AGREEMENT AND PLAN OF MERGER among LAS VEGAS GAMING, INC. LAS VEGAS GAMING MERGER SUB, INC. ADLINE GAMING INC. and
among
LAS
VEGAS GAMING, INC.
"LVGI"
LAS
VEGAS GAMING MERGER SUB, INC.
"LVMS"
XXXXXX
GAMING INC.
"AGI"
and
XXXXXX
NETWORK, LLC
"Shareholder"
Page
1
THIS
AGREEMENT AND PLAN OF MERGER (the
"Agreement") is made and entered into this 14th day of January, 2005, by and
among LAS VEGAS GAMING, INC., a Nevada corporation ("LVGI"), LAS VEGAS GAMING
MERGER SUB, INC., a Nevada corporation ("LVMS"), XXXXXX GAMING INC., a Georgia
corporation (“AGI”) and XXXXXX NETWORK, LLC, a Georgia Limited Liability
Company, the sole shareholder of AGI ("Shareholder").
R E C I T AL S:
WHEREAS, the
parties believe that a business combination between AGI and the LVMS is in the
best interest of the parties to this Agreement and their respective
shareholders; and
WHEREAS, the
respective Boards of Directors of LVGI, LVMS, and AGI have, and Shareholder has,
approved the merger of AGI with and into LVMS upon the terms and conditions set
forth in this Agreement; and
WHEREAS,
each
party hereto wishes to adopt this Agreement together with the form of
Certificate of Merger attached hereto as Exhibit
B (the
“Certificate of Merger”) as a “plan of reorganization” within the meaning of
Section 368(a) of the Internal Revenue Code of 1986 (the “Code”), and to cause
this merger to qualify as a reorganization under the provision of Section
368(a)(1)(A) of the Code, whereby each share of capital stock of AGI (the “AGI
Common Stock”) will be canceled and whereby LVMS will be the surviving entity of
a merger with AGI;
NOW,
THEREFORE, in
consideration of the premises and mutual covenants 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:
ARTICLE I. THE
MERGER
1.1 The
Merger. At the
Effective Time (as defined in Section 1.3 hereof) and subject to and upon the
terms and conditions of this Agreement, AGI will be merged with and into LVMS
(the "Merger"). Following the Merger, LVMS will continue as the surviving entity
under the name "LAS VEGAS GAMING MERGER SUB, INC." and the separate corporate
existence of AGI will cease. (LVMS and AGI are sometimes referred to
collectively herein as the “Constituent Companies”).
Page
2
1.2 Effects
of the Merger. At the
Effective Time, LVMS will be a wholly owned subsidiary of LVGI. At the Effective
Time, LVMS will, without any other action, possess all the rights, privileges,
powers and franchises, of a public as well as of a private nature, and be
subject to all the restrictions, disabilities and duties of each of the
Constituent Companies; and all rights, privileges, powers and franchises of each
of the Constituent Companies, and all property, real, personal and mixed, and
all debts due to either of the Constituent Companies on whatever account, will
be vested in LVMS; and all property, rights, privileges, powers and franchises,
and all and every other interest will be thereafter the property of LVMS as they
were of the Constituent Companies, and the title to any real estate vested by
deed or otherwise in the Constituent Companies will not revert or be in any way
impaired by reason of the Merger; but all rights of creditors and all liens upon
any property of either of the Constituent Companies will be preserved
unimpaired, and all debts, liabilities and duties of either of the Constituent
Companies will thenceforth attach to LVMS, and may be enforced against it to the
same extent as if said debts, liabilities and duties had been incurred or
contracted by it.
1.3 Closing;
Effective Time and Merger Effective Date. The
closing of the Merger (the “Closing”) will take place on February 11, 2005 (the
“Closing Date”) at the offices of Cane Xxxxx LLP. The Merger will become
effective at the time of the filing of the Certificate of Merger with the
Secretary of State of Nevada in accordance with the provisions of applicable
law, which Certificate of Merger will also be filed with the Secretary of State
of Georgia along with the Secretary of State of Nevada as soon as practicable
after the Closing. The date and time when the Merger will become effective shall
be at such time as the Certificate of Merger is duly filed with the Secretary of
State of Nevada and the Secretary of State of Georgia or such later date as
mutually agreeable to the Constituent Companies and specified in the Certificate
of Merger (the “Effective Time”).
1.4 Directors
and Officers. The
officers and directors of LVMS immediately prior to the Effective Time will,
after the Effective Time, continue to be the officers and directors of LVMS
without change, until their successors have been duly elected and qualified in
accordance with the Articles of Incorporation and Bylaws of LVMS.
ARTICLE
II. STATUS
AND CONVERSION OF SECURITIES;
MERGER CONSIDERATION
2.1 Conversion
of Securities.
(a) At the
Effective Time, all then outstanding shares of AGI Common Stock
shall be
converted into and shall thereafter represent solely the right to
receive:
(i) 400,000
shares of LVGI
Common Stock (the “Shares”);
and
Page
3
(ii) $500,000
cash paid on or before February 11th, 2005
(the “Cash”); and
(iii) Warrants
to purchase 100,000 shares of LVGI Common Stock at a price of $4 per share
exercisable within 5 years of the Closing Date (the “Warrants”).
Collectively,
the Shares, Cash and Warrants described in Sections 2.1(a)(i) and (ii), above,
are hereinafter referred to as the “Merger Consideration.” Upon delivery of the
Merger Consideration, all then outstanding AGI Common Stock shall automatically
be canceled, retired, and extinguished.
(b) Each
share of AGI Common Stock held by AGI including shares held as treasury stock
shall be canceled and no further consideration shall be delivered in exchange
therefore; and
(c) Each
share of Common Stock of LVMS issued and outstanding immediately prior to the
Merger shall continue unchanged and shall continue to evidence one share of
Common Stock of the Surviving Corporation.
2.2 Delivery
of Merger Consideration. LVGI
shall deliver the Shares and Warrants of the Merger Consideration to Shareholder
at the Closing. By accepting delivery of the Merger Consideration, Shareholder
will be deemed to have represented to LVGI that Shareholder has no present
intention of selling or otherwise disposing of any of its interest in the LVGI
Common Stock received as part of the Merger Consideration, except as
contemplated under the registration rights granted in Section 9.1 of this
Agreement. Shareholder will also sign an Investment Letter representing its
intent as provided by Appendix A. All shares of LVGI Common Stock issued upon
the surrender for exchange of the AGI Common Stock in accordance with the terms
of this Article II shall be deemed to have been issued (and paid) in full
satisfaction of all rights pertaining to AGI Common Stock theretofore
represented by such certificates, and there shall be no further registration or
transfer of the shares of AGI Common Stock after the Effective Time.
2.3 Securities
Exemptions. LVGI
hereby represents, warrants and covenants that all the shares of LVGI Common
Stock comprising the Merger Consideration will be issued pursuant to an
exemption from registration provided by Section 4(2) of the Securities Act of
1933, as amended (the “Securities Act”). Each share certificate representing the
LVGI Common Stock so issued will be endorsed with a legend stating that the
shares have been issued pursuant to an exemption from registration provided by
the Securities Act and may not be sold without an exemption from registration or
an effective registration statement.
Page
4
ARTICLE
III.
REPRESENTATIONS AND WARRANTIES OF AGI
As an
inducement to the other parties hereto to enter into this Agreement and to
consummate the Merger, AGI and Shareholder represent and warrant to LVGI and
LVMS, which representations and warranties will be true and correct at Closing,
as follows:
3.1 Organization
and Authority. AGI is
a corporation duly organized, validly existing and in good standing in the State
of Georgia, and is duly qualified to do business as foreign corporation in each
jurisdiction in which the failure to be so qualified would have a material
adverse affect on AGI. Since the date of its incorporation, AGI has consistently
observed and operated within the corporate formalities of the jurisdiction in
which it is incorporated, and has consistently observed and complied with the
corporation law of such jurisdiction. AGI has the full right, power and
authority to execute, deliver and carry out the terms of this Agreement and all
documents and agreements necessary to give effect to the provisions of this
Agreement. This Agreement and all other such agreements and documents executed
in connection herewith by AGI, upon due execution and delivery thereof, will
constitute the valid and binding obligations of AGI, enforceable in accordance
with their respective terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization or similar laws effecting creditors’ rights generally
and by general principles of equity (the “Insolvency/Equity Exceptions”).
3.2 Capitalization. The
authorized capital stock of AGI consists of 100,000,000 shares of common stock,
no par value. There are currently 4,000,000 shares of AGI Common Stock issued
and outstanding and held by the Shareholder, which represents all of the AGI
securities (including options, warrants and other types of securities) issued
and outstanding as of the Closing Date. All outstanding shares of AGI Common
Stock have been issued in accordance with all applicable federal and state
securities laws. AGI does not have any outstanding subscriptions, options,
preferred stock, rights, warrants, convertible securities or other agreements or
commitments to issue, or contracts or any other agreements obligating AGI to
issue, or to transfer from treasury, any shares of its capital stock or
membership interests, as applicable, of any class or kind, or securities
convertible into such stock or interests. No persons who are now holders of AGI
Common Stock, and no persons who previously were holders of AGI Common Stock,
are or ever were entitled to exercise preemptive rights other than persons who
exercised or waived those rights. Neither AGI nor any of its affiliates, is
under any obligation, contract or other arrangement to register (or maintain the
registration of) any of its or their securities under federal or state
securities laws. Neither AGI nor Shareholder is a party to any agreement, voting
trust, proxy or other agreement or understanding of any character, whether
written or oral, with respect to or concerning the purchase, sale or transfer or
voting of AGI Stock or any other security of AGI. Neither AGI nor Shareholder
has any legal obligations, absolute or contingent, to any other person or entity
to sell the assets other than in the ordinary course of business, or any capital
stock or any other security of AGI or any of its
Page
5
subsidiaries
or affect any merger, consolidation or other reorganization of AGI or any of its
subsidiaries or to enter into any agreement with respect thereto.
3.3 Subsidiaries. AGI
does not have any subsidiaries (whether held directly or indirectly) or any
equity investment in any corporation, partnership, joint venture or other
business.
3.4 Real
Estate. AGI
does not own any real estate or any interest in any real estate, other than
leasehold interests.
3.5 Authority
Relative to this Agreement; Enforceability. Neither
Shareholder nor AGI are suffering from any legal disability which would: (a)
prevent them from executing, delivering or performing their obligations under
this Agreement or consummating the Merger, (b) make such execution, delivery,
performance or consummation voidable or subject to necessary ratification, and
(c) require the signature or consent of any third party in connection therewith
for the Merger to be binding and enforceable against Shareholder and its
property. This Agreement and all related ancillary agreements have been duly and
validly executed and delivered by Shareholder and each constitutes the legal,
valid and binding obligation of Shareholder, enforceable against it in
accordance with their respective terms, except insofar as the enforcement
thereof may be limited by the Insolvency/Equity Exceptions.
3.6 Title
to Assets. AGI has
good and marketable title free and clear of any encumbrance in and to all of its
assets and properties, other than purchase money security interests and liens
for taxes not yet due and payable.
3.7 Material
Contracts. Except
as disclosed in writing to LVMS, AGI is not a party to or bound by any agreement
or contract, other than contracts or agreements arising in the ordinary course
of business.
3.8 Litigation. There
are no legal, administrative, arbitration or other proceedings or claims pending
against AGI, nor is AGI subject to any existing judgment which might affect the
financial condition, business, property or prospects of AGI; nor has AGI
received any inquiry from an agency of the federal or of any state or local
government about the Merger, or about any violation or possible violation of any
law, regulation or ordinance affecting its business or assets.
3.9 Taxes. AGI
either: (a) has timely filed with the appropriate taxing authority all tax and
information returns required to have been filed by AGI, or (b) has timely filed
for any required extensions with regard to such returns. All taxes of AGI have
been paid (or estimated taxes have been deposited) to the extent such payments
are required prior to the date hereof or accrued on the books of AGI. The
returns were correct when filed. There are no pending investigations of AGI
concerning any tax returns by any federal, state or local taxing authority, and
there are no federal, state, local or foreign tax liens upon any of AGI’s
assets.
Page
6
3.10 Compliance
with Law and Government Regulations. AGI has
complied in all material respects with, and is not in substantial violation of,
applicable federal, state, local or foreign statutes, laws and regulations
(including without limitation, any applicable environmental, building, zoning or
other law, ordinance or regulation) affecting AGI or its properties or the
operation of its business. AGI is not subject to any order, decree, judgment or
other sanction of any court, administrative agency or other
tribunal.
3.11 Full
Disclosure. None of
the representations and warranties made by the Shareholder herein, or in any
ancillary agreement furnished or to be furnished by Shareholder hereunder
contain or will contain as of the closing date any untrue statement of material
fact, or omits any material fact, the omission of which would be
misleading.
3.12 Absence
of Default. The
execution, delivery, and performance of each of this Agreement and each other
agreement and document executed in connection herewith by AGI, and the
consummation of the transactions contemplated hereby and thereby will not result
in any violation of the terms of, and will not contravene, conflict with,
accelerate the performance of the obligations required under, or constitute a
default under, the Articles of Incorporation and Bylaws of AGI, or any
agreement, judgment, decree, order, law, rule, or regulation or other
restriction applicable to it, or to which it is a party or by which it or its
properties or assets is bound, or result in the creation of any mortgage,
pledge, lien, encumbrance, or charge upon any of its properties or assets. All
consents, qualifications, orders, approvals, or authorizations of, or filings
with, any governmental or regulatory authority, or any third party, required in
connection with the valid execution, delivery, or performance of this Agreement
and each other agreement and document executed in connection herewith by AGI or
the consummation by AGI of the transactions contemplated hereby or thereby have
been duly obtained.
3.13 Broker's
or Finder's Fee. Neither
Shareholder nor AGI has employed, nor is liable for the payment of any fee to,
any finder, broker or similar person in connection with the transactions
contemplated under this Agreement.
ARTICLE
IV.
REPRESENTATIONS AND WARRANTIES OF LVGI
AND LVMS
As an
inducement to the other parties hereto to enter into this Agreement and to
consummate the Merger, and as an inducement to Shareholder to approve of and
consummate the Merger, LVGI hereby represents and warrants to each such party,
which representations and warranties will be true and correct at Closing, as
follows.
4.1 Organization
and Authority. Each of
LVGI and LVMS is a corporation duly organized, validly existing and in good
standing in the State of Nevada, and each is duly
Page
7
qualified
to do business as foreign corporation in each jurisdiction in which the failure
to be so qualified would have a material adverse affect on either. Since the
date of its incorporation, each of LVGI and LVMS has consistently observed and
operated within the corporate formalities of the jurisdiction in which it is
incorporated, and has consistently observed and complied with the corporation
law of such jurisdiction. Each of LVGI and LVMS has the full right, power and
authority to execute, deliver and carry out the terms of this Agreement and all
documents and agreements necessary to give effect to the provisions of this
Agreement. This Agreement and all other such agreements and documents executed
in connection herewith by LVGI and LVMS, upon due execution and delivery
thereof, will constitute the valid and binding obligations of LVGI and LVMS,
enforceable in accordance with their respective terms, except as enforcement may
by Insolvency/Equity Exceptions.
4.2 Capitalization. The
authorized capital stock of LVGI consists of 25,000,000 shares of common stock,
par value $.001 of which 6,807,955 shares are outstanding and 5,000,000 shares
of Preferred Stock par value of $.001 of which 541,400 shares are Series A
Convertible Preferred Stock, of which 346,140 shares are Series B Convertible
Preferred Stock, of which 76,000 are Series C Convertible Preferred Stock.
3,447,589 shares of LVGI Common Stock are reserved for issuance upon exercise of
all outstanding options, warrants, and rights. All outstanding securities of
LVGI are fully paid and nonassessable and have been issued in accordance with
all applicable federal and state securities laws. Upon issuance pursuant to this
Agreement, the shares of LVGI Common Stock issued as a part of the Merger
Consideration will be fully paid and nonasseable and free from all taxes, liens,
and charges with respect to the issue thereof. Except as disclosed in writing to
Shareholder, neither LVGI nor any subsidiary has any obligation (contingent or
other) to purchase, redeem, or otherwise acquire any of its capital stock or any
interests therein or to pay any dividend or make any other distribution in
respect thereof. No
persons who are now holders of LVGI capital stock are, and no persons who
previously were holders of LVGI capital stock were, entitled to exercise
preemptive rights other than persons who exercised or waived those rights.
Except as disclosed in writing to Shareholder, neither LVGI nor any of its
affiliates, is under any obligation, contract or other arrangement to register
(or maintain the registration of) any of its or their securities under federal
or state securities laws. There is no shareholder agreement, voting trust, proxy
or other agreement or understanding of any character, whether written or oral,
with respect to, or concerning, the purchase, sale or transfer or voting of LVGI
capital stock. Neither LVGI nor any of its subsidiaries has any legal
obligations, absolute or contingent, to any other person or entity to sell
assets other than in the ordinary course of business, or any capital stock or
any other security of LVGI or any of its subsidiaries or to affect any merger,
consolidation or other reorganization of LVGI or any of its subsidiaries or to
enter into any agreement with respect thereto.
4.3 Subsidiaries. Except
for Imagineering Gaming, Inc., and Las Vegas Gaming - Panama, LVGI does not have
any subsidiaries (whether held directly or indirectly) or any equity investment
in any corporation, partnership, joint venture or other
Page
8
business.
4.4 Real
Estate. LVMS
and LVGI do not own any real estate or any interest in any real estate, other
than leasehold interests.
4.5 Authority
Relative to this Agreement; Enforceability. Neither
LVGI nor LVMS suffers from any legal disability which would: (a) prevent them
from executing, delivering or performing their obligations under this Agreement
or consummating the Merger, (b) make such execution, delivery, performance or
consummation voidable or subject to necessary ratification, and (c) require the
signature or consent of any third party in connection therewith for the Merger
to be binding and enforceable against LVGI and LVMS. This Agreement and all
related ancillary agreements have been duly and validly executed and delivered
by each of LVGI and LVMS and each constitutes the legal, valid and binding
obligation of the LVGI and LVMS, enforceable against them in accordance with
their respective terms, except insofar as the enforcement thereof may be limited
by the Insolvency/Equity Exceptions.
4.6 Title
to Assets. Each of
LVGI and LVMS has good and marketable title free and clear of any encumbrance in
and to all of its assets and properties, other than purchase money security
interests and liens for taxes not yet due and payable.
4.7 Material
Contracts. Neither
LVGI nor LVMS is a party to, or bound by, any agreement or contract, other than
contracts or agreements arising in the ordinary course of business or previously
disclosed to shareholder.
4.8 Litigation. There
are no legal, administrative, arbitration or other proceedings or claims pending
against either LVGI or LVMS, nor is either LVGI or LVMS subject to any existing
judgment which might adversely affect the financial condition, business,
property or prospects of either LVGI or LVMS; nor has either LVGI or LVMS
received any inquiry from an agency of the federal or of any state or local
government about the Merger, or about any violation or possible violation of any
law, regulation or ordinance affecting their respective business or
assets.
4.9 SEC
Documents. LVGI
has timely filed all reports, schedules, forms, statements, and other documents
required to be filed by it with the SEC pursuant to the reporting requirements
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the
Securities Act of 1933, as amended (the “Securities Act”) and the rules and
regulations promulgated pursuant thereto (all of the foregoing filed prior to
the date hereof and all exhibits included therein and financial statements and
schedules thereto and documents incorporated by reference therein, being
hereinafter referred to as the “SEC Documents”). LVGI has
made available to Shareholder true and complete copies of the SEC Documents. As
of their respective dates, the SEC Documents complied in all material respects
with the requirements of the Securities Act, or the Exchange Act, as the case
may be, and the rules and regulations of the SEC thereunder applicable to such
SEC Documents, and none of the SEC Documents
Page
9
contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. LVGI has
provided Shareholder with a copy of an SEC comment letter regarding various
accounting and other issues relating to LVGI’s most recent 10KSB, and
Shareholder is aware that LVGI is in the process of responding to this comment
letter and is likely as a result to amend its 10KSB in the process. This comment
letter and any modifications to LVGI’s 10KSB that result shall be excluded from
any representation or warranty given under this section or elsewhere in this
agreement. Since the date of the most recent SEC Document, there has been no
material adverse change and no material adverse development in the business,
properties, operations, financial condition, results of operations, or prospects
of LVGI or its subsidiaries. LVGI has not taken any steps, and does not
currently expect to take any steps, to seek protection pursuant to any
bankruptcy law nor does LVGI have any knowledge that its creditors or the
creditors of its subsidiaries intend to initiate involuntary bankruptcy
proceedings.
4.10 Taxes. Each of
LVGI and LVMS either: (a) has timely filed with the appropriate taxing authority
all tax and information returns required to have been filed by either or (b) has
timely filed for any required extensions with regard to such returns. All taxes
of each of LVGI and LVMS have been paid (or estimated taxes have been deposited)
to the extent such payments are required prior to the date hereof or accrued on
the books of either. The returns were correct when filed. There are no pending
investigations of either LVGI or LVMS concerning any tax returns by any federal,
state or local taxing authority, and there are no federal, state, local or
foreign tax liens upon any of their respective assets.
4.11 Compliance
with Law and Government Regulations. Each of
LVGI and LVMS has complied in all material respects with, and is not in
substantial violation of, applicable federal, state, local or foreign statutes,
laws and regulations (including without limitation, any applicable
environmental, building, zoning or other law, ordinance or regulation) affecting
either or their respective properties or the operation of their respective
businesses. Neither LVGI nor LVMS is subject to any order, decree, judgment or
other sanction of any court, administrative agency or other
tribunal.
4.12 Full
Disclosure. None of
the representations and warranties made by the LVGI and LVMS herein, or in any
ancillary agreement furnished or to be furnished either hereunder contains or
will contain as of the Closing Date any untrue statement of material fact, or
omits any material fact, the omission of which would be misleading.
4.13 Absence
of Default. The
execution, delivery, and performance of each of this Agreement and each other
agreement and document executed in connection herewith by LVGI and LVMS, and the
consummation of the transactions contemplated hereby and thereby will not result
in any violation of the terms of, and will not contravene, conflict with,
accelerate the performance of the obligations required under, or constitute a
default under, the Articles of Incorporation or Bylaws of LVGI and LVMS, or
Page
10
any
agreement, judgment, decree, order, law, rule, or regulation or other
restriction applicable to it, or to which it is a party or by which it or its
properties or assets is bound, or result in the creation of any mortgage,
pledge, lien, encumbrance, or charge upon any of the properties or assets of
either LVGI or LVMS. All consents, qualifications, orders, approvals, or
authorizations of, or filings with, any governmental or regulatory authority, or
any third party, required in connection with the valid execution, delivery, or
performance of this Agreement and each other agreement and document executed in
connection herewith by LVGI and LVMS or the consummation by LVGI or LVMS of the
transactions contemplated hereby or thereby have been duly obtained.
4.14 Broker's
or Finder's Fee. Neither
LVGI nor LVMS has employed or is liable for the payment of any fee to, any
finder, broker or similar person in connection with the transactions
contemplated under this Agreement.
ARTICLE V.
COVENANTS OF PARTIES
5.1 Preservation
of Business and Assets. From
the date hereof until the Closing, each party will use its best efforts and will
do or cause to be done all such acts and things as may be necessary to preserve,
protect and maintain intact the operation of its respective business and assets
as a going concern consistent with prior practice and not other than in the
ordinary course of business, including preserving, protecting and maintaining
the goodwill of the suppliers, employees, clientele and others having business
relations with such party. Each party will use its best efforts to retain its
employees in their current positions up to Closing. Through Closing, no party
will acquire or sell or agree to acquire or sell by merging or consolidating
with, or by purchasing or selling a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, association or other business organization or
division thereof. From the date hereof until the Closing, no party will pay any
dividend or distribution to its shareholders as such, and no party will sell,
discard or dispose of any of its assets, other than in the ordinary course of
business.
5.2 Absence
of Material Change. From
the date hereof until the Closing, no party will make any change in its business
or in the utilization of its assets and will not enter into any contract or
commitment or any other transaction with respect to its business or its assets
which is contrary to its representations, warranties and obligations as set
forth in this Agreement.
5.3 Material
Mergers. Except
as contemplated by this Agreement, prior to the Effective Time, each party
hereto, including its respective subsidiaries, if any, will not, without first
obtaining the written consent of the other parties hereto:
(a) dispose
of or encumber any asset or enter into any transaction or make any contract
commitment relating to the properties, assets and business of
Page
11
such entity, other than in the ordinary course of business or as otherwise
disclosed herein;
(b) enter
into any employment contract which is not at will or terminable upon notice of
thirty (30) days or less, without penalty;
(c) enter
into any contract or agreement (i) which cannot be performed within three months
or less, or (ii) which involves the expenditure of over
$200,000.00;
(d) make any
payment or distribution under any bonus, pension, profit-sharing or retirement
plan or incur any obligation to make any such payment which is not in accordance
with such entities usual past practice, or make any payment or incur any
obligation pursuant to or in respect of any other plan or contract or
arrangement providing for bonuses (other than pursuant to normal past
practices), executive incentive compensation, pensions, deferred compensation,
retirement payments, profit-sharing or the like, establish or enter into any
such plan, contract or arrangement, or terminate any plan;
(e) extend
credit to anyone except in the ordinary course of business consistent with prior
practice;
(f) guarantee
the obligation of any person, firm or corporation;
(g) amend its
Articles of Incorporation or Bylaws, or applicable organizational
documents;
(h) discharge
or satisfy any lien, charge, encumbrance or indebtedness outside the ordinary
course of business;
(i) institute,
settle or agree to settle any litigation, action or proceeding before any court
or governmental body; or
(j) engage in
any extraordinary transaction.
5.4 Certain
Tax Matters.
(a) During
the period from the date hereof through the Effective Time, no party will
knowingly or negligently take or fail to take any action that would jeopardize
the treatment of the Merger as a “reorganization” within the meaning of Section
368(a)(1)(A) of the Code (and any comparable provisions of applicable state
law). Each party hereto shall report the Merger, and the exchange of stock, as a
reorganization under Section 368(a) of the Code, and shall not take any position
inconsistent with this characterization except in the event of a contrary final
determination of the Internal Revenue Service. If any party receives notice of
any contrary position by the Internal Revenue Service any party hereto may, at
Page
12
its option and sole expense, contest such position, in which event the other
parties hereto shall cooperate with such contest as reasonably requested by the
contesting party.
(b) Except as
provided below, each party hereto shall provide to the other parties, at the
expense of the requesting party, with such assistance as may reasonably be
requested by any of them in connection with the preparation of any tax return,
any audit or other examination by any regulatory authority, or any judicial or
administrative proceedings relating to liability for taxes, and each party will
retain and provide the requesting party(ies) with any records or information
that may be relevant to any of the foregoing.
5.5 Legal
Conditions to Merger. Each
party hereto will take all reasonable actions necessary to comply promptly with
all legal requirements which may be imposed on it with respect to the Merger and
will promptly cooperate with and furnish information to each other party in
connection with any such requirements imposed upon either any of them in
connection with the Merger.
5.6 Preserve
Accuracy of Representations and Warranties. Each
party hereto will refrain from taking any action which would render any of its
representations and warranties contained in this Agreement untrue, inaccurate or
misleading as of Closing and the Effective Time. Through Closing, each party
will promptly notify the other parties of any lawsuit, claim, audit,
investigation, administrative action or other proceeding asserted or commenced
against such party that may involve or relate in any way to another party to
this Agreement. Each party hereto will promptly notify the other parties of any
facts or circumstances that come to its attention and that cause, or through the
passage of time may cause, any of a party’s representations, warranties or
covenants to be untrue or misleading at any time from the date hereof through
Closing, and such notification will be deemed to update such warranty and
representation so that by such notification it shall be deemed to be true and
accurate.
5.7 Notice
of Subsequent Events. Each
party hereto shall notify the other parties of any changes, additions or events
of which it has knowledge which would cause any material change in this
Agreement (including but not limited to the Exhibits attached hereto and
thereto) promptly after occurrence of the same. If the effect of such change or
addition would, individually or in the aggregate with the effect of changes or
additions previously disclosed pursuant to this Section, constitute a material
adverse effect on the notifying party, any non-notifying party may, within ten
(10) days after receipt of such notice, elect to terminate this Agreement. If no
non-notifying party gives written notice of such termination with such 10-day
period, the non-notifying parties shall be deemed to have consented to such
change or addition and shall not be entitled to terminate this Agreement by
reason thereof.
Page
13
5.8 Current
Return Filing. Each
party will be responsible for the preparation and filing of all of such party’s
own tax returns which were due on or before the Closing, and the payment of all
taxes due.
5.9 Maintain
Books and Accounting Practices. From
the date hereof until the Closing, each party will maintain its books of account
in the usual, regular and ordinary manner on a basis consistent with prior years
and will make no change in its accounting methods or practices.
5.10 Compliance
with Laws and Regulatory Consents. From
the date hereof until the Closing, (a) each party will comply with all
applicable statutes, laws, ordinances and regulations, (b) each party will keep,
hold and maintain all licenses, (c) each party will use its reasonable efforts
and will cooperate fully with the other parties hereto to obtain all consents,
shareholder and other approvals, exemptions and authorizations of third parties,
whether governmental or private, necessary to consummate the Merger, and (d)
each party will make and cause to be made all filings and give and cause to be
given all notices which may be necessary or desirable on their part under all
applicable laws and under their respective contracts, agreements and commitments
in order to consummate the Merger.
5.11 Maintain
Insurance Coverage. From
the date hereof until the Closing, each party will maintain and cause to be
maintained in full force and effect all its currently existing insurance on such
party’s assets and the operations of such party’s business and will provide at
Closing written evidence satisfactory to each other parties that such insurance
continues to be in effect, that all premiums due have been paid.
5.12 Closing
Deliveries. At
Closing, the parties hereto will deliver or cause to be delivered the following,
fully executed and in form and substance reasonably satisfactory to the
receiving parties:
(a) Deliveries
by LVGI and LVMS. LVGI
and LVMS hereby agree to deliver, or cause to be delivered, to Shareholder the
following items at the Closing:
(i) Certified
Resolutions. Copies
of the resolutions, certified by an officer of LVMS approving the terms of this
Agreement for purposes of Nev. Rev. Stat. Sec. 78.438(1) and 78.378 -
78.3793.
(ii) Merger
Consideration. The
Merger Consideration, provided that at the discretion of LVMS, in lieu of
certificates evidencing the LVGI Common Stock (the “Merger Consideration
Shares”), LVGI may deliver irrevocable transfer agent instructions to issue the
Merger Consideration Shares in the name of Shareholder with a restrictive legend
or as is otherwise required by law.
Page
14
(iii) Offer
Letters. Letters
from LVGI offering employment to (A) Xxx Xxxxxxx on terms that are acceptable to
Xxx Xxxxxxx (the “Xxxxxxx Offer Letter”), (B) Xxxx Xxxxx on terms that are
acceptable to Xxxx Xxxxx (the “Xxxxx Offer Letter”), and Xxxxx Xxxxxx on terms
that are acceptable to Xxxxx Xxxxxx (the “Xxxxxx Offer Letter”) each executed by
LVGI.
(b) Deliveries
by Shareholder and AGI.
Shareholder and AGI hereby agree to deliver to LVGI and LVMS the following items
at the Closing:
(i) Certified
Resolutions. Copies
of the resolutions, certified by an officer of AGI, of the Board of Directors of
AGI approving the terms of this Agreement, and a copy of the resolutions of the
shareholders of AGI approving the Merger.
(ii) Stock
Certificates. A
certificate representing all the AGI Shares, together with such stock powers and
all other documentation required by LVMS.
(iii) Investment
Letter. The
Investment Letter, executed by Shareholder.
(iv) Offer
Letters. The
Xxxxxxx Offer Letter, executed by Xxxxxxx, the Xxxxx Offer Letter, executed by
Xxxxx, and the Xxxxxx Offer Letter executed by Xxxxxx, all in a form and content
which is acceptable to LVGI.
ARTICLE VI.
CONDITIONS
TO CLOSING
6.1 Conditions
to Each Party's Obligation to Effect the Merger. The
obligation of each party hereto to effect the Merger shall be subject to the
fulfillment at or prior to the Closing of the following conditions:
(a) This
Agreement and the transactions contemplated hereunder shall have been approved
by Boards of Directors and the shareholders of each of the Constituent Companies
in the manner required by the applicable laws of the jurisdiction of their
respective organization and their respective articles of incorporation and
bylaws.
(b) Each
party hereto shall have received from the other parties copies of all
resolutions and/or consent actions adopted by or on behalf of the
boards
Page
15
directors
and Shareholder of such other parties hereto, certified as of the date of
Closing and evidencing approval of this Agreement and the transactions
contemplated hereunder.
(c) No action
or proceeding before a court or other governmental body by any governmental
agency or public authority shall have been instituted or threatened to restrain
or prohibit the transactions contemplated under this Agreement or to obtain an
amount of damages or other material relief in connection with the execution of
this Agreement or any related agreements or the consummation of the Merger; and
no governmental agency shall have given notice to any party hereto to the effect
that consummation of the transactions contemplated under this Agreement would
constitute a violation of any law or that it intends to commence proceedings to
restrain consummation of the Merger.
(d) All
consents, authorizations, orders and approvals of (or filings or registrations
with) any governmental commission, board or other regulatory body or any other
third party (including lenders and lessors) required in connection with the
execu-tion, delivery and performance of this Agreement shall have been obtained
or made.
(e) The
warranties and representations set forth herein shall be true and correct as of
the Closing Date.
ARTICLE VII.
TERMINATION;
AMENDMENT; EXTENSION AND WAIVER
7.1 Termination
by Mutual Consent. This
Agreement may be terminated and the Merger may be abandoned at any time prior to
the Effective Time, before or after the approval of this Agreement by
Shareholder and/or LVGI, by the mutual consent of the Boards of Directors of AGI
and LVGI.
7.2 Termination
by Certain Parties. This
Agreement may be terminated and the Merger may be abandoned by action of the
Board of Directors of AGI or LVGI if the Merger shall not have been consummated
by February 14, 2005.
7.3 Termination
due to failure to satisfy all the obligation of the Merger
Consideration. This
Agreement will terminate effective immediately, without notice, unless extended
by agreement of the parties, if LVGI fails to pay in full on or before close of
business on February 14, 2005 the Cash specified in 2.1 (ii) of this agreement.
Page
16
7.4 Effect
of Termination and Abandonment. Upon
termination of this Agreement, this Agreement and all its terms (including legal
opinions) related hereto shall be void and of no force or effect, and there
shall be no liability by reason of this Agreement or the termination thereof on
the part of any party hereto, or on the part of the respective directors,
officers, managers, employees, agents, representatives or shareholder of any of
them; provided that this Section will not relieve any party from liability for
damages incurred as a result of any willful breach by such party or by an
affiliate of such party of any of its respective representations, warranties,
covenants or obligations set forth in this Agreement.
7.5 Amendment. This
Agreement may be amended by the parties at any time, provided, that any
amendments requiring the approval of LVGI or Shareholder will not become
effective until the amendment is approved by said holders. This Agreement may
not be amended except by an instrument in writing signed on behalf of all the
parties hereto.
7.6 Extension;
Waiver. At any
time prior to the Effective Time, any party hereto, by action taken by its Board
of Directors evidenced in writing, may, to the extent legally allowed, (a)
extend the time for the performance of any of the obligations or other acts of
the other parties hereto, (b) waive any inaccuracies in the representations and
warranties made to such party contained herein or in any document delivered
pursuant hereto, and (c) waive compliance with any of the agreements or
condi-tions for the benefit of such party contained herein. If any party shall
waive compliance as provided in (b) or (c) above, the other party shall have no
liability for compliance so waived. Any agreement on the part of a party hereto
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
ARTICLE
VIII. SURVIVAL
OF PROVISIONS AND INDEMNIFICATION
8.1 Survival. The
covenants, obligations, representations and warranties of each party contained
in this Agreement, or in any certificate or document delivered pursuant to this
Agreement, will be deemed to be material and to have been relied upon by the
other parties notwithstanding any investigation prior to the Closing, will not
be merged into any documents delivered in connection with the Closing, and will
terminate two (2) years after Closing; provided however, that if a notice
claiming indemnity is properly delivered, the indemnification obligations will
not expire with respect to such claim(s) until the same are resolved as
contemplated hereunder.
8.2 Indemnification
by LVGI and LVMS. LVGI
and LVMS shall indemnify, defend and hold AGI and its officers, directors,
employees, agents and representatives, and Shareholder and its officers,
managers, 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 LVMS of any of their covenants, obligations,
representations or warranties or breach or untruth of any representation,
Page
17
warranty,
fact or conclusion contained in this Agreement or any certificate or document of
LVGI or LVMS delivered pursuant to this Agreement, and (b) any claim that is
brought or asserted by any third party(ies) against Shareholder or AGI arising
out of the ownership, licensing, operation or conduct of LVMS, prior to or after
the Effective Time.
8.3 Indemnification
by AGI and Shareholder. AGI and
Shareholder shall indemnify, defend and hold LVGI and LVMS 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 resulting
from (a) any breach by AGI or Shareholder 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 AGI or Shareholder delivered pursuant to this Agreement, and (b) any
claim that is brought or asserted by any third party(ies) arising out of the
ownership, licensing, operation or conduct of AGI through Closing, unless the
same shall arise from the failure to pay or perform any obligation of AGI
incurred prior to the Closing in the ordinary course of business consistent with
prior practice.
8.4 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:
(1) Claims
by Non-Parties. 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, of any written claim by a third party which is likely to
give rise to a claim by the indemnified party against the indemnifying party
based on the indemnity agreements contained in this Article, stating with
reasonable specificity the nature of said claim and the amount thereof, to the
extent known. The indemnified party will give notice to the indemnifying party
that pursuant to the indemnity, the indemnified party is asserting against the
indemnifying party a claim with respect to a potential loss from the third party
claim, and such notice will constitute the assertion of a claim for indemnity by
the indemnified party. If, within ten (10) days after receiving such notice, the
indemnifying party advises the indemnified party that it will provide
indemnification and 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. 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. If the indemnified party does not receive a written
objection to the notice from the indemnifying party 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
Page
18
such
case the indemnified party may control the defense of the matter or case and, at
its sole discretion, settle or admit liability. 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 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.
(2) Claims
by a Party. The
determination of a claim asserted by a party hereunder (other than as set forth
in subsection (1) above) pursuant to this Article will be made as follows: the
indemnified party will give written notice to the indemnifying party, within
such time as not to prejudice unduly the indemnifying party’s ability to defend
against the underlying claim, of any claim by the indemnified party which has
not been made pursuant to subsection (1) above, stating with reasonable
specificity the nature of such claim and the amount thereof, to the extent
known. The claim will be deemed to have resulted in a determination in favor of
the indemnified party and to have resulted in a liability of the indemnifying
party in an amount equal to the amount of such claim estimated pursuant to this
clause (2) if within thirty (30) days after the indemnifying party's receipt of
the claim the indemnified party will not have received written objection to the
claim. In such event, the claim will be conclusively presumed to have been
assented to and approved. If within the aforesaid thirty (30) 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 sixty (60) days after
receipt of such objection the parties will attempt to settle the disputed claim
as between the indemnified and indemnifying parties. If they are unable to
settle the dispute, the unresolved issue or issues will be settled by a court of
competent jurisdiction located in Las Vegas, NV.
ARTICLE
IX REGISTRATION RIGHTS
9.1
Registration
Rights.
LVGI
agrees that it will include the Merger Consideration Shares and Warrants, and
any other shares of LVGI Common Stock held by Shareholder or any officer,
director, shareholder, or employee of Shareholder (collectively the “Registrable
Securities”) in any registration statement for common stock it files with the
Securities and Exchange Commission.
ARTICLE X INTENTIONALLY LEFT BLANK
Page
19
ARTICLE
XI MISCELLANEOUS
11.1 Other
Expenses. Except
as otherwise provided in this Agreement, each party will pay all of its expenses
in connection with the negotiation, execution, and implementation of the
transactions contemplated under this Agreement.
11.2 Notices. All
notices, requests, demands, waivers and other communications required or
permitted to be given under this Agreement will be in writing and will be deemed
to have been duly given: (a) if delivered personally or sent by facsimile, on
the date received, (b) if delivered by overnight courier, on the day after
mailing, and (c) if mailed, five days after mailing with postage prepaid. Any
such notice will be sent as follows:
To AGI
or Shareholder:
XXXXXX
Network, LLC
0000 Xxxx
Xxxxx Xxxxxxxx
Xxxxx
000
Xxxxxx,
Xxxxxxx 00000
Attention:
Xxx Xxxxxxx, Chief Executive Officer
-OR-
Strategic
Management, Inc.
0000
Xxxxxx Xxx.
Xxxxxx,
XX 00000
Attention:
Xxxxx X. Xxxx, CFO
To
LVGI or LVMS:
To:
Xxxxxxx Xxxx
0000 Xxxx
Xxx Xxxx
Xxxxx
X
Xxx
Xxxxx, XX 00000
11.3 Confidentiality;
Prohibition on Trading. All
parties agree to maintain the confidentiality of this Agreement and the
transactions contemplated hereunder unless disclosure is required by law and
except for disclosures to be made in connection with obtaining shareholder
approval and third party consents, and actions required to consummate the
contemplated transactions. Shareholder agrees not to trade in the securities of
LVGI based upon any nonpublic information.
Page
20
11.4 Controlling
Law. This
Agreement will be construed, interpreted and enforced in accordance with the
substantive laws of the State of Nevada, without giving effect to its conflicts
of laws provisions.
11.5 Headings. Any
table of contents and Section headings in this Agreement are for convenience of
reference only and will not be considered or referred to in resolving questions
of interpretation.
11.6 Benefit. This
Agreement will be binding upon and will inure to the exclusive benefit of the
parties hereto and their respective heirs, legal representatives, successors and
assigns. No party hereto may assign any rights or delegate any duties hereunder
without the prior written consent of the other parties hereto and any prohibited
assignment or delegation will be deemed null and void.
11.7 Partial
Invalidity. The
invalidity or unenforceability of any particular provision of this Agreement
will not affect the other provisions hereof, and this Agreement will be
construed in all respects as if such invalid or unenforceable provisions were
omitted. Further, there will be automatically substituted for such invalid or
unenforceable provision a provision as similar as possible which is valid and
enforceable.
11.8 Counterparts
and Facsimiles This
Agreement may be executed simultaneously in two (2) or more counterparts each of
which will be deemed an original and all of which together will constitute but
one and the same instrument. The signature page to this Agreement and all other
documents required to be executed at Closing may be delivered by facsimile and
the signatures thereon will be deemed effective upon receipt by the intended
receiving party.
11.9 Interpretation. All
pronouns and any variation thereof will be deemed to refer to the masculine,
feminine, neuter, singular or plural as the identity of the person or entity, or
the context, may require. Further, it is acknowledged by the parties that this
Agreement has undergone several drafts with the negotiated suggestions of both;
and, therefore, no presumptions will arise favoring either party by virtue of
the authorship of any of its provisions or the changes made through
revisions.
11.10 Entire
Agreement; Waivers. This
Agreement, including the Appendices and Attachments hereto and those portions
incorporated herein by reference, constitutes the entire agreement between the
parties hereto with regard to the matters contained herein and it is understood
and agreed that all previous undertakings, negotiations, letter of intent and
agreements between the parties, are merged herein. This Agreement may not be
modified orally, but only by an agreement in writing signed by the parties
hereto. The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise will not constitute a waiver of such rights.
Neither the failure nor any delay on the part of any party hereto in exercising
any rights, power or remedy hereunder will operate as a waiver thereof or of any
right, power or
Page
21
remedy;
nor will any single or partial exercise of any right, power or remedy preclude
any further or other exercise thereof, or the exercise of any other right, power
or remedy.
11.11 Legal
Fees and Costs. In the
event any party hereto incurs legal expenses to enforce or interpret any
provision of this Agreement, the prevailing party will be entitled to recover
such legal expenses, including, without limitation, reasonable attorney's fees,
costs and disbursements, in addition to any other relief to which such party
will be entitled.
IN
WITNESS WHEREOF, the
parties hereto have executed this Agreement and Plan of Merger as of the date
first above written.
SHAREHOLDER: XXXXXX NETWORK, LLC
By:
/s/ Xxx
Xxxxxxx
Xxx
Xxxxxxx, President and CEO
AGI: XXXXXX GAMING INC.
By:
/s/ Xxx
Xxxxxxx
Xxx
Xxxxxxx, President and CEO
LVGI:
LAS VEGAS GAMING, INC.
By:
/s/ Xxxx
Xxxxxxx
Title: Vice
President
LVMS:
LAS VEGAS GAMING MERGER SUB, INC.
By: /s/ Xxxx
Xxxxxxx
Title: Vice President
Exhibit
A
Page
22
INVESTMENT
LETTER
1/14,
2005
LAS VEGAS
GAMING, INC.
Gentlemen:
In
connection with the issuance and delivery of 400,000 shares
and 100,000 Warrants of the common stock (the “Shares”) of LAS VEGAS GAMING,
INC. (the “Corporation”) to XxXxxx
Network, LLC, a Georgia limited liability company (the
“Shareholder”), pursuant to an Agreement and Plan of Merger dated January 14,
2005 (the “Merger Agreement”), Shareholder makes the following acknowledgments,
representations and warranties:
1. Investment
Intent. The
Shareholder is acquiring the Shares for investment solely for its own account
and not with a present view to any distribution, transfer or resale to others,
including any “distribution” within the meaning of Securities Act of 1933, as
amended, (the “Securities Act”), provided that nothing in this letter shall
restrict or prohibit the Shareholder from transferring the Shares to its
shareholders at any time or from time to time. The
Shareholder understands that the Shares have not and will not, except as
provided in the Merger Agreement, be registered under the Securities Act by
reason of a specific exemption from the registration provisions of the
Securities Act, the availability of which depends on, among other things, the
bona fide nature of the investment intent and the accuracy of my representations
made herein.
2. Financial
Ability. The
Shareholder is financially able to bear the economic risks of an investment in
the Corporation and has no need for liquidity in this investment. Furthermore,
the financial capacity of the Shareholder is of such a proportion that the total
cost of the Shareholder’s commitment is not material when compared with his
total committed capital. The Shareholder is financially able to suffer a
complete loss of this investment.
3. Experience. The
executive officers of Shareholder have such knowledge and experience in
financial and business matters in general and with respect to investments of a
nature similar to that evidenced by the Shares so as to be capable, by reason of
such knowledge and experience, of evaluating the merits and risks of, and making
an informed business decision with regard to, and protecting his own interests
in connection with, the acquisition of the Shares.
4. Review
of Prospectus and Financial Statements.
Shareholder has been provided with and had the opportunity to review all filings
made by the Corporation with the United States Securities and Exchange
Commission, as disclosed in the Merger Agreement and available at the SEC’s web
site at xxx.xxx.xxx.
Page
23
5. Limited
Public Market.
Shareholder understands that a limited public market now exists for any of the
securities of the Corporation and that the Corporation has made no assurances
that a more active public market will ever exist for the Corporation’s
securities.
6. Restricted
Legend. The
Shareholder acknowledges that certificates representing the Shares will bear a
legend substantially as follows:
THE
SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND
MAY NOT BE TRANSFERRED UNLESS THEY ARE SO REGISTERED OR, IN THE OPINION OF
COUNSEL ACCEPTABLE TO THE CORPORATION, SUCH TRANSFER IS EXEMPT FROM
REGISTRATION.
7. Stock
Transfer.
Shareholder is aware that stop-transfer instructions will be given to the
transfer agent of the common stock of the Corporation to prevent any
unauthorized or illegal transfer of the Shares, provided that Shareholder shall
be entitled to distribute the Shares to its shareholders at any time or from
time to time.
8. Reliance
for Exemptions.
Shareholder understands that the Shares are being issued and delivered to
Shareholder pursuant to exemptions from the registration requirements of federal
and applicable state securities laws and acknowledges that LVGI is relying upon
the investment and other representations made by Shareholder herein as the basis
for such exemptions.
9. Accuracy
of Shareholder Representations. The
Shareholder represents that the information and representations contained in
this letter are true, correct, and complete.
Dated:
[CLOSING DATE]
XxXxxx Network, LLC
By: /s/ Xxx
Xxxxxxx
Xxx Xxxxxxx, President and CEO
Page
24
Exhibit
B
Form
of Certificate of Merger
Attached
Page
25
Exhibit
C
WARRANT
AND FORM OF NOTICE OF EXERCISE
Attached
Page
26
