SHARE PLEDGE AGREEMENT
AGREEMENT
made as of the 8th day of
August,
2007.
B
E T W E E N:
EIGER
TECHNOLOGY, INC., a corporation governed under the laws of the Province
of Ontario
(hereinafter
called the "Parent")
-
and
–
ETIFF
HOLDINGS, LLC, a corporation governed under the laws of the State of
Delaware (hereinafter called the "Holder")
-
and
–
FOUNDATION
VENTURE LEASING INC., in Trust., a corporation governed under the laws
of the Province of Ontario (hereinafter called the
"Debtor")
WHEREAS:
|
The
Debtor has purchased 14,021,600 Shares of common stock (collectively,
the
"Purchased Shares") of Racino Royale, Inc. (the
"Corporation");
|
|
The
Debtor has executed and delivered a promissory note (the
"Note") in the principal amount of $671,080, dated as
of
the date hereof, evidencing the outstanding balance of the purchase
price
owing for the Pledged Shares which Note is to be retired on the following
basis:
|
|
(1)
|
$70,000
on or before August 31, 2007;
|
|
(2)
|
$133,694
on or before September 30, 2007;
and
|
|
(3)
|
$233,693
on or before February 1, 2008; and
|
|
(4)
|
$233,693
on or before September 1, 2008.
|
|
(C)
|
The
Debtor has agreed to pledge 12,619,460 of the Purchased Shares (the
"Pledged Shares") to the Holder as security for the
performance by the Debtor of its obligations pursuant to the terms
of the
Note;
|
NOW
THEREFORE in consideration of the mutual covenants set out in this
agreement and for other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged), the parties agree as
follows:
ARTICLE 1
DEFINITIONS
All
expressions and definitions contained in this agreement shall have the same
meaning as the corresponding expressions and definitions contained in the
Personal Property Security Act (Ontario), unless specifically modified
by this agreement. In addition, the following words and expressions
shall have the following meanings:
|
(a)
|
"Act"
means the Personal Property Security Act (Ontario), as amended or
re- enacted from time to time;
|
|
(b)
|
"Arm's
Length" has the meaning given thereto in the Income Tax
Act (Canada), as amended or re-enacted from time to
time;
|
|
(c)
|
"Corporation"
means Racino Royale, Inc., a corporation governed under the laws
of the
State of Nevada;
|
|
(d)
|
"Distributions"
shall have the meaning attributed to such term in section 6.1(a)(iii);
|
|
(e)
|
"Event
of Default" shall have the meaning attributed to such term in 7.1;
|
|
(f)
|
"Note"
shall have the meaning attributed to such term in Recital (B);
|
|
(g)
|
"Obligations"
means the obligations, indebtedness and liability of the Debtor referred
to in Section 2.1;
|
|
(h)
|
"Pledged
Shares" means 12,619,460 of the Purchased
Shares;
|
|
(i)
|
"Purchased
Shares" shall have the meaning attributed to such term in Recital
(A); and
|
|
(j)
|
"Security
Interest" means the security interest referred to in Section 2.1.
|
ARTICLE 2
THE
SECURITY INTEREST
2.1 Grant
of Security Interest
As
security for the payment and satisfaction of any and all obligations, liability
and indebtedness of the Debtor to the Holder including, without limitation,
under the Note and this agreement (such obligations, indebtedness and liability
being hereinafter collectively called the "Obligations"), the
Debtor hereby grants to the Holder a continuing and specific security interest
in and to the Pledged Shares and any proceeds thereof (the "Security
Interest").
2.2 Attachment
of Security Interest
The
Debtor hereby agrees that the Security Interest in the Pledged Shares shall
attach upon the execution of this agreement by the parties.
2.3 Delivery
of Pledged Shares
The
Debtor agrees that it shall direct the transfer agent of the Corporation to
deliver to the Holder the share certificates representing in aggregate the
Pledged Shares upon issuance thereof, and the Debtor shall deliver to the Holder
an executed power of attorney upon the execution of this Agreement.
2.4 Release
of Pledged Shares
The
Holder shall deliver to the Debtor the share certificate for the Pledged Shares,
released and discharged from the Security Interest in the following amounts
upon
satisfaction of the following amounts under the Note:
|
(a)
|
$70,000
on or before August 31, 2007 – 1,402,140 Pledge Shares
released
|
|
(b)
|
$133,694
on or before September 30, 2007 – 1,869,566 Pledge Shares
released
|
|
(c)
|
$233,
693 on or before February, 1 2008 – 4,673,877 Pledge Shares
released
|
|
(d)
|
$233,
693 on or before September, 1 2008 -4,673,877 Pledge Shares
released
|
ARTICLE 3
REPRESENTATIONS
AND WARRANTIES OF THE DEBTOR
3.1 No
Breach of Applicable Law
The
Debtor hereby represents and warrants to the Holder that the execution and
delivery of this agreement by the Debtor and the observance and performance
of
the terms and conditions of this agreement on the part of the Debtor to be
observed and performed do not constitute a violation of applicable law or a
violation of any contract or obligation to which the Debtor is a party or by
which the Debtor is bound, nor do any of the foregoing constitute a default
or
would, with the passage of time or the giving of notice or both, or otherwise,
constitute a default under any contract or obligation to which the Debtor is
a
party or by which the Debtor is bound.
3.2 Title
The
Debtor hereby represents and warrants to the Holder that the Debtor is the
owner
of the Pledged Shares and is entitled to pledge the Pledged Shares to the
Holder, free of any mortgage, hypothec, charge, lien, security interest or
other
encumbrance.
ARTICLE 4
COVENANTS
OF THE DEBTOR
4.1 General
Covenants
The
Debtor hereby covenants and agrees with the Holder that, so long as the
Obligations or any part thereof remain outstanding, without the prior written
consent of the Holder, such consent not to be unreasonably
withheld:
|
(a)
|
No
Encumbrances: the Debtor will not assume or have outstanding, except
to
the Holder, any mortgage, charge, lien, security interest or other
encumbrance on all or any part of the Pledged Shares;
and
|
|
(b)
|
Sale
and Assignment of Pledged Shares: the Debtor will not sell, transfer,
assign, dispose of, or in any other manner deal with any of the Pledged
Shares
|
ARTICLE 5
COVENANTS
OF THE HOLDER
The
HOLDER hereby covenants and agrees with the Holder that, so long as there is
not
an Event of Default, as defined herein that is not cured as provided in Section
7 hereof.
|
(a)
|
No
Transfer; The Holder will not take any actions to effect a
transfer of the Pledged Shares.
|
|
(b)
|
No
Pledge of the Pledged Shares; The Holder
will not in any way pledge or hypothecate the Pledged
Shares.
|
ARTICLE 6
RIGHTS
BEFORE DEFAULT
6.1 Voting
Rights; Dividends; etc.
|
(a)
|
Unless
and until an Event of Default has occurred and has not been waived
in
writing by the Holder:
|
|
(i)
|
the
Pledged Shares shall remain registered in the name of the
Debtor;
|
|
(ii)
|
the
Debtor shall be entitled to exercise any and all voting and/or consensual
rights and powers relating or pertaining to the Pledged Shares or
any part
thereof for any purpose not inconsistent with the terms of this agreement;
and
|
|
the
Debtor shall be entitled to receive all cash or other distributions
payable in respect of the Pledged Shares (the
"Distributions").
|
|
(b)
|
Unless
otherwise provided for herein, upon the occurrence of an Event of
Default,
all rights of the Debtor to exercise the voting and/or consensual
rights
and powers and/or to receive the Distributions shall cease and the
Holder
shall thereafter be entitled to exercise all such voting rights and/or
consensual rights and to receive all
Distributions.
|
ARTICLE 7
EVENTS
OF DEFAULT
7.1 Event
of Default
Each
of
the following events constitutes an event of default under this agreement (each
an "Event of Default"):
|
(a)
|
Failure
to Make Payment: The Debtor fails to pay when due any amount owing
by the
Debtor to the Holder pursuant to the terms of the Note and such failure
to
pay is not cured within forty-five (45) days of the date upon which
any
such amount is due.
|
|
(b)
|
Default
Under Share Pledge Agreement: The Debtor fails to observe or
perform any of the covenants and obligations, in accordance with
its
terms, any of the Obligations other than as provided in subsection
7.1(a)
and such non-observance or non- performance has not been corrected
within
twenty (20) days of receiving written notice from the Holder to cure
such
default.
|
|
(c)
|
Appointment
of Receiver: The insolvency of the Debtor or the appointment of
a receiver, manager, trustee, liquidator, for any of the property
of the
Debtor or an assignment for the benefit of the Debtor's creditors
or a
distress, execution or other similar process is levied against all
or any
material part of the Pledged
Shares.
|
|
(d)
|
Enforceability
of Other Mortgages and Charges: Any mortgage, charge, lien,
security interest or other encumbrance affecting any real or personal
property of the Debtor becomes
enforceable.
|
|
(e)
|
Bankruptcy: The
institution of a proceeding in bankruptcy against the Debtor, whether
voluntarily or involuntarily, or the institution of proceedings by
the
Debtor to obtain relief against his
creditors.
|
|
(f)
|
Insecurity: The
Holder, acting reasonably, deems itself to be insecure with respect
to the
Security Interest.
|
ARTICLE 8
REMEDIES
UPON DEFAULT
8.1 Effect
of Default
If
any
event of default referred to in 7.1 occurs, the Security
Interest shall become immediately enforceable.
8.2 Remedies
If
the
Security Interest becomes enforceable, the provisions of Part V of the Act
shall
govern the rights, remedies and obligations of the parties in respect of the
default in question, except as otherwise provided in this
Article. Notwithstanding anything to the contrary contained in the
Act or in any other agreement between the parties, upon the Security Interest
becoming enforceable:
|
(a)
|
Acceleration: The
Holder may at its option declare that the whole or any part of any
indebtedness forming a part of the Obligations is immediately due
and
payable in full.
|
|
(b)
|
Foreclosure: At
its option the Holder may retain all or part of the Pledged Shares
in full
satisfaction of the Obligations.
|
ARTICLE 9
POWER
OF ATTORNEY
The
Debtor constitutes and appoints the Holder with full power of substitution,
as
the Debtor's true and lawful attorney-in-fact with full power and authority
in
the place of the Debtor and in the name of the Debtor or in its own name, from
time to time in the Holder's discretion after an Event of Default, to
take any and all appropriate action and to execute any and all documents and
instruments as, in the opinion of such attorney acting reasonably, may be
necessary or desirable to accomplish the purposes of this
agreement. These powers are coupled with an interest and are
irrevocable until this agreement is terminated and the Security Interest created
by this agreement are released. Nothing in this section affects the
right of the Holder as secured party, or any other person on the Holder's
behalf, to sign and file or deliver (as applicable) all such financing
statements, financing change statements, notices, verification agreements and
other documents relating to the Pledged Shares and this agreement as the Holder
or such other person considers appropriate.
ARTICLE 10
GENERAL
CONTRACT PROVISIONS
10.1 Remedies
Cumulative
All
remedies of the Holder at law and pursuant to the provisions of this agreement
shall be cumulative and not in the alternative.
10.2 Security
in Addition
The
Security Interest is in addition to and not in substitution for any other
security now or hereafter held by the Holder.
10.3 Performance
by the Holder
Upon
the
failure by the Debtor to perform any of his obligations under this agreement,
the Holder may, at its option, perform such obligations and the reasonable
expenses of the Holder in so doing shall be payable by the Debtor to the Holder,
upon demand.
10.4 Waiver
The
Holder may waive any default by the Debtor in the observance or the performance
of any of the Obligations or covenants under this agreement. No act
or omission of the Holder in respect of any default by the Debtor shall extend
to or be taken in any manner whatsoever to affect any subsequent default of
the
Debtor or the rights of the Holder resulting there from.
10.5 Extensions
of Time
In
the
event that the Security Interest becomes enforceable, the Holder may grant
extensions of time and other indulgences, take and give up securities, accept
compositions, grant releases and discharges, release any part of the Pledged
Shares to third parties and otherwise deal with any person as the Holder may
see
fit without prejudice to the liability of the Debtor or to the Holder's right
to
hold, realize and deal with the Pledged Shares.
10.6 Notices
All
notices required or permitted to be given hereunder or under the Act by one
party to the other shall be given in writing by personal delivery or by
registered mail, postage prepaid, addressed to such other party or delivered
to
such other party as follows:
|
(a)
|
to
the Debtor at:
|
Foundation
Venture Leasing Inc.
00
Xxxxxxxxxx Xxxxxx Xxxx, Xxxxx 0000
Xxxxxxx,
Xxxxxxx X0X 0X0
Fax: 416-941-8852
Attention: Xxxxxx
Xxxxxxx
|
(b)
|
to
the Holder at:
|
ETIFF
Holdings, LLC
000
Xxxxx
Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx,
Xxxxxxx X0X 0X0
Fax: 000-000-0000
Attention: Xxxxx
Xxxxxxx
or
at
such other address as may be given by one of them to the other in writing from
time to time. A notice given as aforesaid shall be deemed to have
been received when delivered or, if mailed, five (5) business days following
the
day of the mailing thereof; provided that if a notice shall have been mailed
and
if regular mail service shall be interrupted by strike or other irregularity
before the deemed receipt of such notice as aforesaid, such notice shall, unless
earlier actually received, be deemed to have been received five (5) business
days following the resumption of normal mail service.
10.7 Headings
The
division of this agreement into articles, sections and subsections and the
insertion of headings are for convenience of reference only and shall not affect
the construction or interpretation of this agreement. The article,
section and subsection headings in this agreement are not intended to be full
or
precise descriptions of the text to which they refer and are not to be
considered part of this agreement. All uses of the words "hereto",
"herein", "hereof", "hereby" and "hereunder" and similar expressions refer
to
this agreement and not to any particular section or portion of
it. References to an Article, Section or Subsection followed by a
number refer to the applicable article, section or subsection of this
agreement.
10.8 Number
and Gender
All
words
and personal pronouns relating thereto shall be read and construed as the number
and gender of the party or parties referred to in each case require and the
verb
shall be construed as agreeing with the required word and/or
pronoun.
10.9 Currency.
All
sums
of money which are referred to in this Agreement are expressed in lawful money
of the United States of America.
10.10 Further
Assurances
The
Debtor will from time to time, at the request of the Holder and at the expense
of the Debtor, make and do all such acts and things and execute and deliver
all
such agreements, mortgages, deeds and other documents and assurances as be
reasonably necessary or desirable to perfect and preserve the Security
Interest.
10.11 Governing
Law
This
agreement shall be governed by and construed in accordance with the laws of
the
Province of Ontario and the laws of Canada applicable therein.
10.12 Time
of the Essence
Time
shall be of the essence of this agreement.
10.13 Counterparts
This
agreement may be executed in several counterparts, each of which so executed
shall be deemed to be an original and such counterparts together shall
constitute one and the same agreement.
10.14 Binding
Effect
This
agreement shall enure to the benefit of and be binding upon the Debtor and
the
Holder and their respective heirs, executors, successors, assigns and legal
representatives.
10.15 Duplicate
Copy
The
Debtor acknowledges receipt of an executed copy of this agreement.
IN
WITNESS WHEREOF the parties hereto have duly executed this Agreement as
of the date first written above.
|
EIGER
TECHNOLOGY, INC.
|
||||
|
Per:
|
||||
|
Name:
Title:
|
||||
|
I
have the authority to bind the corporation.
|
||||
|
ETIFF
HOLDINGS, LLC
|
||||
|
Per:
|
||||
|
Name:
Title:
|
||||
|
I
have the authority to bind the corporation.
|
||||
|
FOUNDATION
VENTURE LEASING INC.
|
||||
|
Per:
|
||||
|
Name:
Title
|
||||
|
I
have the authority to bind the
corporation.
|
||||