Document:

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                                                                   EXHIBIT 10(2)

                    AMENDED AND RESTATED CONSULTING AGREEMENT

This Amended and Restated Consulting Agreement (the "Agreement"), effective as
of April 4th, 2001 is entered into by and between INNOVATIVE GAMING CORPORATION
OF AMERICA, a Minnesota corporation (herein referred to as the "Company") and
REDWOOD CONSULTANTS, LLC, a California limited liability company (herein
referred to as the "Consultant").

                                    RECITALS

WHEREAS, Company is a publicly- held corporation with its common stock traded on
the Nasdaq Smallcap Market; and

WHEREAS, Company desires to engage the services of Consultant to represent the
company in investors' communications and public relations with existing
shareholders, brokers, dealers and other investment professionals as to the
Company's current and proposed activities, and to consult with management
concerning such Company activities;

NOW THEREFORE, in consideration of the promises and the mutual covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:

1. Term of Consultancy. Company hereby agrees to retain the Consultant to act in
a consulting capacity to the Company and the Consultant hereby agrees to provide
services to the Company commencing April 4th, 2001 and ending on April 3rd,
2006.

2. Duties of Consultant. The Consultant agrees that it will generally provide
the following specified consulting services through its officers and employees
during the term specified in Section 1:

               (a) Consult and assist the Company in developing and implementing
appropriate plans and means for presenting the Company and its business plans,
strategy and personnel to the financial community, establishing an image for the
Company in the financial community, and creating the foundation for subsequent
financial public relations efforts;

               (b) Introduce the Company to the financial community;

               (c) With the cooperation of the Company, maintain an awareness
during the term of this Agreement of the Company's plans, strategy and
personnel, as they may evolve during such period, and consult and assist the
Company in communicating appropriate information regarding such plans, strategy
and personnel to the financial community;

               (d) Assist and consult the Company with respect to its (i)
relations with stockholders, (ii) relations wit h brokers, dealers, analysts and
other investment professionals, and (iii) financial public relations generally;

               (e) Perform the functions generally assigned to stockholder
relations and public relations departments in major corporations, including
responding to telephone and written inquiries (which may be referred to the
Consultant by the Company); preparing press releases for the Company with the
Company's involvement and approval by the Company's management and General
Counsel of press releases, reports and other communications with or to
shareholders, the investment community and the general public; consulting with
respect to the timing, form, distribution and other matters related to such
releases, reports and communications; and, at the Company's request and subject
to

                                       1.
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the Company's securing its own rights to the use of its names, marks, and logos,
consulting with respect to corporate symbols, logos, names, the presentation of
such symbols, logos and names, and other matters relating to corporate image;

               (f) Upon the Company's direction and approval, disseminate
information regarding the Company to shareholders, brokers, dealers, other
investment community professionals and the general investing public;

               (g) Upon the Company's approval, conduct meetings, in person or
by telephone, with brokers, dealers, analysts and other investment professionals
to communicate with them regarding the Company's plans, goals and activities,
and assist the Company in preparing for press conferences and other forums
involving the media, investment professionals and the general investment public;

               (h) At the Company's request, review business plans, strategies,
mission statements budgets, proposed transactions and other plans for the
purpose of advising the Company of the public relations implications thereof;
and,

               (i) Otherwise perform as the Company's consultant for public
relations and relations with financial professionals.

3. Allocation of Time and Energies. The Consultant hereby promises to perform
and discharge faithfully the responsibilities as provided in Section 2 hereof
and which may be assigned to the Consultant from time to time by the officers
and duly authorized representatives of the Company in connection with the
conduct of its financial and public relations and communications activities, so
long as such activities are in compliance with applicable securities laws and
regulations. Consultant and staff shall diligently and thoroughly provide the
consulting services required hereunder. Although no specific hours-per-day
requirement will be required, Consultant and the Company agree that Consultant
will perform the duties set forth herein above in a diligent and professional
manner. It is explicitly understood that Consultant's performance of its duties
hereunder will in no way be measured by the price of the Company's common stock,
nor the trading volume of the Company's common stock. It is further understood
that although the Consultant has agreed that the Company shall be its exclusive
gaming industry client, the Consultant is not working exclusively for the
Company and that after the first twelve months of this Agreement the
Consultant's commitments to other clients will require the Consultant to provide
similar services to one or more additional clients and may limit the amount of
time and energy that Consultant can devote to Client. It is finally understood
that the Company is entering into this Agreement with Redwood Consultants, LLC,
a limited liability company and not any individual member of Redwood
Consultants, LLC, and, as such, Consultant will not be deemed to have breached
this Agreement if any member, officer or director of Redwood Consultants, LLC,
leaves the firm or dies or becomes physically unable to perform any meaningful
activities during the term of the Agreement, provided the Consultant otherwise
performs its obligations under this Agreement. Notwithstanding the foregoing, in
the event both Anthony D. Altavilla and Jens Dalsgaard leave the Consultant, the
Company shall be entitled to terminate this Agreement immediately.

4. Remuneration. As full and complete compensation for services described in
this Agreement, the Company shall compensate Redwood Consultants, LLC, as
follows:

       4.1 For undertaking this engagement and for other good and valuable
consideration, the Company agrees to issue to the Consultant as "Compensation"
(a) 400,000 shares of the Company's Common Stock ("Common Stock"), (b) 150,000 5
year Convertible Preferred Shares ("Convertible Preferred") whereby One (1)
share of Convertible Preferred can be converted into Ten (10) common shares
equaling an aggregate of 1,500,000 shares of Common Stock and (c) warrants for
1,500,000

                                       2.
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shares of the Company's common stock ("Warrants") at the following exercise
prices: warrants to acquire 200,000 shares of the Company's common stock at $1
per Common Stock share, warrants to acquire 200,000 shares of Common Stock at $2
per Common Stock share, warrants to acquire 200,000 shares of Common Stock at $3
per Common Stock share, warrants to acquire 200,000 shares of Common Stock at $4
per Common Stock share, warrants to acquire 200,000 shares of Common Stock at $5
per Common Stock share, warrants to acquire 250,000 shares of Common Stock at
$7.50 per Common Stock share, and warrants to acquire 250,000 shares of Common
Stock at $10 per Common Stock share. The said securities (Common Stock,
Convertible and Warrants) shall have "piggy back" rights to any registration
statement the Company files. The said securities are to be delivered to
Consultant following the signing of this Agreement. The Compensation shall be
issued to the Consultant immediately following execution of this Agreement and
shall, when issued and delivered to Consultant, be fully paid and
non-assessable. The Company understands and agrees that Consultant has foregone
significant opportunities to accept this engagement and that the Company derives
substantial benefit from the execution of this Agreement and the ability to
announce its relationship with Consultant. The Compensation constitutes payment
for Consultant's agreement to consult to the Company and is a nonrefundable,
non-apportionable, and non-ratable retainer. Except as set forth in Section 18
hereof, if the Company decides to terminate this Agreement prior to April 3,
2006 for any reason whatsoever, it is agreed and understood that Consultant
will not be requested or demanded by the Company to return any of the
Compensation paid to it hereunder. Further, if and in the event the Company is
acquired in whole or in part, during the term of this agreement, it is agreed
and understood Consultant will not be requested or demanded by the Company to
return any of the Compensation paid to it hereunder. It is further agreed that
if at any time during the term of this agreement, the Company or substantially
all of the Company's assets are merged with or acquired by another entity, or
some other change occurs in the legal entity that constitutes the Company, the
Consultant shall retain and will not be requested by the Company to return any
of the Compensation.

       4.2 The Compensation shares issued pursuant to this agreement shall be
issued in the names of The Altavilla Family Trust - 2001, u/t/a/ dated March 6,
2001 (200,000 shares, 52,500 Convertible Preferred Shares, 525,000 Warrants),
Jens Dalsgaard (200,000 shares, 52,500 Convertible Preferred Shares, 525,000
Warrants), and Jeff Lamberson (0 shares, 45,000 Convertible Preferred Shares,
450,000 Warrants).

       4.4 With each transfer of shares of Common Stock to be issued pursuant to
this Agreement (collectively, the "Shares"), Company shall cause to be issued a
certificate representing the Common Stock and a written opinion of counsel for
the Company stating that said shares are validly issued, fully paid and
non-assessable and that the issuance and eventual transfer of them to Consultant
has been duly authorized by the Company. Company warrants that all Securities
issued to Consultant pursuant to this Agreement shall have been validly issued,
fully paid and non-assessable and that the issuance and any transfer of them to
Consultant shall have been duly authorized by the Company's board of directors.

       4.5 Consultant acknowledges that the shares of Common Stock to be issued
pursuant to this Agreement (collectively, the "Shares") have not been registered
under the Securities Act of 1933, and accordingly are "restricted securities"
within the meaning of Rule 144 of the Act. As such, the Shares may not be resold
or transferred unless the Company has received an opinion of counsel reasonably
satisfactory to the Company that such resale or transfer is exempt from the
registration requirements of that Act.

                                       3.
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       4.6 In connection with the acquisition of Shares hereunder, the
Consultant represents and warrants to the Company, to the best of its/his
knowledge, as follows:

               (a) Consultant acknowledges that the Consultant has been afforded
the opportunity to ask questions of and receive answers from duly authorized
officers or other representatives of the Company concerning an investment in the
Shares, and any additional information which the Consultant has requested.

               (b) Consultant's investment in restricted securities is
reasonable in relation to the Consultant's net worth, which is in excess of ten
(10) times the Consultant's cost basis in the Shares. Consultant has had
experience in investments in restricted and publicly traded securities, and
Consultant has had experience in investments in speculative securities and other
investments which involve the risk of loss of investment. Consultant
acknowledges that an investment in the Shares is speculative and involves the
risk of loss. Consultant has the requisite knowledge to assess the relative
merits and risks of this investment without the necessity of relying upon other
advisors, and Consultant can afford the risk of loss of his entire investment in
the Shares. Consultant is (i) an accredited investor, as that term is defined in
Regulation D promulgated under the Securities Act of 1933, and (ii) a purchaser
described in Section 25102 (f) (2) of the California Corporate Securities Law of
1968, as amended.

               (c) Consultant is acquiring the Shares for the Consultant's own
account for long-term investment and not with a view toward resale or
distribution thereof except in accordance with applicable securities laws.

       4.7 Ownership Interest Limited to 4.9% of the Company. In no event shall
(i) Consultant, including, without limitation, any officer, director, managing
director, affiliate, employee, client or agent, or (ii) anyone purchasing Shares
from Consultant or any such person or entity be permitted to own or exercise
dominion or control over shares representing in excess of 4.9% of the ownership
of the Company. In the event Consultant or any such party desires to convert any
Convertible or Warrant into Shares of the Company, and such conversion would
increase the ownership of the person or entity to whom such Shares are issued to
in excess of 4.9% of the ownership of the Company, such conversion shall be
prohibited until such time as the ownership interest of such person or entity is
reduced such that the conversion will not result in the ownership of in excess
of 4.9% of the ownership of the Company.

5. Financing "Finder's Fee". It is understood that in the event Consultant
introduces Company, or its nominees, to a lender or equity purchaser, not
already having a preexisting relationship with the Company, with whom Company,
or its nominees, ultimately finances or causes the completion of such financing,
Company agrees to compensate Consultant for such services with a "finder's fee"
in the amount of 3% of total gross funding provided by such lender or equity
purchaser, such fee to be payable in cash. This 3% will be in addition to any
fees payable by Company to any other intermediary, if any, which shall be the
subject of separate agreements negotiated between Company and such other
intermediary. It is also understood that in the event Consultant introduces
Company, or its nominees, to an acquisition candidate, either directly or
indirectly through another intermediary, not already having a preexisting
relationship with the Company, which Company, or its nominees, ultimately
acquires or causes the completion of such acquisition, Company agrees to
compensate Consultant for such services with a "finder's fee" in the amount of
2% of total gross consideration provided by such acquisition, such fee to be
payable in cash. This 2% will be in addition to any fees payable by Company to
any other intermediary. It is specifically understood that Consultant is not and
does not hold itself out be a Broker/Dealer, but is rather merely a "Finder" in
reference to the

                                       4.
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Company procuring financing sources and acquisition candidates. Any obligation
to pay a "Finder's Fee" hereunder shall survive the merging, acquisition, or
other change in the form of entity of the Company and to the extent it remains
unfulfilled shall be assigned and transferred to any successor to the Company.

       5.1 It is further understood that Company, and not Consultant, is
responsible to perform any and all due diligence on such lender, equity
purchaser or acquisition candidate introduced to it by Consultant under this
Agreement, prior to Company receiving funds or closing on any acquisition.

However, Consultant will not introduce any parties to Company about which
Consultant has any prior knowledge of questionable, unethical or illicit
activities.

       5.2 Company agrees that said compensation to Consultant shall be paid in
full at the time said financing or acquisition is closed, such compensation to
be transferred by Company to Consultant within seven (7) business days of the
execution of the financing of acquisition closing document.

Payment of said compensation, shall be a condition precedent to the closing of
such financing or acquisition, and Company shall execute any and all documents
necessary to effect said compensation.

       5.3 As further consideration to Consultant, Company, or its nominees,
agrees to pay with respect to any financing or acquisition candidate provided
directly or indirectly to the Company by any lender or equity purchaser covered
by this Section 5 during the period of one year from the close of the term of
this Agreement, a fee to Consultant equal to that outlined in Section 5 herein.

       5.4 Consultant will notify Company of introductions it makes for
potential sources of financing or acquisitions in a timely manner (within
approximately 3 days of introduction) via facsimile memo. If Company has a
preexisting relationship with such nominee and believes such party should be
excluded from this Agreement, then Company will notify Consultant immediately
within one (1) business day of Consultant's facsimile to Company of such
circumstance via facsimile memo.

         5.5 Consultant acknowledges that the Company's payment of any finder's
fees in connection with the extension of credit or any financing is subject to
prior approval by the Company's gaming regulatory authorities. As such, with
respect to the obligations set forth in Section 5 of this Agreement, such
obligations are effective upon approval of the Nevada Gaming Control Board and
the Nevada Gaming Commission, and the approval of any other gaming regulatory
authority as required by applicable gaming laws, rules and regulations. Should
any prior approval not be obtained, then Section 5 of this Agreement shall be
null and void and Consultant shall not be entitled to any compensation for its
assistance in arranging any financing or extension of credit.

6. Non-Assignability of Services. Consultant's services under this contract are
offered to Company only and may not be assigned by Company to ant entity with
which Company merges or which acquires the Company or substantially all of its
assets. In the event of such merger or acquisition, all compensation to
Consultant herein under the schedules set forth herein shall remain due and
payable, and any compensation received by the Consultant may be retained in the
entirety by Consultant, all without any reduction or pro-rating and shall be
considered and remain fully paid and non-assessable. Notwithstanding the
non-assignability of Consultant's services, Company shall assure that in the
event of any merger, acquisition, or similar change of form of entity, that its
successor entity shall agree to complete all obligations to Consultant,
including the provision and

                                       5.
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transfer of all compensation herein, and the preservation of the value thereof
consistent with the rights granted to Consultant by the Company herein, and to
Shareholders.

7. Expenses. Consultant agrees to pay for all its expenses (phone, labor, etc.),
other than extraordinary items (travel required by/or specifically requested by
the Company, luncheons or dinners to large groups of investment professionals,
mass faxing to a sizable percentage of the Company's constituents, investor
conference calls, print advertisements in publications, etc.) approved by the
Company prior to its incurring an obligation for reimbursement.

8. Indemnification. The Company warrants and represents that all oral
communications, written documents or materials furnished to Consultant by the
Company with respect to financial affairs, operations, profitability and
strategic planning of the Company are accurate and Consultant may rely upon the
accuracy thereof without independent investigation. The Company will protect,
indemnify and hold harmless Consultant against any claims or litigation
including any damages, liability, cost and reasonable attorney's fees as
incurred with respect thereto resulting from Consultant's communication or
dissemination of any said information, documents or materials excluding any such
claims or litigation resulting from Consultant's communication or dissemination
of information not provided or authorized by the Company.

9. Representations. Consultant represents that it is not required to maintain
any licenses and registrations under federal or any state regulations necessary
to perform the services set forth herein. Consultant acknowledges that, to the
best of its knowledge, the performance of the services set forth under this
Agreement will not violate any rule or provision of any regulatory agency having
jurisdiction over Consultant. Consultant acknowledges that, to the best of its
knowledge, Consultant and its officers and directors are not the subject of any
investigation, claim, decree or judgment involving any violation of the SEC or
securities laws. Consultant further acknowledges that it is not a securities
Broker Dealer or a registered investment advisor. Company acknowledges that, to
the best of its knowledge, that it has not violated any rule or provision of any
regulatory agency having jurisdiction over the Company. Company acknowledges
that, to the best of its knowledge, Company is not the subject of any
investigation, claim, decree or judgment involving any violation of the SEC or
securities laws.

10. Legal Representation. The Company acknowledges that it has been represented
by independent legal counsel in the preparation of this Agreement. Consultant
represents that it has consulted with independent legal counsel and/or tax,
financial and business advisors, to the extent the Consultant deemed necessary.

11. Status as Independent Contractor. Consultant's engagement pursuant to this
Agreement shall be as independent contractor, and not as an employee, officer or
other agent of the Company. Neither party to this Agreement shall represent or
hold itself out to be the employer or employee of the other. Consultant further
acknowledges the consideration provided hereinabove is a gross amount of
consideration and that the Company will not withhold from such consideration any
amounts as to income taxes, social security payments or any other payroll taxes.
All such income taxes and other such payment shall be made or provided for by
Consultant and the Company shall have no responsibility or duties regarding such
matters. Neither the Company or the Consultant possess the authority to bind
each other in any agreements without the express written consent of the entity
to be bound.

                                       6.
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12. Attorney's Fee. If any legal action or any arbitration or other proceeding
is brought for the enforcement or interpretation of this Agreement, or because
of an alleged dispute, breach, default or misrepresentation in connection with
or related to this Agreement, the successful or prevailing party shall be
entitled to recover reasonable attorneys' fees and other costs in connection
with that action or proceeding, in addition to any other relief to which it or
they may be entitled.

13. Waiver. The waiver by either party of a breach of any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any subsequent breach by such other party.

14. Notices. All notices, requests, and other communications hereunder shall be
deemed to be duly given if sent by U.S. mail, postage prepaid, addressed to the
other party at the address as set forth herein below:

To the Company:
Innovative Gaming Corporation of America
Roland M. Thomas
Chairman/CEO
333 Orville Wright Court
Las Vegas, NV 89119

       With a copy to:              Loren A. Piel, Esq.
                                    General Counsel
                                    Innovative Gaming Corporation of America
                                    333 Orville Wright Court
                                    Las Vegas, NV  89119

To the Consultant:
Redwood Consultants, LLC
Anthony D Altavilla, Managing Director
Jens Dalsgaard, Managing Director
81 Throckmorton Avenue
Mill Valley, CA  94941

       It is understood that either party may change the address to which
notices for it shall be addressed by providing notice of such change to the
other party in the manner set forth in this paragraph.

15. Choice of Law, Jurisdiction and Venue. This Agreement shall be governed by,
construed and enforced in accordance with the laws of the State of California.
The parties agree that San Francisco County, CA. will be the venue of any
dispute and will have jurisdiction over all parties.

16. Arbitration. Any controversy or claim arising out of or relating to this
Agreement, or the alleged breach thereof, or relating to Consultant's activities
or remuneration under this Agreement, shall be settled by binding arbitration in
California, in accordance with the applicable rules of the American Arbitration
Association, and judgment on the award rendered by the arbitrator(s) shall be
binding on the parties and may be entered in any court having jurisdiction as
provided by Paragraph 14 herein. The provisions of Title 9 of Part 3 of the
California Code of Civil Procedure, including

                                       7.
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section 1283.05, and successor statutes, permitting expanded discovery
proceedings shall be applicable to all disputes that are arbitrated under this
paragraph.

17. Complete Agreement. This Agreement contains the entire agreement of the
parties relating to the subject matter hereof. This Agreement and its terms may
not be changed orally but only by an agreement in writing signed by the party
against whom enforcement of any waiver, change, modification, extension or
discharge is sought.

18. Regulatory Matters.

         18.1 PROHIBITED CONTRACTS. Consultant acknowledges that the Company,
together with its parent and affiliated corporations, partnerships and companies
(collectively, "INNOVATIVE"), is subject to the provisions of the gaming laws,
rules and regulations of each jurisdiction in which Company is licensed to
conduct business including, without limitation, the following acts and any
rules, regulations or orders promulgated thereunder: (i) the Nevada Gaming
Control Act, (ii) the Mississippi Gaming Control Act, (iii) the New Jersey
Casino Control Act, and (iv) any other act, laws, statutes, ordinances, rules,
regulations or tribal compact governing any casino operation (collectively, the
"ACTS"), which prohibit a gaming licensee from entering into any contract or
agreement with (a) a person who is found unsuitable, who is denied a license, or
whose license was revoked by the gaming authorities of any state, nation, tribe
or any other gaming regulatory board, agency or commission (each a
"COMMISSION"), or (b) any business enterprise under control of such person
without the prior approval of the appropriate Commission.

         18.2 LICENSING AND REGULATORY REQUIREMENTS. Consultant hereby covenants
and agrees to use its best efforts to comply and to cause each of its directors,
officers, partners, members and employees (each an "AFFILIATE") to comply with
the requirements of all Acts to the extent the Acts apply. Consultant shall
complete and submit to the Company, and shall cause its Affiliates to complete
and submit to the Company, background investigation consent forms and shall
supply such further information as may be reasonably necessary for Company to
meet its obligations under Company's Compliance Plan. If any Commission requests
that Consultant or any Affiliate (i) provide information to, (ii) file an
application with, (iii) respond to written or oral questions, (iv) cooperate in
a background investigation, (v) appear before such Commission, or (vi) comply
with any other request, Consultant agrees to use its best efforts to comply
fully, and to cause each Affiliate to comply fully, with such request.
Consultant hereby agrees to promptly provide the Company with written notice of
any Commission request and to keep the Company informed of the status of all
such requests and actions taken in response thereto. By entering the Agreement,
Consultant hereby represents and warrants that neither Consultant nor any
Affiliate has been found unsuitable or denied any license or approval by any
Commission. In the event that Consultant has been found unsuitable or has been
denied any license or approval, prior approval of each Commission is required
before the Agreement can be effective. If there has been a finding of
unsuitability or a denial of any license or approval, immediately contact the
Company's General Counsel either via telephone at 702-614-7199 or via letter to
Innovative Gaming Corporation of America, 333 Orville Wright Court, Las Vegas,
Nevada 89119 Attention: General Counsel.

         18.3 TERMINATION OF AGREEMENT. In the event (i) Consultant or any
Affiliate fails to abide by the requirements of this Section 18, or (ii)
Consultant or any Affiliate is found unsuitable or unqualified for any license,
registration, approval or finding of suitability, or otherwise to be associated
with a gaming licensee by any Commission, or (iii) Company determines in the
exercise of

                                       8.
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its sole and absolute discretion that Consultant's or any Affiliate's continued
association with Company may result in (a) the disapproval, modification or
non-renewal of any contract under which Company has sole or shared authority to
manage any gaming operations, or (b) the loss, non-renewal or non-reinstatement
of any license, registration, approval, finding of suitability or franchise held
by Company to conduct any portion of Company's business, or (c) the imposition
of any fine or the taking of any disciplinary action by any Commission, Company
shall be entitled immediately to terminate the Agreement and any unexercised
Warrants or unconverted Convertible and the Company shall thereafter have no
liability to Consultant or any Affiliate for any loss, costs, expense, loss of
anticipated profits, direct damages, indirect damages, consequential damages,
punitive damages, or other damages or liability of any nature whatsoever whether
based on contract, tort or any other theories of liability.

19. Neither party to this Agreement shall be deemed to be granted under the
terms of this Agreement any right, title or interest in or to the trademarks,
trade names, service marks, copyrights, patents or other intellectual property
of the other party. The Consultant and Company expressly acknowledge and agree
that neither party is granted under this Agreement the right to use or
incorporate in any materials, including without limitation marketing materials,
the name, logos, trademarks, or copyrights of the other party without the
advance approval of such party.

20. The parties shall perform all of their respective obligations under this
Agreement in compliance with all applicable federal, state and local laws,
ordinances, rules, regulations, codes or orders.

21. This Agreement is effective on the date of execution or, upon approval of
the Nevada Gaming Control Board or Nevada Gaming Commission (or any other gaming
authority with jurisdiction over the Company or its operations) if such approval
is required, whichever is later. Should any such prior approval be required, but
not obtained, then this Agreement shall be null and void.

AGREED TO:

INNOVATIVE GAMING CORPORATION OF AMERICA

Date: July ___    , 2001           By: ______________________________________
                                       Roland M. Thomas, Chairman/CEO

REDWOOD CONSULTANTS, LLC

Date: July ___    , 2001           By:_______________________________________
                                      Anthony D. Altavilla, Managing Director

Date: July ___    , 2001           By:_______________________________________
                                      Jens Dalsgaard, Managing Director

                                       9.<PAGE>   1
                                                                   EXHIBIT 10(3)

                          REGISTRATION RIGHTS AGREEMENT

     THIS REGISTRATION RIGHTS AGREEMENT, dated as of April [__], 2001 (this
"AGREEMENT"), 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 Shaar Fund Ltd. (the
"INITIAL INVESTOR").

     WHEREAS, upon the terms and subject to the conditions of the Securities
Exchange Agreement dated as of April [__], 2001, between the Initial Investor
and the Company (the "SECURITIES EXCHANGE AGREEMENT"), the Company has agreed to
issue to the Initial Investor (in exchange for all shares of the Company's
Series B Convertible Preferred Stock, Series C Convertible Preferred Stock and
Series D 6% Convertible Preferred Stock held by the Initial Investor) (i) 500
shares of its Series I 6% Convertible Preferred Stock, par value $0.01 per share
(the "SERIES I PREFERRED SHARES") which, upon the terms of and subject to the
conditions of the Company's Certificate of Designation of Series I 6%
Convertible Preferred Stock (the "SERIES I CERTIFICATE OF DESIGNATION"), are
convertible into shares of the Company's common stock, par value $0.01 per share
(the "COMMON STOCK") and (ii) 460 shares of its Series H 4% Convertible
Preferred Stock, par value $0.01 per share (the "SERIES H PREFERRED SHARES" and
together with the Series I Preferred shares, the "PREFERRED SHARES") which, upon
the terms of and subject to the conditions of the Company's Certificate of
Designation of Series H 4% Convertible Preferred Stock (the "SERIES H
CERTIFICATE OF DESIGNATION"), are convertible into shares of Common Stock; and

     WHEREAS, to induce the Initial Investor to execute and deliver the
Securities Exchange Agreement, the Company has agreed to provide with respect to
the Common Stock issued or issuable in lieu of cash dividend payments on the
Preferred Shares and 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) As used in this Agreement, the following terms shall have the meanings:

          (i) "AFFILIATE," of any specified Person means any other Person who
     directly, or indirectly through one or more intermediaries, is in control
     of, is controlled by, or is under common control with, such specified
     Person. For purposes of this definition, control of a Person means the
     power, directly or indirectly, to direct or cause the direction of the
     management and policies of such Person whether by contract, securities,
     ownership or otherwise; and the terms "CONTROLLING" and "CONTROLLED" have
     the respective meanings correlative to the foregoing.

<PAGE>   2

          (ii) "COMMISSION" means the Securities and Exchange Commission.

          (iii) "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.

          (iv) "INVESTOR" means each of 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 8
     hereof.

          (v) "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.

          (vi) "PROSPECTUS" means the prospectus (including, without limitation,
     any preliminary prospectus and any final prospectus filed pursuant to Rule
     424(b) under the Securities Act, including any prospectus that discloses
     information previously omitted from a prospectus filed as part of an
     effective registration statement in reliance on Rule 430A under the
     Securities Act) included in the Registration Statement, as amended or
     supplemented by any prospectus supplement with respect to the terms of the
     offering of any portion of the Registrable Securities covered by the
     Registration Statement and by all other amendments and supplements to such
     prospectus, including all material incorporated by reference in such
     prospectus and all documents filed after the date of such prospectus by the
     Company under the Exchange Act and incorporated by reference therein.

          (vii) "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.

          (viii) "REGISTRABLE SECURITIES" means the Common Stock issued or
     issuable (i) in lieu of cash dividend payments on the Preferred Shares or
     (ii) upon conversion or redemption of the Preferred Shares; provided,
     however, a share of Common Stock shall cease to be a Registrable Security
     for purposes of this Agreement when it no longer is a Restricted Security.

          (ix) "REGISTRATION STATEMENT" means a registration statement of the
     Company filed on an appropriate form under the Securities Act providing for
     the registration of, and the sale on a continuous or delayed basis by the
     holders of, all of the Registrable Securities pursuant to Rule 415 under
     the Securities Act, including the Prospectus contained therein and forming
     a part thereof, any amendments to such registration statement and
     supplements to such Prospectus, and all exhibits and other material
     incorporated by reference in such registration statement and Prospectus.

          (x) "RESTRICTED SECURITY" means any share of Common Stock issued or
     issuable in lieu of cash dividend payments on the Preferred Shares or upon
     conversion or redemption of the Preferred Shares except any such share that
     (i) has been registered pursuant to an effective registration statement
     under the Securities Act and sold in a

                                       2

<PAGE>   3

     manner contemplated by the prospectus included in such registration
     statement, (ii) has been transferred in compliance with the resale
     provisions of Rule 144 under the Securities Act (or any successor provision
     thereto) or is transferable pursuant to paragraph (k) of Rule 144 under the
     Securities Act (or any successor provision thereto), or (iii) otherwise has
     been transferred and a new share of Common Stock not subject to transfer
     restrictions under the Securities Act has been delivered by or on behalf of
     the Company.

          (xi) "SECURITIES ACT" means the Securities Act of 1933, as amended,
     and the rules and regulations of the Commission thereunder, or any similar
     successor statute.

          (xii) "SERIES I REGISTRABLE SECURITIES" means the Common Stock issued
     or issuable (i) in lieu of cash dividend payments on the Series I Preferred
     Shares or (ii) upon conversion or redemption of the Series I Preferred
     Shares.

          (xiii) "SERIES H REGISTRABLE SECURITIES" means the Common Stock issued
     or issuable (i) in lieu of cash dividend payments on the Series H Preferred
     Shares or (ii) upon conversion or redemption of the Series H Preferred
     Shares.

     (b) All capitalized terms used and not defined herein have the respective
meaning assigned to them in the Securities Exchange Agreement.

     2. REGISTRATION

     (a) FILING AND EFFECTIVENESS OF REGISTRATION STATEMENT. The Company shall
prepare and file a registration statement registering the Registrable Securities
within 30 days after April 3, 2001 (such registration statement is referred to
herein as the "REGISTRATION STATEMENT"). The Company shall use its best efforts
to cause the Commission to declare the Registration Statement effective under
the Securities Act as promptly as practicable but in no event later than 180
days after April [__], 2001. The Company shall promptly (and, in any event, no
more than 24 hours after it receives comments from the Commission), notify the
Buyer when and if it receives any comments from the Commission on the
Registration Statement and promptly forward a copy of such comments, if they are
in writing, to the Buyer. At such time after the filing of the Registration
Statement pursuant to this Section 2(a) as (i) the Commission indicates, either
orally or in writing, that it has no further comments with respect to such
Registration Statement or that it is willing to entertain appropriate requests
for acceleration of effectiveness of such Registration Statement and (ii) the
Company shall have received all necessary Nevada gaming regulatory approvals,
the Company shall promptly, and in no event later than two business days after
receipt of such indication from the Commission, request that the effectiveness
of such Registration Statement be accelerated within 48 hours of the
Commission's receipt of such request. The Company shall not include any other
securities in the Registration Statement relating to the offer and sale of the
Registrable Securities. The Company shall notify the Initial Investor by written
notice that such Registration Statement has been declared effective by the
Commission within 24 hours of such declaration by the Commission.

                                       3

<PAGE>   4

     (b) REGISTRATION DEFAULT. If the Registration Statement covering the
Registrable Securities required to be filed by the Company pursuant to Section
2(a) is not (i) filed with the Commission by within 30 after April [__], 2001 or
(ii) declared effective by the Commission within 180 days after April [__], 2001
(either of which, without duplication, an "INITIAL DATE"), then the Company
shall make the payments to the Initial Investor as provided in the next sentence
as liquidated damages and not as a penalty. The amount to be paid by the Company
to the Initial Investor shall be determined as of each Computation Date (as
defined below), and such amount shall be equal to 2% (the "LIQUIDATED DAMAGE
RATE") of $960,000 from the Initial Date to the first Computation Date and 3.5%
for each Computation Date thereafter, calculated on a pro rata basis to the date
on which the Registration Statement is filed with (in the event of an Initial
Date pursuant to clause (i) above) or declared effective by (in the event of an
Initial Date pursuant to clause (ii) above) the Commission (the "PERIODIC
AMOUNT"). The full Periodic Amount shall be paid by the Company to the Initial
Investor by wire transfer of immediately available funds within three days after
each Computation Date.

     As used in this Section 2(b), "COMPUTATION DATE" means the date which is 30
days after the Initial Date and, if the Registration Statement required to be
filed by the Company pursuant to Section 2(a) has not theretofore been declared
effective by the Commission, each date which is 30 days after the previous
Computation Date until such Registration Statement is so declared effective.

     Notwithstanding the above, if the Registration Statement covering the
Registrable Securities required to be filed by the Company pursuant to Section
2(a) is not filed within 30 after April [__], 2001, the Company shall be in
default of this Registration Rights Agreement.

     (c) ELIGIBILITY FOR USE OF FORM S-3. The Company agrees that at such time
as it meets all the requirements for the use of Securities Act Registration
Statement on 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.

     (d) (i) If the Company proposes to register any of its warrants, Common
Stock or any other shares of common stock of the Company under the Securities
Act (other than a registration (A) on Form S-8 or S-4 or any successor or
similar forms, (B) relating to Common Stock or any other shares of common stock
of the Company issuable upon exercise of employee share options or in connection
with any employee benefit or similar plan of the Company or (C) in connection
with a direct or indirect acquisition by the Company of another Person or any
transaction with respect to which Rule 145 (or any successor provision) under
the Securities Act applies), whether or not for sale for its own account, it
will each such time, give prompt written notice at least 20 days prior to the
anticipated filing date of the registration statement relating to such
registration to each Investor, which notice shall set forth such Investor's
rights under this Section 2(e) and shall offer such Investor the opportunity to
include in such registration statement such number of Registrable Securities as
such Investor may request. Upon the written request of any Investor made within
10 days after the receipt of notice from the Company (which request shall
specify the number of Registrable Securities intended to be disposed of by such
Investor), the Company will use its best efforts to effect the registration
under the Securities Act of all Registrable Securities that the Company has been
so requested to register by each Investor, to the extent requisite to permit the
disposition of the Registrable Securities so to be registered;

                                       4

<PAGE>   5

provided, however, that (A) if such registration involves a Public Offering,
each Investor must sell its Registrable Securities to any underwriters selected
by the Company with the consent of such Investor on the same terms and
conditions as apply to the Company and (B) if, at any time after giving written
notice of its intention to register any Registrable Securities pursuant to this
Section 2 and prior to the effective date of the registration statement filed in
connection with such registration, the Company shall determine for any reason
not to register such Registrable Securities, the Company shall give written
notice to each Investor and, thereupon, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration. The
Company's obligations under this Section 2(d) shall terminate on the date that
the registration statement to be filed in accordance with Section 2(a) is
declared effective by the Commission.

     (ii) If a registration pursuant to this Section 2(d) involves a Public
Offering and the managing underwriter thereof advises the Company that, in its
view, the number of shares of Common Stock, warrants or other shares of Common
Stock that the Company, each Investor and all other sellers (the "THIRD-PARTY
SELLERS") intend to include in such registration exceeds the largest number of
shares of Common Stock or warrants (including any other shares of Common Stock
or warrants of the Company) that can be sold without having an adverse effect on
such Public Offering (the "MAXIMUM OFFERING SIZE"), the Company will include in
such registration, only such number of shares of Common Stock or warrants, as
applicable, as does not exceed the Maximum Offering Size, and the number of
shares in the Maximum Offering Size shall be allocated among the Company, the
Investors and any Third-Party Sellers first, among the Company and the Investors
pro rata on the basis of the relative number of shares of Common Stock or
warrants offered for sale under such registration by each of the Company and the
Investors and, second, to any Third-Party Sellers. If as a result of the
proration provisions of this Section 2(d)(ii), any Investor is not entitled to
include all such Registrable Securities in such registration, such Investor may
elect to withdraw its request to include any Registrable Securities in such
registration. With respect to registrations pursuant to this Section 2(d), the
number of securities required to satisfy any underwriters' over-allotment option
shall be allocated pro rata among the Company, the Investors and any Third-Party
Sellers on the basis of proration as set forth in the second sentence preceding.

     3. OBLIGATIONS OF THE COMPANY

     In connection with the registration of the Registrable Securities, the
Company shall:

     (a) Promptly (i) prepare and file with the Commission such amendments
(including post-effective amendments) to the Registration Statement and
supplements to the Prospectus as may be necessary to keep the Registration
Statement continuously effective and in compliance with the provisions of the
Securities Act applicable thereto so as to permit the Prospectus forming part
thereof to be current and useable by Investors for resales of the Registrable
Securities for a period of two years from the date on which the Registration
Statement is first declared effective by the Commission (the "EFFECTIVE TIME")
or such shorter period that will terminate when all the Registrable Securities
covered by the Registration Statement have been sold pursuant thereto in
accordance with the plan of distribution provided in the Prospectus, transferred
pursuant to Rule 144 under the Securities Act or otherwise transferred

                                       5

<PAGE>   6

in a manner that results in the delivery of new securities not subject to
transfer restrictions under the Securities Act (the "REGISTRATION PERIOD") and
(ii) take all lawful action such that each of (A) 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
(B) 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.

     (b) During the Registration Period, comply with the provisions of the
Securities Act with respect to the Registrable Securities of the Company covered
by the Registration Statement until such time as all of such Registrable
Securities have been disposed of in accordance with the intended methods of
disposition by the Investors as set forth in the Prospectus forming part of the
Registration Statement;

     (c) (i) Prior to the filing with the Commission of any Registration
Statement (including any amendments thereto) and the distribution or delivery of
any Prospectus (including any supplements thereto), provide (A) draft copies
thereof to the Investors and reflect in such documents all such comments as the
Investors (and their counsel) reasonably may propose and (B) to the Investors a
copy of the accountant's consent letter to be included in the filing and (ii)
furnish to each Investor whose Registrable Securities are included in the
Registration Statement and its legal counsel identified to the Company, (A)
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 (B) such number
of copies of the Prospectus and all amendments and supplements thereto and such
other documents, as such Investor may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such Investor;

     (d) (i) Register or qualify the Registrable Securities covered by the
Registration Statement under such securities or "blue sky" laws of such
jurisdictions as the Investors 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 3(d), (B) subject itself to general taxation in any such jurisdiction or
(C) file a general consent to service of process in any such jurisdiction;

     (e) As promptly as practicable after becoming aware of such event, notify
each Investor 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,

                                       6

<PAGE>   7

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 Investor as such
Investor may reasonably request;

     (f) As promptly as practicable after becoming aware of such event, notify
each Investor who holds Registrable Securities being sold (or, in the event of
an underwritten offering, the managing underwriters) of the issuance by the
Commission of any stop order or other suspension of the effectiveness of the
Registration Statement at the earliest possible time and take all lawful action
to effect the withdrawal, recession or removal of such stop order or other
suspension;

     (g) Cause all the Registrable Securities covered by the Registration
Statement to be listed 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;

     (h) 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;

     (i) Cooperate with the Investors who hold 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 Investors reasonably may
request and registered in such names as the Investor 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 Investors whose Registrable
Securities are included in such registration statement) an appropriate
instruction and, to the extent necessary, an opinion of such counsel;

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

     (k) 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
(including, at the option of the Company, Rule 158);

     (l) 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

                                       7

<PAGE>   8

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;

     (m) (i) Make reasonably available for inspection by Investors, any
underwriter participating in any disposition pursuant to the Registration
Statement, and any attorney, accountant or other agent retained by such
Investors or any such underwriter all relevant financial and other records,
pertinent corporate documents and properties of the Company and its
subsidiaries, and (ii) cause the Company's officers, directors and employees to
supply all information reasonably requested by such Investors 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 Investors 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 Investors and the other parties entitled thereto by
one firm of counsel designed by and on behalf of the majority in interest of
Investors and other parties;

     (n) In connection with any underwritten offering, make such representations
and warranties to the Investors participating in such underwritten offering and
to the managers, in form, substance and scope as are customarily made by the
Company to underwriters in secondary underwritten offerings;

     (o) In connection with any underwritten offering, obtain opinions of
counsel to the Company (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the managers) addressed to the
underwriters, covering such matters as are customarily covered in opinions
requested in secondary underwritten offerings (it being agreed that the matters
to be covered by such opinions shall include, without limitation, as of the date
of the opinion and as of the Effective Time of the Registration Statement or
most recent post-effective amendment thereto, as the case may be, the absence
from the Registration Statement and the Prospectus, including any documents
incorporated by reference therein, of an untrue statement of a material fact or
the omission of a material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading, subject to customary
limitations);

     (p) In connection with any underwritten offering, obtain "cold comfort"
letters and updates thereof from the independent public accountants of the
Company (and, if necessary, from the independent public accountants of any
subsidiary of the Company or of any business acquired by the Company, in each
case for which financial statements and financial data are, or

                                       8

<PAGE>   9

are required to be, included in the Registration Statement), addressed to each
underwriter participating in such underwritten offering (if such underwriter has
provided such letter, representations or documentation, if any, required for
such cold comfort letter to be so addressed), in customary form and covering
matters of the type customarily covered in "cold comfort" letters in connection
with secondary underwritten offerings;

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

     (r) 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 5 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.

     4. OBLIGATIONS OF THE INVESTORS

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

     (a) It shall be a condition precedent to the obligations of the Company to
complete the registration pursuant to this Agreement with respect to the
Registrable Securities of a particular Investor that such Investor 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 Registration Statement, the Company
shall notify each Investor of the information the Company requires from each
such Investor (the "REQUESTED INFORMATION") if such Investor elects to have any
of its Registrable Securities included in the Registration Statement. If at
least two business days prior to the anticipated filing date the Company has not
received the Requested Information from an Investor (a "NON-RESPONSIVE
INVESTOR"), then the Company may file the Registration Statement without
including Registrable Securities of such Non-Responsive Investor and have no
further obligations to the Non-Responsive Investor;

                                       9

<PAGE>   10

     (b) Each Investor by its acceptance of the Registrable Securities agrees to
cooperate with the Company in connection with the preparation and filing of the
Registration Statement hereunder, unless such Investor has notified the Company
in writing of its election to exclude all of its Registrable Securities from the
Registration Statement; and

     (c) Each Investor agrees that, upon receipt of any notice from the Company
of the occurrence of any event of the kind described in Section 3(e) or 3(f), it
shall immediately discontinue its disposition of Registrable Securities pursuant
to the Registration Statement covering such Registrable Securities until such
Investor's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 3(e) and, if so directed by the Company, such Investor
shall 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
Investor's possession, of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice.

     5. EXPENSES OF REGISTRATION

     All expenses, other than underwriting discounts and commissions, incurred
in connection with registrations, filings or qualifications pursuant to Section
3, but including, without limitation, all registration, listing, and
qualifications fees, printing and engraving fees, accounting fees, and the fees
and disbursements of counsel for the Company.

     6. INDEMNIFICATION AND CONTRIBUTION

     (a) The Company shall indemnify and hold harmless each Investor and each
underwriter, if any, which facilitates the disposition of Registrable
Securities, and each of their respective officers and directors and each person
who controls such Investor 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 an "INDEMNIFIED PERSON") from and against
any losses, claims, damages or liabilities, joint or several, to which such
Indemnified Person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (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 any Registration Statement or an
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, not misleading, or
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in any Prospectus or an omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and the Company hereby agrees to
reimburse such Indemnified Person for all reasonable legal and other expenses
incurred by them 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 (i) 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 3(e), the use by
the Indemnified

                                       10

<PAGE>   11

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) INDEMNIFICATION BY THE INVESTORS AND UNDERWRITERS. Each Investor
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, claims, damages or liabilities to which the
Company or such other persons may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (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 Investor or
underwriter shall be liable under this Section 6(b) for any amount in excess of
the net proceeds paid to such Investor 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) NOTICE OF CLAIMS, ETC. Promptly after receipt by a party seeking
indemnification pursuant to this Section 6 (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 6 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
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 and the Indemnifying Party shall
reasonably have concluded that representation of the Indemnified Party and 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

                                       11

<PAGE>   12

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) CONTRIBUTION. If the indemnification provided for in this Section 6 is
unavailable to or insufficient to hold harmless an Indemnified Person under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (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, claims, damages or liabilities (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, claims, damages
or liabilities (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 6(d) were determined by
pro rata allocation (even if the Investors 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 6(d).
The amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages or liabilities (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 the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligations of the Investors and any underwriters in this
Section 6(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 6, in no event
shall any (i) Investor be required to undertake liability to any person under
this Section 6 for any amounts in excess of the dollar amount of the proceeds to
be received by such Investor from the sale of such Investor's Registrable
Securities (after deducting any fees, discounts and commissions applicable
thereto) pursuant to any Registration Statement under which such

                                       12

<PAGE>   13

Registrable Securities are to be registered under the Securities Act 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 and distributed pursuant to the Registration Statement.

     (f) The obligations of the Company under this Section 6 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 6 shall be in addition to any liability which such Indemnified Person
may otherwise have to the Company. The remedies provided in this Section 6 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.

     7. RULE 144

     With a view to making available to the Investors 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 Investors to sell securities of the
Company to the public without registration ("RULE 144"), the Company agrees to
use its best efforts to:

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

     (b) 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.

     8. ASSIGNMENT

     The rights to have the Company register Registrable Securities pursuant to
this Agreement shall be automatically assigned by the Investors to any permitted
transferee of all or any portion of such Registrable Securities (or all or any
portion of any Preferred Shares of the Company which is 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.

                                       13

<PAGE>   14

     9. 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 the Company
and Investors who hold a majority-in-interest of the Registrable Securities. Any
amendment or waiver effected in accordance with this Section 9 shall be binding
upon each Investor and the Company.

     10. CHANGES IN COMMON STOCK

     If, and as often as, there are any changes in the Common Stock by way of
stock split, stock dividend, reverse split, combination or reclassification, or
through merger, consolidation, reorganization or recapitalization, or by any
other means, appropriate adjustment shall be made in the provisions hereof, as
may be required, so that the rights and privileges granted hereby shall continue
with respect to the Common Stock as so changed.

     11. 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) If, after the date hereof and prior to the Commission declaring the
Registration Statement to be filed pursuant to Section 2(a) effective under the
Securities Act, the Company grants to any Person any registration rights with
respect to any Company securities which are more favorable to such other Person
than those provided in this Agreement, then the Company forthwith shall grant
(by means of an amendment to this Agreement or otherwise) identical registration
rights to all Investors hereunder.

     (c) Except as may be otherwise provided herein, any notice or other
communication or delivery required or permitted hereunder shall be in writing
and shall be delivered personally or sent by certified mail, postage prepaid, or
by a nationally recognized overnight courier service, and shall be deemed given
when so delivered personally or by overnight courier service, or, if mailed,
three days after the date of deposit in the United States mails, as follows:

                                       14

<PAGE>   15

                           (i)      if to the Company, to:

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

                                    with a copy to:

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

                            (ii)    if to the Initial Investor, to:

                                    The Shaar Fund Ltd.,
                                    c/o Levinson Capital Management
                                    2 World Trade Center, Suite 1820
                                    New York, NY  10048
                                    Attention:  Samuel Levinson
                                    (212) 432-7711
                                    (212) 432-7771 (Fax)

                                    with a copy to:

                                    Cadwalader, Wickersham & Taft
                                    100 Maiden Lane
                                    New York, NY 10038
                                    Attention:  Dennis J. Block, Esq.
                                    (212) 504-5555
                                    (212) 504-5557 (Fax)

                           (iii)    if to any other Investor, at such address as
                                    such Investor shall have provided in writing
                                    to the Company.

The Company, the Initial Investor or any Investor may change the foregoing
address by notice given pursuant to this Section 11(c).

     (d) 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.

                                       15

<PAGE>   16

     (e) This Agreement shall be governed by and interpreted in accordance with
the laws of the State of New York. Each of the parties consents to the
jurisdiction of the federal courts whose districts encompass any part of the
City of New York or the state courts of the State of New York sitting in the
City of New York in connection with any dispute arising under this Agreement and
hereby waives, to the maximum extent permitted by law, any objection including
any objection based on forum non conveniens, to the bringing of any such
proceeding in such jurisdictions.

     (f) The remedies provided in this Agreement are cumulative and not
exclusive of any remedies provided by law. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

     (g) The Company shall not enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. 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, except for such rights and conflicts as have been
irrevocably waived. Without limiting the generality of the foregoing, without
the written consent of the holders of a majority in interest of the Registrable
Securities, the Company shall not grant to any person the right to request it to
register any of its securities under the Securities Act unless the rights so
granted are subject in all respect to the prior rights of the holders of
Registrable Securities set forth herein, and are not otherwise in conflict or
inconsistent with the provisions of this Agreement. The restrictions on the
Company's rights to grant registration rights under this paragraph shall
terminate on the date the Registration Statement to be filed pursuant to Section
2(a) is declared effective by the Commission. Notwithstanding the foregoing, the
Company shall be permitted to enter into and perform one or more registration
rights agreements with holders of the Company's Series I 6% Convertible
Preferred Stock, par value $0.01 per share, each containing provisions
substantially similar to the provisions of this Agreement.

     (h) This Agreement, the Securities Exchange Agreement and the Preferred
Shares constitute the entire agreement among the parties hereto with respect to
the subject matter hereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein. This Agreement,
the Securities Exchange Agreement, the Preferred Shares the Series I Certificate
of Designation and the Series H Certificate of Designation supersede all prior
agreements and undertakings among the parties hereto with respect to the subject
matter hereof.

                                       16

<PAGE>   17

     (i) Subject to the requirements of Section 8 hereof, this Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties hereto.

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

     (k) The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning thereof.

     (l) The Company acknowledges that any failure by the Company to perform its
obligations under Section 3, or any delay in such performance could result in
direct damages to the Investors 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.

     (m) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. A facsimile transmission of this signed Agreement shall be legal
and binding on all parties hereto.

                                       17

<PAGE>   18

                  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:

                            THE SHAAR FUND LTD.

                            By:  SHAAR ADVISORY SERVICES, N.V. (the advisor to
                                 The Shaar Fund Ltd.)

                            By:
                               ------------------------------------------------
                               Name:   W. J. Langeveld
                               Title:   Managing Director

141629

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