exhibit4_3.htm


    Exhibit 4.3

     

    
       

      SERIES B
CONVERTIBLE PREFERRED STOCK EXCHANGE AGREEMENT

       

      This
Exchange Agreement (this "Agreement")
is dated as of May 15, 2006, by and among Dirt Motor Sports, Inc., a Delaware
corporation (the "Company"),
and the holders of shares of the Company's Series B Convertible Preferred Stock
whose signatures appear on the signature page attached hereto (the "Holders").

       

      Recitals:

       

      WHEREAS,
certain Holders currently hold an aggregate of 7,343.270 shares of Series B
Convertible Preferred Stock of the Company, par value $.01 per share and stated
value $3,000 per share, convertible into shares of the Company's common stock
C"Common
Stock") at a conversion price of $3.00 per share (the "Series B
Preferred Shares"), issued pursuant to that Series B Convertible
Preferred Stock Purchase Agreement dated as of February 25, 2005 by and among
the Company and the Holders (the "Series B
Purchase Agreement"); and

       

      WHEREAS,
subject to the terms and conditions set forth herein, the Company desires to
cancel and retire the Series B Preferred Shares and forfeit any and all rights
under the Series B Purchase Agreement and the Certificate of Designation of the
Relative Rights and Preferences of the Series B Convertible Preferred Stock
filed with the Colorado Secretary of State on February 18, 2005 and the Holders
are willing to exchange the Series B Preferred Shares for an aggregate of
7,343.270 shares of Series D Convertible Preferred Stock of the Company, par
value $.01 per share and stated value $3,000 per share, convertible into shares
of Common Stock at a conversion price of $3.00 per share (the "Series D
Preferred Shares").

       

      NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby agreed and acknowledged, the parties hereby agree as
follows:

       

      AGREEMENT:

       

      1.      Securities
Exchange.

       

      (a) In
consideration of and in express reliance upon the representations, warranties,
covenants, terms and conditions of this Agreement, each Holder agrees to deliver
to the Company the Series B Preferred Shares in exchange for the Series D
Preferred Shares and the Company agrees to issue and deliver the Series D
Preferred Shares to the Holders in exchange for the Series B Preferred
Shares.

       

      (b) The
closing under this Agreement (the "Closing")
shall take place at the offices of Kramer Levin Naftalis & Frankel LLP, 1177
Avenue of the Americas, New York, NY 10036 upon the satisfaction of each of the
conditions set forth in Sections 4 and 5 hereof (the "Closing
Date").

       

      (c) At the
Closing, the Company shall issue to the Holders an aggregate of 7,343.270 Series
D Preferred Shares as set forth on Exhibit
A hereto and the Holders shall deliver to the Company for cancellation
the Series B Preferred Shares. The Series D Preferred Shares are sometimes
referred to herein as the "Securities".

       

      
        
          
          

        

        
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      2. Representations.,
Warranties and Covenants of the Holders. Each of the
Holders hereby makes the following representations and warranties to the
Company, and covenants for the benefit of the Company, with respect solely to
itself and not with respect to any other Holder:


       

      (a) If a
Holder is an entity, such Holder is a corporation, limited liability company or
partnership duly incorporated or organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization.

       

      (b) This
Agreement has been duly authorized, validly executed and delivered by each
Holder and is a valid and binding agreement and obligation of each Holder
enforceable against such Holder in accordance with its terms, subject to
limitations on enforcement by general principles of equity and by bankruptcy or
other laws affecting the enforcement of creditors' rights generally, and each
Holder has full power and authority to execute and deliver the Agreement and the
other agreements and documents contemplated hereby and to perform its
obligations hereunder and thereunder.

       

      (c) Each
Holder understands that the Securities are being offered and sold to it in
reliance on specific provisions of Federal and state securities laws and that
the Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of each Holder set
forth herein for purposes of qualifying for exemptions from registration under
the Securities Act of 1933, as amended (the "Securities
Act") and applicable state securities laws.

       

      (d) Each
Holder is an "accredited investor" as defined under Rule 501 of Regulation D
promulgated under the Securities Act.

       

      (e) Each
Holder is and will be acquiring the Securities for such Holder's own account,
and not with a view to any resale or distribution in whole or in part, in
violation of the Securities Act or any applicable securities
laws.

       

      (f) The offer
and sale of the Securities is intended to be exempt from
registration under the Securities Act, by virtue of Section 3(a)(9) and/or 4(2)
thereof. Each Holder understands that the Securities purchased hereunder have
not been registered under the Securities Act and that none of the Securities can
be sold or transferred unless they are first registered under the Securities Act
and such state and other securities laws as may be applicable or the Company
receives an opinion of counsel reasonably acceptable to the Company that an
exemption from registration under the Securities Act is available (and then the
Securities may be sold or transferred only in compliance with such exemption and
all applicable state and other securities laws).

       

      3. Representations,
Warranties and Covenants of the Company. The Company
represents and warrants to each Holder, and covenants for the benefit of each
Holder, as follows:

       

      
        
          
          

        

        
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      (a) The
Company has been duly incorporated and is validly existing and in good standing
under the laws of the state of Delaware, with full corporate power and authority
to own, lease and operate its properties and to conduct its business as
currently conducted, and is

       

      duly
registered and qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the failure
to register or qualify would not have a Material Adverse Effect. For purposes of
this Agreement, "Material
Adverse Effect" shall mean any material adverse effect on the business,
operations, properties, prospects, or financial condition of the Company and its
subsidiaries and/or any condition, circumstance, or situation that would
prohibit or otherwise materially interfere with the ability of the Company to
perform any of its obligations under this Agreement in any material
respect.

       

      (b) The
Securities have been duly authorized by all necessary corporate action and, when
paid for or issued in accordance with the terms hereof, the Securities shall be
validly issued and outstanding, fully paid and nonassessable, free and clear of
all liens, encumbrances and rights of refusal of any kind,

       

      (c) This
Agreement has been duly authorized, validly executed and delivered on behalf of
the Company and is a valid and binding agreement and obligation of the Company
enforceable against the Company in accordance with its terms, subject to
limitations on enforcement by general principles of equity and by bankruptcy or
other laws affecting the enforcement of creditors' rights generally, and the
Company has full power and authority to execute and deliver the Agreement and
the other agreements and documents contemplated hereby and to perform its
obligations hereunder and thereunder.

       

      (d) The
execution and delivery of the Agreement and the consummation of the transactions
contemplated by this Agreement by the Company, will not (i) conflict with or
result in a breach of or a default under any of the terms or provisions of, (A)
the Company's certificate of incorporation or by-laws, or (B) of any material
provision of any indenture, mortgage, deed of trust or other material agreement
or instrument to which the Company is a party or by which it or any of its
material properties or assets is bound, (ii) result in a violation of any
provision of any law, statute, rule, regulation, or any existing applicable
decree, judgment or order by any court, Federal or state regulatory body,
administrative agency, or other governmental body having jurisdiction over the
Company, or any of its material properties or assets or (iii) result in the
creation or imposition of any material lien, charge or encumbrance upon any
material property or assets of the Company or any of its subsidiaries pursuant
to the terms of any agreement or instrument to which any of them is a party or
by which any of them may be bound or to which any of their property or any of
them is subject except in the case of clauses (i)(B), (ii) or (iii) for any such
conflicts, breaches, or defaults or any liens, charges, or encumbrances which
would not have a Material Adverse Effect.

       

      (e) The
delivery and issuance of the Securities in accordance with the terms of and in
reliance on the accuracy of each Holder's representations and warranties set
forth in this Agreement will be exempt from the registration requirements of the
Securities Act.

       

      (f) No
consent, approval or authorization of or designation, declaration or filing with
any governmental authority on the part of the Company is required in connection
with the valid execution and delivery of this Agreement or the offer, sale or
issuance of the Securities or the consummation of any other transaction
contemplated by this Agreement.

      
        
          
          

        

        
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      (g) The
Company has complied and will comply with all applicable federal and state
securities laws in connection with the offer, issuance and delivery of the
Securities hereunder. Neither the Company nor anyone acting on its behalf,
directly or indirectly, has or will sell, offer to sell or solicit offers to buy
any of the Securities, or similar securities to, or solicit offers with respect
thereto from, or enter into any preliminary conversations or negotiations
relating thereto with, any person, or has taken or will take any action so as to
bring the issuance and sale of any of the Securities under the registration
provisions of the Securities Act and applicable state securities laws. Neither
the Company nor any of its affiliates, nor any person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D under the Securities Act) in connection with
the offer or sale of any of the Securities.

       

      (h) The
Company represents that it has not paid, and shall not pay, any commissions or
other remuneration, directly or indirectly, to the Holder or to any third party
for the solicitation of the exchange of the Series B Preferred Shares pursuant
to this Agreement.

       

      (i)           The
Company covenants and agrees that promptly following the Closing Date, all
outstanding Series B Preferred Shares will be cancelled and retired by the
Company.

       

      4.           Conditions
Precedent to the Obligation of the Company to Issue the Securities. The obligation
hereunder of the Company to issue and deliver the Securities to each
Holder is
subject to the satisfaction or waiver, at or before the Closing Date, of each of
the conditions
set forth below. These conditions are for the Company's sole benefit and may be
waived by
the Company at any time in its sole discretion. 

       

                  (a) Each
Holder shall have executed and delivered this Agreement.

       

      (b) Each
Holder shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by such Holder at or prior to the Closing
Date.

       

      (c) The
representations and warranties of each Holder shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made at that time, except for representations and warranties that are expressly
made as of a particular date, which shall be true and correct in all material
respects as of such date.

       

      5,           Conditions
Precedent to the Obligation of the Holders to Accept
the

       

      Securities. The
obligation hereunder of each Holder to accept the Securities is subject to the
satisfaction
or waiver, at or before the Closing Date, of each of the conditions set forth
below. These
conditions are for each Holder's sole benefit and may be waived by each Holder
at any time in
its sole discretion.

       

          (a) The
Company shall have executed and delivered this Agreement.

       

      (b) The
Company shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by the Agreement to be
performed, satisfied or complied with by the Company at or prior to the Closing
Date.

       

      (c) Each of
the representations and warranties of the Company shall be true and correct in
all material respects as of the date when made and as of the Closing Date as
though made at that time, except for representations and warranties that speak
as of a particular date, which shall be true and correct in all material
respects as of such date.

       

      
        
          
          

        

        
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      (d) No
statute, regulation, executive order, decree, ruling or injunction shall have
been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction which prohibits the consummation of any of
the transactions contemplated by this Agreement at or prior to the Closing
Date.

       

      (e) As of the
Closing Date, no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, shall be pending against or
affecting the Company, or any of its properties, which questions the validity of
the Agreement or the transactions contemplated thereby or any action taken or to
be taken pursuant thereto. As of the Closing Date, no action, suit, claim or
proceeding before or by any court or governmental agency or body, domestic or
foreign, shall be pending against or affecting the Company, or any of its
properties, which, if adversely determined, is reasonably likely to result in a
Material Adverse Effect.



       

      6. Rights,
Benefits and Obligations of Series P Convertible Preferred Stock Purchase
Agreement and Registration Rights Agreement The
Company and the Holders hereby agree that the Company and the Holders shall have
all of the rights and benefits, and be subject to all of the obligations, under
(i) the Series D Convertible Preferred Stock Purchase Agreement dated as of May
15, 2006 among the Company and the purchasers named therein and (ii) the
Registration Rights Agreement dated as of May 15, 2006 among the Company and the
purchasers named therein, in each case, with respect to the Securities issued
pursuant to this Agreement.

       

      7. Governing
Law; Consent to Jurisdiction. This
Agreement shall be governed by and interpreted in accordance with the laws of
the State of New York without giving effect conflicts of law principles that
would result in the application of the substantive laws of another jurisdiction.
Each of the parties consents to the exclusive jurisdiction of the Federal courts
whose districts encompass any part of the County of New York located in the City
of New York in connection with any dispute arising under this Agreement and
hereby waives, to the maximum extent permitted by law, any objection, including
any objection based on forum non
conveniens, to the bringing of any such proceeding in such jurisdictions.
Each party waives its right to a trial by jury. Each party to this Agreement
irrevocably consents to the service of process in any such proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
such party at its address set forth herein. Nothing herein shall affect the
right of any party to serve process in any other manner permitted by
law.

       

      8. Notices. All notices
and other communications provided for or permitted hereunder shall be made in
writing by hand delivery, express overnight courier, registered first class
mail, or telecopier (provided that any notice sent by telecopier shall be
confirmed by other means pursuant to this Section 11), initially to the address
set forth below, and thereafter at such other address, notice of which is given
in accordance with the provisions of this Section.

       

      
        
          
          

        

        
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        (a) if to the
Company:

         

      

      Dirt
Motor Sports, Inc. 

      2500
McGee Drive, Suite 147 

      Norman,
Oklahoma 73072 

      Attention:
Chief Executive Officer 

      Tel. No.:
(405) 360-5047 

      Fax No.:
(405)360-5354

       

      with a
copy to:

       

      Jackson
Walker L.L.P. 

      2435 N.
Central Expressway Suite 600

      Richardson,
Texas, 75080 

      Attention:
Richard F. Dahlson 

      Tel No.:
(972) 744-2996 

      Fax No.:
(972) 744-2990

       

      (b) if to the
Holders:

       

      At the
address of such Holder set forth on Exhibit A
to this Agreement.

       

      All such
notices and communications shall be deemed to have been duly given: when
delivered by hand, if personally delivered; when receipt is acknowledged, if
telecopied; or when actually received or refused if sent by other
means.

       

      9. Entire
Agreement This
Agreement constitutes the entire understanding and agreement of the parties with
respect to the subject matter hereof and supersedes all prior and/or
contemporaneous oral or written proposals or agreements relating thereto all of
which are merged herein. This Agreement may not be amended or any provision
hereof waived in whole or in part, except by a written amendment signed by both
of the parties.

       

      10. Counterparts. This
Agreement may be executed by facsimile signature and in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

       

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      IN
WITNESS WHEREOF, this Agreement was duly executed on the date first written
above.

       

      
        DIRT MOTOR SPORTS, INC

         

        By:  /s/ Brian
Carter

        Name:  Brian Carter

        Title EVP & CFO

         

        HOLDER:  North Sound Legacy
Institutional Fund LLC

          By:  North Sound Capital
LLC; Manager

         

        By:  /s/ Andrew B.
David

        Name:  Andrew B.
David

        Title:  General
Counsel

        
           

          HOLDER:  North Sound Legacy
International LLC

            By:  North Sound Capital
LLC; Investment Advisor

           

          By: /s/ Andrew B.
David

          Name:  Andrew B.
David

          Title:  General
Counsel

           

        

      

       

      
        
          
          

        

        
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      EXHIBIT A
to the

      SERIES B
CONVERTIBLE PREFERRED STOCK EXCHANGE AGREEMENT FOR

      DIRT
MOTOR SPORTS, INC.

       


      
        
           


        

        
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                Names and
      Addresses of Purchasers

              	Number of Series C
      Preferred Shares Exchanged	
                 

                Number of
      Series D Shares Received

              
	 	 	 
	
                North
      Sound Legacy International Ltd. 

                c/o North
      Sound Capital LLC 53 Forest Avenue, Suite 202 Old Greenwich, CT 06870
      Attention: Andrew David Fax No.: (203) 967-5701

              	3,547.431 	3,547.431 
	 	 	 
	North Sound Legacy
      Institutional Fund LLC 

                c/o North Sound Capital LLC 53 Forest
      Avenue, Suite 202 Old Greenwich, CT 06870 Attention: Andrew David Fax No.:
      (203)967-5701

              	 1,644.754	 1,644.754
	 	 	 
	
                Royal
      Bank of Canada 

                c/o RBC
      Capital Markets Corp

                165 Broadway,
      2"d
      FloorOne Liberty Plaza

                New York, NY 10006-1404

                Attention:
      Michael Frommer

                Fax
      No.: (212) 858-7439

              	  857.440	 857.440
	 	 	 
	 SXJE/Boundless
      Investments LLC	 1,293.645
      	 1,293.645