[FORM OF LOCK-UP AGREEMENT]

 
___________, 201__

 
Pet Airways, Inc.
777 E. Atlantic Avenue, Suite C2-264
Delray Beach, FL 33483
Attention:

Ladies and Gentlemen:
 
This Lock-Up Agreement is being delivered to you in connection with the
Securities Purchase Agreement dated June 3, 2011 (“Purchase Agreement”) and
entered into by and between Pet Airways, Inc., an Illinois corporation (the
“Company”), and Socius CG II, Ltd., a Bermuda exempted company (“Investor”),
with respect to the purchase without registration under the Securities Act of
1933, as amended (the “Act”), in reliance on Section 4(2) of the Act and Rule
506 of Regulation D promulgated thereunder, of shares of the Company’s Series A
Preferred Stock and related Securities.  Capitalized terms used herein without
definition shall have the respective meanings ascribed to them in the Purchase
Agreement.
 
The undersigned, in order to induce the Company to secure financing with respect
to the Company, hereby irrevocably agrees that, for a period of 10 Trading Days
beginning on each date the Company delivers a Tranche Notice to Investor (the
“Tranche Notice Date”) pursuant to the terms of the Purchase Agreement and
ending on the Tranche Closing Date (such period, the “Lock-up Period”), the
undersigned will not (a) sell, offer to sell, contract or agree to sell,
hypothecate, pledge, grant any option to purchase or otherwise dispose of or
agree to dispose of, directly or indirectly, in respect of, or establish or
increase a put equivalent position or liquidate or decrease a call equivalent
position within the meaning of Section 16 of the Securities Exchange Act of
1934, as amended, and the rules and regulations of the SEC promulgated
thereunder (the “Exchange Act”) with respect to, any Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock, or
warrants or other rights to purchase Common Stock or any such securities, or any
securities substantially similar to the Common Stock, (b) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock or any such securities, or
warrants or other rights to purchase Common Stock, whether any such transaction
is to be settled by delivery of Common Stock or such other securities, in cash
or otherwise or (c) publicly announce an intention to effect any transaction
specified in clause (a) or (b).
 
The foregoing sentence shall not apply to (a) bona fide gifts, provided the
recipient thereof agrees in writing to be bound by the terms of this Lock-Up
Agreement, (b) dispositions to any trust for the direct or indirect benefit of
the undersigned and/or the immediate family of the undersigned, provided that
such trust agrees in writing to be bound by the terms of this Lock-Up Agreement
or (c) sales made pursuant to any written sales plans established prior to April
1, 2011 and disclosed in an attachment to this Lock-Up Agreement, where such
plan and sales thereunder are in conformity with the requirements of Rule
10b5-1(c) promulgated under the Exchange Act.  Notwithstanding subsection (a)
above, the undersigned may make a bona fide gift of up to 10,000 shares of
Common Stock to a charity or other non-profit entity and such charity or entity
shall not be required to be bound by the terms of this Lock-Up Agreement.  For
purposes of this paragraph, “immediate family” shall mean the undersigned and
the spouse, any lineal descendent, father, mother, brother or sister of the
undersigned.
 
 
 

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In the event that any Common Stock of the undersigned is subject to any
involuntary transfer, whether by reason of death, bankruptcy or divorce
proceedings or otherwise, the transferee of such Common Stock shall take such
Common Stock subject to this Lock-Up Agreement.

Without limitation of the restrictions set forth above, the undersigned hereby
acknowledges and agrees that any sales, offers to sell, contracts to sell, or
agreements to sell, permitted to be entered into or otherwise permitted to be
effectuated in accordance with the terms hereof and not restricted thereby,
shall be made exclusively pursuant to Rule 144. In addition, the undersigned
acknowledges and agrees that the Current Report on Form 8-K filed by the Company
with the Securities and Exchange Commission (the “SEC”) on August 17, 2010, did
not contain current “Form 10 information” within the meaning of Rule
144(i).  Accordingly, the exemption from registration provided by Rule 144 is
not currently available to the undersigned and will not be available until at
least twelve (12) months after a new Current Report on Form 8-K is filed by the
Company with the SEC which contains current “Form 10 information” within the
meaning of Rule 144(i).

The Company agrees to provide the undersigned with notice that the Company has
delivered a Tranche Notice to Investor prior to, or simultaneous with, its
delivery of the Tranche Notice to Investor.  Such notice shall provide the
undersigned with the Tranche Notice Date and clearly indicate the beginning of
the Lock-up Period.
 
This Lock-Up Agreement shall be terminated and the undersigned shall be released
from its future obligations hereunder on the later of (i) the 10th Trading Day
following the termination of the Purchase Agreement and (ii) the one (1) year
anniversary of the date hereof.
 

 
Sincerely,
         
[NAME OF STOCKHOLDER]

Acknowledged and Agreed:
 
PET AIRWAYS, INC.
   
By:
 
Name: 
 
Title:
 

 
 

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