**Exhibit 10.4**

 

**BORROWER PLEDGE AGREEMENT**

 

**PLEDGE AGREEMENT**(this “**Pledge Agreement**”),dated as of June 22, 2010, between American Wagering, Inc., a Nevadacorporation ( “**Pledgor**”), and Alpine Advisors LLC(“Lender”) ( “**Secured Party**”).

 

WHEREAS,Pledgor has entered into a Loan Agreement dated as of June 22, 2010 (asamended, supplemented, restated or otherwise modified and in effect from timeto time, the “**Loan Agreement**”), with SecuredParty, pursuant to which, among other things, Secured Party has agreed, in itssole discretion, to make loans to Pledgor upon the terms and subject to theconditions specified in the Loan Agreement;

 

WHEREAS,in order to secure all Obligations, Pledgor has agreed to execute and deliverto Secured Party a pledge agreement in substantially the form hereof;

 

NOW,THEREFORE, in consideration of the premises and for other good and valuableconsideration the receipt and sufficiency of which are hereby acknowledged, theparties hereto agree as follows:

 

Section 1.               DEFINITIONS.

 

1.01.        Definition of Terms UsedHerein Generally.  Allcapitalized terms used but not defined herein shall have the meanings set forthin the Loan Agreement.  All terms usedherein and defined in the NVUCC shall have the same definitions herein asspecified therein; provided, however, that if a term is defined inArticle 9 of the NVUCC differently than in another Article of theNVUCC, the term has the meaning specified in Article 9 of the NVUCC.

 

1.02.        Definition of Certain TermsUsed Herein.  As usedherein, the following terms shall have the following meanings:

 

“**Indemnified Party**” shall have the meaning assigned to suchterm in Section 8.04.

 

“**event**” shall have the meaning assigned to such term in Section 8.03(a).

 

“**Lien**” shall mean any security interest, mortgage, lien,encumbrance or adverse claim, and any financing statement or similar documentfiled in respect of same.

 

“**Loan Agreement**” shall have the meaning assigned to such termin the preliminary statement of this Pledge Agreement.

 

“**Pledged Collateral**”shall have the meaning assigned to such term in Section 2.01.

 

“**Pledged Securities**”shall have the meaning assigned to such term in Section 2.02(b).

 

“**NVUCC**” shall mean the Uniform Commercial Code as in effectin the State of Nevada from time to time.

 

“**Securities Act**”shall have the meaning assigned to such term in Section 8.01(d).

 

“**Security Interests**”shall have the meaning assigned to such term in Section 7.

 

“**UCC**” means the Uniform Commercial Code as in effect in anyjurisdiction (except as otherwise contemplated in Section ).  References to particular sections of Article 9of the UCC shall be, unless otherwise indicated, references to Revised Article 9of the UCC adopted and effective in certain jurisdictions on or after July 1,2001.

 

1

----

 

1.03.        Rules of Interpretation.  References to “sections”, “Exhibits” and “Schedules”shall be to Sections, Exhibits and Schedules, respectively, of this PledgeAgreement unless otherwise specifically provided.  Any of the terms defined in this 0 may,unless the context otherwise requires, be used in the singular or the pluraldepending on the reference.  Allreferences to statutes and related regulations shall include (unless otherwisespecifically provided herein) any amendments of same and any successor statutesand regulations.

 

Section 2.               PLEDGE*.*

 

2.01.        Grant of Security Interest.  To secure the payment or performance, as thecase may be, in full of the Obligations, whether at stated maturity, by acceleration or otherwise, Pledgor herebypledges to Secured Party, and grants to Secured Party a first priority andexclusive Security Interest in, the collateral described in Section 2.02(collectively, the “**Pledged Collateral**”).

 

2.02.        Description of PledgedCollateral.

 

(a)   The Pledged Collateral isdescribed as follows and on any separate schedules at any time furnished byPledgor to Secured Party (which schedules are hereby deemed part of this PledgeAgreement):

 

(i)            all right, title andinterest of Pledgor as a holder (whether now or in the future) in(x) shares or other equity interests in any corporations (including,without limitation, those corporations described on Schedule 1 hereto), orany warrants to purchase or depositary shares or other rights in respect of anysuch interests, and (y) all shares of stock, certificates, instruments orother documents evidencing or representing the same;

 

(ii)           all right, title andinterest of Pledgor in and to all present and future payments, proceeds,dividends, distributions, instruments, compensation, property, assets,interests and rights in connection with or related to the collateral listed inclause (i) above, and all monies due or to become due and payable toPledgor in connection with or related to such collateral or otherwise paid,issued or distributed from time to time in respect of or in exchange therefor,and any certificate, instrument or other document evidencing or representingthe same (including, without limitation, all proceeds of dissolution orliquidation); and

 

(iii)          all proceeds of all of theforegoing, of every kind, and all proceeds of such proceeds.

 

(b)   The shares of stock,certificates, instruments or other documents evidencing or representing theforegoing shall be collectively referred to herein as the “**PledgedSecurities**”.

 

2.03.        Delivery of Certificates, Instruments, Etc.

 

(a)   Pledgor shall deliver toSecured Party:

 

(i)            all original shares ofstock, certificates, instruments and other documents evidencing or representingthe Pledged Collateral concurrently with the execution and delivery of thisPledge Agreement, and

 

(ii)           the original shares ofstock, certificates, instruments or other documents evidencing or representingall Pledged Collateral within ten (10) days after Pledgor’s receiptthereof.

 

2

----

 

(iii)          All Pledged Securities thatare certificated securities shall be in bearer form or, if in registered form,shall be issued in the name of Secured Party or endorsed to Secured Party or inblank.

 

2.04.        Registration.  At any time and from time to time, SecuredParty may cause all or any of the Pledged Securities to be transferred to orregistered in its name or the name of its nominee or nominees.

 

2.05.        Authorization to FileFinancing Statements.  Pledgor herebyirrevocably authorizes Secured Party at any time and from time to time to filein any jurisdiction in which the UCC has been adopted any initial financingstatements and amendments thereto that (a) describe the PledgedCollateral, and (b) contain any other information required by part 5of Article 9 of the UCC for the sufficiency or filing office acceptance ofany initial financing statement or amendment, including (i) whetherPledgor is an organization, the type of organization and any organization identificationnumber issued to Pledgor.  Pledgor agreesto furnish any such information to Secured Party promptly upon request.  Pledgor also ratifies its authorization forSecured Party to have filed in any UCC jurisdiction any like initial financingstatements or amendments thereto if filed prior to the date hereof.

 

Section 3.               REPRESENTATIONS ANDWARRANTIES OF PLEDGOR*.*

 

Pledgorhereby represents and warrants to Secured Party that:

 

3.01.        Pledgor’s Legal Status.  (a) Pledgor is an individual or anorganization, as set forth in Schedule 1 hereto; (b) if Pledgor is anorganization, such organization is of the type, and is organized in thejurisdiction, set forth in Schedule 1 hereto; and (c) Schedule 1 heretosets forth Pledgor’s organizational identification number or states thatPledgor has none.

 

3.02.        Pledgor’s Legal Name.  Pledgor’s exact legal name is that set forthin Schedule 1 hereto and on the signature page hereof. If Pledgor is atrust or a trustee acting on behalf of a trust, Schedule 1 sets forth the nameof the trust in its organic documents or if the trust has no name, the name ofthe trustee and the settlor of the trust and additional information sufficientto distinguish the trust from other trusts having one or more of the samesettlors.

 

3.03.        [Reserved]

 

3.04.        Authority; BindingObligation; No Conflict*.*  Pledgor has full power and authority toexecute, deliver and perform its obligations in accordance with the terms ofthis Pledge Agreement and to grant to Secured Party the Security Interest inthe Pledged Collateral pursuant hereto, without the consent or approval of anyother person or entity other than any consent or approval which has beenobtained and is in full force and effect. This Pledge Agreement has been duly authorized, executed and deliveredby Pledgor and is the legally valid and binding obligation of Pledgor,enforceable against Pledgor in accordance with its terms , except asenforcement may be limited by bankruptcy, insolvency, reorganization,moratorium, or similar laws or equitable principles relating to or limitingcreditor’s rights generally.  Thegranting to Secured Party of the Security Interest in the Pledged Collateralhereunder, the execution by Pledgor of this Pledge Agreement and theperformance by Pledgor of its obligations hereunder do not and will not(a) result in the existence or imposition of any Lien nor obligate Pledgorto create any Lien (other than such Security Interest) in favor of any personor entity over all or any of its assets; (b) conflict with any agreement,mortgage, bond or other instrument to which Pledgor is a party or which isbinding upon Pledgor or any of its assets; (c) conflict with Pledgor’scertificate of incorporation, by-laws, or other organizational or charterdocuments; or (d) conflict with any law, regulation or judicial orderbinding on Pledgor or any of the Pledged Collateral.

 

3.05.        Title to Collateral.  The Pledged Collateral is owned by thePledgor free and clear of any Lien, except for Liens expressly permitted by theLoan Agreement. The Pledgor has not filed or 

 

3

----

 

consented to the filing of (a) any financingstatement or analogous document under the UCC or any other applicable lawscovering any Pledged Collateral, (b) any assignment in which the Pledgorassigns any Pledged Collateral or any security agreement or similar instrumentcovering any Pledged Collateral with any foreign governmental, municipal orother office, which financing statement or analogous document, assignment, securityagreement or similar instrument is still in effect, except, in each case, forLiens expressly permitted pursuant to the Loan Agreement.

 

3.06.        Pledged Collateral.  Set forth on Schedule 1 hereto is acomplete and accurate list and description of all the Pledged Collateral.

 

3.07.        Percentage Ownership.  The Pledged Securities of each issuerspecifically identified on Schedule 1 hereto constitute, and until allObligations have been irrevocable paid in cash and performed in full shallcontinue to constitute, the percentage of the outstanding equity of each suchissuer as indicated on Schedule 1 hereto.

 

3.08.        [Reserved]

 

3.09.        Due Authorization, Etc.,of Stock; Not Margin Stock.  The Pledged Securities listed onSchedule 1 hereto have been duly authorized and validly issued and arefully paid and non-assessable and are not subject to any options to purchase orsimilar rights of any person, and none of the Pledged Securities constitutesMargin Stock.

 

3.10.        Required Consents.  Except as may be required in connection withany disposition of any portion of the Pledged Securities by laws affecting theoffering and sale of securities generally, no consent of any person (including,without limitation, partners, shareholders or creditors of Pledgor or of any subsidiaryof Pledgor) and no license, permit, approval or authorization of, exemption by,notice or report to, or registration, filing or declaration with, anygovernmental instrumentality is required in connection with (i) theexecution, delivery, performance, validity or enforceability of this PledgeAgreement, (ii) the perfection or maintenance of the Security Interestcreated hereby (including the first priority nature of such Security Interest),or (iii) the exercise by Secured Party of the rights provided for in thisPledge Agreement.

 

3.11.        Nature of Security Interest.  Upon the delivery of the Pledged Securitiesto Secured Party, the pledge of the Pledged Collateral pursuant to this PledgeAgreement creates a valid and perfected first priority Security Interest in thePledged Collateral, securing the prompt and complete payment, performance andobservance of the Obligations.

 

Section 4.               COVENANTS OF PLEDGOR*.*

 

4.01.        Pledgor’s Legal Status.  Pledgor shall not change its type oforganization, jurisdiction of organization or other legal structure.

 

4.02.        Pledgor’s Name.  Without providing at least 30 days priorwritten notice to Secured Party, Pledgor shall not change its name.

 

4.03.        Pledgor’s OrganizationalNumber. Without providing at least 30 days prior written notice to SecuredParty, Pledgor shall not change its organizational identification number if ithas one.  If Pledgor does not have anorganizational identification number and later obtains one, Pledgor shallforthwith notify Secured Party of such organizational identification number.

 

4.04.        [Reserved]

 

4

----

 

4.05.        Title to Collateral.  (a) Except for the Security Interestherein granted, Pledgor shall be the owner of the Pledge Collateral free fromany Lien, and Pledgor, at its sole cost and expense, shall defend the sameagainst all claims and demands of all persons at any time claiming the same orany interests therein adverse to Secured Party; and (b) Pledgor shall notsell or otherwise dispose of, or pledge, mortgage or create, or suffer to exista Lien on, the Pledged Collateral in favor of any person other than SecuredParty and the inclusion of “proceeds” of the Pledged Collateral under theSecurity Interest granted herein shall not be deemed a consent by Secured Partyto any sale or other disposition of any Pledged Collateral.

 

4.06.        Taxes.  Pledgor shall pay promptly when due alltaxes, assessments, governmental charges and levies upon the Pledged Collateralor incurred in connection with the Pledged Collateral or incurred in connectionwith this Pledge Agreement.

 

4.07.        Further Assurances.  Pledgor will, from time to time, at itsexpense, promptly execute and deliver all further instruments and documents andtake all further action that may be necessary, or that Secured Party mayreasonably request, in order to perfect and protect any Security Interestgranted or purported to be granted hereby or to enable Secured Party toexercise and enforce its rights and remedies hereunder with respect to any PledgedCollateral.

 

Section 5.               VOTING RIGHTS AND CERTAINPAYMENTS PRIOR TO EVENT OF DEFAULT*.*

 

5.01.        Voting Rights Prior to anEvent of Default. So long as no Event of Default shall have occurredand be continuing, Pledgor shall be entitled to exercise, as it shall thinkfit, but in a manner not inconsistent with the terms hereof, the voting powerwith respect to the Pledged Collateral of Pledgor, and for that purpose SecuredParty shall (if any Pledged Securities shall be registered in the name ofSecured Party or its nominee) execute or cause to be executed from time totime, at the expense of Pledgor, such proxies or other instruments in favor ofPledgor or its nominee, in such form and for such purposes as shall bereasonably required by Pledgor and shall be specified in a written requesttherefor, to enable it to exercise such voting power with respect to thePledged Securities.

 

5.02.        Payments and Distributions.

 

(a)   In case any payments,proceeds, dividends, distributions, monies, compensation, property, assets,instruments or rights upon or with respect to any of the Pledged Securities ispaid or payable, then and in any such event, such sum shall be paid by Pledgorover to Secured Party promptly, and in any event within ten (10) daysafter receipt thereof, to be held by Secured Party as additional collateralhereunder.

 

(b)   In case any stock dividendshall be declared with respect to any of the Pledged Collateral, or any sharesof stock or fractions thereof shall be issued pursuant to any stock split involvingany of the Pledged Collateral, or any distribution of capital shall be made onany of the Pledged Collateral, or any shares, obligations or other propertyshall be distributed upon or with respect to the Pledged Collateral, in eachcase pursuant to a recapitalization or reclassification of the capital of theissuer thereof, or pursuant to the dissolution, liquidation (in whole or inpart), bankruptcy or reorganization of such issuer, or to the merger orconsolidation of such issuer with or into another corporation, the shares,obligations or other property so distributed shall be delivered by Pledgor toSecured Party promptly, and in any event within ten (10) days afterreceipt thereof, to be held by Secured Party as additional collateral hereundersubject to the terms of this Pledge Agreement, and all of the same shallconstitute Pledged Collateral for all purposes hereof.

 

5.03.        Voting Rights and OrdinaryPayments After an Event of Default.  Upon the occurrence and during thecontinuance of any Event of Default, all rights of Pledgor to exercise orrefrain 

 

5

----

 

from exercising the voting and other consensualrights that it would otherwise be entitled to exercise pursuant toSection 5.01(a) hereof shall cease, and thereupon Secured Party shallbe entitled to exercise all voting power with respect to the Pledged Securitiesduring such an Event of Default and otherwise to act with respect to thePledged Collateral as outright owner thereof.

 

Section 6.               ALL PAYMENTS IN TRUST.  All payments, proceeds, dividends,distributions, monies, compensation, property, assets, instruments or rightsthat are received by Pledgor contrary to the provisions of Section 5hereof shall be received and held in trust for the benefit of Secured Party,shall be segregated by Pledgor from other funds of Pledgor and shall beforthwith paid over to Secured Party as Pledged Collateral in the same form asso received (with any necessary endorsement).

 

Section 7.               EXPENSES*.* Pledgor shall pay all expenses incurred bySecured Party in connection with the negotiation, execution, delivery,amendment, waiver, renegotiation, enforcement or collection of this PledgeAgreement or the exercise of remedies hereunder, including, without limitation,reasonable attorney’s fees, advertising costs, fees and expenses of advisorsand investment bankers and other experts. If Pledgor fails promptly to pay any portion of the above expenses whendue or to perform any other obligation of Pledgor under this Pledge Agreement,Secured Party may, at its option, but shall not be required to, pay or performthe same and charge Pledgor for all costs and expenses incurred therefor, andPledgor agrees to reimburse Secured Party therefor on demand.  All sums so paid or incurred by Secured Partyfor any of the foregoing, any and all other sums for which Pledgor may becomeliable hereunder and all such costs and expenses incurred by Secured Party inenforcing or protecting the Security Interests created under this Pledge Agreement(the “**Security Interests**”) or any of itsrights or remedies under this Pledge Agreement shall be payable by Pledgor ondemand, shall constitute Obligations, shall bear interest until paid at a rateof 22% per annum, calculated on the basis of a 360-day year prorated for theactual number of days elapsed.

 

Section 8.               REMEDIES*.*

 

8.01.        Disposition Upon Default andRelated Provisions.

 

(a)   Upon the occurrence andduring the continuance of any Event of Default, Secured Party may exercise inrespect of the Pledged Collateral, in addition to other rights and remediesprovided for herein or otherwise available to it, all rights of voting,exercise and conversion with respect to the Pledged Collateral and all of therights and remedies of a secured party on default under the NVUCC at that time(whether or not applicable to the affected Pledged Collateral) and may also,without obligation to resort to other security, at any time and from time totime sell, resell, assign and deliver, in its sole discretion, all or any ofthe Pledged Collateral, in one or more parcels at the same or different times,and all right, title and interest, claim and demand therein and right ofredemption thereof, on any securities exchange on which any Pledged Collateralmay be listed, or at public or private sale, for cash, upon credit or forfuture delivery, and in connection therewith Secured Party may grant options.

 

(b)   If any of the PledgedCollateral is sold by Secured Party upon credit or for future delivery, SecuredParty shall not be liable for the failure of the purchaser to purchase or payfor the same and, in the event of any such failure, Secured Party may resellsuch Pledged Collateral. In no event shall Pledgor be credited with any part ofthe proceeds of sale of any Pledged Collateral until cash payment therefor hasactually been received by Secured Party.

 

(c)   Secured Party may purchaseany Pledged Collateral at any public sale and, if any Pledged Collateral is ofa type customarily sold in a recognized market or is of the type that is thesubject of widely distributed standard price quotations, Secured Party maypurchase such Pledged Collateral at private sale, and in each case may makepayment therefor by any means, including, without limitation, by release ordischarge of Obligations in lieu of cash payment.

 

6

----

 

(d)   Pledgor recognizes thatSecured Party may be unable to effect a public sale of all or part of thePledged Collateral consisting of securities by reason of certain prohibitionscontained in the Securities Act of 1933, as amended (the “**SecuritiesAct**”), or in applicable Blue Sky or other state securities laws, asnow or hereafter in effect, but may be compelled to resort to one or moreprivate sales to a restricted group of purchasers who will be obliged to agree,among other things, to acquire such securities for their own account, forinvestment and not with a view to the distribution or resale thereof. Pledgoragrees that any such Pledged Collateral sold at any such private sale may besold at a price and upon other terms less favorable to the seller than if soldat public sale and that each such private sale shall be deemed to have beenmade in a commercially reasonable manner. Secured Party shall have no obligation to delay the sale of any suchsecurities for the period of time necessary to permit the issuer of suchsecurities, even if such issuer would agree, to register such securities forpublic sale under the Securities Act. Pledgor agrees that private sales made under the foregoing circumstancesshall be deemed to have been made in a commercially reasonable manner.

 

(e)   No demand, advertisement ornotice, all of which are hereby expressly waived, shall be required inconnection with any sale or other disposition of any part of the PledgedCollateral that threatens to decline speedily in value or that is of a typecustomarily sold on a recognized market; otherwise Secured Party shall givePledgor at least ten days’ prior notice of the time and place of any publicsale and of the time after which any private sale or other disposition is to bemade, which notice Pledgor agrees is commercially reasonable.

 

(f)    Secured Party shall not beobligated to make any sale of Pledged Collateral if it shall determine not todo so, regardless of the fact that notice of sale may have been given. SecuredParty may, without notice or publication, adjourn any public or private sale orcause the same to be adjourned from time to time by announcement at the timeand place fixed for sale, and such sale may, without further notice, be made atthe time and place to which the same was so adjourned.

 

(g)   The remedies provided hereinin favor of Secured Party shall not be deemed exclusive, but shall becumulative, and shall be in addition to all other remedies in favor of SecuredParty existing at law or in equity.

 

(h)   To the extent thatapplicable law imposes duties on Secured Party to exercise remedies in acommercially reasonable manner, Pledgor acknowledges and agrees that it is notcommercially unreasonable for Secured Party (i)  to advertise dispositionsof Pledged Collateral through publications or media of general circulation;(ii) to contact other persons, whether or not in the same business asPledgor, for expressions of interest in acquiring all or any portion of thePledged Collateral; (iii) to hire one or more professional auctioneers toassist in the disposition of Pledged Collateral; (iv) to dispose ofPledged Collateral by utilizing Internet sites that provide for the auction ofassets of the types included in the Pledged Collateral or that have the reasonablecapability of doing so, or that match buyers and sellers of assets; (v) todisclaim disposition warranties, or (vi) to the extent deemed appropriateby Secured Party, to obtain the services of brokers, investment bankers,consultants and other professionals to assist Secured Party in the dispositionof any of the Pledged Collateral. Pledgor acknowledges that the purpose of thisclause (h) is to provide non-exhaustive indications of what actions oromissions by Secured Party would not be commercially unreasonable in SecuredParty’s exercise of remedies against the Pledged Collateral and that otheractions or omissions by Secured Party shall not be deemed commerciallyunreasonable solely on account of not being indicated in this clause (h).  Without limiting the foregoing, nothingcontained in this clause (h) shall be construed to grant any rights to Pledgoror to impose any duties on Secured Party that would not have been granted orimposed by this Pledge Agreement or by applicable law in the absence of this clause(h).

 

7

----

 

8.02.        Secured Party AppointedAttorney-in-Fact

 

(a)   To effectuate the terms andprovisions hereof, Pledgor hereby appoints Secured Party as Pledgor’sattorney-in-fact for the purpose, from and after the occurrence and during thecontinuance of an Event of Default, of carrying out the provisions of thisPledge Agreement and taking any action and executing any instrument thatSecured Party from time to time in Secured Party’s reasonable discretion maydeem necessary or advisable to accomplish the purposes of this PledgeAgreement.  Without limiting thegenerality of the foregoing, Secured Party shall, from and after the occurrenceand during the continuance of an Event of Default, have the right and power to:

 

(i)            receive, endorse and collectall checks and other orders for the payment of money made payable to Pledgorrepresenting any interest or dividend or other distribution or amount payablein respect of the Pledged Collateral or any part thereof and to give fulldischarge for the same;

 

(ii)           execute endorsements,assignments or other instruments of conveyance or transfer with respect to allor any of the Pledged Collateral;

 

(iii)          exercise all rights ofPledgor as owner of the Pledged Collateral including, without limitation, theright to sign any and all amendments, instruments, certificates, proxies, andother writings necessary or advisable to exercise all rights and privileges of(or on behalf of) the owner of the Pledged Collateral, including, withoutlimitation, all voting rights with respect to the Pledged Securities;

 

(iv)          ask, demand, collect, suefor, recover, compound, receive and give acquittance and receipts for moneysdue and to become due under or in respect of any of the Pledged Collateral;

 

(v)           file any claims or take anyaction or institute any proceedings that Secured Party may deem necessary ordesirable for the collection of any of the Pledged Collateral or otherwise toenforce the rights of Secured Party with respect to any of the PledgedCollateral; and

 

(vi)          generally to sell, transfer,pledge, make any agreement with respect to or otherwise deal with any of thePledged Collateral as fully and completely as though Secured Party were theabsolute owner thereof for all purposes, and to do, at Secured Party’s optionand Pledgor’s expense, at any time or from time to time, all acts and thingsthat Secured Party deems reasonably necessary to protect, preserve or realizeupon the Pledged Collateral.

 

(b)   Pledgor hereby ratifies and approvesall acts of Secured Party made or taken pursuant to this Section 8.02 (*provided,* that Pledgor does not, by virtue of suchratification, release any claim that Pledgor may otherwise have against SecuredParty for any such acts made or taken by Secured Party through gross negligenceor willful misconduct).  Neither SecuredParty nor any person designated by Secured Party shall be liable for any actsor omissions or for any error of judgment or mistake of fact or law, exceptsuch as may result from Secured Party’s gross negligence or willfulmisconduct.  This power, being coupledwith an interest, is irrevocable so long as this Pledge Agreement shall remainin force.

 

8.03.        Secured Party’s Duties ofReasonable Care

 

(a)   Secured Party shall have theduty to exercise reasonable care in the custody and preservation of any PledgedCollateral in its possession, which duty shall be fully satisfied if suchPledged Collateral is accorded treatment substantially equal to that whichSecured Party accords its own 

 

8

----

 

property and, with respect to any calls,conversions, exchanges, redemptions, offers, tenders or similar mattersrelating to any such Pledged Collateral (herein called “**events**”),

 

(i)            Secured Party exercisesreasonable care to ascertain the occurrence and to give reasonable notice toPledgor of any events applicable to any Pledged Securities that are registeredand held in the name of Secured Party or its nominee,

 

(ii)           Secured Party gives Pledgorreasonable notice of the occurrence of any events of which Secured Party hasreceived actual knowledge, which events are applicable to any securities thatare in bearer form or are not registered and held in the name of Secured Partyor its nominee (Pledgor agreeing to give Secured Party reasonable notice of theoccurrence of any events of which Pledgor has knowledge, which events areapplicable to any securities in the possession of Secured Party), and

 

(iii)          Secured Party endeavors totake such action with respect to any of the events as Pledgor may reasonablyand specifically request in writing in sufficient time for such action to beevaluated and taken or, if Secured Party reasonably believes that the actionrequested would adversely affect the value of the Pledged Collateral ascollateral or the collection of the Obligations, or would otherwise prejudicethe interests of Secured Party, Secured Party gives reasonable notice toPledgor that any such requested action will not be taken and, if Secured Partymakes such determination or if Pledgor fails to make such timely request,Secured Party takes such other action as it deems advisable in thecircumstances.

 

(iv)          Except as hereinabovespecifically set forth, Secured Party shall have no further obligation to ascertainthe occurrence of, or to notify Pledgor with respect to, any events and shallnot be deemed to assume any such further obligation as a result of theestablishment by Secured Party of any internal procedures with respect to anysecurities in its possession, nor shall Secured Party be deemed to assume anyother responsibility for, or obligation or duty with respect to, any PledgedCollateral or its use of any nature or kind, or any matter or proceedingsarising out of or relating thereto, including, without limitation, anyobligation or duty to take any action to collect, preserve or protect its orPledgor’s rights in the Pledged Collateral or against any prior partiesthereto, but the same shall be at Pledgor’s sole risk and responsibility at alltimes.

 

(v)           Pledgor waives anyrestriction or obligation imposed on Secured Party under Sections 9-207(c)(1)and 9-207(c)(2) of the NVUCC.

 

8.04.        Indemnification.  Pledgor hereby releases Secured Party and theofficers, shareholders, members, directors, employees and agents thereof (each,an “**Indemnified Party**”) from any claims,causes of action and demands at any time arising out of or with respect to thisPledge Agreement, the Obligations, the Pledged Collateral and its use and/orany actions taken or omitted to be taken by such Indemnified Party with respectthereto (except such claims, causes of action and demands arising from the badfaith, gross negligence or willful misconduct of such Indemnified Party) andPledgor hereby agrees to hold each Indemnified Party harmless from and withrespect to any and all such claims, causes of action and demands (except suchclaims, causes of action and demands arising from the gross negligence orwillful misconduct of such Indemnified Party).

 

8.05.        Prior Recourse.  Secured Party’s prior recourse to any PledgedCollateral shall not constitute a condition of any demand, suit or proceedingfor payment or collection of the Obligations.

 

8.06.        Secured Party May Perform.  If Pledgor fails to perform any agreementcontained herein, Secured Party may itself perform or cause performance of suchagreement, and the expenses of Secured Party incurred in connection therewithshall be treated as provided in Section 7 hereof.

 

9

----

 

Section 9.               SURETYSHIP WAIVERS BYPLEDGOR; OBLIGATIONS ABSOLUTE.

 

(a)   The Pledgor waives demand,notice, protest, notice of acceptance of this Pledge Agreement, notice of loansmade, credit extended, collateral received or delivered or other action takenin reliance hereon and all other demands and notices of any description.thereof, all in such manner and at such time or times as the Secured Party maydeem advisable.  The Secured Party shallhave no duty as to the collection or protection of the Pledged Collateral or anyincome thereon, nor as to the preservation of rights against prior parties, noras to the preservation of any rights pertaining thereto beyond the safe custodythereof as set forth in Section 8.03.

 

(b)   All rights of the SecuredParty hereunder, the Security Interests and all obligations of the Pledgorhereunder shall be absolute and unconditional irrespective of (a) any lack ofvalidity or enforceability of the Loan Agreement, any other Loan Document, anyagreement with respect to any of the Obligations or any other agreement orinstrument relating to any of the foregoing, (b) any change in the time, manneror place of payment of, or in any other term of, all or any of the Obligations,or any other amendment or waiver of or any consent to any departure from theLoan Agreement, any other Loan Document, or any other agreement or instrument,(c) any exchange, release or non-perfection of any Lien on other collateral, orany release or amendment or waiver of or consent under or departure from or anyacceptance of partial payment thereon and or settlement, compromise oradjustment of any Secured Obligation or of any guarantee, securing orguaranteeing all or any of the Obligations, or (d) any other circumstance thatmight otherwise constitute a defense available to, or a discharge of, thePledgor in respect of the or this Pledge Agreement.

 

Section 10.             MARSHALLING.  Secured Party shall not be required tomarshal any present or future collateral security (including but not limited tothis Pledge Agreement and the Pledged Collateral) for, or other assurances ofpayment of, the Obligations or any of them or to resort to such collateralsecurity or other assurances of payment in any particular order, and all of itsrights hereunder and in respect of such collateral security and otherassurances of payment shall be cumulative and in addition to all other rights,however existing or arising.  To theextent that it lawfully may, Pledgor hereby agrees that it shall not invoke anylaw relating to the marshalling of collateral which might cause delay in orimpede the enforcement of Secured Party’s rights under this Pledge Agreement orunder any other instrument creating or evidencing any of the Obligations orunder which any of the Obligations is outstanding or by which any of theObligations is secured or payment thereof is otherwise assured, and, to theextent that it lawfully may, Pledgor hereby irrevocably waives the benefits ofall such laws.

 

Section 11.             PROCEEDS OF DISPOSITIONS.After deducting all expenses payable to Secured Party, including, withoutlimitation, pursuant to Section 7, the residue of any proceeds of collection orsale of the Obligations or Collateral shall, to the extent actually received incash, be applied to the payment of the remaining Obligations in such order orpreference as Secured Party may elect, proper allowance and provision beingmade for any Obligations not then due or held as additional Collateral.  Upon the final payment and satisfaction infull of all of the Obligations and the termination of the Availability Periodunder the Loan Agreement and after making any payments required bySections 9-608(a)(1)(C) or 9-615(a)(3) of the NVUCC, any excess shall bereturned to Pledgor, and in any event Pledgor shall remain liable for any deficiencyin the payment of the Obligations.

 

Section 12.             REINSTATEMENT. Theobligations of Pledgor pursuant to this Pledge Agreement shall continue to beeffective or automatically be reinstated, as the case may be, if at any timepayment of any of the Obligations is rescinded or otherwise must be restored orreturned by Secured Party upon the insolvency, bankruptcy, dissolution,liquidation or reorganization of Pledgor or any other obligor or otherwise, allas though such payment had not been made.

 

10

----

 

Section 13.             MISCELLANEOUS.

 

13.01.      Notices*.*  Except as otherwise provided herein, wheneverit is provided herein that any notice, demand, request, consent, approval,declaration or other communication shall or may be given to or served upon anyof the parties by any other party, or whenever any of the parties desires togive and serve upon any other party any communication with respect to thisPledge Agreement, each such notice, demand, request, consent, approval, declarationor other communication shall be in writing and shall be given in the manner andto the address, and deemed received, as provided for in the LoanAgreement.  Delivery by telecopier of anexecuted counterpart of any amendment or waiver of any provision of this PledgeAgreement or any Schedule shall be effective as delivery of an originalexecuted counterpart thereof.

 

13.02.      GOVERNING LAW.  THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY,AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEVADA.

 

13.03.      [Reserved]

 

13.04.      Counterparts. This PledgeAgreement may be executed in two or more separate counterparts, each of whichshall constitute an original and all of which shall collectively and separatelyconstitute one and the same agreement.

 

13.05.      Headings.  The headings of each section of this PledgeAgreement are for convenience only and shall not define or limit the provisionsthereof.

 

13.06.      No Strict Construction. The partieshereto have participated jointly in the negotiation and drafting of this PledgeAgreement.  In the event an ambiguity orquestion of intent or interpretation arises, this Pledge Agreement shall beconstrued as if drafted jointly by the parties hereto and no presumption orburden of proof shall arise favoring or disfavoring any party by virtue of theauthorship of any provisions of this Pledge Agreement.

 

13.07.      Severability. In the eventany one or more of the provisions contained in this Pledge Agreement should beheld invalid, illegal or unenforceable in any respect, the validity, legalityand enforceability of the remaining provisions contained herein shall not inany way be affected or impaired thereby (it being understood that theinvalidity of a particular provision in a particular jurisdiction shall not inand of itself affect the validity of such provision in any other jurisdiction).

 

13.08.      Survival of Agreement. Allcovenants, agreements, representations and warranties made by the Pledgorherein and in the certificates or other instruments prepared or delivered in connectionwith or pursuant to this Pledge Agreement shall be considered to have beenrelied upon by the Secured Party and shall survive the execution and deliveryof the Loan Agreement and the advance of all extensions of credit contemplatedthereby, regardless of any investigation made by the Secured Party, and shallcontinue in full force and effect until this Pledge Agreement shall terminate(or thereafter to the extent provided herein).

 

13.09.      Binding Effect; SeveralAgreement*. *This PledgeAgreement is binding upon the Pledgor and the Secured Party and theirrespective successors and assigns, and shall inure to the benefit of thePledgor, the Secured Party and their respective successors and assigns, exceptthat the Pledgor shall have no right to assign or transfer its rights orobligations hereunder or any interest herein (and any such assignment ortransfer shall be void).

 

11

----

 

13.10.      Waivers; Amendment*.*

 

(a)   No failure or delay of theSecured Party in exercising any power or right hereunder shall operate as awaiver thereof, nor shall any single or partial exercise of any such right orpower, or any abandonment or discontinuance of steps to enforce such a right orpower, preclude any other or further exercise thereof or the exercise of anyother right or power.  The rights andremedies of the Secured Party hereunder and of the Secured Party under theother Loan Documents are cumulative and are not exclusive of any rights orremedies that they would otherwise have. No waiver of any provisions of this Pledge Agreement or consent to anydeparture by the Pledgor therefrom shall in any event be effective unless thesame shall be permitted by paragraph (b) below, and then such waiver or consentshall be effective only in the specific instance and for the purpose for whichgiven.  No notice to or demand on thePledgor in any case shall entitle the Pledgor to any other or further notice ordemand in similar or other circumstances.

 

(b)   Neither this PledgeAgreement nor any provision hereof may be waived, amended or modified exceptpursuant to an agreement or agreements in writing entered into by the SecuredParty and the Pledgor.

 

INWITNESS WHEREOF, intending to be legally bound, Pledgor has caused this PledgeAgreement to be duly executed as of the date first above written.

 
| American  Wagering, Inc.  |                     |
|---------------------------|--------------------------|
|                      |                     |
|                      |                     |   |
| By:                       | /s/  Victor Salerno      |   |
|                      | Victor  Salerno          |   |
|                      | Chief  Executive Officer |   |
|                      |                     |   |
| Address:                  | 675 Grier Drive          |   |
|                      | Las Vegas, Nevada 89119  |   |
| Attention:                | General  Counsel         |   |
| Telecopier  No.:          | (702)735-0142            |   |
|                      |                     |
| **Accepted  and Agreed:** | ** **               |
|                      |                     |
| Alpine  Advisors LLC,     |                     |
| as  Secured Party         |                     |
|                      |                     |
|                      |                     |   |
| By:                       | /s/  Don R. Kornstein    |   |
|                      | Don  R. Kornstein        |   |
|                      | Managing  Member         |   |
|                           |                          |  |  |  |

 

12

----

 

**Schedule 1 to Pledge Agreement**

Attached to and forming part of that certain

PledgeAgreement dated as of June 22, 2010

by

AmericanWagering, Inc., as Pledgor,

to

AlpineAdvisors LLC, as Secured Party

 

**Listand Description of Pledged Securities**

 

Description of Pledged Securities:

 
| **Issuer  of Stock**             | ** ** | **Class  of Stock** | ** ** | **Certificate  Numbers** | ** ** | **Number  of Shares** | ** ** | **Percentage  of total  shares** | ** ** |
|---------------------------------------|------------|--------------------------|------------|--------------------------|------------|----------------------------|------------|---------------------------------------|------------|
| Computerized Bookmaking Systems, Inc. |       | Common                   |       | 1                        |       | 100                        |       | 100                                   |       |

 
| Exact Name of Pledgor: American Wagering, Inc.             |
|------------------------------------------------------------|
|                                                       |
| Pledgor is an organization                                 |
|                                                       |
| Pledgor is a corporation                                   |
|                                                       |
| Pledgor is organized under the laws of Nevada              |
|                                                       |
| Pledgor’s organizational identification number:  none |

 

13

----