LOCK-UP AGREEMENT
EXHIBIT 4.10
This Lock-up Agreement (this “Agreement”), dated as of May ___, 2006 (the “Effective
Date”) by and among Dirt Motor Sports, Inc., a Delaware corporation (the “Company”), and
Xxxx X. Xxxxxx (the “Shareholder”).
WHEREAS, to induce certain investors (the “Investors”) to enter into that certain
Series D Convertible Preferred Stock Purchase Agreement dated as of the date hereof (the
“Purchase Agreement”) by and among the Company and the Investors, the Shareholder has
agreed not to sell any shares of the common stock, par value $.0001 per share, of the Company that
the Shareholder presently owns (the “Common Stock”), except in accordance with the terms
and conditions set forth herein. Capitalized terms used herein without definition shall have the
meanings assigned to such terms in the Purchase Agreement.
NOW, THEREFORE, in consideration of the covenants and conditions hereinafter contained, the
parties hereto agree as follows:
1. Restriction on Transfer; Term.
(a) From the Effective Date through the period of twenty-four (24) months following the
Effective Date (the “Initial Period”), the Shareholder hereby agrees with the Company that
the Shareholder will not offer, sell, contract to sell, assign, transfer, hypothecate, pledge or
grant a security interest in, or otherwise dispose of (each, a “Transfer”), or enter into
any transaction which is designed to, or might reasonably be expected to, result in the disposition
of (whether by actual disposition or effective economic disposition due to cash settlement or
otherwise by the Company or any affiliate of the Company or any person in privity with the Company
or any affiliate of the Company), directly or indirectly, any of such Shareholder’s shares of
Common Stock; provided, however, that (i) if the Company undertakes an underwritten
public offering within twelve months of the Effective Date, Shareholder may sell up to one half of
Shareholder’s Common Stock in the underwritten public offering, (ii) if the Company does not
complete an underwritten public offering within six months of the Effective Date, then if the
Company undertakes a private placement of shares of its common stock, Shareholder shall also have
the right, but not the obligation, to participate in such private placement and sell, upon the same
terms and conditions, up to one third (1/3) of the number of shares of common stock to be sold by
the Company in the private placement, and (iii) the Shareholder may Transfer up to one twelfth
(1/12) of such Shareholder’s shares of Common Stock per month, on a non-cumulative basis, beginning
with the first month following the one year anniversary of the Effective Date. Following the
Initial Period, the Shareholder may freely Transfer all of his shares of Common Stock in accordance
with applicable securities laws.
(b) Notwithstanding the foregoing, the restrictions set forth in Section 1 above: (i) may be
waived in whole or in part by the consent of the holders of at least seventy five percent (75%) of
the Company’s outstanding shares of preferred stock, par value $.01 per share; and (ii) shall not
apply to a block trade by Shareholder if Shareholder provides the Company’s financial advisor at
least five days written notice to match the terms of sale of such block trade.
Notwithstanding anything in this Agreement to the contrary; the parties acknowledge that
Shareholder has pledged 1,500,000 shares of Common Stock to F&M Bank as collateral for a credit
facility (the “F&M Loan”), and that F&M Bank, or its successors and assigns, shall not be bound by
the terms and conditions of this Agreement. Shareholder shall, within three business day after the
Effective Date, provide F&M Bank with the names of the Company’s financial advisors to assist F&M
Bank in selling any of the above pledged shares in the event of the default by Shareholder on the
F&M Loan
2. Ownership. Notwithstanding anything to the contrary in this Agreement, the
Shareholder shall retain all rights of ownership in the Common Stock, including, without
limitation, voting rights and the right to receive any dividends, if any, that may be declared in
respect thereof.
3. Notification of Transfer Agent. The Company is hereby authorized to disclose the
existence of this Agreement to its transfer agent. The Company and its transfer agent are hereby
authorized to decline to make any transfer of the Common Stock if such transfer would constitute a
violation or breach of this Agreement and the Purchase Agreement.
4. Notices. All notices, demands, consents, requests, instructions and other
communications to be given or delivered or permitted under or by reason of the provisions of this
Agreement or in connection with the transactions contemplated hereby shall be in writing and shall
be deemed to be delivered and received by the intended recipient as follows: (i) if personally
delivered, on the business day of such delivery (as evidenced by the receipt of the personal
delivery service), (ii) if mailed certified or registered mail return receipt requested, four (4)
business days after being mailed, (iii) if delivered by overnight courier (with all charges having
been prepaid), on the business day of such delivery (as evidenced by the receipt of the overnight
courier service of recognized standing), or (iv) if delivered by facsimile transmission, on the
business day of such delivery if sent by 6:00 p.m. in the time zone of the recipient, or if sent
after that time, on the next succeeding business day (as evidenced by the printed confirmation of
delivery generated by the sending party’s telecopier machine). If any notice, demand, consent,
request, instruction or other communication cannot be delivered because of a changed address of
which no notice was given (in accordance with this Section 4), or the refusal to accept same, the
notice, demand, consent, request, instruction or other communication shall be deemed received on
the second business day the notice is sent (as evidenced by a sworn affidavit of the sender). All
such notices, demands, consents, requests, instructions and other communications will be sent to
the following addresses or facsimile numbers as applicable.
If to the Company:
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Dirt Motor Sports, Inc. | |
0000 XxXxx Xxxxx, Xxxxx 000 | ||
Xxxxxx, Xxxxxxxx 00000 | ||
Attention: | ||
Tel. No.: (000) 000-0000 | ||
Fax No.: (405) - |
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With copies to:
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Xxxxxxx Xxxxxx L.L.P. | |
000 Xxxx Xxxxxx, Xxxxx 0000 | ||
Xxxxxx, Xxxxx 00000 | ||
Attention: Xxxxxxx X. Xxxxxxx | ||
Tel No.: (000) 000-0000 | ||
Fax No.: (000) 000-0000 |
and to:
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Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx LLP | |
The Chrysler Building, | ||
000 Xxxxxxxxx Xxxxxx | ||
Xxx Xxxx, XX 00000 | ||
Telephone: (000) 000-0000 | ||
Facsimile: (000) 000-0000 | ||
Attention: Xxxxxxxxxxx X. Xxxxxxx |
If to the Shareholder,
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addressed to the Shareholder
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at:
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Tel. No.: (405) - | ||
Fax No.: (405) - |
or to such other address as any party may specify by notice given to the other party in accordance
with this Section 4.
5. Amendment. This Agreement may not be modified, amended, altered or supplemented,
except by a written agreement executed by each of the parties hereto.
6. Entire Agreement. This Agreement contain the entire understanding and agreement of
the parties relating to the subject matter hereof and supersedes all prior and/or contemporaneous
understandings and agreements of any kind and nature (whether written or oral) among the parties
with respect to such subject matter, all of which are merged herein.
7. Governing Law. This Agreement shall be governed by and construed in accordance
with the internal laws of the State of Oklahoma, without giving effect to any of the conflicts of
law principles which would result in the application of the substantive law of another
jurisdiction. This Agreement shall be construed and interpreted without regard to any presumption
against the party causing this Agreement to be drafted.
8. Waiver of Jury Trial. EACH OF THE PARTIES HEREBY UNCONDITIONALLY AND IRREVOCABLY
WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH OF THE PARTIES UNCONDITIONALLY AND
IRREVOCABLY CONSENTS TO THE
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EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF OKLAHOMA LOCATED IN CLEVELAND COUNTY AND
THE FEDERAL DISTRICT COURT IN TH STATE OF OKLAHOMA WITH RESPECT TO ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, AND EACH OF
THE PARTIES HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY OBJECTION TO VENUE IN CLEVELAND
COUNTY OR SUCH FEDERAL COURT, AND AGREES THAT SERVICE OF ANY SUMMONS, COMPLAINT, NOTICE OR OTHER
PROCESS RELATING TO SUCH SUIT, ACTION OR OTHER PROCEEDING MAY BE EFFECTED IN THE MANNER PROVIDED IN
SECTION 4.
9. Severability. The parties agree that if any provision of this Agreement be held to
be invalid, illegal or unenforceable in any jurisdiction, that holding shall be effective only to
the extent of such invalidity, illegally or unenforceability without invalidating or rendering
illegal or unenforceable the remaining provisions hereof, and any such invalidity, illegally or
unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction. It is the intent of the parties that this Agreement be fully enforced to
the fullest extent permitted by applicable law.
10. Binding Effect; Assignment. This Agreement and the rights and obligations
hereunder may not be assigned by any party hereto without the prior written consent of the other
parties hereby. This Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
11. Headings. The section headings contained in this Agreement (including, without
limitation, section headings and headings in the exhibits and schedules) are inserted for reference
purposes only and shall not affect in any way the meaning, construction or interpretation of this
Agreement. Any reference to the masculine, feminine, or neuter gender shall be a reference to such
other gender as is appropriate. References to the singular shall include the plural and vice
versa.
12. Third Parties. The parties hereto acknowledge that the terms and provisions of
this Agreement are for the benefit of the Investors.
13. Counterparts. This Agreement may be executed in two or more counterparts, and by
the different parties hereto in separate counterparts, each of which when executed shall be deemed
to be an original, and all of which, when taken together, shall constitute one and the same
document. This Agreement shall become effective when one or more counterparts, taken together,
shall have been executed and delivered by all of the parties.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written
above herein.
DIRT MOTOR SPORTS, INC. | ||
By: |
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Name: |
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Title: |
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Xxxx X. Xxxxxx |
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