Edgar Filing: MULTIMEDIA GAMES INC

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

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[ ] Soliciting Material Under Rule 14a-12

MULTIMEDIA GAMES, INC.
--------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
----------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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MULTIMEDIA GAMES, INC.
8900 SHOAL CREEK BOULEVARD, SUITE 300
AUSTIN, TEXAS 78757
(512) 371-7100

May 2, 2002

Dear Shareholder:

You are cordially invited to attend the annual meeting of shareholders
of Multimedia Games, Inc. to be held on Wednesday, May 29, 2002 at 9:30 a.m.,
local time, at the Holiday Inn Northwest, 8901 Business Park Drive, Austin,
Texas 78759.

Details of the business to be conducted at the annual meeting are given
in the attached Notice of Annual Meeting and Proxy Statement.

Whether or not you attend the annual meeting, it is important that your
shares be represented and voted at the meeting. To assure that your vote is
counted, please sign, date, and promptly return your proxy in the enclosed
postage-prepaid envelope. If you decide to attend the annual meeting and vote in
person, you will of course be able to do so.

YOUR SHARES CANNOT BE VOTED UNLESS YOU SIGN AND RETURN THE ENCLOSED PROXY OR
ATTEND THE ANNUAL MEETING IN PERSON.

A copy of our Annual Report on Form 10-K for our fiscal year ended
September 30, 2001 is also enclosed.

On behalf of our board of directors and management, I would like to
express our appreciation for your continued support of our company. We sincerely
hope you will be able to join us at the meeting. We look forward to seeing you
at that time.

Sincerely yours,

Gordon T. Graves

Chairman of the Board and
Chief Executive Officer

MULTIMEDIA GAMES, INC.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 29, 2002

May 2, 2002

NOTICE IS HEREBY GIVEN that the 2002 Annual Meeting of Shareholders of
Multimedia Games, Inc., a Texas corporation, will be held on Wednesday, May 29,
2002 at 9:30 a.m., local time, at the Holiday Inn Northwest, 8901 Business Park
Drive, Austin, Texas 78759 for the following purposes:

1. To elect the following nominees as directors to serve for the
ensuing year and until their successors are elected: Gordon T.
Graves; Martin A. Keane; Thomas W. Sarnoff; John M. Winkelman
and Clifton E. Lind.

2. To ratify and approve the appointment of BDO Seidman, LLP, as
our independent auditors.

3. To ratify and approve the adoption of our 2001 Stock Option
Plan.

4. To transact such other business as may properly come before
the meeting or any adjournment or postponement thereof.

Each of these items of business is more fully described in the Proxy
Statement accompanying this Notice.

Only shareholders of record at the close of business on April 15, 2002
are entitled to notice of and to vote at the annual meeting. A complete list of
shareholders entitled to vote will be available for inspection at our offices,
8900 Shoal Creek Blvd., Austin, Texas, 78757, for ten days prior to the meeting.

All of you are invited to attend the annual meeting in person. However,
to assure that your vote is represented, you are urged to mark, sign and return
the enclosed proxy card as promptly as possible in the postage-prepaid envelope
enclosed for that purpose. If you receive more than one proxy card because you
own shares registered in different names or addresses, each proxy card should be
completed and returned by you. If you attend the annual meeting in person you
may vote in person even if you have returned a proxy card.

By Order Of The Board Of Directors

Gordon T. Graves

Chairman of the Board and
Chief Executive Officer

MULTIMEDIA GAMES, INC.
8900 SHOAL CREEK BOULEVARD, SUITE 300
AUSTIN, TEXAS 78757

PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD MAY 29, 2002

GENERAL

The enclosed proxy is solicited on behalf of the board of directors of
Multimedia Games, Inc. for use at our annual meeting of shareholders. The annual
meeting will be held May 29, 2002 at 9:30 a.m., local time, at the Holiday Inn
Northwest, 8901 Business Park Drive, Austin, Texas 78759. The Holiday Inn
Northwest telephone number is (512) 343-0888.

These proxy solicitation materials were mailed on or about May 2, 2002
to all shareholders entitled to vote at the annual meeting.

VOTING BY PROXY

You may vote at the annual meeting by completing, signing and returning
the enclosed proxy card. If not revoked, your proxy will be voted at the annual
meeting in accordance with your instructions marked on the proxy card. If you
fail to mark your proxy with instructions, your proxy will be voted as follows:

o FOR the election of the five (5) nominees for director listed
in this Proxy Statement,

o FOR the appointment of BDO Seidman, LLP, as our independent
auditors, and

o FOR the ratification and approval of our 2001 Stock Option
Plan.

As to any other matter that may be properly brought before the annual
meeting, your proxy will be voted as the board of directors may recommend. If
the board of directors makes no recommendation, your proxy will be voted as the
proxy holders named in your proxy card deem advisable. The board of directors
does not know of any other matter that is expected to be presented for
consideration at the annual meeting.

YOU MAY REVOKE YOUR PROXY AND GIVE A NEW PROXY OR VOTE IN PERSON

You may revoke any proxy that has been executed and returned by you at
any time prior to the voting of that proxy. To revoke a prior proxy, you must do
one of the following:

o execute and return a subsequently dated revised proxy,

o give written notice of revocation to Multimedia Games,
Attention: Frank W. Rehanek, Jr., Inspector of Elections, or

o vote in person at the meeting.

VOTING AND QUORUM REQUIREMENTS AT THE MEETING

Only holders of shares of common stock at the close of business on
April 15, 2002 (the "record date") are entitled to notice of and to vote at the
annual meeting. On the record date, there were 12,512,396 shares of common stock
outstanding.

You will have one vote for each share of common stock held by you on
the record rate.

In order to have a meeting it is necessary that a quorum be present. A
quorum will be present if a majority of the shares of common stock are
represented at the annual meeting in person or by proxy. Abstentions and broker
non-votes will be counted for purposes of determining the presence or absence of
a quorum. Abstentions and broker non-votes will not be counted as voted either
for or against a proposal. If a quorum is present, the affirmative vote of

the holders of a majority of the shares entitled to vote on, and that actually
vote for or against, the matter is required to approve any matter.

SOLICITATION OF PROXIES

We are paying for all our costs incurred with soliciting proxies for
the annual meeting. In addition to solicitation by mail, we may use our
directors, officers and regular employees to solicit proxies by telephone or
otherwise. These personnel will not be specifically compensated for these
services. We will pay persons holding shares of Common Stock for the benefit of
others, such as nominees, brokerage houses, banks, and other fiduciaries, for
the expense of forwarding solicitation materials to the beneficial owner.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information as of the record date with respect to
the number of shares of common stock owned by (i) each person known by us to own
beneficially more than 5% of the outstanding shares of our common stock, (ii)
each director and director nominee, (iii) each executive officer named below in
the Summary Compensation Table, and (iv) all of our directors and executive
officers as a group:

COMMON STOCK
NUMBER OF
SHARES
BENEFICIALLY PERCENT
BENEFICIAL OWNER OWNED OF CLASS (1)
---------------- ------------- ------------

Gordon T. Graves 1,376,280(2) 11.00
8900 Shoal Creek Blvd., Ste. 300
Austin, Texas 78757

Eagle Asset Management 965,760(3) 7.72
880 Carillon Parkway
St. Petersburg, Florida 33716

Clifton E. Lind 611,574(4) 4.89

Gordon T. Sjodin 49,350(5) 1.58

Thomas W. Sarnoff 25,000(6) *

John M. Winkelman 59,250(7) *

Martin A. Keane 21,250(8) *

Gary L. Loebig 60,000(9) *

Robert F. Lannert 42,525(10) *

All executive officers and directors
as a group (10 persons) 2,287,354(11) 18.21

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* Less than one percent.

(1) Based upon 12,512,396 shares of common stock outstanding.

(2) Consists of (i) 100,612 shares owned by Mr. Graves, (ii) 1,117,227 shares
owned by Graves Properties, Ltd., a limited partnership controlled by Mr.
Graves, (iii) 1,500 shares owned by Graves Management, Inc. Defined Benefit
Trust, a corporation controlled by Mr. Graves, (iv) 104,441 shares issuable upon
the exercise of warrants held by Graves Properties, Ltd. that are currently
exercisable, and (v) 52,500 shares issuable upon the exercise of stock options
that are exercisable within the next 60 days. Does not include 45,000 shares as
to which Mr. Graves disclaims beneficial ownership, consisting of: shares owned
of record by Cynthia Graves, Mr. Graves' wife.

(3) As reported on Schedule 13G filed with the Securities and Exchange
Commission on January 11, 2002.

(4) Consists of (i) 441,000 shares owned by Mr. Lind, (ii) 9,132 shares owned by
the Lind Family Charitable Foundation, (iii) 79,500 shares issuable upon the
exercise of options that are currently exercisable, (iv) 52,500 shares issuable
upon the exercise of stock options that are exercisable within the next 60 days,
and (v) 29,442 shares that are issuable upon the exercise of warrants that are
currently exercisable.

(5) Consists of (i) 12,450 shares owned by Mr. Sjodin, (ii) 33,150 shares
issuable upon the exercise of stock options that are currently exercisable, and
(iii) 3,750 shares issuable upon the exercise of stock options that are
exercisable within the next 60 days.

(6) Consists of (i) 15,000 shares issuable upon the exercise of stock options
that are currently exercisable, and (ii) 15,000 shares issuable upon the
exercise of stock options that are exercisable within the next 60 days.

(7) Consists of (i) 44,250 shares issuable upon the exercise of options that are
currently exercisable, and (ii) 15,000 shares issuable upon the exercise of
stock options that are exercisable within the next 60 days.

(8) Consists of (i) 2,500 shares owned by Mr. Keane, and (ii) 18,750 shares
issuable upon the exercise of stock options that are exercisable within the next
60 days.

(9) Consists of (i) 45,000 shares issuable upon the exercise of options that are
currently exercisable, and (ii) 15,000 shares issuable upon the exercise of
stock options that are exercisable within the next 60 days.

(10) Consists of (i) 21,750 shares owned by Mr. Lannert, (ii) 5,775 shares
issuable upon the exercise of options that are currently exercisable, and (iii)
15,000 shares issuable upon the exercise of stock options that are exercisable
within the next 60 days.

(11) Consists of (i) 1,706,171 shares owned, (ii) 235,800 shares issuable upon
the exercise of stock options that are currently exercisable, (iii) 202,500
shares issuable upon the exercise of stock options that are exercisable within
the next 60 days, and (iv) 133,883 shares issuable upon the exercise of warrants
that are currently exercisable.

PROPOSAL ONE
ELECTION OF DIRECTORS

NOMINEES AND VOTE REQUIRED TO ELECT NOMINEES

A board of five (5) directors is to be elected at the annual meeting.
The five (5) nominees for director who receive the highest number of affirmative
votes of the shares voting shall be elected as directors. You may vote the
number of shares of common stock you own for up to five (5) persons. Unless you
otherwise instruct by marking your proxy card, the proxy holders will vote the
proxies received by them FOR the election of each of the five (5) nominees named
below. If any of the nominees is unable or declines to serve as a director at
the time of the annual meeting, the proxies will be voted for any nominee
designated by our present board of directors to fill the vacancy. We have no
reason to believe that any of the nominees will be unable or unwilling to serve
if elected. The term of office of each person elected as a director will
continue until the next annual meeting of shareholders or until his successor
has been elected and qualified.

The following table sets forth the nominees, their ages, their
principal occupations and, where applicable, the year in which each became a
director of the Company.

NAME OF NOMINEE AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
--------------- --- -------------------- --------------

Gordon T. Graves 65 Chairman of the Board, Chief Executive Officer 1991
and Director

Clifton E. Lind 55 President, Chief Operating Officer and Director 2000

Martin A. Keane 65 Director and Management Consultant 2000

Thomas W. Sarnoff 75 Director and Chairman and Chief Executive Officer
of Academy of Television Arts & Sciences Foundation 1997

John M. Winkelman 54 Director 2000

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GORDON T. GRAVES has been our Chairman and a Director since our
inception and has been our Chief Executive Officer since September 1994. Since
December 1993 and from 1989 to 1990, Mr. Graves has been the President of Graves
Management, Inc., a management consulting and investment company. From 1992 to
December 1993, Mr. Graves was president and Chief Executive Officer of
Arrowsmith Technologies, Inc., a computer systems company. From 1991 to 1993,
Mr. Graves was employed by KDT Industries, Inc., a high-tech manufacturing and
services company and an affiliate of Arrowsmith Technologies, Inc., as Vice
President of Corporate Development and then President. From 1987 to 1989, Mr.
Graves was the Chairman of the Board of Directors of Gamma International Ltd.
(currently American Gaming and Entertainment, Ltd.) a company co-founded by him.
Mr. Graves has been a Director of GameBay.com Inc., since its inception in 1999.

CLIFTON E. LIND has been our President and Chief Operating Officer
since June 1998, and a Director since May 31, 2000. From 1991 to 1993, Mr. Lind
was the Executive Vice President, Chief Operating Officer and Chief Financial
Officer of KDT Industries, where he worked with Mr. Graves. From 1994 to January
1997, Mr. Lind was the President and Chief Executive Officer of KDT Industries.
From January 1997 until joining us as President, Mr. Lind was President of
Celmark, Inc., an Austin, Texas based company owned by Mr. Lind. Celmark, Inc.
provided financial consulting services to us as well as management and financial
consulting services to start-up companies.

MARTIN A. KEANE has been a Director of ours since November 2000. From
1986 to the present, Dr. Keane has been an independent engineering management
consultant specializing in data processing systems for gaming and marketing
applications. From 1976 to 1986, he was a Vice President with Bally
Manufacturing Corp., where he served as Corporate Director of Technology from
1980 to 1986. Prior to 1980, he served at the General Motors Research Lab in
Detroit, Michigan, where he supervised a small group of Ph.D. mathematicians
working on management science and operations research problems. Dr. Keane holds
nine patents for high-tech gaming devices and other applications. We have no
rights under any patents held by Dr. Keane.

THOMAS W. SARNOFF has been a Director of ours since December 1997. Mr.
Sarnoff was employed by the National Broadcasting Company, Inc. for over 25
years, holding positions that included Vice President, Production and Business
Affairs, Executive Vice President of West Coast Operations, and last serving as
President of NBC Entertainment Corporation from 1969 to 1977. After retiring
from NBC in 1977, Mr. Sarnoff has been engaged in

the production of television and film entertainment, primarily through Sarnoff
Entertainment Corporation, which he formed in 1981. Mr. Sarnoff serves on many
civic and charitable organizations and is currently the Chairman and Chief
Executive Officer and a member of the Board of Directors of the Academy of
Television Arts & Sciences Foundation.

JOHN M. WINKELMAN has been a Director of ours since August 2000. From
1999 to 2000, Mr. Winkelman was the Chief Executive Officer of Viejas Casino and
Turf Club, a casino owned and operated by the Viejas Tribe located in San Diego
County, California. From 1989 to 1999, Mr. Winkelman was the Economic
Development Advisor to the Viejas Native American Council. He has worked
exclusively with Native American enterprises for the past 20 years, with a
primary focus on Native American gaming and related economic development.

No family relationship exists between any of our directors and
executive officers.

MEETINGS OF THE BOARD OF DIRECTORS

During the fiscal year ended September 30, 2001, the board of directors
held 11 meetings. During that period no director attended fewer than 75% of the
aggregate of (i) the total number of meetings of the board of directors held
during the period for which he was a director, and (ii) the total number of
meetings held by all committees of the board of directors during the period that
he served on such committees.

COMMITTEES OF THE BOARD OF DIRECTORS

Our Audit Committee members were, during the fiscal year ended
September 30, 2001, Messrs. Keane, Winkelman and Ali P. Alizadeh. Mr. Alizadeh
resigned from the board and its committees effective January 1, 2002 and was
replaced on these committees by Mr. Sarnoff. Each member of the Audit Committee
has been determined by the board of directors to be "independent" as defined in
the regulations of the Nasdaq National Market. We also have a Compensation
Committee whose members currently are Messrs. Keane, Graves and Sarnoff.

The Audit Committee meets with management and with our independent
certified public accountants to determine the adequacy of our internal controls
and other financial matters. The Compensation Committee reviews general policy
matters relating to compensation and benefits of our employees and officers.

The following table provides the various fees and out-of-pocket costs
billed by BDO Seidman, LLP for the fiscal year ended September 30, 2001:

FINANCIAL INFORMATION SYSTEMS DESIGN
AUDIT FEES AND IMPLEMENTATION FEES ALL OTHER FEES
----------- ----------------------------------------- --------------

$ 175,000 --- $ 126,000

The Audit Committee of the Board has considered whether the provision
by BDO Seidman, LLP of non-audit services included in the fees set forth in the
table above under "All Other Fees" is compatible with maintaining the
independence of BDO Seidman, LLP.

REPORT OF THE COMPENSATION COMMITTEE

OVERVIEW AND PHILOSOPHY. The Compensation Committee (the "Committee")
of our Board of Directors regularly reviews all executive officer pay plans and
develops recommendations for stock option grants for approval by the Board of
Directors. These include the following major compensation elements: base
salaries, annual cash incentives, stock options and various benefit plans.

Through December 2001, the Committee was composed of Mr. Sarnoff and
Mr. Alizadeh, both of whom are "independent" directors, and Mr. Graves, our CEO.
In January 2002, Mr. Keane replaced Mr. Alizadeh on the committee. It is the
Committee's objective that executive compensation be directly related to the
achievement of our planned goals, and enhancement in corporate and share values.

The Committee recognizes that the industry sector in which we operate
is both highly competitive and is challenged by significant legal and regulatory
uncertainty, with the result that there is substantial demand for

qualified, experienced executive personnel. The Committee considers it crucial
that we be assured of retaining and rewarding our top caliber executives who are
essential to the attainment of our ambitious long-term goals.

For these reasons, the Committee believes our executive compensation
arrangements must remain competitive with those offered by other companies of
similar size, scope, performance levels and complexity of operations.

CASH COMPENSATION. The Committee believes that annual cash compensation
should be paid commensurate with attained performance. For these reasons, our
executive cash compensation consists of "fixed" base compensation (salary) and
variable incentive compensation (annual bonus). Base salaries for executive
officers are established considering a number of factors, including the
executive's individual performance and measurable contribution to our success,
and pay levels of similar positions with comparable companies in the industry.
The Committee supports our compensation philosophy of moderate fixed
compensation for elements such as base salary. Base salary decisions are made as
part of our structured annual review process.

STOCK OPTIONS. The Committee recommends executive stock options under
our stock option plans to foster executive officer ownership and to provide
direct linkage with stockholder interests. When recommending the grant of stock
options, the Committee considers the number and terms of options previously
granted, industry practices, the optionee's level of responsibility, and assumed
potential stock value in the future. The exercise prices of stock options
granted to executive officers are equal to the market value of the stock on the
date of grant. Therefore, stock options are intended to provide an incentive to
executives to maximize our profitability which ordinarily, over time, should be
reflected in the price of our stock.

BENEFITS. We provide benefits to the named executive officers that are
generally available to all of our employees. For fiscal year 2001, the amount of
executive level benefits and prerequisites, as determined in accordance with the
rules of the Securities and Exchange Commission relating to executive
compensation, did not exceed 10% of total salary and bonus for any executive
officer.

CHIEF EXECUTIVE OFFICER PERFORMANCE AND COMPENSATION. In setting Mr.
Graves' base salary for fiscal 2001, the Committee took note of our rapid growth
in revenue and earnings in fiscal 2001. Mr. Graves' compensation for fiscal 2001
was $298,621, which reflects an August 2001 increase in his base salary to an
annual rate of $350,000. Mr. Graves participates to a limited extent in the
Committee's deliberations on his compensation. His participation generally
consists of answering questions from the Committee regarding his goals and
objectives for the year and his observations on the peer group to which his
compensation is compared. However, Mr. Graves is not present during that portion
of the Committee's meeting where his performance is evaluated and his
compensation determined.

It is the opinion of the Committee that these compensation policies and
structures provide the necessary discipline to properly align our corporate
economic performance and the interest of our stockholders with progressive and
competitive executive compensation practices in an equitable manner.

THE COMPENSATION COMMITTEE:

Ali P. Alizadeh
Thomas W. Sarnoff
Gordon T. Graves

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS

Mr. Graves is our Chairman of the Board and Chief Executive Officer.

REPORT OF THE AUDIT COMMITTEE

The Audit Committee acts under a written charter adopted and approved
by our board of directors on June, 15, 2000. A copy of the Audit Committee
Charter is attached to this Proxy Statement as Appendix C.

It is not the responsibility of the Audit Committee to plan or conduct
audits or to determine that our financial statements are in all material
respects complete and accurate in accordance with generally accepted accounting
principles. This is the responsibility of our management and the independent
auditors. It is also not the responsibility of the Audit Committee to assure
compliance by us with laws and regulations.

Based on the Audit Committee's:

o review of our audited financial statements for the fiscal year
ended September 30, 2001;

o discussions with our management regarding our audited
financial statements;

o receipt of written disclosures and the letter from our
independent auditors required by Independence Standards Board
Standard No. 1;

o discussions with our independent auditors regarding the
auditor's independence and the matters required to be
discussed by the Statement on Auditing Standards 61; and

o other matters the Audit Committee deemed relevant and
appropriate,

the Audit Committee recommended to our board of directors that the
audited financial statements as of and for the fiscal year ended September 30,
2001 be included in our Annual Report on Form 10-K for our fiscal year ended
September 30, 2001 for filing with the Securities and Exchange Commission.

THE AUDIT COMMITTEE:

Ali P. Alizadeh
Martin A. Keane
John M. Winkelman

PROPOSAL TWO
APPROVAL AND RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS

The board of directors has appointed BDO Seidman, LLP, as our
independent certified public accountants, to audit our books and records for the
current fiscal year. The board recommends that the shareholders ratify such
appointment.

Representatives of BDO Seidman, LLP, are expected to be available at
the annual meeting to respond to appropriate questions and will be given the
opportunity to make a statement if they desire to do so.

VOTE REQUIRED

The affirmative vote of the holders of a majority of the shares of common stock
entitled to vote on, and that vote for or against, is required to approve
Proposal Two.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" RATIFICATION
OF THE APPOINTMENT OF BDO SEIDMAN, LLP, AS OUR INDEPENDENT PUBLIC ACCOUNTANTS.

PROPOSAL THREE
APPROVAL AND RATIFICATION OF 2001 STOCK OPTION PLAN

In September, 2001, our board of directors adopted the Multimedia
Games, Inc. 2001 Stock Option Plan (the "2001 Stock Option Plan" or the "Plan")
pursuant to which an aggregate of 1,750,000 shares of common stock have been
reserved for the grant of stock options. As of March 31, 2002, options to
purchase 824,625 shares of common stock had been granted under the Plan.

The essential features of the 2001 Stock Option Plan are summarized
below. A complete copy of the 2001 Stock Option Plan is attached hereto as
Appendix A. A summary of the federal income tax aspects of the 2001 Stock Option
Plan is included as Appendix B to this Proxy Statement.

PURPOSE. The purpose of the 2001 Stock Option Plan is to attract and
retain highly qualified personnel.

ADMINISTRATION. The administrator of the Plan is the board of directors
subject to the right of the board to form a committee for administration of the
Plan. At present, the Plan is administered by the board.

RESERVED SHARES. As originally adopted by the board, the Plan provided
for the reservation of 1,050,000 shares of common stock for issuance in
connection with the exercise of stock options. The Board has subsequently
increased the total number of shares reserved for issuance to 1,750,000. At
March 31, 2002, options to acquire a total of 824,625 shares have been
granted.

STOCK OPTIONS. Options granted under the Plan may be either incentive
stock options or non-qualified stock options. All of the stock options granted
under the Plan have been non-qualified stock options. The administrator of the
Plan is given broad discretion in setting the price and other terms of stock
options subject to the following:

o the option price may not be less than 100% of the fair market
value of the stock on the date of the grant with respect to
incentive stock options and 85% of the fair market value of
the stock on the date of grant with respect to non-qualified
stock options;

o the option may not be exercisable more than 10 years after the
date of grant;

o stock options may be exercised for cash unless the
administrator permits the option to be exercised for stock;
and

o subject to several limitations the administrator may approve
making loans to participants for the exercise of stock
options.

NON-TRANSFERABILITY. Unless otherwise determined by the administrator,
stock options will be non-transferable.

AMENDMENT. The Board may amend or terminate the Plan (including
amendments which increase the cost of the Plan) but no amendment or termination
shall affect or impair the participant's rights under a previously granted stock
option without the consent of the participant.

The following table provides information regarding the options which
have, as of the Record Date, been granted under the 2001 Stock Option Plan to
(i) each of the named executive officers, (ii) all current executive officers as
a group, excluding the named executive officers (iii) all current directors who
are not executive officers as a group, and (iv) all current employees, including
all current officers who are not executive officers:

NO. OF CURRENT
DATE OF OPTIONS EXPIRATION EXERCISE MARKET VALUE
NAME OR GROUP GRANT GRANTED DATE PRICE ($) OF OPTIONS ($)*
------------- ----- ------- ---------- --------- ---------------

Gordon T. Graves - Chairman/CEO 9/21/01 15,000 9/21/11 $7.53 $ 300,000
Clifton Lind - President and COO 9/21/01 165,000 9/21/11 7.53 3,300,000
Gary Loebig - Executive Vice President 9/21/01 75,000 9/21/11 7.53 1,500,000
Robert Lannert - Senior Vice President 9/21/01 37,500 9/21/11 7.53 750,000
Executive Officers as a group (4 persons) 9/21/01 202,500 9/21/11 7.53 4,050,000
Directors (3) 9/21/01 60,000 9/21/11 7.53 1,200,000
Current Employees (25) 9/21/01 213,375 9/21/11 7.53 4,267,500

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* Market value of the underlying Common Stock as of April 19, 2002 ($27.50) less
the exercise price.

VOTE REQUIRED

The affirmative vote of the holders of a majority of the shares
entitled to vote on, and that vote for or against, is required to approve
Proposal Three.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE APPROVAL
AND RATIFICATION OF THE 2001 STOCK OPTION PLAN.

INFORMATION REGARDING EXECUTIVE OFFICER COMPENSATION

Our executive officers of and their respective ages and positions with
us are as follows:

NAME AGE POSITION
---- --- --------

Gordon T. Graves 65 Chairman of the Board and Chief Executive Officer
Clifton E. Lind 55 President and Chief Operating Officer
Gordon T. Sjodin 60 Executive Vice President
Gary L. Loebig 53 Executive Vice President
Robert F. Lannert 46 Senior Vice President
Thomas G. Le Gassick 35 Vice President
Craig S. Nouis 39 Vice President and Chief Financial Officer
Frank W. Rehanek, Jr. 40 Chief Financial Officer
Glenn Goulet 43 Vice President of Marketing

----------

GORDON T. SJODIN has been our Executive Vice President since May 2000.
Mr. Sjodin first joined us in April 1994 as Vice President--Sales of our
wholly-owned subsidiary MegaBingo, Inc. and served in that position until
September 1994. From September 1994 to December 1998 he served as a Vice
President. In December 1998, Mr. Sjodin was appointed President of our
subsidiary MegaBingo, Inc. and served in that capacity until May 2000.

GARY L. LOEBIG became our Vice President for new market development
upon joining us in December 1998 and was elected Executive Vice President in
December 2001. From 1984 until joining us in December 1998, Mr. Loebig was
employed by Stuart Entertainment, doing business as Bingo King, a publicly
traded company engaged in the manufacture and sale of bingo cards and related
equipment and products. With Bingo King, Mr. Loebig served in various
capacities, beginning as general sales manager and last serving as Senior Vice
President--Market and Product Development.

ROBERT F. LANNERT was our Vice President of Computer and Data
Processing Operations from August 1997 until being elected Senior Vice President
in December 2001. Mr. Lannert has been employed by us since June 1996, and was
supervisor of computer and data processing operations until being elected Vice
President. From 1988 until August 1995, Mr. Lannert was Director of Data
Processing for Debartolo Racing at Remington Park in Oklahoma City, and from
August 1995 until joining us Mr. Lannert was Vice President of Operations for
Spector Entertainment Group.

THOMAS G. LE GASSICK has been our Vice President of sales since March
1999. From 1995 until joining us, Mr. Le Gassick was Vice President of Sales at
Western Gift Distributors, a manufacturer and distributor of bingo products to
charity and Native American gaming operations. From 1987 to 1995, Mr. Le Gassick
was an Executive Vice President at PM Bingo and Promotions, where he provided
financial and game development support and designed numerous gaming-related
products for the industry's leading manufacturers, including Bingo King, Trade
Products, Inc., Ace Novelty, International Gameco, and American Games, Inc.

CRAIG S. NOUIS joined us as Vice President and Chief Financial Officer
in August 2001. From January 2001 to August 2001, Mr. Nouis served as an
independent contractor to us and others providing financial and accounting
services. From July 1993 to January 2001, Mr. Nouis was employed by BDO Seidman,
LLP, an international accounting firm, last serving as audit partner.

FRANK W. REHANEK, JR. has been our Vice President of Finance since
August 2001. From September 1999 to August 2001, Mr. Rehanek was our Chief
Financial Officer. Mr. Rehanek joined us in February 1997 as Corporate
Controller and served in that capacity until September 1999. From April 1993 to
November 1999, Mr. Rehanek was Controller of the Oklahoma Corporate Credit
Union.

GLENN GOULET. Mr. Goulet joined us in November 2000 as Vice President
of Marketing. From 1994 to November 2000, Mr. Goulet served in various
capacities for GTECH Corporation, including Director of Marketing for the
western United States. Prior to joining GTECH, Mr. Goulet spent 10 years in
market research working for ABC News in New York, the Republican National Party
in Washington, D.C. and a private polling firm, Market Strategies, Inc., where
he led the public opinion research for President George H. W. Bush. Mr. Goulet
graduated from New York Institute of Technology and was a Political Fellow at
Michigan State University's Political Leadership Program.

SUMMARY COMPENSATION TABLE

The following table sets forth information concerning the annual
compensation for our Chief Executive Officer and for each of our four next most
highly compensated executive officers whose salary and bonus exceeded $100,000
for services rendered to us during the fiscal year ended September 30, 2001.

COMPENSATION NUMBER LONG-TERM
------------------ OF ANNUAL COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS/WARRANTS(1) AWARDS(2)
--------------------------- ---- -------- ------ ------------------- ------------

Gordon T. Graves 2001 $ 223,621 $ 75,000 165,000 $ 4,800
Chairman and CEO 2000 178,700 -- -- 5,879
1999 142,009 -- (3) 3,514

Clifton E. Lind 2001 201,539 60,000 315,000 5,572
President and COO 2000 187,683 -- 30,000 9,937
1999 180,163 -- (3) 3,628

Gary L. Loebig 2001 145,000 20,000 135,000 5,200
Executive Vice President 2000 168,259 5,000 52,500 8,176
1999 94,778 -- 75,000 1,846

Gordon T. Sjodin 2001 120,360 10,000 15,000 5,214
Executive Vice President 2000 125,677 -- -- 5,027
1999 120,522 -- 15,000 4,073

Robert F. Lannert 2001 105,000 15,000 97,500 5,492
Senior Vice President 2000 109,516 10,000 -- 4,073
1999 95,179 -- 150 7,970

----------

(1) Consists of shares of common stock underlying options granted pursuant to
our Stock Option Plans. See "Management--Stock Option Plans."

(2) Consists of contributions we made on behalf of the named executive officers
to our 401(k) plan.

(3) Does not include shares of common stock underlying warrants issued to a
partnership that purchased player stations from us, in which Messrs. Graves
and Lind each owned a 6.36% partnership interest.

OPTION/WARRANT GRANTS DURING FISCAL 2001

The following table sets forth information regarding options and
warrants we granted to our named executive officers during the fiscal year ended
September 30, 2001.

POTENTIAL REALIZED VALUE
% OF TOTAL AT ASSUMED ANNUAL RATE
NUMBER OF OPTIONS/ OF STOCK PRICE
SECURITIES WARRANTS EXERCISE APPRECIATION FOR OPTION
UNDERLYING GRANTED TO PRICE TERM(1)
OPTIONS/WARRANTS EMPLOYEES IN PER SHARE VESTING EXPIRATION --------------------------
NAME GRANTED FISCAL YEAR ($) PERIOD DATE 5% 10%
----------------------- ---------------- ------------ --------- ------- ---------- ------------ ------------

Gordon T. Graves 165,000 9 (2) (2) (2) $ 2,017,000 $ 3,705,000
Clifton E. Lind 315,000 17 (3) (3) (3) 3,477,000 6,699,000
Gary L. Loebig 135,000 7 (4) 4 yrs (4) 1,479,000 2,859,000
Gordon T. Sjodin 15,000 1 4.79 4 yrs 3/21/2011 187,000 341,000
Robert F. Lannert 97,500 5 (5) 4 yrs (5) 1,114,000 2,110,000

----------

(1) In calculating potential realized value, it is assumed that options are
exercised on the day prior to their expiration date using the treasury stock
method, where the exercise price of the option is subtracted from the potential
market price at the 5% and 10% appreciation rates.

(2) 150,000 options were granted at $4.79 per share, expiring March 21, 2011,
and 15,000 options were granted at $7.53 per share, expiring September 21, 2011.
The $4.79 options vest over four years and the $7.53 options vest over one year.

(3) 150,000 options were granted at $4.79 per share, expiring March 21, 2011,
and 165,000 options were granted at $7.53 per share, expiring September 21,
2011. The $4.79 options and 150,000 of the $7.53 options vest over four years;
15,000 of the $7.53 options vest over one year.

(4) 60,000 options were granted at $4.79 per share, expiring March 21, 2011, and
75,000 options were granted at $7.53 per share, expiring September 21, 2011. (5)
60,000 options were granted at $4.79 per share, expiring March 21, 2011, and
37,500 options were granted at $7.53 per share, expiring September 21, 2011.

The following table sets forth information regarding the exercise of
stock options and warrants during the fiscal year ended September 30, 2001, and
the unexercised stock options and warrants held at September 30, 2001 by the
named executive officers.

VALUE OF UNEXERCISED
NUMBER OF NUMBER OF SECURITIES IN-THE-MONEY
SHARES UNDERLYING UNEXERCISED OPTIONS AT
ACQUIRED OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END(1)
UPON VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------- -------- ----------- ------------- ----------- -------------

Gordon T. Graves(2) -- $ -- -- 165,000 $ -- $ 971,000
Clifton E. Lind(2) 427,500 1,410,750 109,500 315,000 899,000 1,377,000
Gary L. Loebig 37,500 467,250 13,125 211,875 113,000 1,219,000
Gordon T. Sjodin -- -- 94,987 24,412 824,000 163,000
Robert F. Lannert 30,000 317,800 7,612 99,412 65,000 479,000

----------

(1) Market value of the underlying common stock at fiscal year end ($10.60 per
share), minus the exercise price.

(2) Does not include shares of common stock underlying warrants held by Messrs.
Graves and Lind that were initially issued to partnerships in connection
with the purchase of player stations from us, in which Messrs. Graves and
Lind each owned a 6.36% partnership interest.

STOCK OPTION PLANS

1994 Employee and Director Stock Option Plans

In November 1994, our stockholders approved the 1994 Employee Stock
Option Plan and the 1994 Director Stock Option Plan under which options to
purchase an aggregate of 540,000 shares and 90,000 shares, respectively, of
common stock were reserved for issuance. At December 31, 2001, options to
purchase 10,500 shares of common stock were outstanding under the 1994 Employee
Stock Option Plan at a weighted average exercise price of $2.31 per share and no
options were outstanding under the 1994 Director Stock Option Plan. No shares
remain reserved under either plan for future grants.

1996 Incentive Stock Plan

In August 1996, the Board of Directors adopted our 1996 Incentive
Stock Plan, which was amended effective March 1, 1999, pursuant to which
1,192,691 shares of common stock or common stock equivalents were reserved for
issuance.

The 1996 Incentive Stock Plan is administered by our Board of
Directors. The Board of Directors has the authority, subject to the terms of the
1996 Incentive Stock Plan, to determine when and to whom to make grants, the
number of shares to be covered by the grants, the types and terms of awards to
be granted under the 1996 Incentive Stock Plan (which are stock-based incentives
and may include incentive stock options, non-qualified stock options, stock
appreciation rights, restricted stock, performance shares and deferred stock
purchases), the exercise or purchase price of the shares of common stock and
common stock equivalents subject to the awards, and to prescribe, amend and
rescind rules and regulations relating to the 1996 Incentive Stock Plan.

At December 31, 2001, options to purchase 357,018 shares of common
stock were outstanding under the 1996 Incentive Stock Plan at a weighted average
exercise price of $2.36 per share. No shares remain reserved under the 1996
Incentive Stock Plan for future grants.

President's Stock Option Plan

In connection with the employment of Clifton E. Lind as our President
in June 1998, we established the President's Stock Option Plan, pursuant to
which we granted Mr. Lind options to purchase 507,000 shares of common stock at
$2.54 per share. The President's Stock Option Plan was approved by our
stockholders on May 11, 1999. In April 2001, Mr. Lind exercised options for
427,500 shares which he still holds. At December 31, 2001, there remained
outstanding under the President's Stock Option Plan options to purchase 79,500
shares. No shares remain reserved under the President's Stock Option Plan for
future grants.

1998 Senior Executive Stock Option Plan

In connection with the employment of Gary L. Loebig as our Vice
President for New Market Development in November 1998, we established the 1998
Senior Executive Stock Option Plan, pursuant to which we granted Mr. Loebig
options to purchase 75,000 shares of common stock at $2.54 per share. Our
stockholders approved the Senior Executive Stock Option Plan on May 11, 1999.
During fiscal 2001, Mr. Loebig exercised options for 37,500 shares. Options to
purchase an additional 37,500 shares remain outstanding at December 31, 2001. No
shares remain reserved under the 1998 Senior Executive Stock Option Plan for
future grants.

2000 Stock Option Plan

In February 2000, our Board of Directors adopted the 2000 Stock Option
Plan, as later amended, pursuant to which options to purchase 1,463,250 shares
of common stock were reserved for issuance. Options granted under this plan may
be either incentive stock options or non-qualified stock options. The 2000 Stock
Option Plan is also administered by our Board of Directors. At December 31,
2001, options to purchase 987,750 shares had been granted and were outstanding
under the 2000 Stock Option Plan at a weighted average exercise price of $4.79
per share and 475,500 shares remain reserved for future grants.

2001 Stock Option Plan

In September 2001, our Board of Directors adopted the 2001 Stock
Option Plan pursuant to which options to purchase 1,750,000 shares of common
stock were reserved for issuance. Options granted under the plan may be either
incentive stock options or non-qualified stock options. The 2001 Stock Option
Plan is also administered by our Board of Directors. At March 31, 2002, options
to purchase 824,625 shares of common stock had been granted and were outstanding
under the 2001 Stock Option Plan at a weighted average exercise price of $7.58
per share and 925,375 shares remained reserved for future grants.

We have entered into stock option agreements with each of our named
executive officers pursuant to our 2001 Stock Option Plan that provide for full
vesting of all unvested shares in the event of a change of control of us. Change
of control, as defined in the agreements, means any merger or consolidation,
sale of assets, dissolution or the acquisition by any person of at least 51% of
our voting stock.

Our stock option agreement with Clifton E. Lind also provides for full
vesting of all unvested shares subject to his option upon the termination by Mr.
Lind of his employment for good reason. Good reason, as defined in the
agreement, relates to a diminution of Mr. Lind's salary, position or
responsibilities within our company. Our agreement with Mr. Lind also provides
for acceleration of vesting as to all unvested shares that would otherwise vest
through the second anniversary of our termination of Mr. Lind without cause or
Mr. Lind's termination of his employment without good reason.

Other Stock Options

In addition to options granted under our stock option plans, from time
to time we also make option grants to newly-hired employees as an inducement to
provide services to us. During the year ended September 30, 2001, we granted a
total of 616,500 options on an ad hoc basis at a weighted average exercise price
of $3.67 per share.

Director Compensation Plan

On September 21, 2001, we adopted a plan to compensate the members of
our Board of Directors for their services as directors, including serving on
committees of the Board. Prior to that time we had compensated our

directors by the grant of stock options on an ad hoc basis and did not provide
any cash compensation. Under the Director Compensation Plan, each of our
directors, including directors who are also regular full-time employees, will
receive $18,000 per year. In addition, each director will receive $500 for each
Board meeting attended in person, $250 for each Board meeting attended by
telephone, $250 for each committee meeting attended in person and $150 for each
committee meeting attended by telephone. On an annual basis, each sitting
director will receive an option grant for 15,000 shares of common stock that
will vest after one year. Newly elected or appointed directors will receive an
initial grant for 30,000 shares that will vest over two years.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

GAMEBAY.COM

In December 1999, our wholly-owned subsidiary, GameBay.com, Inc. issued 71%
of its equity securities to a group of investors for $6.5 million. In connection
with that transaction, we granted GameBay a license to use our intellectual
property for Internet-based non-gaming purposes. In consideration of the license
grant, we received a one-time fee of $1.0 million, of which $400,000 was
evidenced by a note maturing in December 2000. We also received a royalty right
of 5% of GameBay's future gross revenue. We elected to defer recognition of the
$400,000 GameBay note receivable into income until payment was received. We have
not received any royalty payments to date. As of September 30, 2000, the value
of our investment in GameBay.com was reduced to zero. During the quarter ended
March 31, 2001, we determined that ultimate collection of the $400,000 note
receivable was doubtful, and accordingly, the note was offset against the
related deferred revenue. GameBay has suspended operations and is presently
inactive. Gordon T. Graves, one of our Directors and our Chief Executive
Officer, is a Director of GameBay. Laurence E. Kaplan, who was elected as one of
our Directors in November 2000, and resigned as a director in May 2001, is also
a Director of GameBay.

INDEBTEDNESS OF CERTAIN OFFICERS AND DIRECTORS

On April 12, 2001, Clifton E. Lind, our President and Chief Operating
Officer, exercised his option to purchase 427,500 shares of our Common Stock by
delivering his promissory note as permitted by the President's Stock Option Plan
of 1998. The note is fully recourse to Mr. Lind's other personal assets. In
March 2002, we advanced $355,000 to Mr. Lind to fund his income tax liability
related to the option exercise.

At March 31, 2002, we had the following notes receivable from the following
officers and directors for stock purchases and related tax liability.

OUTSTANDING OUTSTANDING
DECEMBER 31, MARCH 31, INTEREST
2001 2002 RATE DUE DATE
------------- ------------ -------- --------------

Gordon T. Graves $ 660,000 $ 660,000 6% February 2003
Clifton E. Lind 1,136,000 1,491,000 6% *
------------- ------------
$ 1,796,000 $ 2,151,000
------------- ------------

----------

* $355,000 is due in April 2003 and $1,136,000 is due in April 2004.

CONSULTING AGREEMENTS

On April 15, 1998, we entered into a consulting agreement, as later
amended, with Larry D. Montgomery, who at the time was one of our Directors and
who resigned as a director in December 2001. Pursuant to the consulting
agreement, we retained Mr. Montgomery as a consultant through June 1999 and
agreed to pay the cost of all premiums on life, health and disability insurance
for Mr. Montgomery and his family through April 15, 2003. We also pay Mr.
Montgomery rent of $1,000 per month for the use of office space in Topeka,
Kansas. Since June 1999, we have retained Mr. Montgomery as a consultant on a
month-to-month basis at $10,500 per month. Through December 31, 2001, we have
paid a total of $452,000 to Mr. Montgomery pursuant to these arrangements.

On August 16, 2000, we entered into a year-to-year consulting
agreement, as later amended, with John Winkelman, one of our Directors, to
consult with us regarding California Native American gaming opportunities and
other matters. Mr. Winkelman is compensated by us at a daily rate of $1,000 for
each day he provides services. During 2001 and the three months ended December
31, 2001, we paid $60,000 and zero, respectively, to Mr. Winkelman under this
agreement.

On November 9, 2000, we entered into a year-to-year consulting
agreement, as later amended, with Martin Keane, one of our Directors, to consult
with us on technology matters. Mr. Keane is compensated by us at a daily rate of
$1,500. During 2001 and the three months ended December 31, 2001, we have paid
$57,500 and $9,000, respectively, to Mr. Keane under this agreement.

In December 2001, we entered into an eighteen month consulting
agreement with Ali Alizadeh, who resigned as one of our Directors effective
January 1, 2002, to consult with us on investment banking matters. Mr. Alizadeh
is compensated by us at the rate of $5,000 per month.

STOCK PRICE PERFORMANCE GRAPH

The following graph compares on a cumulative basis the percentage change, since
September 30, 1996, in the total shareholder return on our common stock, with
(a) the total return on the NASDAQ Composite Index, which is being used as the
required broad entity market index, and (b) the total return for a selected peer
group index (the "Peer Group"). The Peer Group consists of Mikohn Gaming,
Silicon Gaming, Stuart Entertainment, and Interlott Technologies. The graph
assumes (i) investment of $100 on September 30, 1996 in our common stock, the
NASDAQ Composite Index and the common stock of the Peer Group, and (ii) the
reinvestment of all dividends.

NASDAQ
DATE MGAM PEER GROUP COMPOSITE INDEX
---- ------ ---------- ---------------

September 30, 1996 100.00 100.00 100.00
September 30, 1997 232.61 179.13 137.39
September 30, 1998 46.19 82.62 138.06
September 30, 1999 57.62 58.98 223.83
September 30, 2000 107.61 128.97 299.35
September 30, 2001 276.52 118.95 122.16

DEADLINE FOR RECEIPT OF SHAREHOLDER
PROPOSALS -- 2002 ANNUAL MEETING

Proposals from our shareholders which are intended to be presented by
such shareholders at our annual meeting following our fiscal year ending
September 30, 2002 must be received by us no later than December 31, 2002. Such
proposals must also meet the other requirements of the rules of the Securities
and Exchange Commission relating to shareholders' proposals.

OTHER MATTERS

We know of no other matters to be submitted to the shareholders at the
annual meeting. If any other matters properly come before the annual meeting, it
is the intention of the persons named in the enclosed proxy to vote the shares
they represent as our board of directors may recommend, or, in the absence of a
recommendation, as such persons deem advisable.

BY ORDER OF THE BOARD OF DIRECTORS

GORDON T. GRAVES
Chairman of the Board
and Chief Executive Officer

Austin, Texas
May 2, 2002

APPENDIX A

MULTIMEDIA GAMES, INC.
2001 STOCK OPTION PLAN

SECTION 1. GENERAL PURPOSE OF PLAN; DEFINITIONS.

The name of this plan is the Multimedia Games, Inc. 2001 Stock Plan (the
"Plan"). The Plan was adopted by the Board on September 21, 2001 and was amended
by the Board on April 21, 2002. The purpose of the Plan is to enable the Company
to attract and retain highly qualified personnel who will contribute to the
Company's success by their ability, ingenuity and industry and to provide
incentives to the participating officers, employees, directors, consultants and
advisors that are linked directly to increases in stockholder value and will
therefore inure to the benefit of all stockholders of the Company.

For purposes of the Plan, the following terms shall be defined as set forth
below:

"Act" means Securities Exchange Act of 1934, as amended.

"Administrator" means the Board, or if the Board does not administer the Plan,
the Committee in accordance with Section 2.

"Board" means the Board of Directors of the Company.

"Code" means the Internal Revenue Code of 1986, as amended from time to time, or
any successor thereto.

"Committee" means the Committee of the Board designated from time to time by the
Board to be the Administrator.

"Commission" means Securities and Exchange Commission.

"Company" means Multimedia Games, Inc., a Texas corporation (or any successor
corporation).

"Disability" means the inability of a Participant to perform substantially his
duties and responsibilities to the Company by reason of a physical or mental
disability or infirmity (i) for a continuous period of six months, or (ii) at
such earlier time as the Participant submits medical evidence satisfactory to
the Company that he has a physical or mental disability or infirmity which will
likely prevent him from returning to the performance of his work duties for six
months or longer. The date of such Disability shall be on the last day of such
six-month period or the day on which the Participant submits such satisfactory
medical evidence, as the case may be.

"Effective Date" shall mean the date provided pursuant to Section 9.

"Eligible Employee" means an employee of the Company eligible to participate in
the Plan pursuant to Section 4.

"Fair Market Value" means, as of any given date, with respect to any awards
granted hereunder, at the discretion of the Administrator and subject to such
limitations as the Administrator may impose, (A) if the Stock is publicly
traded, the closing sale price of the Stock on such date as reported in the Wall
Street Journal, or the average of the closing price of the Stock on each day on
which the Stock was traded over a period-of up to twenty trading days
immediately prior to such date, (B) the fair market value of the Stock as
determined in accordance with a method prescribed in the agreement evidencing
any award hereunder, or (C) the fair market value of the Stock as otherwise
determined by the Administrator in the good faith exercise of its discretion.

"Incentive Stock Option" or "ISO" means any Stock Option intended to be
designated as an "incentive stock option" within the meaning of Section 422 of
the Code (and any successor provision of the Code having a similar intent).

"Non-Qualified Stock Option" or "NQSO" means any Stock Option that is not an
Incentive Stock Option, including any Stock Option that provides (as of the time
such option is granted) that it will not be treated as an Incentive Stock
Option.

"Parent Corporation" means any corporation (other the Company) in an unbroken
chain of corporations ending with the Company, if each of the corporations in
the chain (other than the Company) owns stock possessing 50% or more of the
combined voting power of all classes of stock in one of the other corporations
in the chain.

"Participant" means any Eligible Employee, consultant or advisor to the Company
selected by the Administrator, pursuant to the Administrator's authority in
Section 2 below, to receive grants of Stock Options.

"Stock" means the Common Stock, $0.01 par value, of the Company.

A-1

"Stock Option" means any option to purchase shares of Stock granted pursuant to
Section 5.

"Subsidiary" means any corporation (other than the Company) in an unbroken chain
of corporations beginning with the Company, if each of the corporations (other
than the last corporation) in the unbroken chain owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the
other corporations in the chain.

SECTION 2. ADMINISTRATION.

The Plan shall be administered by the Board or by the Committee which shall be
appointed by the Board and which shall serve at the pleasure of the Board.

The Administrator shall have the power and authority to grant Stock Options to
Eligible Employees, consultants and advisors to the Company, pursuant to the
terms of the Plan.

In particular, the Administrator shall have the authority:

(a) to select those employees of the Company who shall be Eligible
Employees;

(b) to determine whether and to what extent Stock Options are to be granted
hereunder to Eligible Employees, consultants and advisors to the
Company;

(d) to determine the terms and conditions, not inconsistent with the terms
of the Plan, of any Stock Option granted hereunder; and

(e) to determine the terms and conditions, not inconsistent with the terms
of the Plan, which shall govern all written instruments evidencing the
Stock Options.

The Administrator shall have the authority, in its discretion, to adopt, alter
and repeal such administrative rules, guidelines and practices governing the
Plan as it shall from time to time deem advisable; to interpret the terms and
provisions of the Plan and any award issued under the Plan (and any agreements
relating thereto); and to otherwise supervise the administration of the Plan.

All decisions made by the Administrator pursuant to the provisions of the Plan
shall be final and binding on all persons, including the Company and the
Participants.

SECTION 3. STOCK SUBJECT TO PLAN.

The total number of shares of Stock reserved and available for issuance under
the Plan (and the total number of shares that may be granted as ISO's) shall be
1,750,000 of shares of Stock. Such shares may consist, in whole or in part, of
authorized and unissued shares or treasury shares.

To the extent that a Stock Option expires or is otherwise terminated without
being exercised, such shares shall again be available for issuance in connection
with future awards under the Plan. If any shares of Stock have been pledged as
collateral for indebtedness incurred by a Participant in connection with the
exercise of a Stock Option and such shares are returned to the Company in
satisfaction of such indebtedness, such shares shall again be available for
issuance in connection with future awards under the Plan. To the extent that a
Participant is eligible to use, and uses, shares of Stock to exercise a Stock
Option, the number of Shares of Stock so used shall be available for issuance in
connection with future awards under the Plan.

In the event of any merger, reorganization, consolidation, recapitalization,
stock dividend or other change in corporate structure affecting the Stock, an
appropriate substitution or adjustment shall be made in the aggregate number of
shares reserved for issuance under the Plan as may be determined by the
Administrator, in its sole discretion. Any other substitutions or adjustments
shall be made as may be determined by the Administrator, in its sole discretion.
In connection with any event described in this paragraph, the Administrator may
provide, in its discretion, for the cancellation of any outstanding awards and
payment in cash or other property therefor.

SECTION 4. ELIGIBILITY.

Officers (including officers who are directors of the Company), employees of the
Company, and consultants and advisors to the Company who are responsible for or
contribute to the management, growth and/or profitability of the

A-2

business of the Company shall be eligible to be granted Stock Options. The
Participants under the Plan shall be selected from time to time by the
Administrator, in its sole discretion, from among the Eligible Employees,
consultants and advisors to the Company recommended by the senior management of
the Company, and the Administrator shall determine, in its sole discretion, the
number of shares covered by each award.

SECTION 5. STOCK OPTIONS.

Any Stock Option granted under the Plan shall be in such form as the
Administrator may from time to time approve, and the provisions of Stock Option
awards need not be the same with respect to each optionee. Recipients of Stock
Options shall enter into a subscription and/or award agreement with the Company,
in such form as the Administrator shall determine which agreement shall set
forth, among other things, the exercise price of the option, the term of the
option and provisions regarding exercisability of the option granted thereunder.

The Stock Options granted under the Plan may be of two types: (i) Incentive
Stock Options and (ii) Non-Qualified Stock Options.

The Administrator shall have the authority to grant any Eligible Employee
Incentive Stock Options, Non-Qualified Stock Options, or both types of Stock
Options. Consultants and advisors may only be granted Non-Qualified Stock
Options. To the extent that any Stock Option does not qualify as an Incentive
Stock Option, it shall constitute a separate Non-Qualified Stock Option. More
than one option may be granted to the same optionee and be outstanding
concurrently hereunder.

Stock Options granted under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Administrator shall deem
desirable:

(1) OPTION PRICE. The option price per share of Stock purchasable under a
Stock Option shall be determined by the Administrator in its sole
discretion at the time of grant but shall not, (i) in the case of
Incentive Stock Options, be less than 100% of the Fair Market Value of
the Stock on such date, (ii) in the case of Non-Qualified Stock Options,
be less than 85% of the Fair Market Value of the Stock on such date, and
(iii) in any event, be less than the par value of the Stock. If an
employee owns or is deemed to own (by reason of the attribution rules
applicable under Section 425(d) of the Code) more than 10% of the
combined voting power of all classes of stock of the Company or any
Parent Corporation and an Incentive Stock Option is granted to such
employee, the option price of such Incentive Stock Option (to the extent
required by the Code at the time of grant) shall be no less than 110% of
the Fair Market Value of the Stock on the date such Incentive Stock
Option is granted.

(2) OPTION TERM. The term of each Stock Option shall be fixed by the
Administrator, but no Stock Option shall be exercisable more than ten
years after the date such Stock Option is granted; provided, however,
that if an employee owns or is deemed to own (by reason of the
attribution rules of Section 425(d) of the Code) more than 10% of the
combined voting power of all classes of stock of the Company or any
Parent Corporation and an Incentive Stock Option is granted to such
employee, the term of such Incentive Stock Option (to the extent required
by the Code at the time of grant) shall be no more than five years from
the date of grant.

(3) EXERCISABILITY. Stock Options shall be exercisable at such time or times
and subject to such terms and conditions as shall be determined by the
Administrator at or after grant. The Administrator may provide, in its
discretion, that any Stock Option shall be exercisable only in
installments, and the Administrator may waive such installment exercise
provisions at any time in whole or in part based on such factors as the
Administrator may determine, in its sole discretion.

(4) METHOD OF EXERCISE. Subject to Section 5(3) above, Stock Options may be
exercised in whole or in part at any time during the option period, by
giving written notice of exercise to the Company satisfying the number of
shares to be purchased, accompanied by payment in full of the purchase
price in cash or in such other form of consideration as is set forth in
the related Stock Option agreement as determined by the Administrator. As
determined by the Administrator, in its sole discretion, payment in whole
or in part may also be made in the form of unrestricted Stock already
owned by the optionee; provided, however, that the right to make payment
in the form of already owned shares may be authorized only at the time of
grant. An optionee shall generally have the rights to dividends and any
other rights of a stockholder with respect to the Stock subject to the

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option only after the optionee has given written notice of exercise, has
paid in full for such shares, and, if requested, has given the
representation described in paragraph (1) of Section 10.

The Administrator may require the voluntary surrender of all or a portion
of any Stock Option granted under the Plan as a condition precedent to
the grant of a new Stock Option. Subject to the provisions of the Plan,
such new Stock Option shall be exercisable at the price, during such
period and on such other terms and conditions as are specified by the
Administrator at the time the new Stock Option is granted. Upon their
surrender, Stock Options shall be canceled and the shares previously
subject to such canceled Stock Options shall again be available for
grants of Stock Options and other awards hereunder.

(5) LOANS. The Company may make loans available to Stock Option holders in
connection with the exercise of outstanding options granted under the
Plan, as the Administrator, in its discretion, may determine; provided,
however, that the right to make payment in the form of loans may be
authorized only at the time of grant and the terms of such loans shall be
specified in the related Stock Option agreement. Such loans shall (i) be
evidenced by promissory notes entered into by the Stock Option holders in
favor of the Company, (ii) be subject to the terms and conditions set
forth in this Section 5(5) and such other terms and conditions, not
inconsistent with the Plan, as the Administrator shall determine, (iii)
bear interest, if any, at such rate as the Administrator shall determine,
and (iv) be subject to Board approval (or to approval by the
Administrator to the extent the Board may delegate such authority). In no
event may the principal amount of any such loan exceed the sum of (x) the
exercise price less the-par value of the shares of Stock covered by the
option, or portion thereof, exercised by the holder, and (y) any federal,
state, and local income tax attributable to such exercise. The initial
term of the loan, the schedule of payments of principal and interest (if
any) under the loan, the extent to which the loan is to be with or
without recourse against the holder with respect to principal or interest
and the conditions upon which the loan will become payable in the event
of the holder's termination of employment shall be determined by the
Administrator. Unless the Administrator determines otherwise, when a loan
is made, shares of Stock having a Fair Market Value at least equal to the
principal amount of the loan shall be pledged by the holder to the
Company as security for payment of the unpaid balance of the loan, and
such pledge shall be evidenced by a pledge agreement, the terms of which
shall be determined by the Administrator, in its discretion; provided,
however, that each loan shall comply with all applicable laws,
regulations and rules of the Board of Governors of the Federal Reserve
System and any other governmental agency having jurisdiction.

(6) NON-TRANSFERABILITY OF OPTIONS. Unless otherwise determined by the
Administrator, no Stock Option shall be transferable by the optionee, and
all Stock Options shall be exercisable, during the optionee's lifetime,
only by the optionee.

(7) TERMINATION OF EMPLOYMENT OR SERVICE. If an optionee's employment with or
service as a director of or consultant or advisor to the Company
terminates by reason of death, Disability or for any other reason, the
Stock Option may thereafter be exercised to the extent provided in the
applicable subscription or award agreement, or as otherwise determined by
the Administrator.

(8) ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS. To the extent that the aggregate
Fair Market Value (determined as of the date the Incentive Stock Option
is granted) of shares of Stock with respect to which Incentive Stock
Options granted to an Optionee under this Plan and all other option plans
of the Company or its Parent Corporation become exercisable for the first
time by the Optionee during any calendar year exceeds $100,000, such
Stock Options shall be treated as Non-Qualified Stock Options.

SECTION 6. AMENDMENT AND TERMINATION.

The Board may amend, alter or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made that would impair the rights of a
Participant under any award theretofore granted without such Participant's
consent.

The Administrator may amend the terms of any award theretofore granted,
prospectively or retroactively, but, subject to Section 3 above, no such
amendment shall impair the rights of any holder without his or her consent.

SECTION 7. UNFUNDED STATUS OF PLAN.

The Plan is intended to constitute an "unfunded" plan for incentive
compensation. With respect to any payments not yet made to a Participant by the
Company, nothing contained herein shall give any such Participant any rights
that are greater than those of a general creditor of the Company.

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SECTION 8. GENERAL PROVISIONS.

(1) The Administrator may require each person purchasing shares pursuant to a
Stock Option to represent to and agree with the Company in writing that
such person is acquiring the shares without a view to distribution
thereof. The certificates for such shares may include any legend which
the Administrator deems appropriate to reflect any restrictions on
transfer.

All certificates for shares of Stock delivered under the Plan shall be
subject to such stock-transfer orders and other restrictions as the
Administrator may deem advisable under the rules, regulations, and other
requirements of the Commission, any stock exchange upon which the Stock
is then listed, and any applicable federal or state securities law, and
the Administrator may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such restrictions.

(2) Nothing contained in the Plan shall prevent the Board from adopting other
or additional compensation arrangements, subject to stockholder approval
if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption
of the Plan shall not confer upon any employee, director, consultant or
advisor of the Company any right to continued employment or service with
the Company, as the case may be, nor shall it interfere in any way with
the right of the Company to terminate the employment or service of any of
its employees, directors, consultants or advisors at any time.

(3) Each Participant shall, no later than the date as of which the value of
an award first becomes includible in the gross income of the Participant
for federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Administrator regarding payment of, any federal,
state, or local taxes of any kind required by law to be withheld with
respect to the award. The obligations of the Company under the Plan shall
be conditional on the making of such payments or arrangements, and the
Company shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment of any kind otherwise due to the
Participant.

(4) No member of the Board or the Administrator, nor any officer or employee
of the Company acting on behalf of the Board or the Administrator, shall
be personally liable for any action, determination, or interpretation
taken or made in good faith with respect to the Plan, and all members of
the Board or the Administrator and each and any officer or employee of
the Company acting on their behalf shall, to the extent permitted by law,
be fully indemnified and protected by the Company in respect of any such
action, determination or interpretation.

SECTION 9. EFFECTIVE DATE OF PLAN.

The Plan became effective (the "Effective Date") on September 21, 2001, provided
that, the Plan shall become effective with respect to Incentive Stock Options on
the date the Company's stockholders formally approve the Plan.

SECTION 10. TERM OF PLAN.

No Stock Option shall be granted pursuant to the Plan on or after the tenth
anniversary of the Effective Date, but awards theretofore granted may extend
beyond that date.

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APPENDIX B

FEDERAL INCOME TAX ASPECTS OF 2001 STOCK OPTION PLAN

The following is a brief summary of the Federal income tax consequences of
transactions under the 2001 Stock Option Plan. This summary is not intended to
be exhaustive and does not discuss the tax consequences of a participant's death
or provisions of the income tax laws of any municipality, state or foreign
country in which an optionee may reside.

INCENTIVE STOCK OPTIONS. An optionee who is granted an ISO will not recognize
taxable income either at the time the option is granted or upon its exercise,
although the exercise may subject the optionee to the alternative minimum tax.
Upon the sale or exchange of the shares more than two years after the grant of
the option and one year after exercising the option, any gain or loss will be
treated as long-term capital gain or loss. If these holding periods are not
satisfied, the optionee will recognize as ordinary income, at the time of sale
or exchange, an amount equal to the difference between the exercise price and
the lower of (i) the fair market value of the shares at the date of the option
exercise, or (ii) the sale price of the shares. A different rule for measuring
ordinary income upon such a premature disposition may apply in the case of
optionees who are subject to Section 16 of the Act. The Company will be entitled
to a deduction in the same amount as the ordinary income recognized by the
optionee. Any gain or loss recognized on such a premature disposition of the
shares in excess of the amount treated as ordinary income will be characterized
as long-term or short-term capital gain or loss, depending on the holding
period.

NON-QUALIFIED STOCK OPTIONS. An optionee will not recognize any taxable income
at the time he or she is granted a NSO. However, upon exercise of the NSO, the
optionee will recognize taxable income generally measured as the excess of the
then Fair Market Value of the shares purchased over the purchase price. Any
taxable income recognized in connection with an option exercise by an optionee
who is also an employee of the Company will be subject to tax withholding by the
Company. Upon resale of such shares by the optionee, any difference between the
sales price and the optionee's purchase price, to the extent not recognized as
taxable income as described above, will be treated as long- term or short-term
capital gain or loss, depending on the holding period.

The Company will generally be entitled to a tax deduction in the same amount as
the ordinary income recognized by the optionee with respect to shares acquired
upon exercise of a NSO.

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APPENDIX C

MULTIMEDIA GAMES, INC.
AUDIT COMMITTEE CHARTER
(AS OF JUNE 15, 2000)

ORGANIZATION

There shall be a committee of the board of directors to be known as the Audit
Committee. It is the objective of the Company that the Audit Committee shall be
composed of directors who are "independent" of the management of the Company as
required by the rules and regulations of the Nasdaq Stock Market, Inc.
("Nasdaq"), or such other exchange as the securities of the Company shall be
listed for trading.

STATEMENT OF POLICY

The Audit Committee shall provide assistance to the board of directors in
fulfilling their responsibility to the shareholders, potential shareholders, and
investment community relating to corporate accounting, reporting practices of
the Company and the quality and integrity of the financial reports of the
Company. In so doing, it is the responsibility of the Audit Committee to
maintain free and open means of communication between the directors, the
independent auditors, and the financial management of the Company.

RESPONSIBILITIES

In carrying out its responsibilities, the Audit Committee believes its policies
and procedures should remain flexible, in order to best react to changing
conditions and to ensure to the directors and shareholders that the corporate
accounting and reporting practices of the Company are in accordance with all
requirements and are of the highest quality.

In carrying out these responsibilities, the Audit Committee will:

o Review and recommend to the board of directors the independent auditors
to be selected to audit the financial statements of the Company and its
divisions and subsidiaries.

o Meet with the independent auditors and financial management of the
Company to review the scope of the proposed audit for the current year
and the audit procedures to be utilized, and at the conclusion thereof
review such audit, including any comments or recommendations of the
independent auditors.

o Review with the independent auditors, and the financial and accounting
personnel of the Company, the adequacy and effectiveness of the
accounting and financial controls of the Company and elicit any
recommendations for the improvement of such internal control procedures
or particular areas where new or more detailed controls or procedures
are desirable. Particular emphasis will be given to the adequacy of
such internal controls to expose any payments, transactions, or
procedures that might be deemed illegal or otherwise improper.

o Review the internal audit function of the Company including the
independence and authority of its reporting obligations, the proposed
audit plans for the coming year, and the coordination of such plans
with the independent auditors.

o Receive prior to each meeting of the Audit Committee a summary of
findings from completed internal audits and a progress report on the
proposed internal audit plan, with explanations for any deviations from
the original plan.

o Review the financial statement's contained in the Company's annual
report to shareholders with management and the independent auditors to
determine that the independent auditors are satisfied with the
disclosure and content of the financial statements to be presented to
the shareholders. Any changes in accounting principles will be
reviewed.

o Provide sufficient opportunity for the financial and accounting
management of the Company and the independent auditors to meet with the
members of the Audit Committee without members of management present.
Among the items to be discussed in these meetings are the independent
auditors' evaluation of the Company's financial, accounting, and
auditing personnel, and the cooperation that the independent auditors
received during the course of the audit.

o Review accounting and financial human resources and succession planning
within the Company.

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o Submit the minutes of all meetings of the Audit Committee to, or
discuss the matters discussed at each committee meeting with, the board
of directors.

o Investigate any matter brought to the attention of the Audit Committee
within the scope of its duties with the power to retain outside counsel
for the purpose if, in its judgment, that is appropriate.

o Review and update the committee's charter annually.

o Approve the compensation of the independent accountant, and review and
approve the discharge of the independent accountants.

o Confirm and assure the independence of the independent accountant,
including a review of management consulting services and related fees
provided by the independent accountant.

o Inquire of management and the independent accountant about significant
risks or exposures and assess the steps management has taken to
minimize such risk to the Company.

o Review with management and the independent accountant at the completion
of the annual audit:

- The Company's annual financial statements and related
footnotes.

- The independent accountant's audit of the financial statements
and its report thereon.

- Any significant changes required in the independent
accountant's audit plan.

- Any serious difficulties or disputes with management
encountered during the course of the audit.

- Other matters related to the conduct of the audit which are to
be communicated to the committee under generally accepted
auditing standards.

o Review filings with the SEC and other published documents containing
the Company's financial statements and consider whether the information
contained in these documents is consistent with the information
contained in the financial statements.

o Review with management and the independent accountant the interim
financial report before it is filed with the SEC or other regulators.

o Review policies and procedures with respect to officers' expense
accounts and perquisites, including their use of corporate assets, and
consider the results of any review of these areas by the internal
auditor or the independent accountant.

o Review legal and regulatory matters that may have a material impact on
the financial statements, related Company compliance policies, and
programs and reports received from regulators.

o Prepare a letter for inclusion in the annual report that describes the
committee's composition and responsibilities, and how they were
discharged.

o The committee shall meet at least four times per year or more
frequently as circumstances require. The committee may ask members of
management or others to attend the meeting and provide pertinent
information as necessary.

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MULTIMEDIA GAMES, INC.

8900 SHOAL CREEK BLVD., SUITE 300

AUSTIN, TEXAS 78757

THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF MULTIMEDIA GAMES, INC.
PROXY FOR 2002 ANNUAL MEETING OF SHAREHOLDERS MAY 29, 2002

The undersigned shareholder(s) of Multimedia Games, Inc., a Texas
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement, each dated May 2, 2002, and hereby appoints
Gordon T. Graves and Clifton E. Lind, and each of them, Proxies and
Attorneys-in-Fact, with full power to each of substitution, on behalf and in the
name of the undersigned, to represent the undersigned at the 2002 Annual Meeting
of Shareholders of Multimedia Games, Inc. to be held on May 29, 2002 at 9:30
a.m., local time, at the Holiday Inn Northwest, located at 8901 Business Park
Drive, Austin, Texas 78759, and at any adjournment or postponement thereof, and
to vote all shares of Common Stock which the undersigned would be entitled to
vote if personally present on any of the following matters and with
discretionary authority as to any and all other matters that may properly come
before the meeting.

1. ELECTION OF DIRECTORS.

[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY to vote
below (except as indicated). for all nominees listed
below.

IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THAT NOMINEE'S NAME IN THE LIST BELOW:

Gordon T. Graves, Martin A. Keane, Thomas W. Sarnoff , John M. Winkelman and
Clifton E. Lind.

2. To ratify and approve the appointment of BDO Seidman, LLP as the
independent public accountants of the Company for the fiscal year ending
September 30, 2002.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

(Continued and to be dated and signed on reverse side)

(Continued from other side)

3. To ratify and approve the adoption of the 2001 Stock Option Plan.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

4. To transact such other business as may properly come before the meeting or
any postponements or adjournments thereof.

THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS MADE. IF NO SPECIFICATION IS MADE, THE SHARES REPRESENTED BY THIS
PROXY WILL BE VOTED FOR EACH OF THE ABOVE PERSONS AND PROPOSALS, AND FOR SUCH
OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING AS THE BOARD OF DIRECTORS
MAY RECOMMEND OR, IN THE ABSENCE OF A RECOMMENDATION, AS THE PROXY HOLDERS DEEM
ADVISABLE.

May 2, 2002
Austin, Texas

Dated: , 2002
------------------------------------------
--------------------------------------------
Signature:

I plan to attend the meeting: [ ]

(This proxy should be marked, dated and signed by each
shareholder exactly as such shareholder's name appears
hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so
indicate. A corporation is requested to sign its name by
its president or other authorized officer, with the
office held designated. If shares are held by joint
tenants or as community property, both holders should
sign.)

TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING,
PLEASE MARK, SIGN AND DATE THIS PROXY AND RETURN IT AS
PROMPTLY AS POSSIBLE.