Document:

ex10_1.htm

    
      

    

    Exhibit
10.1

     

    SIXTH
AMENDMENT TO

    DARTMOUTH
– PHYTOMEDICAL TECHNOLOGIES, INC. RESEARCH AGREEMENT

    

    

    THIS SIXTH AMENDMENT AGREEMENT
(“Amendment”) is entered into as of October 1, 2008, by and between the TRUSTEES OF DARTMOUTH COLLEGE,
a non-profit educational and research institution existing under the laws of the
State of New Hampshire (hereinafter “Dartmouth”) and PHYTOMEDICAL TECHNOLOGIES,
INC. a Corporation of the State of Nevada (hereinafter
“Phytomedical”).

    

    WHEREAS, the parties
previously entered into that certain Research Agreement dated June 1, 2007, (the
“Agreement”); a First Amendment dated July 10, 2007; a Second Amendment dated
November 13, 2007; a Third Amendment dated November 26, 2007; a Fourth Amendment
dated March 14, 2008; and A Fifth Amendment dated March 20, 2008.

    

    WHEREAS, the parties desire to
amend such Agreement as further set forth herein;

    

    NOW, THEREFORE, in
consideration of the premises and the covenants herein contained, the parties
hereby agree to amend the Agreement as follows:

    

    In
Section 9.  Contract Period, shall be amended to read:

    

    The
“Contract Period” shall mean the period commencing on the Effective Date and
ending on September 30, 2009.

    

    In
Section 10. Research Support, the following shall be added:

    

    PHYTOMEDICAL
shall provide additional research support to Dartmouth for laboratory research
at a level of $47,000 for the Contract Period in accordance with the attached
budget, which makes up Attachment C, and the attached Research Plan which makes
up Attachment D.

    

    In
Section 18. Payments, the following shall be added:

    

    As per this Sixth
Amendment, the additional $47,000, as defined in the amended Section
10,  will be paid quarterly from October 1, 2008 thereafter,
the first to be due on October 1, 2008 and every three months
thereafter.  Subsequent payments after the initial payment will be due
within 30 days of PHYTOMEDICAL's receipt of Dartmouth's invoice.

     

    All other
terms and conditions shall remain the same.

    
      
         

      

      
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    IN WITNESS WHEREOF, the
parties have duly executed this Amendment as of the date first written
above:

    

    
      
        
          	
                  PHYTOMEDICAL,
      INC

                	
                  TRUSTEES
      OF DARTMOUTH COLLEGE

                
	 
      	 
      
	
                   /s/
      Greg Wujek 

                	 
      
	
                   Greg Wujek

                	
                  /s/Alla Kan

                
	
                   President
      and CEO

                	
                  Alla Kan

                
	 
      	
                  Director,
      Technology Transfer Office

                
	
                  Dated:
      October 1, 2008

                	 
      
	 
      	
                  Dated:
      September 29, 2008

                

        

      

    

     

     

    Page 2 of 2ex10_1.htm

    
      

    

    Exhibit
10.1

    

    ASSET
PURCHASE AGREEMENT

    

    This
Asset Purchase Agreement (the “Agreement”) between
Arbios Systems, Inc., a Delaware corporation (the “Seller”), and
HepaLife Technologies, Inc., a Florida corporation (the “Buyer”), is entered
into as of October 3, 2008.  The Seller and the Buyer together may be
referred to herein as the “Parties” and each of them may be referred to herein
as a “Party.”

    

    RECITALS

    

    WHEREAS,
the Seller wishes to sell certain of its assets described herein to Buyer and
Buyer wishes to purchase such assets from the Seller;

    

    NOW
THEREFORE, in consideration of the foregoing and of the following covenants, the
sufficiency of which are hereby acknowledged, the Parties hereby agree as
follows:

    

    1.             Sale of
Assets

    

    1.1.           Purchase and Sale of
Assets.  The Seller hereby agrees to sell, transfer and deliver
to Buyer at Closing (as defined below), and the Buyer agrees to purchase and pay
for, all of Seller’s right, title and interest in and to the (a) Investigational
New Drug Application number 5654 for HepatAssist; including orphan drug and fast
track designations relating to the HepatAssist program; (b) the patents, patent
applications and inventions described by the unfiled potential patent claims
listed on Schedule
1.1(a) hereto (the “Patents Rights”); (c)
the trademarks, service marks, trade names and logos listed on Schedule 1.1(a)
hereto (the “Trademark
Rights”); (d) all rights, claims, credits, judgments, choses in action,
rights of set-off or rights for past, present or future infringement against
third parties relating to the Patents Rights; (e) the agreements listed on Schedule 1.1(b)
hereto (the “Assumed
Contracts”); (f) the prototype devices and representative custom or
modified equipment listed in Schedule 1.1(c)
hereto; (g) the other assets listed in Schedule 1.1(d); (h)
all records, data, results, patient files, historical samples, and clinical
trial protocols relating to the foregoing, including without limitation those
items listed in Schedule 1.1(e); and
(i) and all Intellectual Property (as defined below) related to any of the
foregoing.  All of the foregoing are referred to herein as the “Acquired
Assets.”

    

    1.2.           Consideration.  The
purchase price (the “Purchase Price”) of
the Acquired Assets shall consist of the following: (i) $450,000 in cash, (ii) a
Series D warrant to purchase up to 750,000 shares of the Buyer’s common stock at
an exercise price of $0.35 per share in the form attached hereto as Exhibit 1.2
(the “Warrant”), and (iii)
assumption by the Buyer of the Assumed Liabilities (as defined
below).  The Purchase Price shall be paid as follows: The Buyer (a)
shall pay to the Seller within two (2) business days from the Closing Date by
wire transfer of immediately available funds in accordance with the wire
instructions set forth in Schedule 1.2 hereto
(the “Wire
Instructions”) the sum of Two Hundred Fifty Thousand Dollars ($250,000)
and shall issue and deliver the Warrant, and shall assume on and after the
Closing Date the Assumed Liabilities; and (b) on the Deferred Payment Date,
shall pay to the Seller the sum of Two Hundred Thousand Dollars ($200,000) (the
“Deferred Cash
Purchase Price”).  The “Deferred Payment
Date” is the earlier to occur of (i) the date on which the Buyer has
consummated one or more debt or equity financings in which the gross proceeds
received since the date of this Agreement in the aggregate equal or exceed Four
Million Dollars ($4,000,000), or (ii) the eighteen month anniversary of the
Closing Date.  The Deferred Cash Purchase Price may be reduced by
amounts payable, if any, to Buyer under Section 3 (Indemnification
Obligations).

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1.3.           Assumption of
Liabilities.  At the Closing, the Buyer shall assume and become
obligated to discharge when due all of the following liabilities:

    

    (a)           All
liabilities and obligations arising on or after the Closing Date under the
Assumed Contracts; and

    

    (b)           All
liabilities and obligations arising on or after the Closing Date relating to the
Acquired Assets, including without limitation all liabilities and obligations
for the operation, prosecution, maintenance, upkeep, renewal, retention,
shipment, transfer, delivery, storage or disposal of the Acquired
Assets.  Notwithstanding anything herein to the contrary, the decision
whether to maintain the Acquired Assets after the Closing Date will be in the
sole discretion of the Buyer, and nothing herein shall require the Seller to
use, maintain or defend any of the Acquired Assets.

    

    All of
the foregoing are referred to as the “Assumed
Liabilities.”  Other than the Assumed Liabilities, the Buyer
will not assume or have any responsibility with respect to any other obligation
or liability of the Seller or relating to the Acquired Assets, including any
liability arising from the acquisition by the Seller of the Acquired Assets or
the Seller’s operations before or after the Closing.

    

    1.4.           Closing.  Subject
to satisfaction of the conditions in Section 4, the closing of the sale and
purchase of the Acquired Assets under this Agreement (the “Closing”) shall occur
at a place mutually acceptable to the Buyer and the Seller at 9:00 a.m. on
October 3, 2008, or such other date that is mutually acceptable to the Seller
and the Buyer (the “Closing
Date”).  All transactions which are to take place at the
Closing shall be considered to have taken place simultaneously, and no delivery
or payment shall be considered to have been made until all the transactions have
been completed.  Title to, ownership of, control over and risk of loss
of the Acquired Assets shall pass to Buyer effective as of 11:59 p.m. on the
Closing Date unless otherwise provided herein.

    

    1.5.           Seller’s Deliveries at
Closing.  On the Closing Date the Seller shall execute and
deliver or cause to be executed and delivered to the Buyer (a) the Bill of Sale
in the form set forth in Exhibit 1.5(a)
hereto, (b) an Assignment and Assumption Agreement in the form set forth in
Exhibit 1.5(b)
hereto, (c) an Assignment of Patents in the form set forth in Exhibit 1.5(c)
hereto, (d) an Assignment of Trademarks in the form set forth in Exhibit 1.5(d)
attached hereto, (e) any other instruments of conveyance and assignment as the
parties and their respective counsel shall deem reasonably necessary to vest in
Buyer the right, title and interest in and to the Acquired Assets set forth
herein, including without limitation the written consents and confirmations set
forth in Section 4.1, and (f) the Registration Rights Agreement (the form of
which is attached hereto as Exhibit
1.5(f).  (The Bill of Sale, the Assignment and Assumption
Agreement, the Assignment of Patents, the Assignment of Trademarks, and the
Registration Rights Agreement as executed and delivered by the Seller are herein
collectively referred to as the “Seller Transaction
Documents.”)  All tangible assets included in the Acquired
Assets shall be delivered by Seller to Buyer to one or more locations specified
by the Buyer, and title and risk of loss shall pass to Buyer on the Closing
Date.  Seller shall provide Buyer with reasonable assistance in
arranging for the shipment of tangible Acquired Assets to one or more locations
specified by the Buyer.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1.6.           Buyer’s Deliveries at
Closing.  On the Closing Date, (a) the Buyer shall pay to the
Seller the Closing Cash Purchase Price by wire transfer of immediately available
funds, and (b) the Buyer shall execute and deliver or cause to be executed and
delivered to the Seller (i) the Bill of Sale, (ii) the Assignment and Assumption
Agreement, (iii) the Assignment of Patents, (iv) the Assignment of Trademarks,
(v) Warrant, and (vi) the Registration Rights Agreement  (The Bill of
Sale, the Assignment and Assumption Agreement, the Assignment of Patents, the
Assignment of Trademarks, the Warrant, and the Registration Rights Agreement,
all as executed and delivered by the Buyer are herein collectively referred to
as the “Buyer
Transaction Documents”).

    

    1.7.           Obligations on the Deferred
Payment Date.  On the Deferred Payment Date, the Buyer shall
pay the Deferred Cash Purchase Price by wire transfer of immediately available
funds in accordance with the wire instructions of which Seller may notify Buyer
as provided for herein.  In the event that the Deferred Cash Purchase
Price is not paid on the Deferred Payment Date, the Seller shall have the
remedies set forth in Section 6 of this Agreement.

    

    2.         
   Representations and
Warranties.

    

    2.1.           Representation and
Warranties of the Seller.  The Seller hereby represents and
warrants to the Buyer as follows:

    

    2.1.1.  Organization and
Authorization. (i) The Seller is duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization and is duly
qualified to do business as a foreign corporation and is in good standing under
the laws of each jurisdiction in which either the ownership or use of its
assets, or the nature of its activities, requires such qualification, with all
requisite corporate power and authority to enter into this Agreement and the
transaction contemplated hereby, (ii) the execution, delivery and performance of
this Agreement and each of the Seller Transaction Documents has been duly
authorized by all necessary corporate action of the Seller, and (iii) this
Agreement and each of the Seller Transaction Documents has been duly executed
and delivered by Seller and is a valid, binding obligation of the Seller,
enforceable in accordance with its terms except as may be limited by applicable
federal or state bankruptcy, insolvency, reorganization, moratorium or other
laws affecting creditors’ rights generally. The Seller is not in default under
or in violation of any provision of its articles of incorporation or bylaws, as
amended, or any resolution adopted by the board of directors or stockholders of
the Seller.  Except for the consents referred to in Section 4.2.4 of
this Agreement, the Seller is not required to give any notice to, make any
filing with or obtain any authorization, consent or approval of any authority or
person in order for the Parties to consummate the transaction contemplated by
this Agreement.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    2.1.2.  Ownership of
Assets.  The Seller has good and marketable title to the
Acquired Assets, free and clear of any and all mortgages, liens, pledges and
security interests.  All pre-existing security interests in the
Acquired Assets shall, as of the Closing Date, have been released and
discharged.

    

    2.1.3.  Brokers and
Finders.  The Seller has not employed any broker or finder or
incurred any liability for brokerage fees, commissions or finder’s fees in
connection with the transactions contemplated by this Agreement.

    

    2.1.4.  Noncontravention.  Neither
the execution and delivery of this Agreement and the Seller Transaction
Documents, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule to which Seller is
subject or, to the knowledge of the Seller, any  injunction, judgment,
order, decree, ruling, charge or other restriction of any government,
governmental agency, or court to which Seller is subject, or any provision of
the Seller’s certificate of incorporation or By-laws, or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license, instrument,
or other arrangement to which Seller is a party or by which it is bound or to
which any of the Acquired Assets is subject (or result in the imposition of any
security interest upon any of the Acquired Assets).

    

    2.1.5.  Legal
Compliance.  The Seller has (a) complied with all laws
(including rules, regulations and codes) and with all plans, injunctions,
judgments, orders, decrees, rulings and charges thereunder in each case
applicable to the Acquired Assets or to the Seller’s business to the extent
involving the Acquired Assets, and (b) to the best of Seller’s knowledge, no
action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand or notice has been threatened, filed or commenced against the Seller
relating to or involving the Acquired Assets.

    

    2.1.6.  No
Litigation.   (a) There are no actions, suits,
proceedings, hearings, investigations, charges, complaints, claims or demands of
any kind pending or, to the best of the Seller’s knowledge, threatened relating
to or involving the Acquired Assets; (b) there are no injunctions, judgments,
orders or decrees of any kind which are outstanding against the Acquired Assets;
and (c) the Seller is not charged or, to the best of Seller’s knowledge,
threatened with, or under investigation with respect to, any alleged violation
of any provision of any law (including rules, regulations and codes) relating to
or involving the Acquired Assets.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    2.1.7.  Intellectual Property.

    

    (a)           “Intellectual
Property” means the following, as such may exist in all countries and
territories worldwide and under any international convention: (i) inventions
(whether or not reduced to practice), all improvements thereto; (ii) trademarks
and all goodwill associated therewith; (iii) works of authorship; (iv) trade
secrets; (v) business information, confidential or otherwise (including ideas,
research and development, know how, technical data, customer and supplier lists,
pricing and cost information and business and marketing plans and proposals);
(vi) databases; (vii) other proprietary rights; (viii) all registrations and
applications therefore (as applicable) pertaining to the foregoing; and (ix) all
patents, patent applications and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions and
reexaminations thereof, and statutory invention registrations.

    

    (b)           The
Seller owns or has the right to use, pursuant to license, sublicense, agreements
or other permission, the Intellectual Property transferred under this Agreement
as part of the Acquired Assets.  To the best of the Seller’s
knowledge, the Intellectual Property transferred under this Agreement as part of
the Acquired Assets will be owned or available for use by Buyer on identical
terms and conditions immediately subsequent to the Closing. The Seller has taken
all reasonable action to maintain and protect each item of Intellectual Property
owned or used by the Seller and related to the Acquired Assets, including the
use of work-for-hire and confidentiality agreements with all of its employees
and independent contractors who created such Intellectual Property during the
period that the Seller owned the Acquired Assets.

    

    (c)           To
the best knowledge of the Seller, the Seller’s use of the Acquired Assets has
not interfered with, infringed upon, misappropriated, or otherwise conflicted
with any Intellectual Property of any other person, and the Seller has never
received any charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation or violation (including any claim
that the Seller must license or refrain from using any Intellectual Property
rights of any other person).  To the best knowledge of the Seller, no
other person has interfered with, infringed upon, misappropriated or otherwise
conflicted with any Intellectual Property rights included in the Acquired
Assets.

    

    (d)           Set
forth on Schedule
1.1(a) is (i) a list of each registration which has been issued to the
Seller with respect to any of the Seller’s Intellectual Property related to the
Acquired Assets, the date of issuance of each registration and the item of
Intellectual Property to which each registration corresponds; (ii) a list of
each pending application for registration which has been made with respect to
any of the Intellectual Property owned or used in connection with the Acquired
Assets by Seller, the date of each application and the item of Intellectual
Property which is referenced in each application; (iii) a list of each material
license, agreement or other permission which has been granted to any other
person with respect to the Intellectual Property related to the Acquired Assets
(together with any exceptions) and the date of each license, agreement or
permission and the item of Intellectual Property which is the subject of each
license, agreement or permission; and (iv) a list of each unregistered or
unregistrable material item of Intellectual Property related to the Acquired
Assets.  With respect to each item of Intellectual Property set forth
on Schedule
1.1(a):

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (i)  The
Seller possesses all right, title and interest in and to the item free and clear
of all liens and licenses, subject to the rights, if any, of third parties
specified in Schedule
2.1.7 hereto.  Attached hereto as Schedule 2.1.7 is a
description of licenses and materials granted or transferred by prior owners of
the Acquired Assets to third parties.  To the best knowledge of the
Seller, none of the grants or transfers to the third parties listed
on  Schedule
2.1.7 are evidenced by a signed agreement (the Seller has delivered to
the Buyer all unsigned drafts of writings addressed to the third
parties);

    

    (ii)  The
item is not subject to any outstanding injunction, judgment, order, decree,
ruling, charge or other restriction of any authority;

    

    (iii)  No
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand is pending or, to the best knowledge of Seller, threatened which
challenges the legality, validity, enforceability, use, or ownership of the
item; and

    

    (iv)  The
Seller has not agreed to indemnify any other person for or against any
interference, infringement, misappropriation or other conflict with respect to
the item.

    

    (e)           Set
forth on Schedule
1.1(b) is a list of each material item of Intellectual Property related
to the Acquired Assets that any other person owns and that the Seller uses
pursuant to license, sublicense, agreement or permission.  With
respect to each item of Intellectual Property set forth on Schedule
1.1(b):

    

    (i)           To
the best of  Seller’s knowledge, the license, sublicense, agreement or
permission covering the item is legal, valid, binding, enforceable and in full
force and effect, will continue to be legal, valid, binding, enforceable and in
full force and effect following the consummation of the transactions
contemplated by this Agreement, and Seller has fulfilled all obligations of
Seller thereunder;

    

    (ii)           The
Seller is not and, to the best knowledge of the Seller, no other party to the
license, sublicense, agreement or permission is in breach or default, and no
event has occurred which with notice or lapse of time would constitute a breach
or default or permit termination, modification or acceleration
thereunder;

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (iii)           The
Seller has not, and to the best knowledge of the Seller, no other party to the
license, sublicense, agreement or permission has repudiated any provision
thereof;

    

    (iv)           The
item is not subject to any outstanding injunction, judgment, order, decree,
ruling, charge or restriction of any authority;

    

    (v)      
     No action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand is pending or, to the best
knowledge of the Seller, threatened which challenges the legality, validity or
enforceability of the item; and

    

    (vi)           The
Seller has not granted any sublicense or similar right with respect to the
license, sublicense, agreement or permission.

    

    2.1.8.  Assumed Contracts.
The Seller has delivered to Buyer a correct and complete copy of each Assumed
Contract, as amended to date, and to the best of the Seller’s knowledge, the
Assumed Contracts represent all of the contracts and agreements related to the
Acquired Assets to which the Seller is a party.  To the best knowledge
of the Seller, no other agreements exist that limit the rights set forth in the
Assumed Contracts.  With respect to each Assumed Contract: (i) the
Assumed Contract is legal, valid, binding and enforceable against the Seller
and, to the Seller’s knowledge, the other parties thereto and is in full force
and effect; (ii) the Assumed Contract will continue to be legal, valid, binding,
enforceable and in full force and effect to the same extent on identical terms
following the consummation of the transactions contemplated hereby; (iii) the
Seller is not, and to the best knowledge of the Seller, no other party is in
breach or default, and to the best knowledge of the Seller no event has occurred
which with notice or lapse of time would constitute a breach or default, or
permit termination, modification or acceleration, under the Assumed Contract;
and (iv) to the best knowledge of the Seller, no person has repudiated any
provision of the Assumed Contract.

    

    2.1.9.  Accuracy and Completeness of
Presentation Pages.  Attached hereto Schedule 2.1.9 are
selected pages of a PowerPoint presentation
regarding  “HepatAssist.”  All statements made in Schedule 2.1.9
regarding test prior results, the approvals obtained from the FDA, and other
statistical data are accurate and complete in all material
respects.

    

    2.1.10.  Accuracy and Completeness of
Acquired Assets.  Schedules 1.1(a) through 1.1(d) are accurate
and complete in all respects to the best knowledge of Seller.  To the
best knowledge of Seller, the Acquired Assets include all assets, equipment
(other than a Forma Scientific Cryogenic Storage Freezer and the Cryomed 8023
Nitrogen Shippers), Intellectual Property, contracts, agreements, records,
materials and other information of Seller related to Seller’s HepatAssist
program.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    2.1.11.  Brokers.  There
are no brokers or finders known to the Seller to be involved with this
transaction an the Seller has not made any agreement or taken any other action
which might cause any person to become entitled to a broker’s or finder’s fee or
commission as a result of this transaction.

    

    2.1.12.  Full
Disclosure.  No representation, warranty, covenant or agreement
made by the Seller in this Agreement or in any statement, certificate,
instrument or other document or item furnished or delivered or to be furnished
or delivered to the Buyer pursuant to this Agreement or in connection with the
transactions covered by this Agreement contains or will contain any false or
misleading statement of a material fact, or omit any material fact required to
be stated therein or necessary in order to make the statements therein not false
or misleading.

    

    2.1.13.  Disclaimer.  Notwithstanding
anything in this Agreement to the contrary, the Seller makes no, and hereby
disclaims any, representation or warranty to the Buyer with respect to any
warranty of merchantability or fitness for a particular purpose with respect to
the Patent Rights set forth on Schedule
1.1(a).

    

    2.2.           Representations and
Warranties of the Buyer.  The Buyer hereby represents and
warrants to the Seller as follows:

    

    2.2.1.  Organization and
Authorization.  (i) The Buyer is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, with all requisite corporate power and authority to enter into
this Agreement and the transaction contemplated hereby; (ii) the execution,
delivery and performance of this Agreement and each of the Buyer Transaction
Documents has been authorized by all necessary corporate action of Buyer; and
(iii) this Agreement and each of the Buyer Transaction Documents is a valid,
binding obligation of Buyer, enforceable in accordance with its terms except as
may be limited by applicable federal or state bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors’ rights
generally.

    

    2.2.2.  Brokers and
Finders.  The Buyer has not employed any broker or finder or
incurred any liability for brokerage fees, commissions or finder’s fees in
connection with the transactions contemplated by this Agreement.

    

    2.2.3.  Noncontravention.  Neither
the execution and delivery of this Agreement and the Buyer Transaction
Documents, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule to which Buyer is
subject or, to the knowledge of the Buyer, any  injunction, judgment,
order, decree, ruling, charge or other restriction of any government,
governmental agency, or court to which Buyer is subject, or any provision of the
Buyer’s certificate of incorporation or By-laws, or (ii) conflict with, result
in a breach of, constitute a  default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which Buyer is a party or by which it is
bound or to which any of the Acquired Assets is subject (or result in the
imposition of any security interest upon any of the Acquired
Assets).

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    2.2.4.  SEC Reports; Financial
Statements.  The Buyer has filed all required forms, reports
and documents with the Securities and Exchange Commission (“SEC”) since January
1, 2008 (“Buyer SEC Reports”), each of which complied at the time of filing in
all material respects with all applicable requirements of the Securities Act and
the Securities Exchange Act of 1934 (the “Exchange Act”), as applicable, in each
case as in effect on the dates such forms reports and documents were
filed.  None of the Buyer SEC Reports contained, when filed, an untrue
statement of a material fact or omitted to state a material fact required to be
stated or incorporated by reference therein or necessary in order to make the
statements therein in light of the circumstances under which they were made not
misleading, except to the extent superseded by a Buyer SEC Report filed
subsequently and prior to the date hereof.  Except as publicly
disclosed by the Buyer since the filing of its last SEC Report, there have been
no events, changes or effects with respect to the Buyer which the Buyer (i) was
required to publicly disclose, in a filing with the SEC or otherwise, or (ii)
which would reasonably be expected to have a material adverse effect on the
Buyer.  The consolidated financial statements of the Buyer included in
the Buyer SEC Reports have been prepared in all material respects in accordance
with United States generally accepted accounting principles (“GAAP”)
consistently applied and maintained throughout the periods indicated and fairly
present the consolidated financial position of the Buyer and its consolidated
subsidiaries at their respective dates and the results of the consolidated
results of operations and changes in financial position of the Buyer and its
consolidated subsidiaries for the periods covered thereby (subject to normal
year-end adjustments and except that unaudited financial statements do not
contain all required footnotes).

    

    2.2.5.  Issuance of the
Warrant.  The Warrant has been duly authorized and, when issued
in accordance with this Agreement, will be duly and validly issued, fully paid
and nonassessable, free and clear of all liens.  The Buyer has
reserved from its duly authorized capital stock the number of shares of its
common stock issuable upon exercise of the Warrant.

    

    3.           Indemnification
Obligations

    

    3.1.1.  The
Seller shall indemnify and defend Buyer and hold Buyer harmless from and against
any and all actions, suits, proceedings, hearings, investigations, charges,
complaints, claims, demands, injunctions, judgments, orders, decrees, rulings,
damages, dues, diminution of value, penalties, fines, amounts paid in
settlement, liabilities, obligations, taxes, liens, losses, costs, expenses and
fees, including court costs and reasonable attorneys’ fees and expenses
(collectively, “Adverse Consequences”) arising out of, resulting from, relating
to, in the nature of or caused by any misrepresentation or breach of any
representation, warranty, covenant or agreement made by the Seller in this
Agreement or in any statement, certificate, instrument or other document or item
furnished or delivered or to be furnished or delivered by the Seller to Buyer
pursuant to this Agreement or in connection with the transactions contemplated
by this Agreement.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3.1.2.  Buyer
shall indemnify and defend the Seller and hold the Seller harmless from and
against any and all Adverse Consequences arising out of, resulting from,
relating to, in the nature of or caused by any misrepresentation or breach of
any representation, warranty, covenant or agreement made by Buyer in this
Agreement or in any statement, certificate, instrument or other document or item
furnished or delivered or to be furnished or delivered by Buyer to the Seller
pursuant to this Agreement or in connection with the transactions contemplated
by this Agreement.

    

    3.1.3.  A
party seeking indemnification pursuant to this Section (an “Indemnified Party”)
shall give notice to the party from whom such indemnification is sought (the
“Indemnifying Party”) of the assertion of any claim, or the commencement of any
action, suit or proceeding, in respect of which indemnity may be sought pursuant
to this Section (a “Claim”) as soon as practicable after the party entitled to
indemnification becomes aware of any fact, condition or event which may give
rise to damages for which indemnification may be sought under this Section (but
in any event on or prior to the applicable expiration date described below in
Section 9) which contains (i) a description and the amount of any damages
incurred by the Indemnified Party, (ii) a statement that the Indemnified Party
is entitled to indemnification under this Section and a reasonable explanation
of the basis therefor, and (iii) a demand for payment in the amount of such
damages; provided, however that any delay or failure of any Indemnified Party
with regard to notifying any Indemnifying Party of any Claim shall not relieve
the Indemnifying Party from any liability hereunder except to the extent that
the defense of such action is prejudiced by such delay or failure to notify or
promptly notify.  Within 15 days after delivery of a notice of a
Claim, the Indemnifying Party shall deliver to the Indemnified Party a written
response in which the Indemnifying Party shall:  (I) agree that the
Indemnified Party is entitled to receive all of the damages claimed (in which
case such response shall be accompanied by a payment by the Indemnifying Party
to the Indemnified Party of the damages claimed, by check or by wire transfer),
(II) agree that the Indemnified Party is entitled to receive part, but not all,
of the damages claimed and a reasonable explanation of the basis therefor (the
“Agreed Amount”) (in which case such response shall be accompanied by a payment
by the Indemnifying Party to the Indemnified Party of the Agreed Amount, by
check or by wire transfer), or (III) contest that the Indemnified Party is
entitled to receive any of the damages claimed and a reasonable explanation of
the basis therefor. If the Indemnifying Party in such response contests the
payment of all or part of the damages claimed, the Indemnifying Party and the
Indemnified Party shall use good faith efforts to resolve such
dispute.  Any survival period time limitation specified in Section 9
below shall not apply to a Claim which has been the subject of notice from the
Indemnified Party to the Indemnifying Party given prior to the expiration of
such period. After such notice, if the Indemnifying Party shall acknowledge in
writing to the Indemnified Party that the Indemnifying Party shall be obligated
under the terms of its indemnity hereunder in connection with such lawsuit or
action, then the Indemnifying Party shall be entitled, if it so elects, (i) to
take control of the defense and investigation of such lawsuit or action
(provided such defense and investigation are pursued in a diligent and
professional manner); (ii) to employ and engage attorneys of its own choice to
handle and defend the same, at the Indemnifying Party’s cost, risk, and expense
unless the named parties to such action or proceeding include both the
Indemnifying Party and the Indemnified Party and the Indemnified Party has been
advised in writing by counsel that there may be one or more legal defenses
available to such Indemnified Party that are different from or additional to
those available to the Indemnifying Party; and (iii) to compromise or settle
such claim, which compromise or settlement shall be made only with the written
consent of the Indemnified Party, such consent not to be unreasonably
withheld.  In the event the Indemnifying Party does assume the defense
of such Claim as provided above, the Indemnified Party shall have the right to
fully participate in such defense (including engaging attorneys of its own
choice), at its sole expense, and the Indemnifying Party (and its chosen
attorneys) shall keep the Indemnified Party (and its attorneys) reasonably
informed and shall reasonably cooperate with the Indemnified Party (and its
attorneys) in connection with such participation.  If the Indemnifying
Party fails to assume the defense of such claim within 15 days after receipt of
the notice of a Claim, the Indemnified Party against which such Claim has been
asserted will (upon delivering notice to such effect to the Indemnifying Party)
have the right to undertake, at the Indemnifying Party’s cost and expense, the
defense, compromise or settlement of such Claim on behalf of and for the account
and risk of the Indemnifying Party (which defense shall be pursued in a diligent
and professional manner); provided, however, that such Claim shall not be
compromised or settled without the written consent of the Indemnifying Party,
which consent shall not be unreasonably withheld.  In the event the
Indemnified Party assumes the defense of the Claim, the Indemnified Party will
keep the Indemnifying Party reasonably informed of the progress of any such
defense, compromise or settlement.  The Indemnifying Party shall be
liable for any settlement of any action effected pursuant to and in accordance
with this Section for any final judgment (subject to any right of appeal), and
the Indemnifying Party agrees to indemnify and hold harmless an Indemnified
Party from and against any damages by reason of such settlement or
judgment.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3.1.4.  For
purposes of this Section, including the determination of Claims by Buyer, any
and all references to “material” limitations or limitations as to “knowledge” in
Seller’s representations and warranties, while being taken into account for
purposes of determining whether a breach has occurred giving rise to a Claim by
Buyer for Adverse Consequences for which Buyer is to be indemnified, shall be
disregarded for purposes of calculating the amount of said Claim.

    

    3.1.5.  Neither
party shall be required to indemnify the other party pursuant to this Section
unless or until the aggregate monetary amount of Adverse Consequences exceeds
$5,000.00 (the “Basket”) following which the Indemnifying Party shall be
required to indemnify the Indemnified Party (subject to the Indemnity Cap) only
for the monetary amounts of Adverse Consequences in excess of the
Basket.

    

    3.1.6.  Neither
party shall be required to indemnify the other party for an aggregate amount of
Adverse Consequences in excess of $450,000.00 (the “Indemnity
Cap”).

    

    3.1.7.  In
no event shall the provisions of this Section in any way modify or otherwise
limit the rights or remedies available to any of the parties with regard to a
claim of fraud.  The parties shall be entitled as a result of
misrepresentation, breach or default under this Agreement, to pursue any and all
non-monetary relief to which any of them may otherwise be entitled at law, in
equity or otherwise.

    

    3.1.8.  The
amount of damages payable by an Indemnifying Party under this Section shall be
(a) reduced by any insurance proceeds actually received by the Indemnified Party
with respect to the claim for which indemnification is sought, (b) reduced by
any amounts recovered from any third parties, by way of indemnification or
otherwise, with respect to the claim for which indemnification is sought and (c)
any tax benefits actually received by the Indemnified Party or for which the
Indemnified Party is eligible on account of the matter resulting in such damages
or the payment of such damages.  Each Indemnified Party shall, as soon
as is reasonably practicable and commercially feasible, make application for
such insurance procedures referred to in clause (a) above.  Except
with regard to compensation for claims paid to third parties, damages payable by
an Indemnifying Party under this Section shall not include punitive damages or
any special or indirect damages or any damages that are consequential in nature
such as lost profits, diminution in value, damage to reputation and the
like.  Except as set forth in this Agreement, the Seller or the Buyer
are not making any representation, warranty, covenant or agreement with respect
to the matters contained herein.  Provided that the Buyer has complied
with all of the provisions of the this Section 3, Buyer shall have the right to
off-set or set-off any payment due pursuant to this Agreement against any other
payment to be made pursuant to this Agreement or otherwise (including against
indemnification payments).  Except for breaches of Sections 1.2 or 1.7
by Buyer, indemnification under this Section shall be the exclusive means of
recovery by either Buyer or Seller and, as applicable, its officers, directors
and shareholders against the other party for any breach or violation, or alleged
breach or violation, of the representations, warranties, covenants and
agreements under this Agreement and shall be in lieu of any other common law or
statutory rights or remedies.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    4.          
  Conditions to
Closing

    

    4.1.           Seller’s Closing
Condition.  The Seller’s obligation to consummate the
transactions contemplated hereby is subject to the satisfaction of the following
conditions as of the Closing Date:

    

    4.1.1.  No
Litigation.  No action or proceeding before a court or any
other governmental agency or body shall have been instituted or threatened to
stay, restrain or prohibit the consummation of the transactions contemplated
hereby or to impose any remedy, condition or restriction unacceptable to the
Seller in its sole discretion.

    

    4.1.2.  Representations and
Warranties; Performance of Obligations.  All representations
and warranties of the Buyer contained in this Agreement shall be true and
correct in all material respects as of the Closing with the same force and
effect as though made at and as of the Closing and all of the terms, covenants
and conditions of this Agreement to be complied with, performed and satisfied by
the Buyer at or before the Closing shall have been complied with, performed and
satisfied in all material respects.

    

    4.1.3.  Proceedings
Satisfactory.  All actions, proceedings, instruments and
documents required to carry out this Agreement or incidental hereto shall be
reasonably satisfactory to the Seller and its counsel.

    

    4.2.           Buyer’s Conditions
Precedent.  The Buyer’s obligations hereunder are conditioned
upon the following:

    

    4.2.1.  No
Litigation.  No action or proceeding before a court or any
other governmental agency or body shall have been instituted or threatened to
stay, restrain or prohibit the consummation of the transactions contemplated
hereby or to impose any remedy, condition or restriction unacceptable to the
Buyer in its sole discretion.

    

    4.2.2.  Representations and
Warranties; Performance of Obligations.  All representations
and warranties of the Seller contained in this Agreement shall be true and
correct in all material respects as of the Closing Date with the same force and
effect as though made at and as of the Closing Date and all of the terms,
covenants and conditions of this Agreement to be complied with, performed and
satisfied by the Seller at or before the Closing Date shall have been complied
with, performed and satisfied in all material respects.

    

    4.2.3.  Proceedings
Satisfactory.  All actions, proceedings, instruments and
documents required to carry out this Agreement or incidental hereto shall be
reasonably satisfactory to the Buyer and its counsel.

    

    4.2.4.  Consents.  On
or prior to the Closing Date, the Buyer shall have been provided a copy of the
following in a form satisfactory to Buyer:

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (a)           Executed
written consent from Becton Dickinson assigning, effective as of the Closing
Date, to Buyer that certain License Agreement between Becton Dickinson and
Seller dated April 5, 2004 and confirming that any and all of Seller’s
obligations thereunder have been satisfied in full.

    

    (b)           Executed
written consent from Cedars Sinai Medical Center (i) assigning, effective as of
the Closing Date, to Buyer that certain License Agreement between Cedars Sinai
Medical Center and Seller, dated June 29, 2001 and (ii) confirming that,
effective as of the Closing Date, any and all of Seller’s obligations under such
agreement, including without limitation Schedule D, have been satisfied in full
and that Section 4.4 of such agreement is deleted in its entirety and shall be
of no further force or effect.

    

    (c)           Executed
written consent from Cedars Sinai Medical Center assigning, effective as of the
Closing Date, to Buyer that certain License Agreement between Cedars Sinai
Medical Center and Seller, dated August 1, 1999 and confirming that any and all
Seller’s obligations thereunder (other than royalties arising after the Closing
Date) have been satisfied in full.

    

    (d)           Executed
written consent from Circe Biomedical, Inc. (fka W.R. Grace & Co-Conn)
assigning, effective as of the Closing Date, to Buyer that certain Royalty
Agreement by and between Circe Biomedical, Inc. and Seller dated as of January
29, 1999 and confirming that any and all Seller’s obligations
thereunder  (other than royalties arising after the Closing Date) have
been satisfied in full.

    

    (e)           Executed
assignment of inventions agreement by and between Shawn Cain and the Buyer with
respect to the patent claims set forth on Schedule 1.1(a), and best efforts to
obtain, within a reasonable period of time after the Closing, an executed
assignment of inventions agreement with Barbara Chandler.

    

    (f)           Written
acknowledgement from RanD/Medtronic and Gianni Bellini that all rights of Seller
in and to the HepatAssist hardware platform, including without limitation any
software and firmware contained therein or used in connection therewith, have
been transferred to Buyer and that RanD/Medtronic and Gianni Bellini will use
good faith efforts to negotiate and enter into a written agreement with Buyer
promptly after the Closing Date to continue development of the HepatAssist
hardware and software platform on behalf of Buyer.

    

    

    5.       
     Confidentiality.

    

    5.1.           Each
party may disclose or may have disclosed (the “Disclosing Party”) to
another party (the “Receiving Party”)
certain information that the Disclosing Party considers to be confidential
and/or proprietary, including, but not limited to, personally identifiable
information and data entered, the terms and conditions of this Agreement (except
as permitted in Section 9.3 below) technical processes and formulas, product
designs, customer lists, product and business plans, revenues, projections,
marketing and other data, sales, cost, accounting and other technical, business
and financial information, as well as information that the Disclosing Party
marks as confidential (collectively, “Confidential
Information”).  Notwithstanding the foregoing, Confidential
Information does not include information (i) already known by the Receiving
Party without an obligation of confidentiality, (ii) publicly known or which
becomes publicly known through no omission or unauthorized act of the Receiving
Party, (iii) rightfully received from a third party without any obligation of
confidentiality, or (iv) independently developed by the Receiving Party without
use of the Disclosing Party’s Confidential Information.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    5.2.           The
Receiving Party shall make use of the Confidential Information only for the
purposes of this Agreement and shall protect the Disclosing Party’s Confidential
Information by using the same degree of care, but not less than a reasonable
degree of care, to prevent the unauthorized access, use, dissemination, or
publication of the Confidential Information as the Receiving Party uses to
protect its own Confidential Information of a like nature.  The
Receiving Party shall disclose Confidential Information only (i) to those of its
employees, contractors, representatives and consultants with a need to know such
Confidential Information who have first agreed with the Receiving Party, either
as a condition of employment or engagement, or in order to obtain the
Confidential Information, to be bound by terms and conditions substantially
similar to those contained in this Section 4, (ii) as required by court order,
law or regulation or as requested by any regulatory agency or governmental body
having jurisdiction over the Receiving Party, provided that prior to such
disclosure the Receiving Party shall provide prompt written notice to the
Disclosing Party sufficient to permit the Disclosing Party the opportunity to
oppose the disclosure and the Receiving Party shall take all reasonable steps
available to maintain the Confidential Information in confidence, or (iii) to
make appropriate disclosure regarding the tax treatment and tax structure of the
transactions contemplated hereby.

    

    5.3.           All
Confidential Information shall remain the property of the Disclosing Party, and
such Confidential Information and all copies thereof (if any), shall be promptly
returned to the Disclosing Party upon request or upon termination of this
Agreement or, at the Disclosing Party’s sole option, destroyed, in which case
the Disclosing Party shall be notified promptly in writing when its Confidential
Information has been destroyed.  The furnishing of any Confidential
Information between the parties shall not constitute the granting of any right
or license to use such Confidential Information.

    

    5.4.           The
obligations of the parties set forth in this Section 4 shall remain in effect
for three years after the date of this Agreement.

    

    5.5.           Notwithstanding
any other provision in this Section 4 to the contrary, the Buyer shall be
permitted after the Closing to use and disclose any Confidential Information
received from the Seller and included in the Acquired Assets to the extent the
Buyer in its sole discretion determines that it is necessary or appropriate to
use or disclose that Confidential Information in order to carry out any of the
Buyer’s commercial activities through the use of any of the Acquired
Assets.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    6.        
    Failure to Pay the
Contingent Cash Purchase Price.  If the Buyer fails to pay to
the Seller the Deferred Cash Purchase Price on or prior to the eighteen month
anniversary of the Closing Date, then in addition to any other remedies
available to the Seller at law or in equity, the Seller shall have the right to
require the Buyer to re-convey the Acquired Assets to the Seller to the Seller
without the refund or return by the Seller of any portion of the Purchase
Price.  Upon exercise of the foregoing right by the Seller, the Buyer
shall execute and deliver to the Seller such instruments of conveyance and
assignment and other documents, and shall take all other actions, as the Seller
and its counsel may deem reasonably necessary to vest in Seller the right, title
and interest in and to the Acquired Assets.  The Buyer and the Seller
agree that the Seller would be damaged irreparably in the event that the
provisions of this Section are not performed by the Buyer in accordance with its
specific terms.  Accordingly, the Buyer and the Seller agree that,
without posting bond or other undertaking, the Seller will be entitled to an
injunction or injunctions to prevent breaches or violations of the provisions of
this Section and to enforce specifically the terms of this Section in any action
instituted in any court of the United States or any state hereof having
jurisdiction over the Parties and the matter in addition to any other remedy
which it may be entitled, at law or in equity.  The Buyer further
agrees that, in the event of any action for specific performance in respect of
such breach or violation, it will not assert the defense that a remedy at law
would be adequate.  Notwithstanding the foregoing, the Buyer may
withhold from the Deferred Cash Purchase Price payable to Seller any amounts due
or payable to Buyer under Section 3 (Indemnification).

    

    7.           
 Notices.  Any
notice or communication required or permitted to be delivered to any party under
this Agreement shall be in writing and shall be deemed properly delivered, given
and received when delivered (by hand, by registered mail, by courier or express
delivery service or by fax) to the address or fax number set forth beneath the
name of such party below (or to such other address or fax number as such party
shall have specified in a written notice given to the other parties
hereto):

    

    
      	
               
      

            	
              If
      to the Seller:              Arbios
      Systems, Inc.

            

    

    200 E.
Del Mar Blvd., Suite 320

    Pasadena,
CA91105

    Attn:  Shawn
Cain, Interim President & CEO

    Fax:  (626)
356-3107

    

    

    
      	
               
      

            	
              With
      a copy to:            TroyGould
      PC

            

    

    1801
Century Park East, 16th
Floor

    Los
Angeles, CA  90067

    Attn:  Istvan
Benko

    Fax:  (310)
201-4746

    

    

    
      	
               
      

            	
              If
      to Buyer to:               HepaLife
      Technologies, Inc.

            

    

    60 State
Street, Suite 700

    Boston,
MA 02109

    Attn:  Frank
Menzler, President, CEO & Chairman

    Fax:  617-371-2950

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              With
      a copy
      to:                    Muto
      Advisors P.C.

            

    

    125 Main
Street

    Charlestown,
MA 02129

    Attn:  Jennifer
Muto

    Fax:  (801)
672-6868

    

    8.           Termination, Survival of
Representations, Warranties and Covenants;
Etc.    All representations, warranties, covenants,
agreements and indemnities contained in this Agreement shall survive for a
period of twelve (12) months following the date of the Closing.  In no
event shall the liability of the Seller for breaches of representations,
warranties and covenants hereunder exceed an aggregate amount equal to the cash
portion of the Purchase Price actually received by the Seller.  Any
claim for any breach or violation of any representation, warranty or covenant
herein or otherwise relating hereto (other than any claim under Section 5 or any
claim regarding the payment of the Deferred Cash Purchase Price) must be made,
if at all, on or prior to the date which is twelve (12) months after the Closing
Date or it shall be thereafter barred.

    

    9.           Miscellaneous.

    

    9.1.           Governing Law;
Jurisdiction.  This Agreement was executed in, and the
transactions contemplated by and the provisions of this Agreement shall be
governed by and construed in accordance with the laws of The Commonwealth of
Massachusetts without giving effect to the conflict of laws provisions thereof;
and both parties consent to the jurisdiction of the state and federal courts
sitting in Massachusetts.

    

    9.2.           Expenses.  Each
party to this Agreement shall be responsible for its own expenses incurred in
connection with this Agreement and the transactions contemplated hereby and
Buyer shall be responsible for (a) all filing and recordation fees relating to
the transfer of the Acquired Assets hereunder; and (b) all fees, costs and
expenses relating to the shipment, transfer or delivery of all tangible assets
included in the Acquired Assets from their respective locations on the Closing
Date to such location or locations as Buyer may determine.

    

    9.3.           Publicity; SEC
Filings.  Each Party may issue a press release announcing the
execution of this Agreement and the proposed transaction.  Each party
shall provide a draft of such press release to the other Party no less than 24
hours before the issuance of such press release.  If required by the
rules and regulations of the SEC, either Party hereto may publicly disclose the
existence of this Agreement and the terms hereof in a current report or a
periodic report filed with the SEC, provided that the filing party shall provide
the other party with a draft copy of the report no less than 24 hours before the
anticipated filing date.  In the event that a Party intends to issue a
press release or files a report with the SEC regarding this Agreement and the
transactions contemplated hereby, the filing party shall duly consider the
comments of the other party.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    9.4.           Entire Agreement; Third
Party Beneficiaries; Assignment; Etc.  This Agreement,
including all exhibits and schedules attached hereto, constitutes and contains
the entire agreement of the Parties and supersedes any and all prior
negotiations, correspondence, understandings and agreements between the Parties
respecting the subject matter hereof.  This Agreement is not intended
to confer upon any person other than the Parties to this Agreement any rights or
remedies.  The Buyer may not assign its rights or obligations under
this Agreement without the prior written consent of the Seller (not to be
unreasonably withheld), and the Seller may not assign its rights or obligations
under this Agreement without the prior consent of the Buyer (not to be
unreasonably withheld); provided, however, that the Seller may assign,
distribute or otherwise transfer its rights relating to the Note and the
Deferred Cash Purchase Price without the consent of the Buyer; and provided,
further that any person or entity that acquires the Buyer or all or
substantially all of the Acquired Assets after the Closing Date must agree in
writing to assume the obligation to pay the Deferred Cash Purchase Price as if
such person or entity were substituted for the Buyer therein (but no such
assignment and assumption shall relieve the Buyer of such obligation without the
Seller’s written consent).  In addition, the Buyer shall be permitted
to assign and transfer the Acquired Assets to a wholly-owned subsidiary of the
Buyer, provided, however, that such assignee shall agree with the Seller, in
writing, to assume the obligations of the Buyer hereunder on a joint and several
basis and the Buyer shall not thereby be relieved of its obligations
hereunder.

    

    9.5.           No Liability of Officers and
Directors.  The parties hereto acknowledge that the individuals
executing this Agreement on behalf of the Seller and the Buyer do so on behalf
of such entities and not in their individual capacities.  As such no
officer, director, employee or agent of the Seller or the Buyer shall have any
liability hereunder.

    

    9.6.           Counterparts.  This
Agreement may be executed in two or more counterparts and shall be effective
when each party has executed at least one of the counterparts even though all
Parties have not executed the same counterpart. The Parties may execute this
Agreement and all other agreements, certificates, instruments and other
documents contemplated by this Agreement and exchange on the Closing Date
counterparts of such documents by means of facsimile transmission and the
Parties agree that the receipt of such executed counterparts shall be binding on
such Parties and shall be construed as originals.  After the Closing
the Parties shall promptly exchange original versions of this Agreement and all
other agreements, certificates, instruments and other documents contemplated by
this Agreement that were executed and exchanged by facsimile transmission
pursuant to this Section.

    

    9.7.           Other Prospective
Purchasers.  Buyer shall not incur any liability in connection
with the transactions contemplated by this Agreement to any other person with
whom Seller, or its agents or representatives, have had negotiations or
discussions regarding any potential merger, sale or exchange of capital stock or
other business combination involving the Seller or any proposal or offer to
acquire in any manner a substantial equity interest in the Seller or all or a
substantial portion of the assets of the Seller.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    9.8.           Further
Actions.  From time to time, as and when requested by any party
hereto, each other Party shall execute and deliver, or cause to be executed and
delivered, such documents and instruments and shall take, or cause to be taken,
such further or other actions as the requesting party may reasonably deem
necessary or desirable to carry out the intent and purposes of this Agreement,
to transfer, assign and deliver the Acquired Assets to the Buyer effective as of
the Closing Date (or to evidence the foregoing) and to consummate and give
effect to the other transactions, covenants and agreements contemplated hereby.
The Seller acknowledges and agrees that from and after the Closing Date, Buyer
shall be entitled to possession of all documents, books, records, agreements and
financial data of any sort relating to the Acquired Assets.  Without
limiting the generality of the foregoing, the Seller and the Buyer shall
cooperate fully with each other after the Closing Date so that each party has
access to the business records, contracts and other information existing as of
the Closing Date and relating in any manner to the Acquired
Assets.  No files, books or records existing as of the Closing Date
and relating in any manner to the Acquired Assets shall be destroyed by any
party for a period of 3 years after the Closing Date without giving the other
party at least 30 days’ prior written notice, during which time such other party
shall have the right to examine and to remove any such files, books and records
prior to their destruction. The access to files, books and records contemplated
herein shall be during normal business hours and upon not less than 2 days’
prior written request, shall be subject to such reasonable limitations as the
party having custody or control thereof may impose to preserve the
confidentiality of information contained therein and shall not extend to
material subject to a claim of privilege unless expressly waived by the party
entitled to claim the same.

    

    9.9.           Attorneys
Fees.  If either party shall commence an action or proceeding
to enforce any provisions of this Agreement, then the prevailing party in such
action or proceeding shall be reimbursed by the other party for its reasonable
attorneys’ fees and other costs and expenses incurred in the investigation,
preparation and prosecution of such action or proceeding.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, this Agreement has been executed under seal as of the date
first written above.

    

    

    
      	
              SELLER:

            	
              ARBIOS
      SYSTEMS, INC.

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/
      Shawn Cain

            
	 
      	 
      	
              Name:  Shawn
      Cain

            
	 
      	 
      	
              Title:
      Interim President and Interim Chief Executive Officer

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              BUYER:

            	
              HEPALIFE
      TECHNOLOGIES, INC.

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/
      Frank Menzler

            
	 
      	 
      	
              Name:
      Frank Menzler

            
	 
      	 
      	
              Title:
      President, Chief Executive Officer and
Chairman

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
1.5(a)

    

    BILL
OF SALE

    

    KNOW ALL
MEN BY THESE PRESENTS that Arbios Systems, Inc., a Delaware corporation (the
“Seller”), for good and sufficient consideration paid by HepaLife Technologies,
Inc, a Florida corporation (“Buyer”), receipt of which consideration is hereby
acknowledged, does sell, assign and convey unto Buyer and its successors and
assigns all of Seller’s right, title and interest in the Acquired Assets (as
defined in the Asset Purchase Agreement referred to below) (the
“Assets”).

    

    Except as
expressly set forth in Section 2.1 of that certain Asset Purchase Agreement
dated as of October 3, 2008 among the Seller and the Buyer, the Acquired Assets
are being sold “as is and where is” and the Seller makes no, and hereby
disclaims any, representation or warranty to the Buyer with respect to the
Acquired Assets or the transactions contemplated hereby, including without
limitation any warranty of merchantability or fitness for a particular
purpose.

    

    

    

    [The
remainder of this page intentionally left blank]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the
parties hereto have executed this document as a sealed instrument by their duly
authorized officers on the date set forth below.

    

    
      	 
      	
              Dated:
      _______, 2008

            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
              SELLER:

            	
              ARBIOS
      SYSTEMS, INC.

            
	 
      	 
      	 
      	 
      
	 	 	 	 
	 
      	
              By:

            	 
      	 
      
	 
      	 
      	
              Name:
      Shawn Cain

            	 
      
	 
      	 
      	
              Title:
      Interim President and Interim Chief Executive Officer

            	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
              BUYER:

            	
              HEPALIFE
      TECHNOLOGIES, INC.

            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
              By:

            	 
      	 
      
	 
      	 
      	
              Name:
      Frank Menzler

            	 
      
	 
      	 
      	
              Title:
      President, Chief Executive Officer and Chairman

            	 
      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
1.5(b)

    

    ASSIGNMENT
AND ASSUMPTION AGREEMENT

    

    ASSIGNMENT
AND ASSUMPTION AGREEMENT, dated as of            October
3, 2008 (the “Assignment
Agreement”), by and between Arbios Systems, Inc., a Delaware corporation
(the “Seller”), to and in favor of HepaLife Technologies, Inc., a Florida
corporation (“Buyer”).

    

    WHEREAS,
Seller and Buyer are parties to a certain Asset Purchase Agreement dated as of
October 3, 2008 (as amended, supplemented or otherwise modified from time to
time, the “Asset
Purchase Agreement”) (capitalized terms which are used but not defined in
this Assignment Agreement shall have the meaning ascribed to such terms in the
Asset Purchase Agreement);

    

    WHEREAS,
pursuant to the Asset Purchase Agreement, the Seller has agreed to assign to
Buyer the Assumed Contracts and the Buyer has agreed to assume the Assumed
Liabilities;

    

    WHEREAS,
it is the intention of the parties that the Seller will assign to the Buyer and
the Buyer will assume the Assumed Contracts and the Assumed Liabilities by the
execution and delivery of this Assignment Agreement.

    

    NOW,
THEREFORE, in consideration of the foregoing premises and for other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the Seller and Buyer hereby agree as follows:

    

    1.         
   The Seller hereby assigns, sells, conveys, transfers and sets
over to the Buyer, its successors and assigns, free and clear of all liens and
encumbrances, all of the right, title and interest of the Seller in, to and
under the Assumed Contracts.

    

    2.         
   The Seller hereby assigns to the Buyer and the Buyer hereby
assumes and agrees to pay and discharge when due, the Assumed Liabilities, and
the Buyer agrees to be bound by all the terms and conditions contained in the
Assumed Contracts.

    

    3.          
  The Seller hereby constitutes and appoints the Buyer, its successors
and assigns, as the true and lawful agent and attorney-in-fact of the Seller to
demand and receive any and all of the Assumed Contracts which are not in the
possession or under the exclusive control of the Seller, and to give receipts
and releases for and in respect of the same, and any part thereof, and from time
to time to institute and prosecute in the name of the Seller or in the name of
the Buyer, its successors or assigns, as the legal attorney-in-fact of the
Seller thereunto duly authorized, for the benefit of the Buyer, its successors
and assigns, any and all proceedings at law, in equity or otherwise, which the
Buyer, its successors and assigns, may deem proper for the collection and
enforcement of any claim or right of any kind hereby granted, sold, conveyed,
transferred or assigned, or intended so to be, and to do all acts and things in
relation to the Assumed Contracts which the Buyer, its successors and assigns,
shall deem desirable, the Seller hereby declaring that the foregoing powers are
coupled with an interest and are irrevocable by the Seller.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    4.        
    Nothing in this Assignment Agreement, express or
implied, is intended or shall be construed to confer upon or give to any person,
firm or corporation other than the Buyer, its successors and assigns, any remedy
or claim under or by reason of this instrument or any term, covenant or
condition hereof, and all of the terms, covenants, conditions, promises and
agreements in this Assignment Agreement shall be for the sole and exclusive
benefit of the Buyer and its successors and assigns.

    

    5.        
    Neither the making nor the acceptance of this Assignment
Agreement shall enlarge, restrict or otherwise modify the terms of the Asset
Purchase Agreement or constitute a waiver or release by the Seller or the Buyer
of any liabilities, duties or obligations imposed upon either of them by the
terms of the Asset Purchase Agreement.

    

    6.        
    In the event that any provision of this Assignment
Agreement may be construed to conflict with a provision of the Asset Purchase
Agreement, the provision in the Asset Purchase Agreement shall be deemed
controlling.

    

    7.        
    This Assignment Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective successors,
transferees and assigns.

    

    8.        
    This Assignment Agreement was executed in, and the
transactions contemplated by and the provisions of this Agreement shall be
governed by and construed in accordance with the laws of The Commonwealth of
Massachusetts without giving effect to the conflict of laws provisions thereof;
and both parties consent to the jurisdiction of the state and federal courts
sitting in Massachusetts.

    

    9.        
    This Assignment Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.

    

    

    

    [The
remainder of this page intentionally left blank]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the
undersigned have caused this Assignment Agreement to be signed by their
respective duly authorized officers as of the date first above
written.

    

    

    
      	 
      	
              ARBIOS
      SYSTEMS, INC.

            	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	By:	
               

            	 
      
	 
      	
              Name:
      Shawn Cain

            	 
      
	 
      	
              Title:
      Interim President and Interim Chief Executive Officer

            	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              HEPALIFE
      TECHNOLOGIES, INC.

            	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	By:	
               

            	 
      
	 
      	
              Name:
      Frank Menzler

            	 
      
	 
      	
              Title:
      President, Chief Executive Officer and Chairman

            	 
      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
1.5(c)

    

    ASSIGNMENT
OF PATENTS

    

    WHEREAS, Arbios Systems, Inc.,
a Delaware corporation having a place of business at 1050 Winter Street, #1000
Waltham, MA 02451 (“Assignor”), owns all right, title, and interest in and to
the patents and patent applications described in Schedule 1.1(a) attached hereto
(the “Patents”); and

    

    WHEREAS, HepaLife
Technologies, Inc., a Florida corporation, having its principal place of
business at 60 State Street, Suite 700 Boston, MA 02109 (“Assignee”), is
desirous of acquiring all right, title, and interest in and to the
Patents;

    

    NOW, THEREFORE, for $1.00 and
other good and valuable consideration as set forth in the Asset Purchase
Agreement dated October 3, 2008 (the “Purchase Agreement”), the receipt and
sufficiency of which Assignor hereby acknowledges, Assignor does hereby sell,
transfer, convey, and assign to Assignee the Seller’s entire right, title and
interest in and to the Patents, including any an all patents, which may be
granted therefor anywhere in the World, including any and all continuations,
divisions, reissues, renewals and extensions derived therefrom, including rights
under the Paris Convention. Assignor also assigns the right to sue for past and
future infringement of any of the foregoing, and to collect and retain all
damages and profits and enjoy all other remedies granted for
infringements.

    

    Assignor
hereby authorizes and requests the Commissioner of Patents and Trademarks to
issue any United Status Patent on the Patents to assignee to the full end of the
term for which the Patent may be granted, as fully and entirely as the same
would have been held by Assignor had this assignment and sale not been
made.

    

    Agreed to
by the parties on the dates set forth on the following page.

    

    

    

    [REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ARBIOS
SYSTEMS, INC.

     

    ____________________________________

    By:    Shawn Cain

    Its:    Interim President and
Interim Chief Executive Officer

    Date:

     

     

    Commonwealth
of
Massachusetts           )

    

    County of
__________           )

    

    

    On
_______________, 2008 before me, _______________, Notary Public, personally
appeared _________________________, who proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies) and that by his/her/their signature(s) on
the instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.

    

    I certify
under PENALTY OF PERJURY under the laws of the Commonwealth of Massachusetts
that the foregoing paragraph is true and correct.

    

    WITNESS
my hand and official seal.

    

    

    

    
      	 
      	
              ___________________________

            
	 
      	
                         Signature

            

    

    

    

    

    (SEAL)

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    HEPALIFE
TECHNOLOGIES, INC.

    

    ____________________________________

    By: Frank
Menzler

    Its:
President, Chief Executive Officer and Chairman

    Date:

    Commonwealth
of
Massachusetts                      )

    

    County of
__________           )

    

    On
_______________, 2008 before me, _______________, Notary Public, personally
appeared _________________________, who proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies) and that by his/her/their signature(s) on
the instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.

    

    I certify
under PENALTY OF PERJURY under the laws of the Commonwealth of Massachusetts
that the foregoing paragraph is true and correct.

    

    WITNESS
my hand and official seal.

    

    

    

    
      	 
      	
              ___________________________

            
	 
      	
                         Signature

            

    

    

    

    

    (SEAL)

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
1.5(d)

    

    ASSIGNMENT
OF TRADEMARKS

    

    WHEREAS, Arbios Systems, Inc.,
a Delaware corporation having a place of business at 1050 Winter Street, #1000
Waltham, MA 02451 (“Assignor”), owns all right, title, and interest in and to
the trademarks and trademark applications described in Schedule 1.1(a) attached
hereto (the “Trademarks”); and

    

    WHEREAS, HepaLife
Technologies, Inc., a Florida corporation, having its principal place of
business at 60 State Street, Suite 700 Boston, MA 02109 (“Assignee”), is
desirous of acquiring all right, title, and interest in and to the
Trademarks;

    

    NOW, THEREFORE, for $1.00 and
other good and valuable consideration as set forth in the Asset Purchase
Agreement dated October 3, 2008 (the “Purchase Agreement”), the receipt and
sufficiency of which Assignor hereby acknowledges, Assignor does hereby sell,
transfer, convey, and assign to Assignee the Seller’s entire right, title and
interest in and to the Trademarks, together with the goodwill of the business in
connection with which the Trademarks have been used or are intended to be used.
Assignor also assigns the right to sue for past and future infringement of any
of the foregoing, and to collect and retain all damages and profits and enjoy
all other remedies granted for infringements.

    

    In order
to record this Assignment with the United States Patent and Trademark Office
(the “PTO”) in connection with the assignment of the Trademarks, the parties
hereto shall execute this Assignment and the Assignee shall execute and file
with the PTO the Recordation Cover Sheet required by the PTO, together with any
schedules and exhibits thereto, in order to record the assignment effected
hereby.

    

    Agreed to
by the parties on the dates set forth on the following page.

    

    

    

    [REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ARBIOS
SYSTEMS, INC.

    

    ____________________________________

    By:           Shawn
Cain

    Its:           Interim
President and Interim Chief Executive Officer

    Date:

    

    

    Commonwealth
of
Massachusetts           )

    

    County of
__________           )

    

    On
_______________, 2008 before me, _______________, Notary Public, personally
appeared _________________________, who proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies) and that by his/her/their signature(s) on
the instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.

    

    I certify
under PENALTY OF PERJURY under the laws of the Commonwealth of Massachusetts
that the foregoing paragraph is true and correct.

    

    WITNESS
my hand and official seal.

    

    

    

    
      	 
      	
              ___________________________

            
	 
      	
                         Signature

            

    

    

    

    

    (SEAL)

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    HEPALIFE
TECHNOLOGIES, INC.

    

    ____________________________________

    By: Frank
Menzler

    Its:
President, Chief Executive Officer and Chairman

    Date:

    Commonwealth
of
Massachusetts                      )

    

    County of
__________           )

    

    On
_______________, 2008 before me, _______________, Notary Public, personally
appeared _________________________, who proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies) and that by his/her/their signature(s) on
the instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.

    

    I certify
under PENALTY OF PERJURY under the laws of the Commonwealth of Massachusetts
that the foregoing paragraph is true and correct.

    

    WITNESS
my hand and official seal.

    

    

    

    
      	 
      	
              ___________________________

            
	 
      	
                         Signature

            

    

    

    

    

    (SEAL)

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
1.2

    

    FORM
OF WARRANT

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