EXHIBIT 10.51
Name:______________________________________________
Lock-Up Agreement Form
December 21, 2001
Industrial Data Systems Corporation
000 Xxxxxxx Xxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000-0000
Re: Industrial Data Systems Corporation (the "Company")
Ladies and Gentlemen:
The undersigned is an owner of record or beneficially of certain shares
of common stock of Petrocon Engineering, Inc. ("PEI Common Stock") or
securities convertible into or exchangeable or exercisable for the PEI Common
Stock. Petrocon Engineering, Inc. ("PEI") proposes to enter into a merger
whereby PEI Acquisition, Inc., a wholly owned, indirect subsidiary of the
Company, will merge with and into PEI (the "Merger") with PEI as the surviving
corporation. As consideration for their PEI Common Stock and securities
convertible into or exchangeable or exercisable for the PEI Common Stock, each
of the shareholders of PEI will receive shares of common stock, par value $.001
per share, of the Company ("Company Common Stock") and/or securities
convertible into or exchangeable or exercisable for Company Common Stock
("Company Options" and together with Company Common Stock, "Securities"). The
undersigned recognizes that the Merger will be of benefit to the undersigned
and will benefit PEI and the Company. The undersigned acknowledges that the
Company is relying on the representations and agreements of the undersigned
contained in this letter in closing the Merger and in issuing Company Common
Stock to the undersigned in connection with the Merger.
In consideration of the foregoing, the undersigned hereby agrees that the
undersigned will not offer to sell, contract to sell, or otherwise sell,
dispose of, loan, pledge or grant any rights with respect to (collectively,
a "Disposition") any shares of Company Common Stock, any options or warrants to
purchase any shares of Company Common Stock or any securities convertible into
or exchangeable or exercisable for shares of Company Common Stock
(collectively, "Securities") now owned or hereafter acquired directly by such
person or with respect to which such person has or hereafter acquires the power
of disposition, otherwise than (i) as a bona fide gift or gifts, provided the
donee or donees thereof agree in writing to be bound by this restriction, (ii)
as a distribution to partners, beneficiaries or shareholders of such person,
provided that the distributees thereof agree in writing to be bound by the
terms of this restriction, (iii) with respect to sales or purchases of
Securities acquired on the open market, (iv) with respect to sales or purchases
of Securities between the undersigned and any other person who is subject to a
lockup agreement which is essentially identical to this Lockup Agreement, (v) as
a contribution by the undersigned to any escrow account established pursuant to
the terms of the Merger or any
distribution by the escrow agent of any Securities to the undersigned or the
Company pursuant to the terms of the agreements governing such escrow accounts,
or (vi) with the prior written consent of the Company, which may be granted or
withheld in the sole discretion of the Company. In addition, notwithstanding
the foregoing, if the undersigned is a corporation, partnership or trust, the
corporation, partnership or trust may transfer Securities to any affiliate of
such corporation, partnership or trust and if the undersigned is an individual,
such individual may transfer such Securities by gift, will or intestacy to a
member or members of his or her immediate family, or to a trust or partnership,
the beneficiaries or partners of which are exclusively the undersigned and/or a
member or members of his or her immediate family; provided, however, that in
-------- -------
such case it shall be a condition to the transfer that the transferee execute
an agreement stating that the transferee is receiving and holding such
Securities subject to the provisions of this Lock-Up Agreement, and provided
further that such transfer not involve a disposition for value. For purposes of
this Lock-Up Agreement, "immediate family" shall mean any relationship by
blood, marriage or adoption, not more remote than first cousins. The foregoing
restrictions will terminate upon the earlier of (i) a Sale of the Company, or
(ii) the close of trading of the Company Common Stock on the second anniversary
of (and including) the day of the Merger (the "Lock-Up Period"). "Sale of
-------
Company" shall mean (i) a sale of substantially all of the assets of Company to
-------
a person or entity that is not an affiliate of Company, (ii) any sale in a
single transaction or in a series of related and substantially similar
contemporaneous transactions of the Company Common Stock, representing 50% or
more of the total number of shares of Company Common Stock then outstanding
(determined on a fully diluted basis) to any person or entity which is not an
affiliate of the selling shareholders, or (iii) any merger, consolidation or
reorganization of the Company with or into one or more entities which are not
Subsidiaries or affiliates of the Company, as a result of which less than 50%
of the outstanding voting securities or partnership interests of the surviving
or resulting entity are, or are to be, owned by the holders of Company Common
Stock immediately prior to such merger, consolidation or reorganization. The
foregoing restriction has been expressly agreed upon to preclude the holder of
the Securities from engaging in any hedging or other transaction which is
designed to or reasonably expected to lead to or result in a disposition of
Securities subject to this Lock-Up Agreement during the Lock-Up Period, even if
such Securities would be disposed of by someone other than such holder. Such
prohibited hedging or other transactions would include, without limitation, any
short sale (whether or not against the box) or any purchase, sale or grant of
any right (including, without limitation, any put or call option) with respect
to any Securities or with respect to any security (other than a broad-based
market basket or index) that includes, relates to or derives any significant
part of its value from the Securities. The foregoing restrictions do not,
however, preclude any exercise of a warrant or options to purchase Company
Common Stock during the Lock-Up Period or the disposition of any Securities
which are not subject to this Lock-Up Agreement. The undersigned also agrees
and consents to the entry of stop transfer instructions with the Company's
transfer agent and registrar against the transfer of Securities subject to this
Lock-Up Agreement except in compliance with the foregoing restrictions.
The undersigned hereby agrees that the certificate or certificates
evidencing the Securities subject to this agreement shall, for the duration of
the Lock-Up Period, have the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
A CONTRACTUAL RESTRICTION ON TRANSFER AND MAY NOT BE SOLD,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT AS
SET FORTH IN THAT CERTAIN LOCKUP AGREEMENT BETWEEN THE
COMPANY AND THE HOLDER HEREOF, A COPY OF WHICH IS ON FILE
AT THE PRINCIPAL OFFICES OF THE COMPANY
Notwithstanding the foregoing, the legend set forth
above shall, at the request of the holder, be removed from the certificate or
certificates evidencing the Securities released from this Lock-Up Agreement
upon the termination of the Lock-Up Period. This agreement is irrevocable and
will be binding on the undersigned and the respective successors, heirs,
personal representatives, and assigns of the undersigned. Nothing in this
Lock-Up Agreement shall constitute an offer by the Company to sell, or create
any right or obligation for the undersigned to purchase any Securities. In the
event the Merger has not occurred on or before December 31, 2001, this Lock-Up
Agreement shall be of no further force or effect.
Date: December 21, 2001
_________________________________________*
* Indicates that the Shareholder has executed this Lock-Up Agreement by
execution of a Master Signature Page.
