X0202 4 2006-06-23 0 0000902600 AKSYS LTD AKSY 0001257242 DURUS LIFE SCIENCES MASTER FUND LTD C/O INTL. FND. SVCS. (IRELAND) LIMITED 3RD FL., BISHOPS SQ., REDMONDS HILL DUBLIN 2 L2 IRELAND 0 0 1 0 Series B Preferred Stock 1 2006-06-23 4 J 0 0 1000 A Common Stock 5000000 5000 D Warrants 1.1 2006-06-23 4 J 0 0 1000 A Common Stock 5000000 5000 D Series B Preferred Stock 1 2006-06-23 4 J 0 0 1000 A Common Stock 15000000 20000 D Warrants 1.1 2006-06-23 4 J 0 0 1000 A Common Stock 15000000 20000 D On June 23, 2006 (the "Closing"), in connection with the March 31, 2006 securities purchase agreement (the "Securities Purchase Agreement") which the Reporting Person entered into with the Issuer, the Reporting Person, in exchange for $5,000,000 principal amount of outstanding notes, acquired the previously reported newly issued shares of the Issuer's Series B Preferred Stock, $0.01 par value (the "Series B Preferred Stock"), convertible into 5,000,000 shares of the Issuer's Common Stock (the "Share" or "Shares") at a conversion price of $1.00 per Share and warrants (the "Warrants") to purchase 5,000,000 Shares at an exercise price of $1.10 per share. The Reporting Person's shares of Series B Preferred Stock will become redeemable after seven (7) years at the option of the holders of a majority of the voting power of the shares of Series B Preferred Stock then outstanding or at the option of the Reporting Person at an earlier date upon the occurrence of specified trigger events. The Reporting Person's Warrants are exercisable, in whole or in part from time to time at or prior to the close of business on the Expiration Date. The Expiration Date of the Warrants is five years from the date of issuance. On June 23, 2006, the Reporting Person partially exercised the previously reported option for 1,453 shares of the Issuer's Series B Preferred Stock and Warrants in exchange for the cancellation of $1,453,000 existing subordinated promissory notes of the Issuer held by the Reporting Person. As a result of the partial exercise of the option, the Reporting Person has the remaining option to invest by itself or with other investors designated by the Reporting Person, up to $13,547,000 in cash for additional shares of Series B Preferred Stock and Warrants having essentially the same terms as the Series B Preferred Stock and Warrants acquired by the Reporting Person at the Closing. Immediately upon issuance, the aggregate number of Shares into which the Series B Preferred Stock and the Warrants may be converted and exercised, respectively, will be limited to that number of Shares that may be issued by the Issuer without the approval of its stockholders as required by the Marketplace Rules of the Nasdaq Capital Market. Under the Securities Purchase Agreement, the Issuer is obligated to seek such stockholder approval promptly. The Series B Preferred Stock and the Warrants will be acquired by the Reporting Person together as a unit (the "Unit") for $1,000 per Unit. Each Unit consists of one share of Series B Preferred and one Warrant. /s/ Leslie L. Lake, Director 2006-06-27