EXHIBIT
10.1




Privileged
and Confidential:


For
Settlement Purposes Only


Execution
Copy




SETTLEMENT
AGREEMENT




THIS
Settlement Agreement (hereafter referred to as the “AGREEMENT”) is made
effective the 1st day of May, 2009 (“EFFECTIVE DATE”) by and among: (1) Diamond
Game Enterprises, Inc. (hereafter referred to as “DIAMOND”); (2) Multimedia
Games, Inc. (hereinafter referred to as “MULTIMEDIA”); (3) Robert F. (Skip)
Lannert(hereinafter
referred to as “LANNERT”); (4) Gordon Graves(hereinafter
referred to as “GRAVES”); (5) Clifton Lind(hereinafter
referred to as “LIND” and together with LANNERT and GRAVES, the“INDIVIDUAL OFFICERS”);
and (6) The Kaw Nation of Oklahoma, acting on its own behalf and on behalf of
the Kaw Enterprise Development Authority (hereinafter referred to collectively
as “THE KAW NATION”).




RECITALS




WHEREAS,
DIAMOND is claiming that MULTIMEDIA and the INDIVIDUAL OFFICERS, among other
things, unfairly competed with DIAMOND and as a result DIAMOND suffered damages
including lost profits and lost goodwill as more fully set forth in the Third
Amended Petition filed in the District Court of Oklahoma County, Case No.
CJ-2004-9366, in an action entitled “Diamond Game Enterprises, Inc. v.
Multimedia Games, Inc., et al.” (hereafter referred to as the
“LAWSUIT”);




WHEREAS,
MULTIMEDIA and the INDIVIDUAL OFFICERS deny any liability to DIAMOND and any
wrongdoing alleged in the LAWSUIT;




WHEREAS,
THE KAW NATION, MULTIMEDIA and the INDIVIDUAL OFFICERS filed a complaint in the United States District
Court for the Western District of Oklahoma seeking to enjoin the pending
LAWSUIT, which complaint was dismissed on January 16, 2009, and thereafter a
timely appeal was filed in the U.S. Court of Appeals for the Tenth Circuit
captioned Kaw Nation of
Oklahoma, et al. v. Diamond Game Enter., Inc., et. al, Case No. 09-6014
(hereafter referred to as the “INJUNCTION PROCEEDING”);




WHEREAS,
in order to avoid further litigation and the incurrence of unnecessary fees and
expenses which would otherwise be incurred if these matters are not otherwise
settled, DIAMOND, MULTIMEDIA, the INDIVIDUAL OFFICERS and THE KAW NATION
(sometimes hereafter collectively referred to as the “PARTIES”) have reached an
agreement to settle any and all disputes and alleged CLAIMS (as defined below)
involving the LAWSUIT and the INJUNCTION PROCEEDING; and




WHEREAS,
the PARTIES have agreed to mutually release each other from any and all alleged,
potential and/or possible liability and CLAIMS arising out of the LAWSUIT and
INJUNCTION PROCEEDING as further provided herein; provided, however, that
nothing herein is intended to release any claims of the INDIVIDUAL OFFICERS
against MULTIMEDIA, including but not limited to claims for indemnity as
officers and/or directors of MULTIMEDIA.




NOW,
THEREFORE, in consideration of MULTIMEDIA’s payment to DIAMOND of the amounts
set forth hereafter, and in further consideration of the recitals, covenants,
releases, agreements and provisions contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by all PARTIES, the PARTIES hereby agree as follows:




AGREEMENT




1.           Settlement.




(a)           On
or before June 8, 2009 (the “PAYMENT DATE”), MULTIMEDIA agrees to pay to DIAMOND
the aggregate amount of SIXTEEN MILLION DOLLARS AND NO/100 CENTS
($16,000,000.00) (the “SETTLEMENT FUNDS”) in full and final settlement of all of
DIAMOND’S CLAIMS in the LAWSUIT and in the INJUNCTION
PROCEEDING.  MULTIMEDIA shall, in the next business day following the
EFFECTIVE DATE, deliver by wire transfer the sum of THREE MILLION DOLLARS AND
NO/100 CENTS ($3,000,000.00) (“ESCROWED FUNDS”) to McAfee & Taft’s account
listed below and such funds shall be held by McAfee & Taft in trust in a
segregated trust account and released to DIAMOND, with any accrued interest and
without withholding, deduction or setoff of any kind, on the PAYMENT
DATE.  The remaining THIRTEEN MILLION DOLLARS AND NO/100 CENTS
($13,000,000.00) of the SETTLEMENT FUNDS shall be paid on the PAYMENT DATE by
wire transfer to the McAfee & Taft account listed
below.   After receipt of the ESCROWED FUNDS by McAfee & Taft
at the account listed above (x) the ESCROWED FUNDS shall be deemed received by
DIAMOND as of the date the funds are received by McAfee & Taft, (y)
MULTIMEDIA shall be deemed to have discharged its payments obligations relating
to the ESCROWED FUNDS as of such date, and (z) the entire risk of loss and/or
non-payment of the ESCROWED FUNDS by McAfee & Taft to DIAMOND shall be borne
exclusively by DIAMOND, which risk of loss shall include, without limitation,
any risk that the ESCROWED FUNDS will be subject to a lien or otherwise attached
or encumbered following the transfer to McAfee & Taft.




Privileged
and Confidential:
 For
Settlement Purposes Only




ABA
#026009593


Account
#071601562059


McAfee
& Taft Escrow Account


Bank of
America


Oklahoma
City




(b)           The
PARTIES acknowledge and agree that the SETTLEMENT FUNDS are intended to be
allocated in the following manner:




(1) the
portion attributable to DIAMOND’s lost profits (past and future):  $8
million; and




(2) the
portion attributable to DIAMOND’s loss of goodwill and business reputation:
$8 million.




The
PARTIES further agree to each report for tax purposes the total SETTLEMENT FUNDS
amount consistent with the aforementioned allocation.




(c)           Within
two (2) business days of receipt of the SETTLEMENT FUNDS set forth in Section
1(a) above, DIAMOND shall file a Dismissal With Prejudice in the form attached
hereto as Exhibit
A thereby dismissing with prejudice the entire LAWSUIT as against all
defendants.  Thereafter, MULTIMEDIA, the INDIVIDUAL OFFICERS and THE
KAW NATION shall file a stipulation of dismissal dismissing with prejudice all
CLAIMS against DIAMOND in the INJUNCTION PROCEEDING.  In the event
that the SETTLEMENT FUNDS are not paid (or deemed paid) in full in accordance
with Section 1(a) above, DIAMOND may elect, following notice to MULTIMEDIA and a
3-day opportunity to cure, to (i) bring an action against MULTIMEDIA to enforce
this provision of the AGREEMENT and recover the balance of the SETTLEMENT FUNDS,
or (ii) retain the ESCROWED FUNDS and proceed with its claims against the
defendants in the LAWSUIT, and in the event DIAMOND receives a money judgment
against any or all of the defendants therein, it shall credit the ESCROWED FUNDS
against any such judgment so as to reduce any such judgment by the full amount
of the ESCROWED FUNDS.




(d)           Upon
receipt of the SETTLEMENT FUNDS, DIAMOND agrees (i) to return to any disclosing
party all documents or electronic information designated as CONFIDENTIAL or
CONFIDENTIAL – ATTORNEY’S AND EXPERTS ONLY under the PROTECTIVE ORDER during
discovery in the LAWSUIT and the INJUNCTION PROCEEDING; (ii) that it shall not,
directly or indirectly, aid or fund in any way the CORY CASE; (iii) that it
shall not, directly or indirectly commence, aid or fund in any way, prosecute or
cause to be commenced, aided, funded or prosecuted any suit, action or other
proceeding against MULTIMEDIA, any of the INDIVIDUAL OFFICERS or THE KAW NATION
anywhere in CURRENT MULTIMEDIA TERRITORY related to manufacture, promotion,
transportation, sale, lease, deployment, play or use of the CURRENT MULTIMEDIA
GAMES (hereinafter referred to as the “MGAM DISPUTED SUBJECT MATTER”); (iv) that
it shall not appear voluntarily, testify voluntarily or attempt to obtain or
produce voluntarily discovery in any proceeding involving the MGAM DISPUTED
SUBJECT MATTER; (v) that it shall not purchase or take assignment of any CLAIM
that is related to the MGAM DISPUTED SUBJECT MATTER; (vi) that it shall not make
or assert against any customers, lessees, licensees or other transferees of
MULTIMEDIA any CLAIMS which are related to MGAM DISPUTED SUBJECT MATTER; and
(vii) that it shall not make or assert against any manufacturers, distributors
or suppliers to MULTIMEDIA any CLAIMS which are related to MGAM DISPUTED SUBJECT
MATTER if MULTIMEDIA has a pre-existing contractual, statutory or legal
obligation to defend, indemnify, hold harmless or otherwise reimburse any such
manufacturer, distributor or supplier in connection with the CLAIMS made by
DIAMOND.




Privileged
and Confidential:
 For
Settlement Purposes Only




(e)           Following
the filing of the Dismissal With Prejudice by DIAMOND as provided in Section
1(c), MULTIMEDIA agrees (i) to return to DIAMOND all documents or electronic
information designated as CONFIDENTIAL or CONFIDENTIAL – ATTORNEY’S AND EXPERTS
ONLY under the PROTECTIVE ORDER during discovery in the LAWSUIT and the
INJUNCTION PROCEEDING; (ii) that it shall not, directly or indirectly commence,
aid or fund in any way, prosecute or cause to be commenced, aided, funded or
prosecuted any suit, action or other proceeding against DIAMOND anywhere in
CURRENT DIAMOND TERRITORY related to manufacture, promotion, transportation,
sale, lease, deployment, play or use of the CURRENT DIAMOND GAMES (hereinafter
referred to as the “DIAMOND DISPUTED SUBJECT MATTER”); (iii) that it shall not
appear voluntarily, testify voluntarily or attempt to obtain or produce
voluntarily discovery in any proceeding involving the DIAMOND DISPUTED SUBJECT
MATTER; (iv) that it shall not purchase or take assignment of any CLAIM that is
related to the DIAMOND DISPUTED SUBJECT MATTER; (vi) that it shall not make or
assert against any customers, lessees, licensees or other transferees of DIAMOND
any CLAIMS which are related to DIAMOND DISPUTED SUBJECT MATTER; (vi) that it
shall not make or assert against any manufacturers, distributors or suppliers to
DIAMOND any CLAIMS which are related to DIAMOND DISPUTED SUBJECT MATTER if
DIAMOND has a pre-existing contractual, statutory or legal obligation to defend,
indemnify, hold harmless or otherwise reimburse any such manufacturer,
distributor or supplier in connection with the CLAIMS made by
MULTIMEDIA.




(f)           Except
as necessary to enforce any of its rights pursuant to this AGREEMENT against
another party in court or otherwise or as required by law, no party shall
disclose to any person or entity any information relating to the negotiation or
terms of this AGREEMENT.  Notwithstanding the foregoing and subject to
Section 1(g) below, (i) MULTIMEDIA may make disclosure it believes in good faith
is required or advisable under applicable law, rule or regulation (including but
not limited to any state or federal securities laws, rules and regulations and
local, state and federal gaming laws, rules and regulations); (ii) any party may
make otherwise prohibited disclosure to its legal, financial, accounting or
other similar advisors, to its insurers and to bona fide prospective acquirers
and investors in each case who agree to abide by the terms of this Section 1(f);
(iii) if MULTIMEDIA makes public disclosure of any fact pursuant to Section
1(f)(i) above, then DIAMOND may disclose the same fact to the
public.




(g)           MULTIMEDIA,
THE KAW NATION and the INDIVIDUAL OFFICERS will at all times refrain from making
any disparaging or negative comments about DIAMOND or any of its past or present
directors, officers, agents or employees to any other person or
entity.  DIAMOND will at all times refrain from making any disparaging
or negative comments about THE KAW NATION, MULTIMEDIA or any of their respective
past or present directors, officers (including, with respect to MULTIMEDIA, the
INDIVIDUAL OFFICERS), agents or employees to any other person or
entity.  The PARTIES acknowledge that this Section 1(g) shall not be
construed to prevent DIAMOND, MULTIMEDIA or the INDIVIDUAL OFFICERS, or any
company with which they may be affiliated, from competing with the others on a
good faith basis and, when making business presentations, from making good faith
comparative claims between the products of DIAMOND, MULTIMEDIA, the INDIVIDUAL
OFFICERS or any company with which they may be affiliated.




(h)           Each
of the PARTIES hereto understands and agrees that neither the payment of any sum
of money nor the execution of this AGREEMENT shall constitute, be construed as,
or be offered or received into evidence as, an admission of any wrongdoing by,
or liability of, or obligation of, any party hereto.  Each of the
PARTIES hereto agrees and acknowledges that this AGREEMENT is entered into for
the sole purpose of resolving contested claims and disputes as well as avoiding
the substantial costs, expenses, and uncertainties associated with such
disputes.  It is also expressly agreed that neither this AGREEMENT,
its execution, the performance of any of its terms nor any of its contents shall
constitute or be construed or offered as evidence in any proceeding as an
admission of any liability or any fact or any indication that any of the claims,
charges, rulings or conditions made in the LAWSUIT, CLASSIFICATION ORDER or the
Injunction Proceeding by any of the parties thereto against each other have any
merit.




2.           Mutual
Release.  Subject to, and
in consideration of MULTIMEDIA’s payment (or deemed payment) in full to DIAMOND
of the SETTLEMENT FUNDS and the other terms and provisions of this
AGREEMENT:




Privileged
and Confidential:
 For
Settlement Purposes Only




(a)           DIAMOND
hereby releases and forever discharges MULTIMEDIA (and its officers (other than
the INDIVIDUAL OFFICERS), directors, employees, agents, representatives,
successors, attorneys and assigns) from any and all CLAIMS that DIAMOND ever
had, now has or hereafter can, shall or may have for, upon or by reason of any
matter, event, cause or thing whatsoever from the beginning of the world to the
EFFECTIVE DATE, including without limitation all CLAIMS which were asserted or
could have been asserted in the LAWSUIT and the INJUNCTION
PROCEEDING.




(b)           MULTIMEDIA
hereby releases and forever discharges DIAMOND (and its officers, directors,
employees, agents, representatives, successors, attorneys and assigns) from any
and all CLAIMS that MULTIMEDIA ever had, now has or hereafter can, shall or may
have for, upon or by reason of any matter, event, cause or thing whatsoever from
the beginning of the world to the EFFECTIVE DATE, including without limitation
all CLAIMS which were asserted or could have been asserted in the LAWSUIT and
the INJUNCTION PROCEEDING.




(c)           DIAMOND
and the INDIVIDUAL OFFICERS each hereby release and forever discharge the other
(and its officers, directors, employees, agents, representatives, successors,
attorneys and assigns, if any) from any and all CLAIMS that it ever had, now has
or hereafter can, shall or may have (i) which were asserted or could have been
asserted in the LAWSUIT and the INJUNCTION PROCEEDING; or(ii)related to manufacture,
promotion, transportation, sale, lease, deployment, play or use of the CURRENT
MULTIMEDIA GAMES.




(d)           DIAMOND
and THE KAW NATION each hereby release and forever discharge the other (and its
officers, directors, employees, agents, representatives, successors, attorneys
and assigns) from any and all CLAIMS that it ever had, now has or hereafter can,
shall or may have for, upon or by reason of any matter, event, cause or thing
whatsoever from the beginning of the world to the EFFECTIVE DATE, including
without limitation all CLAIMS which were asserted or could have been asserted in
the INJUNCTION PROCEEDING.




(e)           The
discharge and release by DIAMOND in Sections 2(a), 2(c) and 2(d) above shall
apply to all CLAIMS that DIAMOND may have against any insurance carrier of
MULTIMEDIA, THE KAW NATION and any of the INDIVIDUAL OFFICERS.  The
foregoing notwithstanding, nothing in this AGREEMENT shall operate, or be
construed to operate, to discharge or release (i) any CLAIM for breach of this
AGREEMENT or the PROTECTIVE ORDER (as defined below), (ii) any CLAIM that
MULTIMEDIA, THE KAW NATION or any of the INDIVIDUAL OFFICERS may have against
its or their respective insurance carriers; or (iii) any CLAIMS of the
INDIVIDUAL OFFICERS against MULTIMEDIA, including but not limited to CLAIMS for
indemnity as officers and/or directors of MULTIMEDIA.




(f)           Each
party hereto has been advised by legal counsel and is familiar with the
provision of Section 1542 of the California Civil Code, which is set forth
below.  Each party knowingly waives any rights it may have under
Section 1542, and under any similar provision of any other state or federal law,
and the releases provided in Section 2 include all causes of CLAIMS whatsoever
in law or in equity that are not known or are not ascertainable as of the
execution of this AGREEMENT.




“A
general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the
debtor.”




3.           Independent
Counsel.The
PARTIES acknowledge and agree that prior to executing this AGREEMENT they have
sought and obtained the advice of their own respective legal counsel concerning
this AGREEMENT and the matters released herein.  Each party
acknowledges that it has been fully advised regarding the nature of this
AGREEMENT, and has read this AGREEMENT and understands the contents and the
consequences thereof, and knowingly, willingly and voluntarily enters into in
this AGREEMENT.  Further, because each party has been represented by
counsel and has cooperated in the drafting and preparation of this AGREEMENT,
the same shall not be construed for or against the drafter.




4.           Attorneys’
Fees.Each of the
PARTIES, except as expressly otherwise set forth herein, shall bear and pay all
fees and expenses each respective party hereto may incur in connection with the
negotiation, preparation and execution of this AGREEMENT; provided however, that
if any action at law or in equity, including an action for specific performance,
is brought to enforce the provisions of this AGREEMENT, the prevailing party
shall be entitled to recover reasonable attorneys’ fees from the breaching or
defaulting party, which fees may be set by the Court in a trial of such action
or may be enforced by a separate action brought for that purpose, and which fees
shall be in addition to any other relief which may be awarded.




Privileged
and Confidential:
 For
Settlement Purposes Only




5.           Representations
and Warranties.




(a)           MULTIMEDIA
and THE KAW NATION each represent and warrant to DIAMOND, severally and not
jointly, as of the EFFECTIVE DATE and the PAYMENT DATE that: (i) it has not
sold, assigned, transferred, hypothecated, pledged or encumbered, or otherwise
disposed of, in whole or in part, voluntarily or involuntarily, any CLAIM
released pursuant to this AGREEMENT; (ii) it has all the requisite corporate
power and capacity to execute, deliver, and perform this AGREEMENT and any
related agreements, documents or consents to which it is a party; (iii) this
AGREEMENT and any related agreements, documents or consents to which it is a
party have been duly authorized, executed and delivered by all necessary
corporate action; (iv) this AGREEMENT and any related agreements, documents and
consents to which it is a party constitute legal, valid, and binding
obligations, enforceable against it in accordance with their terms; (v) no
consent or approval of any other person or entity is required to authorize it to
enter into this AGREEMENT or any related agreements, documents and consents to
which it is a party and to perform its obligations hereunder and thereunder and
to carry out the transactions contemplated hereby and thereby; and (vi) to the
best of its knowledge, no other person or entity (other than the other PARTIES
hereto) had or has any interest in any CLAIM released pursuant to this
AGREEMENT.




(b)           Each
of the INDIVIDUAL OFFICERS represents and warrants to DIAMOND, severally and not
jointly, as of the EFFECTIVE DATE and the PAYMENT DATE that: (i) he has not
sold, assigned, transferred, hypothecated, pledged or encumbered, or otherwise
disposed of, in whole or in part, voluntarily or involuntarily, any CLAIM
released pursuant to this AGREEMENT; (ii) this AGREEMENT and any related
agreements, documents or consents to which he is a party have been duly
authorized, executed and delivered; (iii) this AGREEMENT and any related
agreements, documents and consents to which he is a party constitute legal,
valid, and binding obligations, enforceable against him in accordance with their
terms; (iv) no consent or approval of any other person or entity is required to
authorize him to enter into this AGREEMENT or any related agreements, documents
and consents to which he is a party and to perform his  obligations
hereunder and thereunder and to carry out the transactions contemplated hereby
and thereby; and (v) to the best of his knowledge, no other person or entity
(other than the other PARTIES hereto) had or has any interest in the any CLAIM
released pursuant to this AGREEMENT.




(c)           DIAMOND
represents and warrants to MULTIMEDIA, each of the INDIVIDUAL OFFICERS and THE
KAW NATION as of the EFFECTIVE DATE and the PAYMENT DATE that: (i) it has not
sold, assigned, transferred, hypothecated, pledged or encumbered, or otherwise
disposed of, in whole or in part, voluntarily or involuntarily, any CLAIM
released pursuant to this AGREEMENT; (ii) it has all the requisite corporate
power and capacity to execute, deliver, and perform this AGREEMENT and any
related agreements, documents or consents to which it is a party; (iii) this
AGREEMENT and any related agreements, documents or consents to which it is a
party have been duly authorized, executed and delivered by all necessary
corporate action; (iv) this AGREEMENT and any related agreements, documents and
consents to which it is a party constitute legal, valid, and binding
obligations, enforceable against it in accordance with their terms; (v) no
consent or approval of any other person or entity is required to authorize it to
enter into this AGREEMENT or any related agreements, documents and consents to
which it is a party and to perform its obligations hereunder and thereunder and
to carry out the transactions contemplated hereby and thereby; and (vi) to the
best of its knowledge, no other person or entity (other than the other PARTIES
hereto) had or has any interest in the any CLAIM released pursuant to this
AGREEMENT.




6.           Additional
Instruments.The
PARTIES agree that they shall execute and deliver any additional instruments in
writing which may be necessary to carry out any agreement, term, condition or
assurance in this AGREEMENT whenever the occasion shall arise and request for
such instruments is reasonably made.




7.           Facsimile
Reproductions.The PARTIES
acknowledge that this AGREEMENT may be circulated by facsimile transmission or
by email containing an electronic copy of this AGREEMENT (e.g., PDF), and that
the PARTIES may ultimately sign such facsimile transmissions (or electronic
copy) as originals in order to expedite the execution of this
AGREEMENT.  Any such facsimile transmission (or electronic copy) of
this AGREEMENT which has been signed by all of the PARTIES shall be fully
binding upon the PARTIES as though such facsimile transmission (or electronic
copy) was an original or final printed agreement.




Privileged
and Confidential:
 For
Settlement Purposes Only




8.           Entire
Agreement.This
AGREEMENT contains all of the agreements and representations between the
PARTIES.  Other than this AGREEMENT, there are no other oral or
unwritten agreements existing between or among the PARTIES.  This
AGREEMENT has been executed in duplicate originals, each original to be
effective as a single original copy, and enforceable against the
PARTIES.  This AGREEMENT may be amended only by written instrument
signed by the PARTIES hereto.  No provision of this AGREEMENT may be
waived orally, but only by a written instrument signed by the party against whom
enforcement of such waiver is sought.  The PARTIES acknowledge and
agree that the provisions of Section 20 and 21 of the PROTECTIVE ORDER shall not
terminate with the disposition of the LAWSUIT but shall continue under further
order by the court in the LAWSUIT.  Any breach of the PROTECTIVE ORDER
by a party or its counsel shall be deemed a breach of this AGREEMENT by such
party.




9.           Benefit.This AGREEMENT shall be
binding upon and shall inure to the benefit of the PARTIES hereto, and their
respective heirs, devisees, personal representatives, successors, trustees,
assigns, administrators, officers, directors, employees and agents. Except as
expressly provided herein, nothing in this AGREEMENT shall be construed as
giving any person or entity (other than the PARTIES hereto and their and their
respective heirs, devisees, personal representatives, successors, trustees,
assigns, administrators, officers, directors, employees and agents) any rights
(including any rights based upon a claim of collateral estoppel or res judicata), remedies or
claims under or in respect of this AGREEMENT or any provision
hereof.  This AGREEMENT has been executed in reliance upon the
provisions of Rule 408 of the Federal Rules of Evidence and all cognate state
rules precluding the introduction of evidence regarding settlement negotiations
or agreements.




10.           Time of
Essence.Time is
of the essence for all purposes of this AGREEMENT.




11.           Governing
Law; Jurisdiction.  This AGREEMENT shall be governed by and
construed in accordance with the laws of the State of Oklahoma, without giving
effect to its principles or rules of conflict of laws to the extent such
principles or rules would require or permit the application of the laws of
another jurisdiction.




12.           Mistake
of Fact.  In entering and making this AGREEMENT, the PARTIES
assume the risk of any mistake of fact or law.  If the PARTIES, or any
of them, should later discover that any fact they relied upon in entering this
AGREEMENT is not true, or that their understanding of the facts or law was
incorrect, the PARTIES shall not be entitled to seek rescission of this
AGREEMENT by reason thereof.  This AGREEMENT is intended to be final
and binding upon the PARTIES regardless of any mistake of fact or
law.




13.           Defined
Terms and Construction.  The capitalized terms defined below
shall have the respective meanings ascribed to them as follows:




(a)           “CLAIMS”
means all claims, counterclaims, third party claims, actions, causes of action,
demands, judgments, debts, expenses, losses, liabilities, and obligations of any
kind and of whatever nature or character, whether accrued, actual, contingent,
latent or otherwise, made or brought for the purpose of recovering any damages
or for the purpose of obtaining any equitable relief or any other relief of any
kind, including any of the foregoing that are acquired, directly or indirectly,
after the EFFECTIVE DATE by operation of law or otherwise.




(b)           “CLASSIFICATION
ORDER” means that certain interlocutory order issued in the LAWSUIT titled
“Order Granting Plaintiff’s Partial Summary Judgment Against the MGAM Defendants
(Regarding Classification of Games) and Denying the MGAM Defendants’ Motion for
Summary Judgment” dated November 29, 2007.




(c)           “CORY
CASE” means Cory Investments
Ltd v. Multimedia Games, Inc.., et. al.,Case No. CJ-2008-4181 (Dist. Ct.
Okla. County filed May 7, 2008).




(d)           “CURRENT
DIAMOND GAMES” means any games or equipment, hardware or software used in gaming
that are or have been manufactured, promoted, transported, sold, leased,
deployed, played or used by DIAMOND at any time on or prior to the EFFECTIVE
DATE (including without limitation the Lucky Tab II, Lucky Tab II Millennium,
Triple Play Series and EZ Tab games); provided, however that the CURRENT DIAMOND
GAMES shall not include any game if there has been a material functional
modification to the equipment, hardware or software for such game after the
EFFECTIVE DATE.




Privileged
and Confidential:
 For
Settlement Purposes Only




(e)           “CURRENT
DIAMOND TERRITORY” means the markets in which DIAMOND has CURRENT DIAMOND GAMES
placed in existing gaming establishments on the EFFECTIVE
DATE.  DIAMOND represents that those markets are located in the
following states:  Oklahoma, Alabama, Texas, Maryland, West Virginia
and Kansas.




(f)           “CURRENT
MULTIMEDIA GAMES” means any games or equipment, hardware or software used in
gaming that are or have been manufactured, promoted, transported, sold, leased,
deployed, played or used by MULTIMEDIA at any time on or prior to the EFFECTIVE
DATE (including without limitation the MegaNanza and Real Time Bingo games);
provided, however that the CURRENT MULTIMEDIA GAMES shall not include any game
if there has been a material functional modification to the equipment, hardware
or software for such game after the EFFECTIVE DATE.




(g)           “CURRENT
MULTIMEDIA TERRITORY” means the markets in which MULTIMEDIA has CURRENT
MULTIMEDIA GAMES placed in existing gaming establishments on the EFFECTIVE
DATE.  MULTIMEDIA represents that those markets are located in the
following states: AL, CA, MN, NY, OK, RI, TX, WA, WI.




(h)           “PROTECTIVE
ORDER” means that certain order issued in the LAWSUIT titled “Protective Order”,
dated October 4, 2005.




(i)           This
AGREEMENT contains article and section headings which are for convenience of
reference only.




[End of
text; signature page follows]




Privileged
and Confidential:
 For
Settlement Purposes Only




IN WITNESS WHEREOF, this
Settlement Agreement has been executed and delivered by the PARTIES hereto on
the date first above written.








Multimedia
      Games, Inc.
                                                                                                                                          
                                                                                                                                          Diamond
      Game Enterprises, Inc.By:
                                                                                                                                          /s/
      Anthony Sanfilippo
                                                                                                                                          
                                                                                                                                          By:
                                                                                                                                          /s/
      James BresloName:
                                                                                                                                          Anthony
      Sanfilippo
                                                                                                                                          
                                                                                                                                          Name:
                                                                                                                                          James
      BresloTitle:
                                                                                                                                          President
      and Chief Executive Officer
                                                                                                                                          
                                                                                                                                          Title
                                                                                                                                          PresidentThe Kaw NationActing
      on its own behalf and on behalf of the Kaw Enterprise Development
      AuthorityBy:
                                                                                                                                          /s/ Guy
      MunroeName:
                                                                                                                                          Guy
      MunroeTitle:
                                                                                                                                          Chairman/CEORobert
      F. (Skip) Lannert
                                                                                                                                          
                                                                                                                                          Gordon
      Graves/s/
      Robert F. Lannert
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          /s/
      Gordon GravesClifton Lind/s/
      Clifton Lind











EXHIBIT
A


Form of Stipulation of
Dismissal for Oklahoma County Litigation


IN
THE DISTRICT COURT IN AND FOR OKLAHOMA COUNTY


STATE
OF OKLAHOMA




)DIAMOND
      GAME ENTERPRISES, INC.,
                                  ))Plaintiff,
                                  
                                  
                                  Case
      No. CJ-2004-9366v.
                                  
                                  
                                  )Honorable Noma D. Gurich)MULTIMEDIA
      GAMES, INC., et
      al.,
                                  ))D.fendants.
                                  
                                  
                                  ))








DISMISSAL WITH
PREJUDICE





Plaintiff, Diamond Game Enterprises,
Inc. hereby dismisses all claims in this action against Multimedia Games, Inc.,
Robert F. “Skip” Lannert, Clifton Lind, and Gordon Graves (collectively,
“Defendants”) with prejudice, each party to bear its own attorney fees and
costs.





Dated
this __ of April, 2009.




John
      N. Hermes, OBA #4133
                            Jeff
      L. Todd, OBA # 17713
                            Mark
      D. Folger, OBA # 20700
                            McAfee
      & Taft: A Professional Corporation
                            Two
      Leadership Square, Tenth Floor
                            Oklahoma
      City, OK 73102.ATTORNEYS FOR
      PLAINTIFF








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