LOCK-UP AND LEAK-OUT AGREEMENT
THIS
LOCK-UP AND LEAK-OUT
AGREEMENT (the “Agreement”) is entered into and
effective as of August 24, 2007 (the “Effective Date”) by and between
AudioStocks, Inc., a Nevada corporation (the “Company”) and BCGU, LLC, a
shareholder of the Company (the “Shareholder”).
RECITALS
WHEREAS,
the Shareholder owns
15,284,749 shares of the Company’s common stock (the “Common
Stock”).
WHEREAS,
the Shareholder understands
that the Company may be seeking additional funding and believes that the lock-up
and leak-out restrictions and provisions, as further described herein, on the
transfer and sale of the Common Stock the Shareholder currently owns will
improve the Company’s prospects for obtaining additional financing and thus
improving the overall financial condition of the Company.
WHEREAS,
for valuable consideration
consisting of $100, the receipt and sufficiency of which is hereby acknowledged,
the Shareholder has agreed to enter into this Agreement.
AGREEMENT
NOW,
THEREFORE, in consideration of the mutual covenants contained in this Agreement,
and for other good and valuable consideration, the receipt of which is hereby
acknowledged it is hereby agreed as follows:
1. Lock-Up
Provisions. Subject to the terms of this Agreement,
the Shareholder agrees that for a period of six (6) months from the Effective
Date of this Agreement (the “Lock-Up Period”), the Shareholder shall not,
directly or indirectly, sell, offer to sell, contract to sell, assign, pledge,
hypothecate, encumber or otherwise transfer, or enter into any contract, option
or other arrangement or understanding with respect to the sale, assignment,
pledge or other disposition of (collectively, a “Transfer”) any
beneficial rights with respect to the Common Stock
1 The
“Float” shall mean the number of issued and outstanding shares of Common
Stock held by Non-Affiliates (as defined in Rule 144 of the Securities Act
of
1933) of the Company
3. Consideration. For
and in consideration of the Shareholder entering into this Agreement, the
Shareholder shall receive from the Company consideration consisting of $100
(the
“Consideration”).
4. Transfer
Agent Instructions. The Shareholder agrees and
consents to the entry of stop transfer instructions (the “Stop Transfer
Instructions”) with the Company’s transfer agent against the Transfer of
Common Stock held by the Shareholder except in compliance with the terms and
conditions of this Agreement. After the twelve (12) month period following
the
Effective Date of this Agreement has lapsed, the Company shall direct the
transfer agent to release Stop Transfer Instructions.
5. Representations,
Warranties and Covenants of the Shareholder.
The
Shareholder represents, warrants
and agrees with, the Company that:
(a) this
Agreement has been duly executed and delivered by the Shareholder and
constitutes a valid and binding obligation of the Shareholder enforceable in
accordance with its terms;
(b) neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will result in any breach or violation of,
be
in conflict with, or constitute a default under, any agreement or instrument
to
which the Shareholder is a party or by which the Shareholder may be affected
or
is bound;
(c) The
Shareholder is not subject to or obligated under any provisions of any law,
regulation, order, judgment or decree which would be breached or violated by
the
execution, delivery and performance of this Agreement by the Shareholder and
the
consummation of the transactions contemplated hereby; and
6. Miscellaneous.
(a) Notices. All
notices or other communications required or permitted by this Agreement or
by
law to be served on or given to either party to this Agreement by the other
party shall be in writing and shall be deemed duly served when personally
delivered to the party at an address agreed upon by both parties.
(b) Assignment. This
Agreement and all the provisions hereof will be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
(c) Governing
Law. The internal law, without regard for conflicts of law
principals, of the State of Delaware will govern all questions concerning the
construction, validity and interpretation of this Agreement and the performance
of the obligations imposed by this Agreement.
(d) Jury
Trial Waiver. To the fullest extent permitted by law, each
of the parties hereto hereby knowingly, voluntarily and intentionally waives
its
respective rights to a jury trial of any claim or cause of action based upon
or
arising out of this Agreement or any other document or any dealings between
them
relating to the subject matter of this Agreement and other
documents.
(e) Counterparts. This
Agreement may be executed in one or more counterparts, any one of which need
not
contain the signatures of more than one party, but all such counterparts taken
together shall constitute one and the same instrument.
(f) Severability. Whenever
possible, each provision of this Agreement will be interpreted in such manner
as
to be effective and valid under applicable law, but if any provision of this
Agreement is held to be prohibited by or invalid under applicable law, such
provision will be ineffective only to the extent of such provision or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
(g) Amendment;
Waiver. The Board of Directors may amend the terms of the
Agreement if it determines it is in the best interest of the Company and its
shareholders. In the event either party wishes to amend this Agreement, the
Agreement may only be amended or waived in a writing executed by the both
parties.
(h) Complete
Agreement. This Agreement contains the complete agreement between
the parties hereto and supersedes any prior understandings, agreements or
representations by or between the parties, written or oral, which may have
related to the subject matter hereof in any way.
IN
WITNESS WHEREOF, the parties hereby
have executed this Agreement as of the date first written above.
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COMPANY:
AUDIOSTOCKS,
INC.
/s/
Xxxx X. Xxxxx
_____________________________
By:
Xxxx X. Xxxxx
Its:
President
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SHAREHOLDER:
BCGU,
LLC
/s/
Xxxx X. Xxxx, Esq.
_____________________________
By:
Xxxx X. Xxxx, Esq.
Its:
Managing Member
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