BUSINESS RELATIONSHIP TERMINATION
AGREEMENT
This Business
Relationship Restructuring Agreement (this “Agreement”)
is made and entered into as of August 9, 2005, by and among
Dirt Motor Sports, Inc., a Delaware corporation (successor to
Boundless Motor Sports Racing, Inc., a Colorado corporation) (the
“Company”), Bobby P. Hartslief
(“Hartslief”), Renee Hartslief (“R.
Hartslief”), Cale Henry Hartslief (“C.
Hartslief”), Tess Jordan Hartslief (“T.
Hartslief”) and Paul A. Kruger (“Kruger”).
Hartslief, R. Hartslief, C. Hartslief and T. Hartslief are
sometimes referred to herein as the “Hartslief Family”,
and each of the above persons and entities are sometimes each
referred to herein as a “Party” and collectively, as
the “Parties”.
WHEREAS ,
the Company and Kruger, on the one hand, and the Hartslief Family,
on the other hand, have determined that it is in their mutual best
interests to terminate their business relationship;
NOW,
THEREFORE , in consideration of the covenants and mutual
promises contained herein, the Parties hereby agree as
follows:
1.
Severance Pay . The Company shall pay to Hartslief $180,000
as severance pay, which amount shall be payable as follows: (i)
$15,000 on August 9, 2005; (ii) $15,000 on September 1,
2005; and (iii) the remaining $150,000 on September 30,
2005.
2.
Cancellation of Stock Options and Restricted Stock Awards .
All stock options granted to Hartslief (the “Granted Stock
Options”), and all restricted stock awarded to Hartslief (the
“Granted Restricted Shares”) (including, without
limitation, the options to purchase 50,000 shares of the
Company’s common stock and the restricted stock award to
purchase 50,000 shares of the Company’s common stock
granted/awarded to Hartslief on or about October 8, 2004) are
hereby canceled in their entirety and of no further force or
effect. Hartslief hereby represents and warrants that he has not
heretofore: (i) exercised any of the Granted Stock Options; or
(ii) been issued any of the Granted Restricted
Shares.
3.
Cancellation of Shares . Hartslief has previously
transferred 700,000 shares of the Company’s common stock
(collectively, the “Hartslief Shares”) to the other
members of the Hartslief Family, as follows: (i) 500,000
shares to R. Hartslief; (ii) 100,000 shares to C. Hartslief;
and (iii) 100,000 shares to T. Hartslief. Kruger has claimed a
right to repurchase the Hartslief Shares pursuant to a letter
agreement, dated July 31, 2003, by and among Kruger, Hartslief
and other current and former stockholders of the Company (the
“Letter Agreement”), which repurchase right has
heretofore been challenged by Hartslief. In settlement of this
dispute, the Parties agree that: (i) 250,000 shares of the
Company common stock held by R. Hartslief will contemporaneously
herewith be returned to the Company for cancellation, and shall be
accompanied by a stock power executed in blank; (ii) all
100,000 of the shares of the Company common stock owned by C.
Hartslief will contemporaneously herewith be returned to the
Company for cancellation, and shall be accompanied by a stock power
executed in blank; and (iii) all 100,000 of the shares of the
Company common stock owned by T. Hartslief will contemporaneously
herewith be returned to the Company for cancellation, and shall
be
accompanied by
a stock power executed in blank. The above referenced stock powers
shall be in substantially the form of Exhibit A
attached hereto. Promptly following its receipt of the foregoing,
the Company shall cause the transfer agent to deliver to
Mr. Richard F. Dahlson, solely in his capacity as the
Secretary of the Company (the “Secretary”), a
certificate evidencing the 250,000 shares being retained by R.
Hartslief (the “Retained Shares”), and Secretary shall
hold the Retained Shares in escrow pursuant to the rights of the
Parties set forth in Section 4 below. In addition,
contemporaneously with her execution of this Agreement, R.
Hartslief will deliver to Secretary five (5) stock powers,
executed in blank, which shall be held together with the Retained
Shares.
(a) R.
Hartslief hereby grants to the Company, or any designee(s) of the
Company (each, a “Designee”) the right to purchase, at
any time and from time to time on or prior to September 30,
2005 (the “Option Period”) any or all of the Retained
Shares at a purchase price of $2.00 per share (the “Per Share
Option Price”).The above right may be exercised by the
Company and/or any of its Designees, by delivery of written notice
to R. Hartslief and Secretary (the “Exercise Notice”),
together with the delivery of a wire transfer, to the account of R.
Hartslief as set forth in Exhibit B attached hereto, in
immediately available funds, in the amount of the aggregate Per
Share Option Price for the rights being so exercised (the
“Aggregate Option Price”). Upon receipt of any Exercise
Notice and the Aggregate Option Price, R. Hartslief shall instruct
Secretary to deliver to the Company the stock certificate for the
Retained Shares, together with appropriate stock powers. The
Company shall then deliver the Retained Shares and stock powers to
its transfer agent with instructions to deliver certificates for
the purchased Retained Shares to the applicable purchaser, and
deliver a certificate for any non-purchased Retained Shares to
Secretary to be held by Secretary pursuant to the terms and
conditions of this Section 4 until the expiration of the
Option Period, at which time any Retained Shares not purchased by
the Company or its Designees pursuant to this Section 4 (the
“Unsold Shares”) shall be returned to R. Hartslief. In
the event that the stock powers executed by R. Hartslief are not
sufficient because of the number of purchasers of Retained Shares,
R. Hartslief agrees to deliver to Secretary additional stock
powers, executed by R. Hartslief in blank. In the event that there
are Unsold Shares following the expiration of the Option Period,
the Company will provide reasonable assistance to R. Hartslief from
time to time with respect to administrative and ministerial actions
necessary for her to sell or transfer any or all of such Unsold
Shares, including, when appropriate under applicable law,
(i) by causing counsel to the Company to issue the opinion
referenced in the legend included on the share certificate that
represents the Retained Shares or (ii) causing a new
certificate without such a legend to be issued to her
(b) The
Company may assign/transfer any or all of its purchase rights under
subsection 4(a) of this Agreement, by written agreement with any
person or entity, a copy of which shall be delivered to R.
Hartslief and Secretary.
5.
Cancellation of Rights under the Letter Agreement . Kruger
hereby agrees that all rights he may have under the Letter
Agreement to purchase from the Hartslief Family any of the
Hartslief Shares is hereby terminated in its entirety and of no
further force or effect.
6.
Confidentiality . Hartslief acknowledges and agrees that the
Company and its subsidiaries are entitled to prevent the disclosure
of Trade Secrets (as defined below). As a material inducement for
the Company entering into this Agreement, Hartslief agrees at all
times after the date of this Agreement to hold in strict confidence
and not to disclose or allow to be disclosed to any person, firm or
corporation, and not to use, the Trade Secrets, without the prior
written consent of the Company. As used herein, “Trade
Secrets” means all confidential and proprietary information
of the Company and its affiliates, including, without limitation,
information derived from reports, investigations, experiments,
research, work in progress, drawings, designs, plans, proposals,
codes, marketing and sales programs, client lists, sponsorship
information, client mailing lists, financial projections, cost
summaries, pricing formula, and all other concepts, ideas,
materials, or information prepared or performed for or by the
Company or its subsidiaries and information related to the
business, products or sales of Employer or its subsidiaries, or any
of their respective customers, vendors and sponsors, other than
information which is otherwise publicly available.
7.
Non-Competition . As a material inducement for the Company
entering into this Agreemen
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