THIS SETTLEMENT AGREEMENT (the "Agreement") is made and entered into effective as of January 1,
2001 by and between North American Gaming and Entertainment Corporation ("North American"); Ellen S.
Robinson and Scott Robinson, Joint Tenants, Janet C. Robinson and Jeffrey S. Robinson (hereinafter referred to
collectively as the "Robinson Group"); Elisa Heard, Brevely Morton, D. W. Morton, Ltd., Kristen Morton
Heard, Del Morton and Kara Smith (hereinafter referred to collectively as the "Morton Group"); Marshall H.
Kaplan and Karen S. Kaplan, Joint Tenants, John Gay, Larry Hendricks, Lewis Isaacks and David McCall
(hereinafter referred to collectively as the "McCall Group") (the Robinson Group, Morton Group and McCall
Group are hereinafter collectively referred to as the "Debenture Holders"); and E.H. Hawes, II, Janice Hawes
and International Tours, Inc. (hereinafter referred to collectively as the "International Group").
WHEREAS, the Debenture Holders own the number of shares of common stock, par value $.01 per share (the
"Common Stock") of North American set forth on Exhibit "A", own Subordinated Debentures payable by North
American (the "Subordinated Debentures") in the original principal amounts set forth on Exhibit "A", and are
owed accumulated dividends by North American on Class A Preferred Stock previously issued and outstanding
(the "Dividends") in the amounts set forth on Exhibit "A"; and
WHEREAS, the Debenture Holders desire to receive payments aggregating $700,000 from North American,
and North American desires to make such payments in consideration of this Agreement and the various actions,
agreements and releases agreed to by the Debenture Holders herein and pursuant to the terms and conditions
WHEREAS, North American will deliver to Debenture Holders a promissory note in the form of the promissory
note (the "Promissory Note") attached hereto as Exhibit "B", and North American will, under the circumstances
set forth in Section 5.