Document:

Exhibit 10.3

 

LOAN
AGREEMENT

 

THIS
LOAN AGREEMENT (this “Agreement”), is entered into as of June 22, 2010, by
and between American Wagering, Inc., a Nevada corporation (“Borrower”),
and Alpine Advisors LLC (“Lender”).

 

RECITALS

 

WHEREAS,
Borrower has borrowed the sum of $195,000 (the “Existing Loan”) from Lender
evidenced by a Secured Promissory Noted dated June 11, 2010 (the “Existing
Note”) and has requested a loan facility from Lender in the principal amount of
up to $500,000.00 to refinance the Existing Loan and for the other uses set
forth herein; and

 

WHEREAS,
Lender is willing, in its sole discretion, to fund the loan facility upon the
terms and subject to the conditions set forth in this Agreement.

 

NOW
THEREFORE, in consideration of the mutual covenants and agreements contained
herein, Borrower and Lender hereby agree as follows:

 

1.             The Loan Facility.

 

(a)     Subject to the terms and conditions set forth herein,
Lender may make available to Borrower up to a $500,000 loan facility (the “Loan
Facility”)  for Borrower’s use from time
to time during the term of this Agreement. 
Lender may, in its sole discretion, and upon Borrower’s request from
time to time during the period from the date hereof through July 30, 2010
(the “Availability Period”), make loans (the “Loans”) to Borrower in an
aggregate principal amount up to the amount of the Loan Facility.  Borrower may request that Lender make a Loan
by giving a written request therefor (each such request, a “Borrowing Request”);
provided that (i) such Borrowing Request must specify the date and amount
of such proposed borrowing and must be received by Lender no later than 11:00 a.m.
7 days (or such lesser number of days as is acceptable to Lender) prior to the
date of such proposed borrowing; (ii) the date of the proposed borrowing
shall be Business Day (as hereinafter defined) during the Availability Period; (iii) each
borrowing of a Loan shall be in a principal amount of $100,000 or a whole
multiple of $100,000 in excess thereof; and (iv) such Borrowing Request
shall specify the account of Borrower to which Lender shall transfer the
proceeds of the requested Loan.

 

(b)     Borrower hereby agrees to pay to Lender the
outstanding principal amount of the Loans, together with any accrued and unpaid
interest thereon at the rate set forth in Section 2 below, on June 10,
2011 (the “Maturity Date”).  Borrower
may, upon notice to Lender, voluntarily prepay the outstanding Loans in whole
or in part; provided that (i) such notice of prepayment must specify the
date and amount of such prepayment and must be received by Lender no later than
11:00 a.m. 10 days (or such lesser number of days as is acceptable to
Lender) prior to any date of prepayment; (ii) any prepayment shall be in a
principal amount of $100,000 or a whole multiple of $100,000 in excess thereof
or, if less, the entire principal amount 

 

 

thereof then outstanding; and (iii) each such
prepayment shall be accompanied by payment of (X) the Repayment Fee set
forth in Section 4 below and accrued and unpaid interest on the principal
amount being prepaid at the rate set forth in Section 2 below.  Amounts prepaid may not be reborrowed.

 

(c)     Borrower may, upon notice to Lender, voluntarily
terminate the undrawn Loan Facility during the Availability Period; provided
that (i) such notice of termination must specify the date of such
termination and must be received by Lender no later than 11:00 a.m. 10
days (or such lesser number of days as is acceptable to Lender) prior to the
date of termination; and (ii) any termination made in conjunction with a
prepayment of Loans then outstanding shall comply with the requirements for
prepayment set forth in subsection (b) above.

 

(d)     On the requested date for borrowing of a Loan, if all
conditions to the making of such Loan have been satisfied and Lender, in its
sole discretion, has elected to make such Loan, Lender will deliver to Borrower
the proceeds of the requested Loan in immediately available funds via wire
transfer to the account designated by Borrower in its written request for such
borrowing.

 

(e)     The Loans made by Lender shall be evidenced by one or
more accounts or records maintained by Lender in the ordinary course of
business.  The accounts or records
maintained by Lender shall be conclusive absent manifest error of the amount of
the Loans made by Lender to Borrower and the interest and payments
thereon.  Any failure to so record or any
error in doing so shall not, however, limit or otherwise affect the obligation
of Borrower hereunder to pay any amount owing with respect to the Obligations
(as hereinafter defined).  Lender will
provide to Borrower a monthly statement of Loans, payments, and other
transactions pursuant to this Agreement. 
Such statement shall be deemed correct, accurate, and binding on
Borrower and as an account stated, unless Borrower notifies Lender in writing
to the contrary within thirty (30) days after such statement is rendered.  In the event a timely written notice of
objections is given by Borrower, only the items to which exception is expressly
made will be considered to be disputed by Borrower.  As used herein, the term “Obligations” shall
mean all loans, advances, liabilities, obligations, covenants, duties, and
indebtedness owing by Borrower or any other Grantor to Lender , whether or not
arising under this Agreement or any other Loan Document, whether or not
evidenced by any note or other instrument, agreement or document, whether
arising from an extension of credit, opening of a letter of credit, acceptance,
loan, guaranty, indemnification, sale of goods, rendition of services, or
otherwise, whether direct or indirect (including, without limitation, those
acquired by assignment from others, and any participation by Lender in Borrower’s
or any other Grantor’s debts owing to others, absolute or contingent, due or to
become due, now existing or hereafter arising, primary or secondary, as
principal or guarantor, and including, without limitation, all interest,
charges, expenses, fees, attorneys’ fees, filing fees and any other sums
chargeable to Borrower or any other Grantor hereunder, under any other Loan
Document, or under any other agreement or instrument with Lender.  The term includes, without limitation,
(interest accruing during the 

 

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pendency of any bankruptcy, insolvency, receivership
or other similar proceeding, regardless of whether allowed or allowable in such
proceeding.

 

2.             Interest.

 

(a)     Subject to the provisions of subsection
(b) below, the outstanding principal amount of the Loans shall bear simple
interest from the date hereof at the rate of 15.0% per annum.  Interest only shall be due and payable
monthly in arrears on the first day of each month for interest accrued during
the previous month.

 

(b)     If any Event of Default (as hereinafter defined)
occurs, then, from the date such Event of Default occurs until it is cured, or
until all Obligations are paid and performed in full, as the case may be, the
outstanding principal amount of the Loans shall bear simple interest at the
rate of 22.0% per annum.  Such accrued
and unpaid default interest shall be due and payable upon demand or, in the
absence of a demand, monthly in arrears on the first day of each month for
interest accrued during the previous month.

 

(c)     Interest charges shall be calculated on the basis of a
360-day year prorated for the actual number of days elapsed.  Interest hereunder shall be due and payable
in accordance with the terms hereof before and after judgment, and before and
after the commencement of any proceeding under any Debtor Relief Law.  As used herein, “Debtor Relief Law” means the
Bankruptcy Code of the United States, and all other liquidation,
conservatorship, bankruptcy, assignment for the benefit of creditors,
moratorium, rearrangement, receivership, insolvency, reorganization, or similar
debtor relief laws of the United States or other applicable jurisdictions from
time to time in effect and affecting the rights of creditors generally.

 

3.             Payment; Interest Reserve Fees.

 

(a)     Except as otherwise provided herein, the Loan Facility
and all accrued and unpaid interest thereon shall be due and payable in full on
the Maturity Date.  All payments in
respect hereof shall be made to Lender at its address set forth in Section [20]
below or such other place as may be designated in writing by Lender for such
purpose, and all payments shall be made in lawful currency of the United States
in immediately available funds.  If any
payment due under this Agreement or the Note shall be due on a day that is not
a Business Day, then such payment shall be made on the next succeeding Business
Day.  For the purposes of this Agreement,
“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in Las Vegas, Nevada are authorized or required by law to
remain closed.

 

(b)     Interest Payment Reserve. Effective with the funding
of the initial Loan by Lender, Borrower shall pre-pay to Lender a sum equal to
two months’ interest on the maximum amount of the Loan Facility (the “Interest
Reserve”).  To effectuate and to account
for such payment, Lender shall deduct the agreed upon sum from the amount of
the initial Loan.  The Interest Reserve
shall be held by Lender as security for the timely payment of interest on the 

 

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Loans when due and, without limitation of any other
remedy Lender may have upon default, may be applied by Lender to accrued
interest on the Loans that is past due. 
If Lender applies any amount of the Interest Reserve to accrued
interest, Borrower shall, immediately upon receipt of notice to do so from
Lender, replenish the Interest Reserve by paying to Lender an amount equal to
the amount of the Interest Reserve applied by Lender or such greater amount as
Lender may require.

 

(c)     Origination Fee.  The parties
agree that, solely for this specific loan transaction, neither Lender nor its
principals shall receive an origination fee pursuant to that certain Engagement
Agreement dated March 12, 2010, as amended.

 

4.             Repayment Fee5. 
In connection with each repayment or prepayment of a Loan (but in any
event subject to the last two sentences of this section), Borrower shall pay to
Lender a fee (the “Repayment Fee”) in the amount of (i) $65,000 if, within
60 days after the date hereof (the “Target Date”), all Loans then outstanding
shall have been irrevocably paid in full, all other Obligations have been
irrevocably paid and performed in full and either the Availability Period has
expired or Borrower has voluntarily terminated the undrawn Loan Facility during
the Availability Period pursuant to Section 1(c) above; and (ii) $100,000
thereafter or in connection with any other repayment or prepayment.  The first repayment or prepayment of a Loan
shall be accompanied by payment of Repayment Fee in the full amount set forth
in clause (i) or (ii) above as then applicable.  Each subsequent repayment or prepayment of a
Loan shall be accompanied by payment of Repayment Fee in an amount equal to (X) the
difference between the full amount set forth in clause (i) or (ii) above
as then applicable minus (Y) the aggregate amount of all Repayment Fee, if
any, paid prior to the date of such repayment or prepayment.

 

5.             Conditions Precedent. 
Lender will not entertain any request for Loans unless the following
conditions precedent have been satisfied as determined by Lender:

 

(a)     Conditions Precedent to Initial Loan.  The making of the initial Loan shall be
subject to the satisfaction, as determined by Lender, of the following
conditions:

 

(i)            Lender’s receipt of the following, each in
form and substance satisfactory to Lender:

 

(1)           an executed counterpart of this Agreement;

 

(2)           an executed counterpart of the Pledge Agreement
between Borrower and Lender, dated as of the date hereof, in the form attached
hereto as Exhibit A (the “Borrower Pledge Agreement”);

 

(3)           an executed counterpart of the Security Agreement
between Computerized Bookmaking Systems, Inc., a Nevada corporation and
wholly-owned subsidiary of Borrower (“CBS” ; Borrower and CBS being sometimes
hereinafter referred to individually as a “Grantor” and, collectively, as the “Grantors”),
and Lender, dated as of the 

 

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date hereof, in the form attached hereto as Exhibit B
(the “CBS Security Agreement”; this Agreement, the Borrower Pledge Agreement,
the CBS Security Agreement and all other agreements, instruments, and documents
heretofore, now or hereafter evidencing, securing, guaranteeing or otherwise
relating to the Obligations, the Collateral (as defined in the Borrower Pledge
Agreement or the CBS Security Agreement, or any other aspect of the
transactions contemplated by this Agreement) are hereinafter sometimes referred
to, individually, as a “Loan Document” and, collectively, as the “Loan
Documents”);

 

(4)           an executed written direction from Borrower to Lender
that, from the proceeds of the initial Loan, an amount equal to the principal
and accrued interest outstanding under the Existing Loan be retained by Lender
and applied in satisfaction of the Existing Loan;

 

(5)           such certificates of resolutions or other action,
incumbency certificates and/or other certificates of officers of each Grantor
as Lender may require evidencing the identity, authority and capacity of each
officer thereof authorized to act in connection with this Agreement and the
other Loan Documents to which such Grantor is a party;

 

(6)           an executed counterpart of an amendment to the Warrant
to Purchase Shares of Common Stock issued on June 11, 2010, by Borrower to
Lender (the “Warrant”) amending the Warrant (a) to require Borrower to
provide Lender, in its capacity as warrantholder, with the written notice to
attend and the opportunity to be present and observe all regular and special
meetings of directors of each Grantor deliver to Lender, and (b) to grant
to Lender, in its capacity as warrantholder, at its sole discretion, upon the
occurrence of any Event of Default the right to (i) provide Borrower with
written notice demanding that Borrower increase number of members of the Board
of Directors of Borrower by 2 persons and (ii) fill the 2 vacancies with
persons designated by Lender until such time as they may be elected to the
Board of Directors by the shareholders at the Borrower’s next annual
shareholder’s meeting;

 

(7)           such documents and certifications as Lender may
require to evidence that each Grantor is duly organized or formed, and that
each Grantor is validly existing, in good standing and qualified to engage in
business in the State of Nevada;

 

(8)           a current receivables ageing, prepared in the form
required by the CBS Security Agreement;

 

(9)           a lockbox agreement, executed by all parties thereto,
regarding collection of the proceeds of Collateral granted pursuant to the CBS
Security Agreement; and

 

(10)         such other assurances, certificates or documents as
Lender may require.

 

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(ii)           All liens and security interests granted pursuant to
the Loan Documents shall have been perfected and shall be subject to no other
liens or security interests (whether junior, equal or senior in priority), and
Lender shall have received evidence satisfactory to Lender to that effect
(including, without limitation, evidence of the filing in the Office of the
Secretary of State of the State of Nevada by Borrower of a UCC-1 Financing
Statement showing CBS as debtor and Lender as secured party perfecting the
Collateral granted pursuant to the CBS Security Agreement).

 

(iii)          Borrower shall have paid all fees and
expenses (including the fees and disbursements of counsel) incurred by Lender
in connection with any of the Loan Documents and the transactions contemplated
thereby.

 

(b)     The making of each Loan shall be subject to the
satisfaction, as determined by Lender, of the following conditions:

 

(i)            Lender’s receipt of the following, each in
form and substance satisfactory to Lender:

 

(1)           a Borrowing Request, duly executed and completed in
compliance with Section 1(b) above; and

 

(2)           a proposed spending budget (each, a “Proceeds Budget”)
relating to the proceeds of the Loan being requested;

 

(ii)           The representations and warranties of each Grantor
contained in each Loan Document, or which are contained in any document
furnished at any time under or in connection herewith or therewith, shall be
true and correct on and as of the date of such Loan;

 

(iii)          (b)           No event or condition that constitutes an
Event of Default or that, with the giving of any notice, the passage of time,
or both, would be an Event of Default (a “Default”) has occurred and is
continuing, or would result from such proposed Loan or from the application of
the proceeds thereof.

 

6.             [Reserved.]

 

7.             Representations and Warranties of
Borrower.  Borrower hereby represents and
warrants to Lender (all of which representations and warranties shall survive
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby) that:

 

(a)     Borrower has full right, power, and authority to enter
into this Agreement and the other Loan Documents to which it is a party,
without the consent, approval, authorization of, or notice to, any other person
or entity, including any governmental entity or regulatory authority;

 

6

 

(b)     Borrower is duly organized and validly existing as
corporations under the laws of the State of Nevada, and is in good standing as
corporations and qualified to do business in each state in which the nature of
its business or property so requires;

 

(c)     The execution, delivery, and performance of this
Agreement and compliance with the terms, conditions and provisions hereof and
the other Loan Documents to which it is a party are not prohibited or
restricted under Borrower’s articles of incorporation or bylaws.  The execution, delivery, and performance of
this Agreement and the other Loan Documents to which it is a party and the
transactions contemplated hereby and thereby (i) do not conflict with or
result in any breach or contravention of any applicable law, regulation,
judicial order, or decree (each, a “Requirement of Law”) to which Borrower is
subject and (ii) do not violate, conflict with, constitute a default or
event of default under, or result in any rights to accelerate or modify any
obligations under any agreement, instrument, lease, mortgage, or indenture to
which Borrower is a party or subject, or to which any of its assets are
subject;

 

(d)     Borrower has the requisite power and authority and is
duly authorized to execute and deliver this Agreement, the other Loan Documents
to which it is a party, and to perform the Obligations.  This Agreement and the other Loan Documents
to which it is a party have been duly executed and delivered by Borrower and
constitute a valid and legally binding obligation of Borrower, enforceable in
accordance with their respective terms, except as enforceability is limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or
other laws relating to or affecting generally the enforcement of creditors’
rights and by equitable principles of general applicability (regardless of
whether such enforceability is considered in a proceeding in equity or at law);

 

(e)     The liens and security interests granted in and to the
Collateral pursuant to the Loan Documents constitute a present, valid, binding,
and enforceable security interest as collateral security for the Obligations
and are subject to no other liens or security interests (whether junior, equal
or senior in priority).

 

(f)      Borrower has made all filings required pursuant to the
Securities Exchange Act of 1934 with the Securities Exchange Commission and all
required filings relating to its listing on the NASDAQ OTC Bulletin Board.  Each Grantor is in compliance in all material
respects with all Requirements of Law applicable to such Grantor.

 

(g)     Each of Borrower and its subsidiaries has good record
and marketable title in fee simple to, or valid leasehold interests in, all
material property necessary or used in the ordinary conduct of its
business.  The property of Borrower and
Grantor is subject to no liens, security interests or other encumbrances, other
than liens and security interests in favor of Lender.

 

(h)     Borrower and its subsidiaries own, or possess the
right to use, all of the trademarks, service marks, trade names, copyrights,
patents, patent rights, franchises, licenses and other intellectual property
rights that are reasonably necessary for the operation of their 

 

7

 

respective businesses, without conflict with the
rights of any other person or entity.  To
the best knowledge of Borrower, no slogan or other advertising device, product,
process, method, substance, part or other material now employed, or now
contemplated to be employed, by Borrower or any of its subsidiaries infringes
upon any rights held by any other person or entity.

 

(i)      The issued and outstanding capital stock of CBS is 100
shares of common stock, represented by Certificate No. 1, all of which
have been duly authorized and issued and are fully-paid and non-assessable, and
none of which constitutes Margin Stock (as defined in Regulation U of the Board
of Governors of the Federal Reserve System of the United States, as the same is
from time to time in effect); and all of such shares are owned by Borrower free
and clear of any lien, security interest or other encumbrance other than the
pledge and security interest in favor of Lender.

 

(j)      The properties of Borrower and its subsidiaries are
insured with financially sound and reputable insurance companies not affiliates
of Borrower, in such amounts, with such deductibles and covering such risks as
are customarily carried by companies engaged in similar businesses and owning
similar properties in localities where Borrower or the applicable subsidiary
operates.

 

(k)     No approval, consent, exemption, authorization, or
other action by, or notice to, or filing with, any governmental authority or
any other person or entity is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, any Grantor of
any Loan Document.

 

(l)      Except as disclosed to Lender prior to the date
hereof, there are no actions, suits, proceedings, claims or disputes pending
or, to the knowledge of Borrower after due and diligent investigation,
threatened or contemplated, at law, in equity, in arbitration or before any
governmental authority, by or against Borrower or any of its subsidiaries or
against any of their properties or revenues.

 

(m)    Neither Grantor is in default under or with respect to
any material contractual obligation.  No
Default or Event of Default has occurred and is continuing or would result from
the consummation of the transactions contemplated by this Agreement or any
other Loan Document.

 

(n)     Borrower and its subsidiaries have filed all Federal,
state and other material tax returns and reports required to be filed, and have
paid all Federal, state and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable, except those which are being contested in
good faith by appropriate proceedings diligently conducted and for which
adequate reserves have been provided in accordance with generally accepted
accounting principles (“GAAP”).  There is
no proposed tax assessment against Borrower or any of its subsidiaries.  Neither Lender nor CBS is party to any tax
sharing agreement.

 

8

 

(o)     Borrower is not engaged and will not engage,
principally or as one of its important activities, in the business of purchasing
or carrying Margin Stock, or extending credit for the purpose of purchasing or
carrying margin stock.  Following the
application of the proceeds of each Loan, not more than 25% of the value of the
assets (either of Borrower only or of Borrower and its subsidiaries on a
consolidated basis) will be Margin Stock.

 

(p)     None of Borrower, any person controlling Borrower, or
any subsidiary of Borrower is or is required to be registered as an “investment
company” under the Investment Company Act of 1940.

 

(q)     Borrower has disclosed to Lender all agreements,
instruments and corporate or other restrictions to which it or any of its
subsidiaries is subject, and all other matters known to it, that, individually
or in the aggregate, could reasonably be expected to have a material adverse
effect upon the business, operations, condition (financial or otherwise),
properties or prospects of Borrower or it subsidiaries (a “Material Adverse
Effect”).  No report, financial
statement, certificate or other information furnished (whether in writing or
orally) by or on behalf of either Grantor to Lender in connection with the
transactions contemplated hereby and the negotiation of this Agreement or
delivered hereunder or under any other Loan Document contains any material misstatement
of fact or omits to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided that, with respect to projected financial information,
Borrower represents only that such information was prepared in good faith based
upon assumptions believed to be reasonable at the time.

 

8.             [Reserved.]

 

9.             Covenants of Borrower. 
For so long as any Obligations remain outstanding or unsatisfied, and so
long as the Availability Period has not expired or been terminated, Borrower
shall, and shall cause its subsidiaries to:

 

(a)     pay or cause to be paid promptly all taxes and
assessments when due, except those which are being contested in good faith by
appropriate proceedings diligently conducted and for which adequate reserves
have been provided in accordance with GAAP, and all lawful claims which, if
unpaid, would by law become a lien upon its property;

 

(b)     [reserved];

 

(c)     deliver to Lender:

 

(i)            Notice of the filing of any documents
filed with the SEC, promptly, but in any event within 2 Business Days, after
the filing thereof;

 

(ii)           promptly after the furnishing thereof, copies of any
statement or report furnished to any holder of debt or equity securities of
Borrower;

 

9

 

(iii)          promptly, but in any event within 2
Business Days, after learning thereof, notice of

 

(1)           any litigation commenced or claim asserted against
Borrower or any of its subsidiaries involving an amount in excess of $25,000;

 

(2)           the occurrence of any Default or Event of Default; and

 

(3)           any matter that has resulted or could reasonably be
expected to result in a Material Adverse Effect.

 

Each notice pursuant to this subsection shall be accompanied by a statement
of an officer of Borrower setting forth details of the occurrence referred to
therein and stating what action Borrower has taken and proposes to take with
respect thereto.  Each notice pursuant to
clause (2) above shall describe with particularity any and all provisions
of this Agreement and any other Loan Document that have been breached.

 

(iv)          promptly, but in any event within 2 Business Days,
such additional information regarding the business, financial or corporate
affairs of Borrower or any of its subsidiaries, or compliance with the terms of
the Loan Documents, as Lender may from time to time reasonably request.

 

(d)     Preserve, renew and maintain in full force and effect
its legal existence and good standing under the laws of the jurisdiction of its
organization; take all reasonable action to maintain all rights, privileges,
permits, licenses and franchises necessary or desirable in the normal conduct
of its business; and preserve or renew all of its registered patents,
trademarks, trade names and service marks, the non-preservation of which could
reasonably be expected to have a Material Adverse Effect.

 

(e)     Maintain, preserve and protect all of its properties
and equipment necessary in the operation of its business in good working order
and condition, ordinary wear and tear excepted, and make all necessary repairs
thereto and renewals and replacements thereof, except in each case where the
failure to do so could not reasonably be expected to have a Material Adverse
Effect.

 

(f)      Maintain with financially sound and reputable
insurance companies not affiliates of Borrower, insurance with respect to its
properties and business against loss or damage of the kinds customarily insured
against by persons or entities engaged in the same or similar business, of such
types and in such amounts as are customarily carried under similar
circumstances by such other persons or entities.

 

(g)     Comply in all material respects with all Requirements
of Law and all orders, writs, injunctions and decrees applicable to it or to its
business or property, except in such instances in which such requirement of Law
or order, writ, injunction or decree is being

 

10

 

contested in good faith by appropriate proceedings
diligently conducted; or the failure to comply therewith could not reasonably
be expected to have a Material Adverse Effect.

 

(h)     Maintain proper books of record and account, in which
full, true and correct entries in conformity with GAAP consistently applied
shall be made of all financial transactions and matters involving the assets
and business of Borrower or such subsidiary, as the case may be; and maintain
such books of record and account in material conformity with all applicable
requirements of any governmental authority having regulatory jurisdiction over
Borrower or such subsidiary, as the case may be.

 

(i)      Permit representatives and independent contractors of
Lender to visit and inspect any of its properties, to examine its corporate,
financial and operating records, and make copies thereof or abstracts
therefrom, and to discuss its affairs, finances and accounts with its
directors, officers, and independent public accountants, all at such reasonable
times during normal business hours and as often as may be reasonably desired,
upon reasonable advance notice to Borrower; provided, however, that when an
Event of Default exists Lender (or any of its representatives or independent
contractors) may do any of the foregoing at the expense of Borrower at any time
during normal business hours and without advance notice.

 

(j)      Use the proceeds of each Loan solely to refinance the
Existing Loan and for the purposes described in the Proceeds Budget delivered
to Lender in connection with such Loan, and in any event not in contravention
of any Requirement of Law or of any Loan Document.

 

(k)     Not create, incur, assume or suffer to exist any lien,
security interest or other encumbrance upon any of its property, assets or
revenues, whether now owned or hereafter acquired, other than in favor of
Lender, except for purchase money security interests granted by Sturgeons LLC
to secure the payment of the outstanding indebtedness incurred by Sturgeons LLC
for the purchase by Sturgeons LLC of equipment provided that
(i) such Liens do not at any time encumber any property other than the
property financed by such indebtedness and (ii) the Indebtedness secured
thereby does not exceed the cost or fair market value, whichever is lower, of
the property being acquired on the date of acquisition.

 

(l)      Not merge or consolidate with or into another person
or entity, or liquidate or dissolve, or sell or otherwise dispose of (whether
in one transaction or in a series of transactions) any Collateral or all or
substantially all of its other assets (whether now owned or hereafter acquired)
to or in favor of any person or entity, other than sales of inventory in the
ordinary course of business.

 

(m)    Not declare or make, directly or indirectly, any
Restricted Payment, or incur any obligation (contingent or otherwise) to do so,
except that (i) any subsidiary of Borrower other than CBS may make a
Restricted Payment to Borrower and (ii) so long as no default or Event of
Default exists, Borrower may declare and pay cash dividends on its outstanding
preferred stock in aggregate amounts and at intervals consistent with past
practice.  As used 

 

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herein, “Restricted Payment” means a dividend or other
distribution (whether in cash, securities or other property) with respect to
any capital stock or other equity interest of Borrower or any of its
subsidiaries, or any payment (whether in cash, securities or other property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any such
capital stock or other equity interest, or on account of any return of capital
to Borrower’s stockholders, partners or members (or the equivalent person or
entity thereof).

 

(n)     Not engage in any material line of business
substantially different from those lines of business conducted by Borrower and
its subsidiaries on the date hereof or any business substantially related or
incidental thereto.

 

(o)     Not enter into any transaction of any kind with any
affiliate of Borrower, whether or not in the ordinary course of business, other
than on fair and reasonable terms substantially as favorable to Borrower or
such subsidiary as would be obtainable by Borrower or such Subsidiary at the
time in a comparable arm’s length transaction with a person or entity other
than an Affiliate.

 

(p)     Not enter into any contractual obligation (other than
this Agreement or any other Loan Document) that (i) limits the ability (1) of
any subsidiary of Borrower to make Restricted Payments to Borrower or any other
subsidiary or to otherwise transfer property to Borrower or any other
subsidiary, (2) of any subsidiary of Borrower to guarantee the
indebtedness of Borrower to Lender or (3) of Borrower or any subsidiary of
Borrower to create, incur, assume or suffer to exist liens on property of such
person or entity in favor of Lender.

 

(q)     Not use the proceeds of any Loan, whether directly or
indirectly, and whether immediately, incidentally or ultimately, to purchase or
carry Margin Stock or to extend credit to others for the purpose of purchasing
or carrying margin stock or to refund indebtedness originally incurred for such
purpose.

 

(r)      At Borrower’s expense, execute and deliver, or cause
to be executed and delivered, to Lender such documents and agreements, and
shall take or cause to be taken such actions, as Lender may, from time to time,
require to carry out the terms and conditions of this Agreement and the other
Loan Documents.

 

10.           Indemnification; Borrower to Reimburse
Lender’s Expenses.

 

(a)     [Reserved]

 

(b)     Borrower shall indemnify and hold harmless Lender and
its members, directors, officers, employees, agents and advisors (each of the
foregoing being called an “Indemnitee”) from and against, and hold each
Indemnitee harmless from,  any and all
loss, damage, liability, or expense, including reasonable fees and
disbursements of counsel for any Indemnitee, incurred by any Indemnitee or asserted
against any Indemnitee by any third party 

 

12

 

or by Borrower or CBS arising out of, in connection
with, or as a result of (i) the execution or delivery of this Agreement,
any other Loan Document or any agreement or instrument contemplated hereby or
thereby, the performance by the parties hereto and thereto of their respective
obligations hereunder or thereunder, the consummation of the transactions
contemplated hereby or thereby, or the administration of this Agreement and the
other Loan Documents, (ii) any Loan or the use or proposed use of the
proceeds thereof, or (iii) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory, whether brought by a third party or by
Borrower or CBS, and regardless of whether any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities or related expenses (x) are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee or (y) result from a claim brought by Borrower or CBS
against an Indemnitee for breach in bad faith of such Indemnitee’s obligations
hereunder or under any other Loan Document, if Borrower or CBS has obtained a
final and nonappealable judgment in its favor on such claim as determined by a
court of competent jurisdiction.

 

(c)     Borrower shall pay for or reimburse Lender for: (i) all
reasonable out of pocket expenses incurred by Lender (including the fees and
disbursements of counsel), in connection with the preparation, negotiation,
execution, delivery and administration of this Agreement and the other Loan
Documents or any amendments, modifications or waivers of the provisions hereof
or thereof (whether or not the transactions contemplated hereby or thereby
shall be consummated), (ii) the costs arising from or relating to any
regulatory or legal expense for Lender associated with this Agreement and/or
any other Loan Document, and (iii) all out of pocket expenses incurred by
Lender (including the fees and disbursements of counsel) in connection with the
enforcement or protection of its rights (A) in connection with this
Agreement and the other Loan Documents, including its rights under this
Section, or (B) in connection with the Loans made hereunder, including all
such out of pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans.

 

11.           [Reserved.]

 

12.           Defaults.  The following
shall constitute events of defaults hereunder (“Event of Default”):

 

(a)     Borrower’s failure to pay, when and as required to be
paid herein or in any other Loan Document, any amount of principal, interest or
fees or any other amount payable hereunder or under any other Loan Document; or

 

(b)     Any warranty or representation made by either Grantor
in any Loan Document proves to have been false or misleading in any material
respect when made or deemed made; or

 

13

 

(c)     Either Grantor’s failure to perform, or breach of, any
other term, obligation or covenant set forth in this Agreement or any other
Loan Document; or

 

(d)     Borrower or any of its subsidiaries (i) fails to
make any payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) in respect of any indebtedness (other than
indebtedness hereunder) having an aggregate principal amount of more than
$100,000, or (ii) fails to observe or perform any other agreement or
condition relating to any such indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event occurs,
the effect of which default or other event is to cause, or to permit the holder
or holders of such indebtedness (or a trustee or agent on behalf of such holder
or holders) to cause, with the giving of notice if required, such indebtedness
to be demanded or terminated or to become due or to be repurchased, prepaid,
defeased or redeemed (automatically or otherwise), or an offer to repurchase,
prepay, defease or redeem such indebtedness to be made, prior to its stated
maturity, or cash collateral in respect thereof to be demanded; or

 

(e)     Borrower or any of its Subsidiaries institutes or
consents to the institution of any proceeding under any Debtor Relief Law, or
makes an assignment for the benefit of creditors; or applies for or consents to
the appointment of any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer for it or for all or any material part of its
property; or any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer is appointed without the application or
consent of such person or entity and the appointment continues undischarged or
unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law
relating to any such person or entity or to all or any material part of its property
is instituted without the consent of such person or entity and continues
undismissed or unstayed for 60 calendar days, or an order for relief is entered
in any such proceeding; or

 

(f)      (i) Borrower or any of its Subsidiaries becomes
unable or admits in writing its inability or fails generally to pay its debts
as they become due, or (ii) any writ or warrant of attachment or execution
or similar process is issued or levied against all or any material part of the
property of any such Person and is not released, vacated or fully bonded within
30 days after its issue or levy; or

 

(g)     There is entered against Borrower or any of its
subsidiaries (i) a final judgment or order for the payment of money in an
aggregate amount exceeding $50,000, or (ii) any one or more non-monetary
final judgments that have, or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect and, in either
case, (A) enforcement proceedings are commenced by any creditor upon such
judgment or order, or (B) there is a period of 10 consecutive days during
which a stay of enforcement of such judgment, by reason of a pending appeal or
otherwise, is not in effect; or

 

(h)     Any Loan Document, at any time after its execution and
delivery and for any reason other than as expressly permitted hereunder or
thereunder or satisfaction in full of 

 

14

 

all the Obligations, ceases to be in full force and
effect; or any Grantor or any other person or entity contests in any manner the
validity or enforceability of any Loan Document; or any Grantor denies that it
has any or further liability or obligation under any Loan Document, or purports
to revoke, terminate or rescind any Loan Document; or

 

(i)      Victor Salerno ceases for any reason to be or act as
the Chief Executive Officer of Borrower; or there occurs any change of control
of Borrower; or

 

(j)      Any lien or security interest purported to be created
under any Loan Document shall cease to be, or shall be asserted by any Grantor
or other person or entity not to be, a valid and perfected lien on or security
interest in any Collateral, with the priority required by this Agreement.

 

13.           Rights and Remedies of Lender. 
Upon the occurrence of an Event of Default, Lender may exercise any one
or more of the following rights and remedies:

 

(a)     declare the Availability Period to be terminated,
whereupon the Availability Period shall be terminated and no further Loans
shall be made hereunder;

 

(b)     declare all or any portion of the unpaid principal
amount of all outstanding Loans, all interest accrued and unpaid thereon, and
all other amounts owing or payable hereunder or under any other Loan Document
to be immediately due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby expressly waived by Borrower;

 

(c)     Pursue and enforce all of the rights and remedies
provided to a secured party with respect to the Collateral under the Nevada
Uniform Commercial Code; or

 

(d)     Pursue any other rights or remedies available to
Lender at law or in equity including recovery of all costs of collection
incurred by Lender due to the Event of Default, including, without limitation,
reasonable attorneys’ fees and expenses;

 

provided, however, that upon the occurrence of any event with respect to
Borrower described in Section 12(e) above, the Availability Period
shall be automatically terminated and no further Loans shall be made hereunder,
and the unpaid principal amount of all outstanding Loans and all interest and
other amounts as aforesaid shall automatically become due and payable, in each
case without further act of Lender.

 

14.           Waiver.  Borrower,
except as otherwise specifically set forth herein, for itself and for its
successors, transferees, and assigns, hereby irrevocably waives diligence,
presentment, and demand for payment, protest, notice, notice of protest and
nonpayment, dishonor and notice of dishonor and all other demands or notices of
any and every kind whatsoever in connection with this Agreement, any other Loan
Document, and the Collateral and the benefit of all statutes, ordinances,
judicial rulings, and other legal principles of any kind, now or hereafter
enacted or in force, affording any right of redemption or cure or any right to
a stay of 

 

15

 

execution or extension of time for payment or
exempting any property of such person from levy and sale upon execution of any
judgment obtained by Lender or any successor or assignee of Lender in respect of
this Agreement, any other Loan Document, and the Collateral.  Borrower hereby agrees that the Loans and any
or all payments coming due hereunder may be extended from time to time in the
sole discretion of Lender without in any way affecting or diminishing Borrower’s
liabilities hereunder or under any other Loan Document.

 

15.           Full Recourse. 
The liability of Borrower for the Obligation shall not be limited to the
Collateral.  Borrower shall remain fully
liable for indefeasible repayment in full of the Obligations in cash and,
specifically, any remaining Obligations in the event that sale or other
liquidation of the Collateral is deficient to satisfy the Obligations in full.

 

16.           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
Agreement.  This Agreement 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 Agreement.

 

17.           Choice of Laws; Actions. 
This Agreement, the Note and the 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 the Agreement shall be state court in Clark County, Nevada.

 

18.           Successors and Assigns. 
Neither this Agreement nor any of the rights or obligations hereunder
shall be assignable or delegable by Borrower without the written consent of
Lender or its assignee first obtained and any attempted assignment without such
written consent shall be void and confer no rights upon any third party.  This Agreement and the other Loan Documents
shall be freely assignable by Lender, subject to compliance with applicable
law. Subject to the foregoing, this Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective
representatives, successors and permitted assigns.

 

19.           Notices.  All notices
under this Agreement shall be in writing and shall be given by personal
delivery, or by registered or certified United States mail, postage prepaid,
return receipt requested, to the addresses set forth below or to such other
person or persons or to such other address or addresses as Lender and Borrowers
or their respective successors or assigns may hereafter furnish to the other
party by notice similarly given.  Notices,
if personally delivered, shall be deemed to have been received on the date of
delivery, and if given by registered or certified mail, shall be deemed to have
been received on the third business day after mailing.

 

16

 

If to Lender:

 

Alpine Advisors LLC

825 Lakeshore Blvd

Incline Village, NV 89451

 

If to
Borrower:

 

American
Wagering, Inc.

Attn:
General Counsel

675 Grier Drive

Las Vegas, Nevada 89119

 

20.           Severability. 
In case any provision of this Agreement 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 such agreement 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 Agreement are inserted for convenience
of reference only and shall not affect the meaning or interpretation of this
Agreement or any provision hereof.

 

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

 

23.           Counterparts. 
This Agreement may be executed in any number of counterparts, each
constituting an original, but all together one and the same instrument.  Delivery of an executed counterpart of a
signature page of this Agreement by telecopy shall be effective as
delivery of a manually executed counterpart of this Agreement

 

24.           Entire Agreement. 
This Agreement, together with the other Loan Documents, 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.

 

[signature page follows]

 

17

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.

 

 

	
  BORROWER:

  	
   

  	
  LENDER:

  
	
  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

  
					

 

18

 

EXHIBIT A

 

FORM OF
BORROWER PLEDGE AGREEMENT

 

[See
Attached]

 

19

 

EXHIBIT B

 

FORM OF
CBS SECURITY AGREEMENT

 

[See
Attached]

 

20Exhibit 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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00178-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00178-of-00352.parquet"}]]