EXHIBIT 10.3

 

LOCK-UP AGREEMENT

 

THIS LOCK-UP AGREEMENT (this “Agreement”) is made and entered into as of May 12,
2004, by and among RITA 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.

 

B. Holder 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

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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 RITA
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, RITA
MEDICAL SYSTEMS, INC. AND HORIZON MEDICAL PRODUCTS, INC., A COPY OF WHICH
AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF RITA 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 1933 Act) 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
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.

 

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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.

 

(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:

 

RITA Medical Systems, Inc.

967 North Shoreline Blvd.

Mountain View, CA 94043

Attention: Joseph DeVivo, President and Chief Executive Officer

Facsimile No.: (650) 967-1691

 

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with a copy to:

 

Heller Ehrman White & McAuliffe LLP

2775 Sand Hill Road

Menlo Park, California 94025

Attention:        Mark Weeks

Steve Tonsfeldt

Facsimile No.: (650) 233-8386

 

If to the Company:

 

Horizon Medical Products, Inc.

One Horizon Way

Manchester, GA 91816

Attention: Robert Wenzel, President

Facsimile No.: (706) 846-5226

 

with a copy to:

 

King & Spalding LLP

191 Peachtree Street

Atlanta, Georgia 30303

Attention: Jon R. Harris, Jr.

Facsimile No.: (404) 572-5136

 

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.

 

RITA MEDICAL SYSTEMS, INC.

     

HORIZON MEDICAL PRODUCTS, INC.

By:           By:        

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Name:           Name:        

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Title:           Title:        

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HOLDER

        By:                    

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SIGNATURE PAGE TO LOCK-UP AGREEMENT