Exhibit 10.4


 


BORROWER PLEDGE AGREEMENT


 


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


 


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


 


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


 


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


 


Section 1.               DEFINITIONS.


 


1.01.        Definition of Terms Used
Herein Generally.  All
capitalized terms used but not defined herein shall have the meanings set forth
in the Loan Agreement.  All terms used
herein and defined in the NVUCC shall have the same definitions herein as
specified therein; provided, however, that if a term is defined in
Article 9 of the NVUCC differently than in another Article of the
NVUCC, the term has the meaning specified in Article 9 of the NVUCC.


 


1.02.        Definition of Certain Terms
Used Herein.  As used
herein, the following terms shall have the following meanings:


 


“Indemnified Party” shall have the meaning assigned to such
term in Section 8.04.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


1

















 


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


 


Section 2.               PLEDGE.


 


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


 


2.02.        Description of Pledged
Collateral.


 


(a)   The Pledged Collateral is
described as follows and on any separate schedules at any time furnished by
Pledgor to Secured Party (which schedules are hereby deemed part of this Pledge
Agreement):


 


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


 


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


 


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


 


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


 


2.03.        Delivery of Certificates, Instruments, Etc.


 


(a)   Pledgor shall deliver to
Secured Party:


 


(i)            all original shares of
stock, certificates, instruments and other documents evidencing or representing
the Pledged Collateral concurrently with the execution and delivery of this
Pledge Agreement, and


 


(ii)           the original shares of
stock, certificates, instruments or other documents evidencing or representing
all Pledged Collateral within ten (10) days after Pledgor’s receipt
thereof.


 


2

















 


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


 


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


 


2.05.        Authorization to File
Financing Statements.  Pledgor hereby
irrevocably authorizes Secured Party at any time and from time to time to file
in any jurisdiction in which the UCC has been adopted any initial financing
statements and amendments thereto that (a) describe the Pledged
Collateral, and (b) contain any other information required by part 5
of Article 9 of the UCC for the sufficiency or filing office acceptance of
any initial financing statement or amendment, including (i) whether
Pledgor is an organization, the type of organization and any organization identification
number issued to Pledgor.  Pledgor agrees
to furnish any such information to Secured Party promptly upon request.  Pledgor also ratifies its authorization for
Secured Party to have filed in any UCC jurisdiction any like initial financing
statements or amendments thereto if filed prior to the date hereof.


 


Section 3.               REPRESENTATIONS AND
WARRANTIES OF PLEDGOR.


 


Pledgor
hereby represents and warrants to Secured Party that:


 


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


 


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


 


3.03.        [Reserved]


 


3.04.        Authority; Binding
Obligation; No Conflict.  Pledgor has full power and authority to
execute, deliver and perform its obligations in accordance with the terms of
this Pledge Agreement and to grant to Secured Party the Security Interest in
the Pledged Collateral pursuant hereto, without the consent or approval of any
other person or entity other than any consent or approval which has been
obtained and is in full force and effect. 
This Pledge Agreement has been duly authorized, executed and delivered
by Pledgor and is the legally valid and binding obligation of Pledgor,
enforceable against Pledgor in accordance with its terms , except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, or similar laws or equitable principles relating to or limiting
creditor’s rights generally.  The
granting to Secured Party of the Security Interest in the Pledged Collateral
hereunder, the execution by Pledgor of this Pledge Agreement and the
performance by Pledgor of its obligations hereunder do not and will not
(a) result in the existence or imposition of any Lien nor obligate Pledgor
to create any Lien (other than such Security Interest) in favor of any person
or entity over all or any of its assets; (b) conflict with any agreement,
mortgage, bond or other instrument to which Pledgor is a party or which is
binding upon Pledgor or any of its assets; (c) conflict with Pledgor’s
certificate of incorporation, by-laws, or other organizational or charter
documents; or (d) conflict with any law, regulation or judicial order
binding on Pledgor or any of the Pledged Collateral.


 


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


 


3

















 


consented to the filing of (a) any financing
statement or analogous document under the UCC or any other applicable laws
covering any Pledged Collateral, (b) any assignment in which the Pledgor
assigns any Pledged Collateral or any security agreement or similar instrument
covering any Pledged Collateral with any foreign governmental, municipal or
other office, which financing statement or analogous document, assignment, security
agreement or similar instrument is still in effect, except, in each case, for
Liens expressly permitted pursuant to the Loan Agreement.


 


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


 


3.07.        Percentage Ownership.  The Pledged Securities of each issuer
specifically identified on Schedule 1 hereto constitute, and until all
Obligations have been irrevocable paid in cash and performed in full shall
continue to constitute, the percentage of the outstanding equity of each such
issuer as indicated on Schedule 1 hereto.


 


3.08.        [Reserved]


 


3.09.        Due Authorization, Etc.,
of Stock; Not Margin Stock.  The Pledged Securities listed on
Schedule 1 hereto have been duly authorized and validly issued and are
fully paid and non-assessable and are not subject to any options to purchase or
similar rights of any person, and none of the Pledged Securities constitutes
Margin Stock.


 


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


 


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


 


Section 4.               COVENANTS OF PLEDGOR.


 


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


 


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


 


4.03.        Pledgor’s Organizational
Number. Without providing at least 30 days prior written notice to Secured
Party, Pledgor shall not change its organizational identification number if it
has one.  If Pledgor does not have an
organizational identification number and later obtains one, Pledgor shall
forthwith notify Secured Party of such organizational identification number.


 


4.04.        [Reserved]


 


4

















 


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


 


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


 


4.07.        Further Assurances.  Pledgor will, from time to time, at its
expense, promptly execute and deliver all further instruments and documents and
take all further action that may be necessary, or that Secured Party may
reasonably request, in order to perfect and protect any Security Interest
granted or purported to be granted hereby or to enable Secured Party to
exercise and enforce its rights and remedies hereunder with respect to any Pledged
Collateral.


 


Section 5.               VOTING RIGHTS AND CERTAIN
PAYMENTS PRIOR TO EVENT OF DEFAULT.


 


5.01.        Voting Rights Prior to an
Event of Default. So long as no Event of Default shall have occurred
and be continuing, Pledgor shall be entitled to exercise, as it shall think
fit, but in a manner not inconsistent with the terms hereof, the voting power
with respect to the Pledged Collateral of Pledgor, and for that purpose Secured
Party shall (if any Pledged Securities shall be registered in the name of
Secured Party or its nominee) execute or cause to be executed from time to
time, at the expense of Pledgor, such proxies or other instruments in favor of
Pledgor or its nominee, in such form and for such purposes as shall be
reasonably required by Pledgor and shall be specified in a written request
therefor, to enable it to exercise such voting power with respect to the
Pledged Securities.


 


5.02.        Payments and Distributions.


 


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


 


(b)   In case any stock dividend
shall be declared with respect to any of the Pledged Collateral, or any shares
of stock or fractions thereof shall be issued pursuant to any stock split involving
any of the Pledged Collateral, or any distribution of capital shall be made on
any of the Pledged Collateral, or any shares, obligations or other property
shall be distributed upon or with respect to the Pledged Collateral, in each
case pursuant to a recapitalization or reclassification of the capital of the
issuer thereof, or pursuant to the dissolution, liquidation (in whole or in
part), bankruptcy or reorganization of such issuer, or to the merger or
consolidation of such issuer with or into another corporation, the shares,
obligations or other property so distributed shall be delivered by Pledgor to
Secured Party promptly, and in any event within ten (10) days after
receipt thereof, to be held by Secured Party as additional collateral hereunder
subject to the terms of this Pledge Agreement, and all of the same shall
constitute Pledged Collateral for all purposes hereof.


 


5.03.        Voting Rights and Ordinary
Payments After an Event of Default.  Upon the occurrence and during the
continuance of any Event of Default, all rights of Pledgor to exercise or
refrain 


 


5

















 


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


 


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


 


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


 


Section 8.               REMEDIES.


 


8.01.        Disposition Upon Default and
Related Provisions.


 


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


 


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


 


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


 


6
















 


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


 


(e)   No demand, advertisement or
notice, all of which are hereby expressly waived, shall be required in
connection with any sale or other disposition of any part of the Pledged
Collateral that threatens to decline speedily in value or that is of a type
customarily sold on a recognized market; otherwise Secured Party shall give
Pledgor at least ten days’ prior notice of the time and place of any public
sale and of the time after which any private sale or other disposition is to be
made, which notice Pledgor agrees is commercially reasonable.


 


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


 


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


 


(h)   To the extent that
applicable law imposes duties on Secured Party to exercise remedies in a
commercially reasonable manner, Pledgor acknowledges and agrees that it is not
commercially unreasonable for Secured Party (i)  to advertise dispositions
of Pledged Collateral through publications or media of general circulation;
(ii) to contact other persons, whether or not in the same business as
Pledgor, for expressions of interest in acquiring all or any portion of the
Pledged Collateral; (iii) to hire one or more professional auctioneers to
assist in the disposition of Pledged Collateral; (iv) to dispose of
Pledged Collateral by utilizing Internet sites that provide for the auction of
assets of the types included in the Pledged Collateral or that have the reasonable
capability of doing so, or that match buyers and sellers of assets; (v) to
disclaim disposition warranties, or (vi) to the extent deemed appropriate
by Secured Party, to obtain the services of brokers, investment bankers,
consultants and other professionals to assist Secured Party in the disposition
of any of the Pledged Collateral. Pledgor acknowledges that the purpose of this
clause (h) is to provide non-exhaustive indications of what actions or
omissions by Secured Party would not be commercially unreasonable in Secured
Party’s exercise of remedies against the Pledged Collateral and that other
actions or omissions by Secured Party shall not be deemed commercially
unreasonable solely on account of not being indicated in this clause (h).  Without limiting the foregoing, nothing
contained in this clause (h) shall be construed to grant any rights to Pledgor
or to impose any duties on Secured Party that would not have been granted or
imposed by this Pledge Agreement or by applicable law in the absence of this clause
(h).


 


7

















 


8.02.        Secured Party Appointed
Attorney-in-Fact


 


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


 


(i)            receive, endorse and collect
all checks and other orders for the payment of money made payable to Pledgor
representing any interest or dividend or other distribution or amount payable
in respect of the Pledged Collateral or any part thereof and to give full
discharge for the same;


 


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


 


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


 


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


 


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


 


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


 


(b)   Pledgor hereby ratifies and approves
all acts of Secured Party made or taken pursuant to this Section 8.02 (provided, that Pledgor does not, by virtue of such
ratification, release any claim that Pledgor may otherwise have against Secured
Party for any such acts made or taken by Secured Party through gross negligence
or willful misconduct).  Neither Secured
Party nor any person designated by Secured Party shall be liable for any acts
or omissions or for any error of judgment or mistake of fact or law, except
such as may result from Secured Party’s gross negligence or willful
misconduct.  This power, being coupled
with an interest, is irrevocable so long as this Pledge Agreement shall remain
in force.


 


8.03.        Secured Party’s Duties of
Reasonable Care


 


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


 


8

















 


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


 


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


 


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


 


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


 


(iv)          Except as hereinabove
specifically set forth, Secured Party shall have no further obligation to ascertain
the occurrence of, or to notify Pledgor with respect to, any events and shall
not be deemed to assume any such further obligation as a result of the
establishment by Secured Party of any internal procedures with respect to any
securities in its possession, nor shall Secured Party be deemed to assume any
other responsibility for, or obligation or duty with respect to, any Pledged
Collateral or its use of any nature or kind, or any matter or proceedings
arising out of or relating thereto, including, without limitation, any
obligation or duty to take any action to collect, preserve or protect its or
Pledgor’s rights in the Pledged Collateral or against any prior parties
thereto, but the same shall be at Pledgor’s sole risk and responsibility at all
times.


 


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


 


8.04.        Indemnification.  Pledgor hereby releases Secured Party and the
officers, shareholders, members, directors, employees and agents thereof (each,
an “Indemnified Party”) from any claims,
causes of action and demands at any time arising out of or with respect to this
Pledge Agreement, the Obligations, the Pledged Collateral and its use and/or
any actions taken or omitted to be taken by such Indemnified Party with respect
thereto (except such claims, causes of action and demands arising from the bad
faith, gross negligence or willful misconduct of such Indemnified Party) and
Pledgor hereby agrees to hold each Indemnified Party harmless from and with
respect to any and all such claims, causes of action and demands (except such
claims, causes of action and demands arising from the gross negligence or
willful misconduct of such Indemnified Party).


 


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


 


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


 


9

















 


Section 9.               SURETYSHIP WAIVERS BY
PLEDGOR; OBLIGATIONS ABSOLUTE.


 


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


 


(b)   All rights of the Secured
Party hereunder, the Security Interests and all obligations of the Pledgor
hereunder shall be absolute and unconditional irrespective of (a) any lack of
validity or enforceability of the Loan Agreement, any other Loan Document, any
agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Obligations,
or any other amendment or waiver of or any consent to any departure from the
Loan Agreement, any other Loan Document, or any other agreement or instrument,
(c) any exchange, release or non-perfection of any Lien on other collateral, or
any release or amendment or waiver of or consent under or departure from or any
acceptance of partial payment thereon and or settlement, compromise or
adjustment of any Secured Obligation or of any guarantee, securing or
guaranteeing all or any of the Obligations, or (d) any other circumstance that
might otherwise constitute a defense available to, or a discharge of, the
Pledgor in respect of the or this Pledge Agreement.


 


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


 


Section 11.             PROCEEDS OF DISPOSITIONS.
After deducting all expenses payable to Secured Party, including, without
limitation, pursuant to Section 7, the residue of any proceeds of collection or
sale of the Obligations or Collateral shall, to the extent actually received in
cash, be applied to the payment of the remaining Obligations in such order or
preference as Secured Party may elect, proper allowance and provision being
made for any Obligations not then due or held as additional Collateral.  Upon the final payment and satisfaction in
full of all of the Obligations and the termination of the Availability Period
under the Loan Agreement and after making any payments required by
Sections 9-608(a)(1)(C) or 9-615(a)(3) of the NVUCC, any excess shall be
returned to Pledgor, and in any event Pledgor shall remain liable for any deficiency
in the payment of the Obligations.


 


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


 


10

















 


Section 13.             MISCELLANEOUS.


 


13.01.      Notices.  Except as otherwise provided herein, whenever
it is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon any
of the parties by any other party, or whenever any of the parties desires to
give and serve upon any other party any communication with respect to this
Pledge Agreement, each such notice, demand, request, consent, approval, declaration
or other communication shall be in writing and shall be given in the manner and
to the address, and deemed received, as provided for in the Loan
Agreement.  Delivery by telecopier of an
executed counterpart of any amendment or waiver of any provision of this Pledge
Agreement or any Schedule shall be effective as delivery of an original
executed counterpart thereof.


 


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


 


13.03.      [Reserved]


 


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


 


13.05.      Headings.  The headings of each section of this Pledge
Agreement are for convenience only and shall not define or limit the provisions
thereof.


 


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


 


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


 


13.08.      Survival of Agreement. All
covenants, agreements, representations and warranties made by the Pledgor
herein and in the certificates or other instruments prepared or delivered in connection
with or pursuant to this Pledge Agreement shall be considered to have been
relied upon by the Secured Party and shall survive the execution and delivery
of the Loan Agreement and the advance of all extensions of credit contemplated
thereby, regardless of any investigation made by the Secured Party, and shall
continue in full force and effect until this Pledge Agreement shall terminate
(or thereafter to the extent provided herein).


 


13.09.      Binding Effect; Several
Agreement.  This Pledge
Agreement is binding upon the Pledgor and the Secured Party and their
respective successors and assigns, and shall inure to the benefit of the
Pledgor, the Secured Party and their respective successors and assigns, except
that the Pledgor shall have no right to assign or transfer its rights or
obligations hereunder or any interest herein (and any such assignment or
transfer shall be void).


 


11

















 


13.10.      Waivers; Amendment.


 


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


 


(b)   Neither this Pledge
Agreement nor any provision hereof may be waived, amended or modified except
pursuant to an agreement or agreements in writing entered into by the Secured
Party and the Pledgor.


 


IN
WITNESS WHEREOF, intending to be legally bound, Pledgor has caused this Pledge
Agreement to be duly executed as of the date first above written.


 


	
  American
  Wagering, Inc.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:
  

  	
  /s/
  Victor Salerno

  	
   

  
	
   

  	
  Victor
  Salerno

  	
   

  
	
   

  	
  Chief
  Executive Officer

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:
  

  	
  675 Grier Drive

  	
   

  
	
   

  	
  Las Vegas, Nevada 89119

  	
   

  
	
  Attention:
  

  	
  General
  Counsel

  	
   

  
	
  Telecopier
  No.: 

  	
  (702)735-0142

  	
   

  
	
   

  	
   

  
	
  Accepted
  and Agreed:

  	
   

  
	
   

  	
   

  
	
  Alpine
  Advisors LLC,

  	
   

  
	
  as
  Secured Party

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:
  

  	
  /s/
  Don R. Kornstein

  	
   

  
	
   

  	
  Don
  R. Kornstein

  	
   

  
	
   

  	
  Managing
  Member

  	
   

  
					



 


12

















 


Schedule 1 to Pledge Agreement


Attached to and forming part of that certain


Pledge
Agreement dated as of June 22, 2010


by


American
Wagering, Inc., as Pledgor,


to


Alpine
Advisors LLC, as Secured Party


 


List
and Description of Pledged Securities


 


Description of Pledged Securities:


 


	
  Issuer

  of Stock

  	
   

  	
  Class

  of Stock

  	
   

  	
  Certificate

  Numbers

  	
   

  	
  Number

  of Shares

  	
   

  	
  Percentage

  of total

  shares

  	
   

  
	
  Computerized Bookmaking Systems, Inc.

  	
   

  	
  Common

  	
   

  	
  1

  	
   

  	
  100

  	
   

  	
  100

  	
   

  



 


	
  Exact Name of Pledgor: American Wagering, Inc.

  
	
   

  
	
  Pledgor is an organization

  
	
   

  
	
  Pledgor is a corporation

  
	
   

  
	
  Pledgor is organized under the laws of Nevada

  
	
   

  
	
  Pledgor’s organizational identification number:
  none

  



 


13