PLEDGE AGREEMENT
This
PLEDGE AGREEMENT
(this
“Agreement”),
dated
as of September __, 2008, is made by Federal Sports & Entertainment, Inc.
(f/k/a Rite Time Mining, Inc.), a Nevada corporation (the “Company”),
each
person and entity listed as a pledgor on the signature pages hereto (each a
“Pledgor”),
and
each additional person, if any, who becomes a Pledgor pursuant to the
requirements of Section 3.18 of the Bridge Loan Agreement (defined below) (the
“Additional Pledgors”), in favor of Gottbetter & Partners, LLP, in its
capacity as collateral agent (in such capacity, the "Collateral
Agent")
for
the "Buyers"
(as
defined below), party to that certain Securities Purchase Agreement, dated
as of
September __, 2008 (the "Securities Purchase
Agreement").
WITNESSETH:
WHEREAS,
the
Company and each party listed as a “Buyer”
on
the
Schedule of Buyers attached to the Securities Purchase Agreement (collectively,
the “Buyers”)
are
parties to that Securities Purchase Agreement, pursuant to which the Company
shall be required to sell, and the Buyers shall purchase, the “Notes”
(as
defined therein); and
WHEREAS,
pursuant to that certain bridge loan agreement dated as of even date herewith
between the Company and Diamond Sports & Entertainment, Inc. (“FLB”), a
Delaware Corporation (the “Bridge Loan Agreement”), the Company has agreed to
lend the proceeds of the Notes to FLB (the “Bridge Loan”) to meet working
capital needs of FLB;
WHEREAS,
pursuant to the Bridge Loan Agreement, the Pledgors have agreed to pledge the
Pledged Shares (as defined in this Agreement) to the Buyers on the terms and
conditions set forth in this Agreement;
WHEREAS,
it is a
condition precedent to the Buyers purchasing the Notes that the Pledgors shall
have executed and delivered to the Collateral Agent for the benefit of itself
and the Buyers this Agreement to secure all of the Company’s obligations under
the Securities Purchase Agreement, the Notes issued pursuant thereto, as such
Notes may be amended, restated, replaced or otherwise modified from time to
time
in accordance with the terms thereof) and the other “Transaction Documents” (as
defined in the Securities Purchase Agreement, the “Transaction
Documents”),
on
such terms and conditions as are set forth herein; and
WHEREAS,
each
Pledgor has determined that the execution, delivery and performance of this
Agreement directly benefits, and is in the best interest of, such
Pledgor.
NOW,
THEREFORE,
in
consideration of the premises and the agreements herein and in order to induce
the Buyers to perform under the Securities Purchase Agreement, each Pledgor
agrees with the Collateral Agent as follows:
SECTION
1. Definitions
and Rules of Interpretation.
(a) Definitions.
Reference is made to the Securities Purchase Agreement and the Notes for a
statement of terms thereof. All terms used in this Agreement which are defined
in the Securities Purchase Agreement or the Notes or in Article 8 or Article
9
of the Uniform Commercial Code as in effect from time to time in the State
of
New York (the “Code”),
and
which are not otherwise defined herein shall have the same meanings herein
as
set forth therein; provided, that terms used herein which are defined in the
Code as in effect in the State of New York on the date hereof shall continue
to
have the same meaning notwithstanding any replacement or amendment of such
statute except as the Collateral Agent may otherwise determine. In the event
that any such term is defined in both the Securities Purchase Agreement or
the
Notes and the Code, the definition of such term in the Securities Purchase
Agreement or the Notes shall control.
(b) Rules
of Interpretation.
Except
as otherwise expressly provided in this Agreement, the following rules of
interpretation apply to this Agreement: (i) the singular includes the plural
and
the plural includes the singular; (ii) “or” and “any” are not exclusive and
“include” and “including” are not limiting; (iii) a reference to any agreement
or other contract includes permitted supplements and amendments; (iv) a
reference to a law includes any amendment or modification to such law and any
rules or regulations issued thereunder; (v) a reference to a person includes
its
permitted successors and assigns; and (vi) a reference in this Agreement to
an
Article, Section, Annex, Exhibit or Schedule is to the Article, Section, Annex,
Exhibit or Schedule of this Agreement.
SECTION
2. Pledge
and Grant of Security Interest.
(a) As
collateral security for all of the Obligations (as defined in Section 3 hereof),
each of the Pledgors hereby pledges and assigns and grants to the Collateral
Agent a continuing security interest in, and Lien on, all of such Pledgor’s
right, title and interest in and to the following (collectively, the
“Collateral”):
the
shares of capital stock FLB described in Schedule 1, which are represented
by
one or more stock certificates representing such equity interests, (including,
but not limited to, any stock dividend and any distribution in connection with
a
stock split) from time to time received, receivable or otherwise distributed
in
respect of any of the foregoing and all cash and noncash proceeds thereof,
and
any additional shares of capital stock of FLB that may be required to be added
to the Collateral pursuant to Section 3.18 of the Bridge Loan Agreement
(collectively, the “Pledged
Shares”).
SECTION
3. Security
for Obligations.
The
security interest created hereby in the Collateral constitutes continuing
collateral security for all of the following obligations, whether now existing
or hereafter incurred (the “Obligations”):
(a) the
payment by the Company, as and when due and payable (by scheduled maturity,
required prepayment, acceleration, demand or otherwise), of all amounts from
time to time owing by it in respect of the Securities Purchase Agreement, the
Notes and the other Transaction Documents, including, without limitation, (A)
all principal of and interest on the Notes (including, without limitation,
all
interest that accrues after the commencement of any bankruptcy proceeding of
the
Pledgors, whether or not the payment of such interest is unenforceable or is
not
allowable due to the existence of such bankruptcy proceeding), and (B) all
fees,
commissions, expense reimbursements, indemnifications and all other amounts
due
or to become due under any of the Transaction Documents, above, for so long
as
the Notes are outstanding; and
2
(b)
the due
performance and observance by each Pledgor of all of its other obligations
from
time to time existing in respect of any of the Transaction Documents for so
long
as the Notes are outstanding.
SECTION
4. Delivery
of the Collateral.
(a) All
certificates currently representing the Pledged Shares shall be delivered to
the
Collateral Agent on or prior to the execution and delivery of this Agreement.
All other promissory notes, certificates and instruments constituting Collateral
from time to time or required to be pledged to the Collateral Agent pursuant
to
the terms of this Agreement (the “Additional
Collateral”)
shall
be delivered to the Collateral Agent promptly upon receipt thereof by or on
behalf of any of the Pledgors. All such promissory notes, certificates and
instruments shall be held by the Collateral Agent pursuant hereto and shall
be
delivered in suitable form for transfer by delivery or shall be accompanied
by
duly executed instruments of transfer or assignment or undated stock powers
executed in blank (“Transfer
Materials”),
all
in form and substance reasonably satisfactory to the Collateral Agent. If any
Collateral consists of uncertificated securities, unless the immediately
following sentence is applicable thereto, the Pledgors shall cause the
Collateral Agent (or its designated custodian, nominee or other designee) to
become the registered holder thereof, or cause each issuer of such securities
to
agree that it will comply with instructions originated by the Collateral Agent
(or its designated custodian, nominee or other designee) with respect to such
securities without further consent by the Pledgors.
(b) If
any
Pledgor shall receive, by virtue of such Pledgor’s being or having been an owner
of any Collateral, any (i) stock certificate (including, without limitation,
any
certificate representing a stock dividend or distribution in connection with
any
increase or reduction of capital, reclassification, merger, consolidation,
sale
of assets, combination of shares, stock split, spin-off or split-off),
promissory note or other instrument, (ii) option or right, whether as an
addition to, substitution for, or in exchange for, any Collateral, or otherwise,
(iii) dividends payable in cash (except such dividends permitted to be retained
by such Pledgor pursuant to Section 7 hereof) or in securities or other property
or (iv) dividends, distributions, cash, instruments, investment property and
other property in connection with a partial or total liquidation or dissolution
or in connection with a reduction of capital, capital surplus or paid-in
surplus, such Pledgor shall receive such stock certificate, promissory note,
instrument, option, right, payment or distribution in trust for the benefit
of
the Collateral Agent, shall segregate it from such Pledgor’s other property and
shall deliver it forthwith to the Collateral Agent in the exact form received,
together with appropriate Transfer Materials, to be held by the Collateral
Agent
as Collateral and as further collateral security for the
Obligations.
SECTION
5. Representations
and Warranties of each Pledgor.
Each
Pledgor severally represents and warrants to the Pledgee (which representations
and warranties shall be deemed to continue to be made until all of the
Obligations have been paid in full and each Transaction Documents have been
irrevocably terminated) that:
3
(a) The
execution, delivery and performance by each Pledgor of this Agreement and the
pledge of the Collateral hereunder do not and will not result in any violation
of any agreement, indenture, instrument, license, judgment, decree, order,
law,
statute, ordinance or other governmental rule or regulation applicable to any
Pledgor;
(b)this
Agreement constitutes the legal, valid, and binding obligation of each Pledgor
enforceable against each Pledgor in accordance with its terms;
(c)(i)
all
Pledged Stock owned by each Pledgor is set forth on Schedule
A
hereto
and (ii) each Pledgor is the direct and beneficial owner of each share of the
Pledged Stock;
(d)all
of
the Pledged Shares have been duly authorized, validly issued and are fully
paid
and nonassessable;
(e)no
consent or approval of any person, corporation, governmental body, regulatory
authority or other entity, is or will be necessary for (i) the execution,
delivery and performance of this Agreement, (ii) the exercise by the Pledgee
of
any rights with respect to the Collateral or (iii) the pledge and assignment
of,
and the grant of a security interest in, the Collateral hereunder;
(f)there
are
no pending or, to the best of Pledgor’s knowledge, threatened actions or
proceedings before any court, judicial body, administrative agency or arbitrator
which may materially adversely affect the Collateral;
(g)each
Pledgor has the requisite power and authority to enter into this Agreement
and
to pledge and assign the Collateral to the Pledgee, for the ratable benefit
of
the Buyers, in accordance with the terms of this Agreement;
(h)each
Pledgor owns each item of the Collateral and, except for the pledge and security
interest granted to Pledgee, for the ratable benefit of the Buyers, hereunder,
the Collateral shall be, immediately following the closing of the transactions
contemplated by the Transaction Documents, free and clear of any other security
interest, mortgage, pledge, claim, lien, charge, hypothecation, assignment,
offset or encumbrance whatsoever;
(i)there
are
no restrictions on transfer of the Pledged Stock contained in the certificate
of
incorporation or by-laws (or equivalent organizational documents) of FLB or
otherwise which have not otherwise been enforceably and legally waived by the
necessary parties;
(j) none
of
the Pledged Shares has been issued or transferred in violation of the securities
registration, securities disclosure or similar laws of any jurisdiction to
which
such issuance or transfer may be subject; and
(k) The
Pledgor shall cause any and all Additional Pledgors to execute a signature
page
of, and thereby become a party to, this Agreement.
4
SECTION
6. Covenants
as to the Collateral.
So long
as any Obligations shall remain outstanding and the Securities Purchase
Agreement and the other Transaction Documents shall not have been terminated,
each Pledgor severally covenants that such Pledgor will, unless the Collateral
Agent shall otherwise consent in writing:
(a) at
such
Pledgor’s expense, defend the Collateral Agent’s right, title and security
interest in and to the Collateral against the claims of any Person;
(b) at
such
Pledgor’s expense, at any time and from time to time, promptly execute and
deliver all further instruments and documents and take all further action that
may be necessary or that the Collateral Agent may reasonably request in order
to
(i) perfect and protect, or maintain the perfection of, the security interest
and Lien purported to be created hereby, (ii) enable the Collateral Agent to
exercise and enforce its rights and remedies hereunder in respect of the
Collateral or (iii) otherwise effect the purposes of this Agreement, including,
without limitation, delivering to the Collateral Agent irrevocable proxies
in
respect of the Collateral registered in the name of such Pledgor, except for
Collateral which the Pledgor is entitled to vote under the terms of Section
7
hereof;
(c) not
sell,
assign, transfer, convey, or otherwise dispose of its rights in or to the
Collateral or any interest therein; nor will any Pledgor create, incur or permit
to exist any Lien whatsoever with respect to any of the Collateral or the
proceeds thereof other than that created hereby; and
(d) not
take
or fail to take any action which would in any manner impair the validity or
enforceability of the Collateral Agent’s security interest in and Lien on any
Collateral.
SECTION
7. Voting
Rights, Dividends, Etc. in Respect of the Collateral.
(a) So
long
as the Collateral Agent has not offered the Collateral for sale in accordance
with Section 8 hereof:
(i) each
Pledgor may exercise any and all voting and other consensual rights pertaining
to any Collateral;
(ii) the
Pledgors may receive and retain any and all dividends, interest or other
distributions paid in respect of the Collateral to the extent permitted by
the
Securities Purchase Agreement; provided,
however,
that
prior to the date by which the Pledged Shares are required to be returned to
the
registered holder thereof, any and all (A) dividends and interest paid or
payable other than in cash in respect of, and instruments (other than checks)
and other property received, receivable or otherwise distributed in respect
of
or in exchange for, any Collateral, (B) dividends and other distributions paid
or payable in cash in respect of any Collateral in connection with a partial
or
total liquidation or dissolution or in connection with a reduction of capital,
capital surplus or paid-in surplus, and (C) cash paid, payable or otherwise
distributed in redemption of, or in exchange for, any Collateral, together
with
any dividend, distribution, interest or other payment which at the time of
such
dividend, distribution, interest or other payment was not permitted by the
Securities Purchase Agreement, shall be, and shall forthwith be delivered to
the
Collateral Agent to hold as, Collateral and shall, if received by any of the
Pledgors, be received in trust for the benefit of the Collateral Agent, shall
be
segregated from the other property or funds of the Pledgors, and shall be
forthwith delivered to the Collateral Agent in the exact form received with
any
Transfer Materials, to be held by the Collateral Agent as Collateral and as
further collateral security for the Obligations; and
5
(iii) the
Collateral Agent will execute and deliver (or cause to be executed and
delivered) to a Pledgor all such proxies and other instruments as such Pledgor
may reasonably request for the purpose of enabling such Pledgor to exercise
the
voting and other rights which it is entitled to exercise pursuant to paragraph
(i) of this Section 7(a) and to receive the dividends, distributions, interest
and other payments which it is authorized to receive and retain pursuant to
paragraph (ii) of this Section 7(a), in each case, to the extent that the
Collateral Agent has possession of such Collateral.
(b) So
long
as the Collateral Agent is entitled to hold the Collateral and has not offered
the Collateral for sale in accordance with Section 10 hereof:
(i) all
rights of each Pledgor to exercise the voting and other consensual rights which
it would otherwise be entitled to exercise pursuant to paragraph (i) of
subsection (a) of this Section 7, and to receive the dividends, distributions,
interest and other payments which it would otherwise be authorized to receive
and retain pursuant to paragraph (ii) of subsection (a) of this Section 7,
shall
cease, and all such rights shall thereupon become vested in the Collateral
Agent
which shall thereupon have the sole right to exercise such voting and other
consensual rights and to receive and hold as Collateral such dividends,
distributions, interest and other payments;
(ii) without
limiting the generality of the foregoing, the Collateral Agent may, at its
option, exercise any and all rights of conversion, exchange, subscription or
any
other rights, privileges or options pertaining to any of the Collateral as
if it
were the absolute owner thereof, including, without limitation, the right to
exchange, in its discretion, any and all of the Collateral upon the merger,
consolidation, reorganization, recapitalization or other adjustment of any
issuer of the Collateral or upon the exercise by any issuer of the Collateral
of
any right, privilege or option pertaining to any Collateral, and, in connection
therewith, to deposit and deliver any and all of the Collateral with any
committee, depository, transfer collateral agent, registrar or other designated
collateral agent upon such terms and conditions as it may determine;
and
(iii) all
dividends, distributions, interest and other payments which are received by
any
Pledgor contrary to the provisions of paragraph (i) of this Section 7(b) shall
be received in trust for the benefit of the Collateral Agent, shall be
segregated from other funds of such Pledgor, and shall be forthwith paid over
to
the Collateral Agent as Collateral in the exact form received with any necessary
endorsement and/or appropriate stock powers duly executed in blank, to be held
by the Collateral Agent as Collateral and as further collateral security for
the
Obligations.
6
SECTION
8. Additional
Provisions Concerning the Collateral.
(a) Each
Pledgor hereby (i) authorizes the Collateral Agent to file one or more financing
or continuation statements, and amendments thereto, relating to the Collateral,
without the signature of such Pledgor where permitted by law, (ii) ratifies
such
authorization to the extent that the Collateral Agent has filed any such
financing or continuation statements, or amendments thereto, without the
signature of such Pledgor prior to the date hereof and (iii) authorizes the
Collateral Agent to execute any agreements, instruments or other documents
in
such Pledgor’s name and to file such agreements, instruments or other documents
that perfect, protect or enforce the security interest and Lien of the
Collateral Agent in the Collateral or as provided under Article 8 or Article
9
of the UCC in any appropriate filing office.
(b) Each
Pledgor hereby irrevocably appoints the Collateral Agent as its attorney-in-fact
and proxy, with full authority in the place and stead and in its name or
otherwise, from time to time in the Collateral Agent’s discretion to take any
action and to execute any instrument which the Collateral Agent may deem
necessary or advisable to accomplish the purposes of this Agreement (subject
to
the rights of such Pledgor under Section
7(a)
hereof),
including, without limitation, to receive, indorse and collect all instruments
made payable to such Pledgor representing any dividend, interest payment or
other distribution in respect of any Collateral and to give full discharge
for
the same. This power is coupled with an interest and is irrevocable until the
termination of this Agreement in accordance with Section 14(e)
hereof.
(c) If
any
Pledgor fails to perform any agreement or obligation contained herein, the
Collateral Agent itself may perform, or cause performance of, such agreement
or
obligation, and the expenses of the Collateral Agent incurred in connection
therewith shall be paid by the Company and shall be secured by the
Collateral.
(d) Other
than the exercise of reasonable care to assure the safe custody of the
Collateral while held hereunder, the Collateral Agent shall have no duty or
liability to preserve rights pertaining thereto and shall be relieved of all
responsibility for the Collateral upon surrendering it or tendering surrender
of
it to the respective Pledgors. The Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral
in
its possession if the Collateral is accorded treatment substantially equal
to
that which the Collateral Agent accords its own property, it being understood
that the Collateral Agent shall not have responsibility for (i) ascertaining
or
taking action with respect to calls, conversions, exchanges, maturities, tenders
or other matters relating to any Collateral, whether or not the Collateral
Agent
has or is deemed to have knowledge of such matters, or (ii) taking any necessary
steps to preserve rights against any parties with respect to any
Collateral.
(e) The
powers conferred on the Collateral Agent hereunder are solely to protect its
interest in the Collateral and shall not impose any duty upon it to exercise
any
such powers. Except for the safe custody of any Collateral in its possession
and
the accounting for monies actually received by it hereunder, the Collateral
Agent shall have no duty as to any Collateral or as to the taking of any
necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral.
7
(f) Upon
the
occurrence and during the continuation of any Default or Event of Default,
the
Collateral Agent may at any time in its discretion (i) without notice to the
Pledgors, transfer or register in the name of the Collateral Agent or any of
its
nominees any or all of the Collateral, subject only to the revocable rights
of
the Pledgors under Section 7(a) hereof, and (ii) exchange certificates or
instruments constituting Collateral for certificates or instruments of smaller
or larger denominations.
SECTION
9. Remedies
Upon Default.
If any
Event of Default shall have occurred and be continuing:
(a) The
Collateral Agent shall deliver to the Buyers their respective pro rata portion
of the Pledged Materials held by the Collateral Agent hereunder, whereupon
the
Buyers may exercise all rights and remedies of a secured party with respect
to
such property as may be available under the Uniform Commercial Code as in effect
in the State of New York, including but not limited to selling the Collateral
or
any part thereof in one or more parcels at public or private sale, at any
exchange or broker’s board or elsewhere, at such price or prices and on such
other terms as the Buyers may deem commercially reasonable. The Pledgors agree
that, to the extent notice of sale shall be required by law, at least ten (10)
days’ notice to any of the Pledgors of the time and place of any public sale or
the time after which any private sale is to be made shall constitute reasonable
notification. The Buyers shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Buyers may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefore, and such sale may, without further notice, be made at the
time
and place to which it was so adjourned.
(b) Each
Pledgor recognizes that it may be impracticable to effect a public sale of
all
or any part of the Pledged Shares or any other securities constituting
Collateral and that the Buyers may, therefore, determine to make one or more
private sales of any such securities to a restricted group of purchasers who
will be obligated to agree, among other things, to acquire such securities
for
its own account, for investment and not with a view to the distribution or
resale thereof. Each Pledgor acknowledges that any such private sale may be
at
prices and on terms less favorable to the seller than the prices and other
terms
which might have been obtained at a public sale and, notwithstanding the
foregoing, agrees that such private sales shall be deemed to have been made
in a
commercially reasonable manner and that the Buyers shall have no obligation
to
delay sale of any such securities for the period of time necessary to permit
the
issuer of such securities to register such securities for public sale under
the
Securities Act of 1933, as amended (the “Securities
Act”).
Each
Pledgor further acknowledges and agrees that any offer to sell such securities
which has been (i) publicly advertised on a bona fide basis in a newspaper
or
other publication of general circulation in the financial community of New
York,
New York (to the extent that such an offer may be so advertised without prior
registration under the Securities Act) or (ii) made privately in the manner
described above to not less than fifteen (15) bona fide offerees shall be deemed
to involve a “public disposition” for the purposes of Section 9-610 of the Code
(or any successor or similar, applicable statutory provision) as then in effect
in the State of New York, notwithstanding that such sale may not constitute
a
“public offering” under the Securities Act, and that the Collateral Agent may,
in such event, bid for the purchase of such securities.
8
(c) Any
cash
held by the Collateral Agent as Collateral and all cash proceeds received by
the
Collateral Agent in respect of any sale of, collection from, or other
realization upon, all or any part of the Collateral shall be applied (after
payment of any amounts payable to the Collateral Agent pursuant to Section
10
hereof) by the Collateral Agent against, all or any part of the Obligations
in
such order as the Collateral Agent shall elect consistent with the provisions
of
the Securities Purchase Agreement.
(d) In
the
event that the proceeds of any such sale, collection or realization are
insufficient to pay all amounts to which the Buyers are legally entitled, the
Company shall be liable for the deficiency, together with interest thereon
at
the highest rate specified in the Notes for interest on overdue principal
thereof or such other rate as shall be fixed by applicable law, together with
the costs of collection and the reasonable fees, costs and expenses of any
attorneys employed by the Collateral Agent to collect such
deficiency.
(e) In
the
event that the proceeds of any such sale, collection, or realization are more
than sufficient to pay all amounts to which the Buyers are legally entitled,
the
remainder of such proceeds together with any remaining Pledged Shares and
Subsequent Pledged Shares shall be returned to the Pledgors in accordance with
the terms hereof.
SECTION
10. Indemnity
and Expenses.
(a) The
Company hereby agrees to indemnify and hold the Pledgors and the Collateral
Agent (and all of its officers, directors, employees, attorneys, and
consultants) harmless from and against any and all claims, damages, losses,
liabilities, obligations, penalties, fees, costs and expenses (including,
without limitation, reasonable legal fees and disbursements of counsel) to
the
extent that they arise out of or otherwise result from this Agreement
(including, without limitation, enforcement of this Agreement), except such
claims, damages, losses, liabilities, obligations, penalties, fees, costs and
expenses resulting from such Person’s gross negligence or willful misconduct as
determined by a court of competent jurisdiction.
(b) The
Company shall be obligated for, and will upon demand pay to the Pledgors and
the
Collateral Agent the reasonable amount of any and all out-of-pocket costs and
expenses, including the reasonable fees and disbursements of the Collateral
Agent’s counsel and of any experts which the Collateral Agent may incur in
connection with (i) the preparation, negotiation, execution, delivery,
recordation, administration, amendment, waiver or other modification or
termination of this Agreement, (ii) the custody, preservation, use or operation
of, or the sale of, collection from, or other realization upon, any Collateral,
(iii) the exercise or enforcement of any of the rights of the Collateral Agent
hereunder, or (iv) the failure by any Pledgor to perform or observe any of
the
provisions hereof.
SECTION
11. Notices,
Etc.
All
notices and other communications provided for hereunder shall be in writing
and
shall be mailed (by certified mail, postage prepaid and return receipt
requested), sent by Federal Express or other recognized courier service (return
receipt requested), telecopied or delivered by hand, if to any Pledgor, to
it at
the address specified for the Company in the Securities Purchase Agreement
or if
to the Collateral Agent, to it at the address specified in the Securities
Purchase Agreement or, if not a party to the Securities Purchase Agreement
as
follows:
9
|
If
to the Company:
|
Federal
Sports & Entertainment, Inc.
|
00000
Xxxxxx Xxxxxx, #000
Xxxxx,
Xxxxxxxxxx
Attention:
Chief Executive Officer
|
With
a copy to:
|
Gottbetter
& Partners, LLP
|
000
Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx,
XX 00000
Attention:
Xxxx X. Xxxxxxxxxx, Esq.
Telephone:
000.000.0000
Facsimile:
212.400.6901
|
If
to Pledgors, to:
|
Xxxxx
Xxxxx
|
Diamond
Sports & Entertainment, Inc.
0000
Xxxxxx Xxx, Xxx. 000
Xxxxxx,
XX 00000
|
If
to the Collateral Agent, to:
|
Gottbetter
Capital Finance, LLP
|
000
Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx,
XX 00000
Attention:
Xxxx X. Xxxxxxxxxx, Esq.
Telephone:
000-000-0000
Facsimile:
000-000-0000
or
as to
either such Person at such other address as shall be designated by such Person
in a written notice to such other Person complying as to delivery with the
terms
of this Section
11.
All
such notices and other communications shall be effective (i) if sent by
certified mail, postage prepaid, return receipt requested, when received or
three (3) Business Days after mailing, whichever first occurs, (ii) if
telecopied, when transmitted and confirmation is received, provided
same is
on a Business Day and, if not, on the next Business Day or (iii) if delivered
by
hand or sent by Federal Express or other recognized courier service (return
receipt requested), upon delivery, provided
same is
on a Business Day and, if not, on the next Business Day.
SECTION
12. Security
Interest Absolute.
All
rights of the Collateral Agent, all Liens and all obligations of each of the
Pledgors hereunder shall be absolute and unconditional irrespective of: (i)
any
lack of validity or enforceability of the Securities Purchase Agreement or
any
other Transaction Document, (ii) any change in the time, manner or place of
payment of, or in any other term in respect of, all or any of the Obligations,
or any other amendment or waiver of or consent to any departure from the
Securities Purchase Agreement or any other Transaction Document, (iii) any
exchange or release of, or non-perfection of any Lien on any Collateral, or
any
release or amendment or waiver of or consent to departure from any guaranty,
for
all or any of the Obligations, or (iv) any other circumstance which might
otherwise constitute a defense available to, or a discharge of, any of the
Pledgors in respect of the Obligations (other than the payment in full of the
Obligations). All authorizations and agencies contained herein with respect
to
any of the Collateral are irrevocable and powers coupled with an
interest.
10
SECTION
13. Conflict
Waiver.
The
Pledgors hereby acknowledge that the Collateral Agent is counsel to the Company
in connection with the transactions contemplated and referred to herein. The
Pledgors agree that in the event of any dispute arising in connection with
this
Agreement or otherwise in connection with any transaction or agreement
contemplated and referred herein, the Collateral Agent shall be permitted to
continue to represent the Company, and the Pledgors will not seek to disqualify
such counsel and waive any objection the Pledgors might have with respect to
the
Collateral Agent acting as the Collateral Agent pursuant to this
Agreement.
SECTION
14. Miscellaneous.
(a) No
amendment of any provision of this Agreement shall be effective unless it is
in
writing and signed by each Pledgor and the Collateral Agent, and no waiver
of
any provision of this Agreement, and no consent to any departure by the Pledgors
therefrom, shall be effective unless it is in writing and signed by the
Collateral Agent, and then such waiver or consent shall be effective only in
the
specific instance and for the specific purpose for which given.
(b) No
failure on the part of the Collateral Agent to exercise, and no delay in
exercising, any right hereunder or under any other Transaction Document shall
operate as a waiver hereof or thereof; nor shall any single or partial exercise
of any such right preclude any other or further exercise hereof or thereof
or
the exercise of any other right. The rights and remedies of the Collateral
Agent
provided herein and in the other Transaction Documents are cumulative and are
in
addition to, and not exclusive of, any rights or remedies provided by law.
The
rights of the Collateral Agent under any Transaction Document against any party
thereto are not conditional or contingent on any attempt by the Collateral
Agent
to exercise any of its rights under any other Transaction Document against
such
party or against any other Person.
(c) Any
provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining portions
hereof or affecting the validity or enforceability of such provision in any
other jurisdiction.
(d) This
Agreement shall create a continuing security interest in and Lien on the
Collateral and shall (i) remain in full force and effect until the termination
of this Agreement in accordance with Section 14 (e) hereof and (ii) be binding
on the Pledgors and their respective successors and assigns and shall inure,
together with all rights and remedies of the Collateral Agent, to the benefit
of
the Collateral Agent and its successors, transferees and assigns. Without
limiting the generality of clause (ii) of the immediately preceding sentence,
the Collateral Agent may assign or otherwise transfer its rights and obligations
under this Agreement and any other Transaction Document to any other Person
pursuant to the terms of the Securities Purchase Agreement, and such other
Person shall thereupon become vested with all of the benefits in respect thereof
granted to the Collateral Agent herein or otherwise. Upon any such assignment
or
transfer, all references in this Agreement to the Collateral Agent shall mean
the assignee of the Collateral Agent. None of the rights or obligations of
any
of the Pledgors hereunder may be assigned or otherwise transferred without
the
prior written consent of the Collateral Agent, and any such assignment or
transfer shall be null and void.
11
(e) Notwithstanding
anything to the contrary in this Agreement, (i) this Agreement (along with
all
powers of attorney granted hereunder) and the security interests and Lien
created hereby shall terminate and all rights to the Collateral shall revert
to
the Pledgors upon the repayment in full of all indebtedness obligations owed
by
the Company to the Buyers under the Notes (including, without limitation, all
principal, interest, if any, and fees related to the Notes), and (ii) the
Collateral Agent will, upon each Pledgor’s request and at each such Pledgor’s
expense, (A) return to such Pledgor such of the Collateral (to the extent
delivered to the Collateral Agent) as shall not have been sold or otherwise
disposed of or applied pursuant to the terms hereof, and (B) execute and deliver
to such Pledgor, without recourse, representation or warranty, such documents
as
such Pledgor shall reasonably request to evidence such termination.
(f) The
internal laws, and not the laws of conflicts, of New York shall govern the
enforceability and validity of this Agreement, the construction of its terms
and
the interpretation of the rights and duties of the parties, except as required
by mandatory provisions of law and except to the extent that the validity and
perfection or the perfection and the effect of perfection or non-perfection
of
the security interest and Lien created hereby, or remedies hereunder, in respect
of any particular Collateral are governed by the law of a jurisdiction other
than the State of New York.
(g) Each
party to this Agreement hereby irrevocably and unconditionally submits, for
itself and its property, to the exclusive jurisdiction of the United States
District Court for the Southern District of New York sitting in Manhattan or
the
Commercial Division, Civil Branch of the Supreme Court of the State of New
York
sitting in New York County in connection with any suit, action or proceeding
directly or indirectly arising out of, under or in connection with this
Agreement or the other Transaction Documents or the transactions contemplated
hereby or thereby. No party to this Agreement may move to (i) transfer any
such
suit, action or proceeding brought in such New York court or federal court
to
another jurisdiction, (ii) consolidate any such suit, action or proceeding
brought in such New York court or federal court with a suit, action or
proceeding in another jurisdiction or (iii) dismiss any such suit, action or
proceeding brought in such New York court or federal court for the purpose
of
bringing the same in another jurisdiction. Each party to this Agreement agrees
that a final judgment in any such suit, action or proceeding shall be conclusive
and may be enforced in any other jurisdiction by suit on the judgment or in
any
other manner provided by law. Each party to this Agreement hereby irrevocably
and unconditionally waives, to the fullest extent it may legally and effectively
do so, any objection which it may now or hereafter have to the laying of venue
of any suit, action or proceeding arising out of or relating to this Agreement
or the other Transaction Documents, in any New York court sitting in the County
of New York or any federal court sitting in the Southern District of New
York.
12
(h) Each
Pledgor irrevocably consents to the service of process of any of the aforesaid
courts in any such action, suit or proceeding by the mailing of copies thereof
by registered or certified mail (or any substantially similar form of mail),
postage prepaid, to such Pledgor at its address provided herein, such service
to
become effective when received or 10 days after such mailing, whichever first
occurs.
(i) Nothing
contained herein shall affect the right of the Collateral Agent to serve process
in any other manner permitted by law or commence legal proceedings or otherwise
proceed against any Pledgor or any property of any Pledgor in any other
jurisdiction.
(j) Each
Pledgor irrevocably and unconditionally waives any right it may have to claim
or
recover in any legal action, suit or proceeding referred to in this Section
any
special, exemplary, punitive or consequential damages.
(k) EACH
PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR OTHER TRANSACTION DOCUMENTS.
(l) The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof. The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.
(m) This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which shall be deemed to be an
original, but all of which taken together shall constitute one and the same
agreement. The parties agree that Buyers are third party beneficiaries to this
Agreement.
(n) All
of
the obligations of the Pledgors hereunder are joint and several. The Collateral
Agent may, in its sole and absolute discretion, enforce the provisions hereof
against any of the Pledgors and shall not be required to proceed against all
Pledgors jointly or seek payment from the Pledgors ratably. In addition, the
Collateral Agent may, in its sole and absolute discretion, select the Collateral
of any one or more of the Pledgors for sale or application to the Obligations,
without regard to the ownership of such Collateral, and shall not be required
to
make such selection ratably from the Collateral owned by all of the Pledgors.
The release or discharge of any Pledgor by the Collateral Agent shall not
release or discharge any other Pledgor from the obligations of such Person
hereunder.
[SIGNATURE
PAGE FOLLOWS]
13
IN
WITNESS WHEREOF, each Pledgor has caused this Agreement to be executed and
delivered by its officer thereunto duly authorized, as of the date first above
written.
|
FEDERAL
SPORTS & ENTERTAINMENT, INC.
|
|
|
By:
___________________________________
|
|
|
Name:
Xxxxx Xxxxxxx
|
|
|
Title:
President
|
|
|
PLEDGORS:
|
|
| _______________________________________ | |
|
Xxxxx
Xxxxx
|
|
| _______________________________________ | |
|
Xxxx
Xxxxx
|
|
| _______________________________________ | |
|
Xxxxx
Xxxxxxx
|
ACCEPTED
BY:
GOTTBETTER
& PARTNERS, LLP
as
Collateral Agent
By:
___________________________
Name:
Xxxx X. Xxxxxxxxxx
Title:
Managing Partner
[SIGNATURE
PAGE TO PLEDGE AGREEMENT]
14
SCHEDULE
1 TO PLEDGE AGREEMENT
Pledged
Shares
|
Pledgor
|
Number
of Shares
|
Class
|
Certificate
No.(s)
|
|||
|
Xxxxx
Xxxxx
|
333,334
|
Common
Stock
|
18
|
|||
|
143,324
|
Common
Stock
|
19
|
||||
|
20,000
|
Common
Stock
|
*
|
||||
|
Xxxx
Xxxxx
|
333,333
|
Common
Stock
|
20
|
|||
|
68,719
|
Common
Stock
|
21
|
||||
|
Xxxxx
Xxxxxxx
|
187,670
|
Series
A Preferred Stock
|
PA-37
|
|||
|
223,833
|
Series
A Preferred Stock
|
PA-38
|
||||
|
18,921
|
Series
C Preferred Stock
|
*
|
||||
|
145,663
|
Common
Stock
|
22
|
*
A
certificate for these shares will be provided to Collateral Agent as soon as
it
becomes available.
15
