EXHIBIT 4.8


 


EXECUTION
COPY


 


REGISTRATION RIGHTS AGREEMENT


 


REGISTRATION RIGHTS AGREEMENT (this “Agreement”),
dated as of January 13, 2006, by and between AKSYS, LTD., a Delaware corporation, (the “Company”), and FUSION CAPITAL FUND II, LLC (together with it permitted
assigns, the “Buyer”).  Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings set forth in the
Common Stock Purchase Agreement by and between the parties hereto, dated as of
the date hereof (as amended, restated, supplemented or otherwise modified from
time to time, the “Purchase Agreement”).


 


WHEREAS:


 


A.            The Company has agreed, upon the terms and
subject to the conditions of the Purchase Agreement, to issue to the Buyer (i) up
to Twenty Million Dollars ($20,000,000) of the Company’s common stock,
par value $0.01 per share (the “Common Stock”)
(the “Purchase Shares”), and (ii) such
number of shares of Common Stock as is required pursuant to Section 4(f) of
the Purchase Agreement (the “Commitment Shares”);
and


 


B.            To induce the Buyer to enter into the
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the “1933 Act”), and applicable state securities
laws.


 


NOW, THEREFORE, in consideration of the premises and the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company and the Buyer hereby agree as
follows:


 


1.             DEFINITIONS.


 


As
used in this Agreement, the following terms shall have the following meanings:


 


a.             “Investor”
means the Buyer, any transferee or assignee thereof to whom a Buyer assigns its
rights under this Agreement and who agrees to become bound by the provisions of
this Agreement in accordance with Section 9 and any transferee or assignee
thereof to whom a transferee or assignee assigns its rights under this
Agreement and who agrees to become bound by the provisions of this Agreement in
accordance with Section 9.


 


b.             “Person”
means any person or entity including any corporation, a limited liability
company, an association, a partnership, an organization, a business, an
individual, a governmental or political subdivision thereof or a governmental
agency.


 


c.             “Register,”
“registered,” and “registration” refer to a registration
effected by preparing and filing one or more registration statements of the
Company in compliance with the 1933 Act and pursuant to Rule 415 under the
1933 Act or any successor rule providing for offering securities on a
continuous basis (“Rule 415”),
and the declaration or ordering of effectiveness of such registration
statement(s) by the United States Securities and Exchange Commission (the “SEC”).


 





















 


d.             “Registrable
Securities” means the Purchase Shares which have been, or which may
from time to time be, issued or issuable upon purchases of the Available Amount
under the Purchase Agreement (without regard to any limitation or restriction
on purchases) and the Commitment Shares issued or issuable to the Investor and
any shares of capital stock issued or issuable with respect to the Purchase
Shares, the Commitment Shares or
the Purchase Agreement as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise, without regard to any
limitation on purchases under the Purchase Agreement.


 


e.             “Registration
Statement” means the registration statement of the Company covering
only the sale of the Registrable Securities.


 


2.             REGISTRATION.


 


a.             Mandatory Registration.  The
Company shall use its best efforts to file the Registration Statement with the
SEC on or prior to May 31, 2006. 
The Registration Statement shall register only the Registrable
Securities and no other securities of the Company.  The Investor and its counsel shall have a
reasonable opportunity to review and comment upon such registration statement
or amendment to such registration statement and any related prospectus prior to
its filing with the SEC.  Investor shall furnish
all information reasonably requested by the Company for inclusion therein.  The Company shall use its reasonable best
efforts to have the Registration Statement or amendment declared effective by
the SEC at the earliest possible date. 
The Company shall use reasonable best efforts to keep the Registration
Statement effective pursuant to Rule 415 promulgated under the 1933 Act
and available for sales of all of the Registrable Securities at all times until
the earlier of (i) the date as of which the Investor may sell all of the
Registrable Securities without restriction pursuant to Rule 144(k)
promulgated under the 1933 Act (or successor thereto) or (ii) the date on
which (A) the Investor shall have sold all the Registrable Securities and
no Available Amount remains under the Purchase Agreement (the “Registration Period”).  The Registration Statement (including any
amendments or supplements thereto and prospectuses contained therein) shall not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein, or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading.


 


b.             Rule 424 Prospectus.  The
Company shall, as required by applicable securities regulations, from time to
time file with the SEC, pursuant to Rule 424 promulgated under the 1933
Act, the prospectus and prospectus supplements, if any, to be used in
connection with sales of the Registrable Securities under the Registration
Statement.  The Investor and its counsel
shall have a reasonable opportunity to review and comment upon such prospectus
prior to its filing with the SEC. The Investor shall use its reasonable best
efforts to comment upon such prospectus within one (1) Trading Day from
the date the Investor receives the final version of such prospectus.


 


c.             Sufficient Number of Shares Registered.  In
the event the number of shares available under the Registration Statement is
insufficient to cover all of the Registrable Securities, the Company shall
amend the Registration Statement or file a new registration statement (a “New Registration Statement”), so as to
cover all of such Registrable Securities as soon as practicable, but in any
event not later than ten (10) Trading Days after the necessity therefor
arises.  The Company shall use it
reasonable best efforts to cause such amendment and/or New Registration
Statement to become effective as soon as practicable following the filing
thereof.


 


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3.             RELATED OBLIGATIONS.


 


With
respect to the Registration Statement and whenever any Registrable Securities
are to be registered pursuant to Section 2(b) including on any New
Registration Statement, the Company shall use its reasonable best efforts to
effect the registration of the Registrable Securities in accordance with the
intended method of disposition thereof and, pursuant thereto, the Company shall
have the following obligations:


 


a.             The Company shall prepare and file with the
SEC such amendments (including post-effective amendments) and supplements to
any registration statement and the prospectus used in connection with such
registration statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the 1933 Act, as may be necessary to keep the Registration
Statement or any New Registration Statement effective at all times during the
Registration Period, and, during such period, comply with the provisions of the
1933 Act with respect to the disposition of all Registrable Securities of the
Company covered by the Registration Statement or any New Registration Statement
until such time as all of such Registrable Securities shall have been disposed
of in accordance with the intended methods of disposition by the seller or
sellers thereof as set forth in such registration statement.


 


b.             The Company shall permit the Investor to
review and comment upon the Registration Statement or any New Registration
Statement and all amendments and supplements thereto at least two (2) Trading
Days prior to their filing with the SEC, and not file any document in a form to
which Investor reasonably objects.  The
Investor shall use its reasonable best efforts to comment upon the Registration
Statement or any New Registration Statement and any amendments or supplements
thereto within two (2) Trading Days from the date the Investor receives
the final version  thereof.  The Company shall furnish to the Investor,
without charge any correspondence from the SEC or the staff of the SEC to the
Company or its representatives relating to the Registration Statement or any
New Registration Statement.


 


c.             Upon request of the Investor, the Company
shall furnish to the Investor, (i) promptly after the same is prepared and
filed with the SEC, at least one copy of such registration statement and any
amendment(s) thereto, including financial statements and schedules, all
documents incorporated therein by reference and all exhibits, (ii) upon
the effectiveness of any registration statement, a copy of the prospectus
included in such registration statement and all amendments and supplements
thereto (or such other number of copies as the Investor may reasonably request)
and (iii) such other documents, including copies of any preliminary or
final prospectus, as the Investor may reasonably request from time to time in
order to facilitate the disposition of the Registrable Securities owned by the
Investor.


 


d.             The Company shall use reasonable best efforts
to (i) register and qualify the Registrable Securities covered by a
registration statement under such other securities or “blue sky” laws of such
jurisdictions in the United States as the Investor reasonably requests, (ii) prepare
and file in those jurisdictions, such amendments (including post-effective
amendments) and supplements to such registrations and qualifications as may be
necessary to maintain the effectiveness thereof during the Registration Period,
(iii) take such other actions as may be necessary to maintain such
registrations and qualifications in effect at all times during the Registration
Period, and (iv) take all other actions reasonably necessary or advisable
to qualify the Registrable Securities for sale in such jurisdictions; provided,
however, that the Company shall not be required in connection therewith or as a
condition thereto to (x) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3(d), (y)
subject itself to general taxation in any such jurisdiction, or (z) file a
general consent to service of process in any such jurisdiction.  The Company shall promptly notify the 


 


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Investor
who holds Registrable Securities of the receipt by the Company of any
notification with respect to the suspension of the registration or
qualification of any of the Registrable Securities for sale under the
securities or “blue sky” laws of any jurisdiction in the United States or its
receipt of actual notice of the initiation or threatening of any proceeding for
such purpose.


 


e.             As promptly as practicable after becoming
aware of such event or facts, the Company shall notify the Investor in writing
of the happening of any event or existence of such facts as a result of which
the prospectus included in any registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, and
promptly prepare a supplement or amendment to such registration statement to
correct such untrue statement or omission, and deliver a copy of such
supplement or amendment to the Investor (or such other number of copies as the
Investor may reasonably request).  The
Company shall also promptly notify the Investor in writing (i) when a
prospectus or any prospectus supplement or post-effective amendment has been
filed, and when a registration statement or any post-effective amendment has
become effective (notification of such effectiveness shall be delivered to the
Investor by facsimile on the same day of such effectiveness and by overnight
mail), (ii) of any request by the SEC for amendments or supplements to any
registration statement or related prospectus or related information, and (iii) of
the Company’s reasonable determination that a post-effective amendment to a
registration statement would be appropriate.


 


f.              The Company shall use its reasonable best
efforts to prevent the issuance of any stop order or other suspension of
effectiveness of any registration statement, or the suspension of the
qualification of any Registrable Securities for sale in any jurisdiction and,
if such an order or suspension is issued, to obtain the withdrawal of such
order or suspension at the earliest possible moment and to notify the Investor
of the issuance of such order and the resolution thereof or its receipt of
actual notice of the initiation or threat of any proceeding for such purpose.


 


g.             The Company shall use reasonable best efforts
to (i) cause all the Registrable Securities to be listed on each
securities exchange on which securities of the same class or series issued by
the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, or (ii) secure
designation and quotation of all the Registrable Securities on the Principal
Market. The Company shall pay all fees and expenses in connection with
satisfying its obligation under this Section.


 


h.             The Company shall cooperate with the Investor
to facilitate the timely preparation and delivery of certificates (not bearing
any restrictive legend) representing the Registrable Securities to be offered
pursuant to any registration statement and enable such certificates to be in
such denominations or amounts as the Investor may reasonably request and
registered in such names as the Investor may request.


 


i.              The Company shall at all times provide a
transfer agent and registrar with respect to its Common Stock.


 


j.              If reasonably requested by the Investor, the
Company shall (i) immediately incorporate in a prospectus supplement or
post-effective amendment such information as the Investor believes should be
included therein relating to the sale and distribution of Registrable
Securities, including, without limitation, information with respect to the
number of Registrable Securities being sold, the purchase price being paid
therefor and any other terms of the offering of the Registrable Securities; (ii) make
all required filings of such prospectus supplement or post-effective amendment
as 


 


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soon
as notified of the matters to be incorporated in such prospectus supplement or
post-effective amendment; and (iii) supplement or make amendments to any
registration statement.


 


k.             The Company shall use its reasonable best
efforts to cause the Registrable Securities covered by the any registration
statement to be registered with or approved by such other governmental agencies
or authorities as may be necessary to consummate the disposition of such
Registrable Securities.


 


l.              Within one (1) Trading Day after any
registration statement which includes the Registrable Securities is ordered
effective by the SEC, the Company shall deliver, and shall cause legal counsel
for the Company to deliver, to the transfer agent for such Registrable
Securities (with copies to the Investor) confirmation that such registration
statement has been declared effective by the SEC in the form attached hereto as
Exhibit A.  Thereafter, if
requested by the Buyer at any time, the Company shall require its counsel to
deliver to the Buyer a written confirmation whether or not the effectiveness of
such registration statement has lapsed at any time for any reason (including,
without limitation, the issuance of a stop order) and whether or not the
registration statement is current and available to the Buyer for sale of all of
the Registrable Securities.


 


m.            The Company shall take all other reasonable
actions necessary to expedite and facilitate disposition by the Investor of
Registrable Securities pursuant to any registration statement.


 


4.             OBLIGATIONS OF THE INVESTOR.


 


a.             The Company shall notify the Investor in
writing of the information the Company reasonably requires from the Investor in
connection with any registration statement hereunder.  The Investor shall furnish to the Company
such information regarding itself, the Registrable Securities held by it and
the intended method of disposition of the Registrable Securities held by it as
shall be reasonably required to effect the registration of such Registrable
Securities and shall execute such documents in connection with such
registration as the Company may reasonably request.


 


b.             The Investor agrees to cooperate with the
Company as reasonably requested by the Company in connection with the
preparation and filing of any registration statement hereunder.


 


c.             The Investor agrees that, upon receipt of any
notice from the Company of the happening of any event or existence of facts of
the kind described in Section 3(f) or the first sentence of 3(e), the
Investor will immediately discontinue disposition of Registrable Securities
pursuant to any registration statement(s) covering such Registrable Securities
until the Investor’s receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3(f) or the first sentence of
3(e). Notwithstanding anything to the contrary, the Company shall cause its
transfer agent to promptly deliver shares of Common Stock without any
restrictive legend in accordance with the terms of the Purchase Agreement in
connection with any sale of Registrable Securities with respect to which an
Investor has entered into a contract for sale prior to the Investor’s receipt
of a notice from the Company of the happening of any event of the kind
described in Section 3(f) or the first sentence of 3(e) and for
which the Investor has not yet settled.


 


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5.             EXPENSES OF REGISTRATION.


 


All
reasonable expenses, other than sales or brokerage commissions, incurred in
connection with registrations, filings or qualifications pursuant to Sections 2
and 3, including, without limitation, all registration, listing and qualifications
fees, printers and accounting fees, and fees and disbursements of counsel for
the Company, shall be paid by the Company.


 


6.             INDEMNIFICATION.


 


a.             To the fullest extent permitted by law, the
Company will, and hereby does, indemnify, hold harmless and defend the
Investor, each Person, if any, who controls the Investor, the members, the
directors, officers, partners, employees, agents, representatives of the
Investor and each Person, if any, who controls the Investor within the meaning
of the 1933 Act or the Securities Exchange Act of 1934, as amended (the “1934 Act”) (each, an “Indemnified Person”), against any losses,
claims, damages, liabilities, judgments, fines, penalties, charges, costs,
attorneys’ fees, amounts paid in settlement or expenses, joint or several,
(collectively, “Claims”) incurred
in investigating, preparing or defending any action, claim, suit, inquiry,
proceeding, investigation or appeal taken from the foregoing by or before any
court or governmental, administrative or other regulatory agency, body or the
SEC, whether pending or threatened, whether or not an indemnified party is or
may be a party thereto (“Indemnified Damages”),
to which any of them may become subject insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon: (i) any untrue statement or alleged untrue statement of
a material fact in the Registration Statement, any New Registration Statement
or any post-effective amendment thereto or in any filing made in connection
with the qualification of the offering under the securities or other “blue sky”
laws of any jurisdiction in which Registrable Securities are offered (“Blue Sky Filing”), or the omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in the final
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading, (iii) any violation or alleged violation by the
Company of the 1933 Act, the 1934 Act, any other law, including, without
limitation, any state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities pursuant to the
Registration Statement or any New Registration Statement  or (iv) any material violation by the
Company of this Agreement (the matters in the foregoing clauses (i) through
(iv) being, collectively, “Violations”).  The Company shall reimburse each Indemnified
Person promptly as such expenses are incurred and are due and payable, for any
legal fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. 
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a): (i) shall
not apply to a Claim by an Indemnified Person arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by such Indemnified Person expressly for
use in connection with the preparation of the Registration Statement, any New
Registration Statement or any such amendment thereof or supplement thereto, if
such prospectus was timely made available by the Company pursuant to Section 3(c) or
Section 3(e); (ii) with respect to any superceded prospectus, shall
not inure to the benefit of any such person from whom the person asserting any
such Claim purchased the Registrable Securities that are the subject thereof
(or to the benefit of any person controlling such person) if the untrue
statement or omission of material fact contained in the superceded prospectus
was corrected in the revised prospectus, as then amended or supplemented, if
such revised prospectus was timely made available by the Company pursuant to Section 3(c) or
Section 3(e), and the Indemnified Person was 


 


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promptly
advised in writing not to use the incorrect prospectus prior to the use giving
rise to a violation and such Indemnified Person, notwithstanding such advice,
used it; (iii) shall not be available to the extent such Claim is based on
a failure of the Investor to deliver or to cause to be delivered the prospectus
made available by the Company, if such prospectus was timely made available by
the Company pursuant to Section 3(c) or Section 3(e); and (iv) shall
not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Company, which consent shall
not be unreasonably withheld.  Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Person and shall survive the transfer
of the Registrable Securities by the Investor pursuant to Section 9.


 


b.             In connection with the Registration Statement
or any New Registration Statement, the Investor agrees to severally and not
jointly indemnify, hold harmless and defend, to the same extent and in the same
manner as is set forth in Section 6(a), the Company, each of its
directors, each of its officers who signs the Registration Statement or any New
Registration Statement, each Person, if any, who controls the Company within
the meaning of the 1933 Act or the 1934 Act (collectively and together with an
Indemnified Person, an “Indemnified Party”),
against any Claim or Indemnified Damages to which any of them may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim
or Indemnified Damages arise out of or are based upon any Violation, in each
case to the extent, and only to the extent, that such Violation occurs in
reliance upon and in conformity with written information about the Investor set
forth on Exhibit B attached hereto and furnished to the Company by
the Investor expressly for use in connection with such registration statement;
and, subject to Section 6(d), the Investor will reimburse any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such Claim; provided, however, that the indemnity agreement
contained in this Section 6(b) and the agreement with respect to
contribution contained in Section 7 shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior
written consent of the Investor, which consent shall not be unreasonably
withheld; provided, further, however, that the Investor shall be liable under
this Section 6(b) for only that amount of a Claim or Indemnified
Damages as does not exceed the net proceeds to the Investor as a result of the
sale of Registrable Securities pursuant to such registration statement.  Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such Indemnified
Party and shall survive the transfer of the Registrable Securities by the
Investor pursuant to Section 9.


 


c.             Promptly after receipt by an Indemnified
Person or Indemnified Party under this Section 6 of notice of the
commencement of any action or proceeding (including any governmental action or
proceeding) involving a Claim, such Indemnified Person or Indemnified Party
shall, if a Claim in respect thereof is to be made against any indemnifying
party under this Section 6, deliver to the indemnifying party a written
notice of the commencement thereof, and the indemnifying party shall have the
right to participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume control
of the defense thereof with counsel mutually satisfactory to the indemnifying
party and the Indemnified Person or the Indemnified Party, as the case may be;
provided, however, that an Indemnified Person or Indemnified Party shall have
the right to retain its own counsel with the fees and expenses to be paid by
the indemnifying party, if, in the reasonable opinion of counsel retained by
the indemnifying party, the representation by such counsel of the Indemnified
Person or Indemnified Party and the indemnifying party would be inappropriate
due to actual or potential differing interests between such Indemnified Person
or Indemnified Party and any other party represented by such counsel in such
proceeding. The Indemnified Party or Indemnified Person shall cooperate fully
with the indemnifying party in connection with any negotiation or defense of
any such action or claim by the indemnifying party and shall furnish to the
indemnifying party all 


 


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information
reasonably available to the Indemnified Party or Indemnified Person which
relates to such action or claim.  The
indemnifying party shall keep the Indemnified Party or Indemnified Person fully
apprised at all times as to the status of the defense or any settlement negotiations
with respect thereto.  No indemnifying
party shall be liable for any settlement of any action, claim or proceeding
effected without its written consent, provided, however, that the indemnifying
party shall not unreasonably withhold, delay or condition its consent.  No indemnifying party shall, without the
consent of the Indemnified Party or Indemnified Person, consent to entry of any
judgment or enter into any settlement or other compromise which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to
such Indemnified Party or Indemnified Person of a release from all liability in
respect to such claim or litigation. 
Following indemnification as provided for hereunder, the indemnifying
party shall be subrogated to all rights of the Indemnified Party or Indemnified
Person with respect to all third parties, firms or corporations relating to the
matter for which indemnification has been made. 
The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or Indemnified
Party under this Section 6, except to the extent that the indemnifying
party is prejudiced in its ability to defend such action.


 


d.             The indemnification required by this Section 6
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or Indemnified
Damages are incurred.


 


e.             The indemnity agreements contained herein
shall be in addition to (i) any cause of action or similar right of the
Indemnified Party or Indemnified Person against the indemnifying party or
others, and (ii) any liabilities the indemnifying party may be subject to
pursuant to the law.


 


7.             CONTRIBUTION.


 


To
the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section 6
to the fullest extent permitted by law; provided, however, that: (i) no
seller of Registrable Securities guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of
Registrable Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities.


 


8.             REPORTS AND DISCLOSURE UNDER THE SECURITIES
ACTS.


 


With
a view to making available to the Investor the benefits of Rule 144
promulgated under the 1933 Act or any other similar rule or regulation of
the SEC that may at any time permit the Investor to sell securities of the
Company to the public without registration (“Rule 144”),
the Company agrees, at the Company’s sole expense, to:


 


a.             make and keep public information available,
as those terms are understood and defined in Rule 144;


 


b.             file with the SEC in a timely manner all
reports and other documents required of the Company under the 1933 Act and the
1934 Act so long as the Company remains subject to such 


 


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requirements
and the filing of such reports and other documents is required for the
applicable provisions of Rule 144; and


 


c.             furnish to the Investor so long as the
Investor owns Registrable Securities, promptly upon request, (i) a written
statement by the Company that it has complied with the reporting and or
disclosure provisions of Rule 144, the 1933 Act and the 1934 Act, (ii) a
copy of the most recent annual or quarterly report of the Company and such
other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested to permit the Investor to sell such
securities pursuant to Rule 144 without registration.


 


d.             take such additional action as is requested
by the Investor to enable the Investor to sell the Registrable Securities
pursuant to Rule 144, including, without limitation, delivering all such
legal opinions, consents, certificates, resolutions and instructions to the
Company’s Transfer Agent as may be 
requested from time to time by the Investor and otherwise fully
cooperate with Investor and Investor’s broker to effect such sale of securities
pursuant to Rule 144.


 


The
Company agrees that damages may be an inadequate remedy for any breach of the
terms and provisions of this Section 8 and that Investor shall, whether or
not it is pursuing any remedies at law, be entitled to equitable relief in the
form of a preliminary or permanent injunctions, without having to post any bond
or other security, upon any breach or threatened breach of any such terms or
provisions.


 


9.             ASSIGNMENT OF REGISTRATION RIGHTS.


 


The
Company shall not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Investor, including by merger or
consolidation.  The Investor may not
assign its rights under this Agreement without the written consent of the
Company, other than to an affiliate of the Investor controlled by Steven G.
Martin or Joshua B. Scheinfeld.


 


10.           AMENDMENT OF REGISTRATION RIGHTS.


 


Provisions
of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Investor.


 


11.           MISCELLANEOUS.


 


a.             A Person is deemed to be a holder of
Registrable Securities whenever such Person owns or is deemed to own of record
such Registrable Securities.  If the
Company receives conflicting instructions, notices or elections from two or
more Persons with respect to the same Registrable Securities, the Company shall
act upon the basis of instructions, notice or election received from the
registered owner of such Registrable Securities.


 


b.             Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered:  (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one (1) Trading Day
after deposit with a nationally recognized overnight delivery service, in each
case properly addressed to the party to receive the same.  The addresses and facsimile numbers for such
communications shall be:


 


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  If to the Company:

  	
   

  
	
   

  	
  Aksys, Ltd.

  	
   

  
	
   

  	
  Two Marriott Drive

  
	
   

  	
  Lincolnshire,  Illinois 60069

  
	
   

  	
  Telephone:

  	
  847-229-2020

  
	
   

  	
  Facsimile:

  	
  847-229-2080

  
	
   

  	
  Attention:

  	
  Laurence
  P. Birch

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  
	
   

  	
  Kirkland & Ellis LLP

  	
   

  
	
   

  	
  200 East Randolph Drive

  	
   

  
	
   

  	
  Chicago,
  Illinois 60601

  
	
   

  	
  Telephone:

  	
  312-861-2181

  
	
   

  	
  Facsimile:

  	
  312-861-2200

  
	
   

  	
  Attention:

  	
  Keith S. Crow, P.C.

  
	
   

  	
   

  
	
  If to the Investor:

  	
   

  
	
   

  	
  Fusion
  Capital Fund II, LLC

  	
   

  
	
   

  	
  222
  Merchandise Mart Plaza, Suite 9-112

  
	
   

  	
  Chicago,
  IL 60654

  
	
   

  	
  Telephone:

  	
  312-644-6644

  
	
   

  	
  Facsimile:

  	
  312-644-6244

  
	
   

  	
  Attention:

  	
  Steven
  G. Martin

  
						



 


or
at such other address and/or facsimile number and/or to the attention of such
other person as the recipient party has specified by written notice given to
each other party three (3) Trading Days prior to the effectiveness of such
change.  Written confirmation of receipt (A) given
by the recipient of such notice, consent, waiver or other communication, (B) mechanically
or electronically generated by the sender’s facsimile machine containing the
time, date, recipient facsimile number and an image of the first page of
such transmission or (C) provided by a nationally recognized overnight
delivery service, shall be rebuttable evidence of personal service, receipt by
facsimile or receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.


 


c.             Failure of any party to exercise any right or
remedy under this Agreement or otherwise, or delay by a party in exercising
such right or remedy, shall not operate as a waiver thereof.


 


d.             The corporate laws of the State of Delaware
shall govern all issues concerning the relative rights of the Company and its
stockholders.  All other questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of Illinois,
without giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Illinois or any other jurisdictions) that would cause the
application of the laws of any jurisdictions other than the State of
Illinois.   Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting
the City of Chicago, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding
is improper.  Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it 


 


10





















 


under
this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by law.  If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.  EACH PARTY
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.


 


e.             This Agreement, and the Purchase  Agreement constitute the entire agreement
among the parties hereto with respect to the subject matter hereof and
thereof.  There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein and therein.  This Agreement and
the Purchase Agreement supersede all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof and thereof.


 


f.              Subject to the requirements of Section 9,
this Agreement shall inure to the benefit of and be binding upon the permitted
successors and assigns of each of the parties hereto.


 


g.             The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.


 


h.             This Agreement may be executed in identical
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. 
This Agreement, once executed by a party, may be delivered to the other
party hereto by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.


 


i.              Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.


 


j.              The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent
and no rules of strict construction will be applied against any party.


 


k.             This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns, and
is not for the benefit of, nor may any provision hereof be enforced by, any
other Person.


 


* * * * * *


 


11





















 


IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be duly
executed as of day and year first above written.


 


	
   

  	
  THE COMPANY:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AKSYS, LTD.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  William C. Dow

  	
   

  
	
   

  	
  Name:

  	
  William
  C. Dow

  
	
   

  	
  Title:

  	
  President
  and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BUYER:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FUSION CAPITAL FUND II, LLC

  	
   

  
	
   

  	
  BY: FUSION CAPITAL
  PARTNERS, LLC

  	
   

  
	
   

  	
  BY:SGM HOLDINGS CORP.

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Steven G. Martin

  	
   

  
	
   

  	
  Name:Steven
  G. Martin

  
	
   

  	
  Title:
  President

  
								



 


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