Exhibit 4.5
December 4, 2001
Xxxxxxx X. Xxxxxxx
00000 Xxxxxxxxx Xxxxxx
Xxxxx X
Xxxxx Xxxxx, Xxxxxxxxx 00000
Dear Xx. Xxxxxxx:
Petrocon Engineering, Inc., a Texas corporation (the "Company"), has
issued to you a Warrant (the "Existing Warrant") pursuant to the Warrant
Agreement dated October 17, 1996 (the "Existing Warrant"), among Xxxxxx X.
Xxxxx, Xxxxxx X. Xxxxxx and the Company. The Existing Warrant grants you the
right to purchase 60,000 shares (the "Existing Warrant Shares") of the common
stock, $.001 par value, of the Company (the "Petrocon Common Stock") at an
exercise price of $6.25 per share (the "Existing Exercise Price"). The Existing
Warrant expires on October 17, 2003.
The Company has entered into an Agreement and Plan of Merger (the
"Merger Agreement") with Industrial Data Systems Corporation, a Nevada
corporation ("IDS"), IDS Engineering Management, LC, a Texas limited liability
company and wholly-owned subsidiary of IDS ("LC"), and PEI Acquisition, Inc., a
Texas corporation and a wholly-owned subsidiary of LC ("Newco"), pursuant to
which the Company will merge with Newco (the "Merger"). Pursuant to the Merger,
the Company will become an indirect wholly-owned subsidiary of IDS. A proxy
statement and prospectus describing the proposed transaction has been sent to
you by the Company.
In connection with the Merger, you are required to exchange the
Existing Warrant for a Warrant (the "Substitute Warrant") to be issued by IDS.
IDS and the Company will grant this warrant by delivery of the Warrant Agreement
among the Company, you and Xxxxxx X. Xxxxx, attached hereto as Exhibit A (the
"New Agreement"). Xxxxxx X. Xxxxxx is not a party to the New Agreement because
he has surrendered his Warrants.
The Substitute Warrant to be granted to you will permit you to
purchase a number of shares (rounded to the nearest whole share) of the Common
Stock, $.001 par value, of IDS (the "New Warrant Shares") equal to the number of
Existing Warrant Shares multiplied by the Conversion Ratio (as hereinafter
defined). The exercise price per share (rounded to the nearest whole cent) for
the New Warrant Shares (the "New Exercise Price") will be equal to the Existing
Exercise Price divided by the Conversion Ratio. The term "Conversion Ratio"
means the number of shares of Common Stock, $.001 par value, of IDS (the "IDS
Common Stock") being issued in exchange for each outstanding share of Petrocon
Common Stock in connection with the Merger. The Conversion Ratio is expected to
be between .88 and 1.06 shares of IDS Common Stock for each share of Petrocon
Common Stock. The Substitute Warrant to be granted to you will have the same
expiration date as the Existing Warrant and will be subject in all other
respects to the terms of the New Agreement. The proxy statement and prospectus
sent to you by
Xxxxxxx X. Xxxxxxx
December 4, 2001
Page 2
the Company contains a more detailed description of the Conversion Ratio and the
factors that will determine the final Conversion Ratio.
For good and valuable consideration received by you, and in order to
induce Petrocon and IDS to consummate the Merger Agreement, by execution of this
letter agreement in the space provided below, you hereby agree that, at the
effective time of the Merger, the Existing Warrant issued to you pursuant to the
Existing Agreement will be automatically converted, without any further action
by you, into the Substitute Warrant and the Existing Warrant shall thereafter be
of no further force and effect. At or after the effective time of the Merger
you agree to surrender the Existing Warrant in exchange for the Substitute
Warrant and to execute the New Agreement. However, your failure to do so shall
not affect the conversion of the Existing Warrant into the Substitute Warrant
described above.
Very truly yours,
PETROCON ENGINEERING, INC.
By:___________________________________
Xxxxxxx X. Xxxxxx, President
INDUSTRIAL DATA SYSTEMS CORPORATION
By:___________________________________
Xxxxxxx X. Xxxxxx, President
ACCEPTED AND AGREED TO
as of the date first above written.
____________________________________________
Xxxxxxx X. Xxxxxxx
cc: Xxxxxxx X. Xxxx
