Filed
Pursuant to Rule 424(b)(3)
File
No.
333-122655
PROSPECTUS
SUPPLEMENT NO. 1
(To
Prospectus Dated September 2, 2005)
ARBIOS
SYSTEMS, INC.
Common
Stock
This
Prospectus Supplement No. 1 amends and supplements our prospectus dated
September 2, 2005 (the “Prospectus”) and should be read in conjunction with, and
must be delivered with the Prospectus.
Management
Changes.
Effective
November 7, 2005, Walter C. Ogier became our new President and Chief Executive
Officer. In addition, on November 8, 2005, Mr. Ogier was appointed as a member
of our Board of Directors.
Prior
to
joining us, Mr. Ogier was for four years the President and Chief Executive
Officer of GENETIX Pharmaceuticals, Inc., a private genomics and gene therapy
company. From 1997 to 2001, Mr. Ogier was President and Chief Executive Officer
of Eligix, Inc., a Harvard University-affiliated, venture backed company,
engaged in monoclonal antibody-based therapies for stem cell transplantation
and
immune therapy. From
1994
to 1997, Mr. Ogier was with Aastrom Biosciences, Inc., a publicly traded
company
developing patient-specific products utilizing proprietary adult stem cell
technology. While at Aastrom, Mr. Ogier first served as Director of Marketing
before being promoted to Vice President of Marketing. Prior to that, from
1987
to 1994, Mr. Ogier held various positions with Baxter Healthcare Corporation
and
its Fenwal Division, and subsequently served as Director, Business Development
in the Immunotherapy Division. Mr. Ogier earned a Bachelor of Arts degree
in
Chemistry from Williams College in 1979, and received his Masters in Business
Administration from Yale School of Management in 1987.
Under
the
terms of an employment letter we entered into with Mr. Ogier, his annual
salary
is $300,000. Mr. Ogier will be eligible to earn an annual performance bonus
of
up to 50% of his annual salary based on meeting certain performance goals
mutually established by him and the Board of Directors. We have agreed to
pay
Mr. Ogier a bonus of $50,000 on January 31, 2006, which amount will be credited
against the annual bonus that may be payable to Mr. Ogier at the end of his
first year of employment. The agreement is terminable by either Mr. Ogier
or by
us at any time for any reason. However, if we terminate Mr. Ogier’s employment
without Cause (as defined in the employment letter), or if Mr. Ogier elects
to
terminate his employment for Good Reason (as defined in the employment letter),
Mr. Ogier will be entitled to twelve months of salary continuance, including
health benefits.
________________________________________________________
The
date of this Prospectus Supplement is December 21,
2005.
In
connection with his employment, we agreed to issue to Mr. Ogier a stock option
to purchase 500,000 shares of the our common stock at an exercise price equal
to
the closing price of the common stock on the day prior the date he commenced
employment. This option will vest as follows: 250,000 shares on the one year
anniversary of the date Mr. Ogier’s employment commences, and 250,000 shares
will vest ratably at the end of each of the twelve months of the second year
of
employment. The vesting period of the foregoing options will accelerate under
certain circumstances, including upon the occurrence of certain corporate
transactions, including a merger of this corporation or a sale of all or
substantially all of its asset, or if Mr. Ogier terminates his employment
for
Good Reason.
Effective
March 31, 2005, we had entered into an employment agreement with Amy Factor
pursuant to which Ms. Factor was appointed as our interim Chief Executive
Officer. Under the agreement, Ms. Factor agreed to serve as our Chief Executive
Officer until a permanent Chief Executive Officer was hired. Since Mr. Ogier
became the new Chief Executive Officer on November 7, 2005, Ms. Factor resigned
employment as our Chief Executive Officer on November 8, 2005. Ms. Factor,
however, continues to be a member of the Board of Directors.