OPTION AGREEMENT
(the
"Agreement")
THIS
AGREEMENT is effective as of the 8th day
of January, 2008.
BETWEEN:
ETIFF
HOLDINGS,
LLC., a corporation governed under the laws of the State of
Delaware,
(the
"Optionor"),
-
and
-
FOUNDATION
VENTURE LEASING INC., in Trust, a corporation governed under the laws of
the Province of Ontario,
(the "Optionee"),
-
and
-
RACINO ROYALE, INC., a corporation organized under the laws of the State
of Nevada (the "Corporation")
RECITALS:
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A.
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The
Optionor is the legal and beneficial owner of fourteen million twenty-one
thousand, six hundred (14,021,600) shares of common stock (the "Shares")
of the Corporation;
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B.
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The
Optionor has agreed to sell and the Optionee has agreed to purchase
2,620,000 of the Shares in accordance with a share purchase agreement
between the Optionor and the Optionee dated December 7, 2007 (the
"Share
Purchase
Agreement");
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C.
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The
Share Purchase Agreement contemplates that the Optionor grants the
Option
to the Optionee in accordance with the terms hereof.
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THIS
AGREEMENT
WITNESSES that in consideration of the sum of one dollar ($1.00) and
other good and valuable consideration (the receipt and sufficiency of which
is
hereby acknowledged by the Optionor), it is agreed by and between the parties
hereto as follows:
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1.
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In
this Agreement, unless there is something in the subject matter or
context
inconsistent therewith, the following terms shall have the meanings
set
out below.
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"Business
Day"
means a day, other than a Saturday or Sunday, on which banks in Toronto, Ontario
are generally open for business;
"Exercise
Price" means those option exercise prices itemized in Section 3 hereto.
- 2 -
"Share"
or
"Shares"
shall
mean, as the case may be, one or more common shares in the capital of the
Corporation owned by the Optionor as constituted at the date of this
Agreement.
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2.
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The
Optionor hereby gives and grants to the
Optionee, subject to the terms and conditions hereinafter set out,
an
irrevocable option (the "Option")
to purchase up to an aggregate of 2,620,000 Shares (the "Optioned
Shares") (subject to adjustment in accordance with Section
7 below)
from
the Vendor at the exercise price per Optioned Share as set out in
Section
3 below.
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3.
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4.
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The
Optionee shall have the right to exercise the Option, with respect
to all
or any part of the Optioned Shares, at any time prior to 5:00 p.m.
Toronto
time on the Termination Date (as hereinafter defined). To exercise
the
Option or any part of the Option, the Optionee shall deliver to the
Optionor, at its head office, a written notice of exercise predominately
in the form attached hereto as Schedule
"A", specifying the number of Option Shares with respect to which
the Option is being exercised, accompanied by a certified cheque
or bank
draft for the amount equal to the product of the Exercise Price and
the
number of Option Shares with respect to which the Option is being
exercised. Upon any such exercise of the Option, the Optionor
shall, as soon as reasonably practical, deliver to the Optionee a
certificate or certificates registered in the name of the Optionee
representing in the aggregate the number of Option Shares in respect
of
which the Option was exercised. The Optionee, its legal
representatives, legatees or distributees shall not be, and shall
be
deemed not to be, a holder of any Option Shares subject to this Option,
unless and until the certificate(s) representing such Option Shares
is
issued and delivered to the Optionee pursuant to this Agreement.
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5.
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At
5:00 p.m. Toronto time September 1, 2008 (the "Termination
Date"), the Option shall expire and terminate as to such of the
Optioned Shares in respect of which the Option has not then been
exercised.
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6.
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Nothing
herein contained or done pursuant hereto shall obligate the Optionee
to
purchase and/or pay for or the Optionor to issue any Optioned Shares
except those Optioned Shares in respect of which the Optionee shall
have
exercised the Option in the manner hereinbefore provided.
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7.
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If
the outstanding Shares are increased, decreased, changed into or
exchanged
for a different number or kind of shares of securities of the Corporation
through re-organization, merger, re-capitalization, re-classification,
stock dividend, subdivision or consolidation, an appropriate and
proportionate adjustment shall be made by the board of directors
of the
Optionor in its discretion in the number or kind of shares optioned
and
the
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-
3
-
exercise
price per share, as regards any unexercised
portion of the Option. In the event of any consolidation or change of
the Shares of the Corporation at any time prior to a Termination Date into
a
lesser number of shares, the number of shares deliverable by the Optionor on
any
exercise thereafter of the Option shall be reduced to such number of shares
as
would have resulted from such consolidation or change if such exercise of the
Option had been prior to the date of such consolidation or change. In
the event of any reclassification of the Shares of the Corporation at any time
prior to a Termination Date, the number and class of shares deliverable by
the
Optionor on any exercise thereafter of the Option shall be the number and class
of shares as would have resulted from such reclassification if the Option had
been exercised prior to the date of such
reclassification. Adjustments under this Section 7 shall
be made by Optionor with respect to the
Option Shares in the same manner as the adjustments made by the board of
directors of the Corporation with respect to the Shares. No
fractional Option Share or other security shall be required to be issued under
this Option or pursuant to any adjustment contemplated in this
section.
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8.
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The
Optionor represents that the Optioned Shares are duly issued and
outstanding as fully paid and non-assessable common shares of the
Corporation. The Optionor covenants that it has duly reserved, set
aside
and conditionally allotted the Optioned Shares to and in favour of
the
Optionee, its successors and assigns, for transfer upon exercise
of the
Option.
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9.
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All
notices given hereunder must be in writing and may be delivered by
personal delivery or by pre-paid, registered or certified mail, or
by
telecopier or facsimile transmission to the following address or
to such
other address or addresses as a party hereto may advise the other
party in
writing from time to time and shall be deemed received three days
after
mailing by registered or certified mail, and on the day on which
it was
personally delivered or on which it was transmitted by telecopier
or
facsimile if such a day is a Business Day and if delivered or transmitted
prior to 5:00 pm on such Business Day, otherwise it shall be deemed
to
have been received on the next Business Day following such personal
delivery or transmission:
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if
to the
Optionor:
ETIFF
Holdings, LLC
000
Xxxxx
Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx,
Xxxxxxx X0X 0X0
Fax:
905-833-9847
Attention:
Xxxxx Xxxxxxx
- 4 -
if
to the
Optionee:
Foundation
Venture Leasing Inc., in Trust
00
Xxxxxxxxxx Xxxxxx Xxxx, Xxxxx 0000
Xxxxxxx,
Xxxxxxx X0X 0X0
Fax: 416-941-8852
Attention:
Xxxxxx Xxxxxxx
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10.
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Time
shall be of the essence of this Agreement.
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11.
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This
Agreement may be signed in counterparts and each such counterpart
shall
constitute an original document and such counterparts, taken together,
shall constitute one and the same instrument.
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12.
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This
Agreement shall enure to the benefit of and be binding upon the successors
and assigns of the parties hereto. All benefits, rights and options
accruing to the Optionee in accordance with the terms and conditions
of
this Option shall be transferable or assignable by the Optionee upon
compliance with all applicable securities laws.
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13.
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This
Agreement shall be construed under and governed by the internal laws
of
the province of Ontario without regard to its conflict of laws provisions.
The parties hereto submit and attorn to the exclusive jurisdiction
of the
courts of the province of Ontario and irrevocably agree that any
action
commenced by any party shall be in Xxxxxxx, Xxxxxxx.
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SIGNATURE
PAGE TO FOLLOW
- 5 -
IN
WITNESS WHEREOFthis
agreement has been
executed by the parties hereto.
ETIFF
HOLDINGS, LLC.
Per:
Name:
Name:
Title:
I
have
the authority to bind the corporation.
FOUNDATION
VENTURE LEASING INC., in Trust
Per:
Name:
Title:
I
have
the authority to bind the corporation.
RACINO
ROYALE, INC.
Per:
Name:
Title:
I
have
the authority to bind the corporation.
SCHEDULE
"A"
EXERCISE
FORM
TO:
ETIFF HOLDINGS, LLC
The
undersigned Holder of the Option hereby purchases _______ Common Shares in
the
capital of Racino Royale, Inc. and hereby makes payment of the purchase price
for the said number of Common Shares.
The
undersigned hereby directs that the Common Shares hereby purchased be issued
and
delivered as follows:
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Name
in Full
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Address
in Full
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Number
of Shares
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(Please
state full names in which share certificates are to be issued, stating whether
Mr., Mrs., Ms. or Miss.)
DATED
the
________ day of ______________________, 20____.
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Holder’s
Name (please print)
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Authorized
Signature
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