**Exhibit 10.4**

 

**THIS WARRANT AND THE SHARESISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THESECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIESLAW.  THIS WARRANT OR SUCH SHARES MAY NOTBE SOLD, DISTRIBUTED, PLEDGED, OFFERED FOR SALE, ASSIGNED, TRANSFERRED, OROTHERWISE DISPOSED OF UNLESS: (A) THERE IS AN EFFECTIVE REGISTRATIONSTATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAW COVERING ANY SUCHTRANSACTION INVOLVING SAID SECURITIES; (B) THE COMPANY (DEFINED BELOW)RECEIVES AN OPINION OF LEGAL COUNSEL FOR THE HOLDER OF THIS WARRANT (IF SUCH ANOPINION IS REASONABLY REQUESTED BY THE COMPANY) STATING THAT SUCH TRANSACTIONIS EXEMPT FROM REGISTRATION AND SUCH OPINION IS IN FORM AND SUBSTANCEREASONABLY SATISFACTORY TO THE COMPANY; OR (C) PURSUANT TO RULE 144 UNDERSUCH ACT.**

 

**AMERICANWAGERING, INC.**

 

**WARRANT TOPURCHASESHARES OF COMMON STOCK**

 

DATE OF ISSUANCE:  June 11, 2010

 

THIS IS TO CERTIFY THAT, for value received, AlpineAdvisors, LLC (the “Holder”) is entitled but not obligated, during a specifiedperiod of time as set forth in Section 5 herein (the “Exercise Period”),to purchase from American Wagering, Inc., a Nevada corporation (the “Company”),up to six hundred thousand (600,000) fully paid and nonassessable shares of theCompany’s common stock, $.01 par value (the “Common Stock”), at an exerciseprice per share as set forth in Section 1 herein (the “Exercise Price”).  The term “Warrant,” as used herein, refers tothis Warrant to Purchase Shares of Common Stock, the term “Warrant Shares,” asused herein, refers to the shares of Common Stock purchasable hereunder, andthe term “Parties,” as used herein, refers collectively to the Holder and theCompany.

 

**TERMS ANDCONDITIONS**

 

This Warrant is subject to the following terms,provisions, and conditions:

 

1.     ExercisePrice.  The Exercise Price is $0.22per underlying share of Common Stock, subject to adjustment as hereinafterprovided.

 

2.     Mannerof Exercise; Payment for Shares. Subject to the provisions hereof, this Warrant may be exercised by theHolder, in whole or in part (but in not less than 25,000 share increments):

 

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2.1.             Bythe surrender of this Warrant, together with an exercise agreement in the formattached hereto (the “Exercise Agreement”), duly completed and executed by theHolder, to the Company during normal business hours on any business day at theCompany’s principal executive offices (or such other location as the Companymay designate by notice to the Holder); and

 

2.2.             Paymentof the exercise price shall be made, at the option of the Holder by thefollowing methods:

 

a.             bydelivery to the Company of a certified or official bank check payable to theorder of the Company or by wire transfer of immediately available funds to anaccount designated in writing by the Company, in the amount of such exerciseprice;

 

b.             byinstructing the Company to withhold a number of Warrant Shares then issuableupon exercise of this Warrant with an aggregate fair market value as of theexercise date equal to such exercise price;

 

c.             bysurrendering to the Company (x) Warrant Shares previously acquired by theHolder with an aggregate fair market value as of the exercise date equal tosuch exercise price and/or (y) other securities of the Company having avalue as of the exercise date equal to the exercise price (which value in thecase of debt securities shall be the principal amount thereof plus accrued andunpaid interest, in the case of preferred stock shall be the liquidation valuethereof plus accumulated and unpaid dividends and in the case of shares ofCommon Stock shall be the fair market value thereof); or

 

d.             anycombination of the foregoing.

 

2.3.             Inthe event of any withholding of Warrant Shares or surrender of other equitysecurities pursuant to clause (ii), (iii) or (iv) above where thenumber of shares whose value is equal to the exercise price is not a wholenumber, the number of shares withheld by or surrendered to the Company shall berounded up to the nearest whole share and the Company shall make a cash paymentto the Holder (by delivery of a certified or official bank check or by wiretransfer of immediately available funds) based on the incremental fraction of ashare being so withheld by or surrendered to the Company in an amount equal to theproduct of (x) such incremental fraction of a share being so withheld orsurrendered multiplied by (y) in the case of Common Stock, the fair marketvalue per Warrant Share as of the exercise date, and, in all other cases, thevalue thereof as of the exercise date determined in accordance with clause(iii)(y) above. For purposes of this Warrant, “fair market value” shallmean the average closing sales price of the Company’s shares on the NASDAQ OTCBulletin Board for the ten business days immediately preceding the exercisedate.

 

3.     Vesting.  The rights under this Warrant are fullyvested.  No fractional shares or scriprepresenting fractional shares shall be issued upon the exercise of thisWarrant.  In lieu of such fractionalshares, which the Holder would otherwise be entitled to purchase upon suchexercise, the Company shall round up to the next whole share.

 

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4.     Issuanceof Certificates.  The Warrant Sharesso purchased shall be deemed to be issued to the Holder, as the record owner ofsuch Warrant Shares, as of the close of business on the date on which thisWarrant shall have been surrendered, the completed Exercise Agreement shallhave been delivered, and payment shall have been made for such Warrant Sharesas set in Section 2 above. Certificates for the Warrant Shares so purchased, representing theaggregate number of shares specified in the Exercise Agreement, shall bedelivered to the Holder within a reasonable time, not exceeding ten (10) businessdays, after this Warrant shall have been so exercised.  The certificates so delivered shall be insuch denominations as may be reasonably requested by the Holder and shall beregistered in the name of the Holder.  Ifthis Warrant shall have been exercised only in part, then, unless this Warranthas expired, the Company shall, at its expense, at the time of delivery of suchcertificates, deliver to the Holder a new warrant representing the number ofWarrant Shares with respect to which this Warrant shall not then have beenexercised.

 

5.     ExercisePeriod.  This Warrant may beexercised any time before 5:00 p.m., Pacific Standard Time, June 11,2015.

 

6.     Covenantsof the Company.  The Company hereby covenants andagrees as follows:

 

6.1.             Sharesto be Fully Paid.  All Warrant Sharesshall, upon issuance in accordance with the terms of this Warrant, be validlyissued, fully paid, and non-assessable.

 

6.2.             Reservationof Shares.  During the ExercisePeriod, the Company shall at all times have authorized, and reserved for thepurpose of issuance upon exercise of this Warrant, a sufficient number ofshares of Common Stock to provide for the exercise of this Warrant.

 

6.3.             Successorsand Assigns.  This Warrant shall bebinding upon any entity succeeding to the Company by merger, consolidation, oracquisition of all or substantially all the Company’s assets.

 

7.     Representations and Warranties of the Company.  TheCompany hereby represents and warrants to the Holder (which representations andwarranties shall survive the execution and delivery of this Warrant andconsummation of the transactions contemplated hereby) that:

 

7.1.             Existence;Authority.** **TheCompany is a Nevada corporation duly organized, validly existing and in goodstanding under the laws of the State of Nevada and has the power and authorityto enter into this Warrant and to carry out its obligations hereunder.

 

7.2.             Executionand Delivery.  The execution anddelivery of this Warrant by the Company and consummation by the Company of thetransactions contemplated hereby have been duly authorized by all necessaryaction on the part of the Company and no other proceedings on the partof the Company are necessary to authorize this Warrantor any of the transactions contemplated hereby.

 

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7.3.             BindingEffect; Valid Issuance of Warrant:

 

a.             ThisWarrant has been duly executed and delivered by the Company and constitutes alegal, valid and binding obligation of the Company and, assuming this Warrantconstitutes a legal, valid and binding obligation of Holder, is enforceableagainst the Company in accordance with its terms, except as such enforceabilitymay be limited by applicable bankruptcy, insolvency, reorganization,moratorium, or other laws relating to or affecting the enforcement of creditors’rights generally in effect from time to time and by general principles ofequity.

 

b.             This Warrant is, and any Warrant issued in substitutionfor or replacement of this Warrant shall be, upon issuance, duly authorized andvalidly issued.

 

c.             All Warrant Shares issuable upon the exercise of thisWarrant pursuant to the terms hereof shall be, upon issuance, and the Companyshall take all such actions as may be necessary or appropriate in order thatsuch Warrant Shares are, validly issued, fully paid and non-assessable, issuedwithout violation of any preemptive or similar rights of any stockholder of theCompany and free and clear of any liens.

 

d.             The Company shall take commercially reasonable actionsas may be necessary to ensure that all such Warrant Shares are issued withoutviolation by the Company of any applicable law or governmental regulation orany requirements of any domestic securities exchange upon which shares ofCommon Stock or other securities constituting Warrant Shares may be listed atthe time of such exercise.

 

e.             The Company shall use take commercially reasonable actions to cause theWarrant Shares, immediately upon such exercise, to be listed on any domesticnational securities exchange upon which shares of Common Stock or othersecurities constituting Warrant Shares are listed, if any, at the time of suchexercise.

 

8.     RegistrationRights.

 

8.1.             DemandRegistration Rights

 

a.             Onor after June 11, 2012, the Holder may make a written request to theCompany that the Company file a registration statement under the Securities Actof 1933, as amended (the “Securities Act”) covering the registration of theWarrant Shares.  Upon receipt of suchrequest, the Company, at it sole cost and expense, shall as soon as practicable,but no later than ninety (90) days following receipt of such request, file aregistration statement with the Securities and Exchange Commission (“SEC”)covering the Warrant Shares, and use its commercially reasonable efforts tocause, as soon as practicable, the registration statement for the WarrantShares to be declared effective by the SEC and such Warrant Shares to bequalified in those jurisdictions as the Holder may reasonably request.

 

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b.             Ifthe Holder intends to distribute the Warrant Shares covered by its request bymeans of an underwriting, it shall so advise the Company as a part of itsrequest pursuant to Section 8.1 or any request pursuant to Section 8.2.  In such event, the Holder shall enter into anunderwriting agreement in customary form with the underwriter or underwritersselected for such underwriting by the Company (which underwriter orunderwriters shall be reasonably acceptable to the Holder).

 

c.             TheCompany shall not be required to effect a registration pursuant to this Section 8.1:(i) during the period starting with the date sixty (60) days prior to theCompany’s good faith estimate of the date of filing of, and ending on a dateone hundred eighty (180) days after the effective date of, a Company-initiatedregistration; provided that the Company is actively employing in good faith allreasonable efforts to cause such registration statement to become effective; (ii) ifthe Company shall furnish to the Holder a certificate signed by the Chairman ofthe Board stating that in the good faith and reasonable judgment of the Boardof Directors of the Company, it would be seriously detrimental to the Companyand its shareholders for such registration statement to be effected at suchtime, in which event the Company shall have the right to defer such filing fora period of not more than ninety (90) days after receipt of the request of theHolder; provided that such right to delay a request shall be exercised by theCompany not more than once in any twelve (12) month period; or (iii) ifthe Holder proposes to dispose of Warrant Shares that may be immediatelyregistered on Form S-3 pursuant to a request made pursuant to Section 8.2below.

 

d.             TheCompany may include in any such registration other securities for sale for itsown account or for the account of any other person; provided that, if theunderwriter for the offering shall determine that the number of shares proposedto be offered in such offering would be reasonably likely to adversely affectsuch offering, then the securities to be sold by the Holder shall be includedin such registration before any securities proposed to be sold for the accountof the Company or any other person.

 

8.2.             Form S-3Registration.  If, on or after June 11,2012, the Company shall receive from the Holder a written request that theCompany effect a registration on Form S-3 (or any successor to Form S-3)or any similar short-form registration statement and any related qualificationor compliance with respect to all or a part of the Warrant Shares owned by theHolder, the Company, at it sole cost and expense, will, as soon as practicable,but no later than sixty (60) days following receipt of such request, file suchregistration statement and use its commercially reasonable efforts to have suchregistration statement declared effective and obtain all such qualificationsand compliances as may be so requested and as would permit or facilitate thesale and distribution of all or such portion of the Holder’s Warrant Shares asare specified in such request, provided, however, that the Company shall not beobligated to effect any such registration, qualification or compliance pursuantto this Section 8.2: (a) if Form S-3 is not available for suchoffering by the Holder; (b) if the Holder, together with the holders ofany other securities of the Company entitled to inclusion in such registration,proposes to sell Warrant Shares and such other securities (if any) at anaggregate price to the public of less than one million dollars ($1,000,000); or(c) if the Company shall furnish to the Holder a certificate 

 

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signed by the Chairman of the Board of Directors ofthe Company stating that in the good faith and reasonable judgment of the Boardof Directors of the Company, it would be seriously detrimental to the Companyand its stockholders for such Form S-3 registration to be effected at suchtime, in which event the Company shall have the right to defer the filing ofthe Form S-3 registration statement for a period of not more than sixty(60) days after receipt of the request of the Holder under this Section 8.2;provided, that such right to delay a request shall be exercised by the Companynot more than once in any twelve (12) month period.

 

8.3.             Incidental Registration Rights.  If the Company proposes to register any of its stockor other securities under the Securities Act of 1933 in connection with thepublic offering of such securities (other than (i) a registration relatingsolely to employee benefit plans, (ii) a registration relating solely toan SEC Rule 145 transaction, or (iii) a registration effectedpursuant to a form of registration statement that is not available forregistration of the Warrant Shares for sale to the public), the Company shallprovide Holder with written notice of such determination. Upon the writtenrequest of Holder given within twenty (20) days after receipt of any suchnotice from the Company, the Company, at its sole cost and expense, shall causeto be registered under the Act all of the Warrant Shares that Holder hasrequested be registered.

 

8.4.             Most-Favored Nation. If the Company grants any person any rights withrespect to the registration of any shares of equity securities of the Companyor any securities convertible or exercisable into shares of any equitysecurities of the Company that are more favorable to such person than therights of the Holder set forth in this Warrant, then the Company shall grant tothe Holder the same rights granted to such other person.

 

9.     Tag-AlongRights.

 

9.1.             Transfersby majority stockholders of the Company.

 

a.             Inthe event of any proposed transfer (a “Proposed Tag-Along Transfer”) of anyCommon Stock or securities convertible into or exchangeable for Common Stock(collectively, the “Subject Shares”) by existing stockholders, including VictorJ. Salerno (the “Existing Stockholders”), in a single transaction or a seriesof related transactions involving Subject Shares aggregating at least 51% ofthe Common Stock outstanding on a fully diluted basis to an individual,corporation, association, partnership, joint venture, limited liabilitycompany, joint-stock company, trust, organization, business, or other entity(the “Proposed Purchaser”), the Holder shall have the irrevocable and exclusiveright, but not the obligation (the “Tag-Along Right”), to require the purchasefrom it of up to such number of Warrant Shares as determined in accordance withSection 9.3 below.

 

b.             AnyWarrant Shares purchased from the Holder pursuant to this Section 9.1shall be paid for at the same price per share and upon the same terms andconditions as apply to the Proposed Tag-Along Transfer by the ExistingStockholders, provided that the price payable by the Proposed Purchaser shallequal the price proposed to be paid per share of 

 

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Common Stock for which such Warrant Share is exercisable, less the ExercisePrice of such Warrant Share;

 

c.             TheCompany or the Existing Stockholders shall give written notice of at least 30days prior to the date of the Proposed Tag-Along Transfer to the Holder stating(i) the name and address of the Proposed Purchaser, (ii) the proposedamount of consideration and terms and conditions of payment offered by suchProposed Purchaser (if the proposed consideration is not cash, the notice shalldescribe the terms of the proposed consideration), (iii) the number ofSubject Shares proposed to be transferred and (iv) that either theProposed Purchaser has been informed of the Tag-Along Right and has agreed topurchase Warrant Shares in accordance with the terms hereof or that theExisting Stockholders will make such purchase. The Tag-Along Right may beexercised by the Holder by giving written notice to the Company and theProposed Purchaser (the “Tag-Along Notice”), within 20 Business Days of receiptof the notice specified in the preceding sentence (such 20 day period beingreferred to herein as the “Tag-Along Period”), indicating its election toexercise the Tag-Along Right. The Tag-Along Notice shall state the amount ofWarrant Shares that the Holder proposes to include in the Proposed Tag-AlongTransfer. Failure by the Holder to give such notice within the Tag-Along Periodshall be deemed an election by the Holder not to sell its Warrant Shares inconnection with that Proposed Tag-Along Transfer. The closing with respect toany sale to a Proposed Purchaser pursuant to this Section 9.1 shall beheld at the time and place specified in the Tag-Along Notice, but in any eventwithin 90 days of the end of the Tag-Along Period. Consummation of the sale ofSubject Shares by the Existing Stockholders to a Proposed Purchaser shall beconditioned upon the consummation of the sale by the Holder to such ProposedPurchaser of the Warrant Shares subject to the Tag-Along Right.

 

9.2.             PurchaseObligation of Existing Stockholders. In the event that the Proposed Purchaser does not purchase such WarrantShares from the Holder on the same terms and conditions as purchased from theExisting Stockholders, then the Existing Stockholders making such transfershall purchase the Warrant Shares from the Holder if the transfer occurs onsuch terms and conditions.

 

9.3.             Determinationof Transferred Interests.  The numberof Warrant Shares purchased from the Holder shall be determined by multiplyingthe aggregate amount of Subject Shares proposed to be sold by the ExistingStockholders to the Proposed Purchaser by a fraction, the numerator of which isthe total number of shares of Common Stock (including the number of WarrantShares issuable upon exercise of the Warrant) owned by the Holder and thedenominator of which is the Common Stock outstanding on a fully diluted basis.

 

9.4.             Costof Transfer.  The ExistingStockholders who are parties to a sale to a Proposed Purchaser shall arrangefor payment directly by the Proposed Purchaser to the Holder, upon delivery ofthe certificate representing the Warrant Shares to be sold, duly endorsed fortransfer, together with such other documents as the Proposed Purchaser mayreasonably request. The Company shall be responsible for and pay the costs andexpenses (including the reasonable fees 

 

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and disbursements of counsel) incurred by the Holder in connection with asale to a Proposed Purchaser, whether or not such sale is consummated.

 

9.5.             Expirationof the Tag-Along Right.  If at theend of 90 days following the end of the Tag-Along Period, or as otherwiseextended pursuant to the provisions of Section 9.1, the sale of SubjectShares by the Existing Stockholders and the sale of the Warrant Shares by theHolder have not been completed in accordance with the terms of the ProposedPurchaser’s offer, all certificates representing such Subject Shares and WarrantShares shall be returned to the Existing Holders and Holder, as applicable, andall the restrictions on sale, transfer, or assignment contained in thisAgreement shall again be in effect.

 

10.   Drag-AlongRights.  In the event that theholders of at least 66% of the outstanding Common Stock (the “66% Holders”)accept an offer to purchase their shares from a bona fide third party, the 66%Holders may send a written notice (the “Drag-Along Notice”) to the Holderspecifying the name of the purchaser, the consideration payable per share ofCommon Stock and a summary of the material terms of such proposedpurchase.  Upon receipt of a Drag-AlongNotice, the Holder shall be obligated to (i) sell all of its WarrantShares, free of any encumbrance, in the transaction contemplated by theDrag-Along Notice on the same terms and conditions as the 66% Holders(including payment of its pro-rata share of all costs associated with suchtransaction), and (ii) otherwise take all necessary action to cause theconsummation of such transaction, including voting its Warrant Shares in favorof such transaction and not exercising any appraisal rights in connectiontherewith. The Holder (i) further agrees to take all actions (includingexecuting documents) in connection with consummation of the proposedtransaction as may reasonably be requested of it by the 66% Holders, and (ii) herebyappoints the 66% Holders, acting jointly, as its attorney-in-fact to do thesame on its behalf.

 

11.   Representations, Warranties and Covenants of the Holder.  The****Holder hereby represents and warrantsto the Company that:

 

11.1.           AccreditedInvestor Status.** **The Holder represents and warrantsthat the Holder is an “accredited investor” within the meaning of Rule 501(a) ofRegulation D, promulgated under the Securities Act.  **The****Holder understands that the Warrants are being offered and sold only to“accredited investors” (as that term is defined under Rule 501(a) ofRegulation D), and the Holder represents that the Holder is an accreditedinvestor.**

 

11.2.           TheHolder understands that the Company is relying on the Holder with respect tothe accuracy of this representation and understands the significance of theHolder’s representation to the Company that the Holder is an accreditedinvestor.

 

11.3.           Residence.  The address set forth in Section 18 isthe Holder’s true and correct residence or principal place of business and theHolder has no present intention of becoming a resident or domicile of any otherstate or jurisdiction.

 

11.4.           Authority.  The Holder has the power and authority toenter into this Warrant and to carry out its obligations hereunder.

 

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11.5.           Binding Effect.** **This Warrant has been dulyexecuted and delivered by the Holder and constitutes a legal, valid and bindingobligation of the Holder and, assuming this Warrant constitutes a legal, validand binding obligation of the Company, is enforceable against the Holder inaccordance with its terms, except as such enforceability may be limited by applicablebankruptcy, insolvency, reorganization, moratorium, or other laws relating toor affecting the enforcement of creditors’ rights generally in effect from timeto time and by general principles of equity.

 

11.6.           Purchasefor Own Account.  The Holderrepresents and warrants that the Warrant and the Warrant Shares will beacquired for investment purposes only for the Holder’s own account, not as anominee or agent, and not with a view to the resale or distribution of any partthereof, and the Holder has no present intention of selling, granting anyparticipation in, or otherwise distributing the same.  By executing this Warrant, the Holder furtherrepresents and warrants that the Holder does not have any contract,undertaking, agreement, or arrangement with any person to sell, transfer, orgrant participations to such person or to any third person, with respect to anyof the Warrant or the Warrant Shares. Notwithstanding the foregoing, the Holdermay transfer this Warrant to members of Lender, the children of the members ofLender, or a trust for the benefit of the individual members of the Lender orfor the children of the members of the Lenders provided such members, childrenof members, or trust shall remain subject to the transfer restrictions providedin this Agreement and under applicable law.

 

11.7.           RestrictedSecurities.  The Holder acknowledgesand understands that the Warrant and the Warrant Shares are characterized as “restrictedsecurities” under the federal securities laws inasmuch as they are beingacquired from the Company in a transaction not involving a public offering andthat under such laws and applicable regulations such securities may be resoldwithout registration under the Securities Act of 1933, as amended (the “SecuritiesAct”), only in certain limited circumstances. In this regard, the Holder represents and warrants that the Holder isfamiliar with Securities and Exchange Commission Rule 144 (“Rule 144”),as presently in effect, and understands the resale limitations imposed therebyand by the Securities Act.  Without inany way limiting the representations set forth above, the Holder agrees not tomake any disposition of all or any portion of the Warrant and the WarrantShares unless there is then in effect a registration statement under theSecurities Act covering such proposed disposition and such disposition is madein accordance with such registration statement, or the Holder shall havenotified the Company of the proposed disposition and shall have furnished theCompany with a statement of the circumstances surrounding the proposeddisposition.  The Holder acknowledgesthat the Company is under no obligation to register any resale or transfer ofthe Warrant Shares.

 

11.8.           Legend.  The Holder understandsthat, prior to the registration of the Warrant Shares, the stock certificateevidencing the Warrant Shares shall bear the restrictive legend set forthbelow:

 

**THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEENREGISTERED UNDER THE SECURITIES ACT OF 1933, AS**

 

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**AMENDED (THE “ACT”), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOTBE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATIONSTATEMENT WITH RESPECT THERETO UNDER THE ACT OR PURSUANT TO AN EXEMPTION FROMTHE REGISTRATION REQUIREMENT OF SAID ACT AND COMPLIANCE WITH ANY APPLICABLESTATE SECURITIES LAW.**

 

11.9.           Risk of Loss.** **The Holder acknowledges,represents and warrants that it understands investment in the Company involvesa high degree of risk.  The Holder isfinancially capable of bearing the loss of the Holder’s entire investment,understands that an investment in the Warrant and Warrant Shares involvesspecial and substantial risks and recognizes the lack of liquidity of theWarrant and the Warrant Shares and the restrictions upon transferabilitythereof.

 

11.10.         NoSolicitation.  The Holder representsand warrants that the Holder was not solicited to acquire the Warrant or theWarrant Shares by any means of general solicitation, including but not limitedto the following:  (1) anyadvertisement, article, notice or other communication published in anynewspaper, magazine, or similar media, or broadcast over television or radio;or (2) any meeting where attendees were invited by any general solicitationor general advertising.

 

11.11.         Access to Information; Opportunity to Inquire.  The Holder: (i) has had access to information regarding the Company and itspresent and prospective business, assets, liabilities and financial condition; (ii) hassuch knowledge of business and financial affairs as is necessary to enableHolder to understand the speculative nature of and the risks attendant toinvestments in securities, in general, and to an investment in the Warrants andShares, in particular, and to understand the financial, legal and taximplications of the business to be conducted by the Company; (iii) has hadthe opportunity to ask questions and receive answers from the Company and itsmanagement with respect to Holder’s proposed acquisition of the Warrants andthe Shares; and (iv) has determined on the basis of consultation with itsown legal counsel and tax advisors that the acquisition of the Warrants and theShares is consistent with his/her own investment objectives and incomeprospects.

 

11.12.         Finder’sFee.  No person, firm or corporationhas or will have, as a result of any act or omission by the Holder, any right,interest or valid claim against the Company for any commission, fee or othercompensation as a finder or broker, or in any similar capacity, in connectionwith the transactions contemplated by this Warrant.

 

12.   AdjustmentProvisions.  Until the closing of thefirst (1st) financing after the execution of this Warrant, number ofWarrants or the strike price may be adjusted as provided in this Section 12to provide for certain anti-dilution protection.

 

12.1.           Theratio of Warrant Shares to outstanding shares of Common Stock shall be theratio thereof existing on the date hereof (the “Ratio”, which the parties agreeis currently 5.03%),

 

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after giving effect to the issuance of a maximum of2.3 million shares of Common Stock to be covered by options or grants issued tomanagement of the Company.  For purposeshereof, the term “outstanding shares of Common Stock” includes the said maximumof 2.3 million shares, plus 8,379,879 issued shares of Common Stock outstandingas of the date hereof, as well as 647,300 shares currently reserved forissuance under existing options, rights and any other outstanding securities ofthe Company.  If the Company shall(1) declare a dividend or make a distributionof Common Stock payable in shares of Common Stock, (2) subdivide itsoutstanding shares of Common Stock into a greater number of shares of CommonStock, (3) combine its outstanding shares of Common Stock into asmaller number of shares of Common Stock, or (4) issue any shares ofcapital stock of the Company by reclassification or capital reorganization ofits shares of Common Stock, then the number of Warrant Shares and the ExercisePrice in effect immediately prior to such action shall be adjusted so that theHolder shall be entitled to receive the number and kind of shares of CommonStock or other Capital Stock which the Holder would have owned or have beenentitled to receive immediately after such action had the Holder exercised theWarrant immediately prior to the record date in the case of (1), or theeffective date in the case of (2), (3) or (4).  In the event that any adjustment of theExercise Price as required herein results in a fraction of a cent, suchExercise Price shall be rounded up to the nearest cent; or

 

12.2.           Shouldthe Company complete a financing transaction that includes convertible debt orequity securities, or warrants or options for equity securities, at a strikeprice that is less than $.22, Holder’s unexercised Warrants shall be re-pricedto match the strike price of the convertible debt or equity security, option orwarrant.

 

13.   Paymentof Expenses.  The Company shall beresponsible for and pay Holder’s costs and expenses (including reasonable feesand disbursements of counsel) payable in connection with:  (1) the negotiation, preparation,execution and delivery of this Warrant and the other agreements to be executedin connection herewith; (2) the issuance of certificates for WarrantShares upon the exercise of this Warrant; and (3) the enforcement byHolder of any of its rights or remedies under or in connection with thisWarrant and the other agreements to be executed in connection herewith.  The Company shall pay any issuance tax inconnection with the issuance of certificates for Warrant Shares; provided,however, that the Holder shall be responsible for any income or other taxesbased on the Holder’s net income in connection with such issuance.

 

14.   NoRights or Liabilities as a Stockholder. This Warrant shall not entitle the Holder to any voting rights or otherrights as a stockholder of the Company. No provision of this Warrant, in the absence of affirmative action bythe Holder to purchase Warrant Shares, and no mere enumeration herein of therights or privileges of the Holder, shall give rise to any liability of suchHolder for the Exercise Price or as a stockholder of the Company, whether suchliability is asserted by the Company or by creditors of the Company.

 

15.   Transferand Replacement of Warrant.  Neitherthis Warrant, nor any interest in this Warrant, may be sold, distributed,assigned, offered, pledged or otherwise transferred without 

 

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the express written consent of the Company, exceptthat transfers of this Warrant or an interest in this Warrant may be made atany time during the term to members of Lender, the children of the members ofLender, or a trust for the benefit of the individual members of the Lender orfor the children of the members of the Lenders provided such members, childrenof members, or trust shall remain subject to the transfer restrictions providedin this Agreement and under applicable law.

 

15.1.           Replacementsof Warrants.  Upon receipt by theCompany of evidence reasonably satisfactory to it of the loss, theft,destruction, or mutilation of this Warrant, and, in case of loss, theft ordestruction, of indemnity or security reasonably satisfactory to it, and uponsurrender and cancellation of this Warrant, if mutilated, the Company will makeand deliver a new Warrant of like tenor, in lieu of this Warrant.

 

15.2.           Cancellation:Payment of Expenses.  Upon thesurrender of this Warrant in connection with any transfer or replacement asprovided in this Section 15, this Warrant shall be promptly canceled bythe Company.  The Company shall beresponsible for and pay all costs and expenses payable in connection with thepreparation, execution, and delivery of new Warrants pursuant to this****Section 15.  TheHolder shall be responsible for any tax which may be payable in connection withany transfer of a certificate for Warrant Shares.

 

15.3.           Registrar.  The Company shall maintain, at its principalexecutive offices (or such other location as the Company may designate bynotice to the Holder), a registrar for this Warrant, in which the Company shallrecord the name and address of the person in whose name this Warrant has beenissued, as well as the name and address of each transferee and each prior ownerof this Warrant.

 

16.   Representation of Counsel.  The parties acknowledge that they haveconsulted with or have had the opportunity to consult with their own legalcounsel prior to executing this Warrant. This Warrant has been freely negotiated by the parties and any rule ofconstruction to the effect that any ambiguities are to be resolved against thedrafting party shall not be employed in the interpretation of this Warrant.

 

17.   Choiceof Laws; Actions.  This Warrant shallbe construed in accordance with the internal laws of the State of Nevada,without regard to the choice of law principles thereof.  The exclusive venue of any legal suit,action, or proceeding arising out of or relating to this Warrant shall be statecourt in Clark County, Nevada.

 

18.   Notices.** **Any notice given to either party shall be in writingand shall be deemed to have been given when delivered personally or sent bycertified or registered mail, postage prepaid, return receipt requested, dulyaddressed to the party concerned at the address indicated below or to suchchanged address as such party may subsequently give notice of:

 

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If to the Company:

 

AmericanWagering, Inc.Attn:  General Counsel675 Grier DriveLas Vegas, NV 89119

 

If tothe Holder:

 

AlpineAdvisors, LLC825 Lakeshore BlvdIncline Village, NV 89451

 

19.   Severability.  In case any provision of this Warrant shallbe invalid, illegal or unenforceable in any jurisdiction then, as to suchjurisdiction only, such provision shall to the extent of such prohibition orunenforceability be deemed severed from the remainder of this Warrant and thevalidity, legality and enforceability of the remaining provisions shall not inany way be affected or impaired thereby.

 

20.   Section Headings.  The various headings used in this Warrant areinserted for convenience of reference only and shall not affect the meaning orinterpretation of this Warrant or any provision hereof.

 

21.   Amendments.  No amendment or modification of any provisionof this Warrant shall be effective without the written agreement of theparties, and no termination or waiver of any provision of this Warrant, orconsent to any departure by the Company therefrom shall in any event beeffective without the written concurrence of the Holder, which concurrence theHolder shall have the right to grant or withhold at its sole discretion.

 

22.   Counterparts.  This Warrant may be executed in any number ofcounterparts, each constituting an original, but all together one and the sameinstrument.

 

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23.   EntireAgreement.  This Warrant, togetherwith the Agreement, constitutes the sole and entire agreement of the partieswith respect to the subject matter contained herein, and supersedes all priorand contemporaneous understandings and agreements, both written and oral, withrespect to such subject matter.

 

INWITNESS WHEREOF, the Company and the Holder have executed this Warrant as ofthe date first written above.

 

 
| COMPANY:                      |               | HOLDER:                            |
|-------------------------------|--------------------|------------------------------------|
| American Wagering, Inc., |               | Alpine Advisors, LLC               |
| A Nevada corporation          |               | A Nevada Limited liability company |
|                          |               |                               |
|                          |               |                               |
| By:                           | /s/ Victor Salerno |                               | By: | /s/ Don R. Kornstein |
| Name: Victor Salerno          |               | Name: Don R. Kornstein             |
| Its: Chief Executive Officer  |               | Its: Managing Member               |
|                               |                    |                                    |  |  |

 

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**EXERCISE AGREEMENT**

 

TO:         AMERICANWAGERING, INC. (THE “COMPANY”)

 

The undersigned, pursuant to the provisions set forth inthe attached Warrant to Purchase Shares of Common Stock (the “Warrant”) herebyirrevocably elects and agrees to purchase                        shares (the “Exercised Shares”) of the Company’s common stock (“Common Stock”)covered by the Warrant and makes payment herewith in full therefor at the priceper share provided by the Warrant in cash or by certified or official bankcheck in the amount of$                                .

 

If said number of shares of Common Stock shall not beall the shares available under the Warrant, a new warrant is to be issued inthe name of said undersigned covering the balance of the shares availablethereunder less any fraction of a share paid in cash.  Please issue a certificate or certificatesfor the Exercised Shares in the name of and pay any cash for any fractionalshare to:

 

 
|   | NAME:      |                                                                                     |
|--------|------------|------------------------------------------------------------------------------------------|
|   |       |                                                                                     |
|   | SIGNATURE: |                                                                                     |
|   |       |                                                                                     |
|   | DATED:     |                                                                                     |
|   |       |                                                                                     |
|   | ADDRESS:   |                                                                                     |
|   |       |                                                                                     |
|   |       |                                                                                     |
|   |       |                                                                                     |
|   | NOTE:      | The above signature should correspond exactly with the  name on the face of the Warrant. |

 

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