SETTLEMENT AGREEMENT AND MUTUAL RELEASE
This SETTLEMENT AGREEMENT AND MUTUAL RELEASE (the "AGREEMENT") is entered
into by and among AKSYS, LTD., a Delaware corporation ("AKSYS"); DURUS LIFE
SCIENCES MASTER FUND LTD., a Cayman Islands company (the "FUND"); XXXXX XXXXXX,
a Connecticut resident ("SACANE"); DURUS CAPITAL MANAGEMENT, LLC, a Delaware
limited liability company ("DURUS"); DURUS CAPITAL MANAGEMENT (N.A.), LLC, a
Delaware limited liability company ("DURUS N.A."); and ARTAL LONG BIOTECH
PORTFOLIO LLC, a Delaware limited liability company ("ARTAL"). Aksys, the Fund,
Sacane, Durus, Durus N.A. and Artal are collectively referred to herein as the
"PARTIES", and each is individually referred to as a "PARTY." The Fund, Sacane,
Durus, Durus N.A. and Artal are collectively referred to herein as "DEFENDANTS",
and each is individually referred to as a "DEFENDANT." Unless otherwise provided
herein, capitalized terms used herein without definition have the meanings given
to them in the Rights Agreement (as defined below).
WHEREAS, as of the date hereof, the Fund is the record owner and
beneficial owner (as such term is defined in Rule 13d-3 of the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT")) of 21,333,118 shares of
Aksys common stock (which amount includes 281,454 shares of Aksys common stock
issuable upon exercise of warrants (the "WARRANTS") and is net of the Short
Position referred to (and as defined in) Section 3(e) hereof) (the "FUND
SHARES") and Artal is the beneficial owner of 498,100 shares of Aksys common
stock (together with the Fund Shares, the "SHARES");
WHEREAS, on April 11, 2003, Aksys, Sacane and Durus entered into an
agreement relating to Aksys common stock held by the Fund (the "APRIL 2003
AGREEMENT");
WHEREAS, on August 5, 2003, Aksys filed a three-count lawsuit against
Defendants (the "COMPLAINT") in the United States District Court, District of
Connecticut (the "COURT"), Case No. 03-CV-1349 (RNC) (the "LITIGATION"). Count
III of the Complaint, which sought disgorgement of profits under Section 16(b)
of the Exchange Act, was settled pursuant to an agreement among the Parties
dated January 12, 2004 and dismissed pursuant to a Court order of that same
date. Counts I and II of the Complaint allege, respectively, breach of the April
2003 Agreement and violation of Section 13(d) of the Exchange Act;
WHEREAS, Aksys and the Fund entered into a Standstill Agreement dated as
of October 9, 2003 (the "OCTOBER 2003 AGREEMENT");
WHEREAS, Defendants, on the one hand, and Aksys, on the other hand,
desire in this Agreement and pursuant to the terms set forth below fully and
finally to settle, resolve and specifically release each other and certain
related parties from all claims that they may have, whether or not heretofore
asserted, relating to or arising from or otherwise involving the acquisition,
ownership, trading or disposition of shares of Aksys common stock on or before
the date hereof, the application of the Rights Agreement, dated as of October
28, 1996, between Aksys and EquiServe Trust Company, N.A., as successor Rights
Agent to First Chicago Trust Company of New York (the "RIGHTS AGREEMENT"), or
any other agreements or understandings, or otherwise arising between or among
them, including without limitation Counts I and II of the Complaint and any
claims relating to or arising under the April 2003 Agreement, the October
2003 Agreement or the Rights Agreement; PROVIDED, that nothing in this Agreement
shall limit (i) the rights of the Fund or Artal to xxx Xxxxxx, Durus, Durus N.A.
and any of their past or present employees, officers, directors, managers and
members (collectively, the "SACANE PARTIES") for any and all causes of action
and claims, or (ii) the rights of any one or more of the Sacane Parties to xxx
the Fund or Artal and any of their respective past or present employees,
officers, directors, managers and members;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, it is hereby agreed by and among the Parties as
follows:
1. DISMISSAL OF THE COMPLAINT WITH PREJUDICE AGAINST ALL OF THE DEFENDANTS.
Aksys hereby agrees to seek, and the Parties agree to take all reasonable steps
to obtain, as promptly as possible, Court approval of dismissal, with prejudice,
of the Complaint in its entirety by filing a Stipulation of Dismissal of the
Complaint (the "STIPULATION OF DISMISSAL") substantially in the form annexed in
EXHIBIT A hereto on the latest of the dates that each Party executes this
Agreement (the "EFFECTIVE DATE") or within one business day thereafter.
2. AMENDMENT TO RIGHTS AGREEMENT.
(a) AMENDMENT OF RIGHTS AGREEMENT. Concurrently with the execution
of this Agreement, Aksys is entering into the First Amendment to Rights
Agreement in the form annexed as EXHIBIT B hereto (the "RIGHTS AMENDMENT").
(b) FUTURE RIGHTS AGREEMENTS OR OTHER SIMILAR ACTIONS. Aksys shall
not amend the Rights Agreement, adopt or implement any rights agreement or any
other similar plan or arrangement, or take any other actions (outside of the
Rights Agreement) having a disproportionate or other disparate effect upon the
holders of shares based on the number of shares held by such holder, that does
not provide for substantially similar exemptions, protections and other
provisions with respect to the Defendants as those provided in this Agreement
and the other Transaction Agreements (as defined below). Notwithstanding
anything to the contrary herein, upon expiration or termination of the Rights
Agreement, Aksys may adopt a successor rights agreement or similar arrangement,
PROVIDED, that such successor rights agreement or similar arrangement provides
substantially similar exemptions, protections and other provisions with respect
to the Defendants as those provided in this Agreement and the other Transaction
Agreements.
(c) DISPUTE RESOLUTION PROCEDURES. Any dispute or controversy arising
under the Rights Amendment regarding whether any Designated Person (as defined
in the Rights Amendment) shall have materially breached Section 5(a) or 6(a) of
this Agreement for purposes of the Rights Amendment (a "RIGHTS CLAIM") shall be
settled through arbitration in accordance with the procedures set forth in this
Section 2(c). Such procedures shall not apply to any other claims, controversies
or disputes between any of the Parties.
(i) Aksys or the applicable Defendant shall submit a Rights
Claim to arbitration administered by the American Arbitration Association
("AAA") in accordance with its then existing Commercial Arbitration Rules for
Large, Complex Commercial Disputes (the "AAA RULES"). The arbitrators shall have
no authority other than to determine whether there has been a material breach of
Section 5(a) or 6(a) of this Agreement for purposes of the Rights Amendment.
Notwithstanding anything to the contrary in this Agreement or any other
Transaction Agreement, no Exempt Person shall lose its status as an Exempt
Person pursuant to the second proviso of clause (vii) of the definition of
Exempt Person as provided in the Rights Amendment until the arbitrators shall
have finally determined pursuant to these procedures that such Person has
materially violated Section 5(a) or 6(a) hereof, taking into account the notice
and cure provisions herein.
(ii) After the time provided for cure in Section 5(c) or
6(e), as applicable, has lapsed, Aksys or the applicable Defendant (the
"INITIATING PARTY") may commence such arbitration by (A) submitting a Demand for
Arbitration under the AAA Rules ("DEMAND FOR ARBITRATION") and (B) notifying in
writing the applicable Defendant or Aksys, as the case may be (collectively, the
"RESPONDENT"). Such notice shall set forth in reasonable detail the basic
operative facts upon which the Initiating Party is making the Rights Claim and
reference specifically the affected clauses of this Agreement. After the Demand
for Arbitration, response and counterclaim, if any, and reply to counterclaim,
if any, have been submitted, the arbitrators shall permit either the Initiating
Party or the Respondent to propose additional issues for resolution in the
pending proceedings.
(iii) The parties shall attempt, by agreement, to appoint a
sole arbitrator for confirmation by the AAA. If the parties fail so to appoint a
sole arbitrator within 20 days after the commencement of the arbitration
proceedings, a board of three arbitrators shall be appointed by the parties
jointly or, if the parties cannot agree as to three arbitrators within 20 days
after the commencement of the arbitration proceeding, then one arbitrator shall
be appointed by the Initiating Party and one arbitrator shall be appointed by
the Respondent each within 35 days after the commencement of the arbitration
proceeding and the third arbitrator shall be appointed by mutual agreement of
such two arbitrators. If such two arbitrators shall fail to agree within 40 days
after commencement of the arbitration proceeding upon the appointment of the
third arbitrator, the third arbitrator shall be appointed by the AAA in
accordance with the AAA Rules. Notwithstanding the foregoing, if any party shall
fail to appoint an arbitrator within the specified time period, such arbitrator
and the third arbitrator shall be appointed by the AAA in accordance with the
AAA Rules. For purposes of this Section, the "commencement of the arbitration
proceeding" shall be deemed to be the date upon which the Demand for Arbitration
has been delivered to the Respondent in accordance with clause (ii).
(iv) After the appointment of the arbitrators, the parties to
the arbitration shall have the right to take depositions, ask interrogatories,
obtain documentation and to obtain other discovery regarding the subject matter
of the arbitration, and, to that end, to use and exercise all the same rights,
remedies, and procedures, and be subject to all of the same duties, liabilities,
and obligations in the arbitration with respect to the subject matter thereof.
Before any discovery is initiated, the parties shall reach agreement with the
arbitrators on a streamlined and expedited discovery program in order to save
costs and avoid unnecessary delay in completing any arbitration.
(v) A hearing on the Rights Claim shall commence within 30
days following appointment and confirmation of the arbitrators. The decision of
the arbitrators shall be rendered no later than 30 days after commencement of
such hearing.
(vi) Any decision shall be rendered by a majority of the
arbitrators. The arbitrators shall issue to Aksys and the applicable Defendant a
written explanation of the reasons for their decision and a full statement of
the facts as found and the rules of law applied. The arbitrators' decision
rendered in connection with an arbitration pursuant to this Section shall be
final and binding upon Aksys and the applicable Defendant. The arbitral award
shall be conclusive proof of the validity of the determinations of the
arbitrations set forth in the award.
(vii) The place of arbitration shall be in the State of
Delaware.
(viii) In reaching their decision, the arbitrators shall follow
the substantive law of the State of Delaware.
(ix) All proceedings and all documents prepared in connection
with any arbitration conducted hereunder shall be confidential and the subject
matter thereof shall not be disclosed to any Person other than the parties to
the proceedings, their Affiliates, their counsel, witnesses and experts, the
arbitrator, and, if involved, the court and court staff; PROVIDED, that the
parties to the proceedings and their Affiliates may disclose such proceedings
and documents if required by law. All documents filed with the arbitrator or
with a court shall be filed under seal. The parties shall stipulate to all
arbitration and court orders necessary to effectuate fully the provisions of
this Section concerning confidentiality.
3. THE SELL-DOWN PERIOD.
(a) COOPERATION. Aksys shall use its commercially reasonable efforts
to facilitate the disposition of the Shares and the Warrants by the Fund and
Artal and their respective Permitted Transferees under (and as defined in) the
Registration Rights Agreement (as defined below), and, upon any exchange of the
Note (as defined below) for New Shares (as defined below), the New Shares, and
will cooperate with the Fund's and Artal's reasonable requests in that regard
consistent with the terms hereof and the other Transaction Agreements.
(b) PERMITTED DISPOSITION. The Fund and Artal may dispose of the
Shares and Warrants, and the New Shares, in one or more public and/or private
offerings with the decision as to the type of disposition(s) and whether or not
to use any underwriters to be made by the Fund consistent with the terms hereof
and the other Transaction Agreements.
(c) REGISTRATION RIGHTS AGREEMENT. Concurrently with the execution
of this Agreement, Aksys, the Fund and Artal are entering into a Registration
Rights Agreement in the form annexed as EXHIBIT C hereto (the "REGISTRATION
RIGHTS AGREEMENT") providing for, among other things, the preparation and
effectiveness of one or more registration statements covering the Shares,
Warrants and New Shares (together with the appropriate amendments and
supplements thereto, the "REGISTRATION STATEMENT(S)").
(d) RELATED AGREEMENTS. Aksys shall enter into underwriting or
distribution agreements on reasonable terms with any underwriter(s) or broker
dealer(s) selected by the Fund (subject to Aksys' approval, which shall not be
unreasonably withheld) to distribute securities selected by the Fund, Artal
and/or their Permitted Transferees. Aksys agrees that any nationally recognized
underwriter(s) and/or broker dealer(s) that acquire Shares from any Exempt
Person as part of a distribution by such Exempt Person of the Shares (that is,
for the purpose of re-sale to investors), whether pursuant to an underwritten
offering, block trade, agented distribution or any other bona fide distribution
of the Shares, shall be deemed to be "Exempt Persons" under the Rights
Agreement.
(e) SHORT POSITION. With respect to the Fund's existing short
position of 165,000 shares of Aksys common stock (the "SHORT POSITION"), subject
to its obligations under Applicable Law (as defined below), Aksys shall
cooperate with the Fund in closing out such short position, including, without
limitation, by delivering instructions to its transfer agent to release the
"matching" shares and taking such other reasonable actions as the Fund may
request.
(f) STOCK CERTIFICATES. Aksys agrees that the Fund may take
possession of the certificates representing its shares of Aksys common stock
from Xxxxxxx Xxxx & Xxxxx LLP, with whom the certificates were deposited
pursuant to the October 2003 Agreement, at any time. Aksys on the date hereof
shall instruct its transfer agent to remove immediately upon receipt of those
certificates the restrictive legends endorsed on those certificates pursuant to
the October 2003 Agreement.
(g) LIMITATION ON TRANSFERS TO 10% HOLDERS. Each Defendant covenants
that it shall not sell, assign, convey, distribute, transfer or otherwise
dispose of any of the Shares to any Person which, at the time of such transfer
or as a result of such transfer, such Defendant knows (based on information
reasonably available to such Defendant) would beneficially own in excess of 10%
of Aksys' then-outstanding common stock, except to:
(i) any Person with the written consent of Aksys, which
consent shall not be unreasonably withheld, PROVIDED, that in no event shall a
Defendant make any transfer pursuant to this clause (i) to any Person that such
Defendant knows would beneficially own in excess of 14.99% of Aksys'
then-outstanding common stock (based on information reasonably available to such
Defendant);
(ii) any Permitted Transferee, unless such Defendant knows
(based on information reasonably available to such Defendant) that such Person
would beneficially own in excess of 14.99% of Aksys' then-outstanding common
stock;
(iii) any nationally recognized underwriter(s) and/or broker
dealer(s) as part of a distribution by such Defendant of the Shares (that is,
for the purpose of re-sale to investors), whether pursuant to an underwritten
offering, block trade, agented distribution or any other bona fide distribution
of the Shares;
(iv) any Person in a distribution by such Defendant to its
direct or indirect equity or other interest holders (including any Permitted
Transferee) pro rata in accordance with such distributees' respective pro rata
shares of the Defendant's equity or other interests, PROVIDED, that if any such
Person acquires in such distribution beneficial ownership of shares of Aksys
common stock in excess of 14.99% of Aksys' then-outstanding common stock, then
such Person shall be subject to the provisions of Sections 5 and 6 hereof as if
it were a Defendant hereunder (and shall so confirm in writing to Aksys); and
(v) any holder of a proxy granted pursuant to
Section 6(d) hereof.
(h) REASONABLE BEST EFFORTS. Each Defendant shall use reasonable
best efforts to dispose of its Shares as promptly as practicable; PROVIDED,
that no Defendant shall be required to accept a price or other terms for its
Shares that it deems in its discretion not acceptable.
4. FINANCIAL TERMS.
(a) APPROVAL PAYMENT. Immediately following execution of this
Agreement and receipt of the Court's order approving the Stipulation of
Dismissal (the "ORDER"), each of the Fund and Artal, respectively, shall as soon
as possible, and in no event later than two (2) business days thereafter,
deliver, in immediately available funds, to Aksys (1) $17,640,000 in the case of
the Fund and (2) $360,000 in the case of Artal.
(b) REGISTRATION STATEMENT EFFECTIVENESS PAYMENT. Following receipt
of the Order, upon the Initial Registration Statement (as defined in the
Registration Rights Agreement) being declared effective by the Securities and
Exchange Commission, each of the Fund and Artal, respectively, shall as soon as
possible, and in no event later than two (2) business days thereafter, deliver,
in immediately available funds, to Aksys an additional (1) $9,800,000 in the
case of the Fund and (2) $200,000 in the case of Artal.
(c) PURCHASE OF SUBORDINATED NOTE. Aksys shall sell to each of the
Fund and Artal, respectively, and each of the Fund and Artal, respectively,
shall purchase from Aksys, a redeemable exchangeable subordinated note (each, a
"NOTE," and any shares of Aksys common stock issuable upon exchange of a Note,
the "NEW SHARES"), for an aggregate purchase price of (1) $15,778,000, in the
case of the Fund, and (2) $322,000, in the case of Artal, pursuant to a Note
Purchase Agreement in the form annexed as EXHIBIT D hereto (the "NOTE PURCHASE
AGREEMENT"). The Note Purchase Agreement is being executed concurrently with the
execution and delivery of this Agreement. The closing of the purchase of the
Note shall be concurrent with the payments described in Section 4(a) above.
5. DEFENDANTS' STANDSTILL COVENANTS.
(a) CONTROL MATTERS. Except for the acquisition of the Note and the
New Shares, if any, each Defendant covenants that, until such time as the
combined ownership of Voting Securities (as defined below) by (i) the Fund and,
to the Fund's knowledge (based on information reasonably available to the Fund),
its Affiliates and Associates, (ii) such Defendant (if other than the Fund) and,
to such Defendant's knowledge (based on information reasonably available to such
Defendant), its Affiliates and Associates, and (iii) to the knowledge of such
Defendant (based on information reasonably available to such Defendant), all
other Defendants and their respective Affiliates and Associates (with respect to
each Defendant, the Voting Securities described in clauses (i), (ii) and (iii),
collectively (but without double-counting), are referred to as such Defendant's
"KNOWN AGGREGATE OWNERSHIP") is less than 15% of the then-outstanding Aksys
common stock, it shall not, and shall not permit any of its Affiliates
controlled by it or its Associates controlled by it to:
(i) acquire, offer to acquire or agree to acquire, by
purchase or otherwise, beneficial ownership of any of Aksys' securities, except
pursuant to the Note or the Note Purchase Agreement or as a result of a stock
split, stock dividend, distribution, merger, recapitalization, exchange or
similar transaction or any Exempt Event or the exercise of any rights in
connection with an Exempt Event;
(ii) make or participate in any "solicitation" of "proxies"
to vote (as such terms are defined in Rule 14a-1 under the Exchange Act), or
solicit any consent or otherwise seek to advise or influence any individual,
firm, corporation, partnership, joint venture, association, trust,
unincorporated organization or other entity or group (as such term is used in
Section 13(d)(3) of the Exchange Act) (a "PERSON") with respect to the voting of
any Voting Securities, in each case only if and to the extent such solicitation,
advice or influence is in connection with a Control Matter, or become a
"participant" (as such term is used in Schedule 14A under the Exchange Act) in
any election contest with respect to members of the Aksys Board (as defined
below);
(iii) form, or join with others in the formation of, any new
"person" within the meaning of Section 13(d)(3) of the Exchange Act with respect
to any Voting Securities in connection with a Control Matter;
(iv) deposit any Voting Securities into a voting trust or
subject any such Voting Securities to any arrangement or agreement with respect
to the voting thereof in connection with a Control Matter (other than a proxy
granted pursuant to Section 6(d) hereof);
(v) initiate, propose or otherwise solicit stockholders for
the approval of one or more stockholder proposals with respect to Aksys as
described in Rule 14a-8 under the Exchange Act, or induce or attempt to induce
any other Person to initiate any stockholder proposal, in each case in
connection with a Control Matter;
(vi) seek election to or seek to place a representative on
the Aksys Board or seek the removal of any member of the Aksys Board;
(vii) call or seek to have called any meeting of the
stockholders of Aksys; or
(viii) make any press release or public proposal with respect
to any form of business combination transaction involving Aksys, including,
without limitation, a merger, exchange offer or liquidation of Aksys' assets, or
any restructuring, recapitalization or similar transaction with respect to
Aksys.
(b) OTHER MATTERS. Each Defendant further covenants that, until
such time as its known Aggregate Ownership is less than 15% of the
then-outstanding Aksys common stock, it shall not, and shall not permit any of
its Affiliates controlled by it or its Associates controlled by it to:
(i) make or participate in any "solicitation" of "proxies"
to vote (as such terms are defined in Rule 14a-1 under the Exchange Act), or
solicit any consent or otherwise seek to advise or influence any Person with
respect to the voting of any Voting Securities in connection with any matter
other than a Control Matter;
(ii) deposit any Voting Securities into a voting trust or
subject any such Voting Securities to any arrangement or agreement with respect
to the voting thereof in connection with any matter other than a Control Matter
(other than a proxy granted pursuant to Section 6(d) hereof); or
(iii) initiate, propose or otherwise solicit stockholders for
the approval of one or more stockholder proposals with respect to Aksys as
described in Rule 14a-8 under the Exchange Act, or induce or attempt to induce
any other Person to initiate any stockholder proposal, in each case other than
in connection with a Control Matter.
(c) NOTICE AND CURE. In the event that Aksys believes that a
Defendant is in material breach of any of the covenants set forth in Section
5(a) or (b) (without regard to the first proviso in the following sentence) (for
purposes of this Section 5(c), a "POTENTIAL BREACH"), Aksys shall provide such
Defendant with written notice that specifies the Potential Breach in reasonable
detail (based on information reasonably available to Aksys), and such Defendant
shall have the opportunity to cure the Potential Breach (including by ceasing
and correcting in all material respects the allegedly breaching conduct) as
described in the following sentence. Such Defendant shall use its reasonable
best efforts to cure such Potential Breach as soon as practicable after receipt
of such notice from Aksys, but in any event such Defendant shall complete such
cure, in order for such cure to be effective, within 30 days of receipt of such
notice; PROVIDED, that, notwithstanding anything herein to the contrary, no
breach shall be deemed to have occurred unless the breach shall not have been
cured in all material respects prior to the end of the 30th day following the
date of such notice; and PROVIDED, FURTHER, that nothing herein shall prevent
Aksys from seeking interim equitable relief during such 30-day period.
(d) INVESTOR COMMUNICATIONS. The Parties acknowledge that the Fund
in the ordinary course of business will communicate with its shareholders and
investors and their respective managers, members, control persons, officers and
directors, and that, notwithstanding anything in this Agreement to the contrary,
no such communications shall violate any of the provisions of this Section 5 so
long as such communications occur in the ordinary course of business and are not
made with the intent of encouraging or initiating any Control Matter prohibited
under Section 5(a) above.
(e) DEFENDANT VOTING. Notwithstanding anything in this Agreement
to the contrary, none of the provisions of Section 5(a) or (b) shall restrict
the voting by any Defendant of any Shares which such Defendant is permitted to
vote in its own discretion pursuant to Section 6 hereof.
(f) CERTAIN DEFINITIONS. For purposes of this Agreement:
(i) "VOTING SECURITIES" means any securities entitled to
vote generally on matters submitted for a vote of stockholders of Aksys, or any
direct or indirect rights or options to acquire any such securities or any
securities convertible into or exercisable or exchangeable for such securities.
(ii) "CONTROL MATTER" means any proposal or transaction
concerning or involving (A) the control of a majority of the outstanding Voting
Securities, (B) the election or removal of members of the Aksys Board, (C) a
business combination transaction involving Aksys, including, without limitation,
any merger, reorganization, recapitalization, sale of all or substantially all
assets or similar transaction with respect to Aksys, or (D) any other matter
proposed to Aksys' shareholders, including, without limitation, changes to
Aksys' certificate of incorporation or bylaws, that pertains to takeover
defenses or a change in control of Aksys.
6. VOTING AGREEMENT.
(a) 2004 ANNUAL MEETING ELECTION OF DIRECTORS. Each Defendant shall
authorize Aksys' chief executive officer and/or chief financial officer as its
proxy to vote at the 2004 annual meeting of Aksys shareholders, to be held in
May 2004 (the "2004 ANNUAL MEETING"), all Shares owned by it of record or for
which it has the power to direct the vote as of the record date for the 2004
Annual Meeting in favor of the election of Xxxxxxx X. Xxx and Xxxxx X. Xxxxxxxx,
Xx. to the Aksys Board.
(b) OTHER VOTING. In connection with any other vote of Aksys
stockholders, including any vote to be held at the 2004 Annual Meeting, each
Defendant shall authorize a third party selected by the Fund with the consent of
Aksys (such consent not to be unreasonably withheld) or, if no such third party
shall have been selected by the end of the 30th day following the Effective
Date, Aksys' chief executive officer and/or chief financial officer (in either
case, the "VOTING DESIGNEE") as its proxy to vote all Shares owned by it of
record or for which it has the power to direct the vote as of the record date
for such vote:
(i) at the 2004 Annual Meeting, in the case of any
stockholder proposal (as described in Rule 14a-8 under the Exchange Act) being
acted upon by the shareholders, as directed by a majority of the independent
members of the Aksys Board (as defined under the rules of the National
Association of Securities Dealers), and
(ii) for all other matters, in proportion to the votes cast
by all other holders of Aksys common stock (other than other Defendants);
PROVIDED, that from and after certification by the Fund to Aksys that its known
Aggregate Ownership is less than 50% of the then-outstanding Aksys common stock,
the Voting Designee shall vote as provided above only those of Defendants'
Shares that are in excess of 14.99% of the then-outstanding Aksys common stock
(with the Fund to designate which of the Defendants' Shares are to be so voted
by the Voting Designee) and the Defendants' remaining Shares may be voted at
each Defendant's discretion.
(c) TERMINATION OF VOTING. From and after certification by the Fund
to Aksys that the Fund's known Aggregate Ownership is less than 15% of the
then-outstanding Aksys common stock, the voting and other rights, if any, of the
Voting Designee (and, if applicable, the proxies specified in Section 6(a)
above) with respect to the Shares shall be discontinued.
(d) PROXIES. Each Defendant that as of the date hereof owns of
record or holds the power to direct the vote of any Shares shall execute
irrevocable proxies in the forms annexed as EXHIBIT E hereto.
(e) NOTICE AND CURE. In the event that Aksys believes that a
Defendant is in material breach of any of the covenants set forth in Section
6(a) or (b) (without regard to the first proviso in the following sentence) (for
purposes of this Section 6(e), a "POTENTIAL BREACH"), Aksys shall provide such
Defendant with written notice that specifies the Potential Breach in reasonable
detail (based on information reasonably available to Aksys), and such Defendant
shall have the opportunity to cure the Potential Breach (including by ceasing
and correcting in all material respects the allegedly breaching conduct) as
described in the following sentence. Such Defendant shall use its reasonable
best efforts to cure such Potential Breach as soon as practicable after receipt
of such notice from Aksys, but in any event such Defendant shall complete such
cure, in order for such cure to be effective, within 10 days of receipt of such
notice; PROVIDED, that, notwithstanding anything herein to the contrary, no
breach shall be deemed to have occurred unless the breach shall not have been
cured in all material respects prior to the end of the 10th day following the
date of such notice; PROVIDED, FURTHER, that nothing herein shall prevent Aksys
from seeking interim equitable relief during such 10-day period; and PROVIDED,
FURTHER, that nothing herein shall prevent Aksys from exercising any rights
otherwise available to it under its organizational documents or Applicable Laws
to postpone any shareholder meeting or action by written consent in order to
facilitate a cure and correction of such Potential Breach.
7. ACCESS RIGHTS. Until such time as the Fund's known Aggregate Ownership
is less than 15% of the then-outstanding Aksys common stock, Aksys shall provide
the Fund with reasonable access to Aksys' senior management and members of the
Aksys Board, including, without limitation, the opportunity to meet with members
of the Aksys Board immediately prior to or after each regular meeting of the
Aksys Board (at the site of such meeting, if so desired by the Fund), and shall
cause such senior managers and members of the Aksys Board to discuss in good
faith issues raised by the Fund. Aksys shall give the Fund at least 5 business
days' notice of any regular meeting of the Aksys Board and, if requested by the
Fund, the agenda items for such meetings.
8. NO ASSIGNMENT. The Parties represent and warrant that they have not
assigned, transferred or conveyed to any other Person any claim or portion
thereof or interest therein relating to any of the matters that are the subject
of this Agreement.
9. RELEASE OF THE DEFENDANTS. On the Effective Date and subject to Court
approval of the Order, Aksys, for (i) itself and its affiliates (other than the
Fund, to the extent the Fund might otherwise be deemed to be an affiliate of
Aksys) and subsidiaries, predecessor and successor corporations or entities,
(ii) any and all of their respective past, present and future officers,
directors, employees, agents, representatives and attorneys, and (iii) any and
all other persons, firms, corporations and entities that could or might act on
its behalf, does hereby fully, finally and forever release, remise, discharge
and acquit each of the Defendants, their affiliates and subsidiaries,
predecessor and successor corporations or entities, any and all of their
respective past, present and future managers, investors, members, partners,
officers, directors, employees, agents, representatives and attorneys, permitted
assigns and transferees, and any and all other persons, firms, corporations and
entities that could or might act on its behalf, including, without limitation,
Durus Life Sciences Fund, LLC and Durus Life Sciences International Fund Ltd.,
from and against any and all claims, actions, causes of action, debts, damages,
demands, offsets, payments, costs, attorneys' fees, obligations of every kind
and nature, rights, liabilities, charges, expenses, contracts, promises and
agreements (collectively, "CLAIMS") arising out of conduct to date, whether
direct or indirect, regardless of the legal theory upon which they are based,
whether known or unknown, now existing or arising at any time in the future, and
whether liquidated or unliquidated, including, but not limited to, all Claims
arising out of conduct to date relating to or arising from the acquisition,
ownership, trading or disposition of shares of Aksys common stock, all Claims
arising out of conduct to date relating to or arising under the April 2003
Agreement, the October 2003 Agreement or the Rights Agreement and all Claims
arising out of conduct to date that were asserted or that could have been
asserted in the Litigation.
10. RELEASE OF AKSYS. On the Effective Date and subject to Court approval of
the Order, each Defendant, for (i) itself and its affiliates (other than, in the
case of the Fund, Aksys, to the extent Aksys might otherwise be deemed to be an
affiliate of the Fund) and subsidiaries, predecessor and successor corporations
or entities, (ii) any and all of their respective past, present and future
officers, directors, employees, agents, representatives and attorneys, and (iii)
any and all other persons, firms, corporations and entities that could or might
act on its behalf, does hereby fully, finally and forever release, remise,
discharge and acquit Aksys, its affiliates and subsidiaries, predecessor and
successor corporations or entities, any and all of their respective past,
present and future managers, partners, officers, directors, employees, agents,
representatives and attorneys, permitted assigns and transferees, and any and
all other persons, firms, corporations and entities that could or might act on
its behalf, from and against any and all Claims arising out of conduct to date,
whether direct or indirect, regardless of the legal theory upon which they are
based, whether known or unknown, now existing or arising at any time in the
future, and whether liquidated or unliquidated, including, but not limited to,
all Claims arising out of conduct to date relating to or arising from the
acquisition, ownership, trading or disposition of the shares of Aksys common
stock, all Claims arising out of conduct to date relating to or arising under
the April 2003 Agreement, the October 2003 Agreement or the Rights Agreement and
all Claims arising out of conduct to date that were asserted or that could have
been asserted in the Litigation.
11. REPRESENTATIONS AND WARRANTIES.
(a) MUTUAL REPRESENTATIONS AND WARRANTIES. Each Defendant, on the
one hand, represents and warrants to Aksys, and Aksys, on the other hand,
represents and warrants to each Defendant, as follows:
(i) It has the right, power and authority to enter into and
to perform its obligations under those of the Transaction Agreements to which it
is or is contemplated to be a party. The execution, delivery and performance by
it of each Transaction Agreement to which it is or is contemplated to be a party
have been duly authorized by all necessary action on its part. Each Transaction
Agreement to which it is or is contemplated to be a party has been duly executed
and delivered and constitutes its valid and binding obligation, enforceable in
accordance with its terms.
(ii) The execution and delivery of each Transaction Agreement
to which it is or is contemplated to be a party, and the consummation of the
transactions contemplated thereby, by it will not, directly or indirectly (with
or without notice or lapse of time): (A) contravene, conflict with or result in
a violation of (1) any provisions of its certificate or articles of
incorporation, bylaws, management agreement, operating agreement, partnership
agreement or similar governing document or (2) any resolution adopted by its
board of directors or any committee thereof or shareholders, (B) contravene,
conflict with or result in a violation of, or give any governmental authority,
agency or entity of any kind whatsoever, including without limitation any
quasi-governmental agency, self-regulatory organization, arbitrator or arbitral
panel (a "GOVERNMENTAL BODY") the right to exercise any remedy or obtain any
relief under, any federal, state, local or foreign statute, law, ordinance,
rule, regulation, judgment, decree, order, concession, grant, franchise, permit
or other governmental authorization or approval (collectively, "APPLICABLE
LAW"), or (C) contravene, conflict with or result in a violation or breach of,
or default under, any provision of any contract to which it is a party or may be
bound.
(b) ADDITIONAL REPRESENTATIONS AND WARRANTIES AND COVENANTS OF
AKSYS. Aksys additionally represents and warrants to each Defendant as follows:
(i) to Aksys' knowledge, no past or present Aksys
shareholder has made or threatened to make any claims with respect to the
acquisition, ownership, trading or disposition of shares of Aksys common stock
by any of the Defendants, other than as previously disclosed in writing to the
Fund; and
(ii) the Rights Amendment has been adopted and approved by a
unanimous vote of the members of the board of directors of Aksys (the "AKSYS
BOARD"), has been duly executed and delivered by Aksys, and will be effective,
without any further action by any Person, immediately upon the Court's approval
of the Stipulation of Dismissal, and there has not been any Stock Acquisition
Date based on the stock ownership of any Defendant, individually or
collectively, and there has not been any Distribution Date under the Rights
Agreement.
Aksys shall cause the Rights Agent to duly execute and deliver a
counterpart to the Rights Amendment as soon as practicable, and in any event
within 1 business day following the Effective Date.
(c) ADDITIONAL REPRESENTATIONS AND WARRANTIES AND COVENANTS OF
DEFENDANTS.
(i) Each Defendant represents and warrants to Aksys that it
does not hold any Shares with the purpose or intent of controlling Aksys or
changing or influencing the control or management of Aksys or in connection with
or as a participant in any transaction having that purpose or intent.
(ii) Each Defendant covenants that, until such time as such
Defendant's known Aggregate Ownership is less than 15% of the then-outstanding
Aksys common stock, it shall not in the future hold any Shares with the purpose
or intent of controlling Aksys or changing or influencing the control or
management of Aksys or in connection with or as a participant in any transaction
having that purpose or intent.
(iii) Each of the Fund and Artal, respectively, represents
and warrants to Aksys that it is the beneficial owner of that number of Shares
indicated on Schedule I annexed hereto. Each other Defendant represents and
warrants to Aksys that it does not own any Shares of record or beneficially,
other than indirect interests, if any, in the Shares owned by the Fund or Artal
as represented pursuant to the preceding sentence.
(d) ADDITIONAL REPRESENTATION AND WARRANTY OF THE FUND AND ARTAL.
Each of the Fund and Artal represents and warrants to Aksys that neither the
Sacane Parties nor any Person known to the Fund or Artal, respectively (based on
information reasonably available to it), to be an Affiliate or Associate of the
Sacane Parties has the right to direct the voting or disposition of any Shares
beneficially owned by the Fund or Artal or to trade securities on the Fund's or
Artal's behalf or exercise any management power with respect to the Fund or
Artal.
12. NOTICES OF SALES. Each Defendant, until such time as such Defendant's
known Aggregate Ownership is less than 15% of the then-outstanding Aksys common
stock, shall notify Aksys promptly in writing of each sale or other similar
disposition by it of any Shares.
13. PROHIBITION AGAINST SHORT SALES. Each Defendant covenants that, until
such time as such Defendant's known Aggregate Ownership is less than 10% of
Aksys' then-outstanding common stock, it will not engage in short sales of any
Aksys common stock.
14. VOLUNTARY AND KNOWINGLY. The Parties acknowledge that, before executing
this Agreement, they have been advised and given the opportunity to consult with
counsel and have in fact sought and received advice from counsel of their own
choosing, and have been fully advised of their rights under law. The Parties
further acknowledge that they have reviewed this Agreement in its entirety,
understand it and voluntarily execute it.
15. SACANE PARTIES.
(a) NO RELEASE OF SACANE PARTIES. Nothing in this Agreement shall
be construed as a release by the Fund or Artal of any third party or any party
other than Aksys, Aksys' affiliates and subsidiaries, predecessor and successor
corporations and entities, any and all of their respective past, present and
future managers, partners, officers, directors, employees, agents,
representatives and attorneys, permitted assigns and transferees, and any and
all other persons, firms, corporations and entities that could or might act on
Aksys' behalf. Without limiting the generality of the foregoing, nothing in this
Agreement shall be construed as a release by the Fund or Artal of the Sacane
Parties, nor shall this Agreement impair in any way the right of the Fund,
Artal, Durus Life Sciences Fund, LLC and Durus Life Sciences International Fund
Ltd., or any of their respective investors, managers, members and control
persons, from asserting any claims at law or in equity against any of the Sacane
Parties. Any language to the contrary in this Agreement or any other Transaction
Agreement is superseded by this Section 15(a).
(b) NO RELEASE BY SACANE PARTIES. Nothing in this Agreement shall
be construed as a release by the Sacane Parties of any third party or any party
other than Aksys, Aksys' affiliates and subsidiaries, predecessor and successor
corporations and entities, any and all of their respective past, present and
future managers, partners, officers, directors, employees, agents,
representatives and attorneys, permitted assigns and transferees, and any and
all other persons, firms, corporations and entities that could or might act on
Aksys' behalf. Without limiting the generality of the foregoing, nothing in this
Agreement shall be construed as a release by the Sacane Parties of the Fund,
Artal, Durus Life Sciences Fund, LLC and Durus Life Sciences International Fund
Ltd., nor shall this Agreement impair in any way the right of the Sacane Parties
from asserting any claims at law or in equity against any of the Fund, Artal,
Durus Life Sciences Fund, LLC and Durus Life Sciences International Fund Ltd.,
or any of their respective investors. Any language to the contrary in this
Agreement or any of the other Transaction Agreements is superseded by this
Section 15(b).
16. SUFFICIENCY OF CONSIDERATION. Other than the terms set forth in this
Agreement, each Defendant, on the one hand, and Aksys, on the other hand,
acknowledges and agrees that no additional consideration is required or owing to
the other arising out of or relating to the Complaint or other matters covered
hereby, and that sufficient consideration has passed between them by virtue of
this Agreement to render this Agreement and the Transaction Agreements,
including the releases herein, valid and enforceable. Aksys further acknowledges
that each Defendant, and each Defendant further acknowledges that Aksys, is
relying upon the representations and warranties of such Party, among other
things, in entering into this Agreement.
17. ENTIRE AGREEMENT; MODIFICATION.
(a) ENTIRE AGREEMENT. This Agreement and the other Transaction
Agreements constitute the complete, final and exclusive embodiment of the entire
agreement among the Parties with regard to the subject matter hereof. This
Agreement is entered into without reliance on any promise or representation,
written or oral, other than those expressly contained or referenced herein.
Without limiting the generality of the foregoing, the April 2003 Agreement and
the October 2003 Agreement are hereby terminated.
(b) MODIFICATION. This Agreement may not be modified except in a
writing signed by each Party adversely affected by the proposed amendment.
18. SEVERAL OBLIGATIONS. The obligations of Aksys, the Fund, Artal and the
Sacane Parties hereunder are several and not joint; PROVIDED, that the
obligations of the Sacane Parties are joint and several.
19. HEIRS, SUCCESSORS AND ASSIGNS. This Agreement shall bind the heirs,
personal representatives, successors, assigns, executors and administrators of
each Party, and inure to the benefit of each Party, its heirs, personal
representatives, successors, assigns, executors and administrators.
20. GOVERNING LAW. This Agreement shall be governed by and construed
according to the laws of the State of Delaware without giving effect to the
conflicts or choice of law provisions thereof.
21. SEVERABILITY. If any provision of this Agreement or any other
Transaction Agreement is determined to be invalid, void or unenforceable, in
whole or in part, this determination will not affect any other provision of this
Agreement, and the provision in question shall be modified so as to be rendered
valid and enforceable and to give the applicable Parties the intended benefits
of the provision.
22. ENFORCEMENT ACCORDING TO TERMS.
(a) ENFORCEMENT. The Parties intend this Agreement to be enforced
according to its terms. Each Defendant, on the one hand, and Aksys, on the other
hand, acknowledges and agrees that Aksys or the Defendants, as the case may be,
would suffer irreparable harm if any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise
breached. Accordingly, each Defendant, on the one hand, and Aksys, on the other
hand, shall be entitled to an injunction or injunctions (without the need to
post any bond) to prevent breaches of this Agreement by Aksys or the Defendants,
as the case may be, and to enforce specifically its provisions in any court of
the United States or any state having jurisdiction, this being in addition to
any other remedy to which any Party may be entitled at law or in equity.
(b) THIRD PARTY BENEFICIARIES. The Parties acknowledge and agree
that the provisions of this Agreement and each of the Transaction Agreements are
intended to be for the benefit of, and may be enforced by, each of the Parties.
Nothing in this Agreement shall be construed to give any rights to any third
parties to enforce the terms of this Agreement or the Transaction Agreements,
except that third parties who are intended beneficiaries of the release of
claims against them contained in Sections 9 and 10 hereof shall be entitled to
enforce such releases.
(c) LIMITATIONS. In the event a third party claim (the "THIRD PARTY
CLAIM") results in losses for which a Party (the "CLAIMING PARTY") seeks
recovery against another Party (the "REPRESENTING PARTY") as a result of breach
of the representation and warranty contained in Section 11(a)(i), 11(a)(ii)(C)
and 11(b) hereof:
(i) Damages recoverable from the Representing Party for the
breach of the representation and warranty shall not include losses arising from
a general decline in the price of all Aksys common stock as a result of the
Third Party Claim or the settlement thereof; and
(ii) Damages recoverable from the Representing Party in the
claim for breach of the representation and warranty shall be limited to the
extent that any losses in the Third Party Claim arose from acts of misconduct at
any time by those individuals who currently are officers or directors of the
Claiming Party.
23. CONSTRUCTION AND CERTAIN DEFINED TERMS.
(a) HEADINGS. Descriptive headings are for convenience only and
will not control or affect the meaning or construction of any provision of this
Agreement.
(b) TRANSACTION AGREEMENTS. "TRANSACTION AGREEMENTS" shall mean
this Agreement, the Rights Agreement, as amended by the Rights Amendment, the
Registration Rights Agreement, the Note Purchase Agreement, the Note, and all
other agreements, certificates and instruments contemplated herein or therein.
24. WAIVER. No term or condition of this Agreement shall be deemed to have
been waived, nor shall there be an estoppel against the enforcement of any
provision of this Agreement, except by a written instrument signed by the Party
charged with the waiver or estoppel. No written waiver shall be deemed a
continuing waiver unless specifically stated therein, and the written waiver
shall operate only as to the specific term or condition waived, and not for the
future or as to any other act than that specifically waived.
25. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
any of which need not contain the signatures of more than one Party, but all
signed counterparts taken together shall constitute one and the same instrument.
A facsimile signature shall be deemed as valid as an original signature.
26. NOTICES. All demands, notices, communications and reports provided for
in this Agreement shall be in writing and shall be either sent by facsimile with
confirmation to the number specified below or personally delivered or sent by
reputable overnight courier service (delivery charges prepaid) to any party at
the address specified below.
If to Aksys, to:
Aksys, Ltd.
Xxx Xxxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attn: Chief Executive Officer
Chief Financial Officer
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
With a copy to:
Xxxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxx, P.C.
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
If to the Fund, to:
Durus Life Sciences Master Fund Ltd.
c/o International Fund Services (Ireland) Limited
0xx Xxxxx, Xxxxxxx Xxxxxx
Xxxxxxxx Xxxx
Xxxxxx 0, Xxxxxxx
Attn: Xxxxx Xxxxx
Telecopy: (000) 00-00-000-0000
Telephone: (000) 00-00-000-0000
With a copy to:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxx, Esq.
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
And an additional copy to:
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxx, Esq.
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
If to Sacane, to:
Xxxxx Xxxxxx
00 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxxxxx 00000
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
With a copy to:
The Dontzin Law Firm
0 Xxxx 0xxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
If to Durus, to:
Durus Capital Management, LLC
00 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxxxxx 00000
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
With a copy to:
The Dontzin Law Firm
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
If to Durus N.A., to:
Durus Capital Management (N.A.), LLC
00 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxxxxx 00000
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
With a copy to:
The Dontzin Law Firm
0 Xxxx 0xxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
If to Artal, to:
Artal Long Biotech Portfolio LLC
c/o Artal Alternative Treasury Management
00X Xxx xx xx Xxxxx-x'xx
Xxxxxx
Xxxxxxxxxxx
Attn: Xxxxxxxxx Xxxxxxxx, Managing Director
With a copy to:
Shartsis, Xxxxxx & Xxxxxxxx LLP
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxx, Esq.
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
Any such demand, notice, communication or report shall be deemed to have
been given pursuant to this Agreement when delivered personally, when confirmed
if by facsimile or on the second business day after deposit with a reputable
overnight courier service, as the case may be.
27. PUBLIC DISCLOSURE.
(a) DISCLOSURES. Until such time as the Fund's known Aggregate
Ownership is less than 15% of the then-outstanding Aksys common stock:
(i) each Party proposing to make any press release or other
written public announcement or disclosure concerning any Transaction Agreement
(a "DISCLOSURE") shall provide an advance copy to the other Parties and shall
allow each of Aksys, the Fund and Artal the opportunity to comment thereon, and
(ii) no such Disclosure shall be made by any Party in a press
release without the consent of Aksys, in the case of any Disclosure made by any
Defendant, or the consent of the Fund, in the case of any Disclosure made by any
Party other than the Fund, in each case such consent not to be unreasonably
withheld.
(b) PROCESS. At any and all times after the filing of the Stipulation
of Dismissal, if any Party receives a subpoena or other process from any
non-party seeking production or other disclosure of any documentation,
correspondence, or testimony related to the Litigation, the Party receiving the
process promptly shall give written notice and notice by telephone to all other
Parties of the receipt of that process, identifying the production, disclosure
or testimony sought and enclosing a copy of the process.
(c) GOVERNMENTAL BODIES. At any and all times after the filing of the
Stipulation of Dismissal, the Parties may not disclose any documentation,
correspondence, or testimony related to the Litigation except (i) as may be
required by Applicable Law or (ii) to any Governmental Body, PROVIDED, that the
Party disclosing such documentation, correspondence, or testimony requests
confidential treatment thereof to the extent permitted by law.
28. NON-DISPARAGEMENT.
(a) AKSYS COVENANT. Subject to paragraph (d) below, Aksys agrees not to
publicly make or publish, and to instruct its agents and employees not to
publicly make or publish, any Disparaging (as defined below) remarks, comments
or statements (orally or in writing), or instigate, assist or participate in the
making or publication of any Disparaging remarks, comments or statements,
concerning (i) any Defendant, (ii) any Defendant's services, affairs or
operations, or (iii) the reputation of any Person who is known by Aksys (based
on information reasonably available to Aksys) to be a member, manager, officer,
director, agent, employee or investor of any Defendant.
(b) DEFENDANTS COVENANT. Each Defendant agrees not to publicly make
or publish, and to instruct its agents and employees not to publicly make or
publish, any Disparaging remarks, comments or statements (orally or in writing),
or instigate, assist or participate in the making or publication of any
Disparaging remarks, comments or statements, concerning (i) Aksys, (ii) any of
Aksys' services, affairs or operations, or (iii) the reputation of any Person
who is known by such Defendant (based on information reasonably available to
such Defendant) to be a member, manager, officer, director, agent or employee of
Aksys.
(c) DEFINITION OF DISPARAGING. "DISPARAGING" remarks, comments or
statements are those that impugn the character, honesty, integrity or morality
or business acumen or abilities in connection with any aspect of the operation
of business of the Person being disparaged.
(d) EXCEPTIONS AND EXPIRATION. Nothing contained in this Section 28
shall preclude any of the Parties from: (i) complying with its disclosure
obligations under the securities laws; (ii) providing truthful testimony in
response to a subpoena, court order, regulatory request or other legal process
believed in good faith to be valid; or (iii) making any statements of any kind
to such parties' spouse or attorney. The provisions of this Section 28 shall
expire upon the third anniversary of the Effective Date.
29. NO ADMISSION OF LIABILITY. Neither Aksys' nor any Defendant's execution
of this Agreement constitutes or may be construed as an admission of any
liability.
30. FURTHER ASSURANCES.
(a) REASONABLE EFFORTS. Each Party agrees to use reasonable effort to
take reasonable actions as any other Party may request to carry out the intent
of the transactions contemplated by this Agreement and the other Transaction
Agreements and to take any other actions required under Applicable Laws to carry
out and effectuate the intent of this Agreement and the other Transaction
Agreements. Each Party further agrees to cooperate with the other Parties and
use all reasonable efforts to take, or cause to be taken, all action, and do, or
cause to be done, all things, reasonably necessary to carry out and effectuate
the intent of this Agreement and the other Transaction Agreements.
(b) THIRD PARTY CLAIMS. Subject to Section 15 hereof and obligations
under Applicable Law, each Party agrees that neither it nor (i) any of its
affiliates and subsidiaries, predecessor and successor corporations or entities,
(ii) any of its past, present and future officers, directors, employees, agents,
representatives and attorneys, or (iii) any other Persons that such Party
controls that could or might act on its behalf, will assist, directly or
indirectly, any other Person in investigating, preparing or asserting any
Proceeding against any Person released hereunder arising out of conduct to date
or any transaction contemplated by this Agreement or any other Transaction
Agreement; PROVIDED, that nothing contained in this Section 30 shall preclude
any such Person from providing truthful testimony in response to a subpoena,
court order, regulatory request or other legal process believed in good faith to
be valid; and PROVIDED, FURTHER, that nothing in this Section 30 shall preclude
the Fund and Artal from cooperating with and assisting each other in connection
with any actions brought by or against any of the Sacane Parties.
(c) NO INCONSISTENT POSITIONS. Each Defendant, on the one hand, and
Aksys, on the other hand, agrees not to pursue any claim, right or defense
against Aksys or any Defendant, as the case may be, under this Agreement and the
other Transaction Agreements that is inconsistent with the obligations of such
Party under this Agreement and the other Transaction Agreements. Each Party
agrees that it will not make any representation or argument or take any position
inconsistent with the representations, warranties, and agreements made by it in
this Agreement or any other Transaction Agreement, whether in any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding and any informal
proceeding), prosecution, contest, hearing, inquiry, inquest, audit, examination
or investigation that is, has been or may in the future be commenced, brought,
conducted or heard by or before, or that otherwise has involved or may involve,
any Governmental Body (collectively, "PROCEEDINGS"), including in any
negotiation with any Person threatening to make any claims or commence any
Proceeding, and no Party shall initiate or encourage in any way any such
Proceeding.
31. COSTS. Except as otherwise specified herein or in any of the other
Transaction Agreements, each Party will bear its own costs in connection with
this Agreement and the other Transaction Agreements.
* * * * *
IN WITNESS WHEREOF, the Parties have duly authorized and caused this
Settlement Agreement and Mutual Release to be executed as follows:
AKSYS, LTD.
By: /s/ Xxxxxxx X. Xxx
----------------------------------
Name: Xxxxxxx X. Xxx
----------------------------------
Title: President & CEO
----------------------------------
Date: 23 February, 2004
----------------------------------
IN WITNESS WHEREOF, the Parties have duly authorized and caused this
Settlement Agreement and Mutual Release to be executed as follows:
DURUS LIFE SCIENCES MASTER FUND LTD.
By: /s/ Xxxxxx X. Lake
----------------------------------
Name: Xxxxxx X. Lake
----------------------------------
Title: Director
----------------------------------
Date: 2-23-04
----------------------------------
IN WITNESS WHEREOF, the Parties have duly authorized and caused this
Settlement Agreement and Mutual Release to be executed as follows:
DURUS CAPITAL MANAGEMENT, LLC
By: /s/ Xxxxx Xxxxxx
-----------------------------------
Name: Xxxxx Xxxxxx
-----------------------------------
Title: Managing Member
-----------------------------------
Date: 2/23/04
-----------------------------------
IN WITNESS WHEREOF, the Parties have duly authorized and caused this
Settlement Agreement and Mutual Release to be executed as follows:
DURUS CAPITAL MANAGEMENT (N.A.), LLC
By: /s/ Xxxxx Xxxxxx
-----------------------------------
Name: Xxxxx Xxxxxx
-----------------------------------
Title: Managing Member
-----------------------------------
Date: 2/23/04
-----------------------------------
IN WITNESS WHEREOF, the Parties have duly authorized and caused this
Settlement Agreement and Mutual Release to be executed as follows:
XXXXX XXXXXX
/s/ Xxxxx Xxxxxx
------------------------------------------
Date: 2/23/04
-----------------------------------
IN WITNESS WHEREOF, the Parties have duly authorized and caused this
Settlement Agreement and Mutual Release to be executed as follows:
ARTAL LONG BIOTECH PORTFOLIO LLC
By: Artal Alternative Treasury Management
Its: Managing Member
By: /s/ Xxxxxxxxx Xxxxxxxx
-----------------------------------
Name: Xxxxxxxxx Xxxxxxxx
-----------------------------------
Title: Managing Director
-----------------------------------
Date: Feb 23, 04
-----------------------------------
SCHEDULE I
SHARES HELD
(as of the Effective Date)
DEFENDANT SHARES HELD OF
--------- --------------
RECORD OR
---------
BENEFICIALLY
------------
The Fund 21,333,118
Artal 498,100
