Exhibit 10.1
 

 
LOAN AGREEMENT
 
THIS LOAN AGREEMENT (this “Agreement”) is hereby made and entered into as of
February 11, 2014 (the “Effective Date”), by and between REMARK MEDIA, INC., a
Delaware corporation (“Lender”) and BOMBO SPORTS & ENTERTAINMENT, LLC, a New
York limited liability company (“Borrower”).
 
PRELIMINARY STATEMENT
 
A.              Borrower has requested that Lender loan to Borrower the sum of
One Million Dollars and No/100 Cents ($1,000,000) for business purposes
acceptable to Lender.
 
B.              Lender has agreed to make such loan on and subject to the terms
and conditions set forth in this Agreement and the other Loan Documents (as
hereinafter defined).
 
AGREEMENT
 
In consideration of the foregoing, the mutual covenants and agreements set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Lender and Borrower agree as
follows:
 
SECTION 1
AMOUNT AND TERMS OF THE LOAN

1.01           Loan.  Subject to and upon the terms and conditions set forth
herein, including, without limitation, the conditions precedent set forth in
Section 3.01 hereof, Lender agrees to loan to Borrower the amount of One Million
Dollars and No/100 Cents ($1,000,000) (the “Loan”) and Borrower hereby agrees to
accept the Loan.

1.02           Promissory Note.  The Loan shall be evidenced by, and, subject to
Section 2, repaid, with interest in accordance with, that certain Demand
Promissory Note (the “Note”), in the form and having the substance of that
attached hereto as Exhibit A.
 
1.03           Use of Loan Proceeds.  Borrower covenants and agrees to use the
Loan for the purpose set forth in Recital A above.  Notwithstanding anything set
forth in this Agreement to the contrary, Borrower sole use for the proceeds from
the Loan shall to pay $500,000 each to Nicholas Lewin and Nicholas Cutler, which
payments represent debts due and owing to each of Messrs. Lewin and Cutler from
the Borrower or Potter (defined below) personally.  It is agreed and understood
that the $500,000 payment to each individual may not equal to total obligation
due and owing thereunder as of the Effective Date.
 
1.04           Collateralization.  The Loan and the obligations of Borrower
under this Agreement, the Note and the other Loan Documents (as hereinafter
defined) shall be secured by (i) a Membership Interest Pledge Agreement (the
“Pledge Agreement”), in the form attached hereto as Exhibit B, pursuant to which
Robert S. Potter (“Potter”), the current Manager of the Borrower and an owner of
a 86% membership interest of the Borrower will pledge all of his right, title
and interest in and to Borrower (the “Membership Interest”) to Lender; (ii) a
pledge of the all of the assets of the Borrower pursuant to a UCC Financing
Statement which statement shall be filed with applicable governmental offices in
the State of New York in the form attached hereto as Exhibit C (the “UCC
Financing Statement”); and (iii) such other assignments, pledges and other
instruments as may be executed and delivered in connection with the Loan
(collectively, together with this Agreement, the Note, the Pledge Agreement, and
the UCC Financing Statement, the “Loan Documents”).  Borrower shall deliver to
Lender the executed UCC Financing Statement prior to the Effective Date so the
Lender can record such document as of the Effective Date.
 
 
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SECTION 2
CONDITIONS PRECEDENT; CLOSING

3.01           Conditions Precedent to Loan.  Lender’s obligation to make the
Loan is subject to the satisfaction of the following conditions precedent:

(a)           Lender shall have received each of the Loan Documents duly
executed by Borrower, in form and substance satisfactory to Lender and its
counsel;
 
(b)           Lender shall have received a copy of Borrower’s Articles of
Organization filed with the New York Secretary of State (the “Articles”) and a
copy of Borrower’s fully executed Operating Agreement (the “Operating
Agreement”);
 
(c)           Evidence that the existing UCC financing statements filed by Mr.
Robert Moore on February 5, 2009 and by Messrs. Nicholas and Benjamin Lewin
filed on May 30, 2012 each have been terminated in full; and
 
(d)           Lender shall have received such other documents and assurances as
Lender may require.
 
3.02           Closing.  The funding for the Loan by the Lender shall occur when
the provisions of Section 3.01 are completed and approved by the Lender, in
Lender’s sole and absolute discretion.  The proceeds for the Loan by the Lender
shall be delivered by wire transfer to an account identified by the Borrower
before the Closing.

SECTION 4
REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants to Lender as follows:

4.01           Authority.  Borrower is a limited liability company, duly formed
and organized under the laws of the State of New York and the Manager of the
Borrower is duly authorized to execute and deliver each of the Loan Documents to
which Borrower is a party on behalf of Borrower, and Borrower is duly authorized
to perform its obligations under each of the Loan Documents to which it is a
party.

4.02           Legally Enforceable Agreement.  This Agreement and each Loan
Document to which Borrower is a party, upon execution and delivery by Borrower,
is and shall be legal, valid, and binding obligations of Borrower, enforceable
against Borrower in accordance with their respective terms except to the extent
that such enforcement may be limited by applicable bankruptcy, insolvency, and
other similar laws affecting creditors’ rights generally.
 
 
 
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4.03           No Conflicts.  The execution, delivery, and performance by
Borrower of the Loan Documents and the use of the Loan proceeds for such
business purposes of Borrower approved by Lender do not and will not:
 
(a)           result in a breach of or constitute a default under any indenture
or loan or credit agreement or any other agreement, lease, or instrument to
which Borrower is a party or by which they or their properties may be bound or
affected; or
 
(b)           result in, or require, the creation or imposition of any lien,
upon or with respect to any of the properties now owned by Borrower; or
 
(c)           cause Borrower to be in default under any law, rule, regulation,
order, writ, judgment, injunction, decree, determination, or award or any such
indenture, agreement, lease, or instrument.
 
4.04           Litigation.  There is no pending or threatened action or
proceeding against or affecting Borrower before any court, governmental agency,
or arbitrator which may, in any one case or in the aggregate, materially,
adversely affect the financial condition, operations, properties, or business of
Borrower or the ability of Borrower to perform its obligations under the Loan
Documents to which it is a party.
 
4.05           Collateral.  All collateral required in this Agreement is owned
by the grantor of the security interest therein free of any title defects, liens
or interests of others and Lender shall at all times have a first priority lien
on and security interest in such collateral.
 
4.06           Other Obligations.  Borrower is not in default on any obligation
for borrowed money, any purchase money obligation or any other material lease,
commitment, contract, instrument or obligation.
 
4.07           No Event of Default.  There is no event, which is, or with notice
or lapse of time or both would be, an Event of Default under this Agreement.
 
4.08           Entity Documents.  The copy of the Articles and Operating
Agreement of Borrower provided to Lender pursuant to Section 3.01 are complete
and accurate copies of the originals of such entity documents, each of which is
in full force and effect without any modification or amendment from such copies
delivered to Lender.
 
SECTION 5
EXPENSES

5.01           Expenses.  Each party agrees to incur its own expenses with
respect to the preparation and/or review of this Agreement, the Loan Documents,
and any agreement or instrument required by this Agreement.
 
 
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SECTION 6
NEGATIVE COVENANTS

 
So long as all or any part of the Note remains unpaid or Borrower has any
commitment under the Loan Documents, neither Borrower nor any of its affiliates
will without Lender’s prior written consent, which such consent may be withheld
for any reason:
 
6.01           Amend.  Amend the material terms and conditions of any leases or
material agreements, matters or other related documents related to the Borrower,
their affiliates and respective assets or amend in any respect the Articles or
Operating Agreement.
 
6.02           Liens.  Create, incur, assume, or suffer to exist, any lien,
security interest, direct or collateral assignment, or other encumbrance upon or
with respect to any real or personal property or other assets owned by the
Borrower, nor consent to the further pledge or hypothecation by its Member of
the Membership Interest other than pursuant to the Pledge Agreement.  Borrower
shall at all times indemnify, defend, and hold harmless Lender from and against
any and all third party claims, liens or encumbrances asserted against any
collateral subject to the Pledge Agreement or any UCC Financing Statement to
ensure that Lender shall, at all times, have a first priority lien and
encumbrance on all such collateral.
 
SECTION 7
EVENTS OF DEFAULT

7.01           Events of Default.  The occurrence of any of the following events
shall be deemed to be an “Event of Default”:
 
(a)           Borrower should fail to pay any amount due and payable under the
Note (including principal and all accrued interest) as and when due, including,
without limitation, when a demand for payment is made by Lender pursuant to the
terms thereof;
 
(b)           Borrower shall fail to pay any other amount due under any of the
Loan Documents, and such non-payment within five (5) days of the date such
payment is due;
 
(c)           Borrower shall fail to perform of fulfill in full any of its
non-monetary obligations or conditions contained in this Agreement or any of the
other Loan Documents and such failure is not cured within fifteen (15) days
following written notice from Lender, except that Borrower’s failure to deliver
a UCC Financing Statement before the Effective Date shall result in the
transaction not being consummated;
 
(d)           Borrower shall commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to Borrower or
its debts under any bankruptcy, insolvency or other similar debtor relief law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of them, or any of them, or any
substantial part of their property, or if Borrower shall consent to any such
relief or to the appointment or taking possession by any such official in any
involuntary case or other proceeding commenced against Borrower, or if any such
involuntary case or other proceeding shall be commenced against Borrower which
is not dismissed or stayed within sixty (60) days;
 
 
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(e)           If any litigation or other legal action or proceeding is filed by
any third party against Borrower or Lender contesting or seeking to set aside or
enjoin the transactions contemplated by this Agreement or any of the other Loan
Documents; or

(f)           Borrower shall voluntarily or involuntarily dissolve its limited
liability company.

If an Event of Default occurs, Lender shall have all rights under and all
remedies available to it under the Loan Documents or at law or in equity,
including, without limitation, the right to declare the entire amount of the
Note then due and payable in full and the right to foreclose any security
interest in any collateral given by Borrower or its Member as security for
Borrower’s obligations under the Loan Documents, including, without limitation,
pursuant to the Pledge Agreement and/or the UCC Financing Statement.
 
SECTION 8
MISCELLANEOUS

8.01           Amendments, Etc.  No amendment, modification, termination, or
waiver of any provision of this Agreement or the other Loan Documents shall be
effective unless the same shall be in writing and signed by the parties, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.

 
8.02           Notices, Etc.  All notices and other communications provided for
under this Agreement and the other Loan Documents shall be in writing and
delivered or mailed, postage prepaid, certified mail, return receipt requested,
to:
 
 
If to Lender:
Remark Media, Inc.

 
3930 Howard Hughes Parkway, Suite 400

 
Las Vegas, Nevada 89169

 
Attention: Douglas Osrow, Chief Financial Officer

 
If to Borrower:
51 East 42nd Street, Suite 800

 
New York, New York 10017

 
Attention:  Robert S. Potter, Manager

 
8.03           No Waiver; Remedies.  No failure on the part of Lender to
exercise, and no delay in exercising, any right, power or remedy under this
Agreement or the other Loan Documents shall operate as a waiver thereof; nor
shall any single or partial exercise of any right under this Agreement or the
other Loan Documents preclude any other or further exercise thereof or exercise
of any other right.  The remedies provided in this Agreement and the other Loan
Documents are cumulative and not exclusive of any remedies provided by law.
 
8.04           Successors and Assigns.  This Agreement and the other Loan
Documents shall be binding upon and inure to the benefit of Borrower and Lender
and their respective heirs, successors, administrators, executors and assigns,
except that Borrower may not assign or transfer any of its rights under this
Agreement or the other Loan Documents without the prior written consent of
Lender.
 
8.05           Governing Law.  This Agreement and the other Loan Documents shall
be governed by, and construed in accordance with, the laws of the State of
Nevada.
 
 
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8.06           Severability of Provisions.  Any provision of this Agreement or
the other Loan Documents 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
provisions of this Agreement or the Loan Documents or affecting the validity or
enforceability of such provision in any other jurisdiction.
 
8.07           Headings.  Headings in this Agreement are included for the
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
 
8.08           Attorney Fees.  In the event that any action or proceeding is
instituted to interpret or enforce the terms and provisions of this Agreement
and/or the other Loan Documents, Borrower shall reimburse Lender for its costs
and reasonable attorneys’ fees, in addition to any other relief either party may
obtain or be entitled to.
 
8.09           Execution in Counterparts.  This Agreement may be executed in
multiple counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument and may be delivered
by facsimile so long as the originals are sent to the other party with a
reputable overnight carrier.
 
8.10           Neutral Interpretation.  The article and section headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties and shall not in any way affect the meaning
or interpretation of this Agreement.  As used in this Agreement, the term
"person" shall mean and include an individual, a partnership, a joint venture, a
corporation, a trust, a limited liability company, an unincorporated
organization and a government or any department or agency thereof.  Each party
to this Agreement agrees that the provisions contained herein shall not be
construed in favor of or against any party because that party or its counsel
drafted this Agreement, but shall be construed as if all parties prepared this
Agreement, and any rules of construction to the contrary are hereby specifically
waived.
 
8.11           Attorney Representation.  In the negotiation, preparation and
execution of this Agreement, the parties hereto acknowledge that Lender has been
represented by the law firm of Sklar Williams PLLC, Las Vegas, Nevada and that
Lender has been represented by the law firm of Sheppard Mullin Richter & Hampton
LLP, Los Angeles, California.  The parties have read this Agreement in its
entirety and fully understand the terms and provisions contained herein.  The
parties hereto execute this Agreement freely and voluntarily and accept the
terms, conditions and provisions of this Agreement and state that the execution
by each of them of this Agreement is free from any coercion whatsoever.
 
SECTION 9
ADDITONAL BORROWER COVENANTS

For so long as Borrower is indebted to Lender under this Loan Agreement or any
other Loan Documents, and until payment is received in full under the Note,
Borrower shall faithfully perform the following covenants:
 
9.1           Compliance with Loan Documents.  Borrower shall at all times
comply in a timely manner with all of its monetary and non-monetary obligations
under the Loan Documents.
 
9.2           Limitation on Obligations and Indebtedness.  Borrower shall not
enter into any contracts, agreements, obligations or undertakings that obligate
or potentially obligate Borrower to incur any additional material obligation or
create a material liability nor shall Borrower create, incur, assume or permit
to exist any material indebtedness, obligations or liabilities resulting from
borrowing, loans or advances, whether secured or unsecured.
 
 
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9.3.           Books and Records.  Borrower shall at all times keep accurate
accounting books and records with respect to the operation of its business and
use of the Loan proceeds.  Borrower shall prepare quarterly and annual financial
statements of Borrower and its business using consistently applied accounting
principles and shall deliver copies of such statements to Lender, certified by
Borrower’s Manager as true and correct in all material respects, within thirty
(30) days following the end of each calendar quarter.  Upon the occurrence and
during the continuance of any Event of Default, Lender shall have the right to
inspect and audit Borrower’s accounting books and records, which Borrower shall
assemble at its principal place of business.
 
9.4           Waiver of Jury Trial.  BORROWER AGREES NOT TO ELECT A TRIAL BY
JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY
JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH
REGARD TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
 

IN WITNESS WHEREOF, the parties have caused this Loan Agreement to be executed
as of the Effective Date.

 

 
LENDER:
     
Remark Media, Inc.
a Delaware corporation
         
/s/ Douglas Osrow
 
Douglas Osrow, Chief Financial Officer

 
BORROWER:
     
Bombo Sports & Entertainment, LLC,
a New York limited-liability company
         
/s/ Robert S. Potter
 
Robert S. Potter, Manager

 
 
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EXHIBIT A
 
 
FORM OF DEMAND PROMISSORY NOTE
 
 
(See Attached)
 
 
 

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DEMAND PROMISSORY NOTE

$1,000,000
Las Vegas, Nevada
 
February 11, 2014
   

THE TRANSFER, SALE, ASSIGNMENT, HYPOTHECATION, ENCUMBRANCE, OR ALIENATION OF
THIS NOTE AND ANY DOCUMENTS OR AGREEMENTS CONNECTED TO OR RELATED TO THIS NOTE
ARE EACH RESTRICTED BY THE FOLLOWING DOCUMENTS ENTERED INTO BETWEEN THE
UNDERSIGNED BORROWER AND PAYEE: (I) LOAN AGREEMENT; (II) MEMBERSHIP INTEREST
PLEDGE AGREEMENT; AND (III) UCC FINANCING STATEMENT ALL OF EVEN DATE
HEREWITH.  COPIES OF THESE DOCUMENTS ARE AVAILABLE FOR INSPECTION DURING NORMAL
BUSINESS HOURS AT THE PRINCIPAL EXECUTIVE OFFICE OF THE BORROWER, 51 EAST 42ND
STREET, SUITE 800, NEW YORK, NEW YORK 10017.

FOR VALUE RECEIVED, BOMBO SPORTS & ENTERTAINMENT, LLC, a New York limited
liability company ("Borrower") promises to pay to REMARK MEDIA, INC., a Delaware
corporation or order ("Payee") with a mailing address of 3930 Howard Hughes
Parkway, Suite 400, Las Vegas, Nevada 89169 or such other address as Payee may
from time to time designate in writing, the principal sum set forth hereinabove,
together with interest as set forth hereinbelow.

1.           Payment.  Payment of principal and interest on this Demand
Promissory Note (this "Note") shall in all events be due and payable in full on
that date that is 10 days following the date Payee delivers written demand
therefor to Borrower.  Upon receipt of any such demand, Borrower shall pay the
entire balance of this Note to Payee on the expiration of said ten (10) day
period.  Payment of principal and interest on this Note shall be made at the
address of Payee, or at any other place Payee designates in writing from time to
time, and shall be in lawful money of the United States of America.  If so
indicated in such demand notice, payment shall be made in immediately available
funds by wire transfer to a bank account of Payee designated by Payee.  Returned
checks shall in no event be deemed to be payments hereunder.

2.           Interest.  Interest shall be charged and payable on the unpaid
principal balance of this Note outstanding from time to time at the rate of five
percent (5%) per annum.  If demand for payment is made and if such entire
principal balance is not paid in full on the date due pursuant to paragraph 1
above, interest shall then be due and payable from such due date at the rate of
twelve percent (12%) per annum on the outstanding principal balance hereunder
until all principal and accrued and unpaid interest is paid in full.

3.           Collateral.  This Note is the “Note” as defined in that certain
Loan Agreement between Payee and Borrower of even date herewith (the “Loan
Agreement”) and is secured by (i) a Membership Interest Pledge Agreement (the
“Pledge Agreement”) covering the membership interests of the Manager of the
Borrower in the Borrower and (ii) a UCC Financing Statement to be recorded with
the New York Secretary of State (the “UCC Financing Statement”) pledging in full
all of the assets of the Borrower in favor of the Payee.  This Note, the Loan
Agreement, the Pledge Agreement, the UCC Financing Statement, and any other
documents or instruments executed by Payee and Borrower with respect to the Loan
evidenced by this Note or the transactions contemplated in said Loan Agreement
are part of several loan documents between Maker and Holder of even date
herewith (collectively, the “Loan Documents”).  If there is a conflict between
any Loan Document and this Note, the terms of such Loan Document shall
govern.  At any time that Borrower is in default under this Note, without
limiting or waiving any other rights or remedies, Payee shall have the right to
enforce the Pledge Agreement and the Collateral Assignment against all such
collateral described therein.
 
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4.           Prepayment.  This Note may be prepaid at any time, in whole or in
part, without premium or penalty.  All payments hereon shall be applied first to
the payment of accrued interest, with the balance applied to principal.

5.           Costs of Collection.  If Borrower fails to timely make the payments
required hereby, Borrower shall pay all of Payee’s costs of collection
including, without limitation, attorney fees and expenses and court costs.  Such
costs will be added to the balance of principal and interest then due under this
Note.

6.           Failure or Delay Non-waiver.  Failure of the Payee to assert any
right contained herein, or delay in asserting any such right, shall not be
deemed a waiver of that right.

7.           Modifications.  This Note may not be changed, modified, amended, or
terminated, nor may any of its provisions be waived, except by an agreement in
writing signed by Borrower and Payee.

8.           Choice of Law; Jurisdiction.  This Note shall be governed by and
construed in accordance with the laws of the State of Nevada, without regard to
its principles of conflict of laws. Any action brought to enforce the
obligations herein shall be brought in a court located in Clark County, Nevada
and Borrower hereby consents to the exclusive jurisdiction of such courts.

9.           Promises Binding.  This Note shall be binding upon the undersigned
and the undersigned's successors, and assigns.

BORROWER:
 
BOMBO SPORTS & ENTERTAINMENT, LLC,
a New York limited liability company
   
 
Robert S. Potter, Manager

 
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EXHIBIT B
 
 
FORM OF MEMBERSHIP INTEREST PLEDGE AGREEMENT
 
 
(See Attached)
 
 
 

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MEMBERSHIP INTEREST PLEDGE AGREEMENT

This Membership Interest Pledge Agreement (this “Agreement”) is made and entered
into as of February 11, 2014 by and between ROBERT S. POTTER, a resident of the
State of New York (the “Pledgor”) for the benefit of REMARK MEDIA, INC., a
Delaware corporation (“Secured Party”).
 
PRELIMINARY STATEMENTS
 

 
A.        Secured Party and Bombo Sports & Entertainment, LLC, a New York
limited liability company (“Borrower”) are parties to that certain Loan
Agreement (the “Loan Agreement”) of even date herewith.  Capitalized terms not
otherwise defined herein shall have the same meaning as ascribed to such terms
in the Loan Agreement.
 
B.         As a material inducement for Secured Party to enter into the Loan
Agreement, Pledgor, as the Manager of the Borrower in order to secure Borrower’s
obligations contained in the Loan Agreement including, without limitation,
Borrower’s obligations to perform under the Demand Promissory Note (the
“Promissory Note” and, together with the Loan Agreement and all other documents
referred to in the Loan Agreement, the “Loan Documents”) by pledging in favor of
Secured Party, Pledgor’s eighty-six percent (86%) limited liability company
membership interest in and to the Borrower (the “Pledged Interest”).
 
AGREEMENT
 
In consideration of the foregoing, the mutual covenants contained herein and for
other good and valuable consideration the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
 
1.         Pledge.  As security and collateral for the payment when and as due
and payable of any and all of Borrower’s obligations under the Loan Documents
(the “Obligations”), Pledgor pledges, hypothecates, and grants to Secured Party
a continuing, first priority security interest in, and assigns to Secured Party
all right, title and interest in and to:
 
(a)           the Pledged Interest and any certificates representing the Pledged
Interest and any interest of Pledgor in the entries on the books of any
financial intermediary pertaining to the Pledged Interest, and all
distributions, return of capital, redemptions, dividends, cash, warrants,
rights, instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the Pledged Interest;
 
(b)           all additional interest in, and all securities convertible into
and warrants, options and other rights to purchase or otherwise acquire an
interest in any issues of the Pledged Interest from time to time acquired by
Pledgor in any manner (which interest shall be deemed to be part of the Pledged
Interest), the certificates or other instruments representing such additional
interest, if any, securities, warrants, options or other rights and any interest
of Pledgor in the entries on the books of any financial intermediary pertaining
to such additional interest, and all dividends, cash, warrants, rights,
instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such additional interest, securities, warrants, options or other rights; and
 
 
 

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(c)           to the extent not covered by clauses (a) through (b) above, all
proceeds of any or all of the foregoing collateral.  For purposes of this
Agreement, the term “proceeds” includes whatever is receivable or received when
the collateral or proceeds are sold, exchanged, collected or otherwise disposed
of, whether such disposition is voluntary or involuntary, and includes, without
limitation, proceeds of any indemnity or guaranty payable to Pledgor or Secured
Party from time to time with respect to any of the collateral.
 
2.         Voting.  Unless an Event of Default (as defined below) shall have
occurred and be continuing, Pledgor shall be entitled to vote its interest in
the Pledged Interest and to give consents, waivers and ratifications in respect
thereof, provided that no vote shall be cast or consent, waiver or ratification
given or action taken which would violate or not comply with any of the terms
and provisions of this Agreement or which would cause Borrower to be in default
under any of the Loan Documents.  Pledgor represents and warrants that it has
received a copy of all of the Loan Documents to which Borrower is a party and
that it is familiar with the covenants, representations, and warranties of
Borrower under the Loan Documents.  All such rights of Pledgor to vote and to
give consents, waivers and ratifications shall cease in case an Event of Default
shall occur and be continuing.  If an Event of Default shall have occurred and
be continuing, Pledgor grants to Secured Party an irrevocable proxy coupled with
an interest in the Pledged Interest, pursuant to which proxy, Secured Party
shall be entitled to vote or consent in its discretion and in such event Pledgor
agrees to deliver to Secured Party such further evidence of such proxy as
Secured Party may reasonably request.
 
3.          Distributions.  Unless an Event of Default shall have occurred and
be continuing, all distributions payable in respect of the Pledged Interest
shall be paid to Pledgor.
 
4.         Title to Pledged Interest.  Pledgor hereby represents, warrants and
covenants to Secured Party that (i) it has good and marketable title to the
Pledged Interest, free and clear of any and all liens, claims, security
interests and encumbrances other than in favor of Secured Party pursuant to this
Agreement, (ii) the Pledged Interest represents eighty-six percent (86%) the
issued and outstanding membership interests in Borrower, (iii) there are no
other equity or ownership interests in Borrower other than the Pledged Interest
and no other person or party has any right (whether by option, subscription
agreement, or otherwise) to acquire any membership or other equity interest in
Borrower, (iv) the Pledged Interest is “certificated” and represented by
Certificate No. 1 issued by Borrower (the “Certificate”), which Certificate
Pledgor has delivered to Secured Party concurrently herewith with appropriate
powers and/or assignment duly executed by Pledgor and/or Borrower to be held by
Secured Party subject to the terms hereof, (v) the security interest granted to
Secured Party hereunder is and at all times shall be and remain a first priority
lien and security interest in the Pledged Interest and Pledgor has not granted
any other lien or security interest to any other person or party in or to, or
otherwise encumbered the Pledged Interest; and (vi) during the term of this
Agreement, Pledgor shall not hereafter directly or indirectly sell, transfer,
assign, or otherwise dispose of or grant any option with respect to, the Pledged
Interest, nor shall Pledgor create, incur or permit and further pledge,
hypothecation, or encumbrance of, or grant any other lien or security interest
in or to, the Pledged Interest.  Pledgor hereby consents to Secured Party filing
any Uniform Commercial Code financing statement with respect to the security
interest granted hereunder.

 
During the term of this Agreement, if Pledgor shall receive, acquire or have
registered in its name, or become entitled to receive, acquire, or have
registered in its name, any membership certificate, option, or right with
respect to membership interests in Borrower  (including without limitation, any
certificate representing a distribution or exchange of, or in connection with
any reclassification of, the Pledged Interest), whether as an addition to, in
substitution of, or in exchange for any Pledged Interest or otherwise, Pledgor
agrees to accept same as Secured Party’s agent, to hold same in trust for
Secured Party, and to deliver same forthwith to Secured Party in the form
received, with the endorsement(s) of Pledgor where necessary and/or appropriate
powers and/or assignments duly executed to be held by Secured Party subject to
the terms hereof, or if any of the foregoing is uncertificated, register the
same with Secured Party’s security interest noted therein as further security
for the Obligations.
 
 
 

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5.         Events of Default.  For purposes of this Agreement, the terms
“Default” and “Event of Default” shall mean any Event of Default as defined in
the Loan Agreement, including, without limitation, the happening of any of the
following events:
 
(a)           any failure of Borrower to perform or fulfill in full any of the
obligations or conditions contained in the Loan Agreement or any of the other
documents or agreements referenced therein; or
 
(b)           any failure of Pledgor to observe or perform any of the other
provisions of this Agreement if such failure continues for a period of ten (10)
days after written notice of such default is received by the Pledgor; or
 
(c)           if the Pledgor or Borrower becomes insolvent or is the subject of
a petition in bankruptcy, either voluntary or involuntary, or in any other
proceeding under the Federal Bankruptcy Laws or makes an assignment for the
benefit of creditors or is subject to a proceeding for reorganization,
arrangement, readjustment of debt, dissolution or liquidation or if Pledgor or
Vegas Holdings is named in a suit for the appointment of a receiver; or
 
       (d)           If Pledgor voluntarily or involuntarily dissolves its
limited liability company.
 
6.         Remedies Upon Default.  In case an Event of Default shall have
occurred and be continuing, Secured Party shall be entitled to exercise all of
the rights, powers and remedies (whether vested in it by this Agreement or by
law or otherwise (including, without limitation, those of a secured party under
the Uniform Commercial Code) for the protection and enforcement of its rights in
respect of the Pledged Interest, and Secured Party shall be entitled, without
limitation:
 
(a)           to receive all amounts payable in respect of the Pledged Interest
otherwise payable under Paragraph 3 of this Agreement to Pledgor;
 
(b)           to transfer and register all or any part of the Pledged Interest
into Secured Party's name or the name of its nominee or nominees;
 
(c)           to vote all or any part of the Pledged Interest (whether or not
transferred or registered into the name of Secured Party) and give all consents,
waivers and ratification’s in respect thereof and otherwise act with respect to
the Pledged Interest as though it were the outright owner thereof pursuant to
the proxy granted in Paragraph 2 of this Agreement hereof, including, without
limitation, to replace the Manager of Borrower pursuant to Borrower’s Operating
Agreement;
 
 
 

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(d)           at any time and without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon Pledgor (all and each of which
demands, advertisements and/or notices are hereby expressly waived to the extent
permitted by law), to proceed forthwith to collect, redeem, receive,
appropriate, sell, or otherwise dispose of and deliver the Pledged Interest or
any part thereof at public or private sale or sales at Secured Party’’s office
or elsewhere at such prices and on such terms as Secured Party may deem
best.  The foregoing disposition(s) may be for cash or on credit, with Secured
Party having the right to purchase all or any part of the Pledged Interest so
sold at any such sale or sales, public or private, free of any right or equity
of redemption in Pledgor, which right or equity is hereby expressly waived or
released by Pledgor.  Pledgor agrees that ten (10) days prior notice by Secured
Party sent by certified mail, postage prepaid, designating the date after which
a private sale may take place or a public auction may be held, is reasonable
notification of such matters.
 
Pledgor recognizes that Secured Party may be unable to effect a public sale of
all or part of the Pledged Interest, including by reason of certain prohibitions
contained in applicable securities laws but may be compelled to resort to one or
more private sales to a restricted group of purchasers who will be obliged to
agree, among other things, to acquire such Pledged Interest for their own
account for investment and not with a view to the distribution or resale
thereof.  Secured Party, in its sole and absolute discretion is authorized to
sell the Pledged Interest or any part thereof, by private sale in such manner
and under such circumstances as Secured Party or its counsel may deem necessary
or advisable in order that such sale may legally be effectuated without
registration.  Pledgor acknowledges and agrees that private sales so made may be
at prices and other terms less favorable to the seller than if the Pledged
Interest were sold at public sale, and that Secured Party has no obligation to
delay the sale of any Pledged Interest for the period of time necessary to
permit Pledgor, even if it would agree, to register the Pledged Interest for
public sale under applicable securities laws.  Pledgor acknowledges and agrees
that any private sales made under the foregoing circumstances shall be deemed to
have been in a commercially reasonable manner.
 
7.         Remedies, Cumulative.  Each right, power and remedy of Secured Party
provided for in this Agreement or in the Loan Documents or now or hereafter
existing at law or in equity or by statute or otherwise shall be cumulative and
concurrent and shall be in addition to every other such right, power or
remedy.  The exercise or beginning of the exercise by Secured Party of any one
or more of the rights, powers or remedies provided for in this Agreement or in
the Loan Documents or now or hereafter existing at law or in equity or by
statute or otherwise shall not preclude the simultaneous or later exercise by
Secured Party of all such other rights, powers or remedies, and no failure or
delay on the part of Secured Party to exercise any such right, power or remedy
shall operate as a waiver thereof.
 
8.         Application of Money by Secured Party.  All money collected upon any
sale or sales of the Pledged Interest hereunder, together with all other monies
received by Secured Party hereunder, shall be applied to the payment of all
reasonable costs and expenses incurred or paid by Secured Party in connection
with any sale, transfer or delivery of the Pledged Interest or the collection of
any such money (including reasonable attorneys' fees and expenses), and the
balance of such money shall be held by Secured Party and applied by it at any
time or from time to time to the payment of the Obligations and in such order
and manner as Secured Party in its reasonable discretion may determine.
 
 
 

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9.         Further Assurances.  Pledgor at its expense will execute, acknowledge
and deliver all such instruments and take all such action as the Secured Party
may reasonably request in order to further effectuate the purposes of this
Agreement and to carry out the terms hereof.
 
10.       Termination and Release.  Upon the payment in full of the Obligations
in accordance with the terms of the Loan Documents, and the payment of all other
sums payable (including, without limitation, the reasonable expenses and
disbursements of Secured Party) this Agreement shall terminate and Secured
Party, at the request and expense of Pledgor, will promptly execute and deliver
to Pledgor a proper instrument or instruments acknowledging the satisfaction and
termination of this Agreement, and will duly assign, transfer and deliver to
Pledgor such of the Pledged Interest as has not theretofore been sold or
otherwise applied or released pursuant to this Agreement, together with any
monies at the time held by Secured Party hereunder and together with the
Certificate or such new certificate issued by Borrower then evidencing such part
of the Pledged Interest held by Secured Party at such time.
 
11.       Notices.  All notices, requests, demands or other communications to or
upon the parties hereto shall be in writing, shall be given or made to the party
to which such notice, request, demand or other communication is required or
permitted to be given or made under this Agreement at the following addresses:

 
If to the Secured Party:
3930 Howard Hughes Parkway, Suite 400

 
Las Vegas, Nevada 89169

 
Attention:  Douglas Osrow

 
If to Pledgor:
c/o Bombo Sports & Entertainment, LLC

 
51 East 42nd Street, Suite 800

 
New York, New York 10017

or at such other address as either party hereto may hereafter specify to the
other in writing, and (unless otherwise specified herein) shall be deemed to
have been duly given (i) when delivered personally; (ii) three (3) days after
being sent by a nationally recognized overnight courier; or (iii) five (5) days
after mailing, and all mailed notices shall be by certified or registered mail,
return receipt requested, postage prepaid.
 
12.        Miscellaneous.  This Agreement may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.  The
headings in this Agreement are for purposes of reference only and shall not
limit or define the meaning hereof. The representations, covenants and
agreements of Pledgor herein contained shall survive the date hereof. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns and may be executed in two or more
counterparts. The terms and conditions of this Agreement shall be construed as a
whole according to its fair meaning and not strictly for or against any
party.  The parties acknowledge that each of them has reviewed this Agreement
and has had the opportunity to have it reviewed by their attorneys and that any
rule or construction to the effect that ambiguities are to be resolved against
the drafting party shall not apply in the interpretation of this Agreement,
including amendments or any exhibits. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada.
 
 
 

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IN WITNESS WHEREOF, the parties hereto have duly authorized, executed and
delivered this Agreement effective as of the date hereof.

 
PLEDGOR:
             
 
 
Robert S. Potter, Personally

Confirmation of Borrower:

The undersigned Borrower confirms that the forgoing Membership Interest Pledge
Agreement does not violate any provisions of the Operating Agreement of
Borrower, that all consents of Borrower and its Manager required under such
Operating Agreement have been obtained in connection therewith, if applicable,
that the Pledged Interest represents an 86% membership interest in Borrower and
has been dully issued to Pledgor, and that the Pledged Interest is evidenced by
the Certificate described herein.  The undersigned further acknowledges that
Secured Party shall have the right to rely on this confirmation for all
purposes.

Bombo Sports & Entertainment, LLC,
a New York limited liability company
 
By:
 
Its:
 

 
 

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EXHIBIT C
 
 
FORM OF UCC FINANCING STATEMENT
 
 
(See Attached)
 
 
 

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