Exhibit
10.6


 


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


 


AMERICAN
WAGERING, INC.


 


AMENDED AND
RESTATED WARRANT TO PURCHASE

SHARES OF COMMON STOCK


 


DATE OF ISSUANCE:  June 11, 2010 Original Warrant


 


DATE OF ISSUANCE: 
June 21, 2010


 


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


 


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


 

















 


TERMS AND
CONDITIONS


 


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


 


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


 


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


 


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


 


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


 


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


 


b.             by instructing the Company to withhold a
number of Warrant Shares then issuable upon exercise of this Warrant with an
aggregate fair market value as of the exercise date equal to such exercise
price;


 


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


 


d.             any combination of the foregoing.


 


2.3.             In the event of any withholding of Warrant
Shares or surrender of other equity securities pursuant to clause (ii),
(iii) or (iv) above where the number of shares whose value is equal
to the  exercise price is not a whole
number, the number of shares withheld by or surrendered to the Company shall be
rounded up to the nearest whole share and the Company shall make a cash payment
to the Holder (by delivery of a certified or official bank check or by wire
transfer of immediately available funds) based on the incremental fraction of a
share being so withheld by or surrendered to the Company in an amount equal to
the product of (x) such incremental fraction of a share being so withheld
or surrendered multiplied by (y) in the case of


 


3

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


4

















 


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


 


7.2.             Execution and Delivery. 
The execution and delivery of this Warrant by the Company and
consummation by the Company of the transactions contemplated hereby have been
duly authorized by all necessary action on the part of the Company and no other
proceedings on the part  of the
Company are necessary to authorize this Warrant or any of the transactions
contemplated hereby.


 


5

















 


7.3.             Binding Effect; Valid Issuance of Warrant:


 


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


 


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


 


c.             All Warrant Shares issuable
upon the exercise of this Warrant pursuant to the terms hereof shall be, upon
issuance, and the Company shall take all such actions as may be necessary or
appropriate in order that such Warrant Shares are, validly issued, fully paid
and non-assessable, issued without violation of any preemptive or similar
rights of any stockholder of the Company and free and clear of any liens.


 


d.             The Company shall take
commercially reasonable actions as may be necessary to ensure that all such
Warrant Shares are issued without violation by the Company of any applicable
law or governmental regulation or any requirements of any domestic securities
exchange upon which shares of Common Stock or other securities constituting
Warrant Shares may be listed at the time of such exercise.


 


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


 


8.     Registration Rights.


 


8.1.             Demand Registration Rights


 


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


 


6

















 


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


 


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


 


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


 


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


 


7

















 


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


 


8.3.             Incidental Registration
Rights.  If the Company proposes to register any of its stock
or other securities under the Securities Act of 1933 in connection with the
public offering of such securities (other than (i) a registration relating
solely to employee benefit plans, (ii) a registration relating solely to
an SEC Rule 145 transaction, or (iii) a registration effected
pursuant to a form of registration statement that is not available for
registration of the Warrant Shares for sale to the public), the Company shall
provide Holder with written notice of such determination. Upon the written
request of Holder given within twenty (20) days after receipt of any such
notice from the Company, the Company, at its sole cost and expense, shall cause
to be registered under the Act all of the Warrant Shares that Holder has
requested be registered.


 


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


 


9.     Tag-Along Rights.


 


9.1.             Transfers by majority stockholders of the
Company.


 


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


 


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


 


8

















 


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


 


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


 


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


 


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


 


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


 


9

















 


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


 


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


 


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


 


11.   Observer Rights; Election of Directors.


 


11.1.           Observer Rights.  A
representative of Holder, or its appointee, shall be entitled to observe all
meetings of the Company’s Board of Directors (the “Board”) and receive all
information provided to the Board; provided, that such observer rights shall
terminate at such time as the Obligations between the Company, as Borrower, and
the Lender under that certain Loan Agreement dated June [·], 2010 are
satisfied and the Loan Agreement is terminated. 
The Company requires and the Holder agrees that as a condition precedent
to Holder’s representative or appointee attending a Board meeting or having
access to any information provided to the Board, the representative or
appointee shall agree to keep confidential all information so received during
such meetings or otherwise on the same basis as the Holder has agreed to
maintain confidentiality pursuant to Section 8 of the Engagement Agreement
dated March 12, 2010, between Issuer and Holder; and the Company reserves
the right not to provide information and to exclude such representative or
appointee from any Board meeting or portion thereof if delivery of such
information or attendance at such meeting by such representative or appointee
would result in the disclosure of trade secrets to such holders or its
representative in violation of the foregoing confidentiality obligation or
would adversely affect the attorney-


 


10

















 


client
privilege between the Company and its counsel or if such representative or
appointee is a direct competitor of the Company.


 


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


 


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


 


12.1.           Accredited Investor Status.  The Holder represents and warrants
that the Holder is an “accredited investor” within the meaning of
Rule 501(a) of Regulation D, promulgated under the Securities
Act.  The
Holder understands that the Warrants are being
offered and sold only to “accredited investors” (as that term is defined under
Rule 501(a) of Regulation D), and the Holder represents that the
Holder is an accredited investor.


 


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


 


12.3.           Residence.  The address
set forth in Section 18 is the Holder’s true and correct residence or
principal place of business and the Holder has no present intention of becoming
a resident or domicile of any other state or jurisdiction.


 


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


 


12.5.           Binding Effect.  This Warrant has been duly executed and
delivered by the Holder and constitutes a legal, valid and binding obligation
of the Holder and, assuming this Warrant constitutes a legal, valid and binding
obligation of the Company, is enforceable against the Holder in accordance with
its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or other laws relating to
or affecting the enforcement of creditors’ rights generally in effect from time
to time and by general principles of equity.


 


11
















 


12.6.          Purchase for Own Account. 
The Holder represents and warrants that the Warrant and the Warrant
Shares will be acquired for investment purposes only for the Holder’s own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and the Holder has no present intention of
selling, granting any participation in, or otherwise distributing the
same.  By executing this Warrant, the
Holder further represents and warrants that the Holder does not have any contract,
undertaking, agreement, or arrangement with any person to sell, transfer, or
grant participations to such person or to any third person, with respect to any
of the Warrant or the Warrant Shares. Notwithstanding the foregoing, the Holder
may transfer this Warrant to members of Lender, the children of the members of
Lender, or a trust for the benefit of the individual members of the Lender or
for the children of the members of the Lenders provided such members, children
of members, or trust shall remain subject to the transfer restrictions provided
in this Agreement and under applicable law.


 


12.7.          Restricted Securities. 
The Holder acknowledges and understands that the Warrant and the Warrant
Shares are characterized as “restricted securities” under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Securities Act of 1933, as amended (the “Securities Act”), only in certain
limited circumstances.  In this regard,
the Holder represents and warrants that the Holder is familiar with Securities
and Exchange Commission Rule 144 (“Rule 144”), as presently in
effect, and understands the resale limitations imposed thereby and by the
Securities Act.  Without in any way
limiting the representations set forth above, the Holder agrees not to make any
disposition of all or any portion of the Warrant and the Warrant Shares unless
there is then in effect a registration statement under the Securities Act
covering such proposed disposition and such disposition is made in accordance
with such registration statement, or the Holder shall have notified the Company
of the proposed disposition and shall have furnished the Company with a
statement of the circumstances surrounding the proposed disposition.  The Holder acknowledges that the Company is
under no obligation to register any resale or transfer of the Warrant Shares.


 


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


 


THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT THERETO
UNDER THE ACT OR PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENT OF
SAID ACT AND COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAW.


 


12

















 


12.9.          Risk of Loss.  The
Holder acknowledges, represents and warrants
that it understands investment in the Company involves a high degree of
risk.  The Holder is financially capable
of bearing the loss of the Holder’s entire investment, understands that an
investment in the Warrant and Warrant Shares involves special and substantial
risks and recognizes the lack of liquidity of the Warrant and the Warrant
Shares and the restrictions upon transferability thereof.


 


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


 


12.11.        Access to
Information; Opportunity to Inquire.  The
Holder:  (i) has had access to
information regarding the Company and its present and prospective business,
assets, liabilities and financial condition; (ii) has such knowledge of
business and financial affairs as is necessary to enable Holder to understand
the speculative nature of and the risks attendant to investments in securities,
in general, and to an investment in the Warrants and Shares, in particular, and
to understand the financial, legal and tax implications of the business to be
conducted by the Company; (iii) has had the opportunity to ask questions
and receive answers from the Company and its management with respect to Holder’s
proposed acquisition of the Warrants and the Shares; and (iv) has
determined on the basis of consultation with its own legal counsel and tax
advisors that the acquisition of the Warrants and the Shares is consistent with
his/her own investment objectives and income prospects.


 


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


 


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


 


13.1.          The ratio of Warrant Shares to outstanding
shares of Common Stock shall be the ratio thereof existing on the date hereof
(the “Ratio”, which the parties agree is currently 5.03%), after giving effect
to the issuance of a maximum of 2.3 million shares of Common Stock to be
covered by options or grants issued to management of the Company.  For purposes hereof, the term “outstanding
shares of Common Stock” includes the said maximum of 2.3 million shares, plus
8,379,879 issued shares of Common Stock outstanding as of the date hereof, as
well as 647,300 shares currently reserved for issuance under existing options,
rights and any other outstanding securities of the Company.  If the Company shall (1) declare a
dividend or make a distribution of
Common Stock payable in shares of Common Stock, (2) subdivide its
outstanding shares of


 


13

















 


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


 


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


 


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


 


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


 


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


 


14

















 


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


 


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


 


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


 


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


 


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


 


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


 


	
  If to the Company:

  
	
   

  
	
   

  	
  American
  Wagering, Inc.

  
	
   

  	
  Attn:
  General Counsel

  
	
   

  	
  675
  Grier Drive

  
	
   

  	
  Las
  Vegas, NV 89119

  



 


15

















 


	
  If to the Holder:

  
	
   

  
	
   

  	
  Alpine
  Advisors, LLC

  
	
   

  	
  825
  Lakeshore Blvd

  
	
   

  	
  Incline
  Village, NV 89451

  



 


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


 


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


 


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


 


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


 


16

















 


24.  Entire Agreement. 
This Warrant, together with the Agreement, constitutes the sole and
entire agreement of the parties with respect to the subject matter contained
herein, and supersedes all prior and contemporaneous understandings and
agreements, both written and oral, with respect to such subject matter.


 


IN
WITNESS WHEREOF, the Company and the Holder have executed this Warrant as of
the date first written above.


 


	
  COMPANY:

  	
   

  	
  HOLDER:

  
	
  American
  Wagering, Inc.,

  	
   

  	
  Alpine
  Advisors, LLC

  
	
   A Nevada corporation

  	
   

  	
   A Nevada Limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Victor Salerno

  	
   

  	
  By:

  	
  /s/
  Don R. Kornstein

  
	
  Name:
  Victor Salerno

  	
   

  	
  Name:
  Don R. Kornstein

  
	
  Its:
  Chief Executive Officer

  	
   

  	
  Its:
  Managing Member

  
					



 


17

















 


EXERCISE
AGREEMENT


 


TO:         AMERICAN WAGERING, INC. (THE “COMPANY”)


 


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


 


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


 


	
   

  	
  NAME:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SIGNATURE:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DATED:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ADDRESS:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  NOTE:

  	
  The above signature should correspond exactly with the
  name on the face of the Warrant.