Document:

Exhibit
10.25

 

[Execution
Copy]

 

PATENT AND TRADEMARK SECURITY
AGREEMENT

 

THIS
PATENT AND TRADEMARK SECURITY AGREEMENT (this “Agreement”), dated as of March
31, 2006, is made between AKSYS, LTD., a Delaware corporation (“Debtor”), and
DURUS LIFE SCIENCES MASTER FUND LTD., a Cayman Islands Exempted Company (the “Secured
Party”).

 

Debtor
and Secured Party hereby agree as follows:

 

Section 1.   Definitions;
Interpretation.

 

(a)           Terms Defined in Security Agreement. All capitalized terms used in this
Agreement and not otherwise defined herein shall have the meanings assigned to
them in the Security Agreement.

 

(b)           Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:

 

“Collateral”
has the meaning set forth in Section 2.

 

“PTO”
means the United States Patent and Trademark Office.

 

“Security
Agreement” means the Security Agreement dated as of March 31, 2006 between Debtor
and Secured Party, as amended, amended and restated, modified, renewed or
extended from time to time.

 

(c)           Terms Defined in UCC. Where applicable and except as
otherwise defined herein, terms used in this Agreement shall have the meanings
assigned to them in the UCC.

 

(d)           Interpretation. The rules of interpretation applicable to the
Security Agreement shall also be applicable to this Agreement and are
incorporated herein by this reference.

 

Section 2.   Security
Interest.

 

(a)           Grant of Security Interest. As security for the payment and
performance of the Obligations, Debtor hereby grants to Secured Party a
security interest in all of Debtor’s right, title and interest in, to and under
the following property, in each case whether now or hereafter existing or
arising or in which Debtor now has or hereafter owns, acquires or develops an
interest and wherever located (collectively, the “Collateral”):

 

(i)            all patents and patent applications, domestic or
foreign, all licenses relating to any of the foregoing and all income and
royalties with respect to any licenses (including such patents and patent
applications as described in Schedule A), all rights to sue for

 

1

 

past, present or future infringement thereof, all rights
arising therefrom and pertaining thereto and all reissues, divisions,
continuations, renewals, extensions and continuations-in-part thereof;

 

(ii)           all state (including common law), federal and foreign
trademarks, service marks and trade names, and applications for registration of
such trademarks, service marks and trade names, all licenses relating to any of
the foregoing and all income and royalties with respect to any licenses
(including such marks, names and applications as described in Schedule B),
whether registered or unregistered and wherever registered, all rights to sue
for past, present or future infringement or unconsented use thereof, all rights
arising therefrom and pertaining thereto and all reissues, extensions and
renewals thereof;

 

(iii)          the entire goodwill of or associated with the
businesses now or hereafter conducted by Debtor connected with and symbolized
by any of the aforementioned properties and assets;

 

(iv)          all commercial tort claims associated with or arising
out of any of the aforementioned properties and assets;

 

(v)           all accounts, all intangible intellectual or other similar
property and other general intangibles associated with or arising out of any of
the aforementioned properties and assets and not otherwise described above,
including all license payments and payments under insurance (whether or not
Secured Party is the loss payee thereof) or any indemnity, warranty or guaranty
payable by reason of loss or damage to or otherwise with respect to the
foregoing Collateral; and

 

(vi)          all products, proceeds and supporting obligations of
or with respect to any and all of the foregoing Collateral.

 

(b)           Continuing Security Interest. Debtor agrees that this Agreement
shall create a continuing security interest in the Collateral which shall
remain in effect until terminated in accordance with Section 12.

 

Section 3.   Supplement
to Security Agreement. This Agreement
has been granted in conjunction with the security interests granted to Secured
Party under the Security Agreement. The rights and remedies of Secured Party with
respect to the security interests granted herein are without prejudice to, and
are in addition to those set forth in the Security Agreement, all terms and
provisions of which are incorporated herein by reference.

 

Section 4.   Representations
and Warranties. Debtor represents and warrants to Secured Party that:

 

(a)           Patents. A true and correct list of all of the existing
Collateral consisting of U.S. patents and patent applications and/or
registrations owned by Debtor, in whole or in part, is set forth in Schedule
A.

 

(b)           Trademarks. A true and correct list of all of the existing
Collateral consisting of U.S. trademarks, trademark registrations and/or
applications owned by Debtor, in whole or in part, is set forth in Schedule
B.

 

2

 

Section 5.   Further
Acts. On a continuing basis, Debtor shall make, execute, acknowledge and
deliver, and file and record in the proper filing and recording places, all
such instruments and documents, and take all such action as may be necessary or
advisable or may be reasonably requested by Secured Party to carry out the
intent and purposes of this Agreement, or for assuring, confirming or
protecting the grant or perfection of the security interest granted or
purported to be granted hereby, to ensure Debtor’s compliance with this Agreement
or to enable Secured Party to exercise and enforce its rights and remedies
hereunder with respect to the Collateral, including any documents for filing
with the PTO and/or any applicable state office. Secured Party may record this
Agreement, an abstract thereof, or any other document describing Secured Party’s
interest in the Collateral with the PTO, at the expense of Debtor.

 

Section 6.   Authorization
to Supplement. If Debtor shall obtain rights as owner to any new, or apply
for registration of, any U.S. trademarks or service marks, or any U.S. patents,
the provisions of this Agreement shall automatically apply thereto. Debtor
shall give prompt notice in writing to Secured Party with respect to the
foregoing. Without limiting Debtor’s obligations under this Section 6, Debtor
authorizes Secured Party to modify this Agreement by amending Schedules A
or B to include any such new patent or trademark and service mark registration
or such application. Notwithstanding the foregoing, no failure to so modify
this Agreement or amend Schedules A or B shall in any way
affect, invalidate or detract from Secured Party’s continuing security interest
in all Collateral, whether or not listed on Schedule A or B.

 

Section 7.   Binding
Effect. This Agreement shall be binding upon, inure to the benefit of and
be enforceable by Debtor, Secured Party and their respective successors and
assigns. Debtor may not assign, transfer, hypothecate or otherwise convey its
rights, benefits, obligations or duties hereunder except as specifically
permitted by the Security Agreement.

 

Section 8.   Notices.
All notices and other communications
required or permitted hereunder shall be in writing and shall be deemed
effectively given: (i) upon personal delivery to the party to be notified;
(ii) when sent by confirmed telex or facsimile if sent during normal
business hours of the recipient, if not, then on the next business day;
(iii) five (5) days after having been sent by registered or certified
mail, return receipt requested, postage prepaid; or (iv) two (2) days
after deposit with a nationally recognized overnight courier, specifying next
day delivery, with written verification of receipt. All communications shall be
sent to the parties hereto at their respective addresses or facsimile
numbers set forth in the below their names on the signature pages hereof, or as notified by such party from time to
time at least ten (10) days prior to the effectiveness of such notice.

 

Section 9.   Governing
Law. This Agreement shall be construed in accordance with and governed by
the internal laws of the State of New York (as permitted by Section 5-1401
of the New York General Obligations Law (or any similar successor provision))
without giving effect to any choice of law rule that would cause the application
of the laws of any jurisdiction other than the internal laws of the State of
New York to the rights and duties of the parties, except as required by
mandatory provisions of law and to the extent the validity or perfection of the
security interests hereunder, or the remedies hereunder, in respect of any
Collateral are governed by the law of a jurisdiction other than New York.

 

3

 

Section 10.   Amendment;
Conflict. No amendment to this Agreement, or any waiver of any provision
hereof, shall be effective unless it is in writing and signed by Secured Party
and (in the case of any amendment) the Debtor. To the extent that any provision
of this Agreement conflicts with any provision of the Security Agreement, the
provision giving Secured Party
greater rights or remedies shall govern, it being understood that the purpose
of this Agreement is to add to, and not detract from, the rights granted to Secured Party under the Security
Agreement.

 

Section 11.   Counterparts.
This Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall
be deemed to be an original and all of which taken together shall constitute
but one and the same agreement.

 

Section 12.   Termination.
Upon payment and performance in full of all Obligations (other than inchoate
indemnity obligations and any other obligations which by their terms are to
survive the termination of the Loan Documents), the security interests created
by this Agreement shall terminate and Secured Party shall promptly execute and
deliver to Debtor such documents and instruments reasonably requested by Debtor
as shall be necessary to evidence termination of all such security interests
given by Debtor to Secured Party hereunder, including cancellation of this
Agreement by written notice from Secured Party to the PTO.

 

[Signature Pages
Following]

 

4

 

IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement, as of
the date first above written.

 

	
   

  	
  Debtor

  
	
   

  	
   

  
	
   

  	
  AKSYS, LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Laurence P.
  Birch

  	
   

  
	
   

  	
   

  	
  Title: CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
  Two Marriott
  Drive

  
	
   

  	
  Lincolnshire, IL
  60069

  
	
   

  	
  Attn.:

  	
   

  	
   

  
	
   

  	
  Fax:
  847-229-2080

  
	
   

  	
   

  
	
   

  	
  With a
  copy to:

  
	
   

  	
   

  
	
   

  	
  Keith S. Crow
  P.C. 

  
	
   

  	
  Kirkland &
  Ellis LLP 

  
	
   

  	
  200 East
  Randolph Drive 

  
	
   

  	
  Chicago,
  Illinois 60601 

  
	
   

  	
  Fax:
  312-861-2200

  
							

 

S-1

 

	
   

  	
   

  	
  Secured Party

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DURUS LIFE
  SCIENCES MASTER FUND

  LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ Leslie Lake

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Leslie
  Lake

  
	
   

  	
   

  	
   

  	
  Title: Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Durus Life Sciences Master Fund Ltd. 

  
	
   

  	
   

  	
  c/o International Fund Services (Ireland) Ltd.

  
	
   

  	
   

  	
  3rd Floor, Bishops Square 

  
	
   

  	
   

  	
  Redmonds Hill 

  
	
   

  	
   

  	
  Dublin 2, Ireland 

  
	
   

  	
   

  	
  Attention: Susan Byrne 

  
	
   

  	
   

  	
  Fax: (011)
  35-31-707-5013 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  With a
  copy to: 

  
	
   

  	
   

  	
  Gavin Grover,
  Esq.

  
	
   

  	
   

  	
  Morrison &
  Foerster LLP 

  
	
   

  	
   

  	
  425 Market
  Street 

  
	
   

  	
   

  	
  San Francisco, California 94105 

  
	
   

  	
   

  	
  Fax: 415-269-7522 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  And with a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Paul N. Roth,Esq. 

  
	
   

  	
   

  	
  Schulte, Roth &
  Zabel 

  
	
   

  	
   

  	
  919 Third Avenue 

  
	
   

  	
   

  	
  New York, New York
  10022 

  
	
   

  	
   

  	
  Fax: 212-593-5955

  

 

S-2

 

SCHEDULE A

to the Patent and Trademark Security Agreement

 

Issued U.S. Patents of Debtor

 

	
  Patent No.

  	
   

  	
  Issue Date

  	
   

  	
  Registered Owner

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5,591,344

  	
   

  	
  1/7/1997

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Hot
  Water Disinfection of Dialysis Machines, Including the Extracorporeal Circuit
  thereof

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5,630,935

  	
   

  	
  5/20/1997

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Pressure Relief Valve with
  Sample Removal Port

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5,645,734

  	
   

  	
  7/8/1997

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Dialysate Separation
  Method

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5,651,893

  	
   

  	
  7/29/1997

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Disinfection of Dialysis
  Machine

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5,658,456

  	
   

  	
  8/19/1997

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Batch Dialysate Chemical
  Vessel with Machine-Readable Indicator

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5,670,050

  	
   

  	
  9/23/1997

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Method for Detection of
  Leakage of Blood

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5,674,390

  	
   

  	
  10/7/1997

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Dialysis Machine with
  Leakage Detection

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5,674,397

  	
   

  	
  10/7/1997

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Debubblers

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5,674,404

  	
   

  	
  10/7/1997

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Filter Integrity Test
  Method for Dialysis Machines

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5,690,821

  	
   

  	
  11/25/1997

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Apparatus for Supplying a
  Batch of Chemicals to a Dialysate Tank

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5,690,831

  	
   

  	
  11/25/1997

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Method of Rinsing Back
  Blood to Hemodialysis Patient

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5,702,606

  	
   

  	
  12/30/1997

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Method of Priming Dialyzer

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5,705,066

  	
   

  	
  1/6/1998

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Apparatus for Opening a
  Vessel

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5,707,086

  	
   

  	
  1/13/1998

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Tubing Connector and Parts
  for Receiving the Connector

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5,714,060

  	
   

  	
  2/3/1998

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Disinfection of Arterial
  and Venous Line Connectors of Hemodialysis Machine

  

 

A-1

 

	
  Patent No.

  	
   

  	
  Issue Date

  	
   

  	
  Registered Owner

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5,716,531

  	
   

  	
  2/10/1998

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Method for Determining
  Sodium Clearance of Dialyzer

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5,725,776

  	
   

  	
  3/10/1998

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Methods for
  Ultrafiltration Control In Hemodialysis

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5,762,782

  	
   

  	
  6/9/1998

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Water Treatment for
  Dialysate Preparation

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5,783,072

  	
   

  	
  7/21/1998

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Lightweight Noncompliant
  Dialysate Solution Tank for Batch Dialysate Preparation Systems

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5,788,099

  	
   

  	
  8/4/1998

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Vessel for Containing
  Batch Quantities of Dialysate or Other Physiologic Solution Chemicals

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5,788,851

  	
   

  	
  8/4/1998

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  User Interface and Method
  for Control of Medical Instruments, such as Dialysis Machines

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5,858,239

  	
   

  	
  1/12/1999

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Methods and Apparatus for
  Adjustment of Blood Drip Chamber of Dialysis Machines Using Touchscreen
  Interface

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5,863,421

  	
   

  	
  1/26/1999

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Hemodialysis Machine with
  Automatic Priming by Induced Pressure Pulses

  
	
  5,932,103

  	
   

  	
  8/3/1999

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  withdrawal of Priming
  Fluid From Extracorporeal Circuit of Hemodialysis Machines or the Like

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5,932,110

  	
   

  	
  8/3/1999

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Dialysate Conductivity
  Adjustment in a Batch Dialysate Preparation System

  
	
  6,044,691

  	
   

  	
  4/4/2000

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Blood Tubing Set Integrity
  Tests for Extracorporeal Circuits

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6,132,616

  	
   

  	
  10/17/200

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Method for Flushing and
  Filling of an Extracorporeal Blood Circulating System of a Dialysis Machine

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6,136,201

  	
   

  	
  10/24/2000

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Method of Preparation of
  Batch of Physiologic Solution

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6,146,523

  	
   

  	
  11/14/2000

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  User Interface and Method
  for Control of Medical Instruments, such as Dialysis 

  

 

A-2

 

	
  Patent No.

  	
   

  	
  Issue Date

  	
   

  	
  Registered Owner

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Machines

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6,153,102

  	
   

  	
  11/28/2000

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Disinfection of Dead-Ended
  Lines in Medical Instruments

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6,280,634

  	
   

  	
  8/28/2001

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Method of Determining
  System Volume of a Dialysis Machine

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6,355,161

  	
   

  	
  3/12/2002

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Bottles for Dialysis
  Machines and Method for Automatically Identifying Such Bottles

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6,691,047

  	
   

  	
  2/10/2004

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Calibration of Pumps, Such
  as Blood Pumps of Dialysis Machine

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6,868,309

  	
   

  	
  3/15/2005

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Dialysis Machine with
  Symmetric Multi-Processing (SMP) Control System and Method of Operation

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D383,842

  	
   

  	
  9/16/1997

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Dialysis Machine

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D395,085

  	
   

  	
  6/9/1998

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Dialysis Machine

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D395,517

  	
   

  	
  6/23/1998

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Chemical Vessel

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D403,079

  	
   

  	
  12/22/1998

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Chemical Vessel

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D435,646

  	
   

  	
  12/26/2000

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Bottle for Dialysis
  Machine

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D435,647

  	
   

  	
  12/26/2000

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Bottle for Dialysis
  Machine

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D435,648

  	
   

  	
  12/26/2000

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Bottle for Dialysis
  Machine

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D435,649

  	
   

  	
  12/26/2000

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Bottle for Dialysis
  Machine

  

 

A-3

 

Pending U.S. Patent Applications of Debtor

 

	
  Application

  No.

  	
   

  	
  Publication

  Date

  	
   

  	
  Registered Owner

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10/921,677

  	
   

  	
  2/23/2006

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  Citrate-Based
  Dialysate Chemical Formulations

  

 

A-4

 

SCHEDULE B

to the Patent and Trademark Security Agreement

 

U.S. Registered Trademarks of Debtor

 

	
  Registration No.

  	
   

  	
  Registration Date

  	
   

  	
  Registered Owner

  	
   

  	
  Mark

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2,407,373

  	
   

  	
  11/21/2000

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  AKSYS

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2,472,036

  	
   

  	
  7/24/2001

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  PHD

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2,500,717

  	
   

  	
  10/23/2004

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  AKSYS

  
	
  2,659,850

  	
   

  	
  12/10/2002

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  AKSYS

  

 

B-1

 

Pending U.S. Trademark Applications of Debtor

 

	
  Serial No.

  	
   

  	
  Filed Date

  	
   

  	
  Applicant

  	
   

  	
  Mark

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  78/584,229

  	
   

  	
  3/10/2005

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  HOME FEELS
  BETTER.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  78/586,437

  	
   

  	
  3/14/2005

  	
   

  	
  Aksys, Ltd.

  	
   

  	
  HOME FEELS
  BETTER. AKSYSExhibit 10.26

 

[Execution Copy]

 

GUARANTY

 

THIS GUARANTY (“Guaranty”), dated as of March 31, 2006,
is made by each Guarantor named in the signature pages hereof (“Guarantor”), in
favor of in favor of DURUS LIFE SCIENCES MASTER FUND LTD., a Cayman Islands Exempted
Company (“Lender”).

 

Aksys, Ltd., a Delaware corporation (“Company”), and
Lender are parties to a Bridge Loan Agreement dated as of the date hereof (as
amended, amended and restated, modified, renewed or extended from time to time,
the “Loan Agreement”) pursuant to which Lender has or will extend certain
credit to Company and Company has or will execute and deliver the Note described
therein. Guarantor has agreed to guarantee the indebtedness and other
obligations of Company to Lender under or in connection with the Loan Agreement,
the Notes and the other Loan Documents (as defined in the Loan Agreement and as
amended, amended and restated, modified, renewed or extended from time to time)
as set forth herein. Guarantor will derive substantial direct and indirect
benefits from the extension of credit to Company (which benefits are hereby
acknowledged by Guarantor). All capitalized terms used in this Guaranty and not
otherwise defined herein shall have the meanings assigned to them in the Loan
Agreement.

 

Accordingly, to induce Lender to extend credit to
Company, and in consideration thereof, Guarantor hereby agrees as follows:

 

1.             Guaranty. Guarantor hereby unconditionally and irrevocably
guarantees to Lender the full and prompt payment when due (whether at stated
maturity, declaration, acceleration, demand or otherwise) and performance of the
indebtedness, liabilities and other obligations of Company to Lender, under or
in connection with the Loan Agreement, the Note and the other Loan Documents or
any other documents or instruments executed or delivered in connection
therewith, including interest that accrues after the commencement by or against
Company or Guarantor of any Insolvency Proceeding. The terms “indebtedness,” “liabilities”
and “obligations” are used herein in their most comprehensive sense and include
any and all advances, debts, obligations and liabilities, now existing or
hereafter arising, regardless of by what instrument, agreement, contract or
entry in Lender’s accounts they may be evidenced, or whether evidenced by any
instrument, agreement, contract or entry in Lender’s accounts, whether
voluntary or involuntary and whether due or not due, absolute or contingent,
liquidated or unliquidated, determined or undetermined, and whether recovery
upon such indebtedness, liabilities and obligations may be or hereafter become
unenforceable under the Bankruptcy Code or other applicable law. The foregoing
indebtedness, liabilities and other obligations of Company, and all other
indebtedness, liabilities and obligations to be paid or performed by Guarantor
in connection with this Guaranty (including any and all amounts due under
Section 12 hereof), shall hereinafter be collectively referred to as the “Guaranteed
Obligations.”

 

2.             Liability of Guarantor. The liability of Guarantor under
this Guaranty shall be irrevocable, absolute, independent and unconditional,
and shall not be affected by any circumstance which might constitute a
discharge of a surety or guarantor other than the indefeasible payment and
performance in full of all Guaranteed Obligations. In furtherance of the
foregoing and without limiting the generality thereof, Guarantor agrees as
follows:

 

 

(i) Guarantor’s liability hereunder shall be the
immediate, direct, and primary obligation of Guarantor and shall not be
contingent upon Lender’s exercise or enforcement of any remedy it may have
against Company or any other Person, or against any collateral for any
Guaranteed Obligations; (ii) this Guaranty is a guaranty of payment when
due and not of collectibility; (iii) Lender may enforce this Guaranty upon
the occurrence of an Event of Default notwithstanding any dispute between Lender
and Company with respect to the existence of such default; (iv) Guarantor’s
payment of a portion, but not all, of the Guaranteed Obligations shall in no
way limit, affect, modify or abridge Guarantor’s liability for any portion of
the Guaranteed Obligations remaining unsatisfied; and (v) Guarantor’s liability
with respect to the Guaranteed Obligations shall remain in full force and
effect without regard to, and shall not be impaired or affected by, nor shall
Guarantor be exonerated or discharged by, (A) any Insolvency Proceeding
with respect to Company, Guarantor, any other guarantor or any other Person; (B) any
limitation, discharge, or cessation of the liability of Company, any other
guarantor or any other Person for any Guaranteed Obligations due to any
statute, regulation or rule of law, or any invalidity or unenforceability in
whole or in part of any of the Guaranteed Obligations; (C) any merger,
acquisition, consolidation or change in structure of Company, Guarantor or any
other guarantor or Person, or any sale, lease, transfer or other disposition of
any or all of the assets or shares of Company, Guarantor, any other guarantor
or other Person; (D) any assignment or other transfer, in whole or in
part, of Lender’s interests in and rights under this Guaranty, including Lender’s
right to receive payment of the Guaranteed Obligations, or any assignment or
other transfer, in whole or in part, of Lender’s interests in and to any collateral
securing any Guaranteed Obligations; (E) any claim, defense, counterclaim
or setoff, other than that of prior performance, that Company, Guarantor, any
other guarantor or other Person may have or assert, including any defense of
incapacity or lack of corporate or other authority to execute or deliver any Loan
Document or this Guaranty or any other document related to the Guaranteed
Obligations; (F) Lender’s amendment, modification, renewal, extension,
cancellation or surrender of any Loan Document, any Guaranteed Obligations, any
collateral securing any Guaranteed Obligations, or Lender’s exchange, release,
or waiver of any such collateral; (G) Lender’s exercise or nonexercise of
any power, right or remedy with respect to any of the collateral securing any
Guaranteed Obligations, including Lender’s compromise, release, settlement or
waiver with or of Company, any other guarantor or any other Person; (H) any
direction of application of payment to Company, Guarantor, any other guarantor
or other Person; (I) Lender’s vote, claim, distribution, election,
acceptance, action or inaction in any Insolvency Proceeding related to the Guaranteed
Obligations; (J) any impairment or invalidity of any of the collateral securing
any Guaranteed Obligations or any failure to perfect any of Lender’s Liens
thereon or therein; and (K) any other guaranty of all or any part of the
Guaranteed Obligations.

 

3.             Consents. Guarantor hereby consents and agrees that, without
notice to or further assent from Guarantor: 
(i) the time, manner, place or terms of any payment under any Loan Document
may be extended or changed, including by an increase or decrease in the principal
amount or in the interest rate on any Guaranteed Obligation or any fee or other
amount payable under such Loan Document, by a modification or renewal of any Loan
Document or otherwise; (ii) the time for Company’s (or any other Person’s)
performance of or compliance with any term, covenant or agreement on its part
to be performed or observed under any Loan Document may be extended, or such
performance or compliance waived, or failure in or departure from such
performance or compliance consented to, all in such manner and upon such terms
as Lender may deem proper; (iii) Lender may discharge or release, in whole
or in part any other guarantor or

 

2

 

any other Person liable for the payment and performance of
all or any part of the Guaranteed Obligations, and may permit or consent to any
such action or any result of such action, and Lender shall not be liable to
Guarantor for any failure to collect or enforce payment of the Guaranteed
Obligations; (iv) Lender may take and hold security of any kind, at any
time, as collateral for the Guaranteed Obligations, and may, from time to time,
in whole or in part, exchange, sell, surrender, release, subordinate, modify,
waive, rescind, compromise or extend such security and may permit or consent to
any such action or the result of any such action, and may apply such security
and direct the order or manner of sale thereof; (v) Lender may request and
accept other guaranties of the Guaranteed Obligations and may, from time to
time, in whole or in part, surrender, release, subordinate, modify, waive,
rescind, compromise or extend any such guaranty and may permit or consent to
any such action or the result of any such action; and (vi) Lender may
exercise, or waive or otherwise refrain from exercising, any other right, remedy,
power or privilege granted by any Loan Document, or otherwise available to Lender,
with respect to the Guaranteed Obligations and any collateral therefor, even if
the exercise of such right, remedy, power or privilege affects or eliminates
any right of subrogation or any other right of Guarantor against Company; all
as Lender may deem advisable, and all without impairing, abridging, releasing
or affecting this Guaranty.

 

4.             Waivers. (a) Guarantor waives and agrees not to
assert:  (i) any right to require Lender
to proceed against Company, any other guarantor or any other Person, to proceed
against or exhaust any collateral or other security held for the Guaranteed
Obligations (except to the extent required by applicable law), to give notice
of or institute any public or private sale, foreclosure, or other disposition
of any collateral or security for the Guaranteed Obligations, including,
without limitation, to comply with applicable provisions of the New York
Uniform Commercial Code (“UCC”) or any equivalent provision of any other
applicable law in connection with the sale, foreclosure, or other disposition
of any collateral or to pursue any other right, remedy, power or privilege of Lender
whatsoever; (ii) the defense of the statute of limitations in any action
hereunder or for the collection or performance of the Guaranteed Obligations;
(iii) any defense arising by reason of any lack of corporate or other
authority or any other defense of Company, Guarantor or any other Person;
(iv) any defense based upon Lender’s errors or omissions in the
administration of the Guaranteed Obligations; (v) any rights to set-offs
and counterclaims; (vi) any defense based upon an election of remedies
(including, if available, an election to proceed by nonjudicial foreclosure)
which destroys or impairs the subrogation rights of Guarantor or the right of
Guarantor to proceed against Company or any other obligor of the Guaranteed
Obligations for reimbursement, and (vii) without limiting the generality
of the foregoing, to the fullest extent permitted by law, any other defenses or
benefits that may be derived from or afforded by applicable law limiting the
liability of or exonerating guarantors or sureties, or which may conflict with
the terms of this Guaranty. (b) Guarantor waives
any and all notice of the acceptance of this Guaranty, and any and all notice
of the creation, renewal, modification, extension or accrual of the Guaranteed
Obligations, or the reliance by Lender upon this Guaranty, or the exercise of
any right, power or privilege hereunder. The Guaranteed Obligations shall
conclusively be deemed to have been created, contracted, incurred and permitted
to exist in reliance upon this Guaranty. Guarantor waives promptness,
diligence, presentment, protest, demand for payment, notice of default,
dishonor or nonpayment and all other notices to or upon Company, Guarantor or
any other Person with respect to the Guaranteed Obligations. (c) The obligations of Guarantor hereunder are
independent of and separate from the obligations of Company and any other guarantor
and upon the occurrence and during the

 

3

 

continuance of any default, a separate action or actions may
be brought against Guarantor, whether or not Company or any such other guarantor
is joined therein or a separate action or actions are brought against Company
or any such other guarantor. (d) Guarantor
shall not have any right to require Lender to obtain or disclose any
information with respect to (i) the financial condition or character of
Company or Guarantor or the ability of Company or Guarantor to pay and perform
the Guaranteed Obligations; (ii) the Guaranteed Obligations;
(iii) any collateral or other security for any or all of the Guaranteed
Obligations; (iv) the existence or nonexistence of any other guarantees of
all or any part of the Guaranteed Obligations; (v) any action or inaction
on the part of Lender or any other Person; or (vi) any other matter, fact
or occurrence whatsoever.

 

5.             Subrogation. Until the Guaranteed Obligations shall be satisfied in
full, Guarantor shall not have, and shall not directly or indirectly exercise,
(i) any rights that it may acquire by way of subrogation under this
Guaranty, by any payment hereunder or otherwise, (ii) any rights of contribution,
indemnification, reimbursement or similar suretyship claims arising out of this
Guaranty, or (iii) any other right which it might otherwise have or
acquire (in any way whatsoever) which could entitle it at any time to share or
participate in any right, remedy or security of Lender as against Company or
other guarantors, whether in connection with this Guaranty, any other Loan
Documents or otherwise. If any amount shall be paid to Guarantor on account of
the foregoing rights at any time when any Guaranteed Obligations are
outstanding or any Commitment remains in effect, such amount shall be held in
trust for the benefit of Lender and shall forthwith be paid to Lender to be
credited and applied to the Guaranteed Obligations.

 

6.             Continuing Guaranty; Reinstatement. Guarantor agrees that this Guaranty
is a continuing guaranty relating to any Guaranteed Obligations, including
Guaranteed Obligations which may exist continuously or which may arise from
time to time under successive transactions, and Guarantor expressly
acknowledges that this Guaranty shall remain in full force and effect
notwithstanding that there may be periods in which no Obligations exist. This
Guaranty shall continue to be effective or shall be reinstated and revived, as
the case may be, if, for any reason, any payment of the Guaranteed Obligations
by or on behalf of Company or Guarantor (or receipt of any proceeds of collateral)
shall be rescinded or must otherwise be restored by Lender, whether as a result
of any Insolvency Proceeding or otherwise. To the extent any payment is
rescinded or restored, the Guaranteed Obligations shall be revived in full
force and effect without reduction or discharge for such payment.

 

7.             Payments. Guarantor hereby agrees, in furtherance of the
foregoing provisions of this Guaranty and not in limitation of any other right
which Lender or any other Person may have against Guarantor by virtue hereof,
upon the failure of Company to pay any of the Guaranteed Obligations due to Lender
when and as the same shall become due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including amounts
that would become due but for the operation of the automatic stay under §362(a)
of the Bankruptcy Code), Guarantor shall forthwith pay, or cause to be paid, in
cash, to Lender an amount equal to the amount of the Guaranteed Obligations
then due as aforesaid (including interest which, but for the filing of a
petition in any Insolvency Proceeding with respect to Company, would have
accrued on such Guaranteed Obligations, whether or not a claim is allowed
against Company for such interest in any such Insolvency Proceeding). All
payments made by Guarantor hereunder

 

4

 

shall be applied in accordance with the Loan Agreement. Guarantor
shall make each payment hereunder, without deduction (whether for taxes or
otherwise), set-off or counterclaim, on the day when due in same day or
immediately available funds, and in U.S. dollars.

 

8.             Representations. Guarantor represents and warrants to
Lender that:

 

(a)           Guarantor
is duly organized, validly existing and in good standing under the laws of the
jurisdictions in which it is formed and has the requisite power and authority
to own its properties and to carry on its businesses as now being conducted. Guarantor
is duly qualified as a foreign entity to do business and is in good standing in
every jurisdiction in which the ownership of property or the nature of its
businesses conducted by it makes such qualification necessary and where the
failure to qualify would reasonably be expected to have a Material Adverse
Effect.

 

(b)           Guarantor has
the requisite power and authority to enter into and perform its obligations
under this Guaranty and the other Loan Documents to which it is a party. The
execution and delivery of this Guaranty and the other Loan Documents to which
it is a party by Guarantor and the consummation by Guarantor of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action of Guarantor. This Guaranty and the other Loan Documents to
which it is a party have been (or when delivered, will have been) duly executed
and delivered by Guarantor and constitute (or when so delivered, will
constitute) the legal, valid and binding obligations of Guarantor, enforceable
against Guarantor in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of applicable creditors’
rights and remedies and except as rights to indemnification and to contribution
may be limited by federal or state securities law.

 

(c)           The execution,
delivery and performance of this Guaranty and the other Loan Documents to which
Guarantor is a party, and the consummation by Guarantor of the transactions
contemplated hereby and thereby will not (i) result in a violation of its
articles or certificate of incorporation or bylaws, or other applicable
organizational documents, or (ii) conflict with, result in a breach of, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give rise to any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which Guarantor is a party or by which any of its property or
assets is bound or affected, (iii) result in a violation of any law, rule,
regulation, order, judgment or decree applicable to Guarantor or by which any
of its property or assets is bound or affected, or (iv) except as
contemplated by the Transaction Documents, result in, or require, the creation,
or imposition of any Lien upon or with respect to any of the properties or
assets of Guarantor.

 

(d)           Guarantor
is not required to obtain any consent, approval, license, exemption, authorization
or order of, or make any filing or registration with, any court, governmental
agency or authority or any regulatory or self-regulatory agency or any other
person in connection with the execution, delivery or performance of its
obligations under or contemplated by this Guaranty or the other Loan Documents
to which it is a party, except for any filings necessary to perfect any Liens
on any Collateral provided by Guarantor.

 

5

 

9.             Covenants. So long as this Guaranty shall be in effect, Guarantor:

 

(a)           will
furnish to Lender from time to time such information respecting Guarantor’s
financial condition as Lender may from time to time reasonably request and will
execute, acknowledge, deliver, file, notarize and register at its own expense
all such further agreements, instruments, certificates, documents and
assurances and perform such acts as Lender shall deem necessary or appropriate
to effectuate the purposes of this Guaranty and shall reasonably request.

 

(b)           will
observe, perform and comply with all covenants applicable to Guarantor set
forth in Article V of the Loan Agreement, which by their terms Company is
required to cause Guarantor to observe, perform and comply with, as if such
covenants were set forth in full herein.

 

10.           Notices. All notices and other
communications required or permitted hereunder shall be in writing and shall be
deemed effectively given: (i) upon personal delivery to the party to be
notified; (ii) when sent by confirmed telex or facsimile if sent during
normal business hours of the recipient, if not, then on the next business day;
(iii) five (5) days after having been sent by registered or certified
mail, return receipt requested, postage prepaid; or (iv) two (2) days
after deposit with a nationally recognized overnight courier, specifying next
day delivery, with written verification of receipt. All communications shall be
sent to the parties hereto (i) if to Lender, at its address or facsimile
number set forth in the Loan Agreement, and (ii) if to Guarantor, at its
address or facsimile number set forth below its name on the signature pages hereof;
or,
in each case, as notified by such party from time to time at least ten (10)
days prior to the effectiveness of such notice.

 

11.           No Waiver. No failure on the part of Lender to exercise, and no
delay in exercising, any right, remedy, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, remedy, power or privilege preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. The
rights and remedies under this Guaranty are cumulative and not exclusive of any
rights, remedies, powers and privileges that may otherwise be available to Lender.

 

12.           Costs and Expenses. Guarantor agrees to pay on demand
all reasonable costs and expenses of Lender and reasonable fees and
disbursements of counsel in connection with the enforcement, or preservation of
any rights under, this Guaranty.

 

13.           Binding Effect. This Guaranty shall be binding upon
Guarantor and its successors and assigns, and inure to the benefit of and be
enforceable by Lender and its successors and assigns; provided that Guarantor
shall not have the right to assign, transfer, hypothecate or otherwise convey
its rights, benefits, obligations or duties hereunder without the prior written
consent of Lender. Any such purported assignment, transfer, hypothecation or
other conveyance by Guarantor without the prior express written consent of Lender
shall be void. Guarantor acknowledges and agrees that in connection with an
assignment of, or grant of a participation in, the Guaranteed Obligations, Lender
may assign, or grant participations in, all or a portion of its rights and
obligations hereunder. Upon any assignment of Lender’s rights hereunder, such
assignee or assignees shall have, to the extent of such assignment, all rights
of Lender hereunder.

 

6

 

Guarantor agrees that, upon any such assignment, such
assignee may enforce directly, without joinder of Lender, the rights of Lender
set forth in this Guaranty. Any such assignee shall be entitled to enforce Lender’s
rights and remedies under this Guaranty to the same extent as if it were an
original secured party named herein.

 

14.           Entire Agreement; Amendment. There are no conditions to the
full effectiveness of this Guaranty. This Guaranty and the other Loan Documents
contain the entire agreement of the parties with respect to the subject matter
hereof and supersede any prior agreements, commitments, drafts, communication,
discussions and understandings, oral or written, with respect thereto. No
amendment to this Guaranty, or any waiver of any provision hereof, shall be
effective unless it is in writing and signed by Lender and (in the case of any
amendment) Guarantor. Any such amendment, waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.

 

15.           Knowing and Explicit Waivers. Guarantor acknowledges that it has
either obtained the advice of legal counsel or has had the opportunity to
obtain such advice in connection with the terms and provisions of this Guaranty.
Guarantor acknowledges and agrees that each of the waivers and consents set
forth herein, including, without limitation, those contained in Sections 2
through 4, are made with full knowledge of their significance and consequences.
Additionally, Guarantor acknowledges and agrees that by executing this
Guaranty, it is waiving certain rights, benefits, protections and defenses to
which it may otherwise be entitled under applicable law. Guarantor further
acknowledges and agrees that Lender is relying on such waivers in creating the Guaranteed
Obligations, and that such waivers are a material part of the consideration
which Lender is receiving for creating the Guaranteed Obligations.

 

16.           Severability. If any provision of this Guaranty shall be prohibited
by or invalid under any applicable law or regulation in any jurisdiction, it
shall, as to such jurisdiction, be deemed modified to conform to the minimum
requirements of such law or regulation, or, if for any reason it is not deemed
so modified, it shall be ineffective and invalid only to the extent of such
prohibition or invalidity without affecting the remaining provisions of this
Guaranty, or the validity or effectiveness of such provision in any other
jurisdiction.

 

17.           Governing Law; Submission to Jurisdiction; Jury
Trial Waiver.

 

(a)           This
Guaranty shall be construed in accordance with and governed by the internal
laws of the State of New York (as permitted by Section 5-1401 of the New
York General Obligations Law (or any similar successor provision)) without
giving effect to any choice of law rule that would cause the application of the
laws of any jurisdiction other than the internal laws of the State of New York
to the rights and duties of the parties.

 

(b)           GUARANTOR
HEREBY KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVES THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS GUARANTY AND THE OTHER LOAN
DOCUMENTS TO WHICH IT IS A PARTY, THIS WAIVER BEING A MATERIAL INDUCEMENT FOR LENDER
TO ACCEPT THIS GUARANTY AND ENTER INTO THE OTHER LOAN DOCUMENTS.

 

7

 

(c)           For
purposes of any suit, action or other legal proceeding relating to this Guaranty
or the other Loan Documents to which it is a party or the enforcement of any
provision of this Guaranty or such Loan Documents, Guarantor hereby expressly
and irrevocably submits and consents to the exclusive jurisdiction of the
courts of the State of New York sitting in the borough of Manhattan and the
United States District Court for the Southern District of New York for the
purposes of any such suit, action or legal proceeding, including to enforce any
settlement, order or award; and agrees that such state and federal courts shall
be deemed to be a convenient forum; and waives and agrees not to assert (by way
of motion, as a defense or otherwise), in any such legal proceeding commenced
in such court any claim that Guarantor is not subject personally to the
jurisdiction of such court, that such legal proceeding has been brought in an
inconvenient forum, that the venue of such proceeding is improper or that the Guaranty
or such Loan Documents or the subject matter thereof may not be enforced in or
by such court.

 

(d)           Guarantor
agrees to the entry of an order to enforce any resolution, settlement, order or
award made pursuant to this Section by the courts of the State of New York
sitting in the borough of Manhattan or the United States District Court for the
Southern District of New York and in connection therewith hereby waives, and
agrees not to assert by way of motion, as a defense, or otherwise, any claim
that such resolution, settlement, order or award is inconsistent with or
violative of the laws or public policy of the laws of the State of New York or
any other jurisdiction.

 

18.           Future Guarantors. At such time following the date
hereof as any Subsidiary of Company (an “Acceding Subsidiary”) is required to
accede hereto pursuant to the terms of Section 5.02(m) of the Loan
Agreement, such Acceding Subsidiary shall execute and deliver to Lender an
accession agreement substantially in the form of Annex 1 (the “Accession
Agreement’), signifying its agreement to be bound by the provisions of this
Guaranty as a Guarantor to the same extent as if such Acceding Subsidiary had
originally executed this Guaranty as of the date hereof.

 

19.           Multiple Guarantors; Joint and Several Liability. When this Guaranty is executed by
more than one Guarantor, the word “Guarantor” shall mean all and any one or
more of them, and the obligations of all Persons signing this Guaranty shall be
joint and several.

 

20.           Counterparts. This Guaranty may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute but one and the same agreement.

 

21.           Termination. This Guaranty shall terminate upon payment and
performance in full of all Guaranteed Obligations (other than inchoate
indemnity obligations and any other obligations which by their terms are to
survive the termination of the Loan Documents).

 

[Signature Pages
Following]

 

8

 

IN WITNESS WHEREOF, Guarantor has duly executed this
Guaranty, as of the date first above written.

 

GUARANTORS

 

	
   

  	
  GRANTOR: 

  
	
   

  	
   

  
	
   

  	
  AKSYS INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Laurence P. Birch

  	
   

  
	
   

  	
   

  	
  Name: Laurence P. Birch

  
	
   

  	
   

  	
  Title: CEO

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
  Two Marriot Drive 

  
	
   

  	
  Lincolnshire, IL 60069 

  
	
   

  	
  Attn:

  	
   

  	
   

  
	
   

  	
  Fax: 847-229-2080

  
					

 

 

	
   

  	
  With a copy
  to:

  
	
   

  	
   

  
	
   

  	
  Keith
  S. Crow P.C. 

  
	
   

  	
  Kirkland
  & Ellis LLP 

  
	
   

  	
  200
  East Randolph Drive 

  
	
   

  	
  Chicago,
  Illinois 60601 

  
	
   

  	
  Fax:
  312-861-2200

  

 

S-1

 

Annex 1

to the Guaranty

 

FORM OF
ACCESSION AGREEMENT

 

	
  To:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Re:

  	
   

  	
   

  	
   

  

 

 

Ladies and Gentlemen:

 

This Accession Agreement
is made and delivered pursuant to Section 18 of that certain Guaranty dated as
of                 ,
2006 (as amended, amended and restated, modified, renewed or extended from time
to time, the “Guaranty”), made by each Guarantor named in the signature pages
thereof (each a “Guarantor”), in favor of DURUS LIFE SCIENCES MASTER FUND LTD.,
a Cayman Islands Exempted Company (“Lender”). All capitalized terms used in
this Accession Agreement and not otherwise defined herein shall have the
meanings assigned to them in either the Guaranty or the Loan Agreement.

 

Aksys, Ltd., a Delaware
corporation (“Company”) is party to that certain Loan Agreement dated as of                 ,
2006 (as amended, amended and restated, modified, renewed or extended from time
to time, the “Loan Agreement”) by and between Company and Lender.

 

The undersigned,                                                         
[insert name of acceding Guarantor], a                                           
[corporation, partnership, limited liability
company, etc.], is a Subsidiary of Company and hereby acknowledges
for the benefit of Lender that it shall be a “Guarantor” for all purposes of
the Guaranty effective from the date hereof. The undersigned confirms that the
representations and warranties set forth in Section 8 of the Guaranty are
true and correct as to the undersigned as of the date hereof.

 

Without limiting the
foregoing, the undersigned hereby agrees to perform all of the obligations of a
Guarantor under, and to be bound in all respects by the terms of, the Guaranty,
including Section 9, to the same extent and with the same force and effect
as if the undersigned were an original signatory thereto.

 

This Accession Agreement
shall constitute a Loan Document under the Loan Agreement.

 

This Accession Agreement
shall be construed in accordance with and governed by the internal laws of the
State of New York (as permitted by Section 5-1401 of the New York General
Obligations Law (or any similar successor provision)) without giving effect to
any choice of law rule that would cause the application of the laws of any
jurisdiction other than the internal laws of the State of New York to the
rights and duties of the parties.

 

A-1

 

IN WITNESS WHEREOF, the
undersigned has duly executed this Accession Agreement, as of                               ,
200     .

 

 

	
   

  	
  [GUARANTOR]

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Title

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for
  Notices:

  	
   

  
	
   

  	
  c/o

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attn.:

  	
   

  	
   

  
	
   

  	
  Fax No.:

  	
   

  	
   

  
								

 

A-2

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