ex102.htm


    Exhibit
10.2

     

    FIRST AMENDMENT TO
WARRANTS

     

    This First Amendment to Warrants (this
“Amendment”),
is made and entered into as of October 24, 2008, by and among Las Vegas Gaming,
Inc., a Nevada corporation (the “Company”) and CAMOFI
MASTER LDC, a Cayman Islands limited duration company (“Holder”).

     

    Whereas,
the Company and Holder are parties to that certain Securities Purchase Agreement
dated as of March 31, 2006 (the “Purchase Agreement”),
pursuant to which the Company issued to Holder certain senior secured notes and
that certain Common Stock Purchase Warrant dated March 31, 2006 (the “2006 Warrant”)
granting Holder the right to purchase up to 2,500,000 shares of the Company’s
common stock, $.001 par value (“Common Stock”), at an
exercise price of $1.48 per share (the “2006 Warrant
Shares”);

     

    Whereas,
on March 22, 2007, the Company issued to Holder that certain Stock Purchase
Warrant dated as of such date (the “2007 Warrant” and
together with the 2006 Warrant, the “Warrants”) pursuant
to which the Company granted the Holder the right to purchase up to 175,000
shares of Common Stock at an exercise price of $1.48 per share (the “2007 Warrant
Shares”);

     

    Whereas,
in connection with prior commitments to the senior secured notes issued to the
Holder, the Company issued to the Holder 300,000 shares of its Common Stock
Series A, $.001 par value (“Common Stock Series
A”), represented by share certificate no. 2517 dated February 14, 2008
(the “Common
Shares” and together with the 2006 Warrant Shares and the 2007 Warrant
Shares, the “Shares”);

     

    Whereas,
the original senior secured notes issued to the Holder by the Company have been
amended and restated into the Amended and Restated Senior Secured Convertible
Note Due January 1, 2010 in the aggregate principal amount of $6,051,250.00 (the
“Note”);

     

    Whereas,
the Company executed that certain Investment Agreement, dated as of September
30, 2008 (the “Investment
Agreement”), by and between the Company and IGT, a Nevada corporation
(“IGT”);

     

    Whereas,
the Company and Holder desire to amend the Warrants to provide for the Warrants
to be exercised for Common Stock or Common Stock Series A, to provide certain
registration rights for the Shares, and to make certain other changes as set
forth herein;

     

    Now
Therefore, in consideration of the premises and the mutual covenants and the
agreements herein set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:

     

    1. Each of
the Warrants is hereby amended by addition of the following
provisions:

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    (a)           Exercisable
Shares.  Immediately upon consummation of the elimination of
the Common Stock class of securities by the Company, whether as contemplated by
Section 7(f) of the Investment Agreement, or otherwise, any then unexercised
portion of the Warrants shall be exercisable for the same number of shares of
Common Stock Series A, as the number of shares of Common Stock into which they
were then exercisable. In order to carry out the provisions of this Section 1,
the Company’s obligations under Section 4.12 of the Purchase Agreement, Section
15 of the 2007 Warrant, and Section 2(e)(i) of the 2006 Warrant shall apply
equally to shares of Common Stock and shares of Common Stock Series
A.

     

    (b)           Registration
Rights

     

    (i) Incidental Registration
Rights.  If the Company at any time seeks to register under the
Securities Act of 1933, as amended, for sale to the public in an underwritten
offering any of its equity securities (other than a registration on Form S-4 or
Form S-8, or any successor forms promulgated for similar purposes) and if the
form of registration statement to be used may be used for the registration of
Shares, on each such occasion it will promptly furnish Holder with prior written
notice thereof. At the written request of Holder, given within ten days after
the receipt of such notice, to register any of the Shares, the Company will
cause such Shares, for which registration will have been requested, to be
included in such registration statement in an amount so as to permit the sale or
other disposition by Holder as part of such underwritten public offering of such
Shares as are registered, provided, that if the managing underwriter advises the
Company in writing that, in its opinion, the number of securities requested and
otherwise proposed to be included in such offering exceeds the number that can
be sold without adversely affecting the marketability of the offering, the
Company will include in such registration to the extent of the number which the
Company is so advised can be sold in such offering, first, the securities the
Company proposes to sell in such registration, second, the securities IGT or its
affiliates have requested to be included in such registration (“IGT Securities”), and
third, the Shares, which, in the opinion of such managing underwriter, can be
sold without having the adverse effect referred to above. If the registration is
an underwritten offering and the managing underwriter advises the Company in
writing that in its opinion the number of IGT Securities, Shares and, if
permitted hereunder, other securities requested to be included in such offering
exceeds the number of IGT Securities, Shares and other securities, if any, which
can be sold in an orderly manner in such offering within a price range
acceptable to the holder of securities initially requesting such registration,
without adversely affecting the marketability of the offering, the Company will
include in such registration prior to the inclusion of any securities that are
not IGT Securities, the number of IGT Securities requested to be included by the
holders of IGT Securities pro
rata among the respective holders thereof on the basis of the number of
IGT Securities owned by each such holder.  To the extent that in such
opinion of the managing underwriter after inclusion of all IGT Securities
requested to be included that additional securities may be included, the Company
will include in such registration prior to the inclusion of any such additional
securities that are not Shares, the number of Shares requested to be included by
the holders of Shares pro
rata among the respective holders thereof on the basis of the number of
Shares owned by each such holder.

     

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

     

    (ii) Expenses.  All
expenses incurred by the Company in complying with this Section 1(c), including
all registration and filing fees, printing expenses, fees and disbursements of
counsel and independent public accountants for the Company, listing or quotation
fees, and fees of transfer agents and registrars, will be borne in full by the
Company. Holder will be responsible for all underwriting commissions, transfer
taxes, discounts and fees with respect to Shares and the fees and expenses of
accountants and legal counsel for Holder.

     

    (iii) Listing.  The
Company will cause all Shares registered as provided in this Section 1(c) to be
listed on each securities exchange on which similar securities issued by the
Company are then listed or, if no similar securities issued by the Company are
then listed on any securities exchange, use its reasonable best efforts to cause
all such Shares to be listed on the AMEX, the NYSE or the NASDAQ stock market,
as determined by the Company.

     

    (iv) Indemnification.  The
Company will enter into customary and reasonable indemnification and
contribution agreements with any underwriter and Holder in the event of an
underwritten offering.

     

    2. The 2007
Warrant is hereby amended by adding to the end of Section 3 thereof the
following new language:

     

    “Cashless
Exercise.  This Warrant may also be exercised by means of a “cashless
exercise” in which the Holder shall be entitled to receive a certificate for the
number of shares of Common Stock equal to the quotient obtained by dividing
[(A-B) (X)] by (A), where:

     

    
      	
               
      

            	
              (A)
      = the VWAP on the Trading Day immediately preceding the date of such
      election;

            


    

    


    
      	
               
      

            	
              (B)
      = the Exercise Price of this Warrant, as adjusted;
  and

            


    

    


    
      	
               
      

            	
              (X)
      = the number of shares of Common stock issuable upon exercise of this
      Warrant in accordance with the terms of this Warrant by means of a cash
      exercise rather than a cashless
exercise.

            


    

    


    
      	
               
      

            	
              For
      the purposes of this Section 3, the following definitions shall
      apply:

            


    

    


    “Trading Day” means a
day on which the Common Stock is traded on a Trading Market.

     

    “Trading Market” means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the Nasdaq SmallCap Market, the American
Stock Exchange, the New York Stock Exchange, the Nasdaq National Market or the
OTC Bulletin Board.

     

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

     

    “VWAP” means, for any
date, the price determined by the first of the following clauses that applies:
(a) if the Common Stock is then listed or quoted on a Trading Market, the daily
volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the primary Trading Market on which the Common Stock is then
listed or quoted as reported by Bloomberg Financial L.P. (based on a Trading Day
from 9:30 a.m. EST to 4:00 p.m. Eastern Time) using the VAP function;
(b) if the Common Stock is not then listed or quoted on the Trading Market
and if prices for the Common Stock are then reported in the “Pink Sheets”
published by the Pink Sheets, LLC (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per
share of the Common Stock so reported; or (c) in all other cases, the fair
market value of a share of Common Stock as determined by a nationally
recognized-independent appraiser selected in good faith by Holder.”

     

    3. Continuation of
Warrants.  Each of the Warrants shall remain in full force and
effect as amended by this Amendment.

     

    4. Acknowledgement of
Company.  The Company hereby acknowledges that after giving
effect to the transactions contemplated by the Investment Agreement, the
Warrants are exercisable to purchase an aggregate of 2,675,000 shares of Common
Stock or Common Stock Series A, as applicable, at an exercise price of $1.48 per
share.

     

    5. Execution and
Counterparts. This Amendment may be executed in two or more counterparts,
all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart.  In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a “.pdf” format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or “.pdf” signature page were an original
thereof.

     

    [Signature pages
follow]

     


    
      
         


      

      
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    IN WITNESS WHEREOF, the parties hereto
have caused this Amendment to be duly executed by their respective authorized
signatories as of the date first indicated above.

     

    LAS
VEGAS GAMING, INC.

     

    By: /s/ Bruce A.
Shepard                                           


    Name:
Bruce A. Shepard

    Title:
Chief Financial Officer

    


    Address
for Notice:

    4000 Ali
Baba

    Las
Vegas, Nevada 89118

    


    


     

    


     

    [SIGNATURE PAGE FOR HOLDER
FOLLOWS]

     


    
      
         


      

      
        5

        
          

        

      

      
         


      

    


    IN WITNESS WHEREOF, the undersigned
have caused this Amendment to be duly executed by their respective authorized
signatories as of the date first indicated above.

     

    


     

    Name of
Holder:  CAMOFI MASTER
LDC                                                                  


     

    Signature of Authorized Signatory of
Holder:  /s/ Richard
Smithline                    


     

    Name of
Authorized Signatory:  Richard
Smithline                                                    


     

    Title of
Authorized Signatory: Director                                                                       


     

    Address
for Notice:

     

    


    c/o
Centrecourt Asset Management LLC

    350
Madison Avenue, 8th
Floor

    NYC, NY
10017

    


     

    


     


    
      
         


      

      
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