EMPLOYMENT AGREEMENT



      This Employment Agreement (the "Agreement") is entered into as of

September 17, 2004 (the "Effective Date") by and between NxStage Medical, Inc.,

a Delaware corporation (the "Company" or "NxStage"), and Philip Licari, an

individual ("Mr. Licari"), residing at 37 Croton Street, Wellesley, MA 02481.



                              W I T N E S S E T H



      WHEREAS, the Company desires to employ Mr. Licari to provide certain

services to the Company subject to the terms set forth herein; and



      WHEREAS, Mr. Licari desires to be employed by the Company in return for

certain compensation and benefits.



      NOW, THEREFORE, in consideration of the mutual covenants and agreements

set forth herein and for other good and valuable consideration, the receipt and

sufficiency of which are hereby acknowledged, the parties agree as follows:



1. EMPLOYMENT BY THE COMPANY.



Subject to the terms and conditions set forth in this Agreement, the Company

agrees to employ Mr. Licari to render full-time services to the Company as its

Vice President and Chief Operating Officer. Mr. Licari shall perform the duties

and have the responsibilities and authorities that are customarily associated

with his then current title, and such other duties of an executive nature as may

be assigned from time to time by the Chief Executive Officer of the Company (the

"CEO"), consistent with the Bylaws of the Company. As Chief Operating Officer,

Mr. Licari agrees to devote his best efforts and substantially all of his

business time and attention (except as otherwise provided in this Agreement and

for vacation periods as set forth herein and reasonable periods of illness or

other incapacities permitted by the Company's general employment policies or, in

the absence of such policies, consistent with the employment policies common to

the industry at large) to the business of the Company and to use the highest

degree of professionalism in performing services for the Company.



2. COMPENSATION.



      2.1 Salary. During the term of this Agreement, as compensation for the

proper and satisfactory performance of all duties to be performed and services

to be provided under this Agreement, the Company agrees to pay Mr. Licari a base

salary ("Base Salary") in the amount of Two Hundred Twenty-Five Thousand Dollars

($225,000) per year of employment, payable on a semi-monthly basis and in

accordance with the Company's standard payroll practices, less required

deductions for state and federal withholding taxes, Social Security and all

other employee taxes and payroll deductions (the "Semi-Monthly Base Payment").

In addition beginning in calendar year 2005, Mr. Licari shall be eligible to

receive annual bonus compensation in an amount up to 25% of his Base Salary at

the discretion of the Board,



<PAGE>



dependent upon Mr. Licari's achievement of certain objectives and the overall

performance of the Company. For calendar year 2004, bonus compensation shall be

guaranteed in an amount equal to 25% of Mr. Licari's Base Salary, pro-rated to

reflect his partial year of service. Mr. Licari's base salary shall be reviewed

annually by the CEO and may be increased or decreased in the sole discretion of

the CEO.



      2.2 Equity.



            (a) As of the Effective Date and subject to the terms of this

Agreement, the Company shall grant to Mr. Licari an Incentive stock option,

exercisable at any time during the Period of Employment (as defined below) and

within ten (10) years after the grant of the option (the "Stock Option"), to

purchase an aggregate of 285,780 shares of the Company's Common Stock at a price

of $3.00 per share (the "Shares"). Such number of shares of Common Stock

constitutes one and one-half percent (1 1/2%) of the fully-diluted shares of

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