Document:

EXHIBIT 10.2

The  offer  and  sale of this  Convertible  Promissory  Note  and of the  equity
securities  issuable upon conversion  hereof have not been registered  under the
Securities Act of 1933, as amended, or under the securities laws of any state or
other jurisdiction (together,  the "Securities Laws") and may not be offered for
sale,  sold or otherwise  transferred or encumbered in the absence of compliance
with such Securities Laws and until the Company (as defined herein) shall, if it
so requests,  have  received an opinion from counsel  acceptable  to it that the
proposed disposition will not violate any applicable  Securities Laws. This Note
is non-negotiable and  non-transferable  and no interest shall be paid except to
the payee named herein except as otherwise noted herein. This Note is secured by
a Security  Agreement of even date  herewith  given by the Company to the Holder
(as defined herein).

                    INNOVATIVE GAMING CORPORATION OF AMERICA
                           CONVERTIBLE PROMISSORY NOTE

$                                                              Las Vegas, Nevada
 -----------                                                   -----------------

         FOR  VALUE  RECEIVED,  Innovative  Gaming  Corporation  of  America,  a
Minnesota corporation (the "Company"),  promises to pay to ____________________,
or its successors and assigns (collectively,  the "Holder"),  in lawful money of
the United  States of  America,  on _______ the date 18 months from date of this
Note,  the  principal  sum  of  ____________________  ($______),  together  with
interest on the unpaid  principal  balance at a rate equal to FIVE AND  ONE-HALF
PERCENT (5.5%) per annum, in the manner provided below.

1.       PAYMENTS.

         1.1 Interest.  The principal  amount of $______ will bear interest at a
rate equal to FIVE AND ONE-HALF  PERCENT (5.5%) per annum,  and shall be due and
payable on the last day of each of the Company's fiscal quarters,  commencing on
the last day of the Company's current fiscal quarter, and at final maturity;  in
the event that any  principal  amount of this Note is converted  into Series A-1
5.5%  Convertible  Preferred  Stock as  provided  below,  all accrued but unpaid
interest  with respect to the  principal  amount so  converted  shall be due and
payable on the date of such conversion.  Interest shall be computed on the basis
of actual days elapsed and a year of 360 days.  Upon the  happening of any Event
of Default,  this Note, at the option of the Holder,  shall bear interest  until
paid in full at a rate per annum equal to the rate of 15%.

         1.2 Manner of Payment.  All payments of principal  and interest on this
Note (other than any  payments  made in the form of Series A-1 5.5%  Convertible
Preferred Stock as provided below) shall be made in immediately  available funds
wired to the account  designated  by the  Holder.  If any payment due under this
Note is due on a day  which  is not a  Business  Day (as  defined  below),  such
payment shall be due on the next succeeding  Business Day, and such extension of
time  shall not be taken  into  account in  calculating  the amount of  interest
payable under this Note. The term "Business Day" shall mean any day other than a
Saturday, Sunday or legal holiday in the State of Minnesota.

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2.       DEFAULT.

          2.1  Event  of  Default.  The  occurrence  of any  one or  more of the
following events shall constitute a breach hereunder (an "Event of Default"):

                    (a) The Company  shall fail to make any payment of principal
          or interest  hereon when due or shall  default in  performance  of any
          covenant or agreement contained herein.

                    (b) The Company  shall become  insolvent or shall  generally
          not pay its debts as they mature or shall apply for, shall consent to,
          or shall  acquiesce  in the  appointment  of a  custodian,  trustee or
          receiver  for the Company or for a  substantial  part of the  property
          thereof   or,  in  the  absence  of  such   application,   consent  or
          acquiescence,  a custodian, trustee or receiver shall be appointed for
          the Company or for a substantial part of the property thereof;  or any
          bankruptcy,  reorganization,  debt  arrangement  or other  proceedings
          under any  bankruptcy  or  insolvency  law shall be  instituted  by or
          against the Company.

                    (c) The maturity of any material indebtedness of the Company
          (other than the indebtedness on this Note) shall be accelerated or the
          Company shall fail to pay any such material  indebtedness when due or,
          in the case of  indebtedness  payable on demand,  when  demanded.  For
          these  purposes,  indebtedness of the Company shall be deemed material
          if it  exceeds  $100,000  as to any  item  of  indebtedness  or in the
          aggregate for all items of  indebtedness  with respect to which any of
          the events described in this paragraph has occurred.

                    (d) Any default  shall occur under the terms of the Security
          Agreement or the Securities  Purchase Agreement dated as of August 20,
          2002 by and  between  the  Company  and the  Holder  (the  "Securities
          Purchase  Agreement")  and shall  continue for more than the period of
          grace, if any, applicable thereto.

                    (e) A  judgment  or  judgments  for the  payment of money in
          excess  of the sum of  $25,000  in the  aggregate  shall  be  rendered
          against the Company and the Company  shall not  discharge  the same or
          provide for its  discharge,  or procure a stay of  execution  thereof,
          prior to any execution on such judgment,  within 15 days from the date
          of entry  thereof,  and within said period of 15 days,  or such longer
          period during which  execution shall be stayed,  appeal  therefrom and
          cause the execution to be stayed during such appeal.

                    (f) Any execution or attachment  shall be issued whereby any
          substantial  part of the  property  of the  Company  shall be taken or
          attempted  to be taken and the same  shall not have  been  vacated  or
          stayed within 15 days after the issuance thereof.

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<PAGE>

                  (g)  The  Security   Agreement  or  the  Securities   Purchase
         Agreement  shall, at any time,  cease to be in full force and effect or
         shall  be  judicially  declared  null  and  void,  or the  validity  or
         enforceability thereof shall be contested by the Company.

                  (h) The  taking of any  action  described  in Article 8 of the
         Company's  Certificate of Designation for the Company's Series A-1 5.5%
         Convertible  Preferred  Stock after the date on which  shares of Series
         A-1 5.5% Convertible Preferred Stock are issued without the shareholder
         approval required by such Article.

                  (i) Any  representation or warranty or covenant of the Company
         made  in  the  Securities  Purchase  Agreement,  or in  any  agreement,
         statement  or  certificate  given in  writing  pursuant  thereto  or in
         connection  therewith,  shall prove to have been untrue or incorrect in
         any  material  respect  as of  the  date  it  was  made,  furnished  or
         delivered.

          2.2 Remedies.  Upon the occurrence of an Event of Default  (unless all
Events of Default  have been cured by the Company or waived by  Holder),  Holder
may declare this Note to be, and the same shall  forthwith  become,  immediately
due and  payable  and Holder may  exercise  all  rights and  remedies  under the
Security  Agreement  and all rights  available  to it under law,  including  its
rights under Section 4 hereof.

3. TRANSFERABILITY. Except as otherwise provided in Section 6.6 below, Holder is
prohibited from transferring any of its right, title and interest in this Note.

4. CONVERSION.

4.1 Conversion into Preferred  Stock. At any time while there remains any unpaid
principal  or accrued  interest  outstanding  hereunder,  Holder  shall have the
right,  at its option  and in  accordance  with the  provisions  of Section  4.2
hereof,  in whole or in part,  to convert the unpaid  balance of  principal  due
hereunder  into  fully  paid  and  nonassessable   shares  of  Series  A-1  5.5%
Convertible  Preferred  Stock.  Subject to  adjustment as described  below,  the
number of shares of Series A-1 5.5% Convertible  Preferred Stock into which this
Note may be converted (the "Conversion  Shares") shall be equal to the principal
to be so converted divided by 1,000.

          4.2 Conversion Procedure.

                  (a) Notice of  Conversion.  Holder  shall not be  entitled  to
         convert this Note into shares of Series A-1 5.5% Convertible  Preferred
         Stock until it has  surrendered  this Note at the Company's  office and
         given  written  notice to the  Company in the form  attached  hereto as
         Exhibit A (the "Conversion Notice") of Holder's election to convert all
         or any portion of the  principal of this Note  pursuant to Section 4.1.
         If this Note is  converted  only in part and not in full,  the  Company
         shall  execute  and  deliver a new note to the  Holder  thereof  in the
         principal  amount equal to that  portion of the  principal of this Note
         not so converted.

                  (b) Mechanics and Effect of Conversion.  No fractional  shares
         of Series A-1 5.5%  Convertible  Preferred  Stock  shall be issued upon
         conversion of this Note.  Upon the  conversion of this Note pursuant to

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         Section 4.1, the Holder shall  surrender this Note,  duly endorsed,  at
         the Company's  principal office. At its expense,  the Company shall, as
         soon as  practicable  after any  conversion,  issue and deliver to such
         Holder a certificate or certificates for the number of shares of Series
         A-1 5.5%  Convertible  Preferred  Stock to which  the  Holder  shall be
         entitled upon such conversion  (bearing such legends as are required by
         the Securities  Purchase  Agreement and by applicable state and federal
         securities laws in the opinion of Company's  counsel),  together with a
         new note for the principal  amount of the Note that was not  converted.
         Upon  conversion of all or a portion of the principal  owing under this
         Note,  the Company shall be forever  released from all its  obligations
         and  liabilities  under  this  Note,  to the  extent  of the  amount so
         converted;  provided,  that the Company  shall remain  obligated to pay
         interest  accrued but unpaid on the amount of  principal  so  converted
         through the date of such conversion.

         4.3 Reservation of Preferred  Stock. For so long as any principal under
this Note remains outstanding, the Company shall reserve and keep available such
number of shares of Series A-1 5.5%  Convertible  Preferred  Stock as shall from
time to time be  sufficient  to effect  conversion  of this  Note.  The  Company
covenants that all shares of Series A-1 5.5%  Convertible  Preferred Stock which
shall be so issuable shall, upon issuance,  be duly authorized,  validly issued,
fully paid and nonassessable, free from preemptive or similar rights on the part
of the holders of any shares of capital  stock or  securities  of the Company or
any other  person or entity,  and free from all taxes,  liens and  charges  with
respect to the issue  thereof (not  including  any income  taxes  payable by the
Holder of this Note in respect of gains thereon). The Company shall use its best
efforts to take all such action as may be  necessary  to ensure that such shares
of  Series  A-1  5.5%  Convertible  Preferred  Stock  may be so  issued  without
violation of any applicable law or regulation, or of any applicable requirements
of the National  Association  of  Securities  Dealers,  Inc. and of any domestic
securities exchange upon which the Common Stock of the Company may be listed.

         4.4  Limitations  on  Conversion  Shares.  For so long as the Company's
Common Stock is listed on the Nasdaq  SmallCap  Market  ("Nasdaq"),  the Company
will not issue  Conversion  Shares on  conversion  of this and any similar notes
issued  in  the  Private  Placement  (as  defined  in  the  Securities  Purchase
Agreement) in excess of the Maximum  Issuance Amount (as defined below),  unless
its  shareholders  have approved such issuance as required by Nasdaq rules.  The
"Maximum  Issuance  Amount"  is  equal to 20% of the  number  of  shares  of the
Company's  Common Stock which were issued and outstanding on the Initial Closing
Date (as defined in the  Securities  Purchase  Agreement).  If after October 15,
2002 (which  date shall be extended to November  30, 2002 in the event of delays
caused by the SEC or gaming  regulatory  authorities with  jurisdiction over the
Company)  the Holder is unable to convert  some or all of this Note upon request
by reason of this Section 4.4 or because the Company shall have failed to obtain
the shareholder  approval  described in Section IV.E of the Securities  Purchase
Agreement, the Holder may elect, at the Holder's sole discretion, to (i) rescind
any conversion request and retain this Note and the Holder's rights hereunder as
though no such request had been made, (ii) (A) accept as many Conversion  Shares
as are issuable,  (B) receive payment of accrued but unpaid interest pursuant to
Section 1.1 with respect to the principal amount so converted and (C) retain the
remainder of the principal  amount of this Note together with accrued but unpaid
interest  thereon or (iii) treat such event as an Event of Default and  exercise
its  remedies  pursuant to Section 2.2 (except that the amount that shall become
due and payable upon  declaration  that this Note is due and payable shall be an
amount equal to (x) all accrued  interest on the  principal  amount of this Note
plus (y) two (2) times the principal amount of this Note).

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5. ANTI-DILUTION ADJUSTMENTS.

         5.1  Adjustments  for Stock Splits and  Subdivisions.  In the event the
Company  should  at any time or from  time to time  after  the date of  issuance
hereof fix a record date for the  effectuation  of a split or subdivision of the
outstanding  shares of Series A-1 5.5%  Convertible  Preferred Stock, or for the
determination of holders of Series A-1 5.5% Convertible Preferred Stock entitled
to receive a dividend  or other  distribution  payable in  additional  shares of
Series  A-1 5.5%  Convertible  Preferred  Stock or other  securities  or  rights
convertible  into,  or entitling  the holder  thereof to directly or  indirectly
receive  additional  shares of Series A-1 5.5% Convertible  Preferred Stock (the
"Series A-1 5.5% Convertible  Preferred Stock  Equivalents")  without payment of
any  consideration  by such holder for the additional  shares of Series A-1 5.5%
Convertible  Preferred  Stock or Series  A-1 5.5%  Convertible  Preferred  Stock
Equivalents  (including  the  additional  shares of Series A-1 5.5%  Convertible
Preferred Stock issuable upon conversion or exercise thereof),  then, as of such
record date (or the date of such dividend distribution,  split or subdivision if
no record  date is fixed),  the number of shares of Series A-1 5.5%  Convertible
Preferred  Stock  issuable  upon  conversion  of this Note shall be  adjusted in
proportion to the increase of such outstanding shares.

         5.2  Adjustments  for Reverse Stock Splits.  If the number of shares of
Series A-1 5.5%  Convertible  Preferred Stock  outstanding at any time after the
date hereof is decreased by a combination  of the  outstanding  shares of Series
A-1 5.5%  Convertible  Preferred  Stock  through a reverse  stock  split,  then,
following  the record date of such  combination,  the number of shares of Series
A-1 5.5% Convertible Preferred Stock issuable upon conversion of this Note shall
be  appropriately  decreased in proportion  to the decrease in such  outstanding
shares.

         5.3 Adjust for  Reorganization,  Reclassification,  Merger and Sale. If
any capital  reorganization  or  reclassification  of the  capital  stock of the
Company, or consolidation or merger of Company with another corporation,  or the
sale of all or substantially  all of its assets to another  corporation shall be
effected in such a way that holders of the Series A-1 5.5% Convertible Preferred
Stock shall be entitled to receive  stock,  securities or assets with respect to
or  in  exchange  for  such  common  shares,   then,  as  a  condition  of  such
reorganization,  reclassification,  consolidation,  merger or sale,  the  Holder
shall have the right to convert  and  receive  upon the basis and upon the terms
and  conditions  specified  in this Note and in lieu of the shares of Series A-1
5.5%  Convertible  Preferred  Stock  immediately   theretofore  convertible  and
receivable upon the exercise of the rights  represented  hereby,  such shares of
stock,  other securities or assets as would have been issued or delivered to the
Holder as if it had  exercised  this Note and had received such shares of Series
A-1  5.5%   Convertible   Preferred   Stock   prior   to  such   reorganization,
reclassification,  consolidation,  merger or sale.  The Company shall not effect
any such consolidation, merger or sale, unless prior to the consummation thereof
the  successor  corporation  (if other  than the  Company)  resulting  from such
consolidation  or merger,  or the  corporation  purchasing  such  assets,  shall
assume,  by written  instrument  executed and mailed to the registered Holder of
this  Note,  the  obligation  to deliver to such  Holder  such  shares of stock,
securities  or assets as, in  accordance  with the  foregoing  provisions,  such
Holder may be entitled to convert.

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<PAGE>

6. MISCELLANEOUS.

          6.1 Waiver. No waiver by Holder of any right or remedy under this Note
shall be effective unless in a writing signed by Holder. Neither the failure nor
any delay in  exercising  any  right,  power or  privilege  under this Note will
operate as a waiver of such right,  power or privilege  and no single or partial
exercise of any such right, power or privilege by Holder will preclude any other
or further  exercise of such right,  power or  privilege  or the exercise of any
other right,  power or privilege.  To the maximum extent permitted by applicable
law, (a) no claim or right of Holder  arising out of this Note can be discharged
by Holder, in whole or in part by a waiver or renunciation of the claim or right
unless in a writing, signed by Holder, (b) no waiver that may be given by Holder
will be applicable  except in the specific  instance for which it is given,  and
(c) no notice to or demand on the  Company  will be deemed to be a waiver of any
obligation  of the  Company  or of the right of Holder  to take  further  action
without  notice or demand as provided in this Note.  The Company  hereby  waives
presentment, demand, protest and notice of dishonor and protest.

          6.2 Amendment.  This Note may not be amended or modified  except by an
instrument  in  writing  signed by the party  against  whom  enforcement  of any
amendment or modification is sought.

          6.3 Notices. Any notice or other communication or delivery required or
permitted  hereunder shall (1) be in writing and shall be delivered  personally,
by  certified  mail  (postage  prepaid),  by a nationally  recognized  overnight
courier service,  or by electronic mail or facsimile  transmission,  and (2) and
shall be deemed given when so delivered  personally,  if mailed,  three (3) days
after  the date of  deposit  in the  United  States  mails,  when  delivered  by
overnight  courier service,  or, if transmitted  electronically or by facsimile,
upon receipt of electronic confirmation of transmission, as follows:

         If to the Company:           Innovative Gaming Corporation of America
                                      Attention: Loren A. Piel, General Counsel
                                      333 Orville Wright Court
                                      Las Vegas, Nevada 89119
                                      Tel: (702) 614-7199
                                      Fax: (702) 614-7114
                                      E-Mail: lpiel@igca.com

         With a copy to:              Maslon Edelman Borman & Brand, LLP
                                      Attention: Douglas T. Holod, Esq.
                                      3300 Wells Fargo Center
                                      90 South Seventh Street
                                      Minneapolis, Minnesota 55402
                                      Tel: (612) 672-8313
                                      Fax: (612) 642-8313
                                      E-Mail: doug.holod@maslon.com

         If to Holder:
                                      __________________________________

                                      __________________________________

                                      __________________________________

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<PAGE>

         6.4  Severability.  If any  provision  in this Note is held  invalid or
unenforceable  by any court of competent  jurisdiction,  the other provisions of
this Note will remain in full force and effect.  Any provision of this Note held
invalid or  unenforceable  only in part or degree  will remain in full force and
effect to the extent not held invalid or unenforceable.

          6.5 Governing Law. This Note will be governed by the laws of the State
of Minnesota without regard to the conflicts of law principles of such state.

         6.6 Consent to Jurisdiction.  AT THE OPTION OF THE HOLDER THIS NOTE MAY
BE ENFORCED IN ANY FEDERAL  COURT OR MINNESOTA  STATE COURT  SITTING IN HENNEPIN
COUNTY, MINNESOTA; AND THE COMPANY CONSENTS TO THE JURISDICTION AND VENUE OF ANY
SUCH  COURT  AND  WAIVES  ANY  ARGUMENT  THAT THE  VENUE IN SUCH  FORUMS  IS NOT
CONVENIENT. IF THE COMPANY COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE
UNDER ANY TORT OR  CONTRACT  THEORY  ARISING  DIRECTLY  OR  INDIRECTLY  FROM THE
RELATIONSHIP CREATED BY THIS NOTE, THE HOLDER AT ITS OPTION SHALL BE ENTITLED TO
HAVE  THE   CASE   TRANSFERRED   TO  ONE  OF  THE   JURISDICTIONS   AND   VENUES
ABOVE-DESCRIBED,  OR, IF SUCH TRANSFER CANNOT BE ACCOMPLISHED  UNDER  APPLICABLE
LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.

         6.7 Costs and  Expenses.  The Company  shall  reimburse the Holder upon
demand for all reasonable  out-of-pocket expenses paid or incurred by the Holder
(including  reasonable  attorneys'  fees)  in  connection  with  the  amendment,
modification, interpretation, collection and enforcement of this Note.

         6.8 Parties in Interest;  Assignment.  This Note shall bind the Company
and its  successors  and  assigns.  This Note  shall not be  assigned  by Holder
without the express prior written  consent of the Company,  which consent may be
granted or withheld in the Company's reasonable discretion.

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<PAGE>

         IN WITNESS WHEREOF, the Company has executed and delivered this Note as
of the date first stated above.

                            INNOVATIVE GAMING CORPORATION OF AMERICA:

                            By:
                                   ---------------------------------------------
                            Name:  Laus M. Abdo
                            Its:   President, Chief Executive Officer and Chief
                                   Financial Officer

                                       8
<PAGE>

                                    EXHIBIT A

                              NOTICE OF CONVERSION
                          AT THE ELECTION OF THE HOLDER

                   (To Be Signed Only Upon Conversion of Note)

TO INNOVATIVE GAMING CORPORATION OF AMERICA:

          The undersigned,  the Holder of the foregoing Note,  hereby surrenders
such Note for conversion  into shares of Series A-1 5.5%  Convertible  Preferred
Stock, to the extent of  $____________  of the principal,  and requests that the
certificates   for  such  shares  be  issued  in  the  name  of,  and  delivered
to,_____________________________________ whose address is set forth below:

         Delivery Address:

                ______________________________________________________

                ______________________________________________________

                ______________________________________________________

Dated:
      _____________________

                              __________________________________________________
                              (Signature must conform in all respects to name of
                              Holder as specified on the face of the Note)EXHIBIT 10.3

                          REGISTRATION RIGHTS AGREEMENT

         THIS  REGISTRATION   RIGHTS  AGREEMENT  dated  August  21,  2002  (this
"Agreement")  is entered into by and between  Innovative  Gaming  Corporation of
America, a Minnesota  corporation,  with principal  executive offices located at
333 Orville Wright Court, Las Vegas, Nevada 89119 (the "Company"), and the party
named on the signature page below (the "Initial Investor").

         WHEREAS, the Company has authorized its officers to execute and deliver
to one or more parties,  including the Initial Investor, one or more convertible
secured  promissory  notes in an aggregate  principal  amount not to exceed Five
Million and No/Dollars  ($5,000,000.00) (the "Notes") which are convertible into
shares (the  "Preferred  Shares") of the Company's  Series A-1 5.5%  Convertible
Preferred Stock,  par value $0.01 per share, in a series of transactions  exempt
from   registration   under  the   Securities   Act  (as  defined  below)  (such
transactions, collectively, the "Private Placement").

         WHEREAS, upon the terms and subject to the conditions of the Securities
Purchase  Agreement dated as of August 20, 2002 between the Initial Investor and
the Company (the  "Securities  Purchase  Agreement"),  the Company has agreed to
issue and sell to the Initial Investor certain of the Notes;

         WHEREAS,  the  Preferred  Shares  are  convertible  into  shares of the
Company's common stock, par value $0.01 per share (the "Common Stock"), upon the
terms  of  and  subject  to  the  conditions  of the  Company's  Certificate  of
Designation of Series A-1 5.5% Convertible  Preferred Stock (the "Certificate of
Designation"); and

         WHEREAS,  to induce the  Initial  Investor  to execute  and deliver the
Securities  Purchase  Agreement and  consummate  the  transactions  contemplated
thereby,  the Company  has agreed to provide  with  respect to the Common  Stock
issued or issuable upon conversion of the Preferred Shares certain  registration
rights under the Securities Act.

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
covenants  contained herein, the parties hereto,  intending to be legally bound,
hereby agree as follows:

1.       Definitions

(a) Unless the context requires  otherwise,  the terms defined in this Section 1
shall have the following meanings for all purposes of this Agreement:

          (i)       "Affiliate"  shall  have the  meaning  set forth in Rule 405
                    under the Securities Act.

          (ii)      "Claim" is defined in Section 7(c).

          (iii)     "Commission" means the Securities and Exchange Commission or
                    any  other  federal  agency  at the time  administering  the
                    Securities Act.

<PAGE>

          (iv)      "Exchange Act" means the Securities Exchange Act of 1934, as
                    amended,  and the rules and  regulations  of the  Commission
                    thereunder,  or any similar  successor  statute,  all as the
                    same shall be in effect from time to time.

          (v)       "Form S-3" means  such form under the  Securities  Act as in
                    effect on the date hereof or any successor registration form
                    under  the  Securities  Act  subsequently   adopted  by  the
                    Commission  which  permits  inclusion  or  incorporation  of
                    substantial  information  by  reference  to other  documents
                    filed by the Company with the Commission.

          (vi)      "Holder"  means the Initial  Investor and any  transferee or
                    assignee of  Registrable  Securities  which agrees to become
                    bound by all of the terms and  provisions of this  Agreement
                    in accordance with Section 9 hereof.

          (vii)     "Indemnified Party" is defined in Section 7(c).

          (viii)    "Indemnified Person" is defined in Section 7(a).

          (ix)      "Indemnifying Party" is defined in Section 7(c).

          (x)       "Initiating  Holders"  means the record holder or holders of
                    at least 30% of the Registrable Securities.

          (xi)      "Losses" is defined in Section 7(a).

          (xii)     "NASD Rules" is defined in Section 4(w).

          (xiii)    "Non-Responsive Holder" is defined in Section 5(a).

          (xiv)     "Other Shares" is defined in Section 2(f).

          (xv)      "Person"  means any  individual,  partnership,  corporation,
                    limited liability company, joint stock company, association,
                    trust,  unincorporated  organization,  or  a  government  or
                    agency or political subdivision thereof.

          (xvi)     "Public   Offering"  means  an  offer  registered  with  the
                    Commission and the appropriate state securities  commissions
                    by the Company of its Common Stock and made  pursuant to the
                    Securities Act.

          (xvii)    The terms "register," "registered," and "registration" refer
                    to  a  registration  effected  by  preparing  and  filing  a
                    registration  statement  or similar  document in  compliance
                    with the Securities  Act, and the declaration or ordering of
                    effectiveness of such registration statement.

          (xviii)   "Registrable  Securities"  means  (a) the  shares  of Common
                    Stock (or any other equity securities) at any time issued or
                    subject to issuance  upon the  conversion  of the  Preferred
                    Shares  and (b) any  shares  of  Common  Stock (or any other
                    equity  securities)  issued as (or subject to issuance  upon
                    the  conversion  or exercise of any warrant,  right or other

                                        2
<PAGE>

                    security that is issued as) a dividend or other distribution
                    with respect to, or in exchange for, or in  replacement  of,
                    the shares referenced in (a) above; excluding, in all cases,
                    however,   any   Registrable   Securities   when  (aa)  such
                    securities  shall  have been sold to the  public  either (i)
                    pursuant to a registration  statement that has been declared
                    effective  under the  Securities  Act or (ii) pursuant to an
                    exemption from such registration, (bb) such securities shall
                    be eligible for  transfer  without  restriction  pursuant to
                    paragraph (k) of Rule 144 under the  Securities  Act (or any
                    successor  provision  thereto) or (cc) such securities shall
                    have ceased to be outstanding.

          (xix)     "Registration  Expenses"  means  all  expenses  incurred  in
                    effecting  any  registration  pursuant  to  this  Agreement,
                    including,    without    limitation,    all    registration,
                    qualification,  and filing fees,  printing expenses,  escrow
                    fees,  fees and  disbursements  of counsel for the  Company,
                    blue sky fees and  expenses,  and expenses of any regular or
                    special   audits   incident  to  or  required  by  any  such
                    registration,  but shall not include  Selling  Expenses (but
                    excluding  the  compensation  of  regular  employees  of the
                    Company, which shall be paid in any event by the Company).

          (xx)      "Registration Period" means the period beginning on the date
                    a registration statement is declared effective and ending on
                    earlier  of  (a)  such  time  as  all  of  the   Registrable
                    Securities included in such registration statement have been
                    disposed  of in  accordance  with the  intended  methods  of
                    disposition by the holder or holders thereof as set forth in
                    such  registration  statement  or (b) 120  days  after  such
                    registration statement becomes effective (provided, however,
                    that (i) such 120 day period  shall be extended for a period
                    of time equal to the period the Holder refrains from selling
                    any securities  included in such registration at the request
                    of an underwriter  of Common Stock (or other  securities) of
                    the  Company;  and (ii) in the case of any  registration  of
                    Registrable  Securities on Form S-3 which are intended to be
                    offered  on a  continuous  or  delayed  basis,  such 120 day
                    period shall be extended to a period of one year).

          (xxi)     "Requested Information" is defined in Section 5(a).

          (xxii)    "Securities  Act"  means  the  Securities  Act of  1933,  as
                    amended,  and the rules and  regulations  of the  Commission
                    thereunder,  or any similar  successor  statute,  all as the
                    same shall be in effect from time to time.

          (xxiii)   "Selling Expenses" shall mean all underwriting discounts and
                    selling  commissions  applicable to the sale of  Registrable
                    Securities  and fees and  disbursements  of counsel  for any
                    Holder.

          (b)       Certain other terms are defined elsewhere in this Agreement.

          (c)       All  capitalized  terms used and not defined herein have the
                    meanings  assigned  to  them  in  the  Securities   Purchase
                    Agreement.

2.       Demand Registration

                                        3
<PAGE>

          (a) Request for  Registration.  If the Company  shall receive from the
Initiating Holders a written request that the Company effect a registration with
respect to all or any part of the Registrable Securities, the Company will:

          (i)       within ten days of receipt  thereof,  give written notice of
                    the proposed registration to all other Holders; and

          (ii)      use its best efforts to effect such registration (including,
                    without  limitation,   filing   post-effective   amendments,
                    appropriate  qualifications  under  applicable  blue  sky or
                    other state securities laws, and appropriate compliance with
                    the Securities Act) and facilitate the sale and distribution
                    of all or such portion of such Registrable Securities as are
                    specified in such request, together with all or such portion
                    of the  Registrable  Securities  of any  Holder  or  Holders
                    joining  in  such  request  as are  specified  in a  written
                    request  received by the  Company  within 20 days after such
                    written notice from the Company is delivered, as promptly as
                    possible.

          (b)  Exceptions to  Requirement  to Effect  Registration.  The Company
shall  not be  obligated  to  effect,  or to take  any  action  to  effect,  any
registration pursuant to Section 2(a):

          (i)       As to more than two such  registrations  per year  (counting
                    for these  purposes only (A)  registrations  which have been
                    declared  or  ordered   effective   and  pursuant  to  which
                    securities have been sold and (B)  registrations  which have
                    been  withdrawn  by the Holders as to which the Holders have
                    not elected to bear the  Registration  Expenses  pursuant to
                    Section 6 except in cases  where  such  withdrawal  is based
                    upon material  adverse  information  relating to the Company
                    that is different  from the  information  known or available
                    (upon  request from the Company or otherwise) to the Holders
                    requesting  registration  at the time of their  request  for
                    registration under Section 2(a));

          (ii)      If the Company delivers written notice to all Holders within
                    30 days  of a  request  for  registration  pursuant  to this
                    Section 2(a) that the Company  intends to file for an public
                    offering  of shares of its  Common  Stock  within 90 days of
                    such written  notice (in which case the Company shall afford
                    all Holders their rights  pursuant to Section 3 with respect
                    to such offering); or

          (iii)     If the  Initiating  Holders  propose to dispose of shares of
                    Registrable  Securities which may be immediately  registered
                    on Form S-3 pursuant to a request made under Section 2(g).

          (c) Registration Statement. Subject to Section 2(b), the Company shall
file a registration  statement covering the Registrable  Securities requested to
be  registered  as soon as  practicable,  and in any event  within 60 days after
receipt of the request or requests of the Initiating Holders.

          (d) Inclusion of Other  Securities.  The registration  statement filed
pursuant to the request of the Initiating Holders may, subject to the provisions
of Sections 2(e) and 2(f),  include other securities of the Company with respect
to which  registration  rights have been granted,  and may include securities of
the Company  being sold for the  account of the  Company.  If the Company  shall

                                        4
<PAGE>

request  inclusion in any  registration  pursuant to Section 2(a) of  securities
being sold for its own account,  or if other Persons shall request  inclusion in
any  registration  pursuant to Section 2(a),  the Initiating  Holders shall,  on
behalf of all Holders,  offer to include such securities in the underwriting and
may  condition  such  offer  on  their  acceptance  of  the  further  applicable
provisions of this Section 2.

          (e) Underwriting.  The Initiating  Holders may elect that the offering
shall  be  underwritten  by  an  underwriter  or  underwriters   selected  by  a
majority-in-interest  of the Initiating Holders and reasonably acceptable to the
Company.  The  Company  shall  (together  with all  Holders  and  other  Persons
proposing to distribute their securities through such  underwriting)  enter into
an  underwriting  agreement in  customary  form with the  representative  of the
underwriter  or  underwriters  selected for such  underwriting  by a majority in
interest of the Initiating Holders, which underwriters are reasonably acceptable
to the  Company,  and  the  right  of  any  Person  (including  any  Holder)  to
registration  pursuant to this Section 2 shall be conditioned upon such Person's
participation in such underwriting and the inclusion of such Person's securities
in the underwriting  (unless otherwise mutually agreed by a majority in interest
of the Initiating Holders and such Person with respect to such participation and
inclusion)  to the  extent  provided  herein.  If a  Person  who  has  requested
inclusion in such  registration as provided above does not agree to the terms of
any such underwriting, such Person shall be excluded therefrom by written notice
from the Company,  the underwriter or the Initiating Holders.  The securities so
excluded shall also be withdrawn from  registration.  If shares are so withdrawn
when the number of shares to be included  in such  registration  had  previously
been reduced as provided in Section  2(f),  then the Company  shall offer to all
Holders who have retained rights to include  securities in the  registration the
right to include  additional  securities  in the  registration  in an  aggregate
amount  equal to the  number  of  shares so  withdrawn,  with such  shares to be
allocated among such Holders requesting additional inclusion.

          (f)  Priority  on  Demand  Registration.   Notwithstanding  any  other
provision of this Section 2, if the  representative of the underwriters  advises
the Initiating Holders in writing that marketing factors require a limitation on
the number of shares to be  underwritten,  then the Initiating  Holders shall so
advise  all  Holders  of  Registrable   Securities   that  would   otherwise  be
underwritten,  and the number of shares to be  included in the  underwriting  or
registration  shall be allocated (i) first among all Holders thereof  (including
Initiating Holders) and all other holders of Common Shares of the Company issued
or  issuable,  directly or  indirectly,  on  conversion  of Notes  issued in the
Private  Placement in  proportion  (as nearly as  practicable)  to the amount of
Registrable  Securities  or other Common Shares of the Company held by each such
holder and (ii)  second to any other  Common  Shares of the  Company  (including
Common  Shares  issued or issuable  upon  conversion  of shares of any currently
unissued  series of preferred  stock of the Company) or other  securities of the
Company  (the "Other  Shares").  The Other  Shares  shall be excluded  until the
aggregate number of shares of Registrable Securities requested for inclusion may
be included in such registration.

          (g)  Registrations  on Form  S-3.  At any  time at which  the  Company
qualifies  for the use of Form S-3,  in  addition  to the  rights  contained  in
Sections  2(a)  and 3,  Initiating  Holders  shall  have the  right  to  request
registrations on Form S-3 or any similar short form registration  (such requests
shall be in  writing  and  shall  state the  number  of  shares  of  Registrable
Securities  to be disposed of and the intended  methods of  disposition  of such

                                        5
<PAGE>

shares by such Holder or Holders) up to four times per year (which  number shall
be increase  to five or six,  as the case may be, if the  Company  elects to any
registration  demands  made  pursuant to Section 2(a) be subject to this Section
2(g) as provided in Section 2(b)(iii)). The provisions of Sections 2(a) and 2(c)
and the  allocation  provision  of clause (i) of Section 2(f) shall apply to any
registration on Form S-3 pursuant to this Section 2(g); the relevant  provisions
of Section  2(e) shall also  apply if the  registration  is for an  underwritten
offering.

3.       Company Registration

(a) Company Registration.  If the Company shall determine to register any of its
securities  either for its own  account or the  account of a security  holder or
holders (other than pursuant to Sections 2), other than a registration  relating
solely  to  employee  benefit  plans,  or a  registration  relating  solely to a
transaction  covered  by Rule 145 under  the  Securities  Act (or any  successor
thereto), the Company will:

          (i)       promptly give to each Holder written notice thereof; and

          (ii)      use  its   reasonable   best  efforts  to  include  in  such
                    registration (and any related  qualification  under blue sky
                    laws or other  compliance),  except as set forth in  Section
                    3(c) below, and in any underwriting  involved  therein,  all
                    the Registrable Securities specified in a written request or
                    requests,  made by any Holder and  received  by the  Company
                    within 20 days after the  written  notice  from the  Company
                    described  in clause (i) above is  delivered by the Company.
                    Such written request may specify all or a part of a Holder's
                    Registrable Securities.

          (b)  Underwriting.  If the  registration  of which the  Company  gives
notice is for a  registered  public  offering  involving  an  underwriting,  the
Company  shall so advise  the  Holders  as a part of the  written  notice  given
pursuant  to  Section  3(a)(i).  In such  event,  the  right  of any  Holder  to
registration  pursuant to this Section 3 shall be conditioned upon such Holder's
participation   in  such   underwriting  and  the  inclusion  of  such  Holder's
Registrable  Securities in the underwriting to the extent provided  herein.  All
Holders proposing to distribute their securities through such underwriting shall
(together  with the Company and the other  holders of  securities of the Company
with registration  rights to participate  therein  distributing their securities
through such  underwriting)  enter into an  underwriting  agreement in customary
form with the representative of the underwriter or underwriters  selected by the
Company.  If any  Holder  does not agree to the terms of any such  underwriting,
such Holder shall be excluded  therefrom  by written  notice from the Company or
the  underwriter.  Any Registrable  Securities or other  securities  excluded or
withdrawn from such underwriting shall be withdrawn from such  registration.  If
shares are so  withdrawn  from the  registration  and if the number of shares of
Registrable  Securities to be included in such  registration had previously been
reduced  pursuant to Section  3(c),  the Company shall then offer to all Persons
who have retained the right to include  securities in the registration the right
to include  additional  securities in the  registration  in an aggregate  amount
equal to the number of shares so  withdrawn,  with such  shares to be  allocated
among the Persons  requesting  additional  inclusion in accordance  with Section
3(c).

          (c)  Priority  on  Company  Registrations.  Notwithstanding  any other
provision of this Section 3, if the  representative of the underwriters  advises
the Company in writing that marketing factors require a limitation on the number

                                        6
<PAGE>

of shares to be underwritten, the representative may limit or exclude the amount
of  securities  (including  Registrable   Securities)  to  be  included  in  the
registration  by the Company's  stockholders  (including the Holders),  provided
that (i) first, (A) if the Company initiated the registration to cover the offer
and sale of securities for its own account,  the securities the Company proposes
to sell shall be included,  or (B) if the Company  initiated the registration to
cover the offer and sale of  securities  for the account of any of its  security
holders,  the  securities to be sold by such security  holders shall be included
(provided,  that all holders of Common Shares of the Company issued or issuable,
directly or indirectly,  on conversion of Notes issued in the Private Placement,
including all Holders, shall all be treated together for purposes of this clause
(i)(B)), (ii) second, the Registrable Securities requested to be included in the
registration  shall be included,  pro rata among the holders of such Registrable
Securities  on the basis of the number of  Registrable  Securities  held by each
such  Holder and all other  holders of Common  Shares of the  Company  issued or
issuable,  directly or indirectly,  on conversion of Notes issued in the Private
Placement  and (iii) third,  Other Shares shall be included,  pro rata among the
holders of such Other  Shares on the basis of the number of Other Shares held by
each such holder.

4.       Obligations of the Company

         If and whenever the Company is required by the  provisions of Section 2
or  Section 3 to  effect a  registration  of  Registrable  Securities  under the
Securities  Act, the Company  shall,  as promptly as possible and as provided in
such Section:

          (a) In the  case of a  demand  registration  pursuant  to  Section  2,
prepare and file with the  Commission  the requisite  registration  statement to
effect such registration  (including such audited financial statements as may be
required  by the  Securities  Act)  and use  its  best  efforts  to  cause  such
registration statement to become effective.

          (b) As far in  advance as  practical  before  filing any  registration
statement  or any  amendment  thereto  and the  distribution  or delivery of any
prospectus (including any supplements thereto),  furnish each Holder with copies
of  reasonably  complete  drafts  of all  such  documents  proposed  to be filed
(including  exhibits),  and any such Holder shall have the opportunity to object
to any information  pertaining  solely to such Holder that is contained  therein
and the Company shall make the corrections  reasonably  requested by such Holder
with respect to such information prior to filing such registration  statement or
amendment.

          (c) Permit any Holder that,  in its judgment  exercised in  reasonable
good  faith,  might be deemed to be a  controlling  Person  of the  Company,  to
participate in the preparation of such registration or comparable  statement and
to require the insertion therein of material furnished to the Company in writing
relating to such  Holder or its plan of  distribution,  which in the  reasonable
judgment of the Holder and its counsel should be included

          (d)  Prepare  and  file  with  the  Commission   such  amendments  and
supplements to such registration statement and any prospectus used in connection
therewith as may be necessary to maintain the effectiveness of such registration
statement and to comply with the  provisions of the  Securities Act with respect
to the disposition of all Registrable  Securities  included in such registration

                                        7
<PAGE>

statement, in accordance with the intended methods of disposition thereof, until
the end of the Registration Period.

          (e) Take all  lawful  action  such that  each of (i) the  registration
statement and any amendment thereto does not, when it becomes effective, contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, not misleading
and (ii) the  prospectus  forming part of the  registration  statement,  and any
amendment or supplement  thereto,  does not at any time during the  Registration
Period  include  an  untrue  statement  of a  material  fact or omit 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.

          (f) Furnish to each Holder whose  Registrable  Securities are included
in the registration  statement and its legal counsel  identified to the Company,
(i) promptly after the same is prepared and publicly distributed, filed with the
Commission,  or received by the Company, one copy of the registration statement,
each prospectus,  and each amendment or supplement thereto, and (ii) such number
of copies of the prospectus and all amendments and supplements  thereto and such
other  documents,  as such Holder may reasonably  request in order to facilitate
the disposition of the Registrable Securities owned by such Holder.

          (g) Use its best  efforts to (i)  register or qualify the  Registrable
Securities covered by the registration  statement under such securities or "blue
sky" laws of such  jurisdictions as the Holders who hold a  majority-in-interest
of the Registrable Securities being offered reasonably request, (ii) prepare and
file in such jurisdictions such amendments (including post-effective amendments)
and supplements to such  registrations and qualifications as may be necessary to
maintain the effectiveness  thereof at all times during the Registration Period,
(iii) take all such other lawful  actions as may be  necessary to maintain  such
registrations and  qualifications in effect at all times during the Registration
Period,  and (iv) take all such other  lawful  actions  reasonably  necessary or
advisable to qualify the Registrable  Securities for sale in such jurisdictions;
provided,  however,  that  the  Company  shall  not be  required  in  connection
therewith  or as a  condition  thereto  to (A)  qualify  to do  business  in any
jurisdiction  where it would not  otherwise  be required to qualify but for this
Section 4(g), (B) subject itself to general taxation in any such jurisdiction or
(C) file a general consent to service of process in any such jurisdiction except
as may be required by the Securities Act.

          (h) As promptly as  practicable  after  becoming  aware of such event,
notify  each  Holder of the  occurrence  of any event,  as a result of which the
prospectus included in the registration  statement,  as then in effect, includes
an  untrue  statement  of a  material  fact or omits 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,  and
promptly  prepare an amendment to the  registration  statement and supplement to
the  prospectus  to correct such untrue  statement  or  omission,  and deliver a
number of copies of such  supplement and amendment to each Holder as such Holder
may reasonably request.

          (i) Notify the Holders of Registrable Securities and the underwriters,
if any, of the following  events and (if requested by any such persons)  confirm
such notification in writing: (i) the filing of the prospectus or any prospectus
supplement and the  registration  statement and any amendment or  post-effective

                                        8
<PAGE>

amendment  thereto  and,  with  respect  to the  registration  statement  or any
post-effective  amendment thereto,  the declaration of the effectiveness of such
document;  (ii) any requests by the  Commission for amendments or supplements to
the  registration  statement or the  prospectus or for  additional  information;
(iii) the issuance or threat of issuance by the  Commission of any stop order or
other  suspension  of the  effectiveness  of the  registration  statement or the
initiation  of any  proceedings  for that  purpose;  and (iv) the receipt by the
Company of any notification  with respect to the suspension of the qualification
of the Registrable  Securities for sale in any jurisdiction or the initiation or
threat of initiation of any proceeding for such purpose.

          (j) Take all  lawful  action  (i) to  prevent  the  entry of any order
suspending  the  effectiveness  of the  registration  statement,  suspending  or
preventing the use of any related  prospectus or suspending the qualification of
any  security  included  in  such   registration   statement  for  sale  in  any
jurisdiction  and (ii) in the event of the issuance of any such stop,  to obtain
the withdrawal, recession or removal of such order.

          (k) Cause all the Registrable  Securities  covered by the registration
statement  to be listed,  upon  official  notice of issuance,  on the  principal
national securities exchange,  and included in an inter-dealer  quotation system
of a registered  national securities  association,  on or in which securities of
the same class or series issued by the Company are then listed or included.

          (l)  Maintain a transfer  agent and  registrar,  which may be a single
entity, for the Registrable  Securities not later than the effective date of the
registration statement.

          (m) Cooperate with each Holder of Registrable Securities being offered
to  facilitate  the timely  preparation  and  delivery of  certificates  for the
Registrable  Securities to be offered pursuant to the registration statement and
enable  such  certificates  for  the  Registrable   Securities  to  be  in  such
denominations  or  amounts,  as the case may be, as the  Holder  reasonably  may
request and  registered  in such names as the Holder may  request;  and,  within
three business days after a registration  statement  which includes  Registrable
Securities  is declared  effective  by the  Commission,  deliver and cause legal
counsel  selected  by the  Company  to  deliver  to the  transfer  agent for the
Registrable  Securities (with copies to the Holders whose Registrable Securities
are included in such registration  statement) an appropriate instruction and, to
the extent necessary, an opinion of such counsel.

          (n)  Take  all such  other  lawful  actions  reasonably  necessary  to
expedite and  facilitate  the  disposition  by the Holders of their  Registrable
Securities  in accordance  with the intended  methods  therefor  provided in the
prospectus which are customary under the circumstances.

          (o) Use its best  efforts  to  comply  with all  applicable  rules and
regulations of the Commission.

          (p)  Make  generally  available  to its  security  holders  as soon as
practicable,  but in any event not later  than  three (3)  months  after (i) the
effective  date (as  defined in Rule  158(c)  under the  Securities  Act) of the
Registration  Statement,  and (ii)  the  effective  date of each  post-effective
amendment  to the  Registration  Statement,  as the  case  may be,  an  earnings
statement of the Company and its  subsidiaries  complying  with Section 11(a) of
the  Securities Act and the rules and  regulations of the Commission  thereunder

                                        9
<PAGE>

(including, at the option of the Company, Rule 158).

          (q) In the event of an  underwritten  offering,  promptly  include  or
incorporate  in a  Prospectus  supplement  or  post-effective  amendment  to the
registration  statement such information as the managers reasonably agree should
be included therein and to which the Company does not reasonably object and make
all required filings of such prospectus  supplement or post-effective  amendment
as soon as  practicable  after it is  notified  of the matters to be included or
incorporated in such prospectus supplement or post-effective amendment.

          (r) Make  reasonably  available  for  inspection  by the Holders,  any
underwriter  participating  in any  disposition  pursuant  to  the  registration
statement, and any attorney,  accountant or other agent retained by such Holders
or any such  underwriter  all relevant  financial and other  records,  pertinent
corporate  documents  and  properties of the Company and its  subsidiaries,  and
cause the Company's officers,  directors and employees to supply all information
reasonably  requested  by  such  Holders  or  any  such  underwriter,  attorney,
accountant or agent in connection with the registration statement, in each case,
as is customary for similar due diligence examinations;  provided, however, that
all records,  information  and documents  that are  designated in writing by the
Company, in good faith, as confidential,  proprietary or containing any material
nonpublic  information  shall be kept  confidential by such Holders and any such
underwriter,   attorney,   accountant  or  agent  (pursuant  to  an  appropriate
confidentiality  agreement in the case of any such holder or agent), unless such
disclosure is made  pursuant to judicial  process in a court  proceeding  (after
first giving the Company an opportunity  promptly to seek a protective  order or
otherwise  limit the scope of the  information  sought  to be  disclosed)  or is
required by law, or such records,  information or documents  become available to
the  public  generally  or  through  a  third  party  not  in  violation  of  an
accompanying obligation of confidentiality;  and provided, further, that, if the
foregoing  inspection and  information  gathering  would  otherwise  disrupt the
Company's  conduct of its business,  such inspection and  information  gathering
shall, to the maximum extent  possible,  be coordinated on behalf of the Holders
and the other parties entitled thereto by one firm of counsel designed by and on
behalf of the majority in interest of the Holders.

          (s) In  connection  with any  underwritten  offering,  enter  into and
perform its obligations under an underwriting  agreement reasonably in usual and
customary form with respect to such underwriting.

          (t) If such securities are being sold through  underwriters,  furnish,
at the  request of any such  underwriter  and on the date that such  Registrable
Securities are delivered to the underwriters for sale, (i) an opinion,  dated as
of such date, of the counsel  representing  the Company for the purposes of such
registration,  in form and substance as is customarily  given to underwriters in
an   underwritten   public   offering  and  reasonably   satisfactory   to  such
underwriters, addressed to the underwriters and (ii) a "comfort" letter dated as
of such date, from the independent  certified public accountants of the Company,
in form and substance as is customarily  given by independent  certified  public
accountants to underwriters  in an  underwritten  public offering and reasonably
satisfactory to such underwriters, addressed to the underwriters.

                                       10
<PAGE>

          (u) If such  securities are being sold in a  registration  pursuant to
Section 2 but are not being sold through  underwriters,  furnish, at the request
of any Holder requesting  registration of Registrable Securities and on the date
the registration  statement with respect to such securities  becomes  effective,
(i) an opinion,  dated as of such date, of the counsel  representing the Company
for the purposes of such  registration,  in form and substance as is customarily
given in  connection  with  such  offerings  and  reasonably  satisfactory  to a
majority-in-interest   of  the  Holders  of  Registrable  Securities  requesting
registration,  addressed  to the  Holders  requesting  such  opinion  and (ii) a
"comfort"  letter dated as of such date, from the independent  certified  public
accountants  of the Company,  in form and substance as is  customarily  given by
independent  certified public  accountants in connection with such offerings and
reasonably  satisfactory to a majority-in-interest of the Holders of Registrable
Securities  requesting  registration,  addressed to the Holders  requesting such
letter.

          (v)  In  connection  with  any  underwritten  offering,  deliver  such
documents and  certificates  as may be reasonably  required by the managers,  if
any.

          (w) In the event that any broker-dealer  registered under the Exchange
Act shall be an  "affiliate"  (as  defined in Rule  2729(b)(1)  of the rules and
regulations of the National  Association of Securities Dealers,  Inc. (the "NASD
Rules") (or any successor  provision thereto)) of the Company or has a "conflict
of interest" (as defined in Rule  2720(b)(7) of the NASD Rules (or any successor
provision  thereto)) and such broker-dealer  shall underwrite,  participate as a
member  of  an  underwriting  syndicate  or  selling  group  or  assist  in  the
distribution  of  any  Registrable   Securities   covered  by  the  registration
statement,  whether  as a  Holder  of  such  Registrable  Securities  or  as  an
underwriter,  a  placement  or sales  agent or a broker  or  dealer  in  respect
thereof, or otherwise,  the Company shall assist such broker-dealer in complying
with the requirements of the NASD Rules, including,  without limitation,  by (A)
engaging a "qualified  independent  underwriter" (as defined in Rule 2720(b)(15)
of the NASD Rules (or any successor  provision  thereto)) to  participate in the
preparation  of  the  registration   statement   relating  to  such  Registrable
Securities,  to exercise usual standards of due diligence in respect thereof and
to recommend  the public  offering  price of such  Registrable  Securities,  (B)
indemnifying  such  qualified  independent  underwriter  to  the  extent  of the
indemnification  of  underwriters  provided  in  Section  7(a)  hereof,  and (C)
providing such information to such broker-dealer as may be required in order for
such broker-dealer to comply with the requirements of the NASD Rules.

5.       Obligations of the Holders

          In connection with the registration of the Registrable Securities, the
Holders shall have the following obligations:

          (a) It  shall  be a  condition  precedent  to the  obligations  of the
Company to complete a  registration  pursuant to this  Agreement with respect to
the Registrable Securities of a particular Holder that such Holder shall furnish
to the Company such information  regarding  itself,  the Registrable  Securities
held by it and the intended method of disposition of the Registrable  Securities
held by it as shall be reasonably  required to effect the  registration  of such
Registrable  Securities and shall execute such documents in connection with such
registration as the Company may reasonably request. As least seven days prior to
the first anticipated filing date of the relevant  registration  statement,  the
Company shall notify each Holder of the  information  the Company  requires from

                                       11
<PAGE>

each such Holder (the "Requested Information") if such Holder elects to have any
of its Registrable  Securities  included in such registration  statement.  If at
least two business days prior to the anticipated filing date the Company has not
received the Requested  Information from a Holder (a  "Non-Responsive  Holder"),
then  the  Company  may  file  such  registration  statement  without  including
Registrable  Securities  of such  Non-Responsive  Holder  and  have  no  further
obligations  to the  Non-Responsive  Holder  with  respect to such  registration
statement.

          (b) Each  Holder  agrees  that,  upon  receipt of any notice  from the
Company (i) of the occurrence of any event of the kind described in Section 4(h)
or (ii) the issuance by the Commission of any stop order or other  suspension of
the  effectiveness  of the  registration  statement,  it shall  (x)  immediately
discontinue   its  disposition  of  Registrable   Securities   pursuant  to  the
registration  statement  covering  such  Registrable  Securities  until (A) such
Holder's  receipt  of the  copies  of the  supplemented  or  amended  prospectus
contemplated  by 4(h) and/or (B) the  withdrawal,  recession  or removal of such
stop order or other suspension of effectiveness  and (y) , if so directed by the
Company,  deliver to the Company (at the expense of the Company) or destroy (and
deliver to the Company a certificate of destruction) all copies in such Holder's
possession of the prospectus covering such Registrable Securities current at the
time of receipt of such notice.

6.       Expenses of Registration

          All   Registration   Expenses   incurred   in   connection   with  any
registration,  qualification or compliance pursuant to Sections 2 and 3 shall be
borne by the Company; provided,  however, that, with respect to any registration
proceeding begun pursuant to Section 2(a) or 2(g), if the  registration  request
is  subsequently  withdrawn  at the  request of the Holders of a majority of the
Registrable  Securities  to be  registered,  the Holders of such a majority  may
elect to have the participating Holders bear such expenses. All Selling Expenses
relating to securities  registered  pursuant to Sections 2 and 3 (together  with
any  Registration  Expenses  elected  to be borne by the  participating  Holders
pursuant  to the  preceding  sentence)  shall be borne  by the  holders  of such
securities  pro rata on the  basis of the  number of  shares  of  securities  so
registered on their behalf.

7.       Indemnification and Contribution

          (a) The Company shall indemnify and hold harmless each Holder and each
underwriter,   if  any,  which   facilitates   the  disposition  of  Registrable
Securities,  and each of their respective partners,  stockholders,  officers and
directors  and each Person who controls  such Holder or  underwriter  within the
meaning of Section 15 of the  Securities  Act or Section 20 of the  Exchange Act
(each such Person  being  sometimes  hereinafter  referred to as a  "Indemnified
Person") from and against any losses, claims, damages,  expenses or liabilities,
joint or several (collectively,  "Losses"), to which such Indemnified Person may
become subject under the Securities Act or otherwise, insofar as such Losses (or
actions  in  respect  thereof)  arise  out of or are based  upon (i) any  untrue
statement  or alleged  untrue  statement  of a material  fact  contained  in any
registration  statement or any omission or alleged  omission to state  therein a
material fact required to be stated  therein or necessary to make the statements
therein,  not misleading,  (ii) any untrue statement or alleged untrue statement
of a material  fact  contained  in any  prospectus  or any  omission  or alleged
omission  to state  therein a material  fact  required  to be stated  therein or

                                       12
<PAGE>

necessary  to make the  statements  therein,  in the light of the  circumstances
under which they were made,  not  misleading  or (iii) any  violation or alleged
violation by the Company of the  Securities  Act,  the  Exchange  Act, any state
securities law or any rule or regulation  promulgated under any state securities
law in connection with the offering covered by such registration statement;  and
the Company  hereby  agrees to reimburse  each such  Indemnified  Person for all
reasonable  legal and other  expenses  incurred  by such  Indemnified  Person in
connection with  investigating or defending any such action or claim as and when
such expenses are  incurred;  provided,  however,  that the Company shall not be
liable to any such  Indemnified  Person in any such case to the extent  that any
such  loss,  claim,  damage or  liability  arises out of or is based upon (x) an
untrue  statement or alleged untrue statement made in, or an omission or alleged
omission from, such registration statement or prospectus in reliance upon and in
conformity with written information furnished to the Company by such Indemnified
Person  expressly  for use therein or (ii) in the case of the  occurrence  of an
event of the type specified in Section 4(h), the use by the  Indemnified  Person
of an outdated or  defective  prospectus  after the Company has provided to such
Indemnified  Person an updated  prospectus  correcting  the untrue  statement or
alleged  untrue  statement or omission or alleged  omission  giving rise to such
loss, claim, damage or liability.

          (b) Each Holder  agrees,  as a consequence  of the inclusion of any of
its Registrable Securities in a registration statement, and each underwriter, if
any, which facilitates the disposition of Registrable Securities shall agree, as
a consequence  of  facilitating  such  disposition  of  Registrable  Securities,
severally and not jointly,  to (i) indemnify and hold harmless the Company,  its
directors  (including  any Person who, with his or her consent,  is named in the
registration  statement as a director nominee of the Company),  its officers who
sign any  registration  statement  and each  Person,  if any,  who  controls the
Company within the meaning of either Section 15 of the Securities Act or Section
20 of the  Exchange  Act,  against any Losses to which the Company or such other
Persons may become  subject,  under the Securities Act or otherwise,  insofar as
such  Losses (or actions in respect  thereof)  arise out of or are based upon an
untrue  statement or alleged  untrue  statement of a material fact  contained in
such registration  statement or prospectus or arise out of or are based upon the
omission or alleged  omission to state  therein 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, in the case of the  prospectus),  not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue  statement or omission or alleged  omission was made
in reliance upon and in  conformity  with written  information  furnished to the
Company by such  holder or  underwriter  expressly  for use  therein;  provided,
however,  that no Holder or underwriter  shall be liable under this Section 7(b)
for any amount in excess of the net proceeds paid to such Holder or  underwriter
in respect of shares sold by it, and (ii) reimburse the Company for any legal or
other  expenses  incurred by the Company in  connection  with  investigating  or
defending any such action or claim as such expenses are incurred.

          (c) Promptly after receipt by a party seeking indemnification pursuant
to  this  Section  7  (an   "Indemnified   Party")  of  written  notice  of  any
investigation,   claim,   proceeding   or  other  action  in  respect  of  which
indemnification  is being  sought  (each,  a  "Claim"),  the  Indemnified  Party
promptly  shall notify the party against whom  indemnification  pursuant to this
Section  7 is  being  sought  (the  "Indemnifying  Party")  of the  commencement
thereof;  but the omission to so notify the Indemnifying Party shall not relieve
it from any  liability  that it  otherwise  may have to the  Indemnified  Party,
except to the extent that the  Indemnifying  Party is materially  prejudiced and

                                       13
<PAGE>

forfeits  substantive  rights  and  defenses  by  reason  of  such  failure.  In
connection  with any  Claim as to which  both  the  Indemnifying  Party  and the
Indemnified  Party are  parties,  the  Indemnifying  Party  shall be entitled to
assume the defense thereof. Notwithstanding the assumption of the defense of any
Claim by the Indemnifying  Party, the Indemnified  Party shall have the right to
employ  separate  legal counsel and to participate in the defense of such Claim,
and the Indemnifying Party shall bear the reasonable fees,  out-of-pocket  costs
and expenses of such  separate  legal counsel to the  Indemnified  Party if (and
only if): (x) the  Indemnifying  Party shall have agreed to pay such fees, costs
and expenses,  (y) the  Indemnified  Party shall  reasonably have concluded that
representation  of the Indemnified  Party by the Indemnifying  Party by the same
legal  counsel  would  not  be  appropriate  due to  actual  or,  as  reasonably
determined  by legal counsel to the  Indemnified  Party,  potentially  differing
interests  between such parties in the conduct of the defense of such Claim,  or
if there may be legal defenses  available to the  Indemnified  Party that are in
addition to or disparate from those available to the Indemnifying  Party, or (z)
the  Indemnifying  Party shall have failed to employ  legal  counsel  reasonably
satisfactory to the Indemnified  Party within a reasonable  period of time after
notice of the  commencement  of such Claim.  If the  Indemnified  Party  employs
separate legal counsel in circumstances  other than as described in clauses (x),
(y) or (z) above,  the fees,  costs and expenses of such legal  counsel shall be
borne  exclusively  by the  Indemnified  Party.  Except as provided  above,  the
Indemnifying  Party  shall  not,  in  connection  with  any  Claim  in the  same
jurisdiction,  be  liable  for the fees and  expenses  of more  than one firm of
counsel for the Indemnified Party (together with appropriate local counsel). The
Indemnified   Party  shall  not,  without  the  prior  written  consent  of  the
Indemnifying Party (which consent shall not unreasonably be withheld), settle or
compromise  any  Claim or  consent  to the entry of any  judgment  that does not
include an unconditional  release of the Indemnifying Party from all liabilities
with respect to such Claim or judgment.

          (d)  If  the  indemnification  provided  for  in  this  Section  7  is
unavailable  to or  insufficient  to hold harmless an  Indemnified  Person under
Section  7(a) or Section  7(b) in  respect of any Losses (or  actions in respect
thereof) referred to therein,  then each Indemnifying  Party shall contribute to
the amount paid or payable by such Indemnified  Party as a result of such Losses
(or actions in respect  thereof) in such proportion as is appropriate to reflect
the  relative  fault of the  Indemnifying  Party  and the  Indemnified  Party in
connection  with the  statements or omissions  which resulted in such Losses (or
actions  in  respect  thereof),   as  well  as  any  other  relevant   equitable
considerations.  The relative fault of such  Indemnifying  Party and Indemnified
Party shall be  determined  by  reference  to, among other  things,  whether the
untrue or alleged  untrue  statement  of a material  fact or omission or alleged
omission  to state a material  fact  relates  to  information  supplied  by such
Indemnifying  Party or by such  Indemnified  Party,  and the  parties'  relative
intent,  knowledge,  access to information and opportunity to correct or prevent
such  statement or omission.  The parties hereto agree that it would not be just
and equitable if  contribution  pursuant to this Section 7(d) were determined by
pro rata allocation (even if the Holders or any underwriters were treated as one
entity for such  purpose) or by any other  method of  allocation  which does not
take account of the equitable  considerations  referred to in this Section 7(d).
The amount paid or payable by an Indemnified Party as a result of the Losses (or
actions in respect  thereof)  referred  to above  shall be deemed to include any
legal or other fees or expenses reasonably incurred by such Indemnified Party in
connection with  investigating  or defending any such action or claim. No person
guilty of fraudulent  misrepresentation  (within the meaning of Section 11(f) of

                                       14
<PAGE>

the Securities  Act) shall be entitled to  contribution  from any person who was
not guilty of such fraudulent misrepresentation.  The obligations of the Holders
and any  underwriters  in this  Section 7(d) to  contribute  shall be several in
proportion  to  the   percentage  of   Registrable   Securities   registered  or
underwritten, as the case may be, by them and not joint.

          (e) Notwithstanding any other provision of this Section 7, in no event
shall any (i) Holder be required to undertake liability to any person under this
Section  7 for any  amounts  in  excess of the  dollar  amount  of the  proceeds
received by such Holder from the sale of such  Holder's  Registrable  Securities
(after  deducting any fees,  discounts and commissions  applicable  thereto) and
(ii) underwriter be required to undertake  liability to any Person hereunder for
any  amounts  in  excess  of  the  aggregate   discount,   commission  or  other
compensation  payable  to  such  underwriter  with  respect  to the  Registrable
Securities underwritten by it.

          (f) The  obligations  of the Company  under this Section 7 shall be in
addition  to  any  liability  which  the  Company  may  otherwise  have  to  any
Indemnified  Person and the  obligations  of any  Indemnified  Person under this
Section 7 shall be in addition to any liability  which such  Indemnified  Person
may otherwise have to the Company.  The remedies  provided in this Section 7 are
not exclusive and shall not limit any rights or remedies  which may otherwise be
available to an indemnified party at law or in equity.

          (g) Notwithstanding  the foregoing,  to the extent that the provisions
on  indemnification  and  contribution  contained in an  underwriting  agreement
entered into in connection with an underwritten  public offering are in conflict
with the foregoing  provisions,  the provisions in such  underwriting  agreement
shall control,  unless such underwriting agreement does not specifically provide
for indemnification between the Company and the Holders.

8.       Reporting

          (a) With a view to making  available  to the Holders  the  benefits of
Rule 144 under the Securities Act or any other similar rule or regulation of the
Commission  that may at any time  permit the Holders to sell  securities  of the
Company to the public without  registration  ("Rule 144"), the Company agrees to
use its best efforts to:

          (i)       comply with the provisions of paragraph (c) (1) of Rule 144;

          (ii)      file with the  Commission in a timely manner all reports and
                    other documents required to be filed by the Company pursuant
                    to Section 13 or 15(d) under the  Exchange  Act;  and, if at
                    any time it is not  required to file such reports but in the
                    past had been required to or did file such reports, it will,
                    upon the  request  of any  Investor,  make  available  other
                    information  as  required  by, and so long as  necessary  to
                    permit sales of, its Registrable Securities pursuant to Rule
                    144; and

          (iii)     so long as a Holder owns any Registrable Securities, furnish
                    to the  Holder  forthwith  upon  written  request  a written
                    statement  by the  Company  as to its  compliance  with  the
                    reporting  requirements  of Rule 144, and of the  Securities
                    Act and the Exchange  Act, a copy of the most recent  annual
                    or quarterly  report of the Company,  and such other reports
                    and documents so filed as a Holder may reasonably request in
                    availing  itself of any rule or regulation of the Commission
                    allowing  a  Holder  to sell  any  such  securities  without
                    registration.

                                       15
<PAGE>

          (b)  Eligibility  For Use Of  Form  S-3.  The  Company  shall  use its
reasonable  best  efforts  to  qualify  for  registration  on  Form  S-3  or any
comparable or successor  form or forms.  The Company agrees that at such time as
it meets all the  requirements for the use of Form S-3 it shall file all reports
and  information  required  to be filed by it with  the  Commission  in a timely
manner and take all such other action so as to maintain such eligibility for the
use of such form.

9.       Assignment

         The rights to have the Company register Registrable Securities pursuant
to this Agreement shall be automatically assigned by any Holder to any permitted
transferee of all or any portion of such  Registrable  Securities (or all or any
portion  of  any  Preferred   Shares  which  are  convertible  into  Registrable
Securities)  only if: (a) the Investor  agrees in writing with the transferee or
assignee to assign such rights, and a copy of such agreement is furnished to the
Company  within a  reasonable  time after such  assignment,  (b) the Company is,
within a  reasonable  time after such  transfer or  assignment,  furnished  with
written  notice of (i) the name and address of such  transferee  or assignee and
(ii) the  securities  with respect to which such  registration  rights are being
transferred or assigned,  (c) immediately following such transfer or assignment,
the  securities  so  transferred  or  assigned  to the  transferee  or  assignee
constitute  Restricted  Securities  and (d) at or  before  the time the  Company
received  the written  notice  contemplated  by clause (b) of this  sentence the
transferee or assignee  agrees in writing with the Company to be bound by all of
the provisions contained herein.

10.      Amendment and Waiver

         Any  provision  of this  Agreement  may be amended  and the  observance
thereof may be waived (either  generally or in a particular  instance and either
retroactively  or  prospectively),  only  with the  written  consent  of (i) the
Company,  (ii) Holders who hold 75% of the  Registrable  Securities and (iii) if
any principal or interest remains unpaid on any of the Notes, the holders of 75%
of the aggregate  principal amount of the Notes that are then unpaid  (provided,
that any  amendment  to the  provisions  with  respect to the  treatment  of all
persons  holding Common Shares issued or issuable,  directly or  indirectly,  on
conversion  of Notes issued in the Private  Placement  shall require the written
consent  of the  holders  of 75% of such  Common  Shares  that are  "Registrable
Securities"  under  the terms of the  respective  holders'  registration  rights
agreements  with  the  Company,  all of  which  are in the  same  form  as  this
Agreement).  Any amendment or waiver effected in accordance with this Section 10
shall be binding upon each Holder and the Company.

11.      Other Registration Rights Agreements

          (a) Other than entering into other agreements in the same form as this
Agreement with other purchasers of Notes in the Private  Placement,  the Company
shall not on or after the date of this  Agreement  enter into any agreement with
any holder or prospective holder of any securities of the Company that (i) gives
such holder or prospective  holder any  registration  rights with respect to any
securities of the Company or (ii) is inconsistent with the rights granted to the
holders of Registrable  Securities in this Agreement or otherwise conflicts with
the provisions hereof.

                                       16
<PAGE>

          (b) Other than  other  agreements  in the same form as this  Agreement
entered  into with  other  purchasers  of Notes in the  Private  Placement,  the
Company is not  currently a party to any  agreement  granting  any  registration
rights with respect to any of its securities to any person which  conflicts with
the  Company's  obligations  hereunder  or gives  any  other  party the right to
include any securities in any registration statement filed pursuant hereto.

12.      Miscellaneous

          (a) A person or entity  shall be deemed to be a Holder of  Registrable
Securities  whenever  such  person or entity  owns of  record  such  Registrable
Securities.  If  the  Company  receives  conflicting  instructions,  notices  or
elections  from  two or more  persons  or  entities  with  respect  to the  same
Registrable  Securities,  the Company shall act upon the basis of  instructions,
notice  or  election  received  from the  registered  owner of such  Registrable
Securities.

          (b) Except as may be otherwise  provided  herein,  any notice or other
communication  or  delivery  required  or  permitted  hereunder  shall (1) be in
writing and shall be delivered personally,  by certified mail (postage prepaid),
by a nationally  recognized  overnight courier service, or by electronic mail or
facsimile  transmission,  and (2) and shall be deemed  given  when so  delivered
personally,  if  mailed,  three (3) days after the date of deposit in the United
States mails,  when delivered by overnight  courier service,  or, if transmitted
electronically  or by  facsimile,  upon receipt of  electronic  confirmation  of
transmission, as follows::

          (i)     if to the Company, to:

                  Innovative Gaming Corporation of America
                  333 Orville Wright Court
                  Las Vegas, Nevada  89119
                  Attention: Loren A. Piel, General Counsel
                  (702) 614-7199
                  (703) 614-7114 (Fax)

                  with a copy to:

                  Maslon Edelman Borman & Brand, LLP
                  3300 Wells Fargo Center
                  90 South Seventh Street
                  Minneapolis, Minnesota  55402
                  Attention:  Douglas T. Holod, Esq.
                  (612) 672-8200
                  (612) 672-8397 (Fax)

          (ii)    if to any Holder,  at such address as such Holder shall have
                  provided in writing to the Company.

The  Company or any Holder may  change  the  foregoing  address by notice  given
pursuant to this Section 12(b).

                                       17
<PAGE>

          (c) This Agreement may be executed in any number of  counterparts  and
by the different parties hereto on separate counterparts,  each of which when so
executed and delivered shall be an original,  but all which counterparts when so
executed shall together  constitute one and the same instrument.  A facsimile or
digital  transmission of this signed Agreement shall be legal and binding on all
parties hereto.

          (d) The headings of this  Agreement are for  convenience  of reference
and shall not form part of, or affect the interpretation of, this Agreement.

          (e) This Agreement  constitutes the entire agreement among the parties
pertaining to the subject  matter hereof and  supersedes  all prior  agreements,
understandings,  negotiations, and discussions,  whether oral or written, of the
parties.  No amendment,  supplement,  modification,  or waiver of this Agreement
shall be binding unless executed in writing by all parties.  No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of
any other  provision  hereof  (whether  or not  similar),  nor shall such waiver
constitute a continuing waiver unless otherwise  expressly  provided in writing.
Failure of any party to exercise  any right or remedy  under this  Agreement  or
otherwise,  or delay by a party in  exercising  such right or remedy,  shall not
operate as a waiver thereof.

          (f) This Agreement  shall be governed by and interpreted in accordance
with the laws of the State of Minnesota,  without regard to the conflicts-of-law
principles of such state.  Each of the parties hereto  consents to the exclusive
jurisdiction  of the federal  courts whose  districts  encompass any part of the
City of Minneapolis or the state courts of the State of Minnesota sitting in the
City of Minneapolis in connection with any dispute arising under this Agreement.
Each party hereto hereby irrevocably and unconditionally  waives, to the fullest
extent  it may  effectively  do so,  any  defense  of an  inconvenient  forum or
improper venue to the maintenance of such action or proceeding in any such court
and any right of  jurisdiction on account of its place of residence or domicile.
Each party hereto irrevocably and unconditionally consents to the service of any
and all process in any such action or  proceeding  in such courts by the mailing
of copies of such  process by  certified  or  registered  airmail at its address
specified in Section  12(b).  Each party hereto agrees that a final  judgment in
any such action or proceeding  shall be conclusive  and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.

          (g) The remedies  provided in this  Agreement are  cumulative  and not
exclusive of any  remedies  provided by law. In the event any one or more of the
provisions  contained  in this  Agreement  should be held  invalid,  illegal  or
unenforceable in any respect,  the validity,  legality and enforceability of the
remaining  provisions  contained  herein  shall  not in any way be  affected  or
impaired  thereby.  It is hereby  stipulated and declared to be the intention of
the parties  that they would have  executed  the  remaining  terms,  provisions,
covenants and restrictions  without  including any of such that may be hereafter
declared invalid, illegal, void or unenforceable.

          (h) Subject to the requirements of Section 9, the terms and conditions
of this  Agreement  shall  inure  to the  benefit  of and be  binding  upon  the
respective  successors  and assigns of the parties.  Nothing in this  Agreement,
express or implied,  is intended to confer upon any party other than the parties
hereto  or  their  respective  successors  and  assigns  any  rights,  remedies,
obligations  or  liabilities  under or by  reason of this  Agreement,  except as
expressly provided in this Agreement.

                                       18
<PAGE>

          (i) If any  action at law or in  equity is  necessary  to  enforce  or
interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable  attorneys'  fees,  costs and  disbursements in addition to any other
relief to which such party may be entitled.

          (j) All pronouns and any  variations  thereof refer to the  masculine,
feminine or neuter, singular or plural, as the context may require.

          (k) The  Company  acknowledges  that any  failure  by the  Company  to
perform its obligations  under this Agreement,  or any delay in such performance
could result in direct  damages to the Holders and the Company  agrees that,  in
addition  to any  other  liability  the  Company  may have by reason of any such
failure or delay,  the Company shall be liable for all direct  damages caused by
such failure or delay.

         IN WITNESS  WHEREOF,  the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.

                                INNOVATIVE GAMING CORPORATION OF AMERICA

                                By:_____________________________________________
                                Name:
                                Title:

                                Initial Investor

                                By:_____________________________________________

                                       19

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