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
by
and between
LAS
VEGAS GAMING, INC.,
LAS
VEGAS GAMING ACQUISITION CORP.
and
▇▇▇▇▇▇
NETWORK HOLDINGS INC
and
▇▇▇▇▇▇
MEDIA LLC, ▇▇▇▇▇▇ NETWORK LLC,
FREEVIEW
NETWORK LLC, ▇▇▇ ▇▇▇▇▇▇▇
and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
EXHIBITS
Exhibit
A Technology
Exhibit
B Existing
Technology Licenses
Exhibit
C Partial
List of Company Assets
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 ▇▇▇▇▇▇ Network Holdings Inc, a Georgia corporation (“▇▇▇▇▇▇” or the “Transferor” as
defined in Section 1.01) and ▇▇▇▇▇▇ Media LLC, a Georgia limited liability
company, ▇▇▇▇▇▇ Network LLC, a Georgia limited liability company, and Freeview
Network LLC, a Georgia limited liability company, ▇▇▇ ▇▇▇▇▇▇▇, an individual
residing in Nevada, and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, 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:
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A.
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WHEREAS
LVGAC and LVGI are entering into this Agreement to acquire the Acquired
Assets (as defined in Section 2.01
below);
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B.
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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 ▇▇▇▇▇▇ 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);
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C.
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WHEREAS
the Acquired Assets are free from any Liens or Encumbrances, and ▇▇▇▇▇▇
and the Additional Parties are authorized to enter into this Asset
Acquisition Agreement;
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D.
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WHEREAS
LVGAC shall not assume, and ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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;
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E.
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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, ▇▇▇▇▇▇, 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 ▇▇▇▇▇▇ Media LLC, a Georgia limited liability company, ▇▇▇▇▇▇ Network LLC,
a Georgia limited liability company, and Freeview Network LLC, a Georgia limited
liability company, ▇▇▇ ▇▇▇▇▇▇▇, an individual residing in Nevada,
and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, an individual residing in Texas.
“▇▇▇▇▇▇” or “Transferor” means
▇▇▇▇▇▇ NETWORK HOLDINGS INC, a Georgia corporation.
“▇▇▇▇▇▇ 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.
▇▇▇▇▇▇ 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 ▇▇▇▇▇▇
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 (“▇▇▇▇▇▇
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 ▇▇▇▇▇▇ Network Holdings Inc and
▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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) ▇▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Gaming,
Inc., et al. Case No: A571641 filed in the Eight Judicial District Court,
▇▇▇▇▇ 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 ▇▇▇▇▇ County, Nevada and the
parties consent to be subject to personal jurisdiction in any local, state or
federal court located in ▇▇▇▇▇ 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/ ▇▇▇
▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇, President and CEO
LVGAC:
LAS VEGAS GAMING ACQUISITION
CORP., a Nevada Corporation
By:
/s/ ▇▇▇
▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇, President
TRANSFEROR:
▇▇▇▇▇▇ NETWORK HOLDINGS
INC, a Georgia corporation
By:
/s/ ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇, CEO
|
ADDITIONAL
PARTIES:
▇▇▇▇▇▇ MEDIA, LLC, a
Georgia limited liability company
By:
/s/ ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇, CEO
▇▇▇▇▇▇ NETWORK, LLC, a
Georgia limited liability company
By:
/s/ ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇, CEO
FREEVIEW NETWORK, LLC, a
Georgia limited liability company
By:
/s/ ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇, CEO
/s/
▇▇▇
▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇,
individually
/s/
▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
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 ▇▇▇▇▇▇ Network management and
delivery software currently located at ▇▇▇.▇▇▇▇▇▇▇.▇▇▇ and one of the P3-600
/256MEG/250GIGHD Dell server box
4.
Design and all associated drawings and electronic files for the
▇▇▇▇▇-1000, ▇▇▇▇▇-2000 and 5000 hardware designs
5.
Source code and executables for the embedded application running on the
▇▇▇▇▇-1000 and ▇▇▇▇▇-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 ▇▇▇▇▇▇
Network LLC and ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Media
LLC and ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Network
LLC and ▇▇▇▇▇▇ Media LLC (title chain clean-up – original agreement for “At Home
Wagering” should have been with ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Media LLC (joining of Freeview Network LLC and ▇▇▇▇▇▇
Media LLC entities into one entity), a copy of which is attached
hereto;
6. The
“License Agreement” dated October 21, 2004 between ▇▇▇▇▇▇ Network LLC and ▇▇▇▇▇▇
Media LLC (residential arena license), a copy of which is attached
hereto;
7. The
“License Agreement” dated October 8, 2004 between ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Gaming Inc and
▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Network management and delivery
software currently located at ▇▇▇.▇▇▇▇▇▇▇.▇▇▇ and
one of the P3-600/256MEG/250GIGHD Dell server box
3. Design
and all associated drawings and electronic files for ▇▇▇▇▇-1000 and ▇▇▇▇▇-2000
hardware design
4. Source
code and executables for embedded application running on the ▇▇▇▇▇-1000 and
▇▇▇▇▇-2000 hardware designs
5. The
following Domain Names:
|
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
|
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
|
|
▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
|
▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
|
|
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
|
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
|
|
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
|
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
|
|
▇▇▇▇▇▇▇▇▇▇.▇▇▇
|
▇▇▇▇▇▇.▇▇
|
|
▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
|
▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇
|
|
▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
|
▇▇▇▇▇▇▇.▇▇
|
|
▇▇▇▇▇▇▇.▇▇▇
|
▇▇▇▇▇▇▇▇.▇▇▇
|
|
▇▇▇▇▇▇▇▇.▇▇▇
|
6. Software
and Web Sites.
(a) Website
design and HTML code located at ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
7. Trade
Names / Marks.
(a) Logo
of ▇▇▇▇▇▇ Network, LLC
8. Contracts. None
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9.
Equipment
(a) SAMITs
6V
Masters
9
6V
▇▇▇▇▇▇
▇▇
▇▇
▇▇▇▇▇▇
▇▇
▇▇
▇▇▇▇▇▇▇▇
12
Broken
3
(b) 5000
Design 6
prototypes
(b) Miscellaneous
Computers, Monitors. Test Equipment and Software
10. Other
Assets. None
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