Rights without prior consultation with
                you.

            

    

    

    
      	
              3.

            	
              You
                will be generally obligated to maintain the confidentiality of the
                matters
                covered by your activities hereunder, but it is agreed that information
                not subject to the attorney client privilege may be used by you in
                consultation with the officers, directors, and legal advisors of
                Immunocept in connection with its evaluation of its rights under
                the
                License Agreement.

            

    

    

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

      
        
           

          Portions
            of this Exhibit were omitted and have been filed separately with the
            Secretary
            of the Commission pursuant to the Company’s application requesting confidential
            treatment
            under Rule 24b-2 of the Securities Exchange Act of 1934.

           

        

      

    

    
      	
              4.

            	
              You
                are not obligated to devote any specific amount of time to this
                engagement, and it is recognized that you have other full time employment
                and that the amount of time that you will devote to this engagement
                is
                limited in amount and with respect to
                schedule.

            

    

    

    
      	
              5.

            	
              This
                Letter Agreement will terminate on the earlier
                of:

            

    

     

    
      	 	
              a.

            	
              Your
                death, resignation, or notice that you are unable to continue your
                consultation hereunder for any
                reason.

            

    

    

    
      	 	
              b.

            	
              Notice
                from Arbios terminating this letter agreement and the consultation
                at any
                time after either (i) the expiration of five years from the date
                hereof or
                (ii) the issuance of one US patent and one foreign patent with respect
                to
                the Patent Rights after the effective date of the License Agreement,
                whichever comes first.

            

    

    

    
      	
              6.

            	
              In
                the event this Letter Agreement is terminated under clause 5 a.,
                then
                Immunocept will have the right to have Arbios appoint another consultant
                under substantially similar terms as this Letter
                Agreement.

            

    

    

    Please
      sign and return a copy of this letter to us indicating your agreement to the
      terms hereof.

     

    
      	 	 	 	
              Very
                truly yours,

            
	 	 	 	
               

               

            
	
            	 	 	/s/
              Walter
              Ogier
	
            	 	 	
              
Walter
              C. Ogier
	
            	 	 	
              President

            

    
      	
              Agreed:

            	 	 	 
	
               

               

            	 	 	 
	/s/
              David
              Radunsky	 	 	
            
	
              
David
              Radunsky	 	 	
            

    

    

    
      
        
        

      

      
        31Exhibit
      10.2

    

    THIS
      WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY
      APPLICABLE STATE LAWS, AND NO INTEREST THEREIN MAY BE SOLD, DISTRIBUTED,
      ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS THERE IS AN EFFECTIVE
      REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS
      COVERING ANY SUCH TRANSACTION, OR SUCH TRANSACTION IS EXEMPT FROM THE
      REGISTRATION REQUIREMENTS OF THE ACT AND SUCH LAWS, SUCH COMPLIANCE, AT THE
      OPTION OF THE CORPORATION, TO BE EVIDENCED BY AN OPINION OF
      THE
      WARRANT HOLDER'S COUNSEL, IN FORM ACCEPTABLE TO THE CORPORATION, THAT NO
      VIOLATION OF SUCH REGISTRATION PROVISIONS WOULD RESULT FROM ANY PROPOSED
      TRANSFER OR ASSIGNMENT.

     

    COMMON
      STOCK PURCHASE WARRANT

    

    ARBIOS
      SYSTEMS, INC.

    

    THIS
      CERTIFIES that for good and valuable consideration received, Immunocept LLC,
      or
      a registered assignee (the “Holder”)
      is
      entitled, upon the terms and subject to the conditions hereinafter set forth,
      to
      acquire from Arbios Systems, Inc., a Delaware corporation (the “Corporation”),
      up to
      225,000 (Two hundred twenty-five thousand) fully paid and nonassessable shares
      of common stock, par value $0.001, of the Corporation (“Warrant
      Stock”)
      at a
      purchase price per share (the “Exercise
      Price”)
      of
      $1.50 (the “Warrant”).

     

    
      	
              1.

            	
              Term
                of Warrant

            

    

     

    Subject
      to the terms and conditions set forth herein, this Warrant shall be exercisable,
      in whole or in part, at any time on or after the date hereof and at or prior
      to
      11:59 p.m., Pacific Standard Time, on March 29th, 2013 (the “Expiration
      Date”).
      

     

    
      	
              2.

            	
              Exercise
                of Warrant.

            

    

     

    The
      purchase rights represented by this Warrant are exercisable by the registered
      Holder hereof, in whole or in part, at any time and from time to time at or
      prior to the Expiration Date by delivery of the following to the office of
      the
      Corporation specified in Section 13:

     

    (a) A
      duly
      executed Notice of Exercise in the form attached hereto;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b) Payment
      of the Exercise Price for the shares thereby purchased either (i) by cash or
      by
      check or bank draft payable to the order of the Corporation, (ii) by
      cancellation of indebtedness of the Corporation to the Holder hereof, if any,
      at
      the time of exercise in an amount equal to the purchase price of the shares
      thereby purchased, or (iii) by net exercise pursuant to Section 2.1 hereof;
      and

     

    (c) This
      Warrant.

     

    Upon
      the
      exercise of the rights represented by this Warrant, the Holder shall be entitled
      to receive from the Corporation a stock certificate in proper form representing
      the number of shares of Warrant Stock so purchased.

     

    2.1 Net
      Exercise.

     

    Notwithstanding
      any provisions herein to the contrary, in the event of a Change of Control
      the
      Holder may elect, in lieu of exercising this Warrant by payment of cash, to
      receive shares equal to the value (as determined below) of this Warrant (or
      the
      portion hereof being canceled) by surrender of this Warrant at the principal
      office of the Corporation together with the properly endorsed Notice of Exercise
      in which event the Company shall issue to the Holder, upon consummation of
      such
      Change of Control, a number of shares of Warrant Stock computed using the
      following formula:

     

    X
      =
Y
      (A-B)

    A

     

    
      	
            	Where
              X =	
               the
                number of shares of Warrant Stock to be issued to the
                Holder

            

    

     

    
      	 	
              Y
                =

            	
              the
                number of shares of Warrant Stock purchasable under the Warrant or,
                if
                only a portion of the Warrant is being exercised, the portion of
                the
                Warrant being canceled (at the date of such
                calculation)

            

    

     

    
      	 	
              A
                =

            	
              the
                fair market value of one share of the Corporation’s Warrant Stock (at the
                date of such calculation)

            

    

     

    
      	 	
              B
                =

            	
              Exercise
                Price (as adjusted to the date of such
                calculation)

            

    

     

    For
      purposes of the above calculation, the fair market value of one share of Warrant
      Stock shall be the
      value
      received in such Change of Control by the holders of the securities as to which
      purchase rights under this Warrant exist.
      

     

    
      	
              3.

            	
              Issuance
                of Shares; No Fractional Shares of
                Scrip.

            

    

     

    Certificates
      for shares purchased hereunder shall be delivered to the Holder hereof by the
      Corporation's transfer agent at the Corporation's expense within a reasonable
      time after the date on which this Warrant shall have been exercised in
      accordance with the terms hereof. Each certificate so delivered shall be in
      such
      denominations as may be requested by the Holder hereof and shall be registered
      in the name of such Holder or, subject to applicable laws, such other name
      as
      shall be requested by the Holder. If, upon exercise of this Warrant, fewer
      than
      all of the shares of Warrant Stock evidenced by this Warrant are purchased
      prior
      to the Expiration Date, one or more new warrants substantially in the form
      of,
      and on the terms in, this Warrant will be issued for the remaining number of
      shares of Warrant Stock not purchased upon exercise of this Warrant. The
      Corporation hereby represents and warrants that all shares of Warrant Stock
      which may be issued upon the exercise of this Warrant will, upon such exercise,
      be duly and validly authorized and issued, fully paid and nonassessable and
      free
      from all taxes, liens and charges in respect of the issuance thereof (other
      than
      liens or charges created by or imposed upon the Holder of the Warrant Stock).
      The Corporation agrees that the shares so issued shall be and will be deemed
      to
      be issued to such Holder as the record owner of such shares as of the close
      of
      business on the date on which this Warrant shall have been surrendered for
      exercise in accordance with the terms hereof. No fractional shares or scrip
      representing fractional shares shall be issued upon the exercise of this
      Warrant. With respect to any fraction of a share called for upon the exercise
      of
      this Warrant, an amount equal to such fraction multiplied by the then current
      price at which each share may be purchased hereunder shall be paid in cash
      to
      the Holder of this Warrant.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	
              4.

            	
              Charges,
                Taxes and Expenses.

            

    

     

    Issuance
      of certificates for shares of Warrant Stock upon the exercise of this Warrant
      shall be made without charge to the Holder hereof for any issue or transfer
      tax
      or other incidental expense in respect of the issuance of such certificate,
      all
      of which taxes and expenses shall be paid by the Corporation, and such
      certificates shall be issued in the name of the Holder of this Warrant or in
      such name or names as may be directed by the Holder of this Warrant; provided,
      however, that in the event certificates for shares of Warrant Stock are to
      be
      issued in a name other than the name of the Holder of this Warrant, this Warrant
      when surrendered for exercise shall be accompanied by an Assignment Form to
      be
      provided by the Corporation duly executed by the Holder hereof.

     

    
      	
              5.

            	
              No
                Rights as Stockholders.

            

    

     

    This
      Warrant does not entitle the Holder hereof to any voting rights or other rights
      as a stockholder of the Corporation prior to the exercise hereof.

     

    
      	
              6.

            	
              Exchange
                and Registry of Warrant.

            

    

     

    This
      Warrant is exchangeable, upon the surrender hereof by the registered Holder
      at
      the above mentioned office or agency of the Corporation, for a new Warrant
      of
      like tenor and dated as of such exchange. The Corporation shall maintain at
      the
      above-mentioned office or agency a registry showing the name and address of
      the
      registered Holder of this Warrant. This Warrant may be surrendered for exchange,
      transfer or exercise, in accordance with its terms, at such office or agency
      of
      the Corporation, and the Corporation shall be entitled to rely in all respects,
      prior to written notice to the contrary, upon such registry.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	
              7.

            	
              Loss,
                Theft, Destruction or Mutilation of
                Warrant.

            

    

     

    Upon
      receipt by the Corporation of evidence reasonably satisfactory to it of the
      loss, theft, destruction or mutilation of this Warrant and in case of loss,
      theft or destruction of indemnity or security reasonably satisfactory to it,
      and
      upon reimbursement to the Corporation of all reasonable expenses incidental
      thereto, and upon surrender and cancellation of this Warrant, if mutilated,
      the
      Corporation will make and deliver a new Warrant of like tenor and dated as
      of
      such cancellation, in lieu of this Warrant.

     

    
      	
              8.

            	
              Saturdays,
                Sundays and Holidays.

            

    

     

    If
      the
      last or appointed day for the taking of any action or the expiration of any
      right required or granted herein shall be a Saturday
      or a Sunday or that is a legal holiday, then such action may be taken or such
      right may be exercised on the next succeeding
      day not a Saturday, Sunday or legal holiday.

     

    
      	
              9.

            	
              Merger,
                Sale of Assets, Etc.

            

    

     

    If
      at any
      time prior to the Expiration Date the Corporation proposes to effect an
      acquisition of the Corporation by another entity by means of any transaction
      or
      series of related transactions (including, without limitation, any
      reorganization, merger or consolidation) that results in the transfer of 50%
      or
      more of the outstanding voting power of the Corporation or sell or convey all
      or
      substantially all of the Corporation’s assets to any other entity (each, a
“Change of Control”), then, as a condition of such Change of Control, the
      Corporation or its
      successor, as the case may be, shall enter into a supplemental
      agreement to make lawful and adequate provision whereby the Holder shall have
      the right to receive, upon exercise of the Warrant, the kind and amount of
      equity securities which would have been received upon such Change of Control
      by
      a Holder of a number of shares of common stock equal to the number of shares
      issuable upon exercise of the Warrant immediately prior to such Change of
      Control. If the property to be received upon such Change of Control is not
      equity securities, or in the event of an initial public offering of securities
      of the Corporation registered under the Act (whether or not such public offering
      would be deemed a Change of Control), the Corporation shall give the Holder
      of
      this Warrant twenty (20) business days prior written notice of the proposed
      effective date of such transaction, and if this Warrant has not been exercised
      by or on the effective date of such transaction, it shall terminate.
      Notwithstanding the foregoing, in the event of a public offering or Change
      of
      Control, the Holder shall have the right to deliver a Notice of Exercise to
      the
      Corporation conditioned upon consummation of such public offering or Change
      of
      Control transaction (a “Conditional Notice”). In the event of a Conditional
      Notice, this Warrant shall be exercised only in the event such transaction
      is
      consummated, and shall be deemed so exercised immediately prior to the
      consummation of such public offering or Change of Control transaction (but
      after
      giving effect to any adjustment to the Exercise Price).

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	
              10.

            	
              Subdivision,
                Combination, Reclassification, Conversion,
                Etc.

            

    

     

    If
      the
      Corporation at any time shall by subdivision, combination, reclassification
      of
      securities or otherwise, change the Warrant Stock into the same or a different
      number of securities of any class or classes, this Warrant shall thereafter
      entitle the Holder to acquire such number and kind of securities as would have
      been issuable in respect of the Warrant Stock (or other securities which were
      subject to the purchase rights under this Warrant immediately prior to such
      subdivision, combination, reclassification or other change) as the result of
      such change if this Warrant had been exercised in full for cash immediately
      prior to such change. The Exercise Price hereunder shall be adjusted if and
      to
      the extent necessary to reflect such change. If the Warrant Stock or other
      securities issuable upon exercise hereof are subdivided or combined into a
      greater or smaller number of shares of such security, the number of shares
      issuable hereunder shall be proportionately increased or decreased, as the
      case
      may be, and the Exercise Price shall be proportionately reduced or increased,
      as
      the case may be, in both cases according to the ratio which the total number
      of
      shares of such security to be outstanding immediately after such event bears
      to
      the total number of shares of such security outstanding immediately prior to
      such event. The Corporation shall give the Holder prompt written notice of
      any
      change in the type of securities issuable hereunder, any adjustment of the
      Exercise Price for the securities issuable hereunder, and any increase or
      decrease in the number of shares issuable hereunder.

     

    
      	
              11.

            	
              Transferability; Compliance
                with Securities Laws.

            

    

     

    (a) This
      Warrant may not be transferred or assigned in whole or in part without
      compliance with all applicable federal and state securities laws by the
      transferor and transferee (including the delivery of investment representation
      letters and legal opinions reasonably satisfactory to the Corporation, if
      requested by the Corporation). Subject to such restrictions, prior to the
      Expiration Date, this Warrant and all rights hereunder are transferable by
      the
      Holder hereof, in whole or in part, at the office or agency of the Corporation
      referred to in Section 2 hereof. Any such transfer shall be made in person
      or by
      the Holder's duly authorized attorney, upon surrender of this Warrant together
      with the Assignment Form attached hereto properly endorsed.

     

    (b) The
      Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant
      and
      the Warrant Stock issuable upon exercise hereof are being acquired solely for
      the Holder's own account and not as a nominee for any other party, and for
      investment, and that the Holder will not offer, sell or otherwise dispose of
      this Warrant or any shares of Warrant Stock to be issued upon exercise hereof
      except under circumstances that will not result in a violation of the Act,
      or
      any state securities laws. Upon exercise of this Warrant, the Holder shall,
      if
      requested by the Corporation, confirm in writing, in a form satisfactory to
      the
      Corporation, that the shares of Warrant Stock so purchased are being acquired
      solely for Holder's own account and not as a nominee for any other party, for
      investment, and not with a view toward distribution or resale.

     

    (c) The
      Holder understands that the Warrant Stock has not been registered under the
      Act
      on the basis that no distribution or public offering of the stock of the
      Corporation is to be effected. The Holder realizes that the basis for the
      exemption may not be present if, notwithstanding its representations, the Holder
      has a present intention of acquiring the securities for a fixed or determinable
      period in the future, selling (in connection with a distribution or otherwise),
      granting any participation in, or otherwise distributing the securities. The
      Holder has no such present intention.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (d) Notwithstanding
      the foregoing, no registration statement, no-action letter or opinion of counsel
      shall be necessary for a transfer, pledge or grant of security interest by
      a
      holder of a Warrant (or securities issuable upon exercise thereof) (i) to a
      fund, partnership, limited liability company, trust, or other entity that is
      an
      affiliate of such holder, (ii) to a partner or member (or retired partner or
      member) of such transferring holder, or to the estate of any such partner or
      member (or retired partner or member), (iii) to holder’s spouse, siblings,
      lineal descendants or ancestors by gift, will or intestate succession or (iv)
      in
      compliance with Rule 144(k) (or any successor provision) of the Act so long
      as
      the Corporation is furnished with satisfactory evidence of compliance with
      such
      rule; provided, however, that, in the case of (i), (ii) or (iii), the transferee
      agrees in writing to be subject to the terms of this Warrant to the same extent
      as if he or she were an original holder hereunder. 

     

    (e) Each
      certificate representing the Warrant Stock or other securities issued in respect
      of the Warrant Stock upon any stock split, stock dividend, recapitalization,
      merger, consolidation or similar event, shall be stamped or otherwise imprinted
      with a legend substantially in the following form (in addition to any legend
      required under applicable securities laws):

     

    THE
      SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED. SUCH SHARES MAY NOT BE SOLD, OFFERED FOR
      SALE, PLEDGED OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
      STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR UNLESS THE SALE OR TRANSFER
      IS
      EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID
      ACT.

     

    
      	
              12.

            	
              Representations
                and Warranties.

            

    

     

    The
      Corporation hereby represents and warrants to the Holder hereof
      that:

     

    (a) during
      the period that this Warrant is outstanding, the Corporation will reserve from
      its authorized and unissued common stock a sufficient number of shares to
      provide for the issuance of Warrant Stock upon the exercise of this
      Warrant;

     

    (b) the
      issuance of this Warrant shall constitute full authority to the Corporation's
      officers who are charged with the duty of executing stock certificates to
      execute and issue the necessary certificates for the shares of Warrant Stock
      issuable upon exercise of this Warrant;

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (c) the
      Corporation has all requisite legal and corporate power to execute and deliver
      this Warrant, to sell and issue the Warrant Stock hereunder, and to carry out
      and perform its obligations under the terms of this Warrant; 

     

    (d) all
      corporate action on the part of the Corporation, its directors and stockholders
      necessary for the authorization, execution, delivery and performance of this
      Warrant by the Corporation, the authorization, sale, issuance and delivery
      of
      the Warrant Stock, the grant of registration rights as provided herein and
      the
      performance of the Corporation's obligations hereunder has been
      taken;

     

    (e) the
      Warrant Stock, when issued in compliance with the provisions of this Warrant
      and
      the Corporation's Certificate of Incorporation (as they may be amended from
      time
      to time), will be validly issued, fully paid and nonassessable, and free of
      all
      taxes, liens or encumbrances with respect to the issue thereof, and will be
      issued in compliance with all applicable federal and state securities laws;
      

     

    (f) the
      issuance of the Warrant Stock will not be subject to any preemptive rights,
      rights of first refusal or similar rights;

     

    (g) Except
      and to the extent as waived or consented to by the Holder, the Corporation
      will
      not, by amendment of its Articles of Incorporation or through any
      reorganization, transfer of assets, consolidation, merger, dissolution, issue
      or
      sale of securities or any other voluntary action, avoid or seek to avoid the
      observance or performance of any of the terms to be observed or performed
      hereunder by the Corporation, but will at all times in good faith assist in
      the
      carrying out of all the provisions of this Warrant and in the taking of all
      such
      action as may be necessary or appropriate in order to protect the exercise
      rights of the Holder against impairment; and

     

    (h) In
      the
      event of any taking by the Corporation of a record of the holders of any class
      of securities for the purpose of determining the holders thereof who are
      entitled to receive any dividend (other than a cash dividend which is the same
      as cash dividends paid in previous quarters) or other distribution, the Company
      shall mail to the Holder, at least ten (10) days prior to the date the
      Corporation plans to take a record of any class of securities for the purpose
      of
      determining the holders thereof who are entitled to receive any dividend, a
      notice specifying the date on which any such record is to be taken for the
      purpose of such dividend or distribution.

     

    
      	
              13.

            	
              Notices.

            

    

     

    All
      notices required or permitted hereunder shall be in writing and shall be deemed
      effectively given: (a) upon personal delivery to the party to be notified,
      (b)
      when sent by confirmed facsimile if sent during normal business hours of the
      recipient, if not, then on the next business day, (c) five (5) days after having
      been sent by registered or certified mail, return receipt requested, postage
      prepaid, or (d) one (1) business day after deposit with a nationally recognized
      overnight courier, specifying next day delivery, with written verification
      of
      receipt. 

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    All
      communications to the Corporation shall be sent to the following
      address:

     

    Arbios
      Systems, Inc.

    1050
      Winter Street, Suite 1000

    Waltham,
      MA 02451

    Facsimile:
      1-781-839-7294

    Attn:
      President

    

    and
      all
      communications to the Holder shall be sent to the following
      address:

     

    Immunocept
      LLC

    6530
      Clearhaven Circle

    Dallas,
      TX 75248

    Attn:
      James R. Matson, MD

    

    or
      such
      other address as the Corporation or Holder may designate by ten (10) days
      advance written notice to the other parties hereto.

     

    
      	
              14.

            	
              Governing
                Law.

            

    

     

    This
      Warrant shall be governed by and construed in accordance with the laws of the
      State of New York.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Corporation has caused this Warrant to be executed by
      its
      duly authorized officers.

     

    
      Dated:
        March 29, 2007

       

    

    
      	ARBIOS
              SYSTEMS, INC.	 	 	 
	 	
               

               

            	 	 	 
	By:	/s/
              Walter
              Ogier	 	 	
            
	 	
              

              Walter
                C. Ogier

            	 	 	
            
	 	
              President
                and Chief Executive Officer

            	 	 	
            

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    

    NOTICE
      OF EXERCISE

    

    To: Arbios
      Systems, Inc.

     

    (1) □ The
      undersigned hereby elects to purchase _______ shares of common stock of Arbios
      Systems, Inc. pursuant to the terms of the attached Warrant and tenders herewith
      payment of the exercise price in full, together with all applicable transfer
      taxes, if any.

    

    □ The
      undersigned hereby elects to purchase _______ shares of common stock of Arbios
      Systems, Inc. pursuant to the terms of the net exercise provisions set forth
      in
      Section 2.1 of the attached Warrant, and shall tender payment of all applicable
      transfer taxes, if any.

    

    (2) Please
      issue a certificate or certificates representing said shares of common stock
      in
      the name of the undersigned or in such other name as is specified
      below:

    

    ______________________________________

    (Name)

    
 

    ______________________________________

    (Address)

    

    (3) The
      undersigned represents that (i) the aforesaid shares of common stock are being
      acquired for the account of the undersigned for investment and not with a view
      to, or for resale in connection with, the distribution thereof and that the
      undersigned has no present intention of distributing or reselling such shares;
      (ii) the undersigned is experienced in making investments of this type and
      has
      such knowledge and background in financial and business matters that the
      undersigned is capable of evaluating the merits and risks of this investment
      and
      protecting the undersigned’s own interests; and (iii) the undersigned
      understands that the shares of common stock issuable upon exercise of this
      Warrant have not been registered under the Securities Act of 1933, as amended
      (the “Securities Act”), by reason of a specific exemption from the registration
      provisions of the Securities Act, which exemption depends upon, among other
      things, the bona fide nature of the investment intent as expressed herein,
      and,
      because such securities have not been registered under the Securities Act,
      they
      must be held indefinitely unless subsequently registered under the Securities
      Act or an exemption from such registration is available.

    

    Date:__________________________

    

    

    ______________________________

    (Signature)

     

    
      
        
        

      

      
        10

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