Exhibit 10.1
TERMINATION AND SETTLEMENT AGREEMENT

This Termination and Settlement Agreement (the “Agreement”) is entered into as
of June 28, 2006 (the date on which both parties have executed and delivered
this Agreement), by and between Spectre Gaming, Inc., a Minnesota corporation
(“Spectre”), and Bally Gaming, Inc., a Nevada corporation (“Bally”).

INTRODUCTION

A. Spectre and Bally are parties to that certain Redemption Technology and
Supply Agreement dated May 24, 2005, as amended (the “Redemption Technology and
Supply Agreement”), pursuant to which, inter alia, Spectre licensed certain
technology from Bally.

B. The parties wish to terminate the Redemption Technology and Supply Agreement,
settle all claims the parties may have against each other, and provide for
Spectre’s limited license rights and corresponding obligations associated with
such rights as described in a Technology Agreement dated June 28, 2006 (the
“Technology Agreement”).

AGREEMENT

Now, Therefore, in consideration of the foregoing facts and premises, which are
hereby made a part of this Agreement, and the mutual covenants set forth herein,
and for other good and valuable consideration the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:

1. Termination of Redemption Technology and Supply Agreement. On the terms set
forth herein, the parties hereby terminate the Redemption Technology and Supply
Agreement effective immediately, with the exception of survival of the parties’
rights and obligations set forth in Sections 14, 15 and 17 of the Redemption
Technology and Supply Agreement. In addition, Bally hereby releases and
discharges Spectre from all of its payment and other obligations owed to Bally,
including but not limited to liabilities under the Promissory Note dated
September 9, 2005, (the “Promissory Note”) delivered to Bally in connection with
the Redemption Technology and Supply Agreement. Accordingly, Bally shall
promptly return the Promissory Note to Spectre. Nevertheless, Bally shall retain
all funds paid by Spectre pursuant to the Redemption Technology and Supply
Agreement as of the date hereof, and Spectre agrees that it shall take no action
to seek recovery of such amounts already paid by Spectre. In the event the
Technology Agreement does not become effective between the parties, this
Agreement shall be of no further force and effect.

2. Mutual Releases. As of the date hereof, the parties hereby provide the
following releases, pursuant to which each party is releasing the other of and
from any and all obligations to the other party, of every kind and nature,
except those specifically set forth in this Agreement:
 
(a) Spectre hereby releases and forever discharges Bally and its directors,
officers, affiliates and representatives (collectively, the “Bally Released
Parties”) of and from any and all past, present and future claims, demands,
liabilities, judgments and causes of action, at law or in equity, known or
unknown, asserted or unasserted, liquidated or unliquidated, absolute or
contingent, accrued or not accrued, which Spectre ever had, presently has, might
have in the future, claim to have, or claim to have had against the Bally
Released Parties arising out of, touching upon, relating to or in any manner
connected with the Redemption Technology and Supply Agreement or any other
relationship, agreement or arrangement with Bally, prior to and including the
date of this Agreement; provided, however, that Bally’s obligation and liability
for the observation and performance of this Agreement is specifically excluded
from the foregoing release.
 
 
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(b) Bally hereby releases and forever discharges Spectre and its directors,
officers, affiliates and representatives (collectively, the “Spectre Released
Parties”) of and from any and all past, present and future claims, demands,
liabilities, judgments and causes of action, at law or in equity, known or
unknown, asserted or unasserted, liquidated or unliquidated, absolute or
contingent, accrued or not accrued, which Bally ever had, presently has, might
have in the future, claim to have, or claim to have had against any of the
Spectre Released Parties arising out of, touching upon, relating to or in any
manner connected with the Redemption Technology and Supply Agreement or any
other relationship, agreement or arrangement with Spectre, prior to and
including the date of this Agreement; provided, however, that Spectre’s
obligation and liability for the observation and performance of this Agreement
is specifically excluded from the foregoing release.

3. Return of Enabling Technology and Confidential Information.
 
(a) Each party, at its own expense, shall promptly return to the other all
copies of materials that constitute, or are composed of any, confidential
information of the other party. In particular, Spectre shall promptly return to
Bally all copies of the Enabling Technology (as such term is defined in the
Redemption and Technology Supply Agreement) in Spectre’s possession as of the
date of this Agreement. Spectre will not, however, be obligated hereunder to
return any Alpha Boards or other hardware incorporating Enabling Technology, and
Spectre’s use of such Alpha Boards or other hardware shall be in accordance with
the terms and conditions of the Technology Agreement.

(b) For a period of three years following the date hereof, Spectre shall grant
Bally, or a third party engaged by Bally, full access, at reasonable times and
upon reasonable notice and at Bally’s sole cost and expense, to any and all
Spectre facilities in order for Bally to conduct an audit to determine and
confirm that Spectre is in compliance with this Agreement and does not possess
and has not used the Enabling Technology other than as permitted herein.

4. Execution of the Technology Agreement. As consideration for the mutual
releases granted herein, the parties shall execute the Technology Agreement
contemporaneously with this Agreement and that the Technology Agreement becomes
effective between the parties.

5. Limitation on Use of Bally Technology. Spectre agrees that it will not use
any Bally intellectual property in any Spectre games, other than Licensed
Technology as provided for in the Technology Agreement, unless the rights to use
the Licensed Technology are purchased directly from Bally or an authorized Bally
distributor. For all purposes of this Agreement, the parties agree that PDS
Gaming Corporation is an “authorized distributor” of Bally intellectual
property, Alpha Boards and Bally gaming machines. Spectre’s use of any games
produced or otherwise manufactured by Spectre, or any party on behalf of
Spectre, utilizing the Licensed Technology shall comply with the terms and
conditions of the Technology Agreement.

6. Confidentiality. The parties agree that the terms of this Agreement shall be
strictly confidential and its terms shall not be disclosed to any third party
for any purpose whatsoever except as required by applicable law, order or rule
of court or governmental agency having competent jurisdiction or as otherwise
specifically provided herein (including applicable SEC regulations). This
confidentiality provision shall not prohibit the parties from disclosing the
terms of this Agreement to tax, financial, legal or tax or accounting advisors.

 
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7. Representations and Warranties. Each party represents and warrants to the
other that: (a) it has full power and authority to enter into this Agreement and
perform all of its obligations under this Agreement, has duly executed and
delivered this Agreement, and this Agreement is legally binding on it and is
enforceable in accordance with its terms; and (b) no consent or approval from
any person, firm or entity, or any other consent, approval, order or
authorization of, or registration, declaration or filing with any governmental
authority or court, is required in connection with the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby. Each
party acknowledges, agrees, represents and warrants to the other party that,
after the date hereof and excluding this Agreement, there are no agreements,
understandings or obligations, whether oral or written, with such other party.
All of the foregoing representations and warranties shall forever survive this
Agreement and the effectiveness of the transactions contemplated hereby.

8. General Provisions.

(a) This Agreement shall be binding upon and shall inure to the benefit of the
parties and their respective heirs, successors and assigns; provided, however,
that this Agreement may not be assigned by any party without the written consent
of the other party hereto, which consent may be granted or withheld in the sole
and absolute discretion of such other party.

(b) This Agreement may be executed in counterparts, all of which will be
considered one and the same agreement. In addition, signatures to this Agreement
may be delivered by facsimile or other means of electronic transmission, and
signatures so delivered will be valid and binding to the same extent as the
delivery of original signatures.

(c) This Agreement shall not be modified or amended in any fashion except by an
instrument in writing signed by both parties hereto. No consent or waiver shall
be enforceable unless it is in writing and signed by the party against whom such
consent or waiver is sought to be enforced. No consent under and no waiver of
any provision of this Agreement on any one occasion shall constitute a consent
under or waiver of any other provision on such occasion or on any other
occasion, nor shall it constitute a consent under or waiver of the consented-to
or waived provision on any other occasion.

(d) This Agreement shall be construed in accordance with the laws of the State
of Nevada, without regard to its conflicts-of-law principles. No person, firm or
other entity shall be a third-party beneficiary of any provisions of this
Agreement.

(e) All parties agree to execute and deliver any documents or instruments
(including legal instruments of conveyance or otherwise) that may be reasonably
requested by another party in order to effectuate the transactions contemplated
hereby, or to provide reasonable assurance to such requesting party that any of
such transactions has been completed.

(f) If any provision of this Agreement or the application of such provision to
any party or circumstances, shall be held invalid, the remainder of the
Agreement, or the application of such provision to such party or circumstances
other than those to which it is held invalid, shall not be affected thereby.

 
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(g) In view of the purposes of this Agreement, it is agreed that the remedy at
law for failure of any party to perform would be inadequate and that the injured
party or parties, at its or his option, shall have the right to compel the
specific performance of this Agreement in a court of competent jurisdiction, to
the extent permitted by applicable law and not expressly prohibited by this
Agreement.

In Witness Whereof, the parties have executed this Termination and Settlement
Agreement to be effective as of the date first written above.

 

        SPECTRE GAMING, INC.:  
   
   
    By:      

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D. Bradly Olah   President

 
 
 

       
BALLY GAMING, INC.:
 
   
   
    By:      

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Paul Lofgren   Executive Vice President-Business Development

 
 
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