Document:

Exhibit 10.1

 

THIS AGREEMENT IS SUBJECT TO ARBITRATION

 

	
  STATE OF TEXAS

  	
  §

  
	
   

  	
  §

  
	
  COUNTY OF DALLAS

  	
  §

  

 

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT is made and entered into on the 3rd day of
October, 2008, but effective as of the 1st day of August, 2008 (the
“Effective Date”), by and between DG FastChannel, Inc., a Delaware
corporation (the “Corporation”), and Scott K. Ginsburg (the “Employee”).

 

WHEREAS, the Corporation and the Employee were parties to a prior
Employment Agreement effective as of June 1, 2006, which agreement has
terminated in accordance with its terms;

 

WHEREAS, the Corporation desires to enter into an agreement with
respect to the continued employment relationship with the Employee on the terms
and conditions as set forth herein; and

 

WHEREAS, the Employee is willing to enter into such agreement;

 

NOW, THEREFORE, the parties hereto, in consideration of the mutual
covenants and promises hereinafter contained, do hereby agree as follows:

 

1.             Employment.  The Corporation hereby agrees to extend the
employment of  Employee in the capacity
of Chief Executive Officer, and Employee hereby accepts the continued
employment, on the terms and conditions hereinafter set forth.

 

2.             Title and Duties.

 

(a)           The Employee’s job
title shall be Chief Executive Officer of the Corporation.  During the Employment Term the Employee shall
have such authority and duties 

 

 

as are usual and customary for
such position, and shall perform such additional services and duties as the
Board of Directors may from time to time designate consistent with such
position.

 

(b)           The Employee shall
report solely to the Board of Directors. 
Except as otherwise specified by the Board of Directors, the other
senior officers of the Corporation shall report, directly or indirectly through
other senior officers designated from time to time by the Employee or the Board
of Directors, to the Employee, and the Employee shall be responsible for
reviewing the performance of such senior officers of the Corporation.

 

(c)           The Employee shall
devote reasonable business time and best efforts, consistent with past
practices, to the business affairs of the Corporation; in addition, the
Employee may devote reasonable time and attention to:

 

(i)            serving as a director
of, or member of a committee of the directors of, any not-for-profit
organization or engaging in other charitable or community activities; and

 

(ii)           serving as an officer
or director of, or member of a committee of the directors of, the corporations
or organizations for which the Employee presently serves in such capacity, and
such other corporations and organizations that the Board may from time to time
approve in the future; provided, that except as specified above, the
Employee may not accept employment with any other individual or other entity,
or engage in any other venture, which is indirectly or directly in conflict or
competition with the then existing business of the Corporation.

 

3.             Employment
Term.  The term of Employee’s
employment hereunder shall begin on the Effective Date and continue until July 31,
2011, unless earlier terminated as herein provided (the “Employment Term”).

 

4.             Salary
and Other Compensation.  As
compensation for the services to be rendered 

 

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by the Employee to the
Corporation pursuant to this Agreement, the Employee shall be paid the
following compensation and other benefits:

 

(a)           Salary:  Salary shall be payable in equal bimonthly
installments in arrears, or otherwise in accordance with the Corporation’s
ordinary payroll practices.  Employee
shall be entitled to annual salary as set forth below, or such higher
compensation as may be established by the Corporation from time to time:

 

	
  From the Effective Date through
  July 31, 2009 —

  	
   

  	
  $

  	
  450,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  From August 1, 2009 through July 31,
  2010 —

  	
   

  	
  $

  	
  468,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  From August 1, 2010 through July 31,
  2011 —

  	
   

  	
  $

  	
  486,720

  	
   

  

 

(b)           Bonus:  The Employee shall be eligible for an annual
bonus in an amount of up to 75% of the then-applicable annual salary, or such
higher percentage as may be determined by the Compensation Committee (or other
applicable committee) of the Board of Directors, with the criteria upon which
any bonus would be awarded to be determined in the sole discretion of the
Compensation Committee (or other applicable committee) of the Board of
Directors.  Any annual bonus that becomes
payable pursuant to this Section 4(b) shall be paid between January 1
and March 15th of the year following the year for which such annual bonus
was earned; provided, however, in no event will the bonus be paid after December 31
of the year following the year for which such annual bonus was earned.

 

(c)           Stock Incentive Plans:
The Employee shall be entitled to receive a restricted stock grant of 350,000
shares of the Corporation’s common stock, under the Corporation’s stock
incentive plan, with the forfeiture provisions applicable to such shares
terminating as follows: (i) 116,667 shares on August 1, 2009, (ii) 116,667
shares on August 1, 2010 and (iii) 116,666 shares on August 1,
2011, with any such remaining forfeiture provisions terminating upon the
occurrence of a change in control of the Corporation (as defined in the 

 

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restricted stock
agreement).  Notwithstanding the
foregoing, the terms of such grant shall be subject to the terms and conditions
of the Corporation’s stock incentive plan, and any additional terms as might be
included in the applicable restricted stock agreement.  In addition, the Employee may receive
additional awards under such stock incentive plans as the Compensation
Committee (or other applicable committee) of the Board of Directors may
determine from time to time, subject to any limitation as may be provided by
applicable law or regulation or the terms of the stock incentive plan.

 

(d)           Car
Allowance:  The Corporation shall pay to
the Employee a car allowance in an amount equal to $1,000 per month during the
Employment Term.

 

(e)           Employee
Benefit Plans:  The Employee shall be
eligible to participate, on a basis comparable to other executive officers, in
any profit sharing, retirement, insurance, health or other employee benefit
plan maintained by the Corporation.

 

(f)            Reimbursement
of Expenses:  In addition to the
compensation provided for hereof, upon submission of proper vouchers, the
Corporation will pay or reimburse the Employee for all normal and reasonable
travel and entertainment expenses incurred by the Employee during the
Employment Term in connection with the Employee’s responsibilities to the
Corporation.

 

5.             Life
Insurance.  The Corporation, in its
discretion, may apply for and procure in its own name and for its own benefit,
life insurance on the life of the Employee in any amount or amounts considered
advisable by the Corporation, and the Employee shall submit to any medical or
other examination and execute and deliver any application or other instrument
in writing, reasonably necessary to effectuate such insurance.

 

6.             Corporation
Payment of Health Benefit Coverage. 
During the Employment Term, the Corporation shall pay the amount of
premiums or other cost incurred for coverage of the 

 

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Employee and his eligible
spouse and dependent family members under the applicable Corporation health
benefits arrangement (consistent with the terms of such arrangement).

 

7.             Vacations
and Leave.  The Employee shall be
entitled to four weeks of vacation per year and such additional leave time as
is customarily granted to the other executive officers of the Corporation.

 

8.             Non-Disclosure of
Confidential Information.  The
Employee acknowledges that as a result of his employment with the Corporation,
he will be making use of, acquiring, and/or adding to confidential information
of a special and unique nature and value relating to such matters as the
Corporation’s patents, copyrights, proprietary information, trade secrets,
systems, procedures, manuals, confidential reports, and lists of customers
(which are deemed for all purposes confidential and proprietary), as well as
the nature and type of services rendered by the Corporation, the equipment and
methods used and preferred by the Corporation’s customers, and the fees paid by
them.  As a material inducement to the
Corporation to enter into this Agreement and to pay to Employee the compensation
stated in paragraph 4, Employee covenants and agrees that he shall not, at any
time during or following the term of his employment, directly or indirectly
divulge or disclose for any purpose whatsoever any confidential information
that has been obtained by, or disclosed to, him as a result of his employment
by the Corporation.

 

9.             Covenants
Against Competition.  The Employee
acknowledges that the services he is to render are of a special and unusual
character with a unique value to the Corporation, the loss of which cannot
adequately be compensated by damages in action at law.  In view of the unique value to the
Corporation of the services of Employee because of the confidential information
to be obtained by or disclosed to Employee, as hereinabove set forth, and as a
material inducement to the Corporation to enter into this Agreement and to pay
to Employee the compensation stated in paragraph 4, Employee covenants and
agrees that during Employee’s 

 

5

 

employment and for a period of
twelve months after he ceases to be employed by the Corporation for any reason,
he will not, except as otherwise authorized by this Agreement, compete with the
Corporation or any affiliate of the Corporation, solicit the Corporation’s
customers or the customers of an affiliate or directly or indirectly solicit
for employment any of the Corporation’s employees.  For purposes of this paragraph:

 

(a)           the
term “compete” means engaging in the same or any similar business as the Corporation
or any of its affiliates in any manner whatsoever (other than as a passive
investor), including without limitation, as a proprietor, partner, investor,
shareholder, director, officer, employee consultant, independent contractor, or
otherwise, within the United States of America;

 

(b)           the term “affiliate”
means any legal entity that directly or indirectly through one or more
intermediaries controls, is controlled by, or is under the common control with
the Corporation; and

 

(c)           the term “customers”
means all persons to whom the Corporation or any of its affiliates has sold any
product or service within a period of twelve months prior to the time Employee
ceases to be employed by the Corporation.

 

10.           Reasonableness
of Non-Disclosure and Noncompetition Restrictions,

 

(a)           The
Employee has carefully read and considered the provisions of paragraphs 8
and 9, and, having done so, agrees that the restrictions set forth in these
paragraphs, including, but not limited to, the time period of restriction and
geographical areas of restriction are fair and reasonable and are reasonably
required for the protection of the interests of the Corporation and its parent
or subsidiary corporations, officers, directors, shareholders, and other
Employees.

 

(b)           In
the event that, notwithstanding the foregoing, any of the provisions of 

 

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paragraphs 8 and 9 shall
be held to be invalid or unenforceable, the remaining provisions thereof shall
nevertheless continue to be valid and enforceable as though the invalid or
unenforceable parts had not been included therein.  In the event that any provision of paragraphs
8 or 9 relating to the time period and/or the areas of restriction and/or
related aspects shall be declared by a court of competent jurisdiction to
exceed the maximum restrictiveness such court deems reasonable and enforceable,
the time period and/or areas of restriction and/or related aspects deemed
reasonable and enforceable by the court shall become and thereafter be the
maximum restriction in such regard, and the restriction shall remain
enforceable to the fullest extent deemed reasonable by such court.

 

11.           Remedies
for Breach of Employee’s Covenants of Non-Disclosure and Noncompetition.  In the event of a breach or threatened breach
of any of the covenants in paragraphs 8 and 9, the Corporation shall have the
right to seek monetary damages for any past breach and equitable relief,
including specific performance by means of an injunction against the Employee
or against the Employee’s partners, agents, representatives, servants,
employers, employees, family members and/or any and all persons acting directly
or indirectly by or with him, to prevent or restrain any such breach.

 

12.           Termination.  Employment of the Employee under this
Agreement may be terminated:

 

(a)           By
the Employee’s death.

 

(b)           By
mutual agreement of the Employee and the Corporation.

 

(c)           By the Corporation for
Cause.  This Agreement and the Employee’s
employment with the Corporation may be terminated for Cause at any time in
accordance with subparagraph (e) of this section.  For purposes of this Agreement, Cause shall
mean only the following: (i) a conviction of or a plea of guilty or nolo contendre by the Employee to a felony or 

 

7

 

an act of fraud, embezzlement
or theft or other criminal conduct against the Corporation; (ii) habitual
neglect of the Employee’s material duties or failure by the Employee to perform
or observe any substantial lawful obligation of such employment that is not
remedied within thirty (30) days after written notice thereof from the
Corporation or its Board of Directors; or (iii) any material breach by the
Employee of this Agreement.  Should the
Employee dispute whether he was terminated for Cause, then the Corporation and
the Employee shall enter immediately into binding arbitration pursuant to the
Commercial Arbitration Rules of the American Arbitration Association, the
cost of which shall be borne by the non-prevailing party.

 

(d)           By Employee for Good
Reason.  This Agreement and the
Employee’s employment with the Corporation may be terminated at any time, at
the election of the Employee, for Good Reason following notice and a reasonable
opportunity to cure, and in accordance with subparagraph (e) of this
section.  As used in this Agreement, Good
Reason shall mean (i) the assignment to the Employee of duties
inconsistent with the title of Chief Executive Officer of the Corporation, the
removal of the Employee from such office or any reduction in the current scope
or degradation of the Employee’s job responsibilities, duties, functions,
status, offices and title or material reduction in support staff; (ii) the
material reduction of the Employee’s then current Salary and perquisites, on an
aggregate basis; (iii) the relocation of the Corporation’s principal
executive offices to a location more than twenty (20) miles from the
Corporation’s then current offices or the transfer of the Employee to a place
other than the Corporation’s principal executive offices (excepting reasonable
travel on the Corporation’s business); or (iv) any material breach by the
Corporation of this Agreement.

 

(e)           Notice
of Termination.  Any purported
termination of the Employee’s employment, either by the Corporation for Cause
or by the Employee for Good Reason, shall be communicated by a written Notice
of Termination to the other party hereto. 
Such notice shall 

 

8

 

indicate a specific termination
provision in this Agreement which is relied upon, recite the facts and
circumstances claimed to provide the basis for such termination and specify the
effective date of the termination (the “Date of Termination”).  If within thirty (30) days from the date the
Notice of Termination is given, the party receiving such notice notifies the
other party that a dispute exists concerning such termination, the parties
shall resolve such dispute by entering immediately into binding arbitration
pursuant to the Commercial Arbitration Rules of the American Arbitration
Association, the cost of which shall be borne by the non-prevailing party.

 

(f)            At
the end of the Employment Term.

 

(g)           Change
in Control.  In the event of a Change in
Control and, following such Change in Control, if the Employee is terminated by
the Corporation without Cause, or the Employee elects to terminate his
employment for any reason, prior to the end of the Employment Term.  As used in the Agreement, the term “Change in
Control” shall mean:

 

(i)            the sale, lease or
other transfer of all or substantially all of the assets of the Corporation to
any person (other than the Employee and his affiliates) or group (as such term
is used in Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended), other than a group of which the Employee or one of his affiliates
is a member;

 

(ii)           the adoption by the
stockholders of the Corporation of a plan relating to the liquidation or
dissolution of the Corporation;

 

(iii)          the merger of
consolidation of the Corporation with or into another entity or the merger of
another entity into the Corporation or any subsidiary thereof with the effect
that immediately after such transaction the stockholders of the Corporation
immediately prior to such transaction (or their affiliates) hold less than
fifty percent (50%)

 

9

 

of the total
voting power of all securities generally entitled to vote in the election of
directors, managers or trustees of the entity surviving such merger of
consolidation;

 

(iv)          the acquisition by any
person (other than the Employee and his affiliates) or group (other than a
group of which the Employee or one of his affiliates is a member) of more than
fifty percent (50%) of the voting power of all securities of the Corporation
generally entitled to vote in the election of directors of the Corporation; or

 

(v)           that the majority of
the Board is composed of members who (A) have served less than twelve
months and (B) were not approved by a majority of the Board at the time of
their election or appointment.

 

13.           Payments Upon
Termination.  Payments to the
Employee upon termination shall be limited to the following:

 

(a)           If
the Employee is terminated by the Corporation upon death, for Cause, or at the
end of the Employment Term, the Employee shall be entitled to all arrearages of
salary and expenses as of the Date of Termination but shall not be entitled to
further compensation, subject to paragraph 14.

 

(b)           If the Employee terminates
for Good Reason or following a Change of Control pursuant to paragraph 12(g) above,
or if the Employee is terminated by the Corporation other than for Cause or any
other reason set forth in subparagraph (a) above during the Employment
Term, the Employee shall be entitled to the greater of (i) all remaining
salary, in a lump sum payment, under this Agreement to the end of the
Employment Term, or (ii) salary, in a lump sum payment, from the Date of
Termination through the second anniversary of the Date of Termination, at the
rate of salary in effect on the Date of Termination, which lump sum shall be
paid unless otherwise required by Section 15(b) within 90 days
following the Date of Termination, with the exact date of payment determined in
the sole discretion of the 

 

10

 

Corporation.  Employee shall have no obligation to seek
other employment and any income so earned shall not reduce the foregoing
amounts.

 

14.           Severance.  Following the end of the Employment Term,
upon termination of Employee’s employment with the Corporation for any reason
other than Cause, but upon ninety days prior written notice if such termination
is by the Employee, the Corporation shall pay to the Employee in a lump sum an
amount equal to the amount of salary the Employee would have earned if he had
remained employed with the Corporation for a period of six months following the
Date of Termination at the rate of salary in effect on the Date of Termination,
which lump sum shall be paid within 90 days of the Date of Termination, with
the exact date of payment determined in the sole discretion of the Corporation,
unless otherwise specified under Section 15(b).

 

15.           Additional
Termination Provisions.

 

(a)           Separation from
Service.  Notwithstanding anything to
the contrary in this Agreement, with respect to any amounts payable to the
Employee under this Agreement in connection with a termination of the
Employee’s employment, in no event shall a termination of employment occur
under this Agreement unless such termination constitutes a Separation from
Service.  For purposes of this Agreement,
a Separation from Service shall mean the Employee’s “separation from service”
with the Corporation as such term is defined in Treasury Regulation Section 1.409A-1(h) and
any successor provision thereto.

 

(b)           Section 409A
Compliance.  Notwithstanding anything
contained in this Agreement to the Contrary, to the maximum extent permitted by
applicable law, amounts payable to the Employee pursuant to Sections 13 or 14
shall be made in reliance upon Treas. Reg. Section 1.409A-1(b)(9) (Separation
Pay Plans) or Treas. Reg. Section 1.409A-1(b)(4) (Short-Term
Deferrals).  However, to the extent any
such payments are treated as non-qualified 

 

11

 

deferred compensation subject
to Section 409A of  the Code, then
if Employee is deemed at the time of his Separation from Service to be a
“specified employee” for purposes of Section 409A(a)(2)(B)(i) of the
Code, then to the extent delayed commencement of any portion of the benefits to
which Employee is entitled under this Agreement is required in order to avoid a
prohibited distribution under Section 409A(a)(2)(B)(i) of the Code,
such portion of Employee’s termination benefits shall not be provided to
Employee prior to the earlier of (i) the expiration of the six-month
period measured from the date of the Employee’s Separation from Service or (ii) the
date of Employee’s death.  Upon the
earlier of such dates, all payments deferred pursuant to this Section 15(b) shall
be paid in a lump sum to Employee.  The
determination of whether the Employee is a “specified employee” for purposes of
Section 409A(a)(2)(B)(i) of the Code as of the time of his Separation
from Service shall made by the Corporation in accordance with the terms of Section 409A
of the Code and applicable guidance thereunder (including without limitation
Treas. Reg. Section 1.409A-1(i) and any successor provision thereto).

 

(c)           Resignation Upon
Termination.  In the event of
termination of this Agreement other than for death, the Employee hereby agrees
to resign from all positions held in the Corporation, including without
limitations any position as a director, officer, agent, trustee or consultant
of the Corporation or any affiliate of the Corporation.  For the purposes of this provision, the term
“affiliate” has the same meaning as in paragraph 9.

 

16.           Waiver.  A party’s failure to insist on compliance or
enforcement of any provision of this Agreement, shall not affect the validity
or enforceability or constitute a waiver of future enforcement of that
provision or of any other provision of this Agreement by that party or any
other party.

 

17.           Governing Law.  This Agreement shall in all respects be
subject to, and governed by, the laws of the State of Texas.

 

12

 

18.           Severability.  The invalidity or unenforceability of any
provision in the Agreement shall not in any way affect the validity or
enforceability of any other provision and this Agreement shall be construed in
all respects as if such invalid or unenforceable provision had never been in
the Agreement.

 

19.           Notice.  Any and all notices required or permitted
herein shall be deemed delivered if delivered personally or if mailed by
registered or certified mail to the Corporation at its principal place of
business and to the Employee at the address hereinafter set forth following the
Employee’s signature, or at such other address or addresses as either party may
hereafter designate in writing to the other.

 

20.           Assignment.  This Agreement, together with any amendments
hereto, shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors, assigns, heirs and personal
representatives, except that the rights and benefits of either of the parties
under this Agreement may not be assigned without the prior written consent of
the other party.

 

21.           Indemnification
and Insurance; Legal Expenses.  The
Corporation shall indemnify the Employee to the fullest extent permitted by the
laws of the State of Delaware, as in effect at the time of the subject act or
omission, and shall advance to the Employee reasonable attorneys’ fees and
expenses as such fees and expenses are incurred (subject to an undertaking from
the Employee to repay such advances if it shall be finally determined by a
judicial decision which is not subject to further appeal that the Employee was
not entitled to the reimbursement of such fees and expenses) and he will be
entitled to the protection of any insurance policies the Corporation may elect
to maintain generally for the benefit of its directors and officers (“Directors
and Officers Insurance”) against all costs, charges and expenses incurred or
sustained by him in connection with any action, suit or proceeding to which he
may be made a party by 

 

13

 

reason of his being or having
been a director, officer or employee of the Corporation or any of its
subsidiaries or his serving or having served any other enterprise as a
director, officer or employee at the request of the Corporation (other than any
dispute, claim or controversy arising under or relating to this
Agreement).  The Corporation covenants to
maintain during the Employment Term for the benefit of the Employee (in his
capacity as an officer and director of the Corporation) Directors and Officers
Insurance providing benefits to the Employee no less favorable, taken as a
whole, than the benefits provided to the Employee by the Directors and Officers
Insurance maintained by the Corporation on the date hereof; provided, however,
that the Board may elect to terminate Directors and Officers Insurance for all
officers and directors, including the Employee, if the Board determines in good
faith that such insurance is not available or is available only at unreasonable
expense.

 

22.           Amendments.  This Agreement may be amended at any time by
mutual consent of the parties hereto, with any such amendment to be invalid
unless in writing, signed by the Corporation and the Employee.

 

23.           Entire
Agreement.  This Agreement, along
with the Corporation handbook to the extent it does not specifically conflict
with any provision of this Agreement, contains the entire agreement and
understanding by and between the Employee and the Corporation with respect to
the employment of the Employee, and no representations, promises, agreements,
or understandings, written or oral, relating to the employment of the Employee
by the Corporation not contained herein shall be of any force or effect.

 

24.           Burden and Benefit.  This Agreement shall be binding upon, and
shall inure to the benefit of, the Corporation and Employee, and their
respective heirs, personal and legal representatives, successors, and assigns.

 

25.           Headings.  The various headings in this Agreement are
inserted for convenience 

 

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only and are not part of the
Agreement.

 

26.           In-Kind
Benefits and Reimbursements. 
Notwithstanding any thing to the contrary in this Agreement, in-kind
benefits and reimbursements provided under this Agreement during any tax year
of the Employee shall not affect in-kind benefits or reimbursements to be
provided in any other tax year of the Employee and are not subject to liquidation
or exchange for another benefit. 
Notwithstanding any thing to the contrary in this Agreement,
reimbursement requests must be timely submitted by Employee and, if timely
submitted, reimbursement payments shall be made to the Employee as soon as
administratively practicable following such submission, but in no event later
than the last day of Employee’s taxable year following the taxable year in
which the expense was incurred.  In no
event shall the Employee be entitled to any reimbursement payments after the
last day of Employee’s taxable year following the taxable year in which the
expense was incurred.  This paragraph
shall only apply to in-kind benefits and reimbursements that would result in
taxable compensation income to the Employee.

 

27.           Section 409A;
Separate Payments.  This Agreement is
intended to be written, administered, interpreted and construed in a manner
such that no payment or benefits provided under the Agreement become subject to
(a) the gross income inclusion set forth within Code Section 409A(a)(1)(A) or
(b) the interest and additional tax set forth within Code Section 409A(a)(1)(B) (together,
referred to herein as the “Section 409A Penalties”), including, where
appropriate, the construction of defined terms to have meanings that would not
cause the imposition of Section 409A Penalties.  In no event shall the Corporation be required
to provide a tax gross-up payment to Employee or otherwise reimburse Employee
with respect to Section 409A Penalties. 
For purposes of Section 409A of the Code (including, without
limitation, for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii)),
each payment that Employee may be eligible to receive under this Agreement
shall be treated as a separate and distinct payment.

 

15

 

IN WITNESS WHEREOF, the Corporation and Employee have duly executed
this Agreement to be effective as of the day and year first above written.

 

 

	
   

  	
   

  	
  CORPORATION:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DG FASTCHANNEL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   /s/ Kevin C. Howe

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: KEVIN C. HOWE

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Its: Compensation Committee Chairman

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Address for Notice Purposes:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  DG FastChannel, Inc.

  	
   

  	
   

  	
   

  
	
  750 West John Carpenter Freeway

  	
   

  	
   

  	
   

  
	
  Suite 700

  	
   

  	
   

  	
   

  
	
  Irving, TX
  75039

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  EMPLOYEE:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  /s/ Scott
  K. Ginsburg

  
	
   

  	
   

  	
   

  	
  SCOTT K.
  GINSBURG

  

 

16ex101.htm

     

    

    

    

    

    

    

    

    

    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

    
 

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    EXHIBITS

    

    Exhibit
A                     Technology

    Exhibit
B                      Existing
Technology Licenses

    Exhibit
C                      Partial
List of Company Assets

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    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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