EXHIBIT 10.2
FORM OF LOCK-UP LETTER
October 5, 1998
[MATRIDIGM SHAREHOLDER]
Millennium Holding Corp.
c/o Zitel Corporation
47211 Bayside Parkway
Fremont, California 94538
Dear Sirs:
The undersigned understands that Zitel Corporation, a California
corporation ("Zitel") and Millennium Holding Corp., a Delaware corporation,
on the date hereof entered into that certain Agreement and Plan of
Reorganization and Merger by and among Zitel, Millennium Holding Corp.,
Zenith Acquisition Corp., Millennium Acquisition I Corp. and MatriDigm (the
"Merger Agreement") pursuant to which Zitel will acquire MatriDigm
Corporation, a California corporation. Under the Merger Agreement, the
undersigned will receive shares of Holdco Common Stock in exchange for
shares of Company Common Stock held by the undersigned immediately prior to
the Effective Time. Capitalized terms used but not otherwise defined
herein shall have the respective meanings set forth in the Merger
Agreement.
To induce Zitel to enter into the Merger Agreement, during the
period commencing on the date hereof and ending (i) if the Merger is
consummated prior to January 29, 1999, on the second trading day following
the public announcement of the consolidated results of operations of Zitel
and MatriDigm for the fiscal quarter ended March 31, 1999, and (ii) if the
Merger is consummated after January 29, 1999, on the second trading day
following the public announcement of the consolidated results of operations
of Zitel and MatriDigm for the fiscal quarter ended June 30, 1999, the
undersigned agrees not to (x) offer, pledge, sell, contract to sell, sell
any option or contract to purchase, grant any option, right or warrant to
purchase, or otherwise transfer or dispose of, directly or indirectly, any
shares of Holdco Common Stock or any securities convertible into or
exercisable or exchangeable for Holdco Common Stock (including, without
limitation, shares of Holdco Common Stock or securities convertible into or
exercisable or exchangeable for Holdco Common Stock which may be deemed to
be beneficially owned by the undersigned in accordance with the rules and
regulations of the Securities and Exchange Commission) or (y) enter into
any swap or other arrangement that transfers all or a portion of the
economic consequences associated with the ownership of any Holdco Common
Stock (regardless of whether any of the transactions described in clause
(x) or (y) is to be settled by the delivery of Holdco Common Stock, or such
other securities, in cash or otherwise), without the prior written consent
of Salomon Smith Barney; provided, that during such period the undersigned
may make gifts of shares of Holdco Common Stock or securities convertible
into Holdco Common Stock upon the condition that the donees agree to be
bound by the foregoing restriction in the same manner as it applies to the
undersigned; and provided, further, that with respect to securities
convertible into or exercisable or exchangeable for Holdco Common Stock,
the undersigned may distribute such securities to its partners or members,
as the case may be, so long as the recipients of such securities agree to
be bound by the foregoing restriction in the same manner as it applies to
the undersigned[; and provided, further, that during such period, the
undersigned shall be entitled to sell only that number of shares of Holdco
Common Stock required to extinguish the mortgage loan existing as of the
date hereof on the undersigned's primary residence, it being understood
that such proceeds are to be used solely to extinguish such mortgage loan
and not for any other purpose whatsoever(1)].
The undersigned hereby represents and warrants that the
undersigned has full power and authority to enter into the agreement set
forth herein, and that, upon request, the undersigned will execute any
additional documents necessary or desirable in connection with the
enforcement hereof. All authority herein conferred or agreed to be
conferred shall survive the death or incapacity of the undersigned and any
obligations of the undersigned shall be binding upon the heirs, personal
representatives, successors, and assigns of the undersigned.
Very truly yours,
__________________________
(Name - Please Type)
(Address)
(Social Security or Taxpayer
Identification No.)
- -------------------
(1) Franklin Chiang letter only.
SCHEDULE I
Number of shares of capital stock of MatriDigm owned: ________
Certificate Numbers: __________
__________
__________
Number of shares of Holdco Common Stock issuable upon
exchange of such securities: ________