LOCK-UP AGREEMENT
EXHIBIT
E
This Lock-Up Agreement ("Agreement") is made
as of the date set forth below by the undersigned ("Holder") in
connection with such Holder’s ownership of shares of Axis Technologies Group,
Inc., a Delaware corporation (the "Company").
Whereas, Holder is the actual and/or
beneficial owner of shares of Common Stock, $0.001 par value (“Common Stock”), of
the Company;
Whereas,
Holder acknowledges and understands that the Company has entered into or will
enter into a Securities Purchase Agreement dated on or about April ___, 2008
(“Purchase
Agreement”) with certain purchaser(s) (the “Purchasers”),
pursuant to which such Purchasers will purchase secured convertible notes and
warrants of the Company (“Transactions”);
capitalized terms used herein and not otherwise defined shall have the meanings
set forth in the Purchase Agreement; and
Whereas,
Holder acknowledges and understands that, as a condition to proceeding with the
Transactions, the Purchasers have required that, and the Company has agreed to
obtain an agreement from each Holder that, such Holder shall refrain from
selling any securities of the Company during the “Restricted Period”, where the
“Restricted
Period” consists of the fifteen (15) month period immediately following
the Closing Date of the Transactions;
NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which consideration are hereby acknowledged, Holder agrees as
follows:
1. Share
Restriction.
(a) Holder
hereby agrees that during the Restricted Period, Holder will not (1) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (2) enter into any swap or other agreement
that transfers, in whole or in part, any of the economic consequences of
ownership of the Common Stock, whether any such transaction described in clause
(1) or (2) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not
apply in connection with an offer made to all shareholders of the Company in
connection with any merger, consolidation or similar transaction involving the
Company. In addition, Holder agrees that during the Restricted Period
the Holder will not make any demand for or exercise any right with respect to
the registration under the Securities Act of any shares of Common Stock or any
security convertible into or exercisable or exchangeable for Common
Stock.
(b) In
furtherance of the foregoing, Holder further agrees that (i) the Company is
authorized to place "stop orders" on its books to prevent any transfer of shares
of Common Stock or other securities of the Company held by Holder in violation
of this Agreement, and (ii) the Company and any duly appointed transfer agent
for the registration or transfer of the securities described herein are hereby
authorized to decline to make any transfer of securities if such transfer would
constitute a violation or breach of this Agreement.
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(c) Any
subsequent issuance and/or acquisition of shares or the right to acquire shares
by or to Holder will be subject to the provisions of this
Agreement.
(d) Notwithstanding
the foregoing restrictions on transfer, Holder may, at any time and from time to
time during the Restricted Period, transfer the Common Stock or other applicable
securities (i) as bona fide gifts or transfers by will or intestacy, (ii) to any
trust for the direct or indirect benefit of Holder or the immediate family of
Holder, provided that any such transfer shall not involve a disposition for
value, (iii) to a partnership of which the Holder is a general partner, provided
that, in the case of any gift or transfer described in clauses (i), (ii) or
(iii), each donee or transferee agrees in writing to be bound by the terms and
conditions contained herein in the same manner as such terms and conditions
apply to Holder. For purposes hereof, "immediate family" means any
relationship by blood, marriage or adoption, not more remote than first
cousin. If the Closing of the Transactions under the Purchase
Agreement is not consummated, the Holder shall be released from all obligations
under this Agreement.
2. Miscellaneous.
(a) At
any time and from time to time after the signing of this Agreement, Holder will
execute such additional instruments and take such action as may be reasonably
requested by the Purchasers to carry out the intent and purposes of this
Agreement.
(b) This
Agreement shall be governed, construed and enforced in accordance with the laws
of the State of New York without regard to conflicts of laws principles that
would result in the application of the substantive laws of another jurisdiction,
except to the extent that the securities laws of the state in which Holder
resides and federal securities laws may apply. Any proceeding brought
to enforce this Agreement may be brought in courts sitting in New York County,
New York.
(c) This
Agreement contains the entire agreement of Holder with respect to the subject
matter hereof. Holder hereby represents and warrants that Holder has
full power and authority to enter into this Agreement. This Agreement shall be
binding upon Holder, its legal representatives, heirs, successors and
assigns. This Agreement may be signed and delivered by facsimile and
such facsimile signed and delivered shall be enforceable.
(d) The
Holder understands that the execution of this Agreement by Holder is a condition
to the Purchasers’ obligation to consummate the Transactions contemplated by the
Purchase Agreement.
(e) The
Purchasers are third party beneficiaries of this Agreement, with right of
enforcement.
[Signature Page
Follows]
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IN WITNESS WHEREOF, and intending to be
legally bound hereby, Holder has executed this Agreement as of the date set
forth below.
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HOLDER:
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(Signature of
Holder)
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(Print Name of
Holder)
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(Date)
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COMPANY:
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AXIS
TECHNOLOGIES GROUP, INC.
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By:
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Name:
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Title:
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