ex102.htm


    Exhibit
10.2

     

    Form of Warrant to Purchase
Common Stock and Common Stock Series A

     

    


     

    THE
SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR SECURITIES LAWS OF ANY STATE AND MAY NOT
BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO A REGISTRATION
STATEMENT RELATING THERETO IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR
SUCH LAWS.

     

     

    WARRANT

    to
purchase 1,500,000 shares of Common Stock and

    Common
Stock Series A of

    LAS
VEGAS GAMING, INC.

    a
Nevada corporation

     

    Issue
Date: ____________

     

    1.       
Definitions.  Unless
the context otherwise requires, when used herein the following terms shall have
the meanings indicated.

     

    “Affiliate” has the meaning
set forth in Section 1
of the Investment Agreement.

     

    “Board of Directors” has the
meaning set forth in Section 1 of the
Investment Agreement.

     

    “Business Day” has the meaning
set forth in Section
1 of the Investment Agreement.

     

    “Common Shares” has the
meaning set forth in Section 2 of this
Warrant.

     

    “Capital Stock” means (A) with
respect to any Person that is a corporation or company, any and all shares,
interests, participations or other equivalents (however designated) of capital
or capital stock of such Person and (B) with respect to any Person that is not a
corporation or company, any and all partnership or other equity interests of
such Person.

     

    “Common Stock” has the meaning
given to it in Section
1 of the Investment Agreement.

     

    “Common Stock Series A” has
the meaning given to it in Section 1 of the
Investment Agreement.

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


     

    “Company” means Las Vegas
Gaming, Inc., a Nevada corporation.

     

    “Convertible Preferred Stock”
has the meaning set forth in the preamble of the Investment
Agreement.

     

    “Deemed Liquidation Event” has
the meaning set forth in Exhibit A to the Investment Agreement.

     

    “Exchange Act” means the
Securities Exchange Act of 1934, as amended, or any successor statute, and the
rules and regulations promulgated thereunder.

     

    “Exercise Price” means an
amount equal to $2.45 per share, adjusted as set forth herein.

     

    “Expiration Time” has the
meaning set forth in Section
3.

     

    “Investment Agreement” means
the Investment Agreement, dated as of [_________________], 2008 between the
Company and the Investor, including all schedules and exhibits thereto, as
amended.

     

    “Investor” has the meaning set
forth in the preamble of the Investment Agreement.

     

    “Issue Date” means
____________, 2008.

     

    “Market Price” means, with
respect to a particular security, on any given day, the last reported sale price
regular way or, in case no such reported sale takes place on such day, the
average of the last closing bid and ask prices regular way, in either case on
the principal national securities exchange on which the applicable securities
are listed or admitted to trading, or if not listed or admitted to trading on
any national securities exchange, (A) the closing sale price for such day
reported by the Nasdaq Stock Market if such security is traded over-the-counter
and quoted in the Nasdaq Stock Market, or (B) if such security is so traded, but
not so quoted, the average of the closing reported bid and ask prices of such
security as reported by the Nasdaq Stock Market or any comparable system, or (C)
if such security is not listed on the Nasdaq Stock Market or any comparable
system, the average of the closing bid and ask prices as furnished by two
members of the National Association of Securities Dealers, Inc. selected from
time to time by the Company for that purpose.  If such security is not
listed and traded in a manner that the quotations referred to above are
available for the period required hereunder, the Market Price per share of such
security shall be deemed to be the fair value per share of such security as
determined in good faith by the Board of Directors.  Without limiting
the foregoing, shares of Common Stock and shares of Common Stock Series A shall
be deemed to have the same Market Price.  If only one of the Company’s
classes of common stock (Common Stock or Common Stock Series A) is listed and
traded in a manner that the quotations referred to above are available, then the
Market Price determined as set forth above for the class of common stock that is
so listed and traded shall also be the Market Price of the class that is not so
listed and traded.

     


    
      
         


      

      
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    “Person” has the meaning given
to it in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d)(3)
and 14(d)(2) of the Exchange Act.

     

    “SEC” means the
U.S.  Securities and Exchange Commission.

     

    “Securities Act” means the
Securities Act of 1933, as amended, or any successor statute, and the rules and
regulations promulgated thereunder.

     

    “Shares” has the meaning set
forth in Section
2.

     

    “Warrantholder” has the
meaning set forth in Section
2.

     

    “Warrant” means this Warrant,
issued pursuant to the Investment Agreement.

     

    2.       Number of Shares; Exercise
Price.  This certifies that, for value received, IGT, a Nevada
corporation, any Affiliate or any of its registered assigns (together, the
“Warrantholder”), is
entitled, upon the terms and subject to the conditions hereinafter set forth, to
acquire from the Company, in whole or in part, up to an aggregate of 1,500,000
fully paid and nonassessable shares of Common Stock, $.001 par value per share,
of the Company (“Common
Stock”) and/or Common Stock Series A, $.001 par value per share, of the
Company (“Common Stock Series
A”), in any combination (Common Stock and Common Stock Series A
collectively, the “Common
Shares”), subject to Section 4(B), at a
purchase price per Common Share equal to the Exercise Price.  The
number of Common Shares (the “Shares”) and the Exercise
Price are subject to adjustment as provided herein, and all references to
“Common Shares” and “Exercise Price” herein shall be deemed to include any such
adjustment or series of adjustments.

     

    3.      
Exercise of Warrant;
Term.  Subject to Section 2, to the
extent permitted by applicable laws and regulations, the right to purchase the
Shares represented by this Warrant is exercisable, in whole or in part by the
Warrantholder, at any time or from time to time after 9:00 a.m., Las Vegas
time, on the date hereof, but in no event later than 11:59 p.m., Las Vegas time,
on the three (3) year anniversary of the date of issuance of the Warrant;
provided, that if the Company fails to provide written notice to the
Warrantholder on the date that is sixty (60) days prior to such three (3) year
anniversary notifying Warrantholder of the expiration of this Warrant on such
anniversary, then this Warrant shall continue in effect beyond such three (3)
year anniversary and until 11:59 p.m., Las Vegas time on the date that is sixty
(60) days following the date on which the Company provides written notice to the
Warrantholder of the expiration of this Warrant (such date and time of
expiration, the “Expiration
Time”), by (A) the surrender of this Warrant and Notice of Exercise
annexed hereto, duly completed and executed on behalf of the Warrantholder, at
the office of the Company in Las Vegas, Nevada (as the same may be changed by
written notice to the Warrantholder), and (B) payment of the Exercise Price for
the Shares thereby purchased at the election of the Warrantholder in one of the
following manners:

     


    
      
         


      

      
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    (i)   
by
tendering in cash, by certified or cashier’s check or by wire transfer payable
to the order of the Company, or

     

    (ii)  
by having
the Company withhold Common Shares issuable upon exercise of the Warrant equal
in value to the aggregate Exercise Price as to which this Warrant is so
exercised based on the Market Price of the Common Shares on the trading day
prior to the date on which this Warrant and the Notice of Exercise are delivered
to the Company.

     

    If the
Warrantholder exercises this Warrant but not in its entirety, the Warrantholder
will be entitled to receive from the Company promptly, and in any event not
later than two Business Days after such partial exercise, a new warrant in
substantially identical form for the purchase of that number of Shares equal to
the difference between the number of Shares subject to this Warrant and the
number of Shares as to which this Warrant is so exercised.

     

    4.        
Issuance of Shares;
Authorization; Listing.

     

    (A)   
Certificates
for Shares issued upon exercise of this Warrant will be issued in such name or
names as the Warrantholder may designate and will be delivered to such named
Person or Persons promptly, and in any event not later than three Business Days
after the date on which this Warrant has been duly exercised in accordance with
the terms of this Warrant.  The Company hereby represents and warrants
that any Shares issued upon the exercise of this Warrant in accordance with the
provisions of Section 3 will
be duly and validly authorized and issued, fully paid and nonassessable and free
from all taxes, liens and charges (other than liens or charges created by the
Warrantholder or taxes in respect of any transfer occurring contemporaneously
therewith).  The Company agrees that the Shares so issued will be
deemed to have been issued to the Warrantholder as of the close of business on
the date on which this Warrant and payment of the Exercise Price are delivered
to the Company in accordance with the terms of this Warrant, notwithstanding
that the stock transfer books of the Company may then be closed or certificates
representing such Shares may not be actually delivered on such
date.  The Company will use reasonable best efforts to ensure that the
Shares may be issued without violation of any applicable law or regulation or of
any requirement of any securities exchange on which the Shares may be listed or
traded.

     

    (B)     The
Company will at all times reserve and keep available, out of its authorized but
unissued Capital Stock, solely for the purpose of providing for the exercise of
this Warrant, the aggregate number of Common Shares issuable upon exercise of
this Warrant.  Notwithstanding the foregoing, the Warrantholder agrees
that prior to the elimination by the Company of its Common Stock class of
Capital Stock as contemplated in Section 7(f) of the Investment Agreement, if
the Warrantholder seeks to exercise any portion of this Warrant, the
Warrantholder will receive shares of Common Stock Series A upon such exercise if
the Company has

     


    
      
         


      

      
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    authorized
a sufficient number of shares of Common Stock Series A for issuance upon such
exercise; provided, that if at the time of such exercise the Company does not
have a sufficient number of authorized shares of Common Stock Series A for such
exercise, then the Investor will receive upon such exercise shares of Common
Stock.   (For the avoidance of doubt, once the Company has
eliminated its Common Stock class of Capital Stock as contemplated in Section
7(f),  the Company will at all times reserve and keep available, out
of its authorized but unissued Capital Stock, solely for the purpose of
effecting the exercise of the Warrant, the full number of Common Shares issuable
upon exercise of this Warrant.)

     

    5.    
No Fractional Shares or
Scrip.  No fractional Shares or scrip representing fractional
Shares shall be issued upon any exercise of this Warrant.  In lieu of
any fractional Share to which the Warrantholder would otherwise be entitled, the
Warrantholder shall be entitled to receive a cash payment equal to the Market
Price of the Share less the Exercise Price for such fractional
Share.

     

    6.   
No Rights as Stockholders;
Transfer Books.  This Warrant does not entitle the
Warrantholder to any voting rights or other rights as a stockholder of the
Company prior to the date of exercise hereof.  The Company will at no
time close its transfer books against transfer of this Warrant in any manner
which interferes with the timely exercise of this Warrant.

     

    7.    
Charges, Taxes and
Expenses.  Issuance of certificates for Shares to the
Warrantholder upon the exercise of this Warrant shall be made without charge to
the Warrantholder for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificates, all of which taxes and expenses
shall be paid by the Company; provided, that the Company shall have no
obligation to pay taxes on the gain realized by the Warrantholder on the Common
Shares withheld by the Company upon a cashless exercise pursuant to Section
3(B)((ii).

     

    8.    
Transfer/Assignment.

     

    (A)   
Subject
to compliance with applicable securities laws, applicable gaming regulations and
Section 8(B),
without obtaining the consent of the Company to assign or transfer this Warrant,
this Warrant and all rights hereunder are transferable, in whole or in part,
upon the books of the Company by the registered holder hereof in person or by
duly authorized attorney, and a new warrant shall be made and delivered by the
Company, of the same tenor and date as this Warrant but registered in the name
of one or more transferees, upon surrender of this Warrant, duly endorsed, to
the office or agency of the Company described in Section 13 of the
Investment Agreement.  All expenses (other than stock transfer taxes)
and other charges payable in connection with the preparation, execution and
delivery of the new warrants pursuant to this Section 8 shall be
paid by the Company.

     


    
      
         


      

      
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    (B)    
Notwithstanding
the foregoing, this Warrant and any rights hereunder, and any Shares issued upon
exercise of this Warrant, shall be subject to the applicable restrictions as set
forth in Section
7 of the Investment Agreement.

     

    (C)    
If and
for so long as required by the Investment Agreement, this Warrant Certificate
shall contain a legend as set forth in Section 7(g) of the
Investment Agreement.

     

    9.     Exchange and Registry of
Warrant.  This Warrant is exchangeable, upon the surrender
hereof by the Warrantholder to the Company, for a new warrant or warrants of
like tenor and representing the right to purchase the same aggregate number of
Shares.  The Company shall maintain a registry showing the name and
address of the Warrantholder as the registered holder of this
Warrant.  This Warrant may be surrendered for exchange or exercise, in
accordance with its terms, at the office of the Company, and the Company shall
be entitled to rely in all respects, prior to written notice to the contrary,
upon such registry.

     

    10.   
Loss, Theft, Destruction or
Mutilation of Warrant.  Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and in the case of any such loss, theft or destruction, upon
receipt of an indemnity or security reasonably satisfactory to the Company, or,
in the case of any such mutilation, upon surrender and cancellation of this
Warrant, the Company shall make and deliver, in lieu of such lost, stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same aggregate number of Shares as provided for in such
lost, stolen, destroyed or mutilated Warrant.

     

    11.   
Saturdays, Sundays,
Holidays, etc.  If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall not
be a Business Day, then such action may be taken or such right may be exercised
on the next succeeding day that is a Business Day.

     

    12.    
Rule 144
Information.  The Company covenants that it will use its
reasonable best efforts to timely file all reports and other documents required
to be filed by it under the Securities Act and the Exchange Act and the rules
and regulations promulgated by the SEC thereunder (or, if the Company is not
required to file such reports, it will, upon the request of any Warrantholder,
make publicly available such information as necessary to permit sales pursuant
to Rule 144 under the Securities Act), and it will use reasonable best efforts
to take such further action as any Warrantholder may reasonably request, in each
case to the extent required from time to time to enable such holder to sell the
Warrants without registration under the Securities Act within the limitation of
the exemptions provided by (A) Rule 144 under the Securities Act, as such rules
may be amended from time to time, or (B) any similar rule or regulation
hereafter adopted by the SEC.  Without limiting the foregoing, upon
the written request of any Warrantholder, the Company will deliver to such
Warrantholder a written statement confirming whether it has complied with such
requirements.

     


    
      
         


      

      
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    13.    
Adjustments and Other
Rights.  The Exercise Price and the number of Shares issuable
upon exercise of this Warrant shall be subject to adjustment from time to time
as follows; provided that no single event shall be subject to adjustment under
more than one subsection of this Section 13 so as to
result in duplication:

     

    (A)  
Special
Definitions.  For purposes of this Section 13, the
following definitions will apply:

     

    (i)   
“Option” will mean rights,
options or warrants to subscribe for, purchase or otherwise acquire Common
Shares or Convertible Securities.

     

    (ii)   
“Convertible Securities” will
mean any evidences of indebtedness, shares or other securities directly or
indirectly convertible into or exchangeable for Common Shares, but excluding
Options.

     

    (iii)  
“Additional Common Shares”
will mean all Common Shares issued (or, pursuant to Section 13(C) below,
deemed to be issued) by the Company after the Issue Date, other than (1) the
following Common Shares and (2) Common Shares deemed issued pursuant to the
following Options and Convertible Securities (clauses (1) and (2), collectively,
“Exempted
Securities”):

     

    (a)   
Common
Shares, Options or Convertible Securities issued as a dividend or distribution
on Convertible Preferred Stock;

     

    (b)   
Common
Shares, Options or Convertible Securities issued by reason of a dividend, stock
split, split-up or other distribution on Common Shares that is covered by Sections 13(F), 13(G),
13(H) or 13(I);

     

    (c)   
Common
Shares or Convertible Securities actually issued upon the exercise of Options,
or Common Shares actually issued upon the conversion or exchange of Convertible
Securities, in each case provided such issuance is pursuant to the terms of such
Option or Convertible Security.

     

    (B)     
No Adjustment of Exercise
Price.  No adjustment in the Exercise Price or the number of
Shares issuable upon exercise of this Warrant will be made as the result of the
issuance or deemed issuance of Additional Common Shares if the Company receives
written notice from the Warrantholder agreeing that no such adjustment will be
made as the result of the issuance or deemed issuance of such Additional Common
Shares.

     


    
      
         


      

      
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    (C)  
Deemed Issue of Additional
Common Shares.

     

    (i)  
If the
Company at any time or from time to time after the Issue Date issues any Options
or Convertible Securities (excluding Options or Convertible Securities which are
themselves Exempted Securities) or fixes a record date for the determination of
holders of any class of securities entitled to receive any such Options or
Convertible Securities, then the maximum number of Common Shares (as set forth
in the instrument relating thereto, assuming the satisfaction of any conditions
to exercisability, convertibility or exchangeability but without regard to any
provision contained therein for a subsequent adjustment of such number) issuable
upon the exercise of such Options or, in the case of Convertible Securities and
Options therefor, the conversion or exchange of such Convertible Securities,
will be deemed to be Additional Common Shares issued as of the time of such
issue or, in case such a record date will have been fixed, as of the close of
business on such record date.

     

    (ii)  
If the
terms of any Option or Convertible Security, the issuance of which resulted in
an adjustment to the Exercise Price and to the number of Shares issuable upon
exercise of this Warrant pursuant to the terms of Section 13(D), are
revised as a result of an amendment to such terms or any other adjustment
pursuant to the provisions of such Option or Convertible Security (but excluding
automatic adjustments to such terms pursuant to anti-dilution or similar
provisions of such Option or Convertible Security) to provide for either (1) any
increase or decrease in the number of Common Shares issuable upon the exercise,
conversion or exchange of any such Option or Convertible Security or (2) any
increase or decrease in the consideration payable to the Company upon such
exercise, conversion or exchange, then, effective upon such increase or decrease
becoming effective, the Exercise Price and the number of Shares issuable upon
exercise of this Warrant computed upon the original issue of such Option or
Convertible Security (or upon the occurrence of a record date with respect
thereto) will be readjusted to such Exercise Price and such number of Shares,
respectively, as would have obtained had such revised terms been in effect upon
the original date of issuance of such Option or Convertible
Security.  Notwithstanding the foregoing, no readjustment pursuant to
this clause (ii) will
have the effect of increasing the Exercise Price to an amount which exceeds the
lower of (3) the Exercise Price in effect immediately prior to the original
adjustment made as a result of the issuance of such Option or Convertible
Security, or (4) the Exercise Price that would have resulted from any issuances
of Additional Common Shares (other than deemed issuances of Additional Common
Shares as a result of the issuance of such Option or Convertible Security)
between the original adjustment date and such readjustment date.

     

     

    
      
         

      

      
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    (iii)  
If the
terms of any Option or Convertible Security (excluding Options or Convertible
Securities which are themselves Exempted Securities), the issuance of which did
not result in an adjustment to the Exercise Price and to the number of Shares
issuable upon exercise of this Warrant pursuant to the terms of Section 13(D) (either
because the consideration per share (determined pursuant to Section 13(E)) of the
Additional Common Shares subject thereto was equal to or greater than the
Exercise Price then in effect, or because such Option or Convertible Security
was issued before the Issue Date), are revised after the Issue Date as a result
of an amendment to such terms or any other adjustment pursuant to the provisions
of such Option or Convertible Security (but excluding automatic adjustments to
such terms pursuant to anti-dilution or similar provisions of such Option or
Convertible Security) to provide for either (1) any increase in the number of
Common Shares issuable upon the exercise, conversion or exchange of any such
Option or Convertible Security or (2) any decrease in the consideration payable
to the Company upon such exercise, conversion or exchange, then such Option or
Convertible Security, as so amended or adjusted, and the Additional Common
Shares subject thereto (determined in the manner provided in Section 13(C)(i))
will be deemed to have been issued effective upon such increase or decrease
becoming effective.

     

    (iv)  
Upon the
expiration or termination of any unexercised Option or unconverted or
unexchanged Convertible Security (or portion thereof) that resulted (either upon
its original issuance or upon a revision of its terms) in an adjustment to the
Exercise Price and to the number of Shares issuable upon exercise of this
Warrant pursuant to the terms of Section 13(D), the
Exercise Price and number of Shares issuable upon exercise of this Warrant will
be readjusted to such Exercise Price and such number of Shares as would have
obtained had such Option or Convertible Security (or portion thereof) never been
issued.

     

    (v)  
If the
number of Common Shares issuable upon the exercise, conversion or exchange of
any Option or Convertible Security, or the consideration payable to the Company
upon such exercise, conversion or exchange, is calculable at the time such
Option or Convertible Security is issued or amended but is subject to adjustment
based upon subsequent events, any adjustment to the Exercise Price and to the
number of Shares issuable upon exercise of this Warrant provided for in this
Section 13(C)
will be effected at the time of such issuance or amendment based on such number
of shares or amount of consideration without regard to any provisions for
subsequent adjustments (and any subsequent adjustments will be treated as
provided in clauses
(ii) and (iii) of this Section
13(C)).  If the number of shares of Common Stock issuable upon
the exercise, conversion or exchange of any Option or Convertible

     


    
      
         


      

      
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    Security,
or the consideration payable to the Company upon such exercise, conversion
and/or exchange, cannot be calculated at all at the time such Option or
Convertible Security is issued or amended, any adjustment to the Exercise Price
and to the number of Shares issuable upon exercise of this Warrant that would
result under the terms of this Section 13(C) at the
time of such issuance or amendment will instead be effected at the time such
number of shares or amount of consideration is first calculable (even if subject
to subsequent adjustments), assuming for purposes of calculating such adjustment
to the Exercise Price and to the number of Shares issuable upon exercise of this
Warrant that such issuance or amendment took place at the time such calculation
can first be made.

     

    (D)  
Adjustment of Exercise Price
Upon Issuance of Additional Common Shares.  In the event the
Company at any time after the Issue Date issues Additional Common Shares
(including Additional Common Shares deemed to be issued pursuant to Section 13(C)),
without consideration or for a consideration per share less than the applicable
Exercise Price in effect immediately prior to such issue, then the Exercise
Price will be reduced, concurrently with such issue, to the consideration per
share received by the Company for such issue or deemed issue of the Additional
Common Shares; provided that if such
issuance or deemed issuance was without consideration, then the Company will be
deemed to have received an aggregate of $.001 of consideration for all such
Additional Common Shares issued or deemed to be issued.  In addition,
in each case of an adjustment to the Exercise Price pursuant to this Section 13(D), the
number of Shares issuable upon exercise of this Warrant immediately before each
such event will be increased, concurrently with the adjustment to the Exercise
Price, by multiplying the number of Shares then issuable upon exercise of this
Warrant by a fraction:

     

    (i)  
the
numerator of which shall be the Exercise Price then in effect (before adjustment
for the issuance of Additional Common Shares pursuant to this Section 13(D)),
and

     

    (ii)  
the
denominator of which shall be the Exercise Price as adjusted to give effect to
the issuance of Additional Common Shares pursuant to this Section
13(D).

     

    (E)  
Determination of
Consideration.  For purposes of this Section 13, the
consideration received by the Company for the issue of any Additional Common
Shares will be computed as follows:

     

    (i)    Cash and
Property:  Such consideration will:

     

    (a) 
 insofar as
it consists of cash, be computed at the aggregate amount of cash received by the
Company, excluding amounts paid or payable for accrued interest;

     


    
      
         


      

      
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    (b)   insofar
as it consists of property other than cash, be computed at the fair market value
thereof at the time of such issue, as determined in good faith by the Board of
Directors; and

     

    (c) in the
event Additional Common Shares are issued together with other shares or
securities or other assets of the Company for consideration which covers both,
be the proportion of such consideration so received, computed as provided in
clauses (a) and (b) above, as determined in good faith by the Board of
Directors.

     

    (ii) 
  Options and Convertible
Securities.  The consideration per share received by the
Company for Additional Common Shares deemed to have been issued pursuant to
Section 13(C),
relating to Options and Convertible Securities, will be determined by
dividing

     

    (a)  
the total
amount, if any, received or receivable by the Company as consideration for the
issue of such Options or Convertible Securities, plus the minimum aggregate
amount of additional consideration (as set forth in the instruments relating
thereto, without regard to any provision contained therein for a subsequent
adjustment of such consideration) payable to the Company upon the exercise of
such Options or the conversion or exchange of such Convertible Securities, or in
the case of Options for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such Convertible
Securities, by

     

    (b)  
the
maximum number of Common Shares (as set forth in the instruments relating
thereto, without regard to any provision contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such Options or the
conversion or exchange of such Convertible Securities, or in the case of Options
for Convertible Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible
Securities.

     

    (iii)   
Multiple Closing
Dates.  In the event the Company issues on more than one date
Additional Common Shares that are a part of one transaction or a series of
related transactions and that would result in an adjustment to the Exercise
Price and to the number of Shares issuable upon exercise of this Warrant
pursuant to the terms of Section 13(D), and
such issuance dates occur within a period of no more than 90 days
from

     


    
      
         


      

      
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    the first
such issuance to the final such issuance, then, upon the final such issuance,
the Exercise Price and number of Shares issuable upon exercise of this Warrant
will be readjusted to give effect to all such issuances as if they occurred on
the date of the first such issuance (and without giving effect to any additional
adjustments as a result of any such subsequent issuances within such
period).

     

    (F)   
Adjustment for Stock Splits
and Combinations.  In the event the Company at any time or from
time to time after the Issue Date effects a subdivision of outstanding Common
Shares, or effects a combination of outstanding Common Shares, then and in each
such event the number of Shares issuable upon exercise of this Warrant shall be
proportionately adjusted so that the Warrantholder shall be entitled to purchase
the number of Common Shares which such Warrantholder would have owned (after
giving effect to such subdivision or combination) had this Warrant been
exercised immediately prior to such subdivision or combination.  In
addition, in each such event the Exercise Price in effect immediately prior to
such subdivision or combination shall be adjusted to the number obtained by
dividing (i) the product of (1) the number of Shares issuable upon the exercise
of this Warrant (before adjustment for the subdivision or combination pursuant
to this Section
13(F)) and (2) the Exercise Price in effect immediately prior the
subdivision or combination by (ii) the new aggregate number of Shares issuable
upon exercise of this Warrant determined pursuant to the immediately preceding
sentence.  Any adjustment under this Section 13(F) will
become effective as of the close of business on the date the subdivision or
combination becomes effective.

     

    (G)   
Adjustment for Certain
Dividends and Distributions.  In the event the Company at any
time or from time to time after the Issue Date makes or issues, or fixes a
record date for the determination of holders of Common Shares entitled to
receive, a dividend or other distribution on Common Shares that is payable in
additional Common Shares, then and in each such event the Exercise Price in
effect immediately before such event will be decreased as of the time of such
issuance or, in the event such a record date will have been fixed, as of the
close of business on such record date, by multiplying the Exercise Price then in
effect by a fraction:

     

    (i)  
the
numerator of which shall be the total number of Common Shares issued and
outstanding immediately prior to the time of such issuance or the close of
business on such record date, and

     

    (ii) 
the
denominator of which shall be the total number of Common Shares issued and
outstanding immediately prior to the time of such issuance or the close of
business on such record date plus the number of Common Shares issuable in
payment of such dividend or distribution.

     


    
      
         


      

      
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    In
addition, in each such event the number of Shares issuable upon exercise of this
Warrant immediately before such event will be increased as of the time of such
issuance or, in the event such a record date will have been fixed, as of the
close of business on such record date, by multiplying the number of Shares then
issuable upon exercise of this Warrant by a fraction:

     

    (iii)   
the
numerator of which shall be the Exercise Price then in effect (before adjustment
for such dividend or distribution pursuant to this Section 13(G)),
and

     

    (iv)   
the
denominator of which shall be the Exercise Price as adjusted to give effect to
such dividend or distribution pursuant to this Section
13(G).

     

    Notwithstanding
the foregoing, if such record date has been fixed and such dividend is not fully
paid or if such distribution is not fully made on the date fixed therefor, the
Exercise Price and the number of Shares issuable upon exercise of this Warrant
will each be recomputed accordingly as of the close of business on such record
date and thereafter the Exercise Price and the number of Shares issuable upon
exercise of this Warrant will be adjusted pursuant to this subsection as of the
time of actual payment of such dividends or distributions.

     

    (H)    
Other
Distributions.  In case the Company shall fix a record date for
the making of a distribution to holders of Common Shares (i) of shares of any
class other than its Common Stock or Common Stock Series A, (ii) of evidence of
indebtedness of the Company or any subsidiary of the Company, (iii) of
assets (excluding dividends or distributions referred to in Section 13(A)), or
(iv) of rights or warrants (excluding those referred to in Sections 13(F)
and 13(G)), in
each such case, the Exercise Price in effect prior thereto shall be reduced
immediately thereafter to the price determined by dividing (x) an amount equal
to the difference resulting from (1) the number of Common Shares outstanding on
such record date multiplied by the Exercise Price per Share on such record date,
less (2) the fair market value (as reasonably determined by the Board of
Directors) of all of said shares or evidences of indebtedness or assets or
rights or warrants to be so distributed, by (y) the number of Common Shares
outstanding on such record date; such adjustment shall be made successively
whenever such a record date is fixed.  In such event, the number of
Shares issuable upon the exercise of this Warrant shall be increased to the
number obtained by dividing (x) the product of (1) the number of Shares issuable
upon the exercise of this Warrant before such adjustment, and (2) the Exercise
Price in effect immediately prior to the issuance giving rise to this adjustment
by (y) the new Exercise Price determined in accordance with the immediately
preceding sentence.  In the event that such distribution is not so
made, the Exercise Price and the number of Shares issuable upon exercise of this
Warrant then in effect shall be readjusted, effective as of the date when the
Board of Directors determines not to distribute such shares, evidences of
indebtedness, assets, rights or warrants, as the case may be, to the Exercise
Price that would then be in effect and the number of Shares that would then be
issuable upon exercise of this Warrant if such record date had not been
fixed.

     


    
      
         


      

      
        13

        
          

        

      

      
         


      

    


    


     

    (I)  
Adjustment for Merger or
Reorganization, etc.  If there occurs any reorganization,
recapitalization, reclassification, consolidation or merger involving the
Company in which the Common Shares are converted into or exchanged for
securities, cash or other property (other than a transaction covered by Sections 13(A) thru
13(F)
(inclusive), 13(G) or 13(H), then,
following any such reorganization, recapitalization, reclassification,
consolidation or merger, this Warrant will thereafter be exercisable in lieu of
the Common Shares for which it was exercisable prior to such event into the kind
and amount of securities, cash or other property which a holder of the number of
Common Shares of the Company issuable upon exercise of this Warrant immediately
prior to such reorganization, recapitalization, reclassification, consolidation
or merger would have been entitled to receive pursuant to such transaction; and,
in such case, appropriate adjustment (as determined in good faith by the Board
of Directors of the Company) will be made in the application of the provisions
in this Section
13 with respect to the rights and interests thereafter of the
Warrantholders, to the end that the provisions set forth in this Section 13 (including
provisions with respect to changes in and other adjustments of the Exercise
Price) will thereafter be applicable, as nearly as reasonably may be, in
relation to any securities or other property thereafter deliverable upon the
exercise of this Warrant.

     

    (J)  
Rounding of Calculations;
Minimum Adjustments.  All calculations under this Section 13 shall be
made to the nearest one-tenth (1/10th) of a cent or to the nearest one-hundredth
(1/100th) of a share, as the case may be.  Any provision of this Section 13 to the
contrary notwithstanding, no adjustment in the Exercise Price or the number of
Shares into which this Warrant is exercisable shall be made if the amount of
such adjustment would be less than $0.01 or one-tenth (1/10th) of a Common
Share, but any such amount shall be carried forward and an adjustment with
respect thereto shall be made at the time of and together with any subsequent
adjustment which, together with such amount and any other amount or amounts so
carried forward, shall aggregate $0.01 or 1/10th of a Common Share or
more.

     

    (K)  
Timing of Issuance of
Additional Common Shares Upon Certain Adjustments.  In any case
in which the provisions of this Section 13 shall
require that an adjustment shall become effective immediately after a record
date for an event, the Company may defer until the occurrence of such event (i)
issuing to the Warrantholder of this Warrant exercised after such record date
and before the occurrence of such event the additional Common Shares issuable
upon such exercise by reason of the adjustment required by such event over and
above the Common Shares issuable upon such exercise before giving effect to such
adjustment and (ii) paying to such Warrantholder any amount of cash in lieu of a
fractional Common Share; provided, however, that the Company upon request shall
deliver to such Warrantholder a due bill or other appropriate instrument
evidencing such Warrantholder’s right to receive such additional shares, and
such cash, upon the occurrence of the event requiring such
adjustment.

     

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

     

    (L)  
Adjustment for Unspecified
Actions.  If the Company takes any action affecting the Common
Shares, other than actions described in this Section 13,
which in the opinion of the Board of Directors would materially adversely affect
the exercise rights of the Warrantholder in a manner disproportionate to holders
of Common Shares generally, taking into account the ability of the Warrantholder
to exercise this Warrant, the Exercise Price for the Warrant and/or the number
of Shares received upon exercise of the Warrant shall be adjusted for the
Warrantholder’s benefit, to the extent permitted by law, in such manner, and at
such time, as such Board of Directors after consultation with the Warrantholder
shall reasonably determine to be equitable in the
circumstances.  Failure of the Board of Directors to provide for any
such adjustment will be evidence that the Board of Directors has determined that
it is equitable to make no such adjustments in the circumstances.

     

    (M)  
Certificate as to
Adjustments.  Upon the occurrence of each adjustment or
readjustment of the Exercise Price pursuant to this Section 13, the
Company at its expense will, as promptly as reasonably practicable but in any
event not later than ten days thereafter, compute such adjustment or
readjustment in accordance with the terms hereof and furnish to the
Warrantholder a certificate setting forth such adjustment or readjustment
(including the kind and amount of securities, cash or other property for which
the Warrant is exercisable) and showing in detail the facts upon which such
adjustment or readjustment is based.  The Company will, as promptly as
reasonably practicable after the written request at any time of the
Warrantholder (but in any event not later than ten days thereafter), furnish or
cause to be furnished to the Warrantholder a certificate setting forth (i) the
Exercise Price then in effect, and (ii) the number of Shares and the amount, if
any, of other securities, cash or property which then would be received upon
exercise of this Warrant.

     

    (N)  
Notice of Record
Date.  In the event:

     

    (i)   
the Company takes a record of the holders of Common Shares (or other Capital
Stock or securities at the time issuable upon exercise of this Warrant) for the
purpose of entitling or enabling them to receive any dividend or other
distribution, or to receive any right to subscribe for or purchase any shares of
Capital Stock of any class or any other securities, or to receive any other
security; or

     

    (ii)   
of any capital reorganization of the Company, any reclassification of the Common
Shares of the Company, or any Deemed Liquidation Event; or

     

    (iii)   of
the voluntary or involuntary dissolution, liquidation or winding-up of the
Company,

     


    
      
         


      

      
        15

        
          

        

      

      
         


      

    


    


     

    then, and
in each such case, the Company will send or cause to be sent to the
Warrantholder a notice specifying, as the case may be, (i) the record date for
such dividend, distribution or right, and the amount and character of such
dividend, distribution or right, or (ii) the effective date on which such
reorganization, reclassification, consolidation, merger, transfer, dissolution,
liquidation or winding-up is proposed to take place, and the time, if any is to
be fixed, as of which the holders of record of Common Shares (or such other
Capital Stock or securities at the time issuable upon exercise of this Warrant)
will be entitled to exchange their Common Shares (or such other Capital Stock or
securities) for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, transfer, dissolution,
liquidation or winding-up, and the amount per share and character of such
exchange applicable to the Common Shares.  Such notice will be sent at
least ten days prior to the record date or effective date for the event
specified in such notice.

    


    (O)   
No
Impairment.  The Company will not, by amendment of its
certificate of incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company, but will at all
times in good faith assist in the carrying out of all the provisions of this
Warrant and in taking of all such action as may be necessary or appropriate in
order to protect the rights of the Warrantholder.

     

    (P)   
Proceedings Prior to Any
Action Requiring Adjustment.  As a condition precedent to the
taking of any action which would require an adjustment pursuant to this Section 13, the
Company shall use its reasonable best efforts to cause to be taken any action
which may be necessary, including obtaining regulatory, or stockholder approval
or exemptions, in order that the Company may thereafter validly and legally
issue as fully paid and nonassessable all Shares that the Warrantholder is
entitled to receive upon exercise of this Warrant pursuant to this Section
13.

     

    14.   
Governing
Law.  This Warrant shall be binding upon any successors or
assigns of the Company.  This Warrant shall constitute a contract
under the laws of Nevada and for all purposes shall be construed in accordance
with and governed by the laws of Nevada, without giving effect to the conflict
of laws principles.

     

    15.   
Attorneys’
Fees.  In any litigation, arbitration or court proceeding
between the Company and the Warrantholder as the holder of this Warrant relating
hereto, the prevailing party shall be entitled to reasonable attorneys’ fees and
expenses incurred in enforcing this Warrant.

     

    16.   
Amendments.  This
Warrant may be amended and the observance of any term of this Warrant may be
waived only with the written consent of the Company and the
Warrantholder.

     


    
      
         


      

      
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    17.    
Notices.  All
notices hereunder shall be in writing and shall be effective (A) on the day on
which delivered if delivered personally or transmitted by telex or telegram or
telecopier with evidence of receipt, (B) one Business Day after the date on
which the same is delivered to a nationally recognized overnight courier service
with evidence of receipt, or (C) five Business Days after the date on which the
same is deposited, postage prepaid, in the U.S. mail, sent by certified or
registered mail, return receipt requested, and addressed to the party to be
notified at the address indicated below for the Company, or at the address for
the Warrantholder set forth in the registry maintained by the Company pursuant
to Section 9,
or at such other address and/or telecopy or telex number and/or to the attention
of such other Person as the Company or the Warrantholder may designate by
ten-day advance written notice.

     

    18.     
Prohibited
Actions.  The Company agrees that it will not take any action
that would entitle the Warrantholder to an adjustment of the Exercise Price if
the total number of Shares issuable after such action upon exercise of this
Warrant, together with all Common Shares then outstanding and all Common Shares
then issuable upon the exercise of all outstanding options, warrants, conversion
and other rights, would exceed the total number of Common Shares then authorized
by its articles of incorporation.  Notwithstanding anything to the
contrary in this Agreement, the Exercise Price per share will never be less than
the par value of the securities issuable on exercise of this
Warrant.  For any reason at any time, upon the written or oral request
of the holder of this Warrant, the Company shall within one Business Day confirm
orally and in writing to the holder of this Warrant the number of Common Shares
then outstanding.

     

    19.     
Common
Shares.  The Company covenants and agrees that at all times
following the Issue Date (and pending compliance with Section 7(f) of the
Investment Agreement), the Common Stock and Common Stock Series A shall be pari
passu in all respects, shall have identical rights preferences powers privileges
and restriction qualifications and limitations and shall vote together as a
single class on all matters.

     

    20.     
Entire
Agreement.  This Warrant and the forms attached hereto, and the
Investment Agreement, contain the entire agreement between the parties with
respect to the subject matter hereof and supersede all prior and contemporaneous
arrangements or undertakings with respect thereto.

     

    


     

    [Signature
page follows]

     


    
      
         


      

      
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    IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by a
duly authorized officer.

     

    Dated:  [_____________],
2008

     

     

    LAS
VEGAS GAMING, INC.

     

    By:                                                                           

     

    Name:                                                                           

     

    Title:                                                                           

     

    


    


     


    
      
         


      

      
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    [Form of
Notice of Exercise]

     

    Date:  ___________

     

    
      	
              TO:

            	
              Las
      Vegas Gaming, Inc.

            


    

     

    
      	
              RE:

            	
              Election
      to Subscribe for and Purchase Common Stock and/or Common Stock Series
      A

            


    

     

    The
undersigned, pursuant to the provisions set forth in the attached Warrant,
hereby agrees to subscribe for and purchase the number of shares of the Common
Stock and Common Stock Series A set forth below covered by such Warrant. The
undersigned, in accordance with Section 3 of the
Warrant, hereby agrees to pay the aggregate Exercise Price for such shares of
Common Stock and Common Stock Series A in the manner set forth
below.  A new warrant evidencing the remaining shares of Common Stock
and Common Stock Series A covered by such Warrant, but not yet subscribed for
and purchased, should be issued in the name set forth below. If the new warrant
is being transferred, an opinion of counsel is attached hereto with respect to
the transfer of such warrant.

     

    
      	
              Number
      of Shares of Common Stock:

            	 
      
	
               

              Number
      of Shares of Common Stock 

              Series
      A:

            	 
      
	
              Method
      of Payment of Exercise Price

              (note
      if cashless exercise pursuant to 

              Section 3(ii)
      of the Warrant):

            	 
      
	
              Name
      and Address of Person to be Issued 

              New
      Warrant:

               

            	 
      


    

     

    Holder:

     

    By:                                                                           

     

    Name:                                                                           

     

    Title:                                                                           

    


     


    
      
         


      

      
        19