EXHIBIT 10.40
LOCK UP AGREEMENT
This cooperative lock up agreement (the "Lock Up Agreement") is made this 2nd
day of June 2000 by and among SportsPrize Entertainment Inc. (the "Company") and
the shareholders of the Company listed on Exhibits A and B (the "Participants")
with respect to shares of common stock of the Company (the "Shares"). The
Participants own the number of shares set forth beside their names on Exhibits A
and B, and desire to enter into this agreement among themselves to implement
certain selling restrictions or lock up arrangements related to their Shares on
the terms and conditions herein contained.
The Participants agree to lock up their Shares on the basis of an equitable
formula whereby all Participants to the Agreement may sell a fixed percentage of
their total holdings each month during the term of this Agreement.
In consideration of the sum of TEN DOLLARS ($10.00) now paid by the parties
hereto, each to the other (the receipt whereof is hereby acknowledged) and in
further consideration of the mutual covenants and conditions hereinafter
contained, the parties hereto agree as follows:
1. The Participants shall not sell, deal in, assign, transfer in any manner
whatsoever or agree to sell, deal in, assign or transfer in any manner
whatsoever any of the said Shares or beneficial ownership of or any
interest in them, except as follows:
Each month during the term of this Agreement, each Participant may
sell or transfer the lesser of (a) five percent (5%) of the Shares
held by such Participant or (b) the number of shares equal to such
Participant's pro rata share of 30% of aggregate number of shares of
the Company traded during the previous month, while the Company's
shares continue to be listed on the NASD Over the Counter Bulletin
Board, the daily volume will be divided by two to reflect actual
volume (the "Participant's Monthly Eligibility"). The Participant's
"pro rata share" shall be determined by (i) dividing the number of
Shares held by the Participant by (ii) the total number of Shares held
by all Participants. There will be no aggregation of Shares eligible
for sell or transfer, and the Participant's Monthly Eligibility shall
be the maximum number of shares eligible for sell or transfer for any
month during the term of this Agreement.
Each Participant, however, is entitled to sell a minimum of 7,500
shares per month, as a "floor," regardless of the terms specified
above.
2. The Company, in its sole discretion, may consent in writing to pre-arranged
block transactions, including a cross-trade on the market at the
then-current market (at the time of the execution), which trades shall not
be subject to the limitations set forth in this Agreement.
3. Each of the Participants agree to provide the Company with an accounting of
his or her respective interests in Shares of the Company, which may
included one of the following (i) notarized copies of stock certificates,
(ii) statements of account from a registered broker-dealer, bank, or other
fiduciary relationship that is commonly recognized as a depository for
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stock certificates or (iii) other such documents as the Company may
reasonably request. Each Participant agrees to respond to a Company request
within five days of receipt of such notice or such other reasonable time as
may be agreed to by the Company and the Participant.
4. If any Participant sells or transfers Shares in excess of ten percent (10%)
of the Participant's Monthly Eligibility during any month in breach of the
this Agreement, such Participant agrees to pay to the Company liquidated
damages, and not as a penalty, in the amount of $5,000 for each violation,
and shall contribute to the Company the entire proceeds from the sale of
such Shares in excess of the Participant's Monthly Eligibility.
5. This Agreement shall terminate twelve (12) months after the date set forth
above.
6. This Agreement shall be governed under the laws of the State of California.
7. Shareholders may request from the Company an analysis of their monthly
allotment of shares to be sold.
Delivery of an executed counterpart of a signature page of this Agreement via
telephone facsimile transmission will be effective as delivery of a manually
executed counterpart of this Agreement and shall be effective upon delivery to
the Company's principal office and receipt of all required signatories.
SportsPrize Entertainment Inc.
/s/ Robert L. Hunziker
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Robert L. Hunziker
Senior Vice President
SportsPrize Entertainment Inc.
13101 Washington Blvd., Suite 131-141
Los Angeles, California 90066
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