AERO GROW INTERNATIONAL, INC. LOCK UP AGREEMENT
AERO
GROW
INTERNATIONAL, INC.
______________,
2006
Xxxxxxx
Securities, LLC
0000
XXX
Xxxxxxx, Xxxxx 0000
Xxxxxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Dear
Sirs:
The
undersigned is a holder of shares of common stock, and/or options, warrants,
or
other rights to acquire common stock, of Aero Grow International, Inc., a Nevada
corporation (the “Company”). The undersigned understands that the Company
intends to conduct an offering (the “Offering”) of shares of common stock and
common stock purchase warrants, through Xxxxxxx Securities, LLC (the “Placement
Agent”) and one or more other selling agents, to raise a minimum of $5,000,000
and a maximum of $12,000,000 on a best efforts basis. The undersigned recognizes
the benefits that the Company will derive from the Offering and enters into
this
agreement as an inducement, and for and in consideration of the Placement
Agent’s willingness to conduct the Offering.
(i) The
undersigned may sell or transfer up to 50% of the Securities (defined below)
beginning 12 months after the effective date of the Registration Statement
(defined below) and 100% of the Securities 18 months after the effective date
of
the Registration Statement.
(ii) The
undersigned will not transfer (as set forth below) any Securities in the Company
from the date of this letter until the 12 month anniversary of the effective
date of the registration statement that includes the common stock sold in the
Offering (“Registration Statement”), directly or indirectly, through an
“affiliate” or “associate” (as such terms are defined in the General Rules and
Regulations under the Securities Act of 1933, as amended (the “Securities
Act”)), a family member or otherwise, (i) offer, (ii) sell, (iii) pledge, (iv)
hypothecate, (v) grant an option for sale or (vi) otherwise dispose of, or
(vii)
transfer or grant any rights with respect thereto in any manner (either
privately or publicly pursuant to Rule 144 of the General Rules and Regulations
under the Securities Act, or otherwise), or (viii) enter into any swap or any
other agreement or any hedging transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of the Securities
(as defined below), whether any such swap or hedging transaction is to be
settled by delivery of the Securities, in cash or otherwise, with respect to
any
and all shares of common stock of the Company or any other securities of the
Company, including but not limited to any securities convertible or exchangeable
into shares of common stock of the Company or options, warrants or other rights
to acquire common stock of the Company directly or indirectly owned or
controlled by the undersigned on the date hereof or hereafter acquired by the
undersigned pursuant to a stock split, stock dividend, recapitalization or
similar transaction (collectively, the “Securities”).
(iii) The
undersigned agrees to enter into any agreement required by any state securities
authority or any regulatory or other authority (including the American Stock
Exchange, Nasdaq or other national stock exchange on which the securities of
the
Company may be listed or subject to an application for listing), if mutually
requested by the Placement Agent and the Company.
(iv) The
undersigned may sell or otherwise transfer any or all of their Securities in
a
private transaction at any time, provided the undersigned provides to the
Placement Agent and the Company an agreement of any acquirer of the Securities
subject hereto in which the new holder agrees to the same terms as provided
in
this lock up agreement.
This
lock-up agreement does not extend to any Securities of the Company, including
common stock, purchased by the undersigned in an open market
transaction.
The
Securities may be released from this lock-up agreement in such type and number
as mutually determined by the Placement Agent and Company. Any release of the
Securities of the undersigned may be in conjunction with the release of
Securities of other persons subject to similar lock-up agreements. The
undersigned understands and agrees that such releases among persons subject
to
lock-up agreements may be arbitrary as to time, amount and
Security.
In
addition to the release in the immediately preceding paragraph,
if the
Company determines additional funding is needed and engages an independent
third
party to act as an underwriter or placement agent of the Company’s securities
for capital raising purposes, of not less than $8,000,000 gross proceeds, by
means of either a public offering or private placement (“New Offering”), then
the underwriter or placement agent of the New Offering may require the Placement
Agent and Company to release from this and similar lock up agreements an amount
of Securities not to exceed 10% of that number of the equity securities or
underlying equity securities represented by the New Offering, provided further
that such released Securities may be included on the public offering
registration statement either as additional underwritten securities or as
securities being offered by selling shareholders after the public offering
or
included on any registration statement for securities sold in the private
placement. Further, the underwriter or placement agent has the right to
designate to the Placement Agent and the Company the Securities to be released
from this and similar lock up agreements.
This
Agreement shall terminate (i) 18 months after the effective date of the
registration statement which includes the shares of the Company’s common stock
sold in the Offering, or (ii) in the event the Offering does not close on or
before April 30, 2006.
The
undersigned hereby agrees to the placement of a legend on the certificates
representing the Securities subject to this agreement to indicate the
restrictions on resale of the Securities imposed by this agreement and/or the
entry of stop transfer orders with the transfer agent and the registrar of
the
Company's securities against the transfer of the Securities except in compliance
with this agreement.
Very
truly yours,
_______________________________
(Signature)
________________________________
(Print
Name)
2
