**Exhibit10.6**

 

**THIS WARRANT AND THE SHARES ISSUABLEUPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIESACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW.  THIS WARRANT OR SUCH SHARES MAY NOT BESOLD, 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.**

 

**AMENDED ANDRESTATED WARRANT TO PURCHASESHARES OF COMMON STOCK**

 

DATE OF ISSUANCE:  June 11, 2010 Original Warrant

 

DATE OF ISSUANCE: June 21, 2010

 

THIS AMENDED AND RESTATED WARRANT TO PURCHASE SHARES OFCOMMON STOCK amends and restates in its entirety that certain Warrant toPurchase Shares of Common Stock dated June 11, 2010 (the “Original Warrant”).  Except for indicating the date upon which theWarrant was issued to Holder, the Original Warrant is hereby terminated, null,and void.

 

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.

 

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**TERMS ANDCONDITIONS**

 

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

 

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

 

2.     Manner of 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):

 

2.1.             By the surrender of this Warrant, togetherwith an exercise agreement in the form attached hereto (the “Exercise Agreement”),duly completed and executed by the Holder, to the Company during normalbusiness hours on any business day at the Company’s principal executive offices(or such other location as the Company may designate by notice to the Holder);and

 

2.2.             Payment of the exercise price shall bemade, at the option of the Holder by the following methods:

 

a.             by delivery to the Company of a certifiedor official bank check payable to the order of the Company or by wire transferof immediately available funds to an account designated in writing by theCompany, in the amount of such exercise price;

 

b.             by instructing the Company to withhold anumber of Warrant Shares then issuable upon exercise of this Warrant with anaggregate fair market value as of the exercise date equal to such exerciseprice;

 

c.             by surrendering to the Company(x) Warrant Shares previously acquired by the Holder with an aggregatefair market value as of the exercise date equal to such exercise price and/or(y) other securities of the Company having a value as of the exercise dateequal to the exercise price (which value in the case of debt securities shallbe the principal amount thereof plus accrued and unpaid interest, in the caseof preferred stock shall be the liquidation value thereof plus accumulated andunpaid dividends and in the case of shares of Common Stock shall be the fairmarket value thereof); or

 

d.             any combination of the foregoing.

 

2.3.             In the event of any withholding of WarrantShares or surrender of other equity securities pursuant to clause (ii),(iii) or (iv) above where the number of shares whose value is equalto 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 tothe product of (x) such incremental fraction of a share being so withheldor surrendered multiplied by (y) in the case of

 

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Common Stock, thefair market value per Warrant Share as of the exercise date, and, in all othercases, the value thereof as of the exercise date determined in accordance withclause (iii)(y) above. For purposes of this Warrant, “fair market value”shall mean the average closing sales price of the Company’s shares on theNASDAQ OTC Bulletin Board for the ten business days immediately preceding theexercise date.

 

3.     Vesting.  The rightsunder this Warrant are fully vested.  Nofractional shares or scrip representing fractional shares shall be issued uponthe exercise of this Warrant.  In lieu ofsuch fractional shares, which the Holder would otherwise be entitled topurchase upon such exercise, the Company shall round up to the next wholeshare.

 

4.     Issuance of Certificates. The Warrant Shares so purchased shall be deemed to be issued to theHolder, as the record owner of such Warrant Shares, as of the close of businesson the date on which this Warrant shall have been surrendered, the completedExercise Agreement shall have been delivered, and payment shall have been madefor such Warrant Shares as set in Section 2 above.  Certificates for the Warrant Shares sopurchased, representing the aggregate number of shares specified in theExercise Agreement, shall be delivered to the Holder within a reasonable time,not exceeding ten (10) business days, after this Warrant shall have beenso exercised.  The certificates sodelivered shall be in such denominations as may be reasonably requested by theHolder and shall be registered in the name of the Holder.  If this Warrant shall have been exercisedonly in part, then, unless this Warrant has expired, the Company shall, at itsexpense, at the time of delivery of such certificates, deliver to the Holder anew warrant representing the number of Warrant Shares with respect to whichthis Warrant shall not then have been exercised.

 

5.     Exercise Period. This Warrant may be exercised any time before 5:00 p.m., PacificStandard Time, June 11, 2015.

 

6.     Covenants of the Company.  The Company hereby covenants andagrees as follows:

 

6.1.             Shares to be Fully Paid. All Warrant Shares shall, upon issuance in accordance with the terms ofthis Warrant, be validly issued, fully paid, and non-assessable.

 

6.2.             Reservation of Shares. During the Exercise Period, the Company shall at all times haveauthorized, and reserved for the purpose of issuance upon exercise of thisWarrant, a sufficient number of shares of Common Stock to provide for theexercise of this Warrant.

 

6.3.             Successors and Assigns. This Warrant shall be binding upon any entity succeeding to the Companyby merger, consolidation, or acquisition of all or substantially all theCompany’s assets.

 

7.     Representationsand Warranties of the Company.  The Company hereby represents and warrants to theHolder (which representations and warranties shall survive the execution anddelivery of this Warrant and consummation of the transactions contemplated hereby)that:

 

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7.1.             Existence; Authority.** **The Company is a Nevadacorporation duly organized, validly existing and in good standing under thelaws of the State of Nevada and has the power and authority to enter into thisWarrant and to carry out its obligations hereunder.

 

7.2.             Execution and Delivery. The execution and delivery of this Warrant by the Company andconsummation by the Company of the transactions contemplated hereby have beenduly authorized by all necessary action on the part of the Company and no otherproceedings on the partof theCompany are necessary to authorize this Warrant or any of the transactionscontemplated hereby.

 

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7.3.             Binding Effect; Valid Issuance of Warrant:

 

a.             This Warrant has been duly executed anddelivered by the Company and constitutes a legal, valid and binding obligationof the Company and, assuming this Warrant constitutes a legal, valid andbinding obligation of Holder, is enforceable against the Company in accordancewith 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.

 

b.             This Warrant is, and anyWarrant issued in substitution for or replacement of this Warrant shall be,upon issuance, duly authorized and validly issued.

 

c.             All Warrant Shares issuableupon the exercise of this Warrant pursuant to the terms hereof shall be, uponissuance, and the Company shall take all such actions as may be necessary orappropriate in order that such Warrant Shares are, validly issued, fully paidand non-assessable, issued without violation of any preemptive or similarrights of any stockholder of the Company and free and clear of any liens.

 

d.             The Company shall takecommercially reasonable actions as may be necessary to ensure that all suchWarrant Shares are issued without violation by the Company of any applicablelaw or governmental regulation or any requirements of any domestic securitiesexchange upon which shares of Common Stock or other securities constitutingWarrant Shares may be listed at the time of such exercise.

 

e.             The Company shall use take commercially reasonableactions to cause the Warrant Shares, immediately upon such exercise, to belisted on any domestic national securities exchange upon which shares of CommonStock or other securities constituting Warrant Shares are listed, if any, atthe time of such exercise.

 

8.     Registration Rights.

 

8.1.             Demand Registration Rights

 

a.             On or after June 11, 2012, the Holdermay make a written request to the Company that the Company file a registrationstatement under the Securities Act of 1933, as amended (the “Securities Act”)covering the registration of the Warrant Shares.  Upon receipt of such request, the Company, atit sole cost and expense, shall as soon as practicable, but no later thanninety (90) days following receipt of such request, file a registrationstatement with the Securities and Exchange Commission (“SEC”) covering theWarrant Shares, and use its commercially reasonable efforts to cause, as soonas practicable, the registration statement for the Warrant Shares to bedeclared effective by the SEC and such Warrant Shares to be qualified in thosejurisdictions as the Holder may reasonably request.

 

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b.             If the Holder intends to distribute the WarrantShares covered by its request by means of an underwriting, it shall so advisethe Company as a part of its request pursuant to Section 8.1 or anyrequest pursuant to Section 8.2.  Insuch event, the Holder shall enter into an underwriting agreement in customaryform with the underwriter or underwriters selected for such underwriting by theCompany (which underwriter or underwriters shall be reasonably acceptable tothe Holder).

 

c.             The Company shall not be required toeffect a registration pursuant to this Section 8.1: (i) during theperiod starting with the date sixty (60) days prior to the Company’s good faithestimate of the date of filing of, and ending on a date one hundred eighty(180) days after the effective date of, a Company-initiated registration;provided that the Company is actively employing in good faith all reasonableefforts 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 toSection 8.2 below.

 

d.             The Company may include in any suchregistration other securities for sale for its own account or for the accountof any other person; provided that, if the underwriter for the offering shalldetermine that the number of shares proposed to be offered in such offeringwould be reasonably likely to adversely affect such offering, then the securitiesto be sold by the Holder shall be included in such registration before anysecurities proposed to be sold for the account of the Company or any otherperson.

 

8.2.             Form S-3 Registration. If, on or after June 11, 2012, the Company shall receive from theHolder a written request that the Company effect a registration onForm S-3 (or any successor to Form S-3) or any similar short-formregistration statement and any related qualification or compliance with respectto all or a part of the Warrant Shares owned by the Holder, the Company, at itsole cost and expense, will, as soon as practicable, but no later than sixty(60) days following receipt of such request, file such registration statementand use its commercially reasonable efforts to have such registration statementdeclared effective and obtain all such qualifications and compliances as may beso requested and as would permit or facilitate the sale and distribution of allor such portion of the Holder’s Warrant Shares as are specified in such request,provided, however, that the Company shall not be obligated to effect any suchregistration, qualification or compliance pursuant to this Section 8.2:(a) if Form S-3 is not available for such offering by the Holder;(b) if the Holder, together with the holders of any other securities ofthe Company entitled to inclusion in such registration, proposes to sellWarrant Shares and such other securities (if any) at an aggregate price to thepublic of less than one million dollars ($1,000,000); or (c) if the Companyshall furnish to the Holder a certificate

 

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signed bythe Chairman of the Board of Directors of the Company stating that in the goodfaith and reasonable judgment of the Board of Directors of the Company, itwould be seriously detrimental to the Company and its stockholders for suchForm S-3 registration to be effected at such time, in which event theCompany shall have the right to defer the filing of the Form S-3registration statement for a period of not more than sixty (60) days afterreceipt of the request of the Holder under this Section 8.2; provided,that such right to delay a request shall be exercised by the Company not morethan once in any twelve (12) month period.

 

8.3.             Incidental RegistrationRights.  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-Along Rights.

 

9.1.             Transfers by majority stockholders of theCompany.

 

a.             In the event of any proposed transfer (a “ProposedTag-Along Transfer”) of any Common Stock or securities convertible into orexchangeable for Common Stock (collectively, the “Subject Shares”) by existingstockholders, including Victor J. Salerno (the “Existing Stockholders”), in asingle transaction or a series of related transactions involving Subject Sharesaggregating at least 51% of the Common Stock outstanding on a fully dilutedbasis to an individual, corporation, association, partnership, joint venture,limited liability company, joint-stock company, trust, organization, business,or other entity (the “Proposed Purchaser”), the Holder shall have theirrevocable and exclusive right, but not the obligation (the “Tag-Along Right”),to require the purchase from it of up to such number of Warrant Shares asdetermined in accordance with Section 9.3 below.

 

b.             Any Warrant Shares purchased from theHolder pursuant to this Section 9.1 shall be paid for at the same priceper share and upon the same terms and conditions as apply to the ProposedTag-Along Transfer by the Existing Stockholders, provided that the pricepayable by the Proposed Purchaser shall equal the price proposed to be paid pershare of

 

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Common Stock forwhich such Warrant Share is exercisable, less the Exercise Price of suchWarrant Share;

 

c.             The Company or the Existing Stockholdersshall give written notice of at least 30 days prior to the date of the ProposedTag-Along Transfer to the Holder stating (i) the name and address of theProposed Purchaser, (ii) the proposed amount of consideration and termsand conditions of payment offered by such Proposed Purchaser (if the proposedconsideration is not cash, the notice shall describe the terms of the proposedconsideration), (iii) the number of Subject Shares proposed to betransferred and (iv) that either the Proposed Purchaser has been informedof the Tag-Along Right and has agreed to purchase Warrant Shares in accordancewith the terms hereof or that the Existing Stockholders will make suchpurchase. The Tag-Along Right may be exercised by the Holder by giving writtennotice to the Company and the Proposed Purchaser (the “Tag-Along Notice”),within 20 Business Days of receipt of the notice specified in the precedingsentence (such 20 day period being referred to herein as the “Tag-Along Period”),indicating its election to exercise the Tag-Along Right. The Tag-Along Noticeshall state the amount of Warrant Shares that the Holder proposes to include inthe Proposed Tag-Along Transfer. Failure by the Holder to give such noticewithin the Tag-Along Period shall be deemed an election by the Holder not tosell its Warrant Shares in connection with that Proposed Tag-Along Transfer.The closing with respect to any sale to a Proposed Purchaser pursuant to thisSection 9.1 shall be held at the time and place specified in the Tag-AlongNotice, but in any event within 90 days of the end of the Tag-Along Period.Consummation of the sale of Subject Shares by the Existing Stockholders to aProposed Purchaser shall be conditioned upon the consummation of the sale bythe Holder to such Proposed Purchaser of the Warrant Shares subject to theTag-Along Right.

 

9.2.             Purchase Obligation of ExistingStockholders.  In the event that the ProposedPurchaser does not purchase such Warrant Shares from the Holder on the sameterms and conditions as purchased from the Existing Stockholders, then theExisting Stockholders making such transfer shall purchase the Warrant Sharesfrom the Holder if the transfer occurs on such terms and conditions.

 

9.3.             Determination of Transferred Interests. The number of Warrant Shares purchased from the Holder shall bedetermined by multiplying the aggregate amount of Subject Shares proposed to besold by the Existing Stockholders to the Proposed Purchaser by a fraction, thenumerator of which is the total number of shares of Common Stock (including thenumber of Warrant Shares issuable upon exercise of the Warrant) owned by theHolder and the denominator of which is the Common Stock outstanding on a fullydiluted basis.

 

9.4.             Cost of Transfer. The Existing Stockholders who are parties to a sale to a ProposedPurchaser shall arrange for payment directly by the Proposed Purchaser to theHolder, upon delivery of the certificate representing the Warrant Shares to besold, duly endorsed for transfer, together with such other documents as theProposed Purchaser may reasonably request. The Company shall be responsible forand pay the costs and expenses (including the reasonable fees

 

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and disbursementsof counsel) incurred by the Holder in connection with a sale to a ProposedPurchaser, whether or not such sale is consummated.

 

9.5.             Expiration of the Tag-Along Right. If at the end of 90 days following the end of the Tag-Along Period, oras otherwise extended pursuant to the provisions of Section 9.1, the saleof Subject Shares by the Existing Stockholders and the sale of the WarrantShares by the Holder have not been completed in accordance with the terms ofthe Proposed Purchaser’s offer, all certificates representing such SubjectShares and Warrant Shares shall be returned to the Existing Holders and Holder,as applicable, and all the restrictions on sale, transfer, or assignmentcontained in this Agreement shall again be in effect.

 

10.   Drag-Along Rights.  In the event that the holders of at least 66%of the outstanding Common Stock (the “66% Holders”) accept an offer to purchasetheir shares from a bona fide third party, the 66% Holders may send a writtennotice (the “Drag-Along Notice”) to the Holder specifying the name of thepurchaser, the consideration payable per share of Common Stock and a summary ofthe material terms of such proposed purchase. Upon receipt of a Drag-Along Notice, the Holder shall be obligated to(i) sell all of its Warrant Shares, free of any encumbrance, in thetransaction contemplated by the Drag-Along Notice on the same terms andconditions as the 66% Holders (including payment of its pro-rata share of allcosts associated with such transaction), and (ii) otherwise take allnecessary action to cause the consummation of such transaction, includingvoting its Warrant Shares in favor of such transaction and not exercising anyappraisal rights in connection therewith. The Holder (i) further agrees totake all actions (including executing documents) in connection withconsummation of the proposed transaction as may reasonably be requested of itby the 66% Holders, and (ii) hereby appoints the 66% Holders, actingjointly, as its attorney-in-fact to do the same on its behalf.

 

11.   Observer Rights; Election of Directors.

 

11.1.           Observer Rights.  Arepresentative of Holder, or its appointee, shall be entitled to observe allmeetings of the Company’s Board of Directors (the “Board”) and receive allinformation provided to the Board; provided, that such observer rights shallterminate at such time as the Obligations between the Company, as Borrower, andthe Lender under that certain Loan Agreement dated June [·], 2010 aresatisfied and the Loan Agreement is terminated. The Company requires and the Holder agrees that as a condition precedentto Holder’s representative or appointee attending a Board meeting or havingaccess to any information provided to the Board, the representative orappointee shall agree to keep confidential all information so received duringsuch meetings or otherwise on the same basis as the Holder has agreed tomaintain confidentiality pursuant to Section 8 of the Engagement Agreementdated March 12, 2010, between Issuer and Holder; and the Company reservesthe right not to provide information and to exclude such representative orappointee from any Board meeting or portion thereof if delivery of suchinformation or attendance at such meeting by such representative or appointeewould result in the disclosure of trade secrets to such holders or itsrepresentative in violation of the foregoing confidentiality obligation orwould adversely affect the attorney-

 

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clientprivilege between the Company and its counsel or if such representative orappointee is a direct competitor of the Company.

 

11.2.           Election of Directors.  The Amended and Restated Bylaws of the Company provide that the Board ofDirectors shall consist of not more than 9 directors. The Company currentlyconsists of 5 directors.  Upon theoccurrence of an Event of Default in Section 12 the Loan Agreement, theCompany agrees that Holder may, at its sole discretion, (i) provide the Companywith a one-time only written notice demanding that the Company increase numberof its Board of Directors by two (2) persons from 5 directors to 7directors and (ii) appoint persons designated by Holder to fill the 2vacancies; provided that such appointed director positions do not include anyspecial voting, quorum, or replacement rights that are excessive, additional,or absent rights available to the remaining directors of the Board ofDirectors.  The Holder’s Election ofDirectors as set forth in this Section in 11.2 shall terminate at suchtime as the Obligations between the Company, as Borrower, and the Lender underthat certain Loan Agreement dated June [·], 2010 are satisfied and the LoanAgreement is terminated.

 

12.   Representations,Warranties and Covenants of the Holder.  The****Holderhereby represents and warrants to the Company that:

 

12.1.           Accredited Investor Status.** **The Holder represents and warrantsthat the Holder is an “accredited investor” within the meaning ofRule 501(a) of Regulation D, promulgated under the SecuritiesAct.  **The****Holder understands that the Warrants are beingoffered and sold only to “accredited investors” (as that term is defined underRule 501(a) of Regulation D), and the Holder represents that theHolder is an accredited investor.**

 

12.2.           The Holder understands that the Company isrelying on the Holder with respect to the accuracy of this representation andunderstands the significance of the Holder’s representation to the Company thatthe Holder is an accredited investor.

 

12.3.           Residence.  The addressset forth in Section 18 is the Holder’s true and correct residence orprincipal place of business and the Holder has no present intention of becominga resident or domicile of any other state or jurisdiction.

 

12.4.           Authority. The Holder has the power and authority to enter into this Warrant and tocarry out its obligations hereunder.

 

12.5.           Binding Effect.** **This Warrant has been duly executed anddelivered by the Holder and constitutes a legal, valid and binding obligationof the Holder and, assuming this Warrant constitutes a legal, valid and bindingobligation of the Company, is enforceable against the Holder in accordance withits 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.

 

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12.6.          Purchase for Own Account. The Holder represents and warrants that the Warrant and the WarrantShares will be acquired for investment purposes only for the Holder’s ownaccount, not as a nominee or agent, and not with a view to the resale ordistribution of any part thereof, and the Holder has no present intention ofselling, granting any participation in, or otherwise distributing thesame.  By executing this Warrant, theHolder further represents 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.

 

12.7.          Restricted Securities. The Holder acknowledges and understands that the Warrant and the WarrantShares are characterized as “restricted securities” under the federalsecurities laws inasmuch as they are being acquired from the Company in atransaction not involving a public offering and that under such laws andapplicable regulations such securities may be resold without registration underthe Securities Act of 1933, as amended (the “Securities Act”), only in certainlimited circumstances.  In this regard,the Holder represents and warrants that the Holder is familiar with Securitiesand Exchange Commission Rule 144 (“Rule 144”), as presently ineffect, and understands the resale limitations imposed thereby and by theSecurities Act.  Without in any waylimiting the representations set forth above, the Holder agrees not to make anydisposition of all or any portion of the Warrant and the Warrant Shares unlessthere is then in effect a registration statement under the Securities Actcovering such proposed disposition and such disposition is made in accordancewith such registration statement, or the Holder shall have notified the Companyof the proposed disposition and shall have furnished the Company with astatement of the circumstances surrounding the proposed disposition.  The Holder acknowledges that the Company isunder no obligation to register any resale or transfer of the Warrant Shares.

 

12.8.          Legend. The Holder understands that, prior to the registration of the WarrantShares, the stock certificate evidencing the Warrant Shares shall bear therestrictive legend set forth below:

 

**THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEENREGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), ORAPPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, PLEDGED OR OTHERWISETRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT THERETOUNDER THE ACT OR PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENT OFSAID ACT AND COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAW.**

 

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12.9.          Risk of Loss.** **TheHolder acknowledges, represents and warrantsthat it understands investment in the Company involves a high degree ofrisk.  The Holder is financially capableof bearing the loss of the Holder’s entire investment, understands that aninvestment in the Warrant and Warrant Shares involves special and substantialrisks and recognizes the lack of liquidity of the Warrant and the WarrantShares and the restrictions upon transferability thereof.

 

12.10.        No Solicitation. The Holder represents and warrants that the Holder was not solicited toacquire the Warrant or the Warrant Shares by any means of general solicitation,including but not limited to the following: (1) any advertisement, article, notice or other communicationpublished in any newspaper, magazine, or similar media, or broadcast overtelevision or radio; or (2) any meeting where attendees were invited byany general solicitation or general advertising.

 

12.11.        Access toInformation; Opportunity to Inquire.  TheHolder:  (i) has had access toinformation regarding the Company and its present and prospective business,assets, liabilities and financial condition; (ii) has such knowledge ofbusiness and financial affairs as is necessary to enable Holder to understandthe speculative nature of and the risks attendant to investments in securities,in general, and to an investment in the Warrants and Shares, in particular, andto understand the financial, legal and tax implications of the business to beconducted by the Company; (iii) has had the opportunity to ask questionsand receive answers from the Company and its management with respect to Holder’sproposed acquisition of the Warrants and the Shares; and (iv) hasdetermined on the basis of consultation with its own legal counsel and taxadvisors that the acquisition of the Warrants and the Shares is consistent withhis/her own investment objectives and income prospects.

 

12.12.        Finder’s Fee. No person, firm or corporation has or will have, as a result of any actor omission by the Holder, any right, interest or valid claim against theCompany for any commission, fee or other compensation as a finder or broker, orin any similar capacity, in connection with the transactions contemplated bythis Warrant.

 

13.  Adjustment Provisions. Until the closing of the first (1st) financing after the execution of thisWarrant, number of Warrants or the strike price may be adjusted as provided inthis Section 12 to provide for certain anti-dilution protection.

 

13.1.          The ratio of Warrant Shares to outstandingshares of Common Stock shall be the ratio thereof existing on the date hereof(the “Ratio”, which the parties agree is currently 5.03%), after giving effectto the issuance of a maximum of 2.3 million shares of Common Stock to becovered by options or grants issued to management of the Company.  For purposes hereof, the term “outstandingshares of Common Stock” includes the said maximum of 2.3 million shares, plus8,379,879 issued shares of Common Stock outstanding as of the date hereof, aswell as 647,300 shares currently reserved for issuance under existing options,rights and any other outstanding securities of the Company.  If the Company shall (1) declare adividend or make a distribution ofCommon Stock payable in shares of Common Stock, (2) subdivide itsoutstanding shares of

 

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Common Stock into a greater number of shares of Common Stock, (3) combine its outstanding sharesof Common Stock into a smaller number of shares of Common Stock, or(4) issue any shares of capital stock of the Company by reclassificationor capital reorganization of its shares of Common Stock, then the number ofWarrant Shares and the Exercise Price in effect immediately prior to suchaction shall be adjusted so that the Holder shall be entitled to receive thenumber and kind of shares of Common Stock or other Capital Stock which theHolder would have owned or have been entitled to receive immediately after suchaction had the Holder exercised the Warrant immediately prior to the recorddate in the case of (1), or the effective date in the case of (2), (3) or(4).  In the event that any adjustment ofthe Exercise Price as required herein results in a fraction of a cent, suchExercise Price shall be rounded up to the nearest cent; or

 

13.2.          Should the Company complete a financingtransaction that includes convertible debt or equity securities, or warrants oroptions for equity securities, at a strike price that is less than $.22, Holder’sunexercised Warrants shall be re-priced to match the strike price of theconvertible debt or equity security, option or warrant.

 

14.  Payment of Expenses. The Company shall be responsible for and pay Holder’s costs and expenses(including reasonable fees and disbursements of counsel) payable in connectionwith:  (1) the negotiation,preparation, execution and delivery of this Warrant and the other agreements tobe executed in connection herewith; (2) the issuance of certificates forWarrant Shares upon the exercise of this Warrant; and (3) the enforcementby Holder 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.

 

15.  No Rights 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.

 

16.  Transfer and Replacement of Warrant. Neither this Warrant, nor any interest in this Warrant, may be sold,distributed, assigned, offered, pledged or otherwise transferred without theexpress written consent of the Company, except that transfers of this Warrantor an interest in this Warrant may be made at any time during the term tomembers of Lender, the children of the members of Lender, or a trust for the benefitof the individual members of the Lender or for the children of the members ofthe Lenders provided such members, children of members, or trust shall remainsubject to the transfer restrictions provided in this Agreement and underapplicable law.

 

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16.1.          Replacements of Warrants. Upon receipt by the Company of evidence reasonably satisfactory to it ofthe loss, theft, destruction, or mutilation of this Warrant, and, in case ofloss, theft or destruction, of indemnity or security reasonably satisfactory toit, and upon surrender and cancellation of this Warrant, if mutilated, theCompany will make and deliver a new Warrant of like tenor, in lieu of thisWarrant.

 

16.2.          Cancellation: Payment of Expenses.  Upon the surrender of this Warrant inconnection with any transfer or replacement as provided in thisSection 15, this Warrant shall be promptly canceled by the Company.  The Company shall be responsible for and payall costs and expenses payable in connection with the preparation, execution,and delivery of new Warrants pursuant to this****Section 15.  The Holder shall be responsible for any taxwhich may be payable in connection with any transfer of a certificate forWarrant Shares.

 

16.3.          Registrar.  The Companyshall maintain, at its principal executive offices (or such other location asthe Company may designate by notice to the Holder), a registrar for thisWarrant, in which the Company shall record the name and address of the personin whose name this Warrant has been issued, as well as the name and address ofeach transferee and each prior owner of this Warrant.

 

17.  Representation of Counsel. The parties acknowledge that they have consulted with or have had theopportunity to consult with their own legal counsel prior to executing thisWarrant.  This Warrant has been freelynegotiated by the parties and any rule of construction to the effect thatany ambiguities are to be resolved against the drafting party shall not beemployed in the interpretation of this Warrant.

 

18.  Choice of Laws; Actions. This Warrant shall be construed in accordance with the internal laws ofthe State of Nevada, without regard to the choice of law principlesthereof.  The exclusive venue of anylegal suit, action, or proceeding arising out of or relating to this Warrantshall be state court in Clark County, Nevada.

 

19.  Notices.** **Any notice given to either party shall bein writing and shall be deemed to have been given when delivered personally orsent by certified or registered mail, postage prepaid, return receiptrequested, duly addressed to the party concerned at the address indicated belowor to such changed address as such party may subsequently give notice of:

 
| If to the Company: |
|--------------------|
|               |
|               | American  Wagering, Inc. |
|               | Attn:  General Counsel |
|               | 675  Grier Drive |
|               | Las  Vegas, NV 89119 |

 

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| If to the Holder: |
|-------------------|
|              |
|              | Alpine  Advisors, LLC |
|              | 825  Lakeshore Blvd |
|              | Incline  Village, NV 89451 |

 

20.  Severability. In case any provision of this Warrant shall be invalid, illegal orunenforceable in any jurisdiction then, as to such jurisdiction only, suchprovision shall to the extent of such prohibition or unenforceability be deemedsevered from the remainder of this Warrant and the validity, legality andenforceability of the remaining provisions shall not in any way be affected orimpaired thereby.

 

21.  Section Headings. The various headings used in this Warrant are inserted for convenienceof reference only and shall not affect the meaning or interpretation of thisWarrant or any provision hereof.

 

22.  Amendments.  No amendmentor modification of any provision of this Warrant shall be effective without thewritten agreement of the parties, and no termination or waiver of any provisionof this Warrant, or consent to any departure by the Company therefrom shall inany event be effective without the written concurrence of the Holder, whichconcurrence the Holder shall have the right to grant or withhold at its solediscretion.

 

23.  Counterparts. This Warrant may be executed in any number of counterparts, eachconstituting an original, but all together one and the same instrument.

 

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24.  Entire Agreement. This Warrant, together with the Agreement, constitutes the sole andentire agreement of the parties with respect to the subject matter containedherein, and supersedes all prior and contemporaneous understandings andagreements, both written and oral, with respect 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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**EXERCISEAGREEMENT**

 

TO:         AMERICAN WAGERING, 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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