Document:

Exhibit 10.2

INDEMNIFICATION AGREEMENT

This Agreement, dated as of June 23, 2006, is made by
and between Aksys, Ltd., a Delaware corporation (the “Company”), and Howard J.
Lewin (the “Indemnitee”) who is currently serving as a director and/or officer
of the Company.

WHEREAS, the Indemnitee is currently serving in the
capacity or capacities described above;

WHEREAS, the Company wishes the Indemnitee to continue
to serve in such capacity or capacities and the Indemnitee is willing, under
certain circumstances, to continue in such capacity or capacities;

WHEREAS, damages sought and sometimes paid, in many
claims made against corporate directors and officers, and the expenses required
to defend such claims, whether or not the allegations are meritorious, may not
bear a reasonable relationship to the amount of compensation received by and
may be beyond the financial resources of the Indemnitee;

WHEREAS, in addition to indemnification to which the
Indemnitee is entitled to under Delaware General Corporation Law and the
Restated Certificate of Incorporation of the Company, the Company furnishes, at
its expense, directors’ and officers’ liability insurance protecting the
Indemnitee for certain liabilities which might arise in connection with his
service, to or at the request of the Company, but this insurance contains
restrictions and limitations;

WHEREAS, the Indemnitee has indicated that he does not
regard the indemnification available under Delaware General Corporation Law,
the Restated Certificate of Incorporation of the Company, and the Company’s
directors’ and officers’ liability insurance to be adequate protection against
the risks associated with his service to or at the request of the Company;

WHEREAS, the Indemnitee and the Company have concluded
that the exposure to risk of personal liability and payment of damages out of
the Indemnitee’s personal assets may result in overly conservative direction
and supervision of the Company’s affairs, which is detrimental to the best
interests of the Company and its stockholders; and

WHEREAS, the Company has concluded that additional
protection is necessary for its directors and elected officers.

NOW, THEREFORE, the parties hereto, intending to be
legally bound, hereby agree as follows:

1.          Definitions.

(a)           Agent.  For the purposes of this Agreement, “agent”
of the Company means any person who is or was a director, officer, employee,
agent or fiduciary of the Company or a subsidiary of the Company, or is or was
serving at the request of, for the convenience of, or to represent the
interests of the Company or a subsidiary of the Company as a director, officer,

 

employee, agent or fiduciary of another corporation, partnership, joint
venture, trust or other enterprise or entity, including service with respect to
an employee benefit plan.

(b)           Disinterested Director.  For purposes of this Agreement, “Disinterested
Director” of the Company means a director of the Company who is not and was not
a party to the proceeding for which indemnification is being sought by the
Indemnitee.

(c)           Expenses.  For purposes of this Agreement, “expenses”
includes all direct and indirect costs of any type or nature whatsoever
(including, without limitation, all attorneys’ fees and related disbursements,
other out-of-pocket costs and reasonable compensation for time spent by the
Indemnitee for which he is not otherwise compensated by the Company or any
third party) actually and reasonably incurred by the Indemnitee in connection
with either the investigation, defense or appeal of a proceeding or potential
proceeding or establishing or endorsing a right to indemnification under this
Agreement, Section 145 of the General Corporation Law of Delaware (as amended
from time to time), the Restated Certificate of Incorporation of the Company
(as amended from time to time) or otherwise.

(d)           Independent Legal Counsel.  For purposes of this Agreement, “Independent
Legal Counsel” means a law firm, a member of a law firm, or an independent
practitioner, that is experienced in matters of corporation law and shall
include any person who, under the applicable standards of professional conduct
then prevailing, would not have a conflict of interest in representing either
the Company or the Indemnitee in an action to determine the Indemnitee’s rights
under this Agreement.

(e)           Proceeding.  For the purposes of this Agreement, “proceeding”
means any threatened, pending, or completed action, suit or other proceeding,
whether civil, criminal administrative, investigative or any other type
whatsoever.

(f)            Subsidiary.  For purposes of this Agreement, “subsidiary”
means any corporation, partnership, joint venture or other enterprise, a
majority of whose equity interests are owned by the Company, directly or
through one or more of the Company’s other subsidiaries.

2.          Mandatory Indemnification.  In the event the Indemnitee is or was a party
to or is involved (as a party, witness, or otherwise) in any proceeding by
reason of (or arising in part out of) the fact that the Indemnitee is or was
acting as an agent of the Company, whether the basis of the proceeding is the
Indemnitee’s alleged action in an official capacity as a director or officer or
in any other capacity while serving as a director or officer, the Company shall
indemnify the Indemnitee to the fullest extent permitted by applicable law
against any and all expenses, liability, and loss (including judgments, fines,
ERISA excise taxes or penalties, and amounts paid or to be paid in settlement,
and any interest, assessments, or other charges imposed thereon, and any
federal, state, local, or foreign taxes imposed on any director or officer as a
result of the actual or deemed receipt of any payments under this Agreement)
reasonably incurred or suffered by such person in connection with such
proceeding.  The Company shall provide
indemnification pursuant to this Section 2 as soon as practicable, but in no
event later than 30 days after it receives written demand from the
Indemnitee.  Notwithstanding anything in
this Agreement to the contrary, the Indemnitee shall not be entitled to indemnification
pursuant to this 

 2
 

 

Agreement (i) in connection with any proceeding
initiated by the Indemnitee against the Company or any director or officer of
the Company unless the Company has joined in or consented to the initiation of
such proceeding or (ii) on account of any suit in which judgment is rendered
against the Indemnitee pursuant to Section 16(b) of the Securities Exchange Act
of 1934, as amended, for an accounting of profits made from the purchase or
sale by the Indemnitee of securities of the Company.

3.          Mandatory Advancement of
Expenses.  The Company shall
advance all expenses incurred by the Indemnitee in connection with the
investigation, defense, settlement or appeal of any proceeding or potential
proceeding referred to in Section 2 to which the Indemnitee is a party, is
threatened to be made a party or could reasonably be expected to be a party or
with respect to which the Indemnitee could otherwise be involved (including
involvement as a witness as a result of the Indemnitee’s service) as an agent
of the Company.  The Indemnitee hereby
undertakes to repay such amounts advanced if, but only if and to the extent
that, it shall ultimately be determined pursuant to the provisions hereof that
the Indemnitee is not entitled to be indemnified by the Company as authorized
hereby.  The advances to be made
hereunder shall be paid by the Company to the Indemnitee within ten (10) days
following delivery of a written request therefor by the Indemnitee to the
Company; provided however, that, if and to the extent that the Delaware General
Corporation Law requires, an advancement of expenses incurred by the Indemnitee
in his capacity as a director or officer shall be made only upon delivery of an
undertaking by or on behalf of the Indemnitee to repay all amounts so advanced
if it shall ultimately be determined by final judicial decision, from which
there is no further right to appeal, that the indemnitee is not entitled to be
indemnified for such expenses under this Agreement or otherwise.

4.          Maintenance of D&O Insurance.

(a)           So long as the Indemnitee shall
continue to serve as an agent and thereafter so long as there is any reasonable
possibility that the Indemnitee shall be subject to any proceeding by reason of
the fact that the Indemnitee served in any of such capacity, the Company will
employ its best efforts to purchase and maintain in effect for the benefit of
the Indemnitee one or more valid, binding and enforceable policies of directors’
and officers’ liability insurance (“D&O Insurance”) providing, in all
respects, coverage and amounts at least comparable to the D&O insurance in
force as at the date of this Agreement.

(b)           Notwithstanding Section 4(a), the
Company shall not be required to maintain directors’ and officers’ liability
insurance in effect with such coverage amount and terms comparable to the
D&O insurance in force as of the date of this Agreement if, in the
reasonable business judgment of the Board of Directors of the Company, as it
may exist from time to time, either (i) the premium cost for such insurance is
substantially disproportionate to the amount of insurance, (ii) the coverage is
so limited by exclusions that there is insufficient benefit provided by such
insurance or (iii) such insurance is not available.  In the event of such a determination under
the foregoing clauses (i), (ii) or (iii), the Company shall use its best
efforts to maintain the maximum amount of D&O Insurance coverage that it
can reasonably sustain.

 3
 

 

5.          Notice and Other
Indemnification Procedures.

(a)           Promptly after (i) determining that a
reasonable basis exists to believe a proceeding may be commenced by a person
other than such Indemnitee or (ii) receipt by the Indemnitee of notice of the
commencement of or the threat of commencement of any proceeding, the Indemnitee
shall, if the Indemnitee believes that the indemnification with respect thereto
properly may be sought from the Company under this Agreement, notify the
Company thereof.  The failure to notify
or promptly notify the Company shall not relieve the Company from any liability
which it may have to the Indemnitee otherwise than under this Agreement.

(b)           If, at the time of the receipt of a
notice of the commencement of a proceeding pursuant to Section 5(a), the
Company has D&O Insurance in effect, the Company shall give prompt notice
of the commencement of such proceeding to the insurers in accordance with the
procedures set forth in the D&O Insurance policy.  The Company shall thereafter take all
necessary or desirable action to cause such insurers to pay, to or on behalf of
the Indemnitee, all amounts payable as a result of such proceeding in
accordance with the terms of such policy.

(c)           In the event the Company shall be
obligated to pay the expenses of the Indemnitee in connection with any
proceeding or potential proceeding, the Company, shall be entitled to assume
the defense of such proceeding or potential proceeding, with counsel approved
by the Indemnitee (which approval shall not unreasonably be withheld), upon the
delivery to the Indemnitee of written notice of its election so to do.  After delivery of such notice, approval of
such counsel by the Indemnitee and the retention of such counsel by the
Company, the Company will not be liable to the Indemnitee under this Agreement
for any fees of counsel or other expenses subsequently incurred by the
Indemnitee with respect to the same proceeding or potential proceeding, provided that (i) the Indemnitee shall have the right to
employ his own counsel in any such proceeding or potential proceeding at the
Indemnitee’s expense, and (ii) the fees and expenses of the Indemnitee’s
counsel shall be paid by the Company if and to the extent that (A) the
employment of counsel by the Indemnitee has been previously authorized by the
Company, or (B) the Indemnitee shall have reasonably concluded that there is a
conflict of interest between the Company and the Indemnitee or between the
Indemnitee and other individuals indemnified by the Company in the conduct of
any such defense, or (C) the Company shall not, in fact, have employed counsel
to assure the defense of such proceeding or potential proceeding.

6.          Determination of Right to
Indemnification.  It is the
intent of this Agreement to secure for Indemnitee rights of indemnity that are
as favorable as may be permitted under the law and public policy of the State
of Delaware.  Accordingly, the parties
agree that the following procedures and presumptions shall apply in the event
of any question as to whether Indemnitee is entitled to indemnification under
this Agreement:

(a)           To the extent the Indemnitee has been
successful on the merits or otherwise in defense of any proceeding referred to
in Section 2 or in the defense of any claim, issue or matter described therein,
the Company shall indemnify the Indemnitee pursuant to Section 2 against
expenses actually and reasonably incurred by him in connection with the
investigation, defense, or appeal of such proceeding.  If the Indemnitee has not been successful on
the merits or otherwise in any such defense, the Company also shall indemnify the
Indemnitee 

 4
 

 

pursuant to Section 2 unless, and only to the extent
that, the Indemnitee has not met the applicable standard of conduct under the
Company’s Restated Certificate of Incorporation required to entitle the
Indemnitee to such indemnification.

(b)           Subject to the provisions of Section
7 relating to a Change in Control (as defined therein), the determination as to
whether the Indemnitee is entitled to indemnification shall be made as
follows:  (i) if requested by the
Indemnitee by Independent Legal Counsel selected by the Indemnitee with the
consent of the Company (which consent shall not be unreasonably withheld) or
(ii) if no request is made by the Indemnitee for a determination by Independent
Legal Counsel, (A) by a quorum of the Board of Directors consisting of
Disinterested Directors or (B) if such quorum is not obtainable or, even if
obtainable, a quorum of Disinterested Directors so directs, by Independent
Legal Counsel in a written opinion.  If
Independent Legal Counsel shall make such determination, the Company hereby
agrees to pay the reasonable fees of such counsel and to indemnify such counsel
fully against any and all expenses (including attorneys’ fees), claims,
liabilities and damages arising out of or relating to this Agreement or counsel’s
engagement pursuant hereto.

(c)           In making a determination with
respect to entitlement to indemnification hereunder, the person or persons or
entity making such determination shall presume that Indemnitee is entitled to
indemnification under this Agreement. 
Anyone seeking to overcome this presumption shall have the burden of
proof and the burden of persuasion by clear and convincing evidence.  Indemnitee shall be deemed to have acted in
good faith if Indemnitee’s action is based on the records or books of account
of the Company, including financial statements, or on information supplied to
Indemnitee by the officers of the Company in the course of their duties, or on
the advice of legal counsel for the Company or on information or records given
or reports made to the Company by an independent certified public accountant or
by an appraiser or other expert selected with reasonable care by the
Company.  In addition, the knowledge
and/or actions, or failure to act, of any director, officer, agent or employee
of the Company shall not be imputed to Indemnitee for purposes of determining
the right to indemnification under this Agreement.  Whether or not the foregoing provisions of
this Section 6(c) are satisfied, it shall in any event be presumed that
Indemnitee has at all times acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Company.  Anyone seeking to overcome this presumption
shall have the burden of proof and the burden of persuasion by clear and
convincing evidence.

(d)           Notwithstanding a determination that
the Indemnitee is not entitled to indemnification with respect to a specific
proceeding, the Indemnitee shall have the right to apply to the court of
Chancery of Delaware, the court in which that proceeding is or was pending or
any other court of competent jurisdiction, for the purpose of enforcing the
Indemnitee’s right to indemnification or the advance payment of expenses
pursuant to this Agreement.  The burden
of proof shall be on the Company in any such suit to demonstrate by the weight
of the evidence that the Indemnitee is not entitled to indemnification or
advance payment of expenses.  The
Indemnitee’s expenses incurred in successfully establishing his right to
indemnification or advancement of expenses, in whole or in part, in any such
action (or settlement thereof) shall be paid by the Company.

 5
 

 

(e)           Notwithstanding anything in Sections
2 or 3 to the contrary, the Company shall not be liable under this Agreement to
make any indemnity payment or advancement of expenses in connection with any
proceeding or potential proceeding (i) to the extent that payment is actually
made to or on behalf of the Indemnitee under an insurance policy; (ii) to the
extent that payment has been or will be made to the Indemnitee by the Company
otherwise than pursuant to this Agreement; or (iii) to the extent that there
was a final adjudication by a court of competent jurisdiction that the
Indemnitee has not met the applicable standard of conduct required to entitle
the Indemnitee to indemnification under the Delaware General Corporation Law as
it now exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Company to
provide broader indemnification rights than said law permitted the Company to
provide prior to such amendment).

7.          Change in Control.

(a)           The Company agrees that if there is a
Change in Control, as defined below, of the Company (other than a Change in
Control which has been approved by a majority of the members of the Board of
Directors who were directors immediately prior to such Change in Control), then
with respect to all matters thereafter arising concerning the rights of the
Indemnitee to indemnity payments and advance payments of expenses under this
Agreement the Company shall seek legal advice only from Independent Legal
Counsel selected by the Indemnitee with the consent of the Company (which shall
not be unreasonably withheld).  Such counsel,
among other things, shall render a written opinion to the Company and the
Indemnitee as to whether and to what extent the Indemnitee would be permitted
to be indemnified under this Agreement and applicable law.  The Company agrees to pay the reasonable fees
of the Independent Legal Counsel and to indemnify such counsel fully against
any and all expenses (including attorneys’ fees), claims, liabilities and
damages arising out of or relating to this Agreement or counsel’s engagement
pursuant hereto.

(b)           Alternatively, the Indemnitee may
choose to submit all matters arising concerning his rights to indemnity
payments and advance payments of expenses under this Agreement to a panel of
three arbitrators, one of whom is selected by the Company, another of whom is
selected by the Indemnitee and the third of whom is selected by the first two
arbitrators so selected.  Any such
submission shall be governed by the Commercial Arbitration Rules of the
American Arbitration Association and shall be deemed to be a submission within
the meaning of the Federal Arbitration Act or any statutory modification or
re-enactments thereof.  Arbitration
proceedings shall take place in New York, New York, unless otherwise agreed to
by the parties.

(c)           “Change in Control” for purposes of
this Agreement shall be deemed to have occurred if (i) any “person” (as such
term is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder), other than a trustee or
other fiduciary holding securities under an employee benefit plan of the
Company or a corporation owned directly or indirectly by the stockholders of
the Company in substantially the same proportions as their ownership of stock
of the Company, is or becomes the “beneficial owner” (as defined in Rule 13d-3
under said Act), directly or indirectly, of securities of the Company
representing 20% or more of the total voting power represented by the Company’s
then outstanding voting securities, except that a person who as of the date of
this Agreement owns 20% or more of the total voting power represented by the
Company’s 

 6
 

 

outstanding voting securities shall not be deemed to
have caused a Change in Control, or (ii) during any period of two consecutive
years, individuals who at the beginning of such period constitute the Board of
Directors and any new director whose election by the Board or nomination for
election by the Company’s stockholders was approved by a vote of at least two-third
(2/3) of the directors then still in office, who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority of the
Board of Directors, or (iii) the Stockholders of the Company or the Board of
Directors of the Company approve a merger, plan of complete liquidation of the
Company, an agreement for the sale or disposition by the Company of all or any
substantial part of the Company’s assets, or other business combination of the
Company with any other corporation, other than a business combination which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) at least 80% of
the total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such business combination.

8.          Limitation of Actions and
Release of Claims.  No
proceeding shall be brought and no cause of action shall be asserted by the
Company or any subsidiary (or by any stockholder on behalf of the Company or
any subsidiary) against the Indemnitee, his spouse, heirs, estate, executors or
administrators after the expiration of one year from the act or omission of the
Indemnitee upon which such proceeding is based; provided, however, that in the
event that the Indemnitee has fraudulently concealed the facts underlying such
cause of action, no proceeding shall be brought and no cause of action shall be
asserted after the expiration of one year from the earlier of (i) the date the
Company or any subsidiary of the Company discovers such facts, or (ii) the date
the Company or any subsidiary of the Company could have discovered such facts
by the exercise of reasonable diligence. 
Any claim or cause of action of the Company or any subsidiary of the
Company, including claims predicated upon the negligent act or omission of the
Indemnitee, shall be extinguished and deemed released unless asserted by filing
of a legal action within such period. 
This Section 8 shall not apply to any cause of action which has accrued
on the date hereof and of which the Indemnitee is aware on the date hereof but
as to which the Company has no actual knowledge apart from the Indemnitee’s knowledge.

9.          Non-exclusivity.  The provisions for indemnification and
advancement of expenses set forth in this Agreement shall not be deemed
exclusive of any other rights which the Indemnitee may have under any provision
of law, the Company’s Restated Certificate of Incorporation or By-Laws, the
vote of the Company’s stockholders or Disinterested Directors, other
agreements, or otherwise, both as to action in his official capacity and to
action in another capacity while occupying his position as an agent of the
Company, and the Indemnitee’s rights hereunder shall continue after the
Indemnitee has ceased acting as an agent of the Company and shall inure to the
benefit of the heirs, executors and administrators of the Indemnitee.

10.        Settlement.  The Company shall not be liable to indemnify
the Indemnitee under this Agreement for any amounts paid in settlement of any
proceeding without its written consent, which consent shall not be unreasonably
withheld.  The Company shall not settle
any proceeding which would impose any penalty or limitation on the Indemnitee
without the Indemnitee’s written consent, which consent shall not be
unreasonably withheld.  In the event that
consent is not given and the parties hereto are unable to agree on a proposed
settlement, 

 7
 

 

Independent Legal Counsel shall be retained by the
Company, at its expense, with the consent of the Indemnitee, which consent
shall not be unreasonably withheld, for the purpose of determining whether or
not the proposed settlement is reasonable under all the circumstances and if
Independent Legal Counsel determines the proposed settlement is reasonable
under all the circumstances, the settlement may be consummated without the
consent of the other party.

11.        Subrogation Rights.  In the event of any payment under this
Agreement, the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of the Indemnitee against any person or organization
and the Indemnitee shall execute all papers required and shall do everything
that may be reasonably necessary to secure such rights.

12.        Interpretation of
Agreement.  It is understood
that the parties hereto intend this Agreement to be interpreted and enforced so
as to provide indemnification to the Indemnitee to the full extent now or
hereafter not prohibited by law. Indemnitee’s rights hereunder shall apply to
claims made against Indemnitee arising out of acts or omissions which occurred
prior to the date hereof as well as those which occur after the date hereof.

13.        Severability.  If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable for any reason
whatsoever, (a) the validity, legality and enforceability of the remaining
provisions of this Agreement (including, without limitation, all portions of
any paragraphs of this Agreement containing any such provision held to be
invalid, illegal or unenforceable, that are not themselves invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby, and (b) to
the fullest extent possible, the provisions of this Agreement (including,
without limitation, all portions of any paragraph of this Agreement containing
any such provision held to be invalid, illegal or unenforceable) shall be
construed so as to give effect to the intent manifested by the provision held
invalid, illegal or unenforceable and to give effect to Section 13.

14.        Modification and Waiver.  No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both of the
parties hereto.  No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provision hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.

15.        Successors and Assigns.  The terms of this Agreement shall bind, and
shall inure to the benefit of, the successors and assigns of the parties hereto
(including, with respect to the Company, any director or indirect successor by
purchase, merger, consolidation or otherwise to all or substantially all of the
assets or business of the Company).

16.        Death or Disability.  In the event Indemnitee shall become
incapacitated or die, then (a) the Company shall become obligated to provide
indemnification and payments to each person to whom responsibility for any
claim covered hereby shall pass by reason of such incapacity or death to the
same extent the Company would have been obligated to provide indemnification
and payments to Indemnitee if such incapacity or death had not occurred and
(b) each person to whom Indemnitee’s rights shall pass by reason of such
incapacity or death (i) shall be entitled to enforce all rights arising
under or by reason of this Agreement to the same 

 8
 

 

extent to which Indemnitee could have enforced such
rights if such incapacity or death had not occurred and (ii) shall also be
deemed to be an “Indemnitee” for purposes of this Agreement.

17.        Notices.  All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed
duly given (a) on the date of delivery if delivered by hand or (b) on the
second business day after being deposited in the government mail (registered or
express), postage prepaid.  Addresses for
notice to either party are as shown on the signature page of this Agreement, or
as subsequently modified by written notice.

18.        Governing Law.  This Agreement shall be governed exclusively
by and construed according to the laws of the State of Delaware, as applied to
contracts between Delaware residents entered into and to be performed entirely
within Delaware.

19.        Consent to Jurisdiction.  The Company and the Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of Delaware
and the Company irrevocably consents to the jurisdiction of any court in which
an Indemnitee brings action pursuant to Section 6(d), for all purposes in
connection with any proceeding which arises out of or relates to this
Agreement.  The Company agrees not to
initiate any such action or proceeding in any state other than Delaware.

 9
 

 

IN WITNESS WHEREOF, the parties hereto have entered
into this Indemnification Agreement effective as of the date first above
written.

 

	
  

  	
  AKSYS, LTD.

  
	
   

  	
  Two Marriott Drive

  Lincolnshire, Illinois 60069

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INDEMNITEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
				

 

 10Exhibit
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.

 1
 

 

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

 2
 

 

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.

 3
 

 

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.

 4
 

 

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:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 5

 

EXHIBIT A

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00109-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00109-of-00352.parquet"}]]