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LOCK-UP AGREEMENT

Lockup Agreement

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This Lockup Agreement involves

DIRT MOTOR SPORTS, INC. | Paul A. Kruger

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Title: LOCK-UP AGREEMENT
Governing Law: Oklahoma     Date: 6/1/2006
Law Firm: Jackson Walker L.L.P.;Jenkens & Gilchrist Parker Chapin LLP;    

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EXHIBIT 4.10

LOCK-UP AGREEMENT

     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 Paul A. Kruger (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:

 

Dirt Motor Sports, Inc.

 

 

2500 McGee Drive, Suite 147

 

 

Norman, Oklahoma 73072

 

 

Attention:                                        

 

 

Tel. No.: (405) 360-5047

 

 

Fax No.: (405)      -               

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