This Termination Agreement involves
Title: BUSINESS RELATIONSHIP TERMINATION AGREEMENT
Governing Law: Delaware Date: 8/16/2005
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.
4. Purchase Option .
(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 Agreement, Hartslief agrees that for a period of one-year after the date of this Agreement, neither Hartslief, nor any of his affiliates, will directly or indirectly: (i) compete with the Company or its affiliates in the Business (as hereinafter defined) in the United States of America or in Australia; (ii) act as an officer, director, employee, consultant, equityholder, lender, advisor or agent of any person or entity which is in competition with the Company; or (iii) undertake or plan for the organization of any business activity in competition with the Company, and Hartslief will not combine or conspire with any other person or entity for the purpose of the organization of any such competitive business activity; provided, however, that this Section 7 shall not prohibit Hartslief or any of his affiliates from purchasing or holding an aggregate equity interest of up to 3% in any publicly-traded company which is in competition with the Company. As used herein, “Business” means dirt track car racing or the promotion and/or sanctioning of dirt track car racing.