Exhibit 10.3

AKSYS, LTD.

Proprietary Information Agreement

THIS AGREEMENT is made as of June 23, 2006 between Aksys, Ltd., a Delaware
corporation (the “Company”), and Howard J. Lewin (the “Employee”).

The Company and Employee desire to enter into an agreement defining the relative
rights of the Company and Employee with respect to Intellectual Property (as
defined below) owned by the Company or its customers to which Employee may have
access or may contribute as a result of Employee’s employment with the Company
and confirming the obligation of Employee to refrain from competing with the
Company during his employment with the Company and for a period of time
thereafter as provided herein.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
employment or the continuation of employment of the Employee with the Company
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company and Employee hereby agree as follows:

1.             Nondisclosure and Nonuse of Confidential Information.

a.                                       Unless Employee first obtains the
written consent of the Company, Employee shall not disclose or use at any time,
either during his or her employment with the Company or thereafter, any
Confidential Information (as defined below) of which Employee is or becomes
aware, whether or not such information is developed by him or her, except to the
extent that such disclosure or use is directly related to and required by
Employee’s performance of duties assigned to Employee by the Company.  Employee
shall take all appropriate steps to safeguard Confidential Information and to
protect it against disclosure, misuse, espionage, loss and theft.

b.                                    As used in this Agreement, the term,
“Confidential Information” means information that is not generally known to the
public and that is used, developed or obtained by the Company in connection with
its business, including but not limited to (i) products or services, (ii) fees,
costs and pricing structures, (iii) designs, (iv) analysis and other internal
business information (including marketing and distribution plans and practices
and data from clinical or other studies regarding the products and services of
the Company), (v) drawings, photographs and reports, (vi)  computer software,
including operating systems and applications, (vii) flow charts, manuals and
documentation, (viii) data bases, (ix) accounting and business methods, (x)
inventions, devices, new developments, methods and processes, whether patentable
or unpatentable and whether or not reduced to practice, (xi) customers and
clients and customer or client lists, (xii) all technology and trade secrets,
(xiii) copyrightable works and (xiv) all similar and related information in
whatever form.  Confidential Information shall not include any information that
has been published in a form generally available to the public prior to the date
Employee proposes to disclose or use such information.  Information shall not be
deemed to have been published merely because individual portions of the
information have been separately published, but only if all material features
comprising such information have been published in combination.

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2.             The Company’s Ownership of Intellectual Property.

a.                                       In the event that Employee as part of
his or her activities on behalf of the Company generates, authors or
contributes, either alone or jointly with others, to any invention, design, new
development, device, product, method or process (whether or not patentable or
reduced to practice or comprising Confidential Information), any copyrightable
work (whether or not comprising Confidential Information) or any other form of
Confidential Information relating directly or indirectly to the Company’s
business as now or hereinafter conducted (collectively and together with any
related proprietary rights, including but not limited to copyrights, patents,
trade secret rights and other intellectual property rights, “Intellectual
Property”), Employee acknowledges that such Intellectual Property is the
exclusive property of the Company and hereby assigns and agrees to assign all
right, title and interest in and to such Intellectual Property to the Company. 
Any copyrightable work prepared in whole or in part by Employee will be deemed
“a work made for hire” under Section 201(b) of the 1976 Copyright Act, as
amended, and the Company shall own all of the rights comprised in the copyright
therein.  Employee shall promptly and fully disclose all Intellectual Property
to the Company and shall cooperate with the Company to protect the Company’s
interests in and rights to such Intellectual Property (including, without
limitation, providing reasonable assistance in securing patent protection and
copyright registrations and executing all documents as reasonably requested by
the Company, whether such requests occur prior to or after termination of
Employee’s employment with the Company, and Employee hereby irrevocably appoints
the Company and any of its officers as Employee’s agent and attorney in fact
(coupled with an interest) to undertake such acts in Employee’s name).

b.                                      In accordance with Section 2872 of the
Illinois Employee Patent Act, Ill. Rev. Stat. Chap. 140 | 301 et seq. (1983),
Employee is hereby advised that Section 2 of this Agreement regarding the
Company’s ownership of Intellectual Property does not apply to any invention for
which no equipment, supplies, facilities or trade secret information of the
Company was used and which was developed entirely on Employee’s own time, unless
(i) the invention relates to the business of the Company or to the Company’s
actual or demonstrably anticipated research or development of (ii) the invention
results from any work performed by Employee for the Company.

c.                                       If, notwithstanding the foregoing,
Employee retains any right, title or interest with respect to any Intellectual
Property, Employee hereby grants, and agree to grant, to the Company, without
any limitations or any additional remuneration, the worldwide, exclusive,
royalty-free, perpetual, irrevocable, transferable, freely sublicenseable, right
and license under all of Employee’s right, title and interest with respect to
any Intellectual Property to make, modify, use, sell or otherwise exploit any
product or service relating directly or indirectly to the Company’s business as
now or hereinafter conducted.

3.                                     Delivery of Materials Upon Termination of
Employment.  As requested by the Company from time to time and upon the
termination of Employee’s employment with the Company for any reason, Employee
shall promptly deliver to the Company all copies and embodiments, in whatever
form, of all Confidential Information and Intellectual Property in Employee’s
possession or within his or her control (including, but not limited to, written
records, notes, photographs, manuals, notebooks, documentation, program
listings, flow charts, magnetic

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media, disks, diskettes, tapes and all other materials containing any
Confidential Information or Intellectual Property) irrespective of the location
or form of such material and, if requested by the Company, shall provide the
Company with written confirmation that all such materials have been delivered to
the Company.

4.                                     License to Other Inventions.  If, in the
course of Employee’s employment with the Company, Employee incorporates into
Company property or otherwise uses an invention, work or other materials owned
by Employee or in which Employee has an interest, the Company is hereby granted
a worldwide, nonexclusive, royalty-free, perpetual, irrevocable, transferable,
freely sublicenseable, right and license perpetual, world-wide license to make,
modify, use, sell or otherwise exploit any product or service relating directly
or indirectly to the Company’s business as now or hereinafter conducted.

5.                                     Non-Compliance.  Employee acknowledges
that his or her failure to comply with any of the provisions of Sections 1, 2, 3
or 4 of this Agreement will irreparably harm the business of the Company, and
that the Company will not have an adequate remedy at law in the event of such
non-compliance.  Therefore, Employee acknowledges that the Company shall be
entitled to injunctive relief without the posting of any bond or other security,
in addition to whatever other remedies it may have, in any court of competent
jurisdiction against any acts of noncompliance by Employee with this Agreement.

6.                                     Noncompetition and Nonsolicitation. 
Employee acknowledges and agrees with the Company that Employee’s services to
the Company are unique in nature and that the Company would be irreparably
damaged if Employee violated his obligations under Section 8 of his Executive
Employment Agreement with the Company dated June 23, 2006 (the “Employment
Agreement”) with respect to noncompetition and nonsolicitation.  Accordingly,
Employee acknowledges and reaffirms his obligations under Section 8 of the
Employment Agreement, including the restrictions on competitive activity and
solicitation set forth therein.

7.                                     Notices.  Any notice provided for in this
Agreement must be in writing and must be either personally delivered, mailed by
first class mail (postage prepaid and return receipt requested) or sent by
reputable overnight courier service (charges prepaid) to the Company at the
address below indicated:

Two Marriott Drive
Lincolnshire, IL 60069
Attention: Chief Financial Officer and Board of Directors

and to the Employee at the address set forth under his or her signature to this
Agreement or to such other address or to the attention of such other person as
the recipient party shall have specified by prior written notice to the sending
party.  Any notice under this Agreement shall be deemed to have been given when
so delivered or sent or, if mailed, five days after deposit in the U.S. mail.

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8.             General Provisions.

a.                                       Company Subsidiaries.  For purposes of
this Agreement, the term “Company” Shall include all subsidiaries of the Company
unless the context requires otherwise.

b.                                      Not an Employment Agreement.  Employee
and the Company acknowledge and agree that this Agreement is not intended and
should not be construed to grant Employee any right to continued employment with
the Company and to otherwise define the terms of Employee’s employment with the
Company.

c.                                     Absence of Conflicting Agreements. 
Except as may be set forth in Exhibit A hereto, Employee hereby warrants and
covenants that (i) his or her employment by the Company and his or her
execution, delivery and performance of this Agreement do not and shall not
result in a breach of the terms, conditions or provisions of any agreement,
instrument, order, judgment or decree to which Employee is subject, (ii)
Employee is not a party to or bound by any employment agreement, non-compete
agreement or confidentiality agreement with any other person or entity and (iii)
upon the execution and delivery of this Agreement by the Company, this Agreement
shall be the valid and binding obligation of Employee, enforceable in accordance
with its terms.

d.                                      Severability.  Whenever possible, each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
is held to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision or any other jurisdiction,
and this Agreement shall be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision had never
been contained herein.  The parties agree that a court of competent jurisdiction
making a determination of the invalidity or unenforceable term or provision
concerning non-competition with a term or provision that is valid and
enforceable and that comes closet to expressing the intention of the invalid or
unenforceable term or provision, and this Agreement shall be enforceable as so
modified.

e.                                       Complete Agreement.  This Agreement,
the Employment Agreement, those documents expressly referred to herein or
therein and other documents of even date herewith embody the complete agreement
and understanding among the parties and supersede and preempt any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.

f.                                         Counterparts.  This Agreement may be
executed in separate counterparts, each of which is deemed to be an original and
all of which taken together constitute one and the same agreement.

g.                                      Successors and Assigns.  Except as
otherwise provided herein, this Agreement shall bind and inure to the benefit of
and be enforceable by the Company and Employee and their respective successors
and assigns; provided that the rights and obligations of Employee under this
Agreement may not be assigned or delegated without the prior written consent of
the Company.

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h.                                      Choice of Law.  All questions concerning
the construction, validity, enforcement and interpretation of this Agreement and
the exhibits hereto shall be governed by the internal law, and not the law of
conflicts, of the State of Illinois.  Disputes arising under this Agreement
shall be arbitrated as set forth in Section 9 of the Employment Agreement,
provided that the Company may seek injunctive, equitable or similar relief from
any court of competent jurisdiction as set forth in Section 5.

i.                                          Remedies.  Each of the parties to
this Agreement shall be entitled to enforce its rights under this Agreement
specifically, to recover damages and costs (including reasonable attorneys fees)
caused by any breach of any provision of this Agreement and to exercise all
other rights existing in its favor.  The parties hereto agree and acknowledge
that Employee’s breach of any term or provision of this Agreement shall
materially and irreparably harm the Company, that money damages shall
accordingly not be an adequate remedy for any breach of the provisions of this
Agreement by Employee and that the Company in its sole discretion and in
addition to any other remedies it may have at law or in equity may apply to any
court of law or equity of competent jurisdiction (without posting any bond or
deposit) for specific performance and/or other injunctive relief in order to
enforce or prevent any violations of the provisions of this Agreement.

j.                                          Amendment and Waiver.  The
provisions of this Agreement may be amended and waived only with the prior
written consent of the Company and Employee.

9.                                       Understanding of this Agreement by
Employee.  THE EMPLOYEE REPRESENTS AND WARRANTS THAT HE (i) HAS READ AND
UNDERSTANDS THIS AGREEMENT, (ii) HAS HAD THE OPPORTUNITY TO OBTAIN ADVICE FOR
LEGAL COUNSEL OF CHOICE IN ORDER TO INTERPRET THIS AGREEMENT, (iii) HAS HAD THE
OPPORTUNITY TO ASK THE COMPANY QUESTIONS ABOUT THIS AGREEMENT AND SUCH QUESTIONS
HAVE BEEN ANSWERED TO THE SATISFACTION OF THE EMPLOYEE AND (iv) HAS BEEN GIVEN A
COPY OF THIS AGREEMENT.

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

AKSYS, LTD.

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

Name:

 

Howard J. Lewin

 

 

Title:

 

 

 

 

 

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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EXHIBIT A

 

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