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Exhibit 3 to Amendment No. 1 to Schedule 13D
FORM OF XXXXX AFFILIATE AGREEMENT
July 13, 2000
Xxxxx Pharma Incorporated
0000 Xxxxx Xxxx
Xx. Xxxxx, Xxxxxxxx 00000
King Pharmaceuticals, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
RE: AFFILIATE AGREEMENT
Ladies and Gentlemen:
The undersigned is a stockholder of Xxxxx Pharma Incorporated, a
Delaware corporation ("Xxxxx"), and will become a stockholder of King
Pharmaceuticals, Inc., a Tennessee corporation ("King"), pursuant to the
transactions described in the Agreement and Plan of Merger, dated as of July 13,
2000 (the "Merger Agreement"), by and among King, Spirit Acquisition Corp., a
Delaware corporation and a wholly-owned subsidiary of King ("Merger Sub") and
Xxxxx. Under the terms of the Merger Agreement, the Merger Sub will be merged
with and into Xxxxx and the shares of common stock of Xxxxx, par value $.04 per
share (the "Xxxxx Common Stock"), will be converted into and exchanged for
shares of common stock of King, no par value per share (the "King Common
Stock"). This Affiliate Agreement represents an agreement by and among the
undersigned, Xxxxx and Xxxx regarding certain rights and obligations of the
undersigned in connection with the (a) shares of Xxxxx Common Stock beneficially
owned by the undersigned and (b) shares of King Common Stock into which such
shares of Xxxxx Common Stock are to be converted as a result of the merger (the
"Merger") of the Merger Sub with and into Xxxxx. In consideration of the Merger
and the mutual covenants contained herein, the undersigned, Xxxxx and Xxxx
hereby agree as follows:
1. Affiliate Status. The undersigned understands and agrees that as to
Xxxxx he or she may be deemed to be an "affiliate" as that term is used in SEC
Accounting Series Release ("ASR") Nos. 130 and 135 and Rule 145 of the rules and
regulations of the Securities and Exchange Commission ("SEC") under the
Securities Act of 1933, as amended (the "1933 Act"), and the undersigned
anticipates that the undersigned will be deemed to be such an "affiliate" at the
time of the Merger and, as such, the undersigned agrees that all shares of Xxxxx
Common Stock beneficially owned by the undersigned, and all shares of King
Common Stock into which such shares are converted in the Merger, shall be
subject to the terms and conditions of this Affiliate Agreement.
2. Restriction on Disposition. The undersigned agrees that during the
Pooling Period (as defined below) he or she will not sell, transfer, or
otherwise dispose of his or her interests in, or reduce his or her risk relative
to, any of the (a) shares of Xxxxx Common Stock over which the undersigned has
or shares voting or dispositive power with respect thereto or (b) shares of King
Common Stock into which such shares of Xxxxx Common Stock are converted upon
consummation of the Merger or upon the exercise of any King options. For
purposes of this Affiliate Agreement, "Pooling Period" shall mean the period
commencing thirty-five (35) days prior to the Effective Time (as defined in the
Merger Agreement) and ending on the date which is two (2) business days after
publication by King of its results of post-Merger operations for the period
which includes at least thirty (30) days of post-Merger combined operations of
King and Xxxxx whether by issuance of an earnings report on Form 10-K, 10-Q, 8-K
or other public issuance (such as a press release) that includes such
information. The undersigned understands that reducing his or her risk relative
to such shares of Xxxxx Common Stock or King Common Stock includes, but is not
limited to, using such shares to secure a non-recourse loan, purchasing a put
option to sell such shares or otherwise entering into a put agreement with
respect to such shares.
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3. Covenants and Warranties of Undersigned. The undersigned represents,
warrants and agrees that King has advised the undersigned that, within thirty
(30) days of execution hereof, the undersigned will, and will cause each of the
other parties whose shares are deemed to be beneficially owned by the
undersigned pursuant to Section 7 hereof to, have all of Xxxxx Common Stock
beneficially owned by the undersigned registered in the name of the undersigned
or such parties as applicable, prior to the effective date of the Merger and not
in the name of any bank, broker-dealer, nominee or clearinghouse.
4. Restrictions on Transfer. The undersigned understands and agrees
that stop transfer instructions with respect to the shares of King Common Stock
received by the undersigned pursuant to the Merger will be given to the King
transfer agent and that there will be placed on the certificates for such
shares, or shares issued in substitution thereof, a legend stating substantially
as follows:
"The shares represented by this certificate were issued
pursuant to a business combination which is accounted for as a
"pooling of interests" and may not be sold, nor may the owner
thereof reduce his risks relative thereto in any way, until
such time as ("King") has published the financial results
covering at least thirty (30) days of combined operations
after the effective date of the merger through which the
business combination was effected."
Such legend will also be placed on any certificate representing King securities
issued subsequent to the original issuance of King Common Stock pursuant to the
Merger as a result of any stock dividend, stock split, or other recapitalization
as long as King Common Stock issued to the undersigned pursuant to the Merger
has not been transferred in such manner to justify the removal of the legend
therefrom. Upon the request of the undersigned, King shall cause the
certificates representing the shares of King Common Stock issued to the
undersigned in connection with the Merger to be reissued free of any legend
relating to restrictions on transfer by virtue of ASR Nos. 130 and 135 promptly
after the requirements of ASR Nos. 130 and 135 have been met upon receipt of an
opinion reasonably acceptable to King to the effect that such legend may be
removed (King may waive, in King's sole and absolute discretion, the King's
right to receive such opinion). In connection therewith, King agrees to notify
the undersigned of the last day of the Pooling Period at least five (5) business
days in advance thereof. The undersigned shall deliver to King's transfer agent
within three (3) business days after receipt of such notice all certificates
representing King Common Stock held beneficially or of record by the
undersigned, together with such representation letters and certificates as
King's transfer agent shall reasonably request. King agrees to cause its
transfer agent to reissue to or as directed by the undersigned, in exchange for
the certificate(s) provided to the transfer agent, certificates free of any
legend relating to restrictions on transfer by virtue of ASR Nos. 130 and 135 on
or prior to the first business day after the expiration of the Pooling Period.
5. Certain Understandings and Acknowledgments. The undersigned
acknowledges and understands that the representations, warranties and covenants
of the undersigned set forth herein will be relied upon by King and Xxxxx, and
their respective affiliates, counsel and accounting firms, and that substantial
losses and damages may be incurred by these persons if the undersigned's
representations, warranties or covenants are breached. The undersigned has
reviewed the applicable provisions of the Merger Agreement and this Affiliate
Agreement and discussed their requirements and impact upon the undersigned's
ability to sell, transfer, or otherwise dispose of the shares of King Common
Stock to be received by the undersigned, to the extent he or she believes
necessary, with his or her counsel or counsel for Xxxxx.
6. Transfer Under Rule 145(d). If the undersigned desires to sell or
otherwise transfer the shares of King Common Stock received by the undersigned
in connection with the Merger pursuant to Rule 145(d) of the 1933 Act at any
time during the restrictive period set forth in Rule 145(d), the undersigned
will comply with the provisions of Rule 145(d) in connection with such sale or
transfer and will provide such representation letters, certificates and opinions
as King or its transfer agent shall reasonably request.
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7. Acknowledgments. The undersigned recognizes and agrees that the
foregoing provisions also may apply to (a) the undersigned's spouse, if that
spouse has the same home as the undersigned, (b) any relative of the undersigned
who has the same home as the undersigned, (c) any trust or estate in which the
undersigned, such spouse, and any such relative collectively own at least a ten
percent (10%) beneficial interest or of which any of the foregoing serves as
trustee, executor, or in any similar capacity, and (d) any corporation or other
organization in which the undersigned, such spouse, and any such relative
collectively own at least ten percent (10%) of any class of equity securities or
of the equity interest. The undersigned further recognizes that, in the event
that the undersigned is a director or an executive officer of King or becomes a
director or executive officer of King upon consummation of the Merger, among
other things, any sale of King Common Stock by the undersigned within a period
of less than six months following the effective time of the Merger may subject
the undersigned to liability pursuant to Section 16(b) of the Securities
Exchange Act of 1934, as amended.
8. Miscellaneous. This Affiliate Agreement is the complete agreement
between Xxxxx, Xxxx and the undersigned concerning the subject matter hereof.
Nothing set forth herein, however, shall be construed to limit in any way any of
the undersigned's other rights incident to ownership of the shares of Xxxxx
Common Stock or King Common Stock. Any notice required to be sent to any party
hereunder shall be sent by registered or certified mail, return receipt
requested, using the addresses set forth herein or such other address as shall
be furnished in writing by the parties. This Affiliate Agreement shall be
governed by the laws of the State of Delaware.
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This Affiliate Agreement is executed as of the 13th day of July, 2000.
Very truly yours,
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Signature
Name:
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Address:
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AGREED TO AND ACCEPTED as of
July 13, 2000
Xxxxx Pharma Incorporated
By:
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Xxxxxx X. Xxxxx
Chairman of the Board,
President and
Chief Executive Officer
King Pharmaceuticals, Inc.
By:
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Xxxx X. Xxxxxxx
Chairman of the Board and
Chief Executive Officer