<PAGE>
                                                                     Exhibit 3.1

                     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

          (2)  50,000,000 shares of Common Stock, par value $0.01 per share (the
     "Common Stock").
<PAGE>
 
          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.

                                      -2-
<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 deliver in lieu of such certificate a new
certificate of like kind representing the number of shares of such class
represented by such lost,

                                      -3-
<PAGE>
 
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 ofdirectors 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.

          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,

                                      -4-
<PAGE>
 
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 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.

                                      -5-
<PAGE>
 
                       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.

          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.

                                      -6-
<PAGE>
 
                            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 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,

                                      -7-
<PAGE>
 
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 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

                                      -8-
<PAGE>
 
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.

          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.

                                      -9-
<PAGE>
 
                       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 defined) 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

          (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.

                                      -10-
<PAGE>
 
          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 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

                                      -11-
<PAGE>
 
          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 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

                                      -12-
<PAGE>
 
     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 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

                                      -13-
<PAGE>
 
     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 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

                                      -14-
<PAGE>
 
          (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 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.

                                      -15-
<PAGE>
 
          (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 (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

                                      -16-
<PAGE>
 
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 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.

                                 *  *  *  *  *

                                     -17-