Unassociated Document


    
      EXHIBIT 10.3

    

     

    
      LOCK-UP
AGREEMENT

       

      April 30,
2010

       

       

      Gentlemen:

      


      Reference is hereby made to the
Agreement and Plan of Merger, dated as of April 30, 2010 (the “Merger
Agreement”), by and among Pioneer Power Solutions, Inc., a Delaware corporation
(the “Parent”), and JEI Acquisition Corp., a Delaware corporation (“Merger
Sub”), Jefferson Electric, Inc., a Delaware corporation (the “Company”), and
Thomas Klink, as the Company Stockholder, pursuant to which Merger Sub has been
merged with and into the Company with the Company as the surviving corporation
(the “Merger”).  All of the terms used, but not otherwise defined, in
this agreement shall have the same respective meanings as utilized in the Merger
Agreement.

       

      The undersigned, Thomas Klink (the
“Company Stockholder”), was, prior to the Effective Time, the sole stockholder
and owner of all of the Shares of the Company Common Stock. At the Effective
Time, all of such Shares of Company Common Stock have been cancelled, and in
exchange therefor, the Company Stockholder is entitled to receive 486,275 shares
of Parent Common Stock constituting the Merger Consideration.  The
Company Stockholder will benefit directly and indirectly from the consummation
of the Merger under the Merger Agreement.  As a condition to the
obligations of Parent and Merger Sub under the Merger Agreement, the Company
Stockholder is required to execute this letter agreement regarding the lock-up
of all of the shares of Parent Common Stock received by the Company Stockholder
as Merger Consideration pursuant to the Merger Agreement.

       

      1.          As
a material inducement to Parent and Merger Sub to enter into the Merger
Agreement, and as a condition to the obligations of Parent and Merger Sub under
the Merger Agreement, and in recognition of the benefit that the Merger will
confer upon the Company Stockholder, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company Stockholder hereby agrees, for the benefit of Parent, that during the
period commencing as of the Effective Time and ending eighteen (18) months
thereafter (i.e., on October 31, 2011) (the “Lock-Up Period”), the
Company Stockholder shall not, without the prior written consent of Parent: (i)
offer, sell, offer to sell, contract to sell, hedge, pledge, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase or sell (or announce any offer, sale, offer of
sale, contract of sale, hedge, pledge, sale of any option or contract to
purchase, purchase of any option or contract of sale, grant of any option, right
or warrant to purchase or other sale or disposition), or otherwise transfer or
dispose of (or enter into any transaction or device that is designed to, or
could be expected to, result in the disposition by any person at any time in the
future), any of the shares of Parent Common Stock received by the Company
Stockholder as Merger Consideration (the “Merger Consideration Shares”), or any
securities into or for which any of the Merger Consideration Shares may be
converted, exercised or exchanged, whether by operation of law or otherwise; or
(ii) enter into any swap or other agreement or any transaction that transfers,
in whole or in part, directly or indirectly, the economic consequence of
ownership of any of the Merger Consideration Shares (whether any such swap or
other transaction described in clause (i) or (ii) above is to be settled by
delivery of any of the Merger Consideration Shares).

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      The
parties further acknowledge and agree that the foregoing restriction shall
preclude the Company Stockholder from engaging in any hedging or other
transaction which is designed to, or which reasonably could be expected to or
result in a sale or disposition of the Merger Consideration Shares, even if such
Merger Consideration Shares would be disposed of by any party other than the
Company Stockholder.  Such prohibited hedging or other transactions would
include, without limitation, any short sale or any purchase, sale or grant of
any right (including, without limitation, any put or call option) with respect
to any of the Merger Consideration Shares, or with respect to any security that
includes, relates to or derives any significant part of its value from such
Merger Consideration Shares.

       

      2.           Notwithstanding
the foregoing, the Company Stockholder may transfer any of the Merger
Consideration Shares: (i) as a bona fide gift, provided that, prior to such
transfer, the donee thereof agrees in writing to be bound by the restrictions
set forth in this agreement; (ii) to any trust, partnership, corporation or
other entity formed for the direct or indirect benefit of the Company
Stockholder or his immediate family (as defined below), provided that, prior to such
transfer, a duly authorized officer, representative or trustee of such
transferee agrees in writing to be bound by the restrictions set forth in this
agreement, and provided further that any such transfer shall not involve a
disposition for value; or (iii) if such transfer occurs by operation of law,
such as rules of descent and distribution, statutes governing the effects of a
merger or a qualified domestic order; provided that, prior to such
transfer, the transferee agrees in writing that such transferee is receiving and
holding any of the Merger Consideration Shares subject to the provisions of this
agreement. For purposes hereof, “immediate family” shall mean any relationship
by blood, marriage or adoption, not more remote than first cousin.

      


      In order
to enable the aforesaid covenants to be enforced, the Company Stockholder hereby
consents to the placing of legends and/or entry of stop transfer instructions or
orders with Parent’s transfer agent in respect of any Merger Consideration
Shares.

      


      3.           Following
the Effective Time and for the duration of the Lock-Up Period, the Company
Stockholder shall at all times maintain good and marketable title to all of the
Merger Consideration Shares, free and clear of all liens, encumbrances and
claims whatsoever.

      


      4.           The
parties hereby acknowledge and agree that, pursuant to the Bank Loan Amendment,
following the Effective Time, all of the Parent Common Stock issued to the
Company Stockholder as Merger Consideration shall be subject to certain
Permitted Liens granted to the Bank as set forth therein (the “Permitted Bank
Lien”).  Notwithstanding anything to the contrary contained in this
agreement, the grant of such Permitted Bank Lien in respect of the Parent Common
Stock following the Effective Time and during the Lock-Up Period hereunder shall
not in any manner whatsoever constitute a violation of any of the provisions of
this agreement relating to a pledge of the shares of such Parent Common Stock or
otherwise.

       

      
        
          
          

        

        
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      5.          This
agreement shall in all respects be governed by, and construed in accordance
with, the applicable laws of the State of Delaware, U.S.A., without giving
effect to principles of conflicts of law.  Each party hereto
irrevocably and unconditionally consents to submit the exclusive jurisdiction of
the United States District Court for the Southern District of New York, or if
jurisdiction in such court is lacking, any court of the State of New York of
competent jurisdiction sitting in New York City, in connection with any action,
suit or proceeding arising out of or relating to this agreement and the
transactions contemplated hereby, and
agrees that service of process may be made in any manner acceptable for use in
such New York courts. 
Each party hereby irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding arising out of this agreement
and/or the transactions contemplated hereby, in the above New York courts, and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.  The parties hereby
expressly waive the right to any jury trial in any action or proceeding
involving this Agreement.

      


      6.           The
parties hereby acknowledge and agree that this agreement is irrevocable and
shall be binding upon the Company Stockholder and his heirs, legal
representatives, successors and permitted assigns.  This Agreement
and/or any right, title or interest hereunder shall not be assigned by the
Company Stockholder without the prior written consent of Parent and/or the
Company.

      


      7.           This
agreement may be amended or modified only by a written agreement executed by all
of the parties hereto.

      


      8.           This
agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.  The facsimile signature of any party to this agreement
shall have the same effect as a manual signature.

       

      9.           This
agreement will become a binding agreement among the parties as of the date
hereof and will terminate on the expiration date of the Lock-Up Period (i.e., on
October 31, 2011).

      


       

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            	 	Very truly yours,	 
	 	 	 
	 	 	 
	
                  	/s/ Thomas Klink	 
	 	
                    Thomas
      Klink

                  	 
	 	 	 	 
	 	 	 
	 	Address:	 
	 	 	 
	 	
                    2323
      Ridgewood Road

                    Grafton, Wisconsin 53024

                  	 
	 	 	 	 


          

        

      

      
 

      ACCEPTED
AND AGREED:

       

      
        PIONEER POWER SOLUTIONS, INC.

         

         

        
          
            	By: 	/s/ Nathan J. Mazurek	 	 	 	 
	
                     

                  	 	 	
                     

                  	 


          

        

         

      

      JEFFERSON
ELECTRIC, INC.

      


      
         

        
          
            	By: 	/s/ Thomas Klink	 	 	 	 
	
                     

                  	 	 	
                     

                  	 


          

        

         

         

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