AKSYS LTD
EX-10.3
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<TYPE>EX-10.3
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<FILENAME>a04-2795_3ex10d3.htm
<DESCRIPTION>EX-10.3
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<p align="right" style="margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Exhibit
10.3</font></b></p>

<p align="right" style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">AKSYS, LTD.</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">NOTE PURCHASE AGREEMENT</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">This NOTE PURCHASE AGREEMENT
(the &#147;<u>Agreement</u>&#148;) is effective as of February&nbsp;23, 2004, by and
among <b><font style="font-weight:bold;">AKSYS,
LTD.</font></b>, a Delaware corporation (the &#147;<u>Company</u>&#148;), <b><font style="font-weight:bold;">DURUS LIFE
SCIENCES MASTER FUND LTD.</font></b>, a Cayman Islands Exempted Company (&#147;<u>Durus</u>&#148;),
and </font><b><font style="font-weight:bold;">ARTAL LONG BIOTECH PORTFOLIO LLC</font></b>,
a Delaware limited liability company (&#147;<u>Artal</u>&#148; and, together with Durus,</font> each a &#147;<u>Purchaser</u>&#148; and, collectively,
the &#147;<u>Purchasers</u>&#148;).</p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">WHEREAS, the Company and the
Purchasers, among others, have entered into that certain Settlement Agreement
and Mutual Release, dated as of the date hereof (the &#147;<u>Settlement Agreement</u>&#148;);
and</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">WHEREAS, as part of the
Settlement Agreement, the Company has agreed to issue to the Purchasers certain
unsecured subordinated promissory notes in the Company in consideration for
cash payments to the Company, pursuant to the terms and conditions hereof.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">NOW, THEREFORE, the parties
hereby agree as follows:</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:0in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">1.</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>The
Notes</b>.</p>

<p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">1.1</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>The
Notes</b>.&#160; The Purchasers agree to
purchase from the Company at the Closing in the aggregate principal amount of
Sixteen Million One Hundred Thousand Dollars ($16,100,000.00) (the &#147;<u>Principal
Amount</u>&#148;) unsecured subordinated promissory notes, in the form of <u>Exhibit
A</u> attached hereto and made a part hereof (each a &#147;<u>Note</u>&#148; and,
collectively, the &#147;<u>Notes</u>&#148;), to be governed by the terms and conditions
of, and repaid in accordance with, this Agreement and the Notes.&#160; The Notes shall be issued in increments of
One Thousand Dollars ($1,000.00) of Principal Amount.</p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">1.2</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Closing</b>.&#160; The purchase and sale of the Notes (the &#147;<u>Closing</u>&#148;)
will take place at the principal offices of Schulte Roth &amp; Zabel LLP, 919
Third Avenue, New York, New York 10022 concurrently with the date and time that
the Purchasers pay to the Company the aggregate sum of Eighteen Million Dollars
($18,000,000.00) pursuant to the Settlement Agreement, or at such date and time
as the parties shall otherwise mutually agree.&#160;
At the Closing, the Company shall deliver to each Purchaser one duly
executed Note, representing such Purchaser&#146;s portion of the Principal Amount
(each, a &#147;<u>Purchase Amount</u>&#148;), in the following denominations:</p>

<p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="50%" style="border-collapse:collapse;margin-left:.25in;width:50.0%;">
 <tr>
  <td width="47%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in .7pt 0in .7pt;width:47.9%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Name of
  Purchaser</font></b></p>
  </td>
  <td width="4%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:4.84%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="44%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in .7pt 0in .7pt;width:44.42%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-indent:0in;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Purchase Amount of Notes</font></b></p>
  </td>
  <td width="2%" valign="top" style="padding:0in .7pt 0in .7pt;width:2.84%;">
  <p align="center" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:center;text-indent:0in;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="47%" valign="top" style="border:none;padding:0in .7pt 0in .7pt;width:47.9%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="4%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:4.84%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="44%" colspan="2" valign="top" style="border:none;padding:0in .7pt 0in .7pt;width:44.42%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="2%" valign="top" style="padding:0in .7pt 0in .7pt;width:2.84%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="47%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in .7pt 0in .7pt;width:47.9%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Durus</font></p>
  </td>
  <td width="4%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in .7pt 0in .7pt;width:4.84%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in .7pt 0in .7pt;width:2.58%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="41%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in .7pt 0in .7pt;width:41.84%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">15,778,000.00</font></p>
  </td>
  <td width="2%" valign="top" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in .7pt 0in .7pt;width:2.84%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-indent:0in;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="47%" valign="top" style="padding:0in .7pt 0in .7pt;width:47.9%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Artal</font></p>
  </td>
  <td width="4%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:4.84%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:2.58%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="41%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:41.84%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">322,000.00</font></p>
  </td>
  <td width="2%" valign="top" style="padding:0in .7pt 0in .7pt;width:2.84%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-indent:0in;">&nbsp;</p>
  </td>
 </tr>
</table>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Each Purchaser may request in advance from the Company that its
Purchase Amount be</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">represented by more than one Note, in which case the Company shall
issue such number of Notes as requested by such Purchaser.&#160; At the Closing, each Purchaser shall deliver
its Purchase Amount to the Company by wire transfer.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:0in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">2.</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Representations
and Warranties of the Company</b>.&#160; The
Company hereby makes the following representations and warranties to the
Purchasers as of the date of this Agreement:</p>

<p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">2.1</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Organization,
Good Standing and Power</b>. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted.&#160; The Company is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, other than those in which the failure to so qualify or
be in good standing would not have a Material Adverse Effect (as defined
below).&#160; For purposes of this Agreement,
the term &#147;<u>Material Adverse Effect</u>&#148; shall mean a material adverse effect
upon the business, financial condition, properties or results of operations of
the Company and its subsidiaries, taken as a whole, or on the ability of the
Company to perform its obligations hereunder.</p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">2.2</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Capitalization</b>.
The authorized capital stock of the Company consists of a total of fifty
million (50,000,000) shares of common stock, par value $0.01 per share (&#147;<u>Common
Stock</u>&#148;), of which 29,806,475 shares of Common Stock were issued and
outstanding as of February 10, 2004, and a total of one million (1,000,000)
shares of preferred stock of the Company, $0.01 par value per share (&#147;<u>Preferred
Stock</u>&#148;), none of which Preferred Stock is issued or outstanding as of the
date hereof.&#160; All of the outstanding
shares of Common Stock have been duly and validly authorized and issued, and
are fully paid and non-assessable.&#160; The Company&#146;s
filings with the Securities and Exchange Commission (the &#147;<u>Commission</u>&#148;)
include true and correct copies of the Company&#146;s Restated Certificate of
Incorporation, as amended and in effect on the date hereof, and the Company&#146;s
Bylaws, as amended and in effect on the date hereof.</p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">2.3</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Commission
Documents, Financial Statements</b>. The Company&#146;s Common Stock is registered
pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as
amended (the &#147;<u>Exchange Act</u>&#148;), and the Company has timely filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the Commission pursuant to the reporting requirements of the
Exchange Act, including material filed pursuant to Section 13(a) or 15(d) of
the Exchange Act (all of the foregoing, including filings incorporated by
reference therein, being referred to herein as the &#147;<u>Commission Documents</u>&#148;).&#160; The Company has maintained all requirements
for the continued listing or quotation of its Common Stock, and such Common
Stock is currently listed or quoted on the Nasdaq National Market.&#160; As of its date, the Company&#146;s Form 10-K for
the year ended December 31, 2002 complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the Commission
promulgated thereunder applicable to such document, and, as of its date, after
giving effect to the information disclosed and incorporated by reference
therein, such Form 10-K did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.&#160; As of
their respective dates, the financial statements of the Company included in the
Commission Documents filed with the Commission since December 31, 2002</p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2</font></p>


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<p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">complied as to form and
substance in all material respects with applicable accounting requirements and
the published rules and regulations of the Commission or other applicable rules
and regulations with respect thereto.&#160;
Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto or (ii) in the case of unaudited
interim statements, to the extent they may not include footnotes or may be
condensed or summary statements).</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">2.4</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Exemption
from Registration; Valid Issuances</b>. The issuance and sale of the Notes, in
accordance with the terms and on the basis of the representations and
warranties set forth in this Agreement, may and shall be properly issued
pursuant to an exemption from the registration requirements under the
Securities Act of 1933, as amended (the &#147;<u>Securities Act</u>&#148;), and
applicable state securities laws.&#160;
Neither the sale of the Notes pursuant to, nor the Company&#146;s performance
of its obligations under or exercise of its rights pursuant to, the this
Agreement and the Notes (collectively, the &#147;<u>Purchase Agreements</u>&#148;) shall
(i) result in the creation or imposition of any liens, charges, claims or other
encumbrances upon the Notes or any of the assets of the Company, or (ii)
entitle the holders of any outstanding shares of capital stock of the Company
to preemptive or other rights to subscribe to or acquire the shares of Common
Stock or other securities of the Company.</p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:0in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">3.</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Representations
and Warranties of the Purchasers</b>.&#160;
Each of the Purchasers, severally but not jointly, hereby represents and
warrants to the Company as of the date of this Agreement, except that, with
regard to Section&nbsp;3.1 below, only Durus represents and warrants to such
information, as follows:</p>

<p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">3.1</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Ownership</b>.&#160; Durus, with and through its affiliates and
associates, first became an owner of fifteen percent (15%) or more of the
Company&#146;s outstanding voting stock on or prior to August 30, 2002.</p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">3.2</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Purchase
Entirely for Own Account</b>.&#160; The
Note(s) are being acquired by the Purchaser for investment for its own account,
and not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and the Purchaser has no present intention of
selling, granting any participation in, or otherwise distributing the
same.&#160; The Purchaser does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participation in the Note(s) to such person or to any third
person.&#160; The Purchaser has not been
organized for the purpose of acquiring the Note(s).</p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">3.3</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Investment
Risk</b>.&#160; The Purchaser understands
that any loan to the Company or investment in the Note(s) involves substantial
risks.</p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">3.4</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Accredited
Investor. </b>&#160;The Purchaser is an
&#147;accredited investor&#148; within the meaning of Rule&nbsp;501(a) of
Regulation&nbsp;D promulgated under the Securities Act, as presently in effect.</p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">3.5</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Restricted
Securities</b>.&#160; The Purchaser
understands that the Note(s) issued to the Purchaser have not been registered
under the Securities Act or state securities laws and have been issued by
reason of a specific exemption from the registration provisions of the
Securities</p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3</font></p>


<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

<p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Act and applicable state
securities laws that depends upon, among other matters, the bona fide nature of
the investment intent and the accuracy of the Purchaser&#146;s representations as
expressed in this Agreement.&#160; The
Purchaser further understands that, except to the extent otherwise agreed in
the Settlement Agreement and other Transaction Agreements (as such term is
defined in the Settlement Agreement), the Company shall have no obligation to
register the Note(s) under the Securities Act or any state securities laws or
to take any action that would make available any exemption from the registration
requirements of such laws.&#160; The
Purchaser hereby acknowledges that, because of the restrictions on transfer or
assignment, under securities laws, of the Note(s), the Purchaser may have to
bear the economic risk of the investment commitment in the Note(s) for an
indefinite period of time.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">3.6</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Legends.&#160; </b>It is understood that the certificate or
certificates evidencing the Note(s) or any substitute therefor or interest
therein may bear the following legend or its substantial equivalent:<br><br></p>

<p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#147;THIS SECURITY HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.&#160; IT MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT
WITH RESPECT TO THE SECURITY UNDER SUCH ACT OR EXEMPTION THEREFROM OR UNLESS SOLD
PURSUANT TO RULE 144 PROMULGATED UNDER SUCH ACT.&#148;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:0in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">4.</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Miscellaneous</b>.</p>

<p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">4.1</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Governing
Law</b>.&#160; The Purchase Agreements shall
be governed by and construed in accordance with the laws of the State of New
York, without regard to conflict of laws principles.</p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">4.2</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Survival</b>.&#160; The representations, warranties, covenants
and agreements made herein shall survive the Closing of the transactions
contemplated hereby.</p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">4.3</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Successors
and Assigns</b>.&#160; Except as otherwise
expressly provided herein and subject to any restrictions on transfer under
applicable securities laws, the provisions hereof shall inure to the benefit of
and be binding upon each of the parties; the successors and assigns of the
Company; and the heirs, devisees, executors, administrators, representatives, successors
and assigns of the Purchasers.&#160; Subject
to applicable law, each of the Purchasers may assign, transfer, distribute or
otherwise dispose of (by operation of law or otherwise) its Note(s), in whole
or in part, or its rights or obligations under this Agreement or its Note(s),
or any interests therein, including without limitation through subdivision of
any then-outstanding Note(s), without the written consent of the Company.&#160; The Company shall not assign, transfer,
distribute or otherwise dispose of (by operation of law or otherwise) this
Agreement or its rights or obligations under or in this Agreement without the
prior written consent of each of the Purchasers.&#160; The Company shall not
assign, transfer or otherwise dispose of (by operation of law or otherwise) its
rights or obligations under or in any Note without the prior written consent of
the Purchaser of such Note.&#160; Any
purported assignment, transfer or other disposition by the Company, except as
permitted herein, shall be null and void.</p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4</font></p>


<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">4.4</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Entire
Agreement</b>.&#160; Together with the
Settlement Agreement and the other Transaction Agreements, the Purchase
Agreements constitute the full and entire understanding and agreement between
the parties with regard to the subject matter hereof and thereof.&#160; Together with the Settlement Agreement and
the other Transaction Agreements, the Purchase Agreements supersede all prior
agreements and understandings between the Company and the Purchasers with
respect to the subject matter hereof and thereof.&#160; This Agreement may not be modified or amended nor may any of the
terms thereof be waived except by an instrument in writing executed by the
Company and a majority of the principal amount of the Notes then
outstanding.&#160; A Note may be modified or
amended and the terms thereof may be waived, in each case, only by an
instrument in writing executed by the Company and the Purchaser of such Note.</p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">4.5</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Notices,
etc</b>.&#160;
All demands, notices, communications and reports provided for in
this Agreement shall be in writing and shall be either sent by facsimile with
confirmation to the number specified below or personally delivered or sent by
reputable overnight courier service (delivery charges prepaid) to any party at
the address specified below.</p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt 1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">If to the Company, to:</font></p>

<p style="margin:0in 0in .0001pt 1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Aksys, Ltd.</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Two Marriott
Drive</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Lincolnshire,
Illinois&#160; 60069</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Attn:</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Chief
Executive Officer</p>

<p style="margin:0in 0in .0001pt 2.0in;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Chief Financial Officer</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Telecopy:&#160; (847) 229-2235</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Telephone:&#160; (847) 229-2020</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt 1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">With a copy to:</font></p>

<p style="margin:0in 0in .0001pt 1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Kirkland &amp; Ellis LLP</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">200 East Randolph Drive</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Chicago, Illinois&#160;
60601</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Attn:&#160; Keith S.
Crow, P.C.</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Telecopy:&#160;
(312) 861-2200</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Telephone:&#160; (312) 861-2000</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt 1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">If to Durus, to:</font></p>

<p style="margin:0in 0in .0001pt 1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Durus Life
Sciences Master Fund Ltd.</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">c/o
International Fund Services (Ireland) Limited</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3rd Floor,
Bishops Square</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Redmonds Hill</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Dublin 2,
Ireland</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Attn:&#160; Susan Byrne</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Telecopy:&#160; (011) 35-31-707-5113</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Telephone:&#160; (011) 35-31-707-5013</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5</font></p>


<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

<p style="margin:0in 0in .0001pt 1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">With a copy to:</font></p>

<p style="margin:0in 0in .0001pt 1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Schulte Roth
&amp; Zabel LLP</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">919 Third
Avenue</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">New York, New
York 10022</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Attn:&#160; Paul N. Roth, Esq.</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Telecopy:
(212) 593-5955</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Telephone:
(212) 756-2000</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt 1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">And an additional copy to:</font></p>

<p style="margin:0in 0in .0001pt 1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Morrison &amp;
Foerster LLP</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">425 Market
Street</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">San Francisco,
California 94105</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Attn:&#160; Gavin Grover, Esq.</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Telecopy:
(415) 268-7522</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Telephone:
(415) 268-7113</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt 1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">If to Artal, to:</font></p>

<p style="margin:0in 0in .0001pt 1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Artal Long
Biotech Portfolio LLC</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">c/o Artal Alternative Treasury Management</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">19A Rue de la Croix-d&#146;or</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Geneva</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Switzerland</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Attn: Christian Tedeschi, Managing Director</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt 1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">With a copy to:</font></p>

<p style="margin:0in 0in .0001pt 1.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Shartsis, Friese &amp; Ginsburg LLP</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">One Maritime Plaza, 18th Floor</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">San Francisco, California 94111</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Attn: Carolyn Gorman, Esq.</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Telecopy: (415) 421-2922</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Telephone: (415) 421-6500</font></p>

<p style="margin:0in 0in .0001pt 2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Any such demand, notice, communication or report shall
be deemed to have been given pursuant to this Agreement when delivered
personally, when confirmed if by facsimile or on the second business day after
deposit with a reputable overnight courier service, as the case may be.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">4.6</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Severability
of this Agreement</b>.&#160; If any provision
of this Agreement or the Notes is determined to be invalid, void or unenforceable,
in whole or in part, this determination will not affect any other provision of
this Agreement or the Notes, and the provision in question shall be modified so
as to be rendered valid and enforceable and the Company and the Purchasers
additionally shall take all such reasonable further actions as are necessary to
give each other the intended benefit of such provision.</p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6</font></p>


<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='6',FILE='C:\jms\smritha\04-2795-3\task80843\2795-3-kk.htm',USER='mkansar',CD='Feb 24 22:51 2004' -->
<br clear="all" style="page-break-before:always;">
</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

<p style="font-size:10.0pt;margin:0in 0in .0001pt;text-indent:.5in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">4.7</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>Counterparts</b>.&#160; This Agreement may be executed in
counterparts, each of which shall be an original, but all of which together
shall be deemed to constitute one instrument.</p>

<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the date and year first written above.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="49%" valign="top" style="padding:0in .7pt 0in .7pt;width:49.12%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="50%" colspan="3" valign="bottom" style="padding:0in .7pt 0in .7pt;width:50.88%;">
  <p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">THE
  COMPANY:</font></b></p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="top" style="padding:0in .7pt 0in .7pt;width:49.12%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="50%" colspan="3" valign="bottom" style="padding:0in .7pt 0in .7pt;width:50.88%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="top" style="padding:0in .7pt 0in .7pt;width:49.12%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="50%" colspan="3" valign="bottom" style="padding:0in .7pt 0in .7pt;width:50.88%;">
  <p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">AKSYS,
  LTD.</font></b></p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="top" style="padding:0in .7pt 0in .7pt;width:49.12%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="4%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:4.78%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="46%" colspan="2" valign="top" style="padding:0in .7pt 0in .7pt;width:46.1%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="top" style="padding:0in .7pt 0in .7pt;width:49.12%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="4%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:4.78%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="46%" colspan="2" valign="top" style="padding:0in .7pt 0in .7pt;width:46.1%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="top" style="padding:0in .7pt 0in .7pt;width:49.12%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="4%" valign="top" style="padding:0in .7pt 0in .7pt;width:4.78%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">By:</font></p>
  </td>
  <td width="28%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in .7pt 0in .7pt;width:28.74%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/
  William C. Dow</font></p>
  </td>
  <td width="17%" valign="top" style="padding:0in .7pt 0in .7pt;width:17.36%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="top" style="padding:0in .7pt 0in .7pt;width:49.12%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="4%" valign="top" style="padding:0in .7pt 0in .7pt;width:4.78%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Its:</font></p>
  </td>
  <td width="28%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in .7pt 0in .7pt;width:28.74%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">President
  and Chief Executive Officer</font></p>
  </td>
  <td width="17%" valign="top" style="padding:0in .7pt 0in .7pt;width:17.36%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="top" style="padding:0in .7pt 0in .7pt;width:49.12%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="4%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:4.78%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="46%" colspan="2" valign="top" style="padding:0in .7pt 0in .7pt;width:46.1%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="top" style="padding:0in .7pt 0in .7pt;width:49.12%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="50%" colspan="3" valign="bottom" style="padding:0in .7pt 0in .7pt;width:50.88%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="top" style="padding:0in .7pt 0in .7pt;width:49.12%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="50%" colspan="3" valign="bottom" style="padding:0in .7pt 0in .7pt;width:50.88%;">
  <p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">THE
  PURCHASERS:</font></b></p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="top" style="padding:0in .7pt 0in .7pt;width:49.12%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="50%" colspan="3" valign="bottom" style="padding:0in .7pt 0in .7pt;width:50.88%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="top" style="padding:0in .7pt 0in .7pt;width:49.12%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="50%" colspan="3" valign="bottom" style="padding:0in .7pt 0in .7pt;width:50.88%;">
  <p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">DURUS
  LIFE SCIENCES MASTER FUND<br>
  LTD.</font></b></p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="top" style="padding:0in .7pt 0in .7pt;width:49.12%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="50%" colspan="3" valign="bottom" style="padding:0in .7pt 0in .7pt;width:50.88%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="top" style="padding:0in .7pt 0in .7pt;width:49.12%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="4%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:4.78%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="46%" colspan="2" valign="top" style="padding:0in .7pt 0in .7pt;width:46.1%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="top" style="padding:0in .7pt 0in .7pt;width:49.12%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="4%" valign="top" style="padding:0in .7pt 0in .7pt;width:4.78%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">By:</font></p>
  </td>
  <td width="28%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in .7pt 0in .7pt;width:28.74%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/
  Leslie L. Lake</font></p>
  </td>
  <td width="17%" valign="top" style="padding:0in .7pt 0in .7pt;width:17.36%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="top" style="padding:0in .7pt 0in .7pt;width:49.12%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="4%" valign="top" style="padding:0in .7pt 0in .7pt;width:4.78%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Its:</font></p>
  </td>
  <td width="28%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in .7pt 0in .7pt;width:28.74%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Director</font></p>
  </td>
  <td width="17%" valign="top" style="padding:0in .7pt 0in .7pt;width:17.36%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="top" style="padding:0in .7pt 0in .7pt;width:49.12%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="4%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:4.78%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="46%" colspan="2" valign="top" style="padding:0in .7pt 0in .7pt;width:46.1%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="top" style="padding:0in .7pt 0in .7pt;width:49.12%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="50%" colspan="3" valign="bottom" style="padding:0in .7pt 0in .7pt;width:50.88%;">
  <p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">ARTAL
  LONG BIOTECH PORTFOLIO LLC</font></b></p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="top" style="padding:0in .7pt 0in .7pt;width:49.12%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="4%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:4.78%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="46%" colspan="2" valign="top" style="padding:0in .7pt 0in .7pt;width:46.1%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="top" style="padding:0in .7pt 0in .7pt;width:49.12%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="4%" valign="top" style="padding:0in .7pt 0in .7pt;width:4.78%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">By:</font></p>
  </td>
  <td width="46%" colspan="2" valign="top" style="padding:0in .7pt 0in .7pt;width:46.1%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Artal
  Alternative Treasury Management</font></p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="top" style="padding:0in .7pt 0in .7pt;width:49.12%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="4%" valign="top" style="padding:0in .7pt 0in .7pt;width:4.78%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Its:</font></p>
  </td>
  <td width="46%" colspan="2" valign="top" style="padding:0in .7pt 0in .7pt;width:46.1%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Managing
  Member</font></p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="top" style="padding:0in .7pt 0in .7pt;width:49.12%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="4%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:4.78%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="46%" colspan="2" valign="top" style="padding:0in .7pt 0in .7pt;width:46.1%;">
  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="top" style="padding:0in .7pt 0in .7pt;width:49.12%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="4%" valign="top" style="padding:0in .7pt 0in .7pt;width:4.78%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">By:</font></p>
  </td>
  <td width="28%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in .7pt 0in .7pt;width:28.74%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/
  Christian Tedeschi</font></p>
  </td>
  <td width="17%" valign="top" style="padding:0in .7pt 0in .7pt;width:17.36%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="top" style="padding:0in .7pt 0in .7pt;width:49.12%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="4%" valign="top" style="padding:0in .7pt 0in .7pt;width:4.78%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Its:</font></p>
  </td>
  <td width="28%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in .7pt 0in .7pt;width:28.74%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Managing
  Director</font></p>
  </td>
  <td width="17%" valign="top" style="padding:0in .7pt 0in .7pt;width:17.36%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
 </tr>
</table>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">7</font></p>


<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

</div>


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