Document:

ex101.htm

    Exhibit
10.1

    

    EXECUTION
COPY

    

    SATISFACTION
AND TERMINATION AGREEMENT

     

    This
Satisfaction and Termination Agreement (this “Agreement”), is made
and entered into as of October 24, 2008 (the “Effective Date”), by
and among Las Vegas Gaming, Inc. a Nevada corporation (the “Company”), CAMOFI
MASTER LDC, a Cayman Islands limited duration company (“CAMOFI” or “Holder”),
Imagineering Gaming, Inc., a Nevada corporation (“IGI”), and Las Vegas Keno,
Inc., a Nevada corporation (“LVKI”).

     

    RECITALS

     

    WHEREAS,
the Company and Holder were parties to that certain Securities Purchase
Agreement dated as of June 30, 2005 (the “2005 Purchase
Agreement”), pursuant to which the Company issued to Holder certain
senior secured notes and that certain Common Stock Purchase Warrant dated June
30, 2005 granting Holder the right to purchase up to 1,050,000 shares of the
Company’s common stock, $0.001 par value per share (the “Common Stock”) at an
exercise price of $1.48 per share (the “2005
Warrant”);

     

    WHEREAS,
the Company and Holder are parties to that certain Securities Purchase Agreement
dated as of March 31, 2006 (the “2006 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 granting Holder the right to purchase up to 2,500,000 shares of Common
Stock at an exercise price of $1.48 per share (the “2006
Warrant”);

     

    WHEREAS,
in connection with the execution of the 2006 Purchase Agreement and the issuance
of the 2006 Warrant, the Company and Holder agreed that each the 2005 Purchase
Agreement and the 2005 Warrant were terminated;

     

    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 Common Stock
represented by share certificate #2517 dated February 14, 2008;

     

    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,
IGI, LVKI and the Holder are parties to a Subsidiary Guarantee dated as of March
31, 2006 (the “Subsidiary
Guarantee”), as amended pursuant to Amendment No. 1 to Subsidiary
Guarantee dated effective as of April 30, 2008 among IGI, LVKI and the Holder
(the Subsidiary Guarantee as amended by Amendment No. 1 to Subsidiary Guarantee,
the “Guarantee”);

     

    WHEREAS,
the Company, IGI, LVKI and the Holder are parties to a Security Agreement dated
as of March 31, 2006 (the “Original Security
Agreement”), as amended pursuant to Amendment No. 1 to Security
Agreement, dated effective April 30, 2008 between the Company, IGI, LVKI and the
Holder (the Original Security Agreement as amended by Amendment No. 1 to
Security Agreement, the “Security
Agreement”);

     

     

    
      
         

      

      
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    WHEREAS,
on March 22, 2007 the Company issued to Holder that certain Stock Purchase
Warrant dated as of such date 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”);

     

    WHEREAS,
the Company, IGI, LVKI and the Holder are parties to a Security Interest
Agreement executed May 13, 2008 (the “First Security Interest
Agreement”);

     

    WHEREAS,
the Company, IGI, LVKI and the Holder are parties to a Security Interest
Agreement executed June 10, 2008 (the “Second Security Interest
Agreement”) (the First Security Interest Agreement and the Second
Security Interest Agreement together the “Security Interest
Agreements”)

     

    WHEREAS,
the Company and the Holder are parties to an Amended and Restated Registration
Rights Agreement dated as of April 30, 2008 (the “RRA”);

     

    WHEREAS,
in connection with the repayment of the Note, the Company, IGI, LVKI and the
Holder are confirming the terminations of the 2005 Purchase Agreement and the
2005 Warrant, and terminating the 2006 Purchase Agreement (except for the
Surviving Provisions (as defined herein)), the Note, the Guarantee, the Security
Agreement and the Security Interest Agreements (all of the foregoing documents
collectively, the “Credit Documents”)
and the RRA (together with the Credit Documents, the “Existing
Agreements”), except to the extent otherwise expressly provided for
herein, on the terms and conditions set forth in this Agreement;
and

     

    WHEREAS, each of the
Company, IGI and LVKI, on the one hand, and Holder, on the other hand,
has agreed to release the other from all claims, rights and obligations
arising from or relating to the Existing Agreements.

     

    WITNESSETH

     

    NOW,
THEREFORE, in consideration of the terms and conditions contained in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound hereby, agree as follows:

     

    1. Capitalized
Terms.  Capitalized terms used and not otherwise defined herein
shall have the following meanings:

     

    “Affiliate” shall
mean, with respect to any Person, any other Person that directly or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with, such Person.  For purposes of this definition,
“control” of a Person means the power, directly or indirectly, to (a) vote five
percent (5%) or more of the equity capital having ordinary voting power for the
election of directors (or similar Persons) of such Person or (b) direct or cause
the direction of the management and policies of such Person whether by contract
or otherwise.

     

     

    
      
         

      

      
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    “Person” shall mean
individual, corporation, partnership, governmental or quasi-governmental agency,
authority, commission, board or other body, or other entity.

     

    “Trading Day” shall
mean a day on which Common Stock is traded on a Trading Market.

     

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

     

    2. Incorporation of Preliminary
Statements and Acknowledgement.  The recitals and preliminary
statements set forth above are hereby incorporated into this Agreement and made
a part hereof.  Without limiting the foregoing, the Company hereby
acknowledges that each of the 2006 Warrant and 2007 Warrant (together, the
“Warrants”)
shall remain in effect in accordance with their respective terms;

     

    3. Termination of Existing
Agreements.

     

    (a) The
Holder, in consideration of the mutual release set forth herein and expressly
subject to and conditioned upon receipt of the Outstanding Balance amount set
forth in Section
4 by wire transfer of immediately available funds, hereby confirms,
covenants and agrees that: 

     

    (i) The
Company, IGI and LVKI are hereby fully and completely discharged from all
liabilities, covenants and obligations under and pursuant to the Note and the
other Existing Agreements, except for (1) the Warrants and (2) sections 4.1,
4.3, 4.5, 4.7, 4.11 (provided that the only portion of Section 4.11 that will
survive as contemplated in this Section 3(a)(i) shall
be the obligation of the Company to indemnify in respect of any breach by the
Company after the Effective Date of any of the other surviving Provisions),
4.12, 5.7 and 5.9 of the 2006 Purchase Agreement (such sections, which shall
survive solely to the extent applicable to the 2006 Warrant and the shares of
Common Stock issuable upon exercise thereof, collectively, the “Surviving
Provisions”);

     

    (ii) all
liens, claims, mortgages, security interests and other encumbrances of any
nature (collectively, “Liens”) under the
Existing Agreements are hereby terminated and released;

     

    (iii) all of
the Holder’s rights, remedies, powers and privileges under and with respect to
all Existing Agreements (excluding the Warrants and the Surviving Provisions)
are hereby extinguished and terminated;

     

    (iv) each of
the Existing Agreements (except for the Warrants and the Surviving Provisions)
is hereby fully and completely terminated and is of no further force and effect,
except as and to the extent otherwise expressly set forth in Section
8;

     

    
      
         

      

      
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    (v) The
Holder shall (1) promptly return to the Company the original Note marked “VOID”
or “CANCELLED” or “PAID”; provided, that if the Note is not so marked upon its
return to the Company, the Company is hereby authorized to so mark the Note, and
(2) promptly execute and deliver to the Company (or its designees) any and all
necessary release documents, including without limitation, UCC-3 financing
statements and releases of Liens, to evidence the release and termination of the
Holder’s Liens on any assets of the Company, IGI, LVKI and any of their
respective Affiliates; and

     

    (vi) The
Holder irrevocably authorizes the Company to file or cause to be filed in any
jurisdiction any UCC-3 financing statements and terminations on behalf of the
Holder necessary to evidence the release and termination of the Holder’s Liens
on any assets of the Company, IGI, LVKI and any of their respective
Affiliates.

     

    (b) The
Holder waives any notice or other formality required under the Note and any of
the other Credit Document for the payoff of the Note and the termination of the
Existing Agreements as provided in this Agreement, and any rights or remedies
the Holder may have as a result of such payoff.

     

    (c) The
Company hereby acknowledges that the share certificate #2517 issued on February
14, 2008 for 300,000 shares of the Company’s Common Stock shall not be
terminated by this Agreement.

     

    4. Payoff of
Note.  The Holder hereby acknowledges and agrees that the
aggregate sum necessary to pay and satisfy in full all principal, interest,
fees, and any other amounts whatsoever owing under the Note and the other Credit
Documents (the “Outstanding Balance”)
is as follows as of the date of this Agreement:

     

    
      	
              Principal:

            	 	$	6,051,250.00	 
	
              Prepayment
      Penalty (20%):

            	 	$	1,210,250.00	 
	
              Interest:

            	 	$	357,022.00	 
	
              Outstanding
      Balance as of October 24, 2008:

            	 	$	7,618,522.00	 

    

     

    Outstanding
Balance shall increase by a per diem amount of $2,017.00 (the "Per Diem Interest")
for each day after October 24, 2008 until full payment of the Outstanding
Balance is made, to account for the continued accrual of interest.

     

    5. Certain Deliveries.
The Company has delivered to the Holder the following on the Effective
Date:

     

    (a) an
opinion of its legal counsel in form and substance satisfactory to Holder,
addressed to the Holder and the Company’s transfer agent, which opinion provides
that all securities currently held by the Holder, other than the Warrants and
the shares of Common Stock, issuable upon exercise of the Warrants (the “Shares”), are freely
tradable under Rule 144 (“Rule 144”)
promulgated under the Securities Act of 1933, as amended; and

     

     

    
      
         

      

      
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    (b) an
opinion of its legal counsel in form and substance satisfactory to Holder,
addressed to the Holder and the Company’s transfer agent, which opinion provides
that, assuming the Holder exercises the Warrants pursuant to the cashless
exercise provisions contained therein, the Shares shall be freely tradable under
Rule 144.

     

    6. Representations and
Warranties of the Company, IGI and LVKI.  The Company, IGI and
LVKI, jointly and severally, represent and warrant as of the date hereof to the
Holder, as follows:

     

    (a) Authorization;
Enforcement.  Each of the Company, IGI and LVKI has the
requisite corporate power and authority to enter into and to consummate the
transactions contemplated by this Agreement and otherwise to carry out its
obligations hereunder.  The execution and delivery of this Agreement
by each of the Company, IGI and LVKI and the consummation by each of them of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of the Company, IGI and LVKI, respectively, and no further
corporate action is required by the Company, IGI or LVKI, or any of their
respective boards of directors or stockholders in connection
therewith.  This Agreement has been duly executed by each of the
Company, IGI and LVKI and constitutes the valid and binding obligation of each
of the Company, IGI and LVKI enforceable against each of them in accordance with
its terms except (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies, and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law.

     

    (b) No
Conflicts.  The execution, delivery and performance of this
Agreement by each of the Company, IGI and LVKI and the consummation by each of
the Company, IGI and LVKI of the transactions contemplated hereby do not and
will not: (i) conflict with or violate any provision of any of their respective
certificates or articles of incorporation, bylaws or other organizational or
charter documents, or (ii) conflict with or result in a violation of any law,
rule, regulation, order, judgment, injunction, decree or other restriction of
any court or governmental authority to which the Company, IGI or LVGI is subject
(including federal and state securities laws and regulations), or by which any
property or asset of the Company, IGI or LVKI is bound or affected; except as
could not have or reasonably be expected to result in a material adverse effect
on the Company, IGI and LVGI, taken as a whole.

     

    (c) After
giving effect to the termination of the Existing Agreements as provided in this
Agreement, (i) the Warrants, the Surviving Provisions and this Agreement are the
only binding agreements (written or oral) of any nature that exist between the
Holder or any Affiliate of the Holder, on the one hand, and any of the Company,
IGI, LVKI or any Affiliate of the Company, IGI or LVKI, on the other hand, and
(ii) neither the Holder nor any Affiliate of Holder has any liability or
obligation, contingent or otherwise, to the Company, IGI or LVKI, or any of
their respective Affiliates of any nature (other than pursuant to the express
terms of the Warrants, the Surviving Provisions and this
Agreement).

     

    
      
         

      

      
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    7. Representations and
Warranties of the Holder. Holder represents and warrants as of the date
hereof to the Company, as follows:

     

    (a) Authority.  The
Holder has the requisite corporate power and authority to enter into and to
consummate the transactions contemplated by this Agreement and otherwise to
carry out its obligations hereunder.  The execution and delivery of
this Agreement by the Holder and the consummation by the Holder of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of the Holder, and no further corporate action is required by
the Holder, or its board of directors or equivalent governing body or
stockholders in connection therewith.  This Agreement has been duly
executed by the Holder and constitutes the valid and binding obligation of the
Holder enforceable against the Holder in accordance with its terms except (i) as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies, and (iii) insofar as indemnification and contribution provisions may
be limited by applicable law.

     

    (b) No
Conflicts.  The execution, delivery and performance of this
Agreement by the Holder and the consummation by the Holder of the transactions
contemplated hereby do not and will not: (i) conflict with or violate any
provision of the Holders’ certificate or articles of incorporation, bylaws or
other organizational or charter documents, or (ii) conflict with or result in a
violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which the Holder is
subject (including federal and state securities laws and regulations), or by
which any property or asset of the Holder is bound or affected; except as could
not have or reasonably be expected to result in a adverse effect on the
Holder.

     

    (c) After
giving effect to the termination of the Existing Agreements as provided in this
Agreement, (i) the Warrants, the Surviving Provisions and this Agreement are the
only binding agreements (written or oral) of any nature that exist between the
Holder or any Affiliate of the Holder, on the one hand, and any of the Company,
IGI, LVKI or any Affiliate of the Company, IGI or LVKI, on the other hand, and
(ii) neither the Company, IGI or LVKI, nor any of their respective Affiliates
has any liability or obligation, contingent or otherwise, to the Holder or any
of Affiliate of the Holder of any nature (other than pursuant to the express
terms of the Warrants, the Surviving Provisions and this
Agreement).

     

    8. Effect on 2006 Purchase
Agreement. Notwithstanding anything
contained in Section 3(a)(i)
and 3(a)(iv) to
the contrary, although all of the terms and provisions of the 2006 Purchase
Agreement other than the Surviving Provisions are being fully terminated
pursuant to this Agreement, the definitions that are contained in the 2006
Purchase Agreement and that are used to define capitalized terms contained in
but not otherwise defined in the 2006 Warrant shall survive the termination of
the terms and provisions (other than the Surviving Provisions) of the 2006
Purchase Agreement for the sole purpose of providing definitions for such
capitalized terms to the extent applicable.

     

     

    
      
         

      

      
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    9. Mutual
Release.

     

    (a) Holder
Release.

     

    (i) Effective
as of the receipt by Holder of the Outstanding Balance as contemplated herein,
the Holder, for itself and on behalf of its Affiliates, successors and assigns
(the “Holder Releasing
Parties”), hereby fully, unconditionally and irrevocably waives, releases
and forever discharges, acquits and holds harmless each of the Company, IGI,
LVKI and their respective Affiliates, successors and assigns (the “Company Released
Parties”) from any and all claims, causes of action, suits, charges,
demands, losses, costs, expenses (including attorneys’ fees and expenses),
obligations, liabilities and/or damages of every kind and nature whatsoever
(including under applicable law), whether now existing, known or unknown,
suspected or unsuspected, fixed or contingent, relating in any way, directly or
indirectly, to the Note, the other Existing Agreements, the Warrants and the
Surviving Provisions, that any of such the Holder Releasing Parties may now have
or may hereafter claim to have against any of the Company Released Parties, in
each case based in whole or in part upon any act or omission, transaction,
agreement, event or other occurrence taking place on or before the date hereof
(collectively, the “Holder Released
Claims”); excluding, however, the obligations of the Company arising from
and relating to the period after the date hereof under the Warrants and the
Surviving Provisions, which remain outstanding and in full force and effect in
accordance with and subject to their respective terms.

     

    (ii) The
Holder further covenants and agrees to never assert, commence or join in the
pursuit of, or to encourage or solicit the assertion, commencement or pursuit of
any Holder Released Claim against any Company Released Party in any sort of
proceeding before any governmental body or any arbitrator of any
nature.  If any governmental body or arbitrator of any nature assumes
jurisdiction over any proceeding against any Company Released Party on behalf of
a Holder Releasing Party, such party will promptly after becoming aware of same
request that such governmental body or arbitrator withdraw from or dismiss with
prejudice any such proceeding.

     

    (iii) The
Holder represents and warrants that (1) no Holder Releasing Party has commenced
any proceeding against any of the Company Released Parties with respect to any
Holder Released Claims, (2) it has agreed to this release knowingly and
voluntarily and in the total absence of any fraud, mistake, duress, coercion
and/or undue influence, (3) Holder is the sole lawful owner of the Holder
Released Claims, and (4) Holder has not assigned, conveyed or otherwise
transferred any Holder Released Claims, or any interest therein, to any other
person or entity.

     

     

    
      
         

      

      
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    (b) Company
Release.

     

    (i) Effective
as of the payment of the Outstanding Balance, each of Company, IGI and LVKI, for
itself and on behalf of its respective Affiliates, successors and assigns (the
“Company Releasing
Parties”), hereby fully, unconditionally and irrevocably waives, releases
and forever discharges, acquits and holds harmless the Holder and its
Affiliates, successors and assigns (the “Holder Released
Parties”) from any and all claims, causes of action, suits, charges,
demands, losses, costs, expenses (including attorneys’ fees and expenses),
obligations, liabilities and/or damages of every kind and nature whatsoever
(including under applicable law), whether now existing, known or unknown,
suspected or unsuspected, fixed or contingent, relating in any way, directly or
indirectly, to the Note, the other Existing Agreements, the Warrants and the
Surviving Provisions that any of such Company Releasing Parties may now have or
may hereafter claim to have against any of the Holder Released Parties, in each
case based in whole or in part upon any act or omission, transaction, agreement,
event or other occurrence taking place on or before the date hereof
(collectively, the “Company Released
Claims”); excluding, however, any obligations of the Holder arising from
and relating to the period after the date hereof under the Warrants and the
Surviving Provisions, which remain outstanding and in full force and effect in
accordance with and subject to their respective terms.

     

    (ii) Each of
the Company, IGI and LVKI further covenants and agrees to never assert, commence
or join in the pursuit of, or to encourage or solicit the assertion,
commencement or pursuit of any Company Released Claim against any the Holder
Released Party in any sort of proceeding before any governmental body or any
arbitrator of any nature.  If any governmental body or arbitrator of
any nature assumes jurisdiction over any proceeding against any Holder Released
Party on behalf of an Company Releasing Party, such party will promptly after
becoming aware of same request that such governmental body or arbitrator
withdraw from or dismiss with prejudice any such proceeding.

     

    (iii) Each of
the Company, IGI and LVKI represents that it (1) has not commenced any
proceeding against any of the Holder Released Parties with respect to the
Company Released Claims, (2) has agreed to this release knowingly and
voluntarily and in the total absence of any fraud, mistake, duress, coercion
and/or undue influence, (3) is the sole lawful owner of its Company Released
Claims, and (4) has not assigned, conveyed or otherwise transferred any Company
Released Claims, or any interest therein, to any other person or
entity.

     

    (c) It is the
intention of all parties that the foregoing releases be construed broadly as a
total and unconditional release and covenant by each party hereto never to
assert any Holder Released Claim or Company Released Claim, as
applicable.

     

    10. Expenses.  Each
party shall pay the fees and expenses of its advisers, counsel, accountants and
other experts, if any, and all other expenses incurred by such party incident to
the negotiation, preparation, execution, delivery and performance of this
Agreement.

     

    
      
         

      

      
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    11. Amendments and
Waivers. The provisions of this Agreement, including the provisions of
this sentence, may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
same shall be in writing and signed by the Company and the Holder.

     

    12. Notices. Any and all
notices or other communications or deliveries required or permitted to be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (a) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number set forth on the signature
pages attached hereto prior to 5:30 p.m. (New York City time) on a Trading Day,
(b) the next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth on
the signature pages attached hereto on a day that is not a Trading Day or later
than 5:30 p.m. (New York City time) on any Trading Day, (c) the second Trading
Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (d) upon actual receipt by the party to whom such
notice is required to be given.  The address for such notices and
communications shall be as set forth on the signature pages attached
hereto.

     

    13. Successors and
Assigns. The rights, obligations and duties of the parties hereunder
shall be personal and not assignable, transferable or delegable in any manner
whatsoever.  Without limiting the foregoing, this Agreement shall
inure to the benefit of and be binding upon the successors and permitted assigns
of each of the parties hereto.  Nothing expressed or referred to in
this Agreement will be construed to give any person or entity other than the
parties to this Agreement, the Company Released Parties and the Holder Released
Parties any legal or equitable right, remedy, or claim under or with respect to
this Agreement or any provision of this Agreement.  This Agreement and
all of its provisions and conditions are for the sole and exclusive benefit of
the parties to this Agreement, their respective successors and permitted
assigns, the Company Released Parties and the Holder Released
Parties.

     

    14. Execution and
Counterparts. This Agreement 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.

     

    15. Specific
Performance.  The parties hereby acknowledge and agree that the
failure of any party to perform its agreements and covenants hereunder will
cause irreparable injury to the other parties for which damages, even if
available, will not be an adequate remedy.  Accordingly, each party
hereby consents to the issuance of injunctive relief by any court of competent
jurisdiction to compel performance of such party’s obligations and to the
granting by any court of the remedy of specific performance of its obligations
hereunder.  Unless otherwise expressly stated in this Agreement, no
right or remedy described or provided in this Agreement is intended to be
exclusive or to preclude a party from pursuing other rights and remedies to the
extent available under this Agreement, at law or in equity.

     

     

    
      
         

      

      
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    16. Governing
Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of New York pertaining to agreements to be
delivered and wholly performed within said State.

     

    17. Severability. If any
term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their commercially reasonable
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

     

    18. Headings. The
headings in this Agreement are for convenience only, do not constitute a part of
the Agreement and shall not be deemed to limit or affect any of the provisions
hereof.

     

    19. Usage.  Whenever
the plural form of a word is used in this Agreement, that word will include the
singular form of that word.  Whenever the singular form of a word is
used in this Agreement, that word will include the plural form of that
word.  The term “or” will not be interpreted as excluding any of the
items described.  The term “include” or any derivative of such term
does not mean that the items following such term are the only types of such
items.

     

    20. Merger.  This
Agreement constitutes the final agreement between the parties.  It is
the complete and exclusive expression of the parties’ agreement on the matters
contained herein.  All prior and contemporaneous negotiations and
agreements between the parties on the matters contained in the Agreement are
expressly merged into and superseded by this Agreement.

     

    21. Filing of Form
8-K.  On or before 9:30 am (NY time) on the fourth Trading Day
immediately following the date hereof, the Company shall file the Current Report
on Form 8-K attached hereto as Exhibit A; provided,
that any delay or failure by the Company to file such Form 8-K due to the acts
or omissions of any third party or due to events or circumstances, in each case
beyond the control of the Company, shall not constitute a breach of this Section
21.  In addition, compliance by the Company with this Section
21 shall not be a condition to, or otherwise limit or impair in any manner
whatsoever, the effectiveness of any provision of this Agreement, including
Section
9.

     

     

    [SIGNATURE
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        10 of
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    IN
WITNESS WHEREOF, the parties hereto have caused this Agreement 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

    

    

     

    IMAGINEERING
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

    

    

     

    LAS
VEGAS KENO, 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
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    IN WITNESS WHEREOF, the undersigned
have caused this Agreement 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

    

     

    
      
         

      

      
        12 of
12ex102.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]

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    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

    

     

    

     

    
      
         

      

      
        6

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