exv4w4



 





EXHIBIT 4.4




SPECTRE GAMING, INC.




UNIT PURCHASE WARRANT




     Spectre Gaming, Inc., a Minnesota corporation (the “Company”), hereby
agrees that, for value received,          , or its assigns, is
entitled, subject to the terms set forth below, to purchase from the Company at
any time or from time to time after November 12, 2004, and before 5:00 P.M.,
Minneapolis, Minnesota time, on November 12, 2009,    
(   ) units (the “Units”), each unit consisting of one share of the
Company’s common stock (the “Common Stock”), and a five-year warrant to
purchase an additional share of Common Stock for $3.75 per share (the “Stock
Warrant”), at an exercise price of $2.50 per Unit, subject to adjustment as
provided herein (the “Exercise Price”).



     1. Exercise. The purchase rights granted by this Warrant shall be exercised by
the holder surrendering this Warrant with the form of exercise attached hereto
duly executed by such holder, to the Company at its principal office,
accompanied by payment, in cash or by cashier’s check payable to the order of
the Company, of the purchase price payable in respect of Units being purchased
(unless exercised pursuant to Section 5 hereof). If fewer than all of the
Units purchasable hereunder are purchased upon exercise, the Company will
execute and deliver to the holder hereof a new Warrant (dated the date hereof)
evidencing the number of Units not so purchased. As soon as practicable after
the exercise of this Warrant and payment of the purchase price, the Company
will cause to be issued in the name of and delivered to the holder hereof, or
as such holder may direct, one or more certificates representing the shares of
Common Stock purchased upon such exercise, together with a Stock Warrant in the
form attached hereto as Exhibit A for the purchase of an equal number of shares
of Common Stock. The Company may require that any certificates representing
Common Stock contain a legend substantially as follows:



The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or
applicable state securities laws. No transfer of such securities
or any interest therein may be made except pursuant to
registration under said laws unless the Company has received an
opinion of counsel acceptable to the Company stating either that
the securities have been registered or such transfer does not
require registration under said laws.



     In addition, any additional shares of Common Stock issued upon exercise of
the Stock Warrant shall contain a legend substantially in the form indicated
therein.



     2. Transfer. This Warrant is issued upon the following terms, to which each
holder hereof consents and agrees: (a) until this Warrant is duly transferred
on the Company’s books, the Company may treat the registered holder of this
Warrant as absolute owner hereof for all purposes without being affected by any
notice to the contrary; (b) each successive holder of this Warrant, or of any
portion of the rights represented thereby, shall be bound by the terms and
conditions set forth herein; and (c) this Warrant is immediately assignable,
notwithstanding anything herein to the contrary, to officers, directors,
employees and registered representatives of             and its affiliates and
subagent(s), and the officers, directors, employees and registered
representatives of such sub-agent(s).



     3. Antidilution Adjustments to Exercise Price. The provisions of this Warrant are subject to adjustment as provided in this
Section 3.



 









 






     (a) The Exercise Price shall be adjusted from time to time such that
in case the Company shall hereafter: (i) pay any dividends on Common
Stock payable in Common Stock or securities convertible into Common
Stock; (ii) subdivide its then-outstanding shares of Common Stock into a
greater number of shares; or (iii) combine its then-outstanding shares of
Common Stock, by reclassification or otherwise. In any such event, the
Exercise Price in effect immediately prior to such event shall (until
adjusted again pursuant hereto) be adjusted immediately after such event
to a price (calculated to the nearest full cent) determined by dividing
(A) the number of shares of Common Stock outstanding immediately prior to
such event, multiplied by the then-existing Exercise Price, by (B) the
total number of shares of Common Stock outstanding immediately after such
event (including in each case the maximum number of shares of Common
Stock issuable in respect of any securities convertible into Common
Stock), and the resulting quotient shall be the adjusted Exercise Price.
Upon any adjustment to the Exercise Price hereof, the exercise price of
the Stock Warrant shall be adjusted pursuant to the terms and conditions
hereof, assuming an adjustment in the number of shares of Common Stock
issuable pursuant to such warrant as provided in the second paragraph of
Section 3(b) hereof.




     Adjustments made pursuant to this subsection shall become effective
immediately after the record date in the case of a dividend or
distribution; or immediately after the effective date in the case of a
subdivision, combination or reclassification. If, as a result of an
adjustment made pursuant to this subsection, the holder of any Warrant
thereafter surrendered for exercise shall become entitled to receive
shares of two or more classes of capital stock or shares of Common Stock
and other capital stock of the Company, the Board of Directors (whose
determination shall be conclusive) shall reasonably and not arbitrarily
determine the allocation of the adjusted Exercise Price between or among
shares of such classes of capital stock or shares of Common Stock and
other capital stock. All calculations under this subsection shall be
made to the nearest cent or to the nearest 1/100 of a share, as the case
may be. In the event that, as a result of an adjustment made pursuant to
this subsection, the holder of any Warrant thereafter surrendered for
exercise shall become entitled to receive any securities of the Company
other than shares of Common Stock, thereafter the exercise price of such
other securities so receivable upon exercise of this Warrant shall be
subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to Common
Stock contained herein.




     (b) Upon each adjustment of the Exercise Price pursuant to Section
3(a), the holder of this Warrant shall thereafter (until another such
adjustment) be entitled to purchase at the adjusted Exercise Price the
number of shares of Common Stock, calculated to the nearest full share,
obtained by multiplying the number of shares of Common Stock specified in
such Warrant (as then in effect, after all adjustments in the Exercise
Price prior thereto) by the Exercise Price in effect prior to such
adjustment and dividing the product so obtained by the adjusted Exercise
Price.




     Upon any adjustment of the number of shares of Common Stock included
in the Units purchasable hereunder pursuant to this subsection, the
number of shares of Common Stock issuable upon exercise of the Stock
Warrant in each Unit (the “Stock Warrant Shares”) shall be adjusted to
such number of shares of Common Stock as is equal to such adjusted number
of shares of Common Stock comprising each Unit. If any adjustment is
made to the number of Stock Warrant Shares hereunder, no additional
adjustment shall be made at the same under the terms of the Stock Warrant
to the number of shares purchasable under the Stock Warrant.



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     (c) In case of (i) any reorganization of the Company’s capital stock
(other than splits or combinations of Common Stock contemplated by and
provided for in Section 3(a)), (ii) any consolidation or merger of the
Company with another company, limited liability company, partnership or
other business entity, or any sale, conveyance, lease or other transfer
by the Company of all or substantially all of its property to any other
company, limited liability company, partnership or other business entity,
which is effected in such a manner that the holders of Common Stock shall
be entitled to receive cash, stock, securities or assets with respect to
or in exchange for Common Stock, or (iii) any dividend or any other
distribution upon any class of the Company’s capital stock payable in
capital stock of a different class, other securities of the Company, or
other Company property (other than cash), then, as a part of such
transaction, lawful provision shall be made so that the holder of each
Warrant then outstanding shall have the right thereafter to convert such
Warrant into the kind and amount of shares of stock and other securities
and property which the holder would have owned or have been entitled to
receive immediately after such consolidation, reorganization, merger,
statutory exchange, sale or conveyance had such Warrant been exercised
immediately before the effective date of such consolidation, merger,
statutory exchange, sale or conveyance and, in any such case, if
necessary, appropriate adjustment shall be made in the application of the
provisions set forth in this Section with respect to the rights and
interests thereafter of any holders of the Warrant, to the end that the
provisions set forth in this Section shall thereafter correspondingly be
made applicable, as nearly as may reasonably be, in relation to any other
shares of stock and other securities and property thereafter deliverable
upon the exercise of the Warrant (including those deliverable upon
exercise of the Stock Warrant). The provisions of this paragraph shall
similarly apply to successive consolidations, mergers, statutory
exchanges, sales or conveyances.




     (d) Upon any adjustment of the Exercise Price, then and in each such
case the Company shall give written notice thereof, by first-class mail,
postage prepaid, addressed to the holder as shown on the Company’s books,
which notice shall state the Exercise Price resulting from such
adjustment and the increase or decrease, if any, in the number of shares
of Common Stock purchasable at such price upon the exercise of this
Warrant, and the number of additional shares of Common Stock purchasable
upon exercise of the accompanying Stock Warrant, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based.




     (e) If at any time: (i) the Company shall pay any dividend upon its
Common Stock payable in stock or make any distribution (other than cash
dividends) to the holders of its Common Stock; (ii) the Company shall
offer for subscription pro rata to the holders of its Common Stock any
additional shares of stock of any class or any other rights; (iii) there
shall be any capital reorganization or reclassification of the capital
stock of the Company, or consolidation or merger of the Company with, or
sale, conveyance, lease or other transfer of all or substantially all of
its assets to, another company; or (iv) there shall be a voluntary or
involuntary dissolution, liquidation or winding up of the Company; then,
in any one or more such cases, the Company shall give prior written
notice, by first-class mail, postage prepaid, addressed to the holder of
the Warrant as shown on the books of the Company, of the date on which
(1) the books of the Company shall close or a record shall be taken for
such stock dividend, distribution or subscription rights or (2) such
reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up shall take place, as the case may
be. Such notice shall also specify the date as of which the holders of
the Common Stock of record shall participate in such dividend,
distribution or subscription rights or shall be entitled to exchange
their Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation, or winding up, as the case may be. Such
written notice shall be given at least 15 days prior to the action in
question and at least 15 days



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prior to the record date or the date on which the Company’s transfer
books are closed in respect thereto.




     (f) If the Company or an affiliate of the Company shall at any time
after the date hereof and prior to the exercise of this Warrant issue any
rights, warrants or options to subscribe for shares of Common Stock or
any other securities of the Company or of such affiliate to all the
shareholders of the Company, then the holder of any unexercised Warrants
on the record date set by the Company or such affiliate in connection
with such issuance of rights, warrants or options shall be entitled, in
addition to the shares of Common Stock or other securities receivable
upon the exercise of the Warrant, to receive such rights, warrants or
options that such holder would have been entitled to receive had the
holder been, on such record date, a holder of record of the number of
whole shares of Common Stock then issuable upon exercise of the holder’s
outstanding Warrants (assuming for purposes of this Section 3(f) that the
exercise of the Warrants is permissible immediately upon issuance).



     4. Transferability; Registration Rights.




     (a) Subject to Section 2(c), prior to making any disposition of the
Warrant, any Common Stock purchased upon exercise of the Warrant or any
Stock Warrant Shares, the holder will give written notice to the Company
describing briefly the manner of any such proposed disposition. The
holder will not make any such disposition until (i) such holder provides
to the Company the written opinion of such holder’s counsel, which
opinion shall be reasonably acceptable to the Company, that registration
under the Securities Act of 1933, as amended (the “Securities Act”), is
not required with respect to such disposition, or (ii) a registration
statement covering the proposed disposition has been filed by the Company
and has become effective. The holder then will make such disposition
only pursuant to the conditions of such opinion or registration. The
Company shall under no circumstances be required to register the Warrant
or the Stock Warrant for resale or distribution under the Act. If
registration under the Securities Act of the Common Stock purchasable
upon exercise of the Warrant is not in effect and such shares of Common
Stock are not freely transferable by the holder of the Warrant or, in the
absence of such an effective registration, if an exemption from state and
federal registration of the sale of such shares is not available during
the term of this Warrant when the holder hereof seeks to sell the Common
Stock to be so acquired, the exercise period of the Warrant will
automatically be extended until such time as the resale registration
under the Securities Act of such shares of Common Stock becomes effective
and applicable to the holder of the Warrant or a state and federal
exemption for such shares becomes applicable to the holder of the
Warrant. In the absence of such an effective registration, or exemption
from such registration, and if, as a result, the term of the Warrant is
so extended beyond the original term hereof, the Warrant shall then
remain exercisable for a period of at least 30 business days from the
date the Company delivers to the holder of the Warrant written notice of
the availability of such registration or exemption from such
registration. In no event will the exercise period of the Warrant expire
before November 12, 2009.




     (b) If, at any time after the date hereof and prior to the
expiration of seven years from the date hereof, the Company shall propose
to file any registration statement under the Securities Act covering a
public offering of the Common Stock (other than a registration on Form
S-4 or Form S-8 (or their successor forms) or any registration form that
does not permit secondary sales), it will notify the holder hereof at
least 30 business days prior to each such filing and will include in the
registration statement (to the extent permitted by applicable regulation)
the
shares of Common Stock underlying each Unit purchasable hereunder to
the extent requested by the holder hereof. Notwithstanding the
foregoing, the number of shares proposed to be registered



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thereby shall
be reduced pro rata with any other selling shareholder (other than the
Company) upon the request of the managing underwriter of such offering,
if any. If the registration statement or offering statement filed
pursuant to such notice has not become effective within six months
following the date such notice is given to the holder hereof, the Company
must again notify such holder in the manner provided above.




     (c) At any time after the date hereof and prior to the expiration of
this Warrant, and provided that a registration statement on Form S-3 (or
its equivalent) is then available to the Company, and on a one-time basis
only, if the holders of a majority of the Warrants and the shares of
Common Stock underlying each Unit purchasable hereunder or acquired upon
exercise of the Warrants request the registration of such shares on Form
S-3 (or its equivalent), the Company shall promptly thereafter effect the
registration under the Securities Act of all such shares which such
holders request in writing to be so registered, and in a manner as nearly
as commercially possible corresponding to the methods of distribution
described in such holders’ request.




     (d) Notwithstanding the foregoing, if the Company shall furnish to
holders of Common Stock requesting a registration statement pursuant to
this Section 4 a certificate signed by the Company’s Chief Executive
Officer stating that in the good faith judgment of the Company’s Board of
Directors, it would be seriously detrimental to the Company and its
shareholders for such registration statement to be filed and it is
therefore essential to defer the filing of such registration statement,
the Company shall have the right to defer such filing for a period of not
more than 180 days after receipt of the request of such holders of Common
Stock.




     (e) The Company shall bear all costs, fees and expenses of any such
registrations referred to in this Section 4, including, without
limitation, the Company’s legal and accounting fees, printing expenses
and blue sky fees and expenses, except the fees and expenses of counsel
or other special advisors to such holders and any of their underwriting
commissions or discounts. The Company will take all necessary action
which may be required in qualifying or registering the Common Stock
included in the registration statement for offering and sale under the
securities or blue sky laws of such states as are reasonably requested by
the holders of such securities.




     (f) The Company will mail to each record holder, at the last known
post office address, written notice of any exercise of the rights granted
under this Section 4, by certified or registered mail, return-receipt
requested, and each holder shall have 15 business days from the date of
deposit of such notice in the U.S. mail to notify the Company in writing
whether such holder wishes to join in such exercise.




     (g) The Company will furnish the holder hereof with a reasonable
number of copies of any prospectus included in such filings and will
amend or supplement the same as required during the period of required
use thereof. The Company will maintain the effectiveness of any
registration statement or the offering statement filed by the Company,
whether or not at the request of the holder hereof, for at least one year
following the effective date thereof.




     (h) The holder of the Warrant agrees to cooperate with the Company
in the preparation and filing of any such registration statement or
offering statement, and in the furnishing of information concerning the
holder for inclusion therein, or in any efforts by the Company to
establish that the proposed sale is exempt under the Securities Act as to
any proposed disposition by the holder.



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     (i) The registration rights of the holder solely with respect to the
Stock Warrant Shares shall be governed by that certain Registration
Rights Agreement by and between the Company and certain investors,
including             , dated as of November 12, 2004 (the “Registration
Rights Agreement”).




     (j) The Company shall indemnify any holder of the Warrant, the Stock
Warrant or any shares of Common Stock issued upon the exercise thereof to
be sold pursuant to any registration statement and any underwriter or
person deemed to be an underwriter under the Securities Act and each
person, if any, who controls such holder or underwriter or person deemed
to be an underwriter within the meaning of Section 15 of the Securities
Act or Section 20(a) of the Securities Exchange Act of 1934, as amended
(“Exchange Act”), against all loss, claim, damage, expense or liability
(including all expenses reasonably incurred in investigating, preparing
or defending against any claim whatsoever) to which any of them may
become subject under the Securities Act, the Exchange Act or otherwise,
arising from such registration statement to the same extent and with the
same effect as the provisions pursuant to which the Company has agreed to
indemnify the holders as set forth in the Registration Rights Agreement,
and to provide for just and equitable contribution as set forth therein.




     (k) The holder of shares of Common Stock to be sold pursuant to a
registration statement, and such holder’s successors and assigns, shall
severally, and not jointly, indemnify, the Company, its officers and
directors and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act, against all loss, claim, damage or expense or liability
(including all expenses reasonably incurred in investigating, preparing
or defending against any claim whatsoever) to which they may become
subject under the Securities Act, the Exchange Act or otherwise, arising
from information furnished in writing by or on behalf of such holder, or
such Holder’s successors or assigns, for specific inclusion in such
registration statement to the same extent and with the same effect as the
provisions pursuant to which the holders has agreed to indemnify the
Company as set forth in the Registration Rights Agreement, and to provide
for just and equitable contribution as set forth therein.




     (l) Nothing contained herein shall be construed as requiring any
holder to exercise this Warrant prior to the initial filing of any
registration statement or the effectiveness thereof.




     (m) If the Company fails to comply with the provisions of this
Section 4, the Company shall, in addition to any other equitable or other
relief available to the holders of this Warrant, the Stock Warrant, the
shares of Common Stock underlying this Warrant or the Stock Warrant, be
liable for any or all incidental, special and consequential damages
sustained by the holders requesting registration of their shares of
Common Stock.




     (n) The Company shall not permit the inclusion of any securities
other than the shares of Common Stock to be included in any registration
statement filed pursuant to Section 4(c) hereof, without the prior
written consent of a majority of the holders of the Warrants, which
consent shall not be unreasonably withheld.



     5. Cashless Exercise Option.




     (a) The holder of this Warrant shall have the right to require the
Company to convert this Warrant (the “Conversion Right”), at any time
after it is exercisable, but prior to its
expiration, into shares of Common Stock and a corresponding Stock
Warrant as provided for in this Section 5. Upon exercise of the
Conversion Right, the Company shall deliver to the holder



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(without
payment by the holder of any Exercise Price) that number of shares of
Common Stock comprising each Unit purchasable hereunder (and a Stock
Warrant to purchase an equal number of Stock Warrant Shares) equal to (i)
the number of Units which would, but for such conversion, be then
issuable pursuant to the provisions of Section 1 above upon the exercise
of this Warrant, as specified by the holder in its Conversion Notice
(defined below) (the “Total Unit Number”) less (ii) the number of Units
equal to the quotient obtained by dividing (x) the product of the Total
Unit Number and the then-applicable Exercise Price per Unit, by (y) the
Fair Market Value (as defined below) of one share of Common Stock
immediately prior to the exercise of the Conversion Right. No fractional
shares shall be issuable upon exercise of the Conversion Right, and if
the number of shares to be issued in accordance with the foregoing
formula is other than a whole number, such fractional share shall be
cancelled.




     (b) The Conversion Right may be exercised by the holder, at any time
or from time to time after this Warrant is exercisable, prior to its
expiration, on any business day, by delivering a written notice in the
form attached hereto (the “Conversion Notice”) to the Company and
specifying (i) the total number of Units the holder of this Warrant is
purchasing pursuant to such conversion, and (ii) a place, and a date not
less than one nor more than 20 business days from the date of the
Conversion Notice for the closing of such conversion.




     (c) At any closing under Section 5(b), (i) the holder will surrender
the Warrant, (ii) the Company will deliver to the holder one or more
certificates for the number of shares of Common Stock comprising each
Unit issuable upon such conversion, together with a Stock Warrant to
purchase an equal number of Stock Warrant Shares, and (iii) the Company
will deliver to the holder a new Warrant representing the number of
Units, if any, with respect to which the Warrant shall not have been
converted.




     (d) “Fair Market Value” of a share of Common Stock as of a
particular date (the “Determination Date”) shall mean, as applicable:




     (i) If the Company’s Common Stock is traded on an exchange or
is quoted on The NASDAQ National Market or The NASDAQ SmallCap
Market, then the average closing or last sale prices, respectively,
reported for the ten consecutive trading days immediately preceding
the Determination Date.




     (ii) If the Company’s Common Stock is not traded on an
exchange or quoted on The NASDAQ National Market or The NASDAQ
SmallCap Market but is traded in the over-the-counter market, then
the average of the closing bid and asked prices reported for the
ten consecutive trading days immediately preceding the
Determination Date.




     (iii) If the Company’s Common Stock is not publicly traded and
there has been a bona fide sale for cash on an arm’s-length basis
within 45 days prior to the Determination Date of such Common Stock
by the Company privately to one or more investors unaffiliated with
the Company (a “Qualifying Sale”), then such most recent sales
price.




     (iv) If the Company’s Common Stock is not publicly traded and
there has been no Qualifying Sale, then fair market value of such
stock will be determined by the Board of Directors of the Company,
acting in good faith utilizing customary business
valuation criteria and methodologies (without discount for
lack of marketability or minority interest).



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     6. [Reserved].



     7. Reservation of Common Stock. A number of shares of Common Stock sufficient
to provide for the exercise of this Warrant, and for the exercise of Stock
Warrant, upon the basis herein set forth shall at all times be reserved for the
exercise thereof. As long as the Warrant is outstanding, the Company shall use
its best efforts to cause all shares of Common Stock issuable upon the exercise
of the Warrant (including the Stock Warrant) to be listed on the
Over-the-Counter Bulletin Board, or any successor trading market on which the
Common Stock may be listed and/or quoted.



     8. Redemption of Stock Warrant. The Stock Warrant contains provisions allowing
the Company to redeem such warrant upon the fulfillment of certain conditions,
as set forth in Sections 8, 9 and 10 thereof. The holder expressly understands
and acknowledges that the Company has such right of redemption, and that the
Company may redeem the Stock Warrant at any time prior to its exercise pursuant
to such provisions and the other terms and conditions of the Stock Warrant
regardless of whether this Warrant has been exercised such that the Stock
Warrant has thereupon been issued to the holder.



     9. Miscellaneous. Whenever reference is made herein to the issue or sale of
shares of Common Stock, the term “Common Stock” shall include any stock of any
class of the Company other than preferred stock with a fixed limit on dividends
and a fixed amount payable in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company.



     The Company will not, by amendment of its Articles of Incorporation or
through reorganization, consolidation, merger, dissolution or sale of assets,
or by any other voluntary act or deed, avoid or seek to avoid the observance or
performance of any of the covenants, stipulations or conditions to be observed
or performed hereunder by the Company, but will at all times in good faith
assist, insofar as it is able, in the carrying out of all provisions hereof and
in the taking of all other action which may be necessary in order to protect
the rights of the holder hereof against dilution.



     The representations, warranties and agreements contained herein shall
survive the exercise of this Warrant. References to the “holder of” include
the immediate holder of shares purchased on the exercise of this Warrant, and
the word “holder” shall include the plural thereof. This Warrant shall be
interpreted under the laws of the State of Minnesota without regard to its
conflicts-of-law principles.



     All shares of Common Stock issued upon the exercise of this Warrant (and
shares of Common Stock issuable upon exercise of the Stock Warrant) shall be
validly issued, fully paid and nonassessable, and the Company will pay all
stock-transfer taxes in respect of the issuance thereof, if any.



     Notwithstanding anything contained herein to the contrary, the holder of
this Warrant shall not be deemed a shareholder of the Company for any purpose
whatsoever (including voting rights) until and unless this Warrant is duly
exercised.



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     IN WITNESS WHEREOF, this Warrant has been duly executed by Spectre Gaming,
Inc., this 12th day of November, 2004.



	 	 	 
	

	 	SPECTRE GAMING, INC.:
	 
	 	 
	

	 	

	

	 	Brian D. Niebur, Chief Financial Officer






THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAW. THESE SECURITIES
MAY NOT BE OFFERED FOR SALE, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ASSIGNED OR
OTHERWISE DISPOSED OF, AND NO TRANSFER OF THE SECURITIES WILL BE MADE BY THE
COMPANY OR ITS TRANSFER AGENT, IN THE ABSENCE OF SUCH REGISTRATION OR AN
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.




Signature Page —
Unit Purchase Warrant




 









 








WARRANT EXERCISE FORM




(To be signed only upon exercise of Warrant)




     The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder,                     Units, consisting of an equal number of
shares of common stock of Spectre Gaming, Inc. (“Common Stock”) and a warrant
to purchase an equal number of shares of Common Stock at a purchase price of
$3.75 per share (“Warrant”), to which such Warrant relates, and herewith makes
payment of
$                                    therefor in cash or by certified check, and requests
that such shares and Warrant be issued and be delivered to,
                    , the address for which is set forth below the
signature of the undersigned.



Dated:
                 




	 	 	 
	

	 	

	

	 	(Signature)
	 
	 	 
	

	 	

	

	 	(Taxpayer’s I.D. Number)
	 
	 	 
	

	 	

	 
	 	 
	

	 	

	

	 	(Address)








 









 








ASSIGNMENT FORM




(To be signed only upon authorized transfer of Warrant)




     FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
unto           the right to purchase Units of Spectre Gaming,
Inc., consisting of an equal number of shares of common stock of Spectre
Gaming, Inc. and a warrant to purchase an equal number of shares of common
stock at a purchase price of $3.75 per share, to which the within Warrant
relates and appoints    , attorney,
to transfer said right on the books of Spectre Gaming, Inc. with full power of
substitution in the premises.



Dated: _______________________




	 	 	 
	

	 	

	

	 	(Signature)
	 
	 	 
	

	 	

	 
	 	 
	

	 	

	

	 	(Address)







 









 








CASHLESS EXERCISE FORM




(To be executed upon exercise of Warrant pursuant to Section 5)




TO: SPECTRE GAMING INC.



The undersigned hereby irrevocably elects a cashless exercise of the right of
purchase represented by the within Warrant for, and to purchase thereunder,
                    Units, consisting of an equal number of shares of Common
Stock, as provided for in Section 5 therein, and a warrant to purchase an
additional equal number of shares of Common Stock at a purchase price of $3.75
per share.



If said number of Units shall not be all the Units purchasable under the within
Warrant, a new Warrant is to be issued in the name of said undersigned for the
balance remaining of the Units purchasable thereunder rounded up to the next
higher number of Units.



Please issue a certificate or certificates for such Common Stock (and a Stock
Warrant, as defined within) in the name of:



	 	 	 
	NAME

	 	

(Please print name)
	 
	 	 
	ADDRESS
	 	 
	

	 	

	 
	 	 
	

	 	

	 
	 	 
	SOCIAL SECURITY NO
	 	 
	

	 	

	 
	 	 
	

	 	

	 
	 	 
	

	 	(Signature)
	 
	 	 
	

	 	NOTE: The above signature should
correspond exactly with the name on the
first page of this Unit Purchase Warrant or
with the name of the assignee appearing in
the assignment form on the preceding page.








 









 








Exhibit A




Stock Warrant




 









 







THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT
(COLLECTIVELY, THE “SECURITIES”) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE SECURITIES
OR BLUE SKY LAWS (“BLUE SKY LAWS”). NO TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES OR ANY INTEREST THEREIN
MAY BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND ANY APPLICABLE BLUE SKY LAWS OR (B) IF THE CORPORATION
HAS BEEN FURNISHED BOTH WITH AN OPINION OF COUNSEL FOR THE HOLDER, WHICH
OPINION AND COUNSEL SHALL BE SATISFACTORY TO THE CORPORATION, TO THE EFFECT
THAT NO REGISTRATION IS REQUIRED BECAUSE OF THE AVAILABILITY OF AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE BLUE SKY LAWS, AND
WITH ASSURANCES THAT THE TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION WILL BE MADE ONLY IN COMPLIANCE WITH THE CONDITIONS OF ANY
SUCH REGISTRATION OR EXEMPTION.




WARRANT TO PURCHASE SHARES OF COMMON STOCK

OF

SPECTRE GAMING, INC.




			
	Warrant No.: ___________
	 	Date: ___________







     This certifies that, for value received,              or
its successors or assigns (collectively, the “Holder”), is entitled to purchase
from Spectre Gaming, Inc., a Minnesota corporation (the “Corporation”),
             (             ) fully paid and nonassessable shares
(the “Shares”) of the Corporation’s common stock (the “Common Stock”), at an
exercise price of Three and 75/100 Dollars ($3.75) per Share (the “Exercise
Price”), subject to adjustment as herein provided. This Warrant may be
exercised by Holder at any time from and after the date hereof until the date
five years from the date hereof, at which time all of Holder’s rights hereunder
shall expire.



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



     1. Exercise of Warrant. The rights represented by this Warrant may be
exercised by the Holder, in whole or in part (but not as to any fractional
shares of Common Stock), by the surrender of this Warrant (properly endorsed,
if required, at the Corporation’s principal office, or such other office or
agency of the Corporation as the Corporation may designate by notice in writing
to the Holder at the address of such Holder appearing on the Corporation’s
books at any time within the period above indicated), and upon payment to it by
certified check, bank draft or cash of the purchase price for such Shares.



     2. Issuance of Shares of Common Stock; No Fractional Shares. As soon as
practicable after the exercise of any Warrant, and in any event within thirty
(30) days after receipt by the Corporation of the notice of exercise under
Section 1, the Corporation at its expense (including the payment by it of any
applicable issuance taxes) will cause to be issued in the name of and
delivered to the Holder thereof or as such Holder (upon payment by such Holder
of any applicable transfer taxes) may direct:



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     (a) a certificate or certificates for the number of fully paid and
nonassessable Shares to which such Holder shall be entitled upon such
exercise plus, in lieu of any fractional share of Common Stock to which
such Holder would otherwise be entitled, an amount in cash equal to such
fraction multiplied by the then-current value of a share of Common Stock,
such current value to be determined by the Corporation’s board of
directors in its sole discretion; and




     (b) in case such exercise includes only part of the Shares
represented by this Warrant, a new warrant of like tenor, representing
the right to acquire that number of Shares (if any) with respect to which
this Warrant shall not then have been exercised, shall also be delivered
to the Holder within such time, unless this Warrant shall have expired.
The Corporation may require that any such new warrant or any certificate
for Shares purchased upon the exercise hereof bear a legend substantially
similar to that which is contained on the face of this Warrant.



     3. Time of Exercise. The exercise of this Warrant shall be deemed effective
immediately prior to the close of business on the business day on which the
Warrant is surrendered to the Corporation as provided in Section 1, and at such
time, the person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such exercise as
provided in Section 2, shall be deemed Holder or Holders of record thereof.



     4. Transferability. This Warrant is issued upon the following terms, to which
Holder consents and agrees:




     (a) until this Warrant is transferred on the books of the
Corporation, the Corporation will treat the Holder of this Warrant,
registered as such on the books of the Corporation, as the absolute owner
hereof for all purposes without effect given to any notice to the
contrary;




     (b) this Warrant may not be exercised, and this Warrant and the
Shares underlying this Warrant shall not be transferable, except in
compliance with all applicable state and federal securities laws,
regulations and orders, and with all other applicable laws, regulations
and orders;




     (c) until the Warrant, and the Shares issuable upon exercise of this
Warrant, are registered under the Securities Act and applicable Blue Sky
Laws, they may not be transferred without the Holder obtaining an opinion
of counsel, which opinion and counsel are satisfactory to the
Corporation, stating that the proposed transaction will not result in a
prohibited transaction under the Securities Act and applicable Blue Sky
Laws. By accepting this Warrant, the Holder agrees to act in accordance
with any conditions imposed on such transfer by any such opinion of
counsel; and




     (d) neither this Warrant nor the Shares issuable upon exercise of
this Warrant have been registered under the Securities Act.



     5. Certain Covenants of the Corporation. The Corporation covenants and agrees
that all Shares which may be issued upon the exercise of the rights represented
by this Warrant, upon issuance and full payment for the Shares so purchased,
will be
duly authorized and issued, fully paid and nonassessable and free from all
taxes, liens and charges with respect to the issue hereof, except those that
may be created by or imposed upon the Holder or its property; and, without
limiting the generality of the foregoing, the Corporation covenants and agrees
that it will from time to time take all such actions as may be required to
ensure that the par value per share of the Common Stock is at all times equal
to or less than this Warrant’s Exercise Price per Share. The Corporation
further covenants and agrees that during the period within which the rights
represented by this Warrant may be exercised, the Corporation will at all times
have authorized and available, free of preemptive or other rights, for the
purpose of issue upon



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exercise of the purchase rights evidenced by this
Warrant, a sufficient number of shares of its Common Stock to provide for the
full exercise of the rights represented by this Warrant.




     6. Adjustment of Exercise Price and Number of Shares. The Exercise Price and
number of Shares are subject to the following adjustments:




     (a) Stock Dividend, Stock Split or Stock Combination. If (i) any
dividends on any class of the Corporation’s capital stock payable in
Common Stock or securities convertible into or exercisable for Common
Stock (collectively, “Common Stock Equivalents”) shall be paid by the
Corporation, (ii) the Corporation shall divide its then-outstanding
 shares of Common Stock into a greater number of shares, or (iii) the
Corporation shall combine its outstanding shares of Common Stock, by
reclassification or otherwise, then, in any such event, the Exercise
Price in effect immediately prior to such event shall (until adjusted
again pursuant hereto) be adjusted immediately after such event to a
price (calculated to the nearest full cent) equal to the quotient of (x)
the number of shares of Common Stock outstanding immediately prior to
such event, multiplied by the Exercise Price in effect immediately prior
to such event, divided by (y) the total number of shares of Common Stock
outstanding immediately after such event. No adjustment of the Exercise
Price shall be made if the amount of such adjustment shall be less than
$.05 per Share; but any such adjustment not required then to be made
shall be carried forward and shall be made at the time and together with
any subsequent adjustment(s) which, together with any adjustment(s) so
carried forward, shall amount to not less than $.05 per Share.




     (b) Number of Shares Issuable on Exercise of Warrants. Upon each
adjustment of the Exercise Price pursuant to this Section, the Holder
shall thereafter (until another such adjustment) be entitled to purchase,
at the adjusted Exercise Price, the number of Shares, calculated to the
nearest full Share, equal to the quotient of (i) the product of (A) the
number of Shares issuable under this Warrant (as then adjusted pursuant
hereto prior to the current adjustment), multiplied by (B) the Exercise
Price in effect prior to such adjustment, divided by (ii) the adjusted
Exercise Price.




     (c) Notice of Adjustment. Upon any adjustment of the Exercise Price
and any increase or decrease in the number of Shares of Common Stock
issuable upon the exercise of the Warrant, then, and in each such case,
the Corporation shall within thirty (30) days thereafter give written
notice thereof, by first-class mail, postage prepaid, addressed to the
Holder as shown on the books of the Corporation. Any such notice shall
state the adjusted Exercise Price and adjusted number of Shares issuable
upon the exercise of the Warrant, and shall set forth in reasonable
detail the methods of calculation of such adjustments and the facts upon
which such calculations were based.




     (d) Effect of Reorganization, Reclassification or Merger. If at any
time while this Warrant is outstanding there should be (i) any
reorganization of the Corporation’s capital stock (other than splits or
combinations of Common Stock contemplated by and provided for in Section
6(a)), (ii) any consolidation or merger of the Corporation with
another corporation, limited liability company, partnership or other
business entity, or any sale, conveyance, lease or other transfer by the
Corporation of all or substantially all of its property to any other
corporation, limited liability company, partnership or other business
entity, which is effected in such a manner that the holders of Common
Stock shall be entitled to receive cash, stock, securities or assets with
respect to or in exchange for Common Stock, or (iii) any dividend or any
other distribution upon any class of the Corporation’s capital stock
payable in capital stock of a different class, other securities of the
Corporation, or other Corporation property (other than cash), then, as a
part of such transaction, lawful provision shall be made so that Holder
shall have the right thereafter to



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receive, upon the exercise hereof, the
number of shares of stock or other securities or property of the
Corporation or of the successor entity resulting from a consolidation or
merger, or of the entity to which the property of the Corporation has
been sold, conveyed, leased or otherwise transferred, as the case may be,
which the Holder would have been entitled to receive upon such capital
reorganization, reclassification of capital stock, consolidation, merger,
sale, conveyance, lease or other transfer, if this Warrant had been
exercised immediately prior to such capital reorganization,
reclassification of capital stock, consolidation, merger, sale,
conveyance, lease or other transfer. In any such case, appropriate
adjustments (as determined by the Corporation’s board of directors) shall
be made in the application of the provisions of this Warrant to the end
that the provisions set forth herein shall thereafter be applicable, as
near as reasonably may be, in relation to any shares or other property
thereafter deliverable upon the exercise of the Warrant as if the Warrant
had been exercised immediately prior to such capital reorganization,
reclassification of capital stock, such consolidation, merger, sale,
conveyance, lease or other transfer and the Holder had carried out the
terms of the exchange as provided for by such capital reorganization,
consolidation or merger.



     7. Prior Notice as to Certain Events. In case at any time: (a) the
Corporation shall pay any dividend upon its Common Stock payable in stock or
make any distribution (other than cash dividends) to the holders of its Common
Stock; (b) the Corporation shall offer for subscription pro rata to the holders
of its Common Stock any additional shares of stock of any class or any other
rights; (c) there shall be any capital reorganization or reclassification of
the capital stock of the Corporation, or consolidation or merger of the
Corporation with, or sale, conveyance, lease or other transfer of all or
substantially all of its assets to, another corporation; or (d) there shall be
a voluntary or involuntary dissolution, liquidation or winding up of the
Corporation; then, in any one or more of such cases, the Corporation shall give
prior written notice, by first-class mail, postage prepaid, addressed to the
Holder as shown on the books of the Corporation, of the date on which (i) the
books of the Corporation shall close or a record shall be taken for such stock
dividend, distribution or subscription rights or (ii) such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up shall take place, as the case may be. Such notice shall also
specify the date as of which the holders of the Common Stock of record shall
participate in such dividend, distribution or subscription rights or shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation, or winding up, as the case may be. Such
written notice shall be given at least 15 days prior to the action in question
and not less than 15 days prior to the record date or the date on which the
Corporation’s transfer books are closed in respect thereto.



     8. Redemption by Corporation. The Corporation may redeem this Warrant, at any
time and at its option, when the average per-share closing bid price of the
Common Stock exceeds Five and No/100 Dollars ($5.00) for any period of thirty
(30) consecutive trading days (as such price is adjusted upon any stock
dividends, splits or combinations),
by delivering notice of the exercise of such right as set forth in Section 9,
at a redemption price equal to $.001 per Share; provided, however, that the
Shares shall then be registered for resale or otherwise be freely tradable.
For purposes of this Section, the closing bid price of the Common Stock shall
be determined by the closing bid price as reported by Nasdaq so long as the
Common Stock is quoted on the Nasdaq National Market or Small Cap Market
Systems (or Over-the-Counter Bulletin Board) and, if the Common Stock is listed
on a national securities exchange, shall be determined by the last reported
sale price on the primary exchange on which the Common Stock is traded.



     9. Notice of Redemption. In the case of any redemption of this Warrant, the
Corporation shall give written notice thereof by first-class mail, postage
prepaid, addressed to the Holder as shown on the books of the Corporation not
less than thirty (30) days prior to the date fixed for redemption. Any notice
which is given in the manner herein provided shall be conclusively presumed to
have been duly given, whether or not the Holder receives the notice. Each such
notice shall specify the date fixed for



A-4









 




redemption, the place of redemption and
the redemption price of $.001 per Share at which the Warrant is to be redeemed,
and shall state that payment of the redemption price will be made upon
surrender of the Warrant at such place of redemption, and that if not exercised
by the close of business on the date fixed for redemption, the exercise rights
of the Warrant shall expire unless extended by the Corporation. Such notice
shall also state the current Exercise Price and the date on which the right to
exercise the Warrant will expire unless extended by the Corporation.




     10. Payment of Warrants on Redemption. If notice of redemption shall have been
given as provided in Section 9, the redemption price of $.001 per Share shall,
unless the Warrant is theretofore exercised pursuant to the terms hereof,
become due and payable on the date and at the place stated in such notice. On
presentation and surrender of the Warrant by the Holder to the Corporation at
such place of payment in such notice specified, the Warrant shall be paid and
redeemed at the redemption price of $.001 per Share. On and after such date of
redemption, the exercise rights of this Warrant shall expire.



     11. Registration Rights. The Shares issuable upon exercise of this Warrant
shall have the registration rights set forth in the Registration Rights
Agreement dated              by and between the Corporation and the original
Holder of this Warrant.



     12. No Rights as Shareholder. This Warrant shall not entitle the Holder hereof
to any voting rights or other rights as a shareholder of the Corporation.



     13. Loss or Mutilation. Upon receipt by the Corporation from Holder of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of this Warrant and indemnity reasonably satisfactory
to the Corporation, and in case of mutilation upon surrender and cancellation
hereof, the Corporation will execute and deliver in lieu hereof a new Warrant
of like tenor to Holder; provided, however, in the case of mutilation no
indemnity shall be required if this Warrant in identifiable form is surrendered
to the Corporation for cancellation.



     14. Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Minnesota without regard to its
conflicts-of-law provisions.



     15. Amendments and Waivers. The provisions of this Warrant may not be amended,
modified or supplemented, and waiver or consents to departures from the
provisions hereof may not be given, unless the Corporation agrees in writing
and has obtained the written consent of the Holder.



     16. Successors and Assigns. All the terms and conditions of this Warrant shall
be binding upon and inure to the benefit of the permitted successors and
assigns of the Corporation and Holder.



     17. Headings and References. The headings of this Warrant are for convenience
only and shall not affect the interpretation of this Warrant. Unless the
context indicates otherwise, all references herein to Sections are references
to Sections of this Warrant.



     18. Notices. All notices or communications hereunder, except as herein
otherwise specifically provided, shall be in writing. Notices sent to the
Holder shall be mailed, hand delivered or faxed and confirmed to the Holder at
his, her or its address set forth in the Corporation’s records. Notices sent
to the Corporation shall be mailed, hand delivered or faxed and confirmed to
Spectre Gaming, Inc., 1466 Pioneer Way, No. 10, El Cajon, California 92020, or
to such other address as the Corporation or the Holder shall notify the other
as provided in this Section.



     19. Counterparts. This Warrant may be executed by the Corporation and attested
to in counterparts.



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     In Witness Whereof, the Corporation has caused this Warrant to be signed
by its duly authorized officer on the date first set forth above.



	 	 	 	 	 
	 	 	SPECTRE GAMING, INC.:
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	
 
	

	 	 	 	[Name], [Title]







ATTEST:




	 	 	 
	By:
	 	 
	

	 	

	

	 	[Name], [Title]







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SUBSCRIPTION FORM




(To be signed only upon exercise of Warrant)




     The Undersigned, the holder of the Warrant referenced below, hereby
irrevocably elects to exercise the purchase right represented by such Warrant
for, and to purchase thereunder,              shares of
common stock of Spectre Gaming, Inc. (the “Shares”) to which such Warrant
relates, herewith makes payment of $             therefor in cash,
certified check, or bank draft, and hereby requests that a certificate
evidencing the Shares be delivered to                   ,
the address of whom is set forth below the signature of the undersigned:



	 	 	 	 	 
	Dated:
	 	 	 	 
	

	 	________________
	 	

	

	 	 	 	(Signature)
	 
	 	 	 	 
	

	 	 	 	

(Printed Name)
	 
	 	 	 	 
	

	 	 	 	

	

	 	 	 	(Address)
	 
	 	 	 	 
	

	 	 	 	

	

	 	 	 	(Address)







Warrant No.           , dated _____________ (the “Warrant”)




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ASSIGNMENT FORM




(To be signed only upon authorized transfer of Warrant)




     For Value Received, the undersigned hereby sells, assigns, transfers and
conveys unto              the right to purchase shares of
common stock of Spectre Gaming, Inc. (the “Corporation”) to which the Warrant
referenced below relates, and hereby appoints                
as his, her or its attorney to transfer said right on the books of the
Corporation with full power of substitution in the premises.



	 	 	 	 	 
	Dated:
	 	 	 	 
	

	 	___________________
	 	

	

	 	 	 	(Signature)
	 
	 	 	 	 
	

	 	 	 	

(Printed Name)
	 
	 	 	 	 
	

	 	 	 	

	

	 	 	 	(Address)
	 
	 	 	 	 
	

	 	 	 	

	

	 	 	 	(Address)







Warrant No.           , dated _____________ (the “Warrant”)





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