<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Innovative Gaming Corporation of America
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
INNOVATIVE GAMING CORPORATION OF AMERICA
4750 TURBO CIRCLE
RENO, NEVADA 89502
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 29, 1998
---------------------
TO THE SHAREHOLDERS OF INNOVATIVE GAMING CORPORATION OF AMERICA:
Please take notice that the Annual Meeting of Shareholders of Innovative
Gaming Corporation of America will be held, pursuant to due call by the Board of
Directors of the Company at the Airport Plaza Hotel, 1981 Terminal Way, Reno,
Nevada on Friday, May 29, 1998, at 10:00 a.m., or at any adjournment or
adjournments thereof, for the purpose of considering and taking appropriate
action with respect to the following:
1. To elect four directors.
2. To transact any other business as may properly come before the
meeting or any adjournments thereof.
Pursuant to due action of the Board of Directors, shareholders of record
on April 1, 1998, will be entitled to vote at the meeting or any adjournments
thereof.
A PROXY FOR THE MEETING IS ENCLOSED HEREWITH. YOU ARE REQUESTED TO FILL
IN AND SIGN THE PROXY, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS, AND MAIL IT
PROMPTLY IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors
Innovative Gaming Corporation of America
Scott Shackelton, Secretary
April 24, 1998
<PAGE> 3
INNOVATIVE GAMING CORPORATION OF AMERICA
4750 TURBO CIRCLE
RENO, NEVADA 89502
---------------------
PROXY STATEMENT
---------------------
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
MAY 29, 1998
PROXIES AND VOTING
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Innovative Gaming Corporation of America
(the "Company") to be used at the Annual Meeting of Shareholders of the Company
to be held May 29, 1998. The approximate date on which this Proxy Statement and
the accompanying proxy were first sent or given to shareholders was April 24,
1998. Each shareholder who signs and returns a proxy in the form enclosed with
this Proxy Statement may revoke the same at any time prior to its use by giving
notice of such revocation to the Company in writing, in open meeting or by
executing and delivering a new proxy to the Secretary of the Company. Unless so
revoked, the shares represented by each proxy will be voted at the meeting and
at any adjournments thereof. Presence at the meeting of a shareholder who has
signed a proxy does not alone revoke that proxy. Only shareholders of record at
the close of business on April 1, 1998 (the "Record Date") will be entitled to
vote at the meeting or any adjournments thereof.
VOTING SECURITIES AND
PRINCIPAL HOLDERS THEREOF
The Company has outstanding one class of voting securities, Common
Stock, $0.01 par value, of which 7,535,211 shares were outstanding as of the
close of business on the Record Date. Each share of Common Stock is entitled to
one vote on all matters put to a vote of shareholders.
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of April 6, 1998, by (i) each person
known by the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock, (ii) each director, (iii) each executive officer named
in the Summary Compensation Table, and (iv) all executive officers and directors
as a group. Unless otherwise indicated, each of the following persons has sole
voting and investment power with respect to the shares of Common Stock set forth
opposite their respective names.
- 1 -
<PAGE> 4
<TABLE>
<CAPTION>
NAME OF BENEFICIAL OWNER NUMBER PERCENT OF CLASS
- ------------------------ ------ ----------------
<S> <C> <C>
Edward G. Stevenson(1) 221,666(2) 2.9
Lyle Berman(3) 33,000(4) *
Paul A. Bible(1) 13,000(5) *
Ronald R. Zideck(1) 6,000(6) *
Scott H. Shackelton(1) 35,000(7) *
Grand Casinos, Inc.(3) 1,127,500(8) 14.8
All executive officers
and directors as a
group (five persons) 308,666(9) 4.0
</TABLE>
- -----------------------
* Less than 1%
1. The address of such person is 4750 Turbo Circle, Reno, Nevada 89502
2. Includes 216,666 shares that such person has the right to acquire within 60
days.
3. The address of such person is 130 Cheshire Lane, Minnetonka, Minnesota
55305.
4. Does not include 1,025,000 shares of Common Stock and 102,500 shares of
Common Stock issuable upon exercise of a warrant (the "Warrant")
beneficially owned by Grand Casinos, Inc. ("Grand Casinos") of which Mr.
Berman disclaims beneficial ownership. Mr. Berman is Chairman of the Board
and a principle shareholder of Grand Casinos.
5. Includes 10,000 shares that such person has the right to acquire within 60
days. Includes 3,000 shares for which Mr. Bible has shared voting rights
with his spouse.
6. Includes 5,000 shares that such person has the right to acquire within 60
days. Includes 1,000 shares for which Mr. Zideck has shared voting rights
with his spouse.
7. Includes 30,000 shares that such person has the right to acquire within 60
days.
8. Includes 102,500 shares that such person has the right to acquire within 60
days.
9. Includes 261,666 shares that such persons has the right to acquire within
60 days.
- 2 -
<PAGE> 5
ELECTION OF DIRECTORS
Four directors are to be elected at the meeting, each director to hold
office until the next Annual Meeting of Shareholders, or until his successor is
elected and qualified. All of the persons listed below are now serving as
directors of the Company. All of the persons listed below have consented to
serve as a director, if elected. The Board of Directors proposes for election
the following nominees:
EDWARD G. STEVENSON, age 51, has been the President, Chief Executive
Officer and a director of the Company since February 1996. Prior to joining the
Company, Stevenson served as the President and Chief Operating Officer of Little
Six, Inc. d/b/a Mystic Lake Casino in Minneapolis, from January 1995 to March
1996. From 1988-1991 and from October 1992 to January 1995, Mr. Stevenson was
the President of CMS International/Summit Casinos of Reno, Nevada. From June
1991 to October 1992, Mr. Stevenson served as president of the Gaming Operations
Division for International Game Technology.
LYLE BERMAN, age 56, has served as a director of the Company since
December 1992 and as Chairman of the Board since December 1995. Mr. Berman has
been the Chairman of the Board of Grand Casinos since October 1991 and Chief
Executive Officer from October 1991 through March 1998, and Chairman of the
Board and Chief Executive Officer of Rainforest Cafe, Inc. since February 1994.
Mr. Berman had been Chief Executive Officer of Stratosphere Corporation from
July 1994 through July 1997 and Chairman from July 1996 through July 1997.
Stratosphere Corporation filed for reorganization under Chapter 11 of the U.S.
Bankruptcy Code in January 1997. Mr. Berman is also a director of G-III Apparel
Group Ltd., New Horizon Kids Quest, Inc. and Wilson's The Leather Investors,
Inc.
PAUL A. BIBLE, age 57, has served as a director of the Company since
April 1997. Mr. Bible is President of the law firm Bible, Hoy & Trachok, Reno,
Nevada, and specializes in commercial and gaming law. Mr. Bible was formerly
chairman of the Nevada Gaming Commission from 1983 to 1987, Chairman of the
State Bar of Nevada Gaming Law Section from 1989 to 1993, Trustee of the
International Association of Gaming Attorneys from 1989 to 1994, and currently
serves as a Vice President of the University of Nevada, Reno, Foundation.
RONALD R. ZIDECK, age 60, was the managing partner of the Nevada office
of the international firm of management accountants and consultants, Grant
Thornton LLP from 1981 to 1997, and specializes in audit and regulatory
reporting for the gaming industry. He served on his firm's National Executive
Committee from 1991 to 1997. Mr. Zideck has also served on the Board of
Directors of Harveys Casino Resorts, which owns and operates casino resorts in
Nevada, Colorado and Iowa, since August 1997, and joined the Board of Directors
of Comstock Bancorp in December 1997.
- 3 -
<PAGE> 6
PROXIES AND VOTING
The affirmative vote of the holders of the greater of (a) a majority of
the outstanding shares of Common Stock of the Company present and entitled to
vote on the election of directors or (b) a majority of the voting power of the
minimum number of shares entitled to vote that would constitute a quorum for
transaction of business at the meeting, is required for election to the Board of
each of the nominees named above. A shareholder who abstains with respect to the
election of directors is considered to be present and entitled to vote on the
election of directors at the meeting, and is in effect casting a negative vote,
but a shareholder (including a broker) who does not give authority to a Proxy to
vote, or withholds authority to vote, on the election of directors, shall not be
considered present and entitled to vote on the election of directors.
All shares represented by proxies will be voted for the election of the
foregoing nominees unless a contrary choice is specified. If any nominee should
withdraw or otherwise become unavailable for reasons not presently known, the
proxies which would have otherwise been voted for such nominee will be voted for
such substitute nominee as may be selected by the Board of Directors.
EXECUTIVE COMPENSATION
The following table sets forth the cash and noncash compensation for
each of the last three fiscal years awarded to or earned by the Chief Executive
Officer and the most highly compensated officers other than the Chief Executive
Officer.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
----------------------------------- COMPENSATION
OTHER ANNUAL AWARDS
NAME AND SALARY BONUS(1) COMPENSATION OPTIONS
PRINCIPAL POSITION YEAR ($) ($) ($) (#)
- ------------------ ---- ------- -------- ------------ -------
<S> <C> <C> <C> <C> <C>
Edward G. Stevenson(2) 1997 251,000 70,000 6,000 -0-
President and 1996 208,974 -0- 5,000 300,000
Chief Executive Officer
Scott H. Shackelton(3) 1997 136,000 -0- 5,700 60,000
Chief Financial Officer 1996 76,284 -0- 3,325 60,000
</TABLE>
- --------------
(1) Bonuses were determined under the Company's Management Incentive Plan.
(2) Mr. Stevenson began his employment with the Company February 15, 1996.
(3) Mr. Shackelton began his employment with the Company on June 10, 1996.
- 4 -
<PAGE> 7
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning the grant
of stock options to the Company's executive officers named in the Summary
Compensation Table during the last fiscal year.
<TABLE>
<CAPTION>
REALIZABLE
VALUE AT
ASSUMED ANNUAL
INDIVIDUAL GRANTS RATES OF STOCK
---------------------------------------------------------------- PRICE
NUMBER OF PERCENT OF APPRECIATION
SECURITIES TOTAL OPTIONS FOR OPTION
UNDERLYING GRANTED TO EXERCISE TERM(1)
OPTIONS EMPLOYEES IN OR BASE PRICE EXPIRATION -------------------
NAME GRANTED FISCAL YEAR PER SHARE DATE 5% 10%
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Edward G. Stevenson -- -- -- -- $ -- $ --
Scott H. Shackelton 60,000(2) 22.1% $4.13 July 2007 155,840 394,929
</TABLE>
- ----------------
(1) Amounts for the executive shown in these columns have been derived by
multiplying the exercise price by the annual appreciation rate shown
(compounded for the term of the options), multiplying the result by the
number of shares covered by the options, and subtracting the aggregate
exercise price of the options. The dollar amounts set forth under this
heading are the result of calculations at the 5% and 10% rates set by the
SEC and therefore are not intended to forecast possible future
appreciation, if any, of the Company's stock price.
(2) Such options were granted at a price equal to the fair market value of the
Company's Common Stock on the date of grant. Options become exercisable on
a pro-rata basis in six equal annual increments beginning on the date of
grant.
- 5 -
<PAGE> 8
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
The following table summarizes information with respect to options held
by the executive officers named in the Summary Compensation Table, and the value
of the options held by such persons at the end of fiscal 1997.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED FY-END (#) FY-END ($)
ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Edward G. Stevenson --- --- 216,666/83,334 $ ---/---
Scott H. Shackelton --- --- 30,000/90,000 $ ---/---
</TABLE>
- 6 -
<PAGE> 9
EMPLOYMENT AGREEMENTS
In February 1996, the Company entered into a three year employment
agreement with Edward G. Stevenson pursuant to which Mr. Stevenson serves the
Company as President and Chief Executive Officer. Pursuant to such agreement,
Mr. Stevenson receives an annual base salary of $250,000 and an annual bonus of
up to 25% of his base salary as determined by the Company's Board of Directors.
In addition, Mr. Stevenson will receive an annual bonus of up to 25% of his base
salary, the exact amount to be determined pursuant to a profit formula to be
determined by the Compensation Committee of the Company's Board of Directors.
Mr. Stevenson was also granted 300,000 options to purchase shares of the
Company's Common Stock at $7.50 per share. 50,000 of such options vested on
February 15, 1996 and the balance vest over three years on a pro-rata basis
beginning February 15, 1997. The exercise price of such stock options were
repriced in October 1996 to $4.75 per share. Upon termination "without cause,"
Mr. Stevenson is entitled to the greater of his base salary for 12 months or the
base salary for the balance of the remaining term of such employment agreement.
Mr. Stevenson has agreed not to compete with the Company while employed by the
Company and the period during which severance is paid, if any.
In June 1996, the Company entered into an employment agreement with
Scott H. Shackelton pursuant to which Mr. Shackelton serves the Company as Vice
President of Finance and Chief Financial Officer. The agreement has an initial
term of two years and provides for automatic renewal for successive one year
terms after June 10, 1998, unless employment has been terminated. Pursuant to
such agreement, Mr. Shackelton receives an annual base salary of $135,000 and
will receive an annual bonus or merit increase of up to 25% of his base salary,
the exact amount to be determined by the Company's Board of Directors. Mr.
Shackelton will also receive an additional bonus of up to 25% of his current
base salary each year, the exact amount to be determined pursuant to a profit
formula to be determined by the Compensation Committee of the Company's Board of
Directors. Mr. Shackelton was also granted 60,000 options pursuant to such
agreement to purchase shares of the Company's Common Stock at $4.75 per share.
Ten thousand (10,000) of such options vested on August 21, 1996, and the balance
of such options vest over five years on a pro-rata basis beginning June 10,
1997. An additional 60,000 options to purchase shares of the Company's Common
Stock at $4.13 per share were granted on July 24, 1997. Upon termination
"without cause" Mr. Shackelton is entitled to the greater of his base salary for
twelve (12) months or the base salary for the remaining term of such employment
agreement. Mr. Shackelton has agreed not to compete with the Company while
employed by the Company and the period during which severance is paid, if any.
- 7 -
<PAGE> 10
DIRECTOR COMPENSATION
Directors who are not employees of the Company are paid $1,000 for each
Board meeting and $500 for each committee meeting they attend, provided that the
maximum paid to such director per day will be the greater amount due for any
single meeting in the case of multiple meetings attended. In May 1997, Paul A.
Bible was granted options pursuant to the Company's 1997 Director Stock Option
Plan to purchase 20,000 shares of the Company's Common Stock at an exercise
price of $5.125, vesting in four equal installments over a three-year period,
with the first installment being on the date of grant. In September, 1997,
Ronald R. Zideck was granted options pursuant to the Company's 1997 Director
Stock Option Plan to purchase 20,000 shares of the Company's Common Stock at an
exercise price of $5.00, vesting in four equal installments over a three-year
period, with the first installment being on the date of grant. Directors who are
employees of the Company are not paid fees or additional remuneration for
service as members of the Board or its Committees.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee presently consists of Messrs. Lyle
Berman and Paul A. Bible. Stanley M. Taube, who resigned as a Director of the
Company in April 1997, served on the Compensation Committee through April 1997.
Mr. Berman is Chairman of the Board of Grand Casinos, Inc.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions on compensation of the Company's executives generally have
been made by the Compensation Committee of the Board of Directors. Each member
of the Compensation Committee is a non-employee director. All decisions by the
Compensation Committee relating to the compensation of the Company's executive
officers are reviewed by the full Board of Directors. Pursuant to rules designed
to enhance disclosure of the Company's policies toward executive compensation,
set forth below is a report prepared by the Compensation Committee addressing
the compensation policies for the Company for the year ended December 31, 1997,
as they affected the Company's executive officers.
The Compensation Committee's executive compensation policies are
designed to provide competitive levels of compensation that integrate pay with
the Company's annual objectives and long-term goals, reward above-average
corporate performance, recognize individual achievements, and assist the Company
in attracting and retaining qualified executives. Executive compensation is set
at levels that the Compensation Committee believes to be consistent with others
in the Company's industry.
- 8 -
<PAGE> 11
There are three elements in the Company's executive compensation program, all
determined by individual and corporate performance.
o Base salary compensation
o Annual incentive compensation
o Stock options
Total compensation opportunities are competitive with those offered by
employers of comparable size, growth and profitability in the Company's
industry.
Base salary compensation is determined by the potential impact the
individual has on the Company, the skills and experiences required by the job,
and the performance and potential of the incumbent in the job.
Annual incentive compensation for executives of the Company is based
primarily on corporate operating earnings and revenue growth and the Company's
positioning for future results, but also includes an overall assessment by the
Compensation Committee of executive management's performance, as well as market
conditions. In March 1997, the Company's Compensation Committee awarded a bonus
of $70,000 to Edward G. Stevenson, the Company's President and Chief Executive
Officer. This bonus was paid pursuant to Mr. Stevenson's employment agreement
with the Company and pursuant to the Management Incentive Plan based upon Mr.
Stevenson's performance and achievement of certain goals, such as the
positioning of the Company for future results.
Awards of stock grants under the Company's 1992 Stock Option and
Compensation Plan (the "Plan") are designed to promote the identity of long-term
interests between the Company's executives and its shareholders and assist in
the retention of executives. The Plan also permits the Committee to grant stock
options to key personnel. Options become exercisable based upon criteria
established by the Company. In July 1997, the Company issued to Scott H.
Shackelton, the Chief Financial Officer, options to purchase 60,000 shares of
the Company's Common Stock, exercisable at $4.13 per share.
The Compensation Committee surveys employee stock option programs of
companies with similar capitalization to the Company prior to recommending the
grant of options to executives. While the value realizable from exercisable
options is dependent upon the extent to which the Company's performance is
reflected in the market price of the Company's common stock at any particular
point in time, the decision as to whether such value will be realized in any
particular year is determined by each individual executive and not by the
Compensation Committee. Accordingly, when the Committee recommends that an
option be granted to an executive, that recommendation does not take into
account any gains realized that year by that executive as a result of his or her
individual decision to exercise an option granted in a previous year.
To date, no executive officer of the Company has received compensation
that exceeds $1 million per year.
LYLE BERMAN
PAUL A. BIBLE
- 9 -
<PAGE> 12
STOCK PERFORMANCE GRAPH
The Securities and Exchange Commission requires that the Company include
in this Proxy Statement a line-graph presentation comparing cumulative,
five-year return to the Company's shareholders (based on appreciation of the
market price of the Company's Common Stock) on an indexed basis with (i) a broad
equity market index and (ii) an appropriate published industry or
line-of-business index, or peer group index constructed by the Company. The
following presentation compares the Company's Common Stock price in the period
from May 28, 1993 (the date of the Company's initial public offering) to
December 31, 1997, to the S&P 500 Stock Index and to a "peer group" index
created by the Company over the same period. The "peer group" index consisted of
the common stock of: Acres Gaming, Inc., Alliance Gaming, Casino Data Systems,
International Game Technology, Mikohn Gaming Corp., Shuffle Master, Inc. and WMS
Industries. The presentation assumes that the value of an investment in each of
the Company's Common Stock, the S&P 500 Index, and the peer group index was $100
on May 28, 1993, and that any dividends paid were reinvested in the same
security.
TOTAL RETURN TO STOCKHOLDERS
(ASSUMES $100 INVESTMENT ON 5/28/93)
[GRAPH HERE]
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
TOTAL RETURN ANALYSIS
5/28/93 7/30/93 7/29/94 12/30/94 12/29/95 12/31/96 12/31/97
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INNOVATIVE GAMING CORP. $100.00 $175.44 $101.75 $ 55.26 $100.00 $ 82.46 $ 31.58
- ------------------------------------------------------------------------------------------------
PEER GROUP $100.00 $ 88.07 $ 56.83 $ 52.03 $ 54.51 $ 66.34 $ 88.83
- ------------------------------------------------------------------------------------------------
S&P 500 $100.00 $ 99.89 $105.02 $106.62 $146.65 $180.29 $240.43
- ------------------------------------------------------------------------------------------------
</TABLE>
Source: Carl Thompson Associates www.ctaonline.com (303) 494-5472.
Data from Bloomberg Financial Markets
- 10 -
<PAGE> 13
OTHER MATTERS
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held three meetings during 1997. The Company has
a Compensation Committee consisting of Messrs. Lyle Berman and Paul A. Bible and
an Audit Committee consisting of Messrs. Ronald R. Zideck and Paul A. Bible, but
does not have a nominating committee of the Board of Directors.
The Company's Compensation Committee did not meet during 1997, but did
take action pursuant to written actions during 1997. The Compensation Committee
administers the 1992 Stock Option and Compensation Plan. The Company's Audit
Committee, did not meet during 1997, but did take action pursuant to written
actions during 1997. Prior to April 1997, Stanley M. Taube was a member of the
Board of Directors, the Compensation Committee and the Audit Committee of the
Company. In April 1997, Mr. Taube resigned from the Board of Directors, the
Compensation Committee and the Audit Committee. In April 1997, Mr. Paul A. Bible
was appointed to the Board of Directors, the Compensation Committee and the
Audit Committee. In September 1997, Mr. Ronald R. Zideck was appointed to the
Board of Directors and the Audit Committee.
INDEPENDENT ACCOUNTANTS
The Board of Directors, upon the recommendation of the Audit Committee,
has selected Arthur Andersen LLP as independent public accountants for fiscal
year 1998. Arthur Andersen LLP has been the independent public accountants for
the Company since May 26, 1994. A representative of Arthur Andersen LLP is
expected to attend the meeting and to have an opportunity to make a statement
and respond to appropriate questions from shareholders.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and NASDAQ. Officers, directors and greater than ten percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file. Based solely on review of the copies of such forms
furnished to the Company, or written representations that no Forms 5 were
required, the Company believes that during the year ended December 31, 1997 all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten-percent beneficial owners were complied with, except for late
Form 3 and Form 4 filings by Ronald R. Zideck, a director of the Company.
- 11 -
<PAGE> 14
PROPOSALS OF SHAREHOLDERS
All proposals of shareholders intended to be presented at the 1999
Annual Meeting of Shareholders of the Company must be received by the Company at
its executive offices on or before December 24, 1998.
SOLICITATION
The Company will bear the cost of preparing, assembling and mailing the
proxy, Proxy Statement, Annual Report and other material which may be sent to
the shareholders in connection with this solicitation. Brokerage houses and
other custodians, nominees and fiduciaries may be requested to forward
soliciting material to the beneficial owners of stock, in which case they will
be reimbursed by the Company for their expenses in doing so. Proxies are being
solicited primarily by mail, but, in addition officers and regular employees of
the Company may solicit proxies personally, by telephone, by telegram or by
special letter.
The Board of Directors does not intend to present to the meeting any
other matter not referred to above and does not presently know of any matters
that may be presented to the meeting by others. However, if other matters come
before the meeting, it is the intent of the persons named in the enclosed proxy
to vote the proxy in accordance with their best judgment.
By Order of the Board of Directors
Innovative Gaming Corporation of America
Scott H. Shackelton
Secretary
- 12 -
<PAGE> 15
(FORM OF PROXY)
INNOVATIVE GAMING CORPORATION OF AMERICA
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS - MAY 29, 1998
The undersigned, a shareholder of Innovative Gaming Corporation of America,
hereby appoints Edward G. Stevenson and Scott Shackelton, and each of them, as
proxies, with full power of substitution, to vote on behalf of the undersigned
the number of shares which the undersigned is then entitled to vote, at the
Annual Meeting of Shareholders of Innovative Gaming Corporation of America to be
held at the Airport Plaza Hotel, 1981 Terminal Way, Reno, Nevada, on Friday, May
29, 1998, at 10:00 a.m., and at any and all adjournments thereof, with all the
powers which the undersigned would possess if personally present, upon:
(1) Election of Directors:
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
(except as marked to vote for all nominees
to the contrary below) listed below
EDWARD G. STEVENSON, LYLE BERMAN,
PAUL A. BIBLE, RONALD R. ZIDECK
INSTRUCTION: To withhold authority to vote for any individual nominee write that
nominee's name on the space provided below.
- --------------------------------------------------------------------------------
(2) Upon such other business as may properly come before the meeting or any
adjournments thereof.
(Continued, and TO BE COMPLETED AND SIGNED on the reverse side)
<PAGE> 16
(Continued from other side)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES
The undersigned hereby revokes all previous proxies relating to the shares
covered hereby and acknowledges receipt of the Notice and Proxy Statement
relating to the Annual Meeting of Shareholders.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. When properly
executed, this proxy will be voted on the proposal set forth herein as directed
by the shareholder, but if no direction is made in the space provided, this
proxy will be voted FOR the election of all nominees for director.
Dated ____________________________, 1998
________________________________________
________________________________________
(Shareholder must sign exactly as the
name appears at left. When signed as a
corporate officer, executor,
administrator, trustee, guardian, etc.,
please give full title as such. Both
joint tenants must sign.)
