EXHIBIT 3
LOCK-UP AGREEMENT
THIS LOCK-UP AGREEMENT (this "Agreement") is made and entered into as of
May 12, 2004, by and among XXXX Medical Systems, Inc., a Delaware corporation
("Parent"), Horizon Medical Products, Inc., a Georgia corporation (the
"Company"), and the undersigned shareholder of the Company ("Holder").
Capitalized terms used but not otherwise defined herein shall have the meanings
ascribed to them in the Merger Agreement (as defined below).
BACKGROUND
A. Parent, the Company and Hornet Acquisition Corp., a Delaware
corporation and wholly owned subsidiary of Parent ("Merger Sub"), have
entered into an Agreement and Plan of Merger, dated as of the date hereof (the
"Merger Agreement"), which provides for the merger of the Merger Sub with and
into the Company (the "Merger"), pursuant to which the Company shall become a
wholly-owned subsidiary of Parent.
X. Xxxxxx has been advised that Holder may be deemed to be an "affiliate"
of Parent after the consummation of the Merger as the term "affiliate" is
defined in Rule 144 of the Rules and Regulations (the "Rules and Regulations")
of the Securities and Exchange Commission (the "Commission"), although nothing
contained herein shall be construed as an admission by Holder that Holder will
in fact be an "affiliate" of Parent after the consummation of the Merger.
C. As a condition and inducement to the willingness of Parent, Merger Sub
and the Company to enter into the Merger Agreement, Holder has agreed to enter
into this Agreement.
NOW, THEREFORE, intending to be legally bound, the parties hereto agree as
follows:
1. Acknowledgments by Holder. Holder has carefully read this Agreement and
the Merger Agreement and has had the opportunity to discuss the requirements of
this Agreement with Holder's professional advisors, who Holder believes are
qualified to advise Holder with regard to such matters.
2. Affiliate Status: Lock-up.
(a) Affiliate Status. Holder has been advised that (i) the issuance of
Parent Common Stock to Holder Company Shareholders in connection with the Merger
will be registered on a registration statement on Form S-4 promulgated under the
Securities Act of 1933, as amended (the "1933 Act") and that the resale by
Holder of shares of Parent Common Stock issued to the undersigned in the Merger
will be registered under the 1933 Act on a post-effective amendment to such
registration statement on Form S-3 (the "Resale Registration Statement"), (ii)
the resale of such shares by Holder may be subject to restrictions set forth in
Rule 144 and Rule 145 of the Rules and Regulations, and (iii) Holder may be
deemed to be an affiliate of Parent after the consummation of the Merger.
(b) Lock-up. Holder agrees, during the 12-month period beginning on the
date of the consummation of the Merger, not to offer, contract to sell or
otherwise sell, dispose of, loan, pledge, grant any rights with respect to, make
any short sale of, grant any option for the purchase of, or enter into any
hedging or similar transaction with the same economic effect as a
sale (each, a "Disposition") of any shares of Parent Common Stock, except to the
extent that: (A)(i) such Disposition is made in conformity with the requirements
of Rule 145(d) promulgated under the 1933 Act, to the extent such Rule may be
applicable to such Disposition, (ii) such Disposition is made pursuant to an
effective registration statement under the 1933 Act or an appropriate exemption
from registration or (iii) Holder delivers to Parent a written opinion of
counsel, reasonably acceptable to Parent in form and substance, that such
Disposition is otherwise exempt from registration under the 1933 Act; and (B)
the number of shares of Parent Common Stock subject to Dispositions made by
Holder during the three month-period ending on the date of any such Disposition
(and including the shares of Parent Common Stock subject to such Disposition)
does not exceed 200% of the number of shares of Parent Common Stock Holder would
be entitled to sell in accordance with the volume limitations set forth in Rule
144(e)(1) of the Rules and Regulations if all shares of Parent Common Stock
subject to Dispositions made by Holder during such three-month period were
subject to such volume limitations (regardless of whether the resale thereof has
been registered under the 1933 Act). Notwithstanding anything to the contrary
herein, this Agreement shall not prohibit a transfer of any shares of Parent
Common Stock by Holder, if Holder is a partnership or limited liability company,
to one or more partners or members of Holder or to an affiliated Person under
common control with Holder; provided, however, that unless such transfer is
effected in accordance with Section 2(b)(B) above, such transfer shall be
permitted only if, as a precondition to such transfer, the transferee agrees in
writing to be bound by all of the terms of this Section 2(b).
(c) Holder understands that there will be placed on the certificates
for the Parent Common Stock issued to Holder, or any substitutions therefor, a
legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE HELD BY AN "AFFILIATE"
OF XXXX MEDICAL SYSTEMS, INC. AND MAY ONLY BE TRANSFERRED IN ACCORDANCE
WITH RULE 144 UNDER THE SECURITIES ACT OF 1933, AND WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE
TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED MAY __,
2004 BETWEEN THE REGISTERED HOLDER HEREOF, XXXX MEDICAL SYSTEMS, INC.
AND HORIZON MEDICAL PRODUCTS, INC., A COPY OF WHICH AGREEMENT IS ON
FILE AT THE PRINCIPAL OFFICES OF XXXX MEDICAL SYSTEMS, INC."
It is understood and agreed that the legend contemplated in this Section 2(c)
shall be removed by delivery of a substitute certificate without such legend if
Holder shall have delivered to Parent a copy of a letter from the staff of the
Securities and Exchange Commission, or a written opinion of counsel reasonably
acceptable to Parent, to the effect that such legend is not required for
purposes of the 1933 Act; provided, however, it is further understood and agreed
that if one year has passed since Holder's acquisition of Parent Common Stock as
a result of the Merger (as determined in accordance with paragraph (d) of Rule
144 under the 0000 Xxx) and Holder is not an "affiliate" of Parent, Holder may
request of Parent in writing that the legend contemplated in this Section 2(c)
be removed by delivery of a substitute certificate without such legend and
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Parent thereafter will cause such substitute certificate to be issued to Holder,
without the delivery of such a letter or written opinion.
(d) As soon as practicable following the execution of the Merger
Agreement, Parent shall prepare (together with the Company) and file with the
Commission, a joint registration and proxy statement consisting of the Company
Proxy Statement, the Parent Proxy Statement and the Registration Statement (as
such terms are defined in the Merger Agreement) for the offer and sale of Parent
Common Stock pursuant to the Merger, included in which shall be the Company
Proxy Statement and the Parent Proxy Statement which shall constitute a
prospectus. Parent shall use commercially reasonable efforts to have the
Registration Statement declared effective under the 1933 Act as promptly as
practicable after its filing. Parent agrees to use its commercially reasonable
efforts to: (i) file the Resale Registration Statement within ten (10) days
subsequent to the Effective Time; (ii) cause the Resale Registration Statement
to be declared effective under the Securities Act as promptly as practicable
after its filing; and (iii) maintain the effectiveness of the Resale
Registration Statement for a period of time ending on the earlier of (A) the
date on which all shares of Parent Common Stock issued in connection with the
Merger to Holder have been sold and (B) the date on which all shares of Parent
Common Stock held by Holder issued to Holder in connection with the Merger, in
the opinion of counsel for Parent, are eligible for sale pursuant to Rule 144
under the 1933 Act and could be sold in any three-month period in accordance
with the volume limitations contained in Rule 144(e)(1) under the 1933 Act.
3. Termination.
This Agreement shall terminate and shall be of no further force and
effect in the event of the termination of the Merger Agreement at any time prior
to the Effective Time.
4. Miscellaneous.
(a) Waiver; Severability. No waiver by any party hereto of any
condition or of any breach of any provision of this Agreement shall be effective
unless in writing and signed by each party hereto. In the event that any
provision of this Agreement, or the application of any such provision to any
person, entity or set of circumstances, shall be determined to be invalid,
unlawful, void or unenforceable to any extent, the remainder of this Agreement,
and the application of such provision to persons, entities or circumstances
other than those as to which it is determined to be invalid, unlawful, void or
unenforceable, shall not be impaired or otherwise affected and shall continue to
be valid and enforceable to the fullest extent permitted by law.
(b) Binding Effect and Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but, except as
otherwise specifically provided herein, neither this Agreement nor any of the
rights, interests or obligations of the parties hereto may be assigned by either
of the parties without prior written consent of the other party hereto.
(c) Amendments and Modification. This Agreement may not be modified,
amended, altered or supplemented except upon the execution and delivery of a
written agreement executed by the parties hereto.
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(d) Governing Law. This Agreement shall be governed by and construed,
interpreted and enforced in accordance with the internal laws of the State of
Delaware without giving effect to any choice or conflict of law provision or
rule (whether of the State of Delaware or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
Delaware.
(e) Entire Agreement. This Agreement sets forth the entire
understanding of Holder, Parent and the Company relating to the subject matter
hereof and supersedes all prior agreements and understandings among Holder,
Parent and the Company relating to the subject matter hereof.
(f) Attorneys' Fees. In the event of any legal actions or proceeding to
enforce or interpret the provisions hereof, the prevailing party shall be
entitled to reasonable attorneys' fees, whether or not the proceeding results in
a final judgment.
(g) Further Assurances. Holder shall execute and/or cause to be
delivered to Parent and the Company such instruments and other documents and
shall take such other actions as Parent may reasonably request to effectuate the
intent and purposes of this Agreement.
(h) Survival. The representations, warranties, covenants and other
provisions contained in this Agreement shall survive the consummation of the
Merger.
(i) Notices. All notices and other communications pursuant to this
Agreement shall be in writing and deemed to be sufficient if contained in a
written instrument and shall be deemed given if delivered personally, by
facsimile, sent by nationally-recognized overnight courier or mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at the following address (or at such other address for a party as shall
be specified by like notice):
If to Parent:
XXXX Medical Systems, Inc.
000 Xxxxx Xxxxxxxxx Xxxx.
Xxxxxxxx Xxxx, XX 00000
Attention: Xxxxxx XxXxxx, President and Chief Executive Officer
Facsimile No.:(000) 000-0000
with a copy to:
Xxxxxx Xxxxxx White & XxXxxxxxx LLP
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxx
Xxxxx Xxxxxxxxx
Facsimile No.: (000) 000-0000
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If to the Company:
Horizon Medical Products, Inc.
Xxx Xxxxxxx Xxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx, President
Facsimile No.: (000) 000-0000
with a copy to:
King & Spalding LLP
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxx X. Xxxxxx, Xx.
Facsimile No.: (000) 000-0000
If to Holder: To the address for notice set forth on the
signature page hereof.
(j) Counterparts. This Agreement shall be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have caused this Lock-Up Agreement to be
duly executed on the day and year first above written.
XXXX MEDICAL SYSTEMS, INC. HORIZON MEDICAL PRODUCTS, INC.
By: /s/ Xxxxxx XxXxxx By: /s/ Xxxxxx X. Xxxxxx
------------------------ -------------------------------
Name: Xxxxxx XxXxxx Name: Xxxxxx X. Xxxxxx
------------------------ -------------------------------
Title: President and CEO Title: Interim CEO
------------------------ -------------------------------
HOLDER
COMVEST VENTURE PARTNERS LP
By: /s/ Xxxxxx Blue
-------------------------
Name: Xxxxxx Blue
------------------------
Title: Partner/President
------------------------
Holder's address for notices:
ComVest Venture Partners LP
-----------------------------
000 Xxxxx Xxxxxx
-----------------------------
Xxx Xxxx, XX 00000
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SIGNATURE PAGE TO LOCK-UP AGREEMENT
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