ASSET ACQUISITION AGREEMENT

by and between

LAS VEGAS GAMING, INC.,
LAS VEGAS GAMING ACQUISITION CORP.

and

ADLINE NETWORK HOLDINGS INC

and

ADLINE MEDIA LLC, ADLINE NETWORK LLC,
FREEVIEW NETWORK LLC, SAM JOHNSON
and LARRY L. ENTERLINE

 

 
 

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EXHIBITS

Exhibit A                     Technology
Exhibit B                      Existing Technology Licenses
Exhibit C                      Partial List of Company Assets

 
 

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ASSET ACQUISITION AGREEMENT

This ASSET ACQUISITION AGREEMENT (together with the Exhibits attached hereto,
the “Agreement”), dated as of September 29, 2008 (“Effective Date”), by and
between Las Vegas Gaming Acquisition Corp. a Nevada corporation (the “Acquirer”
or “LVGAC” as defined in Section 1.01), Las Vegas Gaming, Inc., a Nevada
corporation (“LVGI” as defined in Section 1.01) and Adline Network Holdings Inc,
a Georgia corporation (“Adline” or the “Transferor” as defined in Section 1.01)
and Adline Media LLC, a Georgia limited liability company, Adline Network LLC, a
Georgia limited liability company, and Freeview Network LLC, a Georgia limited
liability company, Sam Johnson, an individual residing in Nevada, and  Larry L.
Enterline, an individual residing in Texas (collectively, the “Additional
Parties”) (additional terms used in this Agreement are defined or otherwise
referenced in Section 1.01):

RECITALS:

A.  
WHEREAS LVGAC and LVGI are entering into this Agreement to acquire the Acquired
Assets (as defined in Section 2.01 below);

B.  
WHEREAS LVGAC is acquiring the Acquired Assets for the benefit of LVGI and for,
among other reasons, to consolidate all of the rights associated with the
various technologies set forth in Exhibit A (defined as “Technology” in Section
1.01) including any rights Adline or the Additional Parties may have  or
pursuant to any of the contracts and licenses set out in Exhibit B (defined as
“Existing License(s)” in Section 1.01);

C.  
WHEREAS the Acquired Assets are free from any Liens or Encumbrances, and Adline
and the Additional Parties are authorized to enter into this Asset Acquisition
Agreement;

D.  
WHEREAS LVGAC shall not assume, and Adline and, if applicable, the Additional
Parties, shall be responsible for the payment, satisfaction, performance and
discharge of all liabilities, obligations, claims, demands, expenses, lawsuits,
all taxes of whatever kind or nature, damages or responsibilities of Adline or,
if applicable, the Additional Parties, whether known or unknown, absolute,
accrued, contingent or otherwise arising out of the operation of the
Transferor’s business prior to the Effective Date, whether due or to become due;

 
E.  
AND WHEREAS this transaction is intended to qualify as a tax deferred
reorganization within the meaning of Sections 367 and 368 of the Internal
Revenue Code of 1986, as amended, and this Agreement is intended as a “plan of
reorganization” within the meaning of such sections.

 

 
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AGREEMENT:

NOW, THEREFORE, in consideration of the mutual representations and warranties
and covenants made herein, LVGAC, LVGI, Adline, and the Additional Parties, each
intending to be legally bound, hereby agree as follows:

ARTICLE I
DEFINITIONS

Section 1.01    Definitions.   For purposes of this Agreement:

“Acquired Assets” are defined in Section 2.01.

“Acquisition Price” means the consideration paid pursuant to Section 2.02.

“Additional Parties” means Adline Media LLC, a Georgia limited liability
company, Adline Network LLC, a Georgia limited liability company, and Freeview
Network LLC, a Georgia limited liability company, Sam Johnson, an individual
residing in Nevada, and  Larry L. Enterline, an individual residing in Texas.

“Adline” or “Transferor” means ADLINE NETWORK HOLDINGS INC, a Georgia
corporation.

“Adline Assets” are defined in Section 2.01.

“Encumbrances” means all Liens, claims, rights of first refusal, assignments,
preemptive rights, rights-of-way, easements, mortgages, encroachments,
restrictions, covenants, title retention agreements, indentures, security
agreements or any other encumbrances of any kind.

“Existing License(s)” means the contract(s) or license(s) set out in Exhibit B.

“Governmental Entity” means any federal, state, local or foreign government or
any court of competent jurisdiction, administrative agency or regulatory
authority or commission or other governmental authority or instrumentality,
domestic or foreign.

“Judgment” means any judgment, order, injunction, award, decree or writ issued
by any Governmental Entity or court.

“Lien” means, with respect to any property or asset (or any income or profits
therefrom) of any Person (in each case whether the same is consensual or
nonconsensual or arises by contract, operation of law, legal process or
otherwise), (a) any mortgage, lien (including any lessor’s or landlord’s lien),
encumbrance, pledge, attachment, levy or other security interest of
 

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any kind thereupon or in respect thereof, or (b) any other arrangement, express
or implied, under which the same is subordinated, transferred, sequestered or
otherwise identified so as to subject the same to, or make the same available
for, the payment or performance of any indebtedness, liability or obligation in
priority to the payment of the ordinary, unsecured liabilities of such Person.

“LVGAC” or “Acquirer” means Las Vegas Gaming Acquisition Corp., a wholly owned
subsidiary of LVGI.

“LVGI” means Las Vegas Gaming, Inc. and the LVGI Affiliates.

“LVGI Affiliates” means an entity directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control or
ownership with Las Vegas Gaming, Inc., including LVGAC.

"Non-Compete Period" means the period beginning on the Effective Date of this
Agreement and ending eighteen (18) months after the Effective Date.
 
“Person” means any individual, firm, corporation, partnership, limited liability
company, trust, joint venture, association, Governmental Entity or other entity.

“Technology” means the inventions, intellectual property, trade secrets, and
know-how defined in Exhibit A.

ARTICLE II
ACQUISITION AND TRANSFER OF ASSETS;
TRANSFEROR’S RETENTION OF LIABILITIES

Section 2.01    Acquisition and Transfer of Assets.   Transferor shall sell,
convey, transfer, assign and deliver to LVGAC, free and clear of any and all
Encumbrances, and LVGAC shall acquire from Transferor, all right, title and
interest in the following (“Acquired Assets”):
 
a.    ADLINE NETWORK HOLDINGS INC (“TRANSFEROR”).  All right title and interest
to any and all tangible and intangible assets of TRANSFEROR, but excluding cash
on hand, accounts receivables and any other receivables.  After this transfer is
made, LVGAC will be the sole owner of all Acquired Assets thereof.

b.    RIGHTS IN THE ADLINE ASSETS.  All right, title and interest to all
tangible and intangible assets identified in Exhibits A, B and C, including any
improvements, copyrights, trade secrets, inventions, unfiled applications and
unexercised options in and to the Technology  (“Adline Assets”).

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c.    RIGHTS HELD BY ADDITIONAL PARTIES.   All right, title and interest, if
any, the Additional Parties may have in any of the assets described in Section
2.01(a)-(b) above, including any improvements, copyrights, trade secrets,
inventions, unfiled applications and unexercised options in and to the
Technology.

Section 2.02     Acquisition Price.   The Acquisition Price to be paid by LVGAC
to the Transferor shall be seven hundred fifty thousand (750,000) shares of
Series A common stock of LVGI (the “Consideration”).  Transferor has directed
that the Acquisition Price shall be paid to Transferor, who Transferor and the
Additional Parties represent is the beneficial owner of the Acquired
Assets.  See Section 2.06 below regarding escrow of a portion of the Acquisition
Price.

Section 2.03     Rights and Privileges of Transferors Consideration Stock. The
holders of the Consideration stock shall enjoy the same rights and privileges
with respect to such stock as those rights and privileges which are or shall be
accorded to the holders of all other currently issued and outstanding Series A
Common Stock in LVGI.

Section 2.04     Liabilities.    Acquirer shall not assume, and Transferor and
the Additional Parties, if applicable, shall be responsible for the payment,
satisfaction, performance and discharge of all liabilities, obligations, claims,
demands, expenses, all taxes of whatever kind or nature, damages or
responsibilities of Transferor or the Additional Parties, as applicable, whether
known or unknown, absolute, accrued, contingent whether due or to become due
(collectively, the “Retained Liabilities”).  The Retained Liabilities shall
include, but not be limited to, amounts owed pursuant to any consulting
contracts with any independent contractors and all known and unknown litigation
including the litigation filed by Paltronics, Inc. against Adline Network
Holdings Inc and Adline Media LLC in the United States District Court for the
Northern District of Illinois, Case No. 3:08-cv-50126 and any litigation
commenced as a result of the execution and consummation of this Agreement by
Transferor’s shareholder or a member of any of the non-individual Additional
Parties.

Section 2.05     LVGI’s use of the Acquired Assets.   Provided said liability is
not caused directly or indirectly by Transferor or the Additional Parties,
Transferor and Additional Parties shall not assume or be liable for the payment,
satisfaction, performance and discharge of any liabilities, obligations, claims,
demands, expenses, all taxes of whatever kind or nature, damages or
responsibilities created / generated as a result of LVGI’s ownership of, nonuse
of or any use of the Acquired Assets by LVGI and Affiliates and any third party
use under a license or assignment granted by LVGI .

Section 2.06     Escrowed Shares. Transferor agrees to allow LVGI to escrow
three hundred seventy-five thousand (375,000) shares of the Consideration for a
period of eighteen (18) months as defined in Article X below.  Said shares to be
escrowed with a neutral escrow agent that is agreed to by the parties and
pursuant to an escrow agreement in form and substance satisfactory to the
parties.
 

 
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ARTICLE III
DELIVERY OF ACQUIRED ASSETS / FURTHER ASSURANCES

Section 3.01     Delivery of Acquired Assets.   Immediately after the execution
of this Agreement, Transferor and Additional Parties, if applicable, shall turn
over all of the Acquired Assets, including all Adline Assets to
LVGAC.  Transferor and Additional Parties, if applicable, shall also deliver all
username and passwords necessary to access any Domain Name Registrar accounts,
ISP accounts, other online accounts, computers, backups, source code, etc.

Section 3.02      Further Assurances.  Upon the reasonable request of LVGI,
Transferor and Additional Parties, if applicable, shall on and after the
Effective Date execute and deliver, or cause to be executed and delivered, to
LVGI such deeds, assignments and other instruments as may be reasonably
requested by LVGI and are required to effectuate completely the transfer and
assignment to LVGAC of the Acquired Assets and to otherwise carry out the
purposes of this Agreement.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES

A.           REPRESENTATIONS OF TRANSFEROR AND ADDITIONAL PARTIES.

Transferor and Additional Parties represent and warrant to LVGI and LVGAC as
follows:

Section 4.01    Title to Assets. Transferor owns all right, title and interest
to the Acquired Assets, including those identified in Exhibits A, B and C.

Section 4.02    Liabilities and Third Party Contracts.   All liabilities and
third party contracts, including the Retained Liabilities and any contingent or
future liabilities, of Transferor or the Additional Parties shall be the
responsibility of Transferor or the Additional Parties, as applicable.

Section 4.03     Organization, Standing and Power.   Transferor and the
non-individual Additional Parties are duly organized, validly existing and in
good standing under the laws of the State of Georgia and have full corporate
power and authority and possesses all governmental franchises, licenses,
permits, authorizations and approvals necessary or desirable to enable them to
own, lease or otherwise hold their properties and assets and to conduct their
businesses as presently conducted.

Section 4.04                                Authority; Execution and Delivery;
Enforceability.Transferor and the Additional Parties have all requisite power
and authority to execute this Agreement and each of the other transaction
agreements to which Transferor and the Additional Parties are (or will be) a
party and to consummate the transactions contemplated hereby and
thereby.  Transferor and the
 

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Additional Parties have duly executed and delivered this Agreement, and this
Agreement constitutes a legal, valid and binding obligation of Transferor and
the Additional Parties, enforceable against Transferor and the Additional
Parties in accordance with its terms, and each other transaction agreement to
which Transferor and the Additional Parties are (or will be) a party, when duly
executed and delivered, will constitute a legal, valid and binding obligation of
Transferor and the Additional Parties, enforceable against Transferor and the
Additional Parties in accordance with its terms.

Section 4.05    No Conflicts.   The execution and delivery by Transferor and the
Additional Parties of this Agreement and each of the other transaction
agreements to which Transferor and the Additional Parties are (or will be) a
party does not, and the consummation of any transaction and compliance with the
terms hereof and thereof will not, conflict with, or result in any violation of
or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any obligation
or to loss of a benefit under, or to increased, additional, accelerated or
guaranteed rights or entitlements of any Person under, or result in the creation
of any Encumbrance upon the Acquired Assets under, any provision of (a) any
material contract, permit or other instrument to which Transferor or the
Additional Parties is party or by which any of the Acquired Assets is bound, (b)
any Judgment, (c) any applicable law applicable to the Additional Parties, the
business of the Transferor or any of the Acquired Assets, or (d) any written or,
to the best knowledge of Transferor and the Additional Parties, oral request of
any Governmental Entity.

Section 4.06     Taxes.   Transferor and the non-individual Additional Parties
have filed in a timely manner (within any applicable extension periods) all tax
returns required to be filed by federal, state, local, provincial or foreign tax
laws prior to or as of the Effective Date, and each such return is true,
complete and correct.

Section 4.07     Workers’ Injuries.  There has not been during the past three
(3) years, any actual or, to the best knowledge of Transferor and the
non-individual Additional Parties, threatened claims of past or present
employees of Transferor or the Additional Parties for compensation for any
material injury, disability or illness arising out of or relating to their
employment by Transferor.

Section 4.08      Litigation.  With exception of the Paltronics, Inc suit noted
in Section 2.04 above, there is (a) no outstanding Judgment against Transferor
or the Additional Parties (whether or not relating to Transferor or the Acquired
Assets), (b) no suit, action, claim, dispute or legal, governmental,
administrative, arbitration or regulatory proceeding (“Proceeding”) pending or,
to the best knowledge of Transferor and the Additional Parties, threatened
against Transferor or Additional Parties related to the Acquired Assets, and (c)
no investigation by any Governmental Entity pending or, to the best knowledge of
Transferor and the Additional Parties, threatened against Transferor or the
Additional Parties (whether or not relating to Transferor or the Acquired
Assets).
 

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Section 4.09     Title to Acquired Assets. Transferor and the Additional
Parties, as applicable, warrant that they own and have good and marketable title
to all of the Acquired Assets, free and clear of any Encumbrances.  Transferor
and the Additional Parties warrant to the best of their knowledge, that the use,
sale, or offering for sale of the Acquired Assets does not and will not violate
any rights of any third party.

Section 4.10      No Other Interests. No Person other than Transferor or the
Additional Parties have any ownership interest or similar rights in or to the
Acquired Assets.

Section 4.11     Company Authorization. The signing officer(s) are fully
authorized to act on behalf of Transferor and the non-individual Additional
Parties and enter into this Agreement and there are no other consents required
by any other parties in order to consummate the transactions contemplated
hereby.

Section 4.12      Full Disclosure. Transferor and the Additional Parties are not
aware of any facts pertaining to the Acquired Assets, which will or may in the
future affect LVGI or LVGAC in a materially adverse manner.

Section 4.13      Fair Consideration. The sale of the Acquired Assets pursuant
to this Agreement is made in exchange for fair and equivalent
consideration.  Transferor and the Additional Parties are not insolvent and will
not be rendered insolvent by the sale, transfer or assignment of the Acquired
Assets pursuant to the terms of the Agreement.  Neither Transferor nor the
Additional Parties are entering into this Agreement to defraud, hinder or delay
their creditors and the consummation of the transactions contemplated by this
Agreement will not have any such effect.  The transactions contemplated in this
Agreement will not constitute a fraudulent conveyance, or otherwise give rise to
any right of any creditor of Transferor or the Additional Parties to any of the
Acquired Assets on or after the Effective Date.

B.           REPRESENTATIONS OF LVGAC AND LVGI.

LVGAC and LVGI represent and warrant to the Transferor:

Section 4.14      Organization, Standing and Power. LVGI and LVGAC are duly
organized, validly existing and in good standing under the laws of the State of
Nevada and have full corporate power and board authority to enter into this
Agreement.

Section 4.15      Authority; Execution and Delivery; Enforceability.LVGI and
LVGAC have all requisite power and authority to execute this Agreement and each
of the other transaction agreements to which it will be a party and to
consummate the transactions contemplated hereby and thereby.  LVGI and LVGAC
have duly executed and delivered this Agreement, and this Agreement constitutes
a legal, valid and binding obligation of LVGI and
 

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LVGAC, enforceable against LVGI and LVGAC in accordance with its terms, and each
other transaction agreement to which LVGI and LVGAC are (or will be) a party,
when duly executed and delivered, will constitute a legal, valid and binding
obligation of LVGI and LVGAC, enforceable against LVGI and LVGAC in accordance
with its terms.

Section 4.16      Company Authorization. The signing officer(s) are fully
authorized to act on behalf of LVGI and LVGAC and enter into this Agreement and
there are no other consents required by any other parties in order to consummate
the transactions contemplated hereby.

Section 4.17      Taxes.   LVGI has filed and LVGAC will file, in a timely
manner (within any applicable extension periods) all tax returns required to be
filed by federal, state, local, provincial or foreign tax laws prior to or as of
the Effective Date, and each such return is true, complete and correct.

Section 4.18      Litigation. With the exceptions of (i) IGT v. Las Vegas Gaming
Inc., Case No. 3:07-cv-00415-BES-VPC filed in the United States District Court,
District of Nevada; (ii) Brandstetter v. Bally Gaming, Inc., et al. Case No:
A571641 filed in the Eight Judicial District Court, Clark County, Nevada; (iii)
June 27, 2008, Order to Show Cause from the Nevada Gaming Control Board re:
deficiencies in financial requirements as to 1) resources in restricted
accounts; 2) current ratio or working capital; 3) interest coverage ratios or
debt to EBITDA ratio and 4) bankroll; and (iv) July 7, 2008, Order to Show Cause
from the Nevada Gaming Control Board re: deficiencies in filing timely reports
with the Nevada Gaming Control Board as to new hires and termination of
personnel, there is (a) no outstanding Judgment against LVGI and LVGAC, (b) no
suit, action, claim, dispute or legal, governmental, administrative, arbitration
or regulatory proceeding (“Proceeding”) pending or, to the best knowledge of
LVGI and LVGAC, threatened against LVGI and LVGAC, and (c) no investigation by
any Governmental Entity pending or, to the best knowledge of LVGI and LVGAC,
threatened against LVGI and LVGAC.

Section 4.19     SEC Reports and Financial Statements. LVGI has filed with the
SEC all forms, reports, schedules, definitive proxy statements and other
documents (collectively, the “LVGI SEC Reports”) required to be filed by LVGI
with the SEC. As of their respective dates, and giving effect to any amendments
or supplements thereto filed prior to the date of this Agreement, the LVGI SEC
Reports complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the “Securities Act”), the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) and the respective rules
and regulations of the SEC promulgated thereunder applicable to such LVGI SEC
Reports, and none of the LVGI SEC Reports contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.  The consolidated
balance sheets and the related consolidated statements of operations,
consolidated
 

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statements of stockholders’ equity and comprehensive income (loss) and
consolidated statements of cash flows (including, in each case, any related
notes and schedules thereto) (collectively, the “LVGI Financial Statements”) of
LVGI contained in the LVGI SEC Reports have been prepared from the books and
records of LVGI and its subsidiaries, comply as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared in conformity with United
States generally accepted accounting principles (“GAAP”) (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as otherwise noted therein)
and present fairly the consolidated financial position and the consolidated
results of operations and cash flows of LVGI and its subsidiaries as of the
dates or for the periods presented therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments in the ordinary course
of business).
 
Section 4.20     LVGI Capitalization.. As of June 30, 2008, the authorized
capital stock of LVGI consisted of 90,000,000 shares of Series A Common Stock;
13,579,340 shares of Series A are issued and outstanding and 6,608,709 shares of
Series A are reserved for issuance upon the exercise of the options and other
awards granted under LVGI’s stock option and incentive plans, warrants, or
pursuant to compensation arrangements.  In addition, 76,750 shares of the
company’s Series B Convertible Preferred Stock; 810,800 shares of the Company’s
Series E Convertible Preferred Stock; 200,000 shares of  LVGI’s Series F
Convertible Preferred Stock; 150,000 shares of LVGI’s Series G convertible
Preferred Stock; and 98,500 shares of Series H Convertible Preferred Stock are
issued and outstanding.  As of the effective date of this Agreement, the LVGI
Shares will be duly authorized and validly issued, fully paid and nonassessable.

                Section 4.21    Absence of Material Adverse Changes.   Except
has disclosed in Section 4.18, since January 1, 2008, LVGI and its subsidiaries
have conducted their business in the ordinary course of business consistent with
past practice and there has not been or occurred:  (i)  any event, condition,
change, occurrence, development or state of circumstances which, individually or
in the aggregate, has had or would reasonably be expected to have a LVGI
material adverse effect; or (ii) any material damage, destruction or other
casualty loss (whether or not covered by insurance) affecting the business or
assets owned or operated by LVGI and its Subsidiaries.
 

ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS

Section 5.01     Actions. The parties hereto shall not take any action that
would, or that could reasonably be expected to, result in (a) any of the
representations and warranties of such party set forth in the Agreement becoming
untrue or inaccurate, or (b) any condition set forth in this Agreement not being
satisfied.

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Section 5.02     Release of Encumbrances. Any and all Encumbrances recorded
against or in any way affecting the Acquired Assets have been or will be
satisfied prior to the Effective Date.  Transferor and the Additional Parties,
if applicable, shall have duly executed and delivered for recordation all
required releases of Liens, termination statements and satisfactions with
respect to Encumbrances being repaid on or before the Effective Date.

ARTICLE VI
NON-COMPETITION AND NON-INTERFERENCE

Section 6.01     Acknowledgements.  Transferor and the Additional Parties
acknowledge that (a) the Acquired Assets transferred under this Agreement are of
a special, unique, unusual, and extraordinary character and (b) the provisions
of this non-competition and non-interference section are reasonable and
necessary to protect the goodwill and other business interests of LVGI.

Section 6.02      Covenants.   Transferor and the Additional Parties covenant
that they will not, directly or indirectly:

a.    During the Non-Compete Period, without the express prior written consent
of LVGI, as owner, officer, director, employee, stockholder, principal,
consultant, agent, lender, guarantor, cosigner, investor or trustee of any
non-public corporation, partnership, proprietorship, joint venture, association
or any other entity of any nature, engage, directly or indirectly, in any
business worldwide which utilizes the Acquired Assets or is competitive with the
Acquired Assets;

b.   Whether for Transferor’s or the Additional Parties’ own account or for the
account of any other Person at any time during the Non-Compete Period, solicit
or attempt to solicit or induce a customer of LVGI or Transferor, whether or not
Transferor or the Additional Parties had personal contact with such Person or
entity prior to the execution of this Agreement; and

c.    Whether for Transferor’s, Additional Parties’ or any other Person’s
account and at any time during the Non-Compete Period, (i) solicit, employ, or
otherwise engage as an employee, independent contractor or otherwise, any Person
who is or was an employee of LVGI or Transferor to work in a business which
utilizes the Technology or competes with LVGI, or in any manner induce, or
attempt to induce, any employee of LVGI or Transferor to terminate his/her
employment with LVGI or Transferor.

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Section 6.03        Injunctive Relief. Transferor and the Additional Parties
acknowledge that the injury that would be suffered by LVGI as a result of a
material breach of the provisions of these non-compete covenants will be
irreparable and that an award of monetary damages to LVGI for such a breach will
be an inadequate remedy. Consequently, LVGI will have the right, in addition to
any other rights it may have, to obtain a temporary restraining order and/or
injunctive relief to restrain any material breach or threatened material breach
or otherwise to specifically enforce any provision of this Agreement. The
parties agree that any bond which is required to be posted in conjunction with
this remedy shall be no more than five hundred dollars ($500.00).

ARTICLE VII
NON-DISCLOSURE COVENANT

Section 7.01        Acknowledgments by Transferor and the Additional
Parties.Transferor and the Additional Parties acknowledge that (a) part of what
LVGAC is acquiring pursuant to this Agreement includes trade secrets and other
confidential information of Transferor (“Confidential Information”); (b) public
disclosure of such Confidential Information could have an adverse effect on the
value of this purchase to LVGAC and LVGI and adversely affect its future
business; and (c) the provisions of this Article VII are reasonable and
necessary to prevent the improper use or disclosure of Confidential Information.

Section 7.02          Intellectual Property, Confidentiality, Trade
Secrets.Transferor and the Additional Parties covenant as follows:

a.     Confidentiality. Transferor and the Additional Parties will hold in
confidence the Confidential Information and will not disclose it to any Person
except with the specific prior written consent of LVGI; provided, however, that
the parties agree that this Agreement does not prohibit the disclosure of
Confidential Information where applicable law requires, including, but not
limited to, in response to subpoenas and/or orders of a governmental agency or
court of competent jurisdiction. In the event that one or more of Tansferor or
the Additional Parties is requested or becomes legally compelled under the terms
of a subpoena or order issued by a court of competent jurisdiction or by a
governmental body to make a disclosure of Confidential Information, Transferor
and the Additional Parties agree that they will (i) immediately provide LVGI
with written notice of the existence, terms and circumstances, surrounding such
request(s) so that LVGI may seek an appropriate protective order or other
appropriate remedy, (ii) cooperate with LVGI in its efforts to decline, resist
or narrow such requests, and (iii) if disclosure of such Confidential
Information is required in the opinion of counsel, exercise reasonable efforts
to obtain an order or other reliable assurance that confidential treatment will
be accorded to such disclosed information.

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b.      Trade Secrets. Any trade secrets being acquired pursuant to this
Agreement will be entitled to all the protections and benefits under the federal
and state trade secret and intellectual property laws and any other applicable
law. Transferor and the Additional Parties hereby waive any requirement that
LVGI submit proof of the economic value of any trade secret or post a bond or
other security.

ARTICLE VIII
ADDITIONAL AGREEMENTS

Section 8.01          Access to Information. Transferor and the Additional
Parties agree that LVGI, its counsel, accountants and other representatives
shall have reasonable access to inspect and review Transferor’s books, records
and files that relate to the Acquired Assets.  LVGI shall be given copies of
documents and information concerning Transferor’s business that relate to the
Acquired Assets, as LVGI may reasonably request.

Section 8.02           Expenses.   LVGI, LVGAC, Transferor and the Additional
Parties will each bear their own expenses in connection with this Agreement and
its performance.

ARTICLE IX
INDEMNIFICATION

Section 9.01          Indemnification by LVGI and LVGAC.  LVGI and LVGAC shall
indemnify, defend and hold Transferor and the Additional Parties and their
officers, directors, employees, agents and representatives harmless against any
and all losses, costs and expenses (including reasonable cost of investigation,
court costs and reasonable legal fees actually incurred) and other damages
resulting from (a) any breach by LVGI or LVGAC of any of their covenants,
obligations, representations or warranties or breach or untruth of any
representation, warranty, fact or conclusion contained in this Agreement or any
certificate or document of LVGI or LVGAC delivered pursuant to this Agreement,
and (b) any claim related to the Acquired Assets that is brought or asserted by
any third party(ies) against Transferor and the Additional Parties arising out
of the ownership, licensing, operation or conduct of LVGI and LVGAC.  No
Indemnification will be provided under this paragraph if the damage or claim
asserted has been caused directly or indirectly by Transferor or the Additional
Parties.

Section 9.02           Indemnification by Transferor and the Additional Parties
.  Transferor and the non-individual Additional Parties shall indemnify, defend
and hold LVGI and LVGAC and their respective officers, directors, employees and
representatives harmless against any and all losses, costs and expenses
(including reasonable cost of investigation, court costs and reasonable legal
fees actually incurred) and other damages up to $1,837,500 as secured in Article
10 resulting from (a) any

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breach by Transferor and the non-individual Additional Parties of any of its
covenants, obligations, representations or warranties or breach or untruth of
any representation, warranty, fact or conclusion contained in this Agreement or
any certificate or document of Transferor and the non-individual Additional
Parties delivered pursuant to this Agreement, and (b) any claim related to the
Acquired Assets that is brought or asserted by any third party(ies) arising out
of the ownership, licensing, operation or conduct of Transferor and the
non-individual Additional Parties, as applicable,. No Indemnification will be
provided under this paragraph if the damage or claim asserted has been caused
directly or indirectly by LVGI or LVGAC.

Section 9.03        Rules Regarding Indemnification.  The obligations and
liabilities of each party hereto (the "indemnifying party") which may be subject
to indemnification liability hereunder to the other party(ies) (the “indemnified
party”) will be subject to the following terms and conditions:

a)           The indemnified party will give written notice to the indemnifying
party, within such time as not to prejudice the indemnifying party’s ability to
defend against the underlying claim, stating with reasonable specificity the
nature of said claim and the amount thereof, to the extent known.

b)           If, within ten (10) days after receiving such notice, the
indemnifying party advises the indemnified party that it will provide
indemnification and / or assume the defense at its expense, then so long as such
defense is being conducted, the indemnified party will not settle or admit
liability with respect to the claim without the consent of the indemnifying
party and will afford to the indemnifying party and defending counsel reasonable
assistance in defending against the claim.

c)           If the indemnifying party assumes the defense, counsel reasonably
acceptable to the indemnified party will be selected by such party and if the
indemnified party then retains its own counsel, it will do so at its own
expense.

d)            If the indemnified party does not receive a written objection to
such notice within ten (10) days after the indemnifying party's receipt of such
notice, the claim for indemnity will be conclusively presumed to have been
assented to and approved, and in such case the indemnified party may control the
defense of the matter or case and, at its sole discretion, settle or admit
liability.

e)           If within the aforesaid ten (10) day period the indemnified party
will have received written objection to a claim (which written objection will
briefly describe the basis of the objection to the claim or the amount thereof,
all in good faith), then for a period of thirty (30) days after receipt of such
objection the parties will attempt to settle the dispute as between the
indemnified party and indemnifying parties.  If they are unable to settle the
dispute, the

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unresolved issue or issues will be settled by a court of competent jurisdiction
located in Las Vegas, Nevada.  During the pendency of any such dispute, the
indemnified party may control all aspects of the defense of the matter or case.

ARTICLE X
ESCROW OF SHARES; SECURITY

Section 10.01       Use of Shares as Security.  Through this Agreement, seven
hundred fifty thousand (750,000) shares of Series A common stock of LVGI (the
“Stock”) are being paid as Consideration.  The Stock and any proceeds from the
Stock shall act as security for LVGI as set out in this Section and LVGI shall
have full rights as a secured party, including the right to foreclose on the
Stock under the Uniform Commercial Code.

Section 10.02      Escrow of Shares.  For a period of eighteen (18) months from
the Effective Date, LVGI shall possess as a perfected secured party in escrow
three hundred seventy-five thousand (375,000) shares of the Stock (“Escrowed
Shares”) with a neutral escrow agent that is agreed to by the parties and
pursuant to an escrow agreement in form and substance satisfactory to the
parties.

Section 10.03      Security Agreement.  For a period of eighteen months (18)
from Effective Date, the Stock shall act as the sole security for Transferor’s
and the non-individual Additional Parties’ performance under Section 9.02 above
and any and all actions, suits, proceedings, losses, damages, claims,
liabilities, demands, assessments, judgments, costs and expenses, including
reasonable attorneys’ fees (“Damages”) up to $1,837,500 existing from, caused by
or resulting or arising from (1) the Paltronics, Inc. litigation identified in
Sections 2.04 above; (2) any litigation commenced as a result of the execution
and consummation of this Agreement by Transferor’s shareholder or a member of
any of the non-individual Additional Parties; (3) any breach of any of the
representations, warranties or covenants set forth in this Agreement by
Transferor or the Additional Parties; (4) any failure by Transferor or the
Additional Parties to perform or otherwise fulfill any covenant, undertaking,
agreement or obligation hereunder; (5) any claims of any third parties related
to Transferor’s or the Additional Parties business; and (6) any claim of any
third party related to a contract or license entered into by Transferor or the
Additional Parties.

Section 10.04     Foreclosure of the Stock.  The Stock shall only be foreclosed
on by LVGI after all procedures defined in Section 9.03 are followed and
Transferor and the Additional Parties, as applicable, fail to meet the required
indemnification obligations.  Any indemnification claim that results in a
foreclosure shall be paid with the Stock, or a portion thereof, as follows: a)
the number of shares that may be foreclosed shall be limited to the number of
actual shares using the current per share market value of the Stock at the time
of the foreclosure required to pay the Damages in full or b) if the actual
number of shares of the Stock required to pay the Damages is equal to or greater
than the number of shares of the Stock received as Consideration, then all
shares of the Stock may be foreclosed on to pay the Damages.  In the event,
Transferor and the Additional Parties, as applicable, elect to pay any required
indemnification amount in cash or other acceptable means, LVGI shall have no
rights to foreclose on the Stock or any portion thereof.
 

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ARTICLE XI
GENERAL PROVISIONS

Section 11.01     Survival. All representations and warranties made by any party
to this Agreement or pursuant hereto shall survive closing of the transactions
contemplated herein.  All statements, of a material nature, contained herein or
in any certificate, exhibit, list or other document delivered in connection with
the transactions contemplated herein shall be deemed to be representations and
warranties.

Section 11.02      Severability.  If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any applicable
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect. Upon such determination that
any term or other provision is invalid, illegal or incapable of being enforced,
such term or other provision will be interpreted so as to best accomplish the
intent of the parties within the limits of applicable law.

Section 11.03      Amendments.    No modification or amendment of this Agreement
and no waiver of any of the terms or conditions hereof shall be valid or binding
unless made in writing and executed by all of the parties hereto.

Section 11.04       Governing Law; Venue; Service.

a.     This Agreement shall be governed by and construed under the laws of the
State of Nevada (irrespective of its choice of law principles).

b.     As part of the consideration for signing this Agreement, the parties to
this Agreement agree that all actions or proceedings arising directly or
indirectly from this Agreement shall be litigated only in courts in Clark
County, Nevada and the parties consent to be subject to personal jurisdiction in
any local, state or federal court located in Clark County, Nevada.

Section 11.05        Waiver. The failure of any of the parties to enforce at any
time any of the provisions of this Agreement or the other transaction agreements
shall in no way be construed to be a waiver of any such provision.  No waiver of
any breach of or non-compliance with this Agreement or any other transaction
agreement shall be held to be a waiver of any other subsequent breach or
non-compliance.

Section 11.06         Advice of Legal Counsel. Each party acknowledges and
represents that, in executing this Agreement, it has had the opportunity to seek
advice as to its legal rights from legal counsel and that the Person signing on
its behalf has read and understood all of the terms and provisions of this
Agreement.  This Agreement shall not be construed against any party by reason of
the drafting, revising or preparation thereof.
 

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Section 11.07         Confidentiality. Each party agrees that this Agreement and
its provisions shall remain confidential subject to any disclosure required by
law or regulation to the SEC, Department of Justice or any court or tribunal of
competent jurisdiction.  Notwithstanding the foregoing, each party shall have
the right to disclose the terms of this Agreement to its attorneys, and
accountants.

Section 11.08          Counterparts/Facsimile, PDF, Electronic Signatures.This
Agreement may be executed in any number of counterparts and by original,
facsimile, .PDF, or electronic signatures.

Section 11.09          Tax-Free Reorganization. The transaction contemplated in
this Agreement is intended by all parties to qualify as a tax deferred
triangular C reorganization within the meaning of Section 367 and 368 of the
Internal Revenue Code of 1986, as amended.  This agreement is intended as a
“plan of reorganization” within the meaning of such Sections.  As such, each
party to this Agreement shall properly report the transaction for federal and
state income tax purposes accordingly.  The parties also agree that:

(a)           it is the sole and exclusive responsibility of Transferor to
ensure that all triangular C reorganization requirements are satisfied;

(b)           all costs and expenses to ensure that the transaction contemplated
by this Agreement constitutes a triangular C reorganization are the sole
responsibility of Transferor;

(c)           any structuring of this transaction to satisfy the requirements of
a triangular C reorganization or the determination by any federal or state tax
authority that the transaction does or does not constitute a triangular C
reorganization shall in no way affect the rights and obligations of the parties
as set forth in this Agreement.

 
 

 
[NEXT PAGE IS THE SIGNATURE PAGE]
 

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SIGNATURE PAGE

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement.

LVGI:
 
LAS VEGAS GAMING, INC., a Nevada Corporation
 
 
By: /s/ Jon
Berkley                                                                  
     Jon Berkley, President and CEO
 
 
LVGAC:
 
LAS VEGAS GAMING ACQUISITION CORP., a Nevada Corporation
 
 
By: /s/  Jon
Berkley                                                                 
     Jon Berkley, President
 
 
 
 
TRANSFEROR:
 
ADLINE NETWORK HOLDINGS INC, a Georgia corporation
 
 
 
By: /s/ Larry L. Enterline                                                      
      Larry L. Enterline, CEO
ADDITIONAL PARTIES:
 
ADLINE MEDIA, LLC, a Georgia limited liability company
 
By: /s/ Larry L.
Enterline                                                             
      Larry L. Enterline, CEO
 
 
ADLINE NETWORK, LLC, a Georgia limited liability company
 
 
By: /s/  Larry L.
Enterline                                                             
      Larry L. Enterline, CEO
 
 
FREEVIEW NETWORK, LLC, a Georgia limited liability company
 
 
By: /s/  Larry L.
Enterline                                                           
      Larry L. Enterline, CEO
 
 
 
 
/s/ SAM
JOHNSON                                                                    
SAM JOHNSON, individually
 
 
 
/s/ LARRY L. ENTERLINE                                                         
LARRY L. ENTERLINE, individually

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EXHIBIT A

TECHNOLOGY

“Technology” as used in this Agreement shall comprise any and all tangible and
intangible goods, information or materials or rights which Transferor or the
Additional Parties, if applicable, possess or hold any rights which relate to:
a) interactive video systems; b) systems, devices and methods for the overlay of
video images and text; c) systems, devices and methods for displaying
promotional events and granting awards; d) gaming machines, systems and devices;
and e) any commercial or residential uses of the foregoing.

“Technology” further includes all intellectual property rights in the
Technology, including any rights in inventions, patents, patent applications,
continuations of patent applications, continuations-in-part of patent
applications, all foreign rights and applications corresponding thereto, and
related copyrights, know-how or otherwise;

“Technology” further includes all rights in all tangible goods representing the
Technology, including all source code, drawings, data files or otherwise;

“Technology” further includes the following and all rights therein:

 1.             Licenses or rights, if any, in LVGI’s Patent application filed
April 1, 2002 titled "Interactive Video System" USPTO Application #: 10/113,882

2.              Licenses or rights, if any, in LVGI’s Patent application filed
October 20, 2003 titled "Closed-loop system for displaying promotional events
and granting awards for electronic video games" USPTO Application #: 10/689,407

3.              Source code and executables for operating the Adline Network
management and delivery software currently located at www.adliner.net and one of
the P3-600 /256MEG/250GIGHD Dell server box

4.              Design and all associated drawings and electronic files for the
SAMIT-1000, SAMIT-2000 and 5000 hardware designs

5.              Source code and executables for the embedded application running
on the SAMIT-1000 and SAMIT-2000 hardware designs.

6.              Any implementation of the Technology in any hardware designs.
 

 
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 EXHIBIT B

EXISTING TECHNOLOGY LICENSES / ASSIGNMENT AGREEMENTS

1.           The “Assignment of License Agreement Rights” dated June 1, 2006
between Adline Network LLC and Adline Network Holdings Inc (title chain clean-up
– combines all rights under one entity), a copy of which is attached hereto;

2.           The “Assignment of License Agreement Rights” dated May 24, 2006
between Adline Media LLC and Adline Network Holdings, Inc (Media contributes all
licensing rights etc in a IRC Section 351 capital contribution in exchange of
stock), a copy of which is attached hereto;

3.           The “Assignment of License Agreement Rights” dated February 15,
2006 between Las Vegas Gaming Inc and Adline Media LLC (transfer of “At Home
Wagering” rights to Las Vegas Gaming Inc), a copy of which is attached hereto;

4.           The “Assignment of Agreement Rights” dated February 1, 2006 between
Adline Network LLC and Adline Media LLC (title chain clean-up – original
agreement for “At Home Wagering” should have been with Adline Media LLC), a copy
of which is attached hereto;

5.           The “Assignment of License Agreement Rights” dated March 1, 2005
between Freeview Network LLC and Adline Media LLC (joining of Freeview Network
LLC and Adline Media LLC entities into one entity), a copy of which is attached
hereto;

6.           The “License Agreement” dated October 21, 2004 between Adline
Network LLC and Adline Media LLC (residential arena license), a copy of which is
attached hereto;

7.           The “License Agreement” dated October 8, 2004 between Adline
Network LLC and Freeview Network LLC (non-gaming commercial arena license), a
copy of which is attached hereto; and

8.            The “License Agreement” dated October 8, 2004 between Adline
Gaming Inc and Adline Network LLC (original non-gaming commercial and
residential arenas license), a copy of which is attached hereto.

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EXHIBIT C

PARTIAL LIST OF TRANSFEROR ASSETS

1.           All rights, by license or otherwise in any intellectual property,
including copyrights, trademarks, trade secrets, patents, pending intellectual
property applications, and enforcement rights.

2.           Object code and executables for operating the AdLine Network
management and delivery software currently located at www.Adliner.net and one of
the P3-600/256MEG/250GIGHD Dell server box

3.           Design and all associated drawings and electronic files for
SAMIT-1000 and SAMIT-2000 hardware design

4.           Source code and executables for embedded application running on the
SAMIT-1000 and SAMIT-2000 hardware designs

5.           The following Domain Names:

freeviewchannel.com
freeviewnetwork.com
freevuechannel.com
freevuenetwork.com
thefreeviewchannel.com
Thefreeviewnetwork.com
thefreevuechannel.com
thefreevuenetwork.com
tightwadtv.com
Adline.tv
adlinenetwork.com
adlinenetwork.tv
adlinenetwork.net
adliner.tv
adliner.net
adliners.net
adliners.com
 

 
6.           Software and Web Sites.
 
(a)         Website design and HTML code located at www.adlinenetwork.com

7.           Trade Names / Marks.
 
(a)         Logo of AdLine Network, LLC

8.           Contracts.  None

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9.            Equipment

(a)           SAMITs                6V Masters                       9
6V Slaves                       34
5V Slaves                       91
5V Ethernet                   12
Broken                             3

(b)           5000 Design          6 prototypes

(b)           Miscellaneous Computers, Monitors. Test Equipment and Software

10.           Other Assets.                                None

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