<PAGE>
As filed with the Securities and Exchange Commission on December 17, 1996
Registration No. 333-
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AKSYS, LTD.
(Exact name of registrant as specified in its charter)
Delaware 36-3890205
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Two Marriott Drive 60069
Lincolnshire, Illinois (Zip Code)
(Address of Principal Executive Offices)
AKSYS, LTD.
1996 STOCK AWARDS PLAN
(Full title of the plan)
LAWRENCE H. N. KINET
Chairman and Chief Executive Officer
Aksys, Ltd.
Two Marriott Drive
Lincolnshire, Illinois 60069
(Name and address of agent for service)
(847) 229-2020
(Telephone number, including area code, of agent for service)
Copy to:
Mark Tresnowski
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
(312) 861-2000
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Proposed maximum Amount of
Title of securities to be registered Amount to be registered aggregate offering price (1) registration fee (1)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock, par value $0.01 500 shares at $16.00 $8,314,326 $2,519.49
per share .................... 16,250 shares at $15.25
82,500 shares at $13.00
27,000 shares at $12.875
9,286 shares at $10.50
92,750 shares at $9.750
9,000 shares at $9.250
4,500 shares at $9.00
2,250 shares at $8.50
655,964 shares at $8.375
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The aggregate offering price and the amount of the registration fee have
been computed in accordance with Rule 457(h) based in part upon the price at
which issued options may be exercised and in part (with respect to issuable
options and awards) on the average of the high and low prices of the shares
reported in the consolidated reporting system on December 11, 1996.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The documents containing information specified in Part I (plan information
and registrant information) will be sent or given to employees as specified by
Rule 428 under the Securities Act of 1933, as amended (the "Securities Act").
Such documents need not be filed with the Commission either as part of this
Registration Statement or as prospectuses or prospectus supplements pursuant to
Rule 424 under the Securities Act. These documents and the documents
incorporated by reference in this Registration Statement pursuant to Item 3 of
Part II of this Registration Statement, taken together, constitute a prospectus
that meets the requirements of Section 10(a) of the Securities Act.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Pursuant to Rule 416 under the Securities Act, this Registration Statement
shall be deemed to cover any additional shares offered under the Plan in order
to reflect share splits, share dividends, mergers and other capital changes.
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.
The following documents filed by Aksys, Ltd. (the "Corporation") with the
Securities and Exchange Commission (the "Commission") are incorporated herein by
reference (File No. 0-28290):
(a) The Prospectus of the Corporation, dated May 16, 1996, filed with the
Commission on May 17, 1996 pursuant to Rule 424(b) of the Securities Act
relating to the public offering of 3,565,000 shares of the Common Stock of the
Corporation, par value $0.01 per share (the "Common Stock").
(b) Quarterly Report on Form 10-Q, filed with the Commission on August 14,
1996; Quarterly Report on Form 10-Q, filed with the Commission on November 14,
1996; Report on Form 8-K, filed with the Commission on October 28, 1996;
Registration Statement on Form 8-A, filed with the Commission on November 5,
1996.
(c) Description of Common Stock contained in the Registration Statement of
the Corporation on Form 8-A filed with the Commission April 24, 1996.
All reports and other documents subsequently filed by the Corporation
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of the
filing of such reports and documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any other subsequently filed document which also is
incorporated or deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
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<PAGE>
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware, as
amended, permits indemnification of directors, officers, employees and agents of
corporations under certain conditions and subject to certain limitations. The
Restated Certificate of Incorporation, as amended, and the Amended and Restated
Bylaws of the Corporation provide for the indemnification of directors,
officers, employees and agents of the Corporation to the fullest extent
permitted by Section 145.
The Corporation has obtained insurance policies under which its directors
and officers are insured, within the limits and subject to the limitations of
the policies, against certain expenses in connection with the defense of certain
actions, suits or proceedings and certain liabilities which might be imposed as
a result of certain actions, suits or proceedings, to which they are parties by
reason of being or having been such directors or officers. In addition, the
Corporation has entered into indemnification agreements with certain of its
officers and directors.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
See Exhibit Index.
ITEM 9. UNDERTAKINGS.
(a) The Corporation hereby undertakes:
(1) to file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in this Registration
Statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
-------- -------
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Corporation pursuant
to Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement.
(2) that, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) to remove from registration by means of a post-effective amendment
any of the securities being
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<PAGE>
registered which remain unsold at the termination of the offering.
(b) The Corporation hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Corporation's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in the Registration Statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Corporation pursuant to the foregoing provisions, or otherwise, the Corporation
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Corporation of expenses incurred or
paid by a director, officer or controlling person of the Corporation in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Corporation will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
-4-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Corporation certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Lincolnshire, State of Illinois, on December 17, 1996.
AKSYS, LTD.
/s/ Lawrence H.N. Kinet
By:___________________________________
Lawrence H.N. Kinet
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on December 17, 1996.
SIGNATURE CAPACITY
--------- --------
/s/ Lawrence H.N. Kinet Chairman, Chief Executive Officer and
______________________________________ Director
Lawrence H.N. Kinet
/s/ Rodney S. Kenley President, Chief Operating Officer
______________________________________ and Director
Rodney S. Kenley
/s/ Dennis N. Cavender Vice President, Chief Financial
______________________________________ Officer
Dennis N. Cavender
/s/ Peter H. McNerney
_____________________________________ Director
Peter H. McNerney
/s/ Larry G. Gerdes
______________________________________ Director
Larry G. Gerdes
/s/ Bernard R. Tresnowski
______________________________________ Director
Bernard R. Tresnowski
/s/ W. Dekle Rountree, Jr.
______________________________________ Director
W. Dekle Rountree, Jr.
-5-
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequentially
Number Description of Document Numbered Page
- --------- ------------------------------------------------------------------------------- -------------
<S> <C> <C>
4.1 Restated Certificate of Incorporation of the Corporation
4.2 Amended and Restated Bylaws of the Corporation, incorporated by reference
to the Corporation's Registration Statement on Form S-1 (Registration No. 333-
2492), Exhibit 3.2
4.3 1996 Stock Awards Plan
5 Opinion of Kirkland & Ellis
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Kirkland & Ellis (included in Exhibit 5)
</TABLE>
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<PAGE>
EXHIBIT 4.1
RESTATED CERTIFICATE OF INCORPORATION
OF
AKSYS, LTD.
(Adopted in accordance with Sections 242 and 245 of the General Corporation Law
of the State of Delaware. This Restated Certificate of Incorporation only
restates and integrates but does not further amend the certificate of
incorporation of Aksys, Ltd. as heretofore amended or supplemented and there is
no discrepancy between those provisions and the provisions of this restated
certificate)
ARTICLE I - Name
----------------
The name of the corporation is Aksys, Ltd. (hereinafter referred to as
the "Corporation").
-----------
ARTICLE II - Registered Office
------------------------------
The address of the registered office of the Corporation in the State
of Delaware is 1209 Orange Street, Wilmington, Delaware 19801. The name of the
registered agent of the Corporation at that address is The Corporation Trust
Company.
ARTICLE III - Purpose
---------------------
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware (the "Delaware General Corporation Law").
--------------------------------
ARTICLE IV - Capital Stock
--------------------------
Part A. General.
------ -------
The maximum number of shares of stock that the Corporation is
authorized to have outstanding at any one time is 51,000,000 shares, consisting
of:
(1) 1,000,000 shares of Preferred Stock, par value $0.01 per share
(the "Preferred Stock"); and
---------------
<PAGE>
(2) 50,000,000 shares of Common Stock, par value $0.01 per share (the
"Common Stock").
------------
The Common Stock and the Preferred Stock are hereafter collectively
referred to as the "Stock."
-----
Part B. Preferred Stock.
------ ---------------
Authority is hereby expressly vested in the board of directors of the
Corporation, subject to the provisions of this ARTICLE IV and to the limitations
----------
prescribed by law, to authorize the issuance from time to time of one or more
series of Preferred Stock. The authority of the board of directors with respect
to each series shall include, but not be limited to, the determination or fixing
of the following by resolution or resolutions adopted by the affirmative vote of
a majority of the total number of the directors then in office:
(a) The designation of such series;
(b) The dividend rate of such series, the conditions and dates upon
which such dividends shall be payable, the relation which such dividends shall
bear to the dividends payable on any other class or classes or series of the
Corporation's capital stock and whether such dividends shall be cumulative or
non-cumulative;
(c) Whether the shares of such series shall be subject to redemption
for cash, property or rights, including securities of any other corporation, by
the Corporation or upon the happening of a specified event and, if made subject
to any such redemption, the times or events, prices, rates, adjustments and
other terms and conditions of such redemptions;
(d) The terms and amount of any sinking fund provided for the
purchase or redemption of the shares of such series;
(e) Whether or not the shares of such series shall be convertible
into, or exchangeable for, at the option of either the holder or the Corporation
or upon the happening of a specified event, shares of any other class or classes
or of any other series of the same class of the Corporation's capital stock and,
if provision be made for conversion or exchange, the times or events, prices,
rates, adjustments and other terms and conditions of such conversions or
exchanges;
(f) The restrictions, if any, on the issue or reissue of any
additional Preferred Stock;
(g) The rights of the holders of the shares of such series upon the
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation; and
(h) The provisions as to voting, optional and/or other special rights
and preferences, if any, including, without limitation, the right to elect one
or more directors.
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<PAGE>
Part C. Common Stock.
------ ------------
Except as otherwise provided by the Delaware General Corporation Law,
by this Restated Certificate of Incorporation and subject to the rights of
holders of any series of Preferred Stock, the holders of record of Common Stock
shall share ratably in all dividends payable in cash, stock or otherwise and
other distributions, whether in respect of liquidation or dissolution (voluntary
or involuntary) or otherwise and, are subject to all the powers, rights,
privileges, preferences and priorities of any series of Preferred Stock as
provided herein or in any resolution or resolutions adopted by the board of
directors pursuant to authority expressly vested in it by the provisions of this
ARTICLE IV.
- ----------
(a) The Common Stock shall not be convertible into, or exchangeable
for, shares of any other class or classes or of any other series of the same of
the Corporation's capital stock.
(b) No holder of Common Stock shall have any preemptive,
subscription, redemption, conversion or sinking fund rights with respect to the
Common Stock, or to any obligations convertible (directly or indirectly) into
stock of the Corporation whether now or hereafter authorized.
(c) Except as otherwise provided by the Delaware General Corporation
Law, by this Restated Certificate of Incorporation and subject to the rights of
holders of any series of Preferred Stock, all of the voting power of the
stockholders of the Corporation shall be vested in the holders of the Common
Stock, and each holder of Common Stock shall have one vote for each share held
by such holder on all matters voted upon by the stockholders of the Corporation.
Part D. Other Provisions.
------ ----------------
(a) Registration of Transfer. The Corporation shall keep at its
------------------------
principal office a register for the registration of the Stock. Upon the
surrender of any certificate representing Stock at such place, the Corporation
shall, at the request of the record holder of such certificate, execute and
deliver (at the Corporation's expense) a new certificate or certificates in
exchange therefor representing in the aggregate the number of shares of Stock
represented by the surrendered certificate. Each such new certificate shall be
registered in such name and shall represent such number of shares of Stock as is
requested by the holder of the surrendered certificate and shall be
substantially identical in form to the surrendered certificate.
(b) Replacement. Upon receipt of evidence reasonably satisfactory to
-----------
the Corporation (an affidavit of the registered holder shall be satisfactory) of
the ownership and the loss, theft, destruction or mutilation of any certificate
evidencing shares of any class of Stock, and in the case of any such loss, theft
or destruction, upon receipt of indemnity reasonably satisfactory to the
Corporation (provided that if the holder is a financial institution or other
institutional investor, its own agreement shall be satisfactory), or, in the
case of any such mutilation upon surrender of such certificate, the Corporation
shall (at its expense) execute and
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<PAGE>
deliver in lieu of such certificate a new certificate of like kind representing
the number of shares of such class represented by such lost, stolen, destroyed
or mutilated certificate and dated the date of such lost, stolen, destroyed or
mutilated certificate.
(c) Notices. Except as otherwise expressly provided hereunder, all
-------
notices referred to herein shall be in writing and shall be delivered by
registered or certified mail, return receipt requested and postage prepaid, or
by reputable overnight courier service, charges prepaid, and shall be deemed to
have been given when so mailed or sent (i) to the Corporation, at its principal
executive offices and (ii) to any stockholder, at such holder's address as it
appears in the stock records of the Corporation (unless otherwise indicated by
any such holder).
ARTICLE V - Existence
---------------------
The Corporation is to have perpetual existence.
ARTICLE VI - Bylaws
-------------------
In furtherance and not in limitation of the powers conferred by
statute, the board of directors of the Corporation is expressly authorized to
make, alter, amend, change, add to or repeal the bylaws of the Corporation by
the affirmative vote of a majority of the total number of directors then in
office. Any alteration or repeal of the bylaws of the Corporation by the
stockholders of the Corporation shall require the affirmative vote of at least a
majority of the voting power of the then outstanding shares of capital stock of
the Corporation entitled to vote on such alteration or repeal, subject to
ARTICLE IX hereof and ARTICLE VII of the Corporation's bylaws.
- ---------- -----------
ARTICLE VII - Stockholders and Directors
----------------------------------------
Part A. Stockholder Action. Election of directors need not be by
------ ------------------
written ballot unless the bylaws of the Corporation so provide. Subject to the
rights of any series of Preferred Stock, from and after the date on which the
Common Stock of the Corporation is registered pursuant to the Securities
Exchange Act of 1934, as amended (the "1934 Act"), (i) any action required or
--------
permitted to be taken by the stockholders of the Corporation must be effected at
an annual or special meeting of stockholders of the Corporation and may not be
effected in lieu thereof by any consent in writing by such stockholders, (ii)
special meetings of stockholders of the Corporation may be called only by either
the board of directors pursuant to a resolution adopted by the affirmative vote
of the majority of the total number of directors then in office or by the chief
executive officer of the Corporation and (iii) advance notice of stockholder
nominations of persons for election to the Board of Directors of the Corporation
and of business to be brought before any annual meeting of the stockholders by
the stockholders of the Corporation shall be given in the manner provided in the
bylaws of the Corporation.
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<PAGE>
Part B. Number of Directors and Term of Office. Subject to any
------ --------------------------------------
rights of the holders of any series of Preferred Stock to elect additional
directors under specified circumstances, the number of directors which shall
constitute the Board of Directors of the Corporation shall be such number as
shall from time to time be fixed by resolution adopted by the affirmative vote
of a majority of the total number of directors then in office. The directors of
the Corporation shall be divided into three classes: Class I, Class II and Class
III. Membership in such class shall be as nearly equal in number as possible.
The term of office of the initial Class I directors shall expire at the annual
election of directors by the stockholders of the Corporation in 1997, the term
of office of the initial Class II directors shall expire at the annual election
of directors by the stockholders of the Corporation in 1998 and the term of
office of the initial Class III directors shall expire at the annual election of
directors by the stockholders of the Corporation in 1999, or thereafter when
their respective successors in each case are elected by the stockholders and
qualified, subject however, to prior death, resignation, retirement,
disqualification or removal from office for cause. At each succeeding annual
election of directors by the stockholders of the Corporation beginning in 1997,
the directors chosen to succeed those whose terms then expire shall be
identified as being of the same class as the directors they succeed and shall be
elected for a term expiring at the third succeeding annual election of directors
by the stockholders of the Corporation, or thereafter when their respective
successors in each case are elected by the stockholders and qualified. If the
number of directors is changed, any increase or decrease shall be apportioned
among the classes so as to maintain the number of directors in each class as
nearly equal as possible, and any additional director of any class elected to
fill a vacancy resulting from an increase in such class shall hold office for a
term that shall coincide with the remaining term of that class, but in no case
shall a decrease in the number of directors shorten the term of any incumbent
director.
Part C. Removal and Resignation. No director may be removed from
------ -----------------------
office without cause and without the affirmative vote of the holders of a
majority of the voting power of the then outstanding shares of capital stock of
the Corporation entitled to vote generally in the election of directors voting
together as a single class; provided, however, that if the holders of any class
or series of capital stock are entitled by the provisions of this Restated
Certificate of Incorporation (it being understood that any references to this
Restated Certificate of Incorporation shall include any duly authorized
certificate of designation) to elect one or more directors, such director or
directors so elected may be removed without cause only by the vote of the
holders of a majority of the outstanding shares of that class or series entitled
to vote. Any director may resign at any time upon written notice to the
Corporation.
Part D. Vacancies and Newly Created Directorships. Subject to any
------ -----------------------------------------
rights of the holders of any series of Preferred Stock to fill such newly
created directorships or vacancies, any newly created directorships resulting
from any increase in the authorized number of directors and any vacancies in the
Board of Directors resulting from death, resignation, disqualification, removal
or other cause shall, unless otherwise provided by law or by resolution approved
by the affirmative vote of a majority of the total number of directors then in
office, be filled only by resolution approved by the affirmative vote of a
majority of the total number of directors then in office, and any director so
chosen shall hold office until the next election of the
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<PAGE>
class for which such director shall have been chosen, and until his successor
shall have been duly elected and qualified, unless he shall resign, die, become
disqualified or be removed for cause.
ARTICLE VIII - General Provisions
---------------------------------
Part A. Dividends. The board of directors shall have authority from
------ ---------
time to time to set apart out of any assets of the Corporation otherwise
available for dividends a reserve or reserves as working capital or for any
other purpose or purposes, and to abolish or add to any such reserve or reserves
from time to time as said board may deem to be in the interest of the
Corporation; and said board shall likewise have power to determine in its
discretion, except as herein otherwise provided, what part of the assets of the
Corporation available for dividends in excess of such reserve or reserves shall
be declared in dividends and paid to the stockholders of the Corporation.
Part B. Issuance of Stock. The shares of all classes of stock of the
------ -----------------
Corporation may be issued by the Corporation from time to time for such
consideration as from time to time may be fixed by the board of directors of the
Corporation, provided that shares of stock having a par value shall not be
issued for a consideration less than such par value, as determined by the board.
At any time, or from time to time, the Corporation may grant rights or options
to purchase from the Corporation any shares of its stock of any class or classes
to run for such period of time, for such consideration, upon such terms and
conditions, and in such form as the board of directors may determine. The board
of directors shall have authority, as provided by law, to determine that only a
part of the consideration which shall be received by the Corporation for the
shares of its stock which it shall issue from time to time, shall be capital
provided, however, that, if all the shares issued shall be shares having a par
value, the amount of the part of such consideration so determined to be capital
shall be equal to the aggregate par value of such shares. The excess, if any,
at any time, of the total net assets of the Corporation over the amount so
determined to be capital, as aforesaid, shall be surplus. All classes of stock
of the Corporation shall be and remain at all times nonassessable.
The board of directors is hereby expressly authorized, in its
discretion, in connection with the issuance of any obligations or stock of the
Corporation (but without intending hereby to limit its general power so to do in
other cases), to grant rights or options to purchase stock of the Corporation of
any class upon such terms and during such period as the board of directors shall
determine, and to cause such rights to be evidenced by such warrants or other
instruments as it may deem advisable.
Part C. Inspection of Books and Records. The board of directors
------ -------------------------------
shall have power from time to time to determine to what extent and at what times
and places and under what conditions and regulations the accounts and books of
the Corporation, or any of them, shall be open to the inspection of the
stockholders; and no stockholder shall have any right to inspect any account or
book or document of the Corporation, except as conferred by the laws of the
State of Delaware, unless and until authorized so to do by resolution of the
board of directors or of the stockholders of the Corporation.
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<PAGE>
Part D. Location of Meetings, Books and Records. Except as otherwise
------ ---------------------------------------
provided in the bylaws, the stockholders of the Corporation and the board of
directors may hold their meetings and have an office or offices outside of the
State of Delaware and, subject to the provisions of the laws of said State, may
keep the books of the Corporation outside of said State at such places as may,
from time to time, be designated by the board of directors.
ARTICLE IX - Amendments
-----------------------
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Restated Certificate of Incorporation in the
manner now or hereinafter prescribed herein and by the laws of the State of
Delaware, and all rights conferred upon stockholders herein are granted subject
to this reservation. Notwithstanding anything contained in this Restated
Certificate of Incorporation to the contrary, Parts A, B and C of ARTICLE IV,
----------
Parts A, C, D and E of ARTICLE VII, ARTICLE X, ARTICLE XII and this ARTICLE IX
----------- --------- ----------- ----------
of this Restated Certificate of Incorporation shall not be altered, amended or
repealed and no provision inconsistent therewith shall be adopted without the
affirmative vote of the holders of at least 66 2/3% of the voting power of the
then outstanding shares of capital stock of the Corporation entitled to vote on
such alteration, amendment or repeal, voting together as a single class (other
than any alteration or amendment to Part A of ARTICLE IV that increases the
----------
authorized number of shares of Preferred Stock or Common Stock).
ARTICLE X - Liability
---------------------
Part A. Limitation of Liability.
------ -----------------------
(a) To the fullest extent permitted by 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
Corporation to provide broader indemnification rights than permitted prior
thereto), and except as otherwise provided in the Corporation's bylaws, no
director of the Corporation shall be liable to the Corporation or its
stockholders for monetary damages arising from a breach of fiduciary duty owed
to the Corporation or its stockholders.
(b) Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
Part B. Right to Indemnification. Each person who was or is made a
------ ------------------------
party or is threatened to be made a party to or is otherwise involved (including
involvement as a witness) in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "proceeding"), by reason of the
----------
fact that he or she is or was a director or officer of the Corporation or, while
a director or officer of the Corporation, is or was serving at the request of
the Corporation as a director, officer, employee or agent of another corporation
or of a
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<PAGE>
partnership, joint venture, trust or other enterprise, including service with
respect to an employee benefit plan (an "indemnitee"), whether the basis of
----------
such proceeding is alleged action in an official capacity as a director or
officer or in any other capacity while serving as a director or officer, shall
be indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than permitted prior thereto), against all expense,
liability and loss (including attorneys' fees, judgments, fines, excise exercise
taxes or penalties and amounts paid in settlement) reasonably incurred or
suffered by such indemnitee in connection therewith and such indemnification
shall continue as to an indemnitee who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the indemnitee's heirs,
executors and administrators; provided, however, that, except as provided in
Part C of this ARTICLE X with respect to proceedings to enforce rights to
---------
indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee only
if such proceeding (or part thereof) was authorized by the board of directors of
the Corporation. The right to indemnification conferred in this Part B of
ARTICLE X shall be a contract right and shall include the obligation of the
- ---------
Corporation to pay the expenses incurred in defending any such proceeding
in advance of its final disposition (an "advance of expenses"); provided,
-------------------
however, that, if and to the extent that the Delaware General Corporation Law
requires, an advance of expenses incurred by an indemnitee in his or her
capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such indemnitee, including, without limitation,
service to an employee benefit plan) shall be made only upon delivery to the
Corporation of an undertaking (an "undertaking"), by or on behalf of such
-----------
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 (a "final adjudication") that such indemnitee is not entitled to be
------------------
indemnified for such expenses under this Part B or otherwise. The Corporation
may, by action of its board of directors, provide indemnification to employees
and agents of the Corporation with the same or lesser scope and effect as the
foregoing indemnification of directors and officers.
Part C. Procedure for Indemnification. Any indemnification of a
------ -----------------------------
director or officer of the Corporation or advance of expenses under Part B of
this ARTICLE X shall be made promptly, and in any event within forty-five days
---------
(or, in the case of an advance of expenses, twenty days), upon the written
request of the director or officer. If a determination by the Corporation that
the director or officer is entitled to indemnification pursuant to this ARTICLE
-------
X is required, and the Corporation fails to respond within sixty days to a
- -
written request for indemnity, the Corporation shall be deemed to have approved
the request. If the Corporation denies a written request for indemnification or
advance of expenses, in whole or in part, or if payment in full pursuant to such
request is not made within forty-five days (or, in the case of an advance of
expenses, twenty days), the right to indemnification or advances as granted by
this ARTICLE X shall be enforceable by the director or officer in any court of
---------
competent jurisdiction. Such person's costs and expenses incurred in connection
with successfully establishing his or her right to indemnification, in whole or
in part, in any such action shall also be indemnified by the Corporation. It
shall be a defense to any such action (other than an action brought to enforce a
claim for the advance of expenses where the undertaking required pursuant
-8-
<PAGE>
to Part B of this ARTICLE X, if any, has been tendered to the Corporation)
---------
that the claimant has not met the standards of conduct which make it permissible
under the Delaware General Corporation Law for the Corporation to indemnify the
claimant for the amount claimed, but the burden of such defense shall be on the
Corporation. Neither the failure of the Corporation (including its board of
directors, independent legal counsel or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Corporation (including its board of
directors, independent legal counsel or its stockholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct. The procedure for indemnification of other employees and agents for
whom indemnification is provided pursuant to Part B of this ARTICLE X shall be
---------
the same procedure set forth in this Part C for directors or officers, unless
otherwise set forth in the action of the board of directors providing
indemnification for such employee or agent.
Part D. Insurance. The Corporation may purchase and maintain
------ ---------
insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee or agent of the Corporation or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss asserted against him or her and incurred by him or
her in any such capacity, whether or not the Corporation would have the power to
indemnify such person against such expenses, liability or loss under the
Delaware General Corporation Law.
Part E. Service for Subsidiaries. Any person serving as a director,
------ ------------------------
officer, employee or agent of another corporation, partnership, limited
liability company, joint venture or other enterprise, at least 50% of whose
equity interests are owned by the Corporation (a "subsidiary" for this ARTICLE X
---------- ---------
shall be conclusively presumed to be serving in such capacity at the request of
the Corporation.
Part F. Reliance. Persons who after the date of the adoption of this
------ --------
provision become or remain directors or officers of the Corporation or who,
while a director or officer of the Corporation, become or remain a director,
officer, employee or agent of a subsidiary, shall be conclusively presumed to
have relied on the rights to indemnity, advance of expenses and other rights
contained in this ARTICLE X in entering into or continuing such service.
---------
The rights to indemnification and to the advance of expenses conferred in this
ARTICLE X shall apply to claims made against an indemnitee arising out of acts
- ---------
or omissions which occurred or occur both prior and subsequent to the adoption
hereof.
Part G. Non-Exclusivity of Rights. The rights to indemnification and
------ -------------------------
to the advance of expenses conferred in this ARTICLE X shall not be exclusive of
---------
any other right which any person may have or hereafter acquire under this
Restated Certificate of Incorporation or under any statute, by-law, agreement,
vote of stockholders or disinterested directors or otherwise.
-9-
<PAGE>
Part H. Merger or Consolidation. For purposes of this ARTICLE
------ ----------------------- -------
X, references to "the Corporation" shall include, in addition to the resulting
- -
Corporation, any constituent Corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent Corporation, or is or
was serving at the request of such constituent Corporation as a director,
officer, employee or agent of another Corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under this ARTICLE X
---------
with respect to the resulting or surviving Corporation as he or she would have
with respect to such constituent Corporation if its separate existence had
continued.
ARTICLE XI - Business Combinations
----------------------------------
The Corporation expressly elects to be governed by Section 203 of the
Delaware General Corporation Law.
ARTICLE XII - Fair Price Provision
----------------------------------
Part A. Required Vote for Certain Business Combinations. In addition
------ -----------------------------------------------
to any affirmative vote required by law or by this Restated Certificate of
Incorporation, and except as otherwise expressly provided in Part B of this
ARTICLE XII:
- -----------
(a) any merger or consolidation of the Corporation or any Subsidiary
(as hereinafter defined) with (i) any Interested Stockholder (as herein defined)
or (ii) any other corporation or entity (whether or not itself an Interested
Stockholder) which is, or after such merger or consolidation would be, an
Affiliate (as hereinafter defied) of any Interested Stockholder; or
(b) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) to or with any
Interested Stockholder or any Affiliate of any Interested Stockholder of any
assets of the Corporation or any Subsidiary having an aggregate Fair Market
Value (as hereinafter defined) of $10,000,000 or more; or
(c) the issuance or transfer by the Corporation or any Subsidiary (in
one transaction or a series of transactions) of any securities of the
Corporation or any Subsidiary to any Interested Stockholder or any Affiliate of
any Interested Stockholder in exchange for cash, securities or other property
(or a combination thereof) having an aggregate Fair Market Value of $10,000,000
or more; or
(d) the adoption of any plan or proposal for the liquidation,
dissolution or winding up of the Corporation proposed by or on behalf of any
Interested Stockholder or any Affiliate of any Interested Stockholder; or
-10-
<PAGE>
(e) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or consolidation
of the Corporation with any of its Subsidiaries or any other transaction
(whether or not with or into or otherwise involving any Interested Stockholder)
which has the effect, directly or indirectly, of increasing the proportionate
share of the outstanding shares of any class of equity or convertible securities
of the Corporation or any Subsidiary which is directly or indirectly owned by
any Interested Stockholder or any Affiliate of any Interested Stockholder;
shall require, subject to Part B of this ARTICLE XII, the affirmative vote of
-----------
the holders of at least 66 2/3% of the voting power of the then outstanding
Voting Stock (as hereinafter defined), voting together as a single class at a
duly constituted meeting of stockholders called expressly for such purpose.
Such affirmative vote shall be required notwithstanding the fact that no vote
may be require or that a lesser percentage may be specified by law.
Part B. Definition of "Business Combination." The term "Business
------ ----------------------------------- --------
Combination" as used in this ARTICLE XII shall mean any transaction which is
- ----------- -----------
referred to in any one or more of clauses (a) through (e) of Part A of ARTICLE
-------
XII; provided, however, that the term "Business Combination" shall not include
- ---
any transaction which occurs prior to the date of the closing of the initial
public offering of the Common Stock of the Corporation.
Part C. Conditions to be Satisfied. The provisions of Part A of this
------ --------------------------
ARTICLE XII shall not be applicable to any particular Business Combination, and
- -----------
such Business Combination shall require only such affirmative vote, if any, as
is required by law and any other provisions of this Restated Certificate of
Incorporation, if all of the conditions specified in either of the following
Paragraphs (a) or (b) are met:
(a) The Business Combination shall have been approved by the
affirmative vote of a majority of the Continuing Directors then in office.
(b) All of the following conditions shall have been met:
(i) The aggregate amount of the cash and the Fair Market Value as of
the date of the consummation of the Business Combination of consideration
other than cash to be received per share by holders of Common Stock in such
Business Combination shall be at least equal to the highest of the
following:
a. (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers fees)
paid by the Interested Stockholder for any shares of Common Stock
acquired by it (1) within the two-year period immediately prior to and
including the first public announcement of the proposal of the
Business Combination (the "Announcement Date") or (2) in the
-----------------
transaction in which it became an Interested Stockholder, whichever is
higher;
b. the Fair Market Value per share of Common Stock on the
Announcement Date or on the date on which the Interested Stockholder
became
-11-
<PAGE>
an Interested Stockholder (such latter date is referred to in
this ARTICLE XII as the "Determination Date"), whichever is higher.
----------- ------------------
(ii) The aggregate amount of the cash and the Fair Market Value as of
the date of the consummation of the Business Combination of consideration
other than cash to be received per share by holders of shares of any other
class of outstanding Voting Stock in such Business Combination shall be at
least equal to the highest of the following (it being intended that the
requirements of this paragraph (ii) shall be required to be met with
respect to every other class of outstanding Voting Stock, whether or not
the Interested Stockholder has previously acquired any shares of a
particular class of Voting Stock):
a. (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees)
paid by the Interested Stockholder for any shares of such class of
Voting Stock acquired by it (1) within the two-year period immediately
prior to and including the Announcement Date or (2) in the transaction
in which it became an Interested Stockholder, whichever is higher;
b. (if applicable) the highest preferential amount per share
which the holders of shares of such class of Voting Stock are entitled
to receive from the corporation in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the corporation;
and
c. the Fair Market Value per share of such class of Voting Stock
on the Announcement Date or on the Determination Date, whichever is
higher.
(iii) The consideration to be received by holders of a particular
class of outstanding Voting Stock shall be in cash or in the same form as
the Interested Stockholder has previously paid for shares of such class of
Voting Stock. If the Interested Stockholder has paid for shares of any
class of Voting Stock with varying forms of consideration, the form of
consideration for such a class of Voting Stock shall be either cash or the
form used to acquire the largest number of shares of such class of Voting
Stock previously acquired by such Interested Stockholder.
(iv) After such Interested Stockholder has become an Interested
Stockholder and prior to the consummation of such Business Combination:
(a) there shall have been (1) no failure to declare and pay at regular
dates therefor the full amount of any dividends (whether or not cumulative)
payable on any series of Preferred Stock, except as approved by the
affirmative vote of a majority of the Continuing Directors; (2) no
reduction in the annual rate of dividends paid on the Common Stock (except
as necessary to reflect any subdivision of the Common Stock), except as
approved by the affirmative vote of a majority of the Continuing Directors;
and (3) an increase in such annual rate of dividends as necessary to
reflect any reclassification (including any reverse stock split),
recapitalization, reorganization or any similar transaction which has the
effect of reducing the number of outstanding shares of the Common Stock,
unless the failure so to increase
-12-
<PAGE>
such annual rate is approved by the affirmative vote of a majority of the
Continuing Directors; the beneficial owner of any additional shares of
Voting Stock except as part of the transaction which results in such
Interested Stockholder becoming an Interested Stockholder.
(v) After such Interested Stockholder has become an Interested
Stockholder, such Interested Stockholder shall not have received the
benefit, directly or indirectly (except proportionately as a stockholder),
of any loans, advances, guarantees, pledges or other financial assistance
or any tax credits or other tax advantages provided by the Corporation,
whether in anticipation of or in connection with such Business Combination
or otherwise, unless such transaction shall have been approved or ratified
by the affirmative vote of a majority of the Continuing Directors after
such person shall have become an Interested Stockholder.
(vi) A proxy or information statement describing the proposed
Business Combination and complying with the requirements of the 1934 Act
and the rules and regulations thereunder (or any subsequent provisions
replacing such 1934 Act, rules and regulations) shall be mailed to public
stockholders of the Corporation at least 20 days prior to the consummation
of such Business Combination (whether or not such proxy or information
statement is required to be mailed pursuant to such 1934 Act, rules or
regulations or subsequent provisions thereof).
Part D. Certain Definitions. For the purposes of this ARTICLE XII:
------ ------------------- -----------
(a) A "person" shall mean an individual, a Group Acting in Concert, a
------
corporation, a partnership, an association, a joint stock company, a trust, a
business trust, a government or political subdivision, any unincorporated
organization or any other association or entity.
(b) "Interested Stockholder" shall mean any person who or which:
----------------------
(i) is the beneficial owner, directly or indirectly, of 15% or more
of the voting power of the then outstanding shares of Voting Stock;
(ii) is an Affiliate of the Corporation and at any time within the
two-year period immediately prior to and including the date in question was
the beneficial owner, directly or indirectly, of 15% or more of the voting
power of the then outstanding shares of Voting Stock; or
(iii) is an assignee of or has otherwise succeeded to the beneficial
ownership of any shares of Voting Stock which were at any time within the
two-year period immediately prior to and including the date in question
beneficially owned by any Interested Stockholder, if such assignment or
succession shall have occurred in the course of a transaction or series of
transactions not involving a public offering within the meaning of the
Securities Act of 1933 (or any subsequent provisions replacing such Act
-13-
<PAGE>
or the rules and regulations promulgated thereunder) and such Assignment or
succession was not approved by a majority of the Continuing Directors;
provided, however, that the term "Interested Stockholder" shall not include
(1) the Corporation; (2) any Subsidiary of the Corporation; (3) any person,
directly or indirectly, owning of the record or beneficially 100% of the
issued and outstanding capital stock of the Corporation (other than
directors' qualifying shares, if any); (4) any employee benefit plan or
compensation arrangement of the Corporation or any Subsidiary of the
Corporation; (5) any person holding shares of Voting Stock organized,
appointed or established by the Corporation or any Subsidiary for or
pursuant to the terms of any such employee benefit plan or compensation
arrangement; or (6) any Grandfathered Person unless such Grandfathered
Person becomes, after the closing of the initial public offering of shares
of Common Stock of the Corporation, the beneficial owner of more than the
Grandfathered Percentage of the Voting Stock then outstanding.
Notwithstanding the foregoing, no person shall become an
"Interested Stockholder" as the result of an acquisition of Voting Stock by
the Corporation which, by reducing the number of shares outstanding,
increase the proportionate number of shares beneficially owned by such
person to 15% (or, if applicable, the Grandfathered Percentage with respect
to such person) or more of the voting power of the then outstanding shares
of Voting Stock; provided, however, that if a person shall become the
beneficial owner of 15% (or, if applicable, the Grandfathered Percentage
with respect to such person) or more of the voting power of the then
outstanding shares of Voting Stock by reason of share purchases by the
Corporation and shall, after such share purchases by the Corporation,
become the beneficial owner of any additional shares of Voting Stock of the
Corporation (other than any shares of Voting Stock issued to such person as
a result of a stock dividend, stock split, reclassification,
recapitalization, or other similar transaction involving the issuance of
shares of Voting Stock on a pro rata basis to all holders of Voting Stock),
then such person shall be deemed to be an "Interested Stockholder" if
immediately thereafter the voting power of the shares of Voting Stock
beneficially owned by such person equals or exceeds 15% (or in the case of
a Grandfathered Person, the Grandfathered Percentage with respect to such
person) or more of the voting power of all of the shares of Voting Stock
then outstanding.
(c) A person shall be deemed the "beneficial owner" of, and shall be
----------------
deemed to beneficially own, any Voting Stock:
(i) which such person or any of such person's Affiliates or
Associates, directly or indirectly beneficially owns (as determined
pursuant to Rule 13d-3 of the Rules and Regulations promulgated by the
Securities and Exchange Commission under the 1934 Act);
(ii) which such person or any of its Affiliates or Associates,
directly or indirectly, has or shares with respect to the Voting Stock (1)
the right to acquire, or direct the acquisition of such Voting Stock
pursuant to any agreement, arrangement, understanding or otherwise (whether
or not in writing) (other than customary
-14-
<PAGE>
arrangements with and between underwriters and selling group members with
respect to a bona fide public offering of securities) or upon the exercise
of conversion rights, exchange rights, warrants or options or otherwise;
provided, however, that a person shall not be deemed the "beneficial owner"
of or to "beneficially own" securities tendered pursuant to a tender or
exchange offer made by or on behalf of such person or any of such person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange, (2) the right to vote, or to direct the voting of,
such Voting Stock pursuant to any agreement, arrangement, understanding or
otherwise (whether or not in writing) (provided that a person shall not be
deemed to be the beneficial owner of any securities if the agreement,
arrangement or understanding to vote such security arises solely from a
revocable proxy given in response to a public proxy or consent solicitation
made pursuant to, and in accordance with, the Rules and Regulations
promulgated under the 1934 Act and is not also then reportable by such
person on Schedule 13D under the 1934 Act (or any comparable or successor
report)), or (3) the right to dispose of, or to direct the disposition of,
such Voting Stock pursuant to any agreement, arrangement, understanding or
otherwise (whether or not in writing) (other than customary arrangements
with and between underwriters and selling group members with respect to a
bona fide public offering of securities); or
(iii) which is beneficially owned, directly or indirectly, by any
other person (or any Affiliate or Associate thereof) with which such person
or any of such person's Affiliates or Associates has any agreement,
arrangement, understanding or otherwise (whether or not in writing) (other
than customary arrangements with and between underwriters and selling group
members with respect to a bona fide public offering of securities) for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy
described in clause 3(ii)(2) above) or disposing of any shares of Voting
Stock;
provided, however, that (1) no person engaged in business as an underwriter of
securities shall be deemed the beneficial owner of any securities acquired
through such person's participation as an underwriter in good faith in a firm
commitment underwriting until the expiration of 40 days after the date of such
acquisition and (2) no person who is a director or an officer of the Corporation
shall be deemed, solely as a result of his or her position as director or
officer of the Corporation, the beneficial owner of any securities of the
Corporation that are beneficially owned by any other director or officer of the
Corporation.
(d) Notwithstanding anything in the definition of beneficial owner to
the contrary, the phrase "then outstanding," when used with reference to a
----------------
person's beneficial ownership of securities of the Corporation, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such person
would be deemed to own beneficially hereunder.
(e) "Affiliate" and "Associate" shall have the respective meanings
--------- ---------
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the 1934 Act (or any subsequent provisions replacing the 1934 Act or the rules
and regulations promulgated thereunder); provided, however, that no person who
is a director or officer of the Corporation
-15-
<PAGE>
shall be deemed an Affiliate or an Associate of any other director or officer of
the Corporation solely as a result of his or her position as a director or
officer of the Corporation.
(f) "Subsidiary" means any corporation of which a majority of any
----------
class of equity security is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of Interested
Stockholder set forth in paragraph (b) of this Part D, the term "Subsidiary"
shall mean only a corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the Corporation.
(g) "Continuing Director" means (i) any member of the Board of
-------------------
Directors of the Corporation who is not an Interested Stockholder or an
Affiliate or Associate of an Interested Stockholder and was a member of the
Board of Directors prior to the time that the Interested Stockholder became an
Interested Stockholder, and (ii) any person who subsequently becomes a member of
the Corporation's Board of Directors who is not an Associate or Affiliate of an
Interested Stockholder and is recommended or approved by the affirmative vote of
a majority of the Continuing Directors.
(h) "Fair Market Value" means:
-----------------
(i) in the case of stock, the highest closing sale price during the
30-day period immediately prior to and including the date in question of a
share of such stock on the principal United States securities exchange
registered under the 1934 Act (or any subsequent provisions replacing such
Act or the rules and regulations promulgated thereunder) on which such
stock is listed or, if such stock is not listed on any such exchange, the
highest closing bid quotation with respect to a share of such stock during
the 30-day period immediately prior to and including the date in question
on the National Association of Securities Dealers Automated Quotation
System or any comparable system then in use, or if no such quotations are
available, the fair market value on the date in question of a share of such
stock as determined by the affirmative vote of a majority of the Continuing
Directors of the Board of Directors in good faith; and
(ii) in the case of property other than cash or stock, the fair market
value of such property on the date in question as determined by an
affirmative vote of a majority of the Continuing Directors of the Board of
Directors in good faith.
(i) "Group Acting in Concert" shall mean persons seeking to combine
-----------------------
or pool their voting or other interests in the securities of the Corporation for
a common purpose, pursuant to any contract, understanding, relationship,
agreement or other arrangement, whether written, oral or otherwise, or any
"group of persons" as defined under Section 13(d) of the 1934 Act (or any
subsequent provisions replacing the 1934 Act or the rules and regulations
promulgated thereunder). When persons act together for any such purpose, their
group is deemed to have acquired their stock.
(j) In the event of any Business Combination in which the Corporation
survives, the phrase "consideration other than cash to be received" as used in
--------------------------------------------
paragraphs (i) and
-16-
<PAGE>
(ii) of Part C of this ARTICLE XII shall include the shares of Common Stock
-----------
and/or the shares of any other class of outstanding Voting Stock retained by
the holders of such shares.
(k) "Voting Stock" shall mean the outstanding shares of capital stock
------------
of the Corporation entitled, at the time, to vote generally in the election of
directors.
(l) "Grandfathered Percentage" shall mean, with respect to any
------------------------
Grandfathered Person, the percentage of the voting power of the then outstanding
shares of Voting Stock that such Grandfathered Person beneficially owns as of
the close of business on the date of the closing of the initial public offering
of shares of Common Stock of the Corporation plus an additional five (5)
percentage points; provided, however, that in the event the underwriters
exercise their over-allotment option in connection with the initial public
offering of shares of Common Stock, the Grandfathered Percentage shall, from and
after the closing of such over-allotment option, mean, with respect to any
Grandfathered Person, the percentage of the voting power of the then outstanding
shares of Voting Stock that such Grandfathered Person beneficially owns as of
the close of business on the date of the closing of the over-allotment option
plus an additional five (5) percentage points; and provided, further, that, in
the event any Grandfathered Person shall sell, transfer or otherwise dispose of
any outstanding shares of Voting Stock after the close of business on the date
of the closing of the initial public offering of the Corporation's Common Stock,
the Grandfathered Percentage shall, subsequent to such sale, transfer or
disposition, mean, with respect to such Grandfathered Person, the lesser of (1)
the Grandfathered Percentage as in effect immediately prior to such sale,
transfer, or disposition or (2) the percentage of the voting power of the then
outstanding shares of Voting Stock that such Grandfathered Person beneficially
owns immediately following such sale, transfer or disposition plus an additional
five (5) percentage points.
(m) "Grandfathered Person" shall mean any Person who or which,
--------------------
together with all Affiliates and Associates of such Person, is, as of the close
of business on the date of the closing of the initial public offering of shares
of Common Stock of the Corporation, the beneficial owner of 15% or more of the
voting power of the then outstanding Voting Stock at such time. Any
Grandfathered Person who becomes, after the close of business on the date of the
initial public offering of shares of Common Stock of the Corporation, the
beneficial owner of less than 15% of the voting power of the then outstanding
shares of Voting Stock shall cease to be a Grandfathered Person.
(n) The term "voting power" shall mean, with respect to each
------------
outstanding share of capital stock of the Corporation, the number of votes which
a holder of such share shall be entitled, at the time, to vote generally in the
election of directors.
Part E. Powers of the Board of Directors. A majority of the
------ --------------------------------
directors of the Corporation, unless there is an Interested Stockholder, in
which case a majority of the Continuing Directors then in office, shall have the
power to determine for the purposes of this ARTICLE XII, on the basis of
-----------
information known to them after reasonable inquiry, (i) whether a person is an
Interested Stockholder, (ii) the number or percentage of shares of Voting Stock
or other equity securities beneficially owned by any person, (iii) whether a
person is an Affiliate or
-17-
<PAGE>
Associate of, or is affiliated or associated with, another person, (iv) whether
the assets of which are the subject of any Business Combination have, or the
consideration to be received for the issuance or transfer of securities by the
Corporation or any Subsidiary in any Business Combination has, an aggregate Fair
Market Value of $10,000,000 or more, (v) whether the requirements of Part C of
this ARTICLE XII have been met with respect to any Business Combination and
-----------
(vi) any other matters of interpretation arising under this ARTICLE XII. The
-----------
good faith determination by the affirmative vote of a majority of the directors
or, if there is an Interested Stockholder, by the affirmative vote of a majority
of the Continuing Directors then in office, on such matters shall be conclusive
and binding for all purposes of this ARTICLE XII.
-----------
Part F. No Effect on Fiduciary Obligations of Interested
------ ------------------------------------------------
Stockholders. Nothing contained in this ARTICLE XII shall be construed to
- ------------ -----------
relieve any Interested Stockholder from any fiduciary obligation imposed by law.
* * * * *
-18-
<PAGE>
EXHIBIT 4.3
AKSYS, LTD.
1996 STOCK AWARDS PLAN
SECTION 1. PURPOSE
The purpose of the Aksys, Ltd. 1996 Stock Awards Plan (the "Plan") is
----
to enable Aksys, Ltd., a Delaware corporation (the "Company"), and its
-------
subsidiaries to attract, retain and motivate its directors and employees by
providing for or increasing the proprietary interests of such persons in the
Company. The Company believes the Plan will further identify the interests of
directors and employees with those of the Company's stockholders.
SECTION 2. PERSONS ELIGIBLE
Any officer, employee, consultant or advisor of the Company or its
subsidiaries, regardless of whether such person is also a director of the
Company or its subsidiaries (an "Employee"), shall be eligible to be considered
--------
for the grant of Employee Awards (as defined below) under the Plan. In
addition, any director of the Company who is not an officer or employee of the
Company or any of its subsidiaries (a "Non-Employee Director") shall be eligible
---------------------
to receive a Director Option (as defined below) as set forth in this Plan.
SECTION 3. EMPLOYEE AWARDS
(a) The Committee (as defined below) on behalf of the Company is
authorized under the Plan to enter into any type of arrangement with an Employee
that is consistent with the provisions of the Plan and that by its terms
involves the issuance or potential issuance of (i) shares of Common Stock, par
value $0.01 per share, of the Company (the "Common Stock") or (ii) a "Derivative
------------
Security" as such term is defined in Rule 16a-1 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") with an exercise or
------------
conversion right at a price related to Common Stock or with a value derived from
the value of the shares of Common Stock. The entering into of any such
arrangement is referred to herein as the grant of an "Employee Award."
--------------
(b) Employee Awards are not restricted to any specified form or
structure and may include, without limitation, sales or bonuses of stock,
restricted stock, stock options, reload stock options, stock purchase warrants,
other rights to acquire stock, securities convertible into or redeemable for
stock, stock appreciation rights, limited stock appreciation rights, phantom
stock, dividend equivalents, performance units or performance shares, and an
Employee Award may consist of one or more such security or benefit.
<PAGE>
(c) Subject to the provisions of the Plan, the Committee, in its
sole and absolute discretion, shall determine all of the terms and conditions of
each Employee Award granted under the Plan, which terms and conditions may
include without limitation:
(i) a provision permitting the recipient of such Employee Award to
pay the purchase price of the Common Stock or other property issuable
pursuant to such Employee Award, or the tax withholding obligation of such
Employee with respect to the Employee Award, in whole or in part, by any
one or more of the following:
(A) the delivery of previously owned shares of Common Stock or
other property,
(B) a reduction in the amount of Common Stock or other property
otherwise issuable pursuant to such Employee Award, or
(C) the delivery of a promissory note, the terms and conditions of
which shall be determined by the Committee;
(ii) a provision conditioning or accelerating the receipt of
benefits pursuant to such Employee Award either automatically or in the
discretion of the Committee upon the occurrence of specified events,
including a change of control of the Company, an acquisition of a specified
percentage of the voting power of the Company, the dissolution or
liquidation of the Company, a sale of substantially all of the property and
assets of the Company or an event of the type described in Section 7
hereof;
(iii) provisions with respect to vesting and exercisability; or
(iv) provisions required in order for such Employee Award to qualify
as an incentive stock option under Section 422 of the Internal Revenue Code
(an "Incentive Stock Option").
----------------------
(d) Notwithstanding any other provision of the Plan, no one
Employee shall be granted options or other Employee Awards with respect to more
than 100,000 shares of Common Stock in any one calendar year; provided, however,
that this limitation shall not apply if it is not required in order for the
compensation attributable to Employee Awards hereunder to qualify as
performance-based compensation as described in Section 162(m) of the Internal
Revenue Code ("Performance-Based Compensation"). The limitation set forth in
------------------------------
this Section 3(d) shall be subject to adjustment as provided in Section 7
hereof, but only to the extent such adjustment would not affect the status of
compensation attributable to Employee Awards hereunder as Performance-Based
Compensation.
-2-
<PAGE>
SECTION 4. NON-EMPLOYEE DIRECTOR AWARDS
Options granted pursuant to this Section 4 shall be referred to as
"Director Options."
(a) Any person who first becomes a Non-Employee Director on or
after the Effective Date shall automatically be granted an option entitling such
director to purchase 5,000 shares of Common Stock on the date on which such
person first becomes a Non-Employee Director, which number of shares gives
effect to (and shall not be adjusted for) the 3-for-2 stock split of the Common
Stock that occurred on the Effective Date, but shall be subject to adjustment
pursuant to Section 7 hereof after the Effective Date. The exercise price for
each such share shall be the last reported sale price of the Common Stock on the
principal securities exchange or other trading market on which shares of the
Common Stock are then listed on the date of grant or, if the Common Stock is at
such time not traded on an exchange or market, the fair market value of a share
of Common Stock on such date as determined by the Committee.
(b) On the later of (i) June 30 of each year and (ii) the day next
following each annual meeting of stockholders of the Company (such date, the
"Determination Date"), commencing in 1996, each person who is a Non-Employee
Director on such Determination Date shall automatically be granted an option
entitling such director to purchase a number of shares of Common Stock equal to
(x) 1,250 multiplied by (y) the number of calendar quarters in the preceding
twelve months (rounded up to the nearest whole number of calendar quarters) in
which such person served as a Non-Employee Director, up to a maximum of four
quarters (as such number of shares may be adjusted pursuant to Section 7 hereof
after the Effective Date). The exercise price for each such share shall be the
last reported sale price of the Common Stock on the principal securities
exchange or other trading market on which shares of the Common Stock are then
listed on such Determination Date (or, if the Determination Date is not a
trading day on such exchange or other trading market, the last trading day
immediately preceding such date) or, if the Common Stock is not listed or quoted
on a securities exchange or other trading market, the fair market value of a
share of Common Stock on such date as determined by the Committee.
(c) Each Director Option shall vest and become exercisable
immediately upon grant.
(d) Each Director Option shall expire and not be exercisable after
the first to occur of (i) the tenth anniversary of the date of grant of such
option and (ii) three months after the optionee ceases to be a director of the
Company (12 months if the optionee ceases to be a director of the Company due to
death or to total and permanent disability as determined by the Board of
Directors of the Company (the "Board") in good faith).
-----
(e) The provisions of this Section 4 that relate to the amount,
price and timing of Director Options shall not be amended more than once every
six months, except as permitted by Rule 16b-3(c)(2)(ii)(B) under the Exchange
Act.
-3-
<PAGE>
SECTION 5. STOCK SUBJECT TO PLAN
(a) At any time, the aggregate number of shares of Common Stock
issued and issuable pursuant to all Employee Awards granted under the Plan shall
not exceed 800,000, subject to adjustment as provided in Section 7 hereof. For
purposes of this Section 5(a), the aggregate number of shares of Common Stock
issued and issuable pursuant to Employee Awards granted under the Plan shall at
any time be deemed to be equal to the sum of the number of shares of Common
Stock which have been issued pursuant to Employee Awards and which have not been
repurchased by the Company and the number of shares which are or may be issuable
at or after such time pursuant to Employee Awards.
(b) At any time, the aggregate number of shares of Common Stock
issued and issuable pursuant to all Director Options granted under the Plan
shall not exceed 100,000, subject to adjustment as provided in Section 7 hereof.
For purposes of this Section 5(b), the aggregate number of shares of Common
Stock issued and issuable pursuant to Director Options granted under the Plan
shall at any time be deemed to be equal to the sum of the number of shares of
Common Stock which have been issued pursuant to Director Options and which have
not been repurchased by the Company and the number of shares which are or may be
issuable at or after such time pursuant to Director Options.
(c) Shares of Common Stock issued pursuant to the Plan may be
authorized but unissued shares, treasury shares, reacquired shares or any
combination thereof.
SECTION 6. ADMINISTRATION
(a) The Plan shall be administered by a committee (the "Committee")
---------
of the Board consisting of two or more directors, each of whom is a
"disinterested person" (as such term is defined in Rule 16b-3 under the Exchange
Act); provided that to the extent permitted at any time under Rule 16b-3 or any
successor rule and under Section 162(m) of the Internal Revenue Code or any
successor statutory provision, and any implementing regulations, without
adversely affecting the ability of the Plan to comply with the conditions for
exemption from Section 16 of the Exchange Act provided by Rule 16b-3 and the
exemption from the limitations on the deductibility of certain executive
compensation provided by Section 162(m), the Committee may delegate the
administration of the Plan in whole or in part, on such terms and conditions, to
such other person or persons as it may determine in its discretion, which
persons may be officers or employees of the Company or third parties (each such
person, an "Authorized Delegate").
---------- --------
(b) Subject to the provisions of the Plan, the Committee (or its
Authorized Delegate) shall be authorized and empowered to do all things
necessary or desirable in connection with the administration of the Plan,
including the following:
(i) adopt, amend and rescind rules and regulations relating to the
Plan;
-4-
<PAGE>
(ii) determine which persons meet the requirements of Section 2
hereof for eligibility under the Plan (and, with respect to employees,
which of such persons, if any, shall be granted Employee Awards);
(iii) determine whether, and the extent to which adjustments are
required pursuant to Section 7 hereof;
(iv) interpret and construe the Plan and the terms and conditions of
any Employee Award or Director Option granted hereunder; and
(v) correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any Employee Award or Director Option in
the manner and to the extent the Committee deems necessary or desirable to
carry it into effect.
(c) Any decision of the Committee (or any Authorized Delegate) in
the interpretation and administration of the Plan shall lie within its sole and
absolute discretion and shall be final, conclusive and binding on all parties
concerned. The Committee may act only by a majority of its members in office,
except that the members thereof may authorize any one or more of their members
or any Authorized Delegate to execute and deliver documents or to take any other
ministerial action on behalf of the Committee with respect to Employee Awards
and Director Options made or to be made to Plan participants. No member of the
Committee or any Authorized Delegate shall be liable for anything done or
omitted to be done by such member or Authorized Delegate, by any other member of
the Committee or by any other Authorized Delegate in connection with the
performance of duties under the Plan, except for his or her own willful
misconduct or as expressly provided by statute. Determinations to be made by the
Committee under the Plan may be made by Authorized Delegates.
SECTION 7. ADJUSTMENTS
If the outstanding securities of the class then subject to the Plan
(initially, the Common Stock) are increased, decreased or exchanged for or
converted into cash, property or a different number or kind of securities, or if
cash, property or securities are distributed in respect of such outstanding
securities, in either case as a result of a reorganization, merger,
consolidation, recapitalization, restructuring, reclassification, dividend
(other than a regular quarterly or annual cash dividend) or other distribution,
stock split, reverse stock split or the like, or if substantially all of the
property and assets of the Company are sold, then, unless the terms of such
transaction shall provide otherwise, the Committee shall make appropriate and
proportionate adjustments in (a) the price and number and type of shares or
other securities or cash or other property that may be acquired pursuant to
Employee Awards and Director Options theretofore granted under the Plan, (b) the
maximum number and type of shares or other securities that may be issued
pursuant to Employee Awards and Director Options thereafter granted under the
Plan, (c) to the extent permitted under Section 3(d) hereof, the maximum number
of shares of Common Stock with respect to which Employee Awards may be granted
to any Employee during any calendar year and (d) the number of shares of Common
Stock to be awarded to Non-Employee Directors pursuant to Director Options under
Section 4 hereof; provided, however, that no adjustment shall be made to the
number of shares of Common
-5-
<PAGE>
Stock that may be acquired pursuant to outstanding Incentive Stock Options or
the maximum number of shares of Common Stock with respect to which Incentive
Stock Options may be granted under the Plan to the extent such adjustment would
result in such options being treated as other than Incentive Stock Options; and
provided further that no such adjustment shall be made to the extent the
Committee determines that such adjustment would result in the disallowance of a
federal income tax deduction for compensation attributable to awards hereunder
by causing such compensation to be other than Performance-Based Compensation.
SECTION 8. AMENDMENT AND TERMINATION
The Board may amend (subject to Section 4(d) hereof) or terminate the
Plan at any time and in any manner; provided however, that no such amendment or
termination shall deprive a participant of an Employee Award or Director Option
previously granted under the Plan of any of his or her rights thereunder,
without the consent of such participant.
SECTION 9. EFFECTIVENESS
The Plan shall be submitted to the stockholders of the Company for
their approval and adoption in accordance with applicable law and Rule 16b-3(b)
under the Exchange Act and Section 162(m) under the Internal Revenue Code. The
Plan shall become effective on April 23, 1996 (the "Effective Date"); provided,
--------------
that the Plan shall cease to be effective and any Employee Awards and Director
Options granted hereunder shall become null and void if the Plan is not approved
by the Company's stockholders prior to or within 12 months after April 23, 1996.
SECTION 10. MISCELLANEOUS PROVISIONS
(a) Neither the Plan nor any action taken hereunder shall be
construed as giving any Employee or other person any right to continue to be
employed by the Company or any of its subsidiaries or a director the right to
continue in such capacity.
(b) Except as may be approved by the Committee where such approval
shall not adversely affect compliance of the Plan with Rule 16b-3 under the
Exchange Act, no rights and interests under the Plan may be assigned or
transferred, hypothecated or encumbered in whole or in part either directly or
by operation of law or otherwise including, but not by way of limitation,
execution, levy, garnishment, attachment, pledge, bankruptcy or in any other
manner, other than by will or the laws of descent and distribution.
(c) It is the intent of the Company that the Plan comply in all
respects with Rule 16b-3 under the Exchange Act and Section 162(m) of the
Internal Revenue Code, that any ambiguities or inconsistencies in construction
of the Plan be interpreted to give effect to such intention and that if any
provision of the Plan is found not to be in compliance with Rule 16b-3 or
Section 162(m), such provision shall be deemed null and void to the extent
required to permit the Plan to comply with Rule 16b-3 or Section 162(m), as the
case may be.
-6-
<PAGE>
(d) The Company shall have the right to deduct from any payment
made under the Plan any federal, state, local or foreign income or other taxes
required by law to be withheld with respect to such payment. It shall be a
condition to the obligation of the Company to issue shares of Common Stock,
other securities or property or any combination thereof, upon exercise,
settlement or payment of any award under the Plan, that the recipient of an
award (or any beneficiary or person entitled to act) pay to the Company, upon
its demand, such amount as may be required by the Company for the purpose of
satisfying any liability to withhold such taxes.
(e) By accepting any award or other benefit under the Plan, each
recipient of an award and each person claiming under or through him or her shall
be conclusively deemed to have indicated his or her acceptance and ratification
of, and consent to, any action taken under the Plan by the Company, the Board or
the Committee or its delegates.
(f) The validity, construction, interpretation, administration and
effect of the Plan, and of its rules and regulations, and rights relating to the
Plan and to awards granted under the Plan, shall be governed by the substantive
laws, but not the choice of law rules, of the State of Delaware.
* * * * *
-7-
<PAGE>
EXHIBIT 5
[Kirkland & Ellis Letterhead]
To Call Writer Direct:
312 861-2000
December 17, 1996
Aksys, Ltd.
Two Marriott Drive
Lincolnshire, IL 60069
Re: Aksys, Ltd. Registration Statement on Form S-8
1996 Stock Awards Plan
Ladies and Gentlemen:
We are acting as special counsel to Aksys, Ltd., a Delaware corporation
(the "Company"), in connection with the proposed registration by the Company of
900,000 shares (the "Shares") of its Common Stock, par value $0.01 per share
(the "Common Stock"), pursuant to a Registration Statement on Form S-8, filed
with the Securities and Exchange Commission (the "Commission") on December 17,
1996, under the Securities Act of 1933, as amended (the "Act") (such
Registration Statement, as amended or supplemented, is hereinafter referred to
as the "Registration Statement"). The Shares are to be issued and sold by the
Company to directors and employees of the Company pursuant to the Aksys, Ltd.
1996 Stock Awards Plan (the "Plan").
In that connection, we have examined such corporate proceedings, documents,
records and matters of law as we have deemed necessary to enable us to render
this opinion.
For purposes of this opinion, we have assumed the authenticity of all
documents submitted to us as originals, the conformity to the originals of all
documents submitted to us as copies and the authenticity of the originals of
all documents submitted to us as copies. We have also assumed the legal
capacity of all natural persons, the genuineness of the signatures of persons
signing all documents in connection with which this opinion is rendered, the
authority of such persons signing on behalf of the parties thereto other than
the Company and the due authorization, execution and delivery of all documents
by the parties thereto other than the Company. As to any facts material to the
opinions expressed herein, we have relied upon the statements and
representations of officers and other representations of the Company and others.
Our opinion expressed below is subject to the qualifications that we
express no opinion as to the applicability of, compliance with, or effect of (i)
any bankruptcy, insolvency, reorganization, fraudulent transfer, fraudulent
conveyance, moratorium or other similar law affecting the enforcement of
creditors' rights generally, (ii) general principles of equity (regardless of
whether enforcement is considered in a
<PAGE>
Aksys, Ltd.
December 17, 1996
Page 2
proceeding in equity or at law), (iii) public policy considerations which may
limit the rights of parties to obtain certain remedies and (iv) any laws except
the General Corporation Law of the State of Delaware and the federal law of the
United States of America.
Based upon and subject to the foregoing qualifications, assumptions and
limitations and the further limitations set forth below, we hereby advise you
that in our opinion the Shares are duly authorized and, when (i) the
Registration Statement becomes effective under the Act and (ii) the Shares have
been duly issued in accordance with the terms of the Plan upon receipt of the
consideration to be paid therefor, the Shares will be validly issued, fully paid
and nonassessable.
We hereby consent to the filing of this opinion with the Commission as
Exhibit 5 to the Registration Statement. In giving this consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the Act or the rules and regulations of the Commission.
We do not find it necessary for the purposes of this opinion, and
accordingly we do not purport to cover herein, the application of the securities
or "Blue Sky" laws of the various states to the issuance and sale of the Shares.
This opinion is limited to the specific issues addressed herein, and no
opinion may be inferred or implied beyond that expressly stated herein. We
assume no obligation to revise or supplement this opinion should the present
laws of Delaware or the federal law of the United States be changed by
legislative action, judicial decision or otherwise.
This opinion is furnished to you in connection with the filing of the
Registration Statement and is not to be used, circulated, quoted or otherwise
relied upon for any other purpose.
Very truly yours,
/s/ KIRKLAND & ELLIS
KIRKLAND & ELLIS
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITOR'S CONSENT
The Board of Directors
Aksys Ltd.
We consent to incorporation by reference in the registration statement on Form
S-8 of Aksys, Ltd. of our report dated February 15, 1996, except for note 10
which is as of April 23, 1996, relating to the balance sheets of Aksys, Ltd. as
of December 31, 1995, and 1994, and the related statements of operations,
stockholders' equity, and cash flows for each of the years in the three-year
period ended December 31, 1995, and for the period from January 18, 1991
(inception) through December 31, 1995, which report appears in the Prospectus of
Aksys, Ltd., dated May 16, 1996.
KPMG Peat Marwick LLP
Chicago, Illinois
December 16, 1996
