SECURITY AGREEMENT

THIS SECURITY AGREEMENT (“Agreement”) is made and entered into as of the ___ day of September, 2008, by and among Diamond Sports & Entertainment, Inc., a Delaware corporation (“Bridge Loan Borrower”), Diamond Concessions, LLC, a California limited liability company (“Subsidiary”), and the Buyers (as defined below).

WHEREAS , Federal Sports & Entertainment, Inc. (the “Borrower”) will issue and deliver to each party listed as a buyer (the “Buyers”) on the Schedule of Buyers attached to that certain Securities Purchase Agreement dated of even date herewith (“Securities Purchase Agreement”) its 0% Secured Convertible Promissory Note (each, a “Note” and together, the “Notes”) in the aggregate principal amount of up to One Million Dollars ($1,000,000), the first of which Notes shall be dated as of the date of this Agreement;

WHEREAS , pursuant to that certain bridge loan agreement dated as of even date herewith between Borrower and Bridge Loan Borrower (the “Bridge Loan Agreement”), Borrower has agreed to lend the proceeds of the Notes to Bridge Loan Borrower (the “Bridge Loan”) to meet working capital needs of Bridge Loan Borrower;

WHEREAS , pursuant to the Bridge Loan Agreement, the Bridge Loan Borrower has agreed to grant a security interest in and to the Collateral (as defined in this Agreement) to the Buyers on the terms and conditions set forth in this Agreement.

WHEREAS, in connection with the Securities Purchase Agreement, the Borrowers will execute an Intercreditor Agreement, dated as of the date hereof (“Intercreditor Agreement”), and all provisions herein are subject to that agreement.

NOW, THEREFORE , for and in consideration of the Bridge Loan, and of the premises and intending to be legally bound, the parties covenant and agree as follows:

“Accounts” shall have the meaning given to that term in the Code and shall include without limitation all rights of the Bridge Loan Borrower or the Subsidiary, whenever acquired, to payment for goods sold or leased or for services rendered, whether or not earned by performance.

“Agent” shall mean John Thomas Bridge & Opportunity Fund

“Chattel Paper” shall have the meaning given to that term in the Code and shall include without limitation all writings owned by the Bridge Loan Borrower or the Subsidiary, whenever acquired, which evidence both a monetary obligation and a security interest in or a lease of specific goods.

“Code” shall mean the Uniform Commercial Code as in effect on the date of this Agreement and as amended from time to time, of the state or states having jurisdiction with respect to all or any portion of the Collateral from time to time.

“Collateral” shall mean (i) all tangible and intangible assets of Bridge Loan Borrower and the Subsidiary, including, without limitation, collectively the Accounts, Chattel Paper, Deposit Accounts, Documents, Equipment, Fixtures, General Intangibles, Instruments, Intellectual Property, Inventory, Investment Property, and Proceeds of each of them.

“Deposit Accounts” shall have the meaning given to that term in the Code and shall include a demand, time, savings, passbook or similar account maintained with a bank, savings bank, savings and loan association, credit union, trust company or other organization that is engaged in the business of banking.

“Documents” shall have the meaning given to that term in the Code and shall include without limitation all warehouse receipts (as defined by the Code) and other documents of title (as defined by the Code) owned by the Bridge Loan Borrower or the Subsidiary, whenever acquired.

“Equipment” shall have the meaning given to that term in the Code and shall include without limitation all goods owned by the Bridge Loan Borrower or the Subsidiary, whenever acquired and wherever located, used or brought for use primarily in the business or for the benefit of the Bridge Loan Borrower or the Subsidiary and not included in Inventory of the Bridge Loan Borrower or the Subsidiary, together with all attachments, accessories and parts used or intended to be used with any of those goods or Fixtures, whether now or in the future installed therein or thereon or affixed thereto, as well as all substitutes and replacements thereof in whole or in part.

“Event of Default” shall mean (i) any of the Events of Default described in the Notes or the Loan Documents, or (ii) any default by the Bridge Loan Borrower in the performance of its obligations under this Agreement.

“Fixtures” shall have the meaning given to that term in the Code, and shall include without limitation leasehold improvements.

“General Intangibles” shall have the meaning given to that term in the Code and shall include, without limitation, all leases under which the Bridge Loan Borrower or the Subsidiary now or in the future leases and or obtains a right to occupy or use real or personal property, or both, all of the other contract rights of the Bridge Loan Borrower or the Subsidiary, whenever acquired, and customer lists, choses in action, claims (including claims for indemnification), books, records, patents, copyrights, trademarks, blueprints, drawings, designs and plans, trade secrets, methods, processes, contracts, licenses, license agreements, formulae, tax and any other types of refunds, returned and unearned insurance premiums, rights and claims under insurance policies, and computer information, software, records and data, and oil, gas, or other minerals before extraction now owned or acquired after the date of this Agreement by the Bridge Loan Borrower or the Subsidiary.

“Instruments” shall have the meaning given to that term in the Code and shall include, without limitation, all negotiable instruments (as defined in the Code), all certificated securities (as defined in the Code) and all other writings which evidence a right to the payment of money now or after the date of this Agreement owned by the Bridge Loan Borrower or the Subsidiary.

“Inventory” shall have the meaning given to that term in the Code and shall include without limitation all goods owned by the Bridge Loan Borrower or the Subsidiary, whenever acquired and wherever located, held for sale or lease or furnished or to be furnished under contracts of service, and all raw materials, work in process and materials owned by the Bridge Loan Borrower or the Subsidiary and used or consumed in the Bridge Loan Borrower’s or the Subsidiary’ business, whenever acquired and wherever located.

“Investment Property,” “Securities Intermediary” and “Commodities Intermediary” each shall have the meaning set forth in the Code.

“Know-How” means all documented and undocumented research, ideas, data, theories, conclusions, reports, drawings, designs, blueprints, schematics, exhibits, models, prototypes, source code, object code, flow charts, manuals, processes, specifications, formulae, product configurations, notes, inventions (whether or not patentable and whether or not reduced to practice) and any other information of any kind developed, in development or maintained by the Bridge Loan Borrower or the Subsidiary or any of their respective employees, agents or representatives relating to any goods or services sold or licensed or offered for sale or license by the Bridge Loan Borrower or the Subsidiary or goods or services which the Bridge Loan Borrower or the Subsidiary have a present intention to sell or license.

“Loan Documents” shall mean collectively, this Agreement, the Notes, the Bridge Loan Agreement, the Securities Purchase Agreement and all other agreements, documents and instruments executed and delivered in connection therewith, as each may be amended, supplemented or modified from time to time.

“Permitted Liens” shall mean all (i) all existing liens on the assets of the Bridge Loan Borrower and the Subsidiary which have been disclosed to the Borrower by the Bridge Loan Borrower in the Bridge Loan Agreement, and (ii) all purchase money security interests hereinafter incurred by the Bridge Loan Borrower in the ordinary course of business to the extent permitted by the Bridge Loan Agreement.

“Proceeds” shall have the meaning given to that term in the Code and shall include without limitation whatever is received when Collateral or Proceeds are sold, exchanged, collected or otherwise disposed of, whether cash or non-cash, and includes without limitation proceeds of insurance payable by reason of loss of or damage to Collateral.

“Trade Secret Rights” means all documentation, Know-How and other materials owned by the Bridge Loan Borrower or the Subsidiary that is considered to be proprietary to the Bridge Loan Borrower or the Subsidiary, is maintained on a confidential or secret basis, and is generally not known to other persons or entities who are not subject to confidentiality restrictions.

2.   Security Interest .

(a)   As security for the full and timely payment of the Notes in accordance with the terms of the Securities Purchase Agreement and the performance of the obligations of the Borrower under the Notes and the Bridge Loan Agreement, the Bridge Loan Borrower and the Subsidiary agree that the Buyers shall have, and the Bridge Loan Borrower and the Subsidiary shall grant and convey to and create in favor of the Buyers, a security interest under the Code in and to such of the Collateral as is now owned by the Bridge Loan Borrower or the Subsidiary. The security interest granted to the Buyers in this Agreement shall be a first priority security interest, prior and superior to the rights of all third parties existing on or arising after the date of this Agreement, subject to the Permitted Liens.

(b)   All of the Equipment, Inventory and Goods owned by Bridge Loan Borrower or the Subsidiary is located in the states as specified on Schedule I attached hereto (except to the extent any such Equipment, Inventory or Goods is in transit or located at a Bridge Loan Borrower or the Subsidiary’s job site in the ordinary course of business). Except as disclosed on Schedule I , none of the Collateral is in the possession of any bailee, warehousemen, processor or consignee. Schedule I discloses such Bridge Loan Borrower and the Subsidiary’s names as of the date hereof as it appears in official filings in the state or province, as applicable, of its incorporation, formation or organization, the type of entity of both the Bridge Loan Borrower and the Subsidiary (including corporation, partnership, limited partnership or limited liability company), organizational identification number issued by both Bridge Loan Borrower and the Subsidiary state of incorporation, formation or organization (or a statement that no such number has been issued), both Bridge Loan Borrower and the Subsidiary state or province, as applicable, of incorporation, formation or organization and the chief place of business, chief executive officer and the office where both Bridge Loan Borrower and the Subsidiary keep their respective books and records. Both Bridge Loan Borrower and the Subsidiary have only one state or province, as applicable, of incorporation, formation or organization. Bridge Loan Borrower and the Subsidiary do not do business and have not done business during the past five (5) years under any trade name or fictitious business name except as disclosed on Schedule I attached hereto.

3.   Provisions Applicable to the Collateral . The parties agree that the following provisions shall be applicable to the Collateral:

(a) The Bridge Loan Borrower and the Subsidiary each covenants and agrees that at all times during the term of this Agreement it shall keep accurate and complete books and records concerning the Collateral that is now owned by the Bridge Loan Borrower and the Subsidiary.

(b) The Buyers or their representatives shall have the right, upon reasonable prior written notice to the Bridge Loan Borrower and during the regular business hours of the Bridge Loan Borrower, to examine and inspect the Collateral and to review the books and records of the Bridge Loan Borrower or the Subsidiary concerning the Collateral that is now owned or acquired after the date of this Agreement by the Bridge Loan Borrower or the Subsidiary and to copy the same and make excerpts therefrom; provided, however, that from and after the occurrence of an Event of Default, the rights of inspection and entry shall be subject to the requirements of the Code.

(c) The Bridge Loan Borrower and the Subsidiary shall at all times during the term of this Agreement keep the Equipment, Inventory and Fixtures that are now owned by the Bridge Loan Borrower or the Subsidiary in the states set forth on Schedule I or, upon written notice to the Buyers, at such other locations for which the Buyers have filed financing statements, and in no other states without 20 days’ prior written notice to the Buyers, except that the Bridge Loan Borrower or the Subsidiary shall have the right until one or more Events of Default shall occur to sell or otherwise dispose of Inventory and other Collateral in the ordinary course of business.

(d) The Bridge Loan Borrower shall not move the location of its principal executive offices without prior written notification to the Buyers.

(e) Without the prior written consent of the Buyers, the Bridge Loan Borrower and the Subsidiary shall not sell, lease or otherwise dispose of any Equipment or Fixtures, except in the ordinary course of their business.

(f) Promptly upon request of the Buyers from time to time, the Bridge Loan Borrower or the Subsidiary shall furnish the Buyers with such information and documents regarding the Collateral and the Bridge Loan Borrower’s or the Subsidiary’s financial condition, business, assets or liabilities, at such times and in such form and detail as the Buyers may reasonably request.

(g) During the term of this Agreement, the Bridge Loan Borrower or the Subsidiary shall deliver to the Buyers, upon their reasonable, written request from time to time, without limitation,

(i) all invoices and customer statements rendered to account debtors, documents, contracts, chattel paper, instruments and other writings pertaining to the Bridge Loan Borrower’s or the Subsidiary’s contracts or the performance of the Bridge Loan Borrower’s or the Subsidiary’s contracts,

(ii) evidence of the Bridge Loan Borrower’s or the Subsidiary’s accounts and statements showing the aging, identification, reconciliation and collection thereof, and

(iii) reports as to the Bridge Loan Borrower’s or the Subsidiary’s inventory and sales, shipment, damage or loss thereof, all of the foregoing to be certified by authorized officers or other employees of the Bridge Loan Borrower or the Subsidiary, and Bridge Loan Borrower or the Subsidiary shall take all necessary action during the term of this Agreement to perfect any and all security interests in favor of Bridge Loan Borrower or the Subsidiary and to assign to Buyers all such security interests in favor of Bridge Loan Borrower or the Subsidiary.

(h) Notwithstanding the security interest in the Collateral granted to and created in favor of the Buyers under this Agreement, the Bridge Loan Borrower or the Subsidiary shall have the right until one or more Events of Default shall occur, at their own cost and expense, to collect the Accounts and the Chattel Paper and to enforce their contract rights.

(i) After the occurrence of an Event of Default, subject to the terms of the Intercreditor Agreement, the Agent shall have the right, in its sole discretion, to give notice of the Buyers’ security interest to account debtors obligated to the Bridge Loan Borrower or the Subsidiary and to take over and direct collection of the Accounts and the Chattel Paper, to notify such account debtors to make payment directly to the Buyers and to enforce payment of the Accounts and the Chattel Paper and to enforce the Bridge Loan Borrower’s or the Subsidiary’s contract rights. It is understood and agreed by the Bridge Loan Borrower and the Subsidiary that Agent shall have no liability whatsoever under this subsection (i) except for their own gross negligence or willful misconduct.

(j) At all times during the term of this Agreement, Bridge Loan Borrower and the Subsidiary shall promptly deliver to the Agent, upon their written request, all existing leases, and all other leases entered into by Bridge Loan Borrower or the Subsidiary from time to time, covering any Equipment or Inventory (“Leased Inventory”) which is leased to third parties.

(l) Bridge Loan Borrower and the Subsidiary shall not change its name, entity status, federal taxpayer identification number, or provincial organizational or registration number, or the state under which it is organized without the prior written consent of the Buyers, which consent shall not be unreasonably withheld.

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