Exhibit 10.4


 





FORM
OF SPONSOR LOCK-UP AGREEMENT


 


THIS
LOCK-UP AGREEMENT (this “Agreement”) is made and entered into as of ___, 2018 by and between
(i) Stellar Acquisition III Inc., a Republic of Marshall Islands corporation, which will be known after the consummation
of the transactions contemplated by the Merger Agreement (as defined below) as “Phunware, Inc.” (including any successor
entity thereto, including the Successor after the Conversion (as such terms are defined in the Merger Agreement), the “Purchaser”),
and (ii) the undersigned (“Holder”). Any capitalized term used but not defined in this Agreement will
have the meaning ascribed to such term in the Merger Agreement.


 


WHEREAS,
on February 27, 2018, (i) the Purchaser, (ii) STLR Merger Subsidiary Inc., a Delaware corporation and a wholly-owned subsidiary
of the Purchaser (“Merger Sub”), and (iii) Phunware, Inc., a Delaware corporation (the “Company”),
entered into that certain Agreement and Plan of Merger (as amended from time to time in accordance with the terms thereof, the
“Merger Agreement”), pursuant to which Merger Sub will merge with and into the Company, with the Company
continuing as the surviving entity (the “Merger”), and as a result of which, (a) all of the issued and
outstanding capital stock of the Company, immediately prior to the consummation of the Merger (the “Closing”),
shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, in exchange for the Stockholder
Merger Consideration, (b) the Company Options shall be assumed by Purchaser with the result that such assumed Company Options
shall be replaced with Assumed Options (as equitably adjusted) exercisable into shares of Purchaser Common Stock, and (c) the
holders of Company Warrants immediately prior to the Closing shall be issued Purchaser Replacement Warrants, all upon the terms
and subject to the conditions set forth in the Merger Agreement and in accordance with the applicable provisions of the of the
DGCL;


 


WHEREAS,
immediately prior to the Closing, Holder is a holder of Purchaser Common Stock in such amounts as set forth underneath Holder’s
name on the signature page hereto, which it acquired from the Purchaser in a private placement that occurred prior to the IPO
(all such Purchaser Common Stock, together with any securities paid as dividends or distributions with respect to such securities
or into which such securities are exchanged or converted, the “Restricted Securities”; provided, that
for the avoidance of doubt, Restricted Securities will not include any Purchaser Private Warrants, for which the Holder shall
separately be subject to certain lock-up restrictions under the letter agreement, dated August 18, 2016 (the “Insider
Letter”), between the Sponsors and the Purchaser); and


 


WHEREAS,
pursuant to the Merger Agreement and as a condition thereof, the parties desire to enter into this Agreement, pursuant to which
the Restricted Securities shall become subject to limitations on disposition as set forth herein in lieu of the transfer restrictions
set forth in Section 7(a) of the Insider Letter.








 






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NOW, THEREFORE,
in consideration of the premises set forth above, which are incorporated in this Agreement as if fully set forth below, and intending
to be legally bound hereby, the parties hereby agree as follows: 


 


1. Lock-Up
Provisions.


 


(a) Holder
hereby agrees not to, during the period commencing from the Closing and ending on the earlier of (x) one hundred and eighty (180)
days after the date of the Closing, and (y) the date after the Closing on which the Purchaser consummates a liquidation, merger,
share exchange or other similar transaction with an unaffiliated third party that results in all of Purchaser’s stockholders
having the right to exchange their equity holdings in Purchaser for cash, securities or other property (the “Lock-Up
Period”): (i) lend, offer, pledge, hypothecate, encumber, donate, assign, 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 Restricted Securities, (ii) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences of ownership of the Restricted Securities, or
(iii) publicly disclose the intention to do any of the foregoing, whether any such transaction described in clauses (i), (ii)
or (iii) above is to be settled by delivery of Restricted Securities or other securities, in cash or otherwise (any of the foregoing
described in clauses (i), (ii) or (iii), a “Prohibited Transfer”). The foregoing sentence shall not
apply to the transfer of any or all of the Restricted Securities owned by Holder (I) by gift, will or intestate succession upon
the death of Holder, (II) to any Permitted Transferee or (III) pursuant to a court order or settlement agreement related to the
distribution of assets in connection with the dissolution of marriage or civil union; provided, however, that in any of cases
(I), (II) or (III) it shall be a condition to such transfer that the transferee executes and delivers to the Purchaser an agreement
stating that the transferee is receiving and holding the Restricted Securities subject to the provisions of this Agreement applicable
to Holder, and there shall be no further transfer of such Restricted Securities except in accordance with this Agreement. As used
in this Agreement, the term “Permitted Transferee” shall mean: (1) the members of Holder’s immediate family
(for purposes of this Agreement, “immediate family” shall mean with respect to any natural person, any of the following:
such person’s spouse or domestic partner, the siblings of such person and his or her spouse or domestic partner, and the
direct descendants and ascendants (including adopted and step children and parents) of such person and his or her spouses or domestic
partners and siblings), (2) any trust for the direct or indirect benefit of Holder or the immediate family of Holder, (3) if Holder
is a trust, to the trustor or beneficiary of such trust or to the estate of a beneficiary of such trust, (4) in the case of an
entity, partners, members or stockholders of such entity that receive such transfer as a distribution, (5) to any affiliate of
Holder, and (6) any transferee whereby there is no change in beneficial ownership. Holder further agrees to execute such agreements
as may be reasonably requested by Purchaser that are consistent with the foregoing or that are necessary to give further effect
thereto.


 


(b) If
any Prohibited Transfer is made or attempted contrary to the provisions of this Agreement, such purported Prohibited Transfer
shall be null and void ab initio, and Purchaser shall refuse to recognize any such purported transferee of the Restricted Securities
as one of its equity holders for any purpose. In order to enforce this Section 1, Purchaser may impose stop-transfer
instructions with respect to the Restricted Securities of Holder (and Permitted Transferees and assigns thereof) until the end
of the Lock-Up Period.


 


(c) During
the Lock-Up Period, each certificate evidencing any Restricted Securities shall be stamped or otherwise imprinted with a legend
in substantially the following form, in addition to any other applicable legends:


 


“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER SET FORTH IN A LOCK-UP AGREEMENT, DATED AS
OF [●], 2018, BY AND AMONG THE ISSUER OF SUCH SECURITIES (THE “ISSUER”) AND THE ISSUER’S SECURITY HOLDER
NAMED THEREIN, AS AMENDED. A COPY OF SUCH LOCK-UP AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE ISSUER TO THE HOLDER HEREOF
UPON WRITTEN REQUEST.”


 


(d) For
the avoidance of any doubt, Holder shall retain all of its rights as a stockholder of the Purchaser during the Lock-Up Period,
including the right to vote any Restricted Securities.


 






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2. Miscellaneous.


 


(a) Termination
of Merger Agreement. Notwithstanding anything to the contrary contained herein, in the event that the Merger Agreement is
terminated in accordance with its terms prior to the Closing, this Agreement and all rights and obligations of the parties hereunder
shall automatically terminate and be of no further force or effect.


 


(b) Binding
Effect; Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective permitted successors and assigns. This Agreement and all obligations of Holder are personal
to Holder and may not be transferred or delegated by Holder at any time. The Purchaser may freely assign any or all of its rights
under this Agreement, in whole or in part, to any successor entity (whether by merger, consolidation, equity sale, asset sale
or otherwise) without obtaining the consent or approval of Holder.


 


(c) Third
Parties. Nothing contained in this Agreement or in any instrument or document executed by any party in connection with the
transactions contemplated hereby shall create any rights in, or be deemed to have been executed for the benefit of, any person
or entity that is not a party hereto or thereto or a successor or permitted assign of such a party.


 


(d) Governing
Law; Jurisdiction. This Agreement and any dispute or controversy arising out of or relating to this Agreement shall be governed
by and construed in accordance with the laws of the State of New York, without regard to the conflict of law principles thereof.
All Actions arising out of or relating to this Agreement shall be heard and determined exclusively in any state or federal court
located in New York, New York (or in any appellate courts thereof) (the “Specified Courts”). Each party
hereto hereby (i) submits to the exclusive jurisdiction of any Specified Court for the purpose of any Action arising out
of or relating to this Agreement brought by any party hereto and (ii) irrevocably waives, and agrees not to assert by way
of motion, defense or otherwise, in any such Action, any claim that it is not subject personally to the jurisdiction of the above-named
courts, that its property is exempt or immune from attachment or execution, that the Action is brought in an inconvenient forum,
that the venue of the Action is improper, or that this Agreement or the transactions contemplated hereby may not be enforced in
or by any Specified Court. Each party agrees that a final judgment in any Action shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by Law. Each party irrevocably consents to the service of
the summons and complaint and any other process in any other action or proceeding relating to the transactions contemplated by
this Agreement, on behalf of itself, or its property, by personal delivery of copies of such process to such party at the applicable
address set forth in Section 2(g). Nothing in this Section 2(d) shall affect the right of any party
to serve legal process in any other manner permitted by applicable law.


 


(e) WAIVER
OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO (i) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY ACTION, SEEK TO ENFORCE THAT FOREGOING WAIVER AND
(ii) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 2(e).


 






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(f) Interpretation.
The titles and subtitles used in this Agreement are for convenience only and are not to be considered in construing or interpreting
this Agreement. In this Agreement, unless the context otherwise requires: (i) any pronoun used in this Agreement shall include
the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural
and vice versa; (ii) “including” (and with correlative meaning “include”) means including without limiting
the generality of any description preceding or succeeding such term and shall be deemed in each case to be followed by the words
“without limitation”; (iii) the words “herein,” “hereto,” and “hereby” and other
words of similar import in this Agreement shall be deemed in each case to refer to this Agreement as a whole and not to any particular
section or other subdivision of this Agreement; and (iv) the term “or” means “and/or”. The parties have
participated jointly in the negotiation and drafting of this Agreement. Consequently, in the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto, and no presumption
or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.


 


(g) Notices.
All notices, consents, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given
when delivered (i) in person, (ii) by facsimile or other electronic means, with affirmative confirmation of receipt, (iii) one
Business Day after being sent, if sent by reputable, nationally recognized overnight courier service or (iv) three (3) Business
Days after being mailed, if sent by registered or certified mail, pre-paid and return receipt requested, in each case to the applicable
party at the following addresses (or at such other address for a party as shall be specified by like notice):


 


	If
        to the Purchaser after the Closing, to:

                                                                                                                                   

        Phunware,
        Inc.

        7800 Shoal Creek Boulevard, Suite 230-S

        Austin, TX 78757

        Attn: Alan S. Knitowski

        Email: aknitowski@phunware.com
	With
        copies to (which shall not constitute notice):

         

        Wilson
        Sonsini Goodrich & Rosati

        One Market Plaza, Spear Tower, Suite 3300, San Francisco, CA 94105

        Attn: Scott Murano, Robert Ishii, Denny Kwon, and Derek Liu

        Email:
        smurano@wsgr.com; rishii@wsgr.com; dkwon@wsgr.com; dliu@wsgr.com

         

        and

         

        Ellenoff
        Grossman & Schole LLP

        1345 Avenue of the Americas, 11th Floor

        New York, New York 10105

        Attn: Barry I. Grossman, Esq.

        Facsimile No.: (212) 370-7889

        Telephone No.: (212) 370-1300

        Email: bigrossman@egsllp.com

         

	If
    to Holder, to:  the address set forth below Holder’s name on the signature page to this Agreement.


 


(h) Amendments
and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance, and either retroactively or prospectively) only with the written consent of the Purchaser
and Holder. No failure or delay by a party in exercising any right hereunder shall operate as a waiver thereof. No waivers of
or exceptions to any term, condition, or provision of this Agreement, in any one or more instances, shall be deemed to be or construed
as a further or continuing waiver of any such term, condition, or provision.


 






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(i) Authorization
on Behalf of the Purchaser. The parties acknowledge and agree that notwithstanding anything to the contrary contained in this
Agreement, any and all determinations, actions or other authorizations under this Agreement on behalf of the Purchaser, including
enforcing the Purchaser’s rights and remedies under this Agreement, or providing any waivers with respect to the provisions
hereof, shall solely be made, taken and authorized by the Purchaser’s directors who qualify as independent directors under
the applicable U.S. national stock exchange on which shares of the Purchaser’s common stock are then listed (or if the Purchaser’s
common stock no longer listed on an U.S. national stock exchange, the last national stock exchange on which the Purchaser’s
common stock was listed) and are otherwise not the Holder or an Affiliate of the Holder (the “Independent Directors”),
with the Independent Directors acting by majority vote, consent or approval thereof. In the event that the Purchaser at any time
does not have any Independent Directors, so long as Holder has any remaining obligations under this Agreement, the Purchaser will
promptly appoint one in connection with this Agreement. Without limiting the foregoing, in the event that Holder or Holder’s
Affiliate serves as a director, officer, employee or other authorized agent of the Purchaser or any of its current or future Affiliates,
Holder and/or Holder’s Affiliate shall have no authority, express or implied, to act or make any determination on behalf
of the Purchaser or any of its current or future Affiliates in connection with this Agreement or any dispute or Action with respect
hereto.


 


(j) Severability.
In case any provision in this Agreement shall be held invalid, illegal or unenforceable in a jurisdiction, such provision shall
be modified or deleted, as to the jurisdiction involved, only to the extent necessary to render the same valid, legal and enforceable,
and the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired
thereby nor shall the validity, legality or enforceability of such provision be affected thereby in any other jurisdiction. Upon
such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties will substitute
for any invalid, illegal or unenforceable provision a suitable and equitable provision that carries out, so far as may be valid,
legal and enforceable, the intent and purpose of such invalid, illegal or unenforceable provision.


 


(k) Specific
Performance. Holder acknowledges that its obligations under this Agreement are unique, recognizes and affirms that in the
event of a breach of this Agreement by Holder, money damages will be inadequate and Purchaser will have no adequate remedy at
law, and agrees that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed
by Holder in accordance with their specific terms or were otherwise breached. Accordingly, the Purchaser shall be entitled to
an injunction or restraining order to prevent breaches of this Agreement by Holder and to enforce specifically the terms and provisions
hereof, without the requirement to post any bond or other security or to prove that money damages would be inadequate, this being
in addition to any other right or remedy to which the Purchaser may be entitled under this Agreement, at law or in equity.











 


(l) Entire
Agreement. This Agreement constitutes the full and entire understanding and agreement among the parties with respect to the
subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties
is expressly canceled; provided, that, for the avoidance of doubt, the foregoing shall not affect the rights and obligations
of the parties under the Merger Agreement or any Ancillary Document or under the Insider Letter (other than the provisions of
Section 7(a) thereof with respect to the Restricted Securities held by the Holder, which will be superseded by the provisions
of this Agreement). Notwithstanding the foregoing, nothing in this Agreement shall limit any of the rights or remedies of the
Purchaser or any of the obligations of Holder under any other agreement between Holder and the Purchaser or any certificate or
instrument executed by Holder in favor of the Purchaser, and nothing in any other agreement, certificate or instrument shall limit
any of the rights or remedies of the Purchaser or any of the obligations of Holder under this Agreement.


 


(m) Further
Assurances. From time to time, at another party’s request and without further consideration (but at the requesting party’s
reasonable cost and expense), each party shall execute and deliver such additional documents and take all such further action
as may be reasonably necessary to consummate the transactions contemplated by this Agreement.


 


(n) Counterparts;
Facsimile.  This Agreement may also be executed and delivered by facsimile signature or by email in portable document
format in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one
and the same instrument.


 


[Remainder
of Page Intentionally Left Blank; Signature Pages Follow]


 




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IN
WITNESS WHEREOF, the parties have executed this Lock-Up Agreement as of the date first written above.


 





	 	Purchaser:
	 	 
	 	STELLAR ACQUISITION III INC.
	 	 	 
	 	By:	       
	 	Name:	 
	 	Title:	 




 


{Additional
Signature on the Following Page}


 


{Signature Page to Sponsor
Lock-Up Agreement}




 









     


     


    

 







IN
WITNESS WHEREOF, the parties have executed this Lock-Up Agreement as of the date first written above. 


 





	Holder:	 
	 	 
	Name of Holder:  [                                                                        ]	 




 





	By:	      	 
	Name:	 	 
	Title:	 	 










 





Number of Shares of
Purchaser Common Stock:


 


Purchaser Common Stock:                                                                            
















 


Address
                                         for Notice:  


 


Address:                                                                                      




                                                                                                       

                                                                                                       

Facsimile No.:                                                                              

Telephone No.:                                                                            

Email:                                                                                            



 


 


{Signature Page to Sponsor
Lock-Up Agreement}