Document:

exv4w6

 

Exhibit 4.6

WARRANT EXCHANGE AGREEMENT

     This Warrant Exchange Agreement (this “Agreement”) is dated as of May 16, 2006, by and
among Dirt Motor Sports, Inc., a Delaware corporation (the “Company”), North Sound Legacy
Institutional Fund LLC, a Delaware limited liability company (“NS Institutional”), and
North Sound Legacy International Fund Ltd., a British Virgin Islands corporation (“NS
International” and, collectively with NS Institutional, the “Holders”).

Recitals:

     WHEREAS, the Holders currently hold (i) Series A Warrants to purchase an aggregate of
2,980,415 shares of the Company’s common stock, par value $.0001 per share (“Common
Stock”), issued pursuant to that Series A Convertible Preferred Stock Purchase Agreement dated
as of July 30, 2004 by and among the Company and the purchasers named therein (the “Series A
Warrants”), (ii) Series B Warrants to purchase an aggregate of 733,334 shares of the Company’s
Common Stock, issued pursuant to that Series B Convertible Preferred Stock Purchase Agreement dated
as of February 25, 2005 by and among the Company and the purchasers named therein (the “Series
B Warrants”) and (iii) Series C Warrants to purchase an aggregate of 1,275,000 shares of the
Company’s Common Stock, issued pursuant to that Series C Convertible Preferred Stock Purchase
Agreement dated as of February 25, 2005 by and among the Company and the purchasers named therein
(the “Series C Warrants” and, collectively with the Series A Warrants and the Series B
Warrants, the “Warrants”);

     WHEREAS, subject to the terms and conditions set forth herein, the Company desires to cancel
the Warrants and the Holders are willing to exchange the Warrants for shares of the Company’s
Common Stock and New Warrants (as defined below), as set forth on Schedule A hereto.

     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, the Holders agree to deliver to the Company the
Warrants in exchange for shares of the Company’s Common Stock and the Company agrees to issue and
deliver shares of the Company’s Common Stock to the Holders in exchange for the Warrants.

          (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 three hundred
thirty thousand (330,000) shares of the Company’s Common Stock and warrants

 

 

(“New Warrants”) to purchase nine hundred seventeen thousand one hundred eighty seven
(917,187) shares of Common Stock having an exercise period of five (5) years, an exercise price of
$0.001 per share, and otherwise in form reasonably acceptable to such Holder, and the Holders shall
deliver to the Company for cancellation the Warrants. Such shares of Common Stock and New Warrants
shall be allocated among each Holder as set forth on Schedule A hereto. The shares of the
Company’s Common Stock are sometimes referred to herein as the “Securities”.

     2. Representations, Warranties and Covenants of the Holders. The Holders hereby make
the following representations and warranties to the Company, and covenants for the benefit of the
Company, as follows:

          (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 such 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 the Holders 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. The Holders understand 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).

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

          (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 this 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.

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          (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.

          (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 Holders or to any third party for the solicitation of
the exchange of the Warrants for shares of Common Stock pursuant to this Agreement.

          (i) The Company’s Common Stock is registered pursuant to Section 12(b) or 12(g) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), and, since December 31,
2005, the Company has timely filed all reports, schedules, forms, statements and other documents
required to be filed by it with the Securities and Exchange Commission (the “Commission”)
pursuant to the reporting requirements of the Exchange Act, including material filed pursuant to
Section 13(a) or 15(d) of the Exchange Act (all of the foregoing including filings incorporated by
reference therein being referred to herein as the “Commission Documents”). The Company has
delivered or made available to the Holders true and complete copies of the Commission Documents
filed with the Commission since December 31, 2005. The Company has not provided to the Holders any
material non-public information or other information which, according to applicable law, rule or
regulation, was required to have been disclosed publicly by the Company but which has not been so
disclosed, other than with respect to the transactions contemplated by this Agreement. At the
times of their respective filings, the Form 10-KSB and the Form 10-QSB complied in all material
respects with the requirements of the Exchange Act and the rules and regulations of the Commission
promulgated thereunder and other federal, state and local laws, rules and regulations applicable to
such documents, and, as of their respective dates, none of the Form 10-KSB and the Form 10-QSB
contained any untrue statement of a material fact or omitted to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial statements of the Company
included in the Commission Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the Commission or other
applicable rules and regulations with respect thereto. Such financial statements have been
prepared in accordance with United States generally accepted accounting principles applied on a
consistent

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basis during the periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto or (ii) in the case of unaudited interim statements, to the extent
they may not include footnotes or may be condensed or summary statements), and fairly present in
all material respects the financial position of the Company and its subsidiaries as of the dates
thereof and the results of operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments).

          (j) The shares of the Company’s Common Stock received by the Holders pursuant to this
Agreement shall be included in Schedule II of the Registration Rights Agreement dated of
even date herewith among the Company and the other parties thereto (the “Registration Rights
Agreement”) and the Holders shall be listed as selling shareholders in any registration
statement filed in accordance with the terms of the Registration Rights Agreement. The Holders
shall be entitled to all of the rights, benefits and remedies of the “Holders” (as defined in the
Registration Rights Agreement) set forth in the Registration Rights Agreement except for any
rights, benefits and remedies included in Section 7(e) thereto.

     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 the Holders 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 the Holders 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 the Holders’ sole benefit and may be waived by any 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. 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.

     7. 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.

          (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:

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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:

North Sound Legacy Institutional Fund LLC

c/o North Sound Capital LLC

20 Horseneck Lane

Greenwich, CT 06830

Attention: Andrew B. David, General Counsel

Tel No.: (203) 340-5784

Fax No.: (203) 340-5700

North Sound Legacy International Ltd.

c/o North Sound Capital LLC

20 Horseneck Lane

Greenwich, CT 06830

Attention: Andrew B. David, General Counsel

Tel No.: (203) 340-5784

Fax No.: (203) 340-5700

     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.

     8. 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.

     9. 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.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

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

	 	 	 	 	 
	 	DIRT MOTOR SPORTS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	NORTH SOUND LEGACY INSTITUTIONAL FUND LLC

 	 
	 	By:  	North Sound Capital LLC 	 
	 	Its:	Manager 	 
	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	NORTH SOUND LEGACY INSTITUTIONAL LTD.

 	 
	 	By:  	North Sound Capital LLC 	 
	 	Its:  	Investment Advisor 	 
	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

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SCHEDULE A 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	Number of Warrants	 	 	 	 	 	Number of shares
	Name	 	 	 	Number of Warrants	 	Percent to	 	Exchanged for 1 share	 	 	 	 	 	of Common Stock
	of Holder	 	Warrants	 	Pre- Exchange	 	Exchange	 	of Common Stock	 	 	 	 	 	and New Warrants
	North Sound
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Legacy Institutional
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Fund LLC
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Series A Warrants	 	 	983,537	 	 	 	100	%	 	4	 	 	 	 	 	245,884 shares
	 
	 	Series B Warrants	 	 	207,667	 	 	 	100	%	 	4	 	 	 	 	 	51,917 shares
	 
	 	Series C Warrants	 	 	420,750	 	 	 	100	%	 	4	 	 	 	 	 	105,188 shares
	 
	 	 	 	 	 	 	 	 	 	 	 	Common Stock:	 	 	106,623	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	New Warrants:	 	 	296,343	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	North Sound Legacy
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	International Fund
Ltd.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Series A Warrants	 	 	1,996,878	 	 	 	100	%	 	4	 	 	 	 	 	499,220 shares
	 
	 	Series B Warrants	 	 	525,667	 	 	 	100	%	 	4	 	 	 	 	 	131,417 shares
	 
	 	Series C Warrants	 	 	854,250	 	 	 	100	%	 	4	 	 	 	 	 	213,563 shares
	 
	 	 	 	 	 	 	 	 	 	 	 	Common Stock:	 	 	223,377	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	New Warrants:	 	 	620,844exv4w7

 

Exhibit 4.7

WARRANT EXCHANGE AGREEMENT

     This Warrant Exchange Agreement (this “Agreement”) is dated as of May___, 2006, by
and among Dirt Motor Sports, Inc., a Delaware corporation (the “Company”), and Royal Bank
of Canada (the “Holder”).

Recitals:

     WHEREAS, the Holder currently holds (i) Series A Warrants to purchase an aggregate of 525,952
shares of the Company’s common stock, par value $.0001 per share (“Common Stock”), issued
pursuant to that Series A Convertible Preferred Stock Purchase Agreement dated as of July 30, 2004
by and among the Company and the purchasers named therein (the “Series A Warrants”), (ii)
Series B Warrants to purchase an aggregate of 100,000 shares of the Company’s Common Stock, issued
pursuant to that Series B Convertible Preferred Stock Purchase Agreement dated as of February 25,
2005 by and among the Company and the purchasers named therein (the “Series B Warrants”)
and (iii) Series C Warrants to purchase an aggregate of 225,000 shares of the Company’s Common
Stock, issued pursuant to that Series C Convertible Preferred Stock Purchase Agreement dated as of
February 25, 2005 by and among the Company and the purchasers named therein (the “Series C
Warrants” and, collectively with the Series A Warrants and the Series B Warrants, the
“Warrants”);

     WHEREAS, subject to the terms and conditions set forth herein, the Company desires to cancel
the Warrants and the Holder is willing to exchange the Warrants for shares of the Company’s Common
Stock, as set forth on Schedule A hereto.

     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, the Holder agrees to deliver to the Company the
Warrants in exchange for shares of the Company’s Common Stock and the Company agrees to issue and
deliver shares of the Company’s Common Stock to the Holder in exchange for the Warrants.

          (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 Holder shares of the Company’s Common
Stock, as set forth on Schedule A hereto, and the Holder shall deliver to the Company for
cancellation the Warrants. The shares of the Company’s Common Stock are sometimes referred to
herein as the “Securities”.

 

 

     2. Representations, Warranties and Covenants of the Holder. The Holder hereby makes
the following representations and warranties to the Company, and covenants for the benefit of the
Company, as follows:

          (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 the Holder and
is a valid and binding agreement and obligation of the Holder enforceable against the 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 the
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) The 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 the 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) The Holder is an “accredited investor” as defined under Rule 501 of Regulation D
promulgated under the Securities Act.

          (e) The Holder is and will be acquiring the Securities for the 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. The 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 the Holder, and covenants for the benefit of the Holder, as follows:

          (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

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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 this 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 the 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 Warrants for shares of Common Stock pursuant to this Agreement.

     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) The Holder shall have executed and delivered this Agreement.

          (b) The 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 the Holder at or prior to the Closing Date.

          (c) The representations and warranties of the 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 Holder to Accept the Securities. The
obligation hereunder of the 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 the Holder’s sole benefit and may be waived by the 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.

4

 

          (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.

          (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. 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.

     7. 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.

          (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

5

 

with a copy to:

Jackson Walker L.L.P.

Bank of America Plaza

901 Main Street

Suite 6000

Dallas, Texas 75202

Attention: Richard F. Dahlson

Tel No.: (214) 953-6000

Fax No.: (214) 953-5822

          (b) if to the Holder:

RBC Capital Markets Corporation

                                        

                                        

Attention:                     

Tel No.: (___) ___-___

Fax No.: (___) ___-___

with a copy to:

Kramer Levin Naftalis & Frankel LLP

1177 Avenue of the Americas

New York, New York 10036

Attention: Christopher S. Auguste

Tel No.: (212) 715-9100

Fax No.: (212) 715-8000

     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.

     8. 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.

     9. 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.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

6

 

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

	 	 	 
	DIRT MOTOR SPORTS, INC.

	 

	 	 
	By:
	 	 
	 

	 	 
	 

	 	Name:

Title:
	 

	 	 
	ROYAL BANK OF CANADA

	 

	 	 
	BY ITS AGENT

	 

	 	 
	RBC CAPITAL MARKETS CORPORATION

	 

	 	 
	By:
	 	 
	 

	 	 
	 

	 	Name:

Title:
	 

	 	 
	By:
	 	 
	 

	 	 
	 

	 	Name:

Title:

7

 

SCHEDULE A 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Number of Warrants	 	 	 	 
	 	 	Number of Warrants	 	 	Percent to	 	 	Exchanged for 1 share	 	 	Number of shares	 
	Warrants	 	Pre- Exchange	 	 	Exchange	 	 	of Common Stock	 	 	of Common Stock	 
	Series A Warrants
	 	525,952	 	 	100%	 	 	4	 	 	131,488 shares
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Series B Warrants
	 	100,000	 	 	100%	 	 	4	 	 	25,000 shares
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Series C Warrants
	 	225,000	 	 	100%	 	 	4	 	 	56,250 shares

8

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