<SEC-DOCUMENT>0000950123-11-028245.txt : 20110323
<SEC-HEADER>0000950123-11-028245.hdr.sgml : 20110323
<ACCEPTANCE-DATETIME>20110323160841
ACCESSION NUMBER:		0000950123-11-028245
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20110317
ITEM INFORMATION:		Entry into a Material Definitive Agreement
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20110323
DATE AS OF CHANGE:		20110323

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			LAKES ENTERTAINMENT INC
		CENTRAL INDEX KEY:			0001071255
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990]
		IRS NUMBER:				411913991
		STATE OF INCORPORATION:			MN
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-24993
		FILM NUMBER:		11706603

	BUSINESS ADDRESS:	
		STREET 1:		130 CHESHIERE LANE
		CITY:			MINNETONKA
		STATE:			MN
		ZIP:			55305
		BUSINESS PHONE:		6124499092

	MAIL ADDRESS:	
		STREET 1:		130 CHESHIRE LANE
		CITY:			MINNETONKA
		STATE:			MN
		ZIP:			55305

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	LAKES GAMING INC
		DATE OF NAME CHANGE:	19980929
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>c63635e8vk.htm
<DESCRIPTION>FORM 8-K
<TEXT>
<HTML>
<HEAD>
<TITLE>e8vk</TITLE>
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<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 1pt solid black; font-size: 1pt">&nbsp;</DIV>




<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>WASHINGTON, D.C. 20549</B>
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B>FORM 8-K</B>
</DIV>


<DIV align="center" style="font-size: 12pt; margin-top: 12pt"><B>CURRENT REPORT</B>
</DIV>


<DIV align="center" style="font-size: 12pt; margin-top: 0pt"><B>Pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>Date of Report (Date of earliest event reported): March&nbsp;17, 2011</B></DIV>

<DIV align="center" style="font-size: 24pt; margin-top: 12pt"><B><FONT style="border-bottom: 1px solid #000000">Lakes Entertainment, Inc.</FONT></B>
</DIV>

<DIV align="center" style="font-size: 10pt">(Exact name of registrant as specified in its charter)</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
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<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<TR></TR>
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<TR valign="bottom">
    <TD align="center" valign="top">Minnesota
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">0-24993
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">41-1913991</TD>
</TR>
<TR style="font-size: 1px">
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">(State or other jurisdiction of <BR>
incorporation)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(Commission File Number)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(IRS Employer<BR>
Identification No.)</TD>
</TR>
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</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="41%">&nbsp;</TD>
    <TD width="18%">&nbsp;</TD>
    <TD width="41%">&nbsp;</TD>
</TR>
<TR></TR>
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<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top">130 Cheshire Lane, Suite&nbsp;101, Minnetonka, Minnesota
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">55305</TD>
</TR>
<TR style="font-size: 1px">
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">(Address of principal executive offices)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(Zip Code)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt">Registrant&#146;s telephone number, including area code: (952)&nbsp;449-9092</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt">Not Applicable</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 0pt"><DIV style="margin-top: 1px"><FONT style="border-top: 1px solid #000000">(Former name or former address, if changed since last report)</FONT></DIV></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><FONT style="font-family: Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Written communications pursuant to Rule&nbsp;425 under the Securities Act (17 CFR 230.425)</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><FONT style="font-family: Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Soliciting material pursuant to Rule&nbsp;14a-12 under the Exchange Act (17 CFR 240.14a-12)</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><FONT style="font-family: Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Pre-commencement communications pursuant to Rule&nbsp;14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><FONT style="font-family: Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Pre-commencement communications pursuant to Rule&nbsp;13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))</TD>
</TR>

</TABLE>
</DIV>

<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>







<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
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<DIV style="font-family: 'Times New Roman',Times,serif">








<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;1.01. Entry into a Material Definitive Agreement.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;17, 2011, Lakes Entertainment, Inc. (&#147;Lakes&#148;) and the Louisiana Department of Revenue
(&#147;LDR&#148;) entered into a Settlement Agreement (&#147;Agreement&#148;) relating to a lawsuit commenced by the
LDR pertaining to the corporate franchise and income taxes Lakes paid in Louisiana for the periods
1998 through 2002. Pursuant to the Agreement, Lakes agreed to pay the LDR $9.0&nbsp;million in full and
final payment related to the matter and the tax periods at issue. In return, the LDR agreed to
dismiss the suit and forever discharge Lakes from all proceedings and liabilities relating to the
matter.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A copy of the agreement is attached as Exhibit&nbsp;10.1 to this Current Report on Form 8-K.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;9.01. Financial Statements and Exhibits.</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Not Applicable</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Not Applicable</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Not Applicable</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Exhibits</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">

    <TD width="3%">&nbsp;</TD>

    <TD width="2%">&nbsp;</TD>
    <TD width="95%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">

    <TD valign="top" nowrap><DIV style="margin-left:0px; text-indent:-0px">10.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Settlement Agreement between Lakes Entertainment, Inc. and Cynthia Bridges,
Secretary of the Department of Revenue, State of Louisiana, effective March&nbsp;17, 2011.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SIGNATURES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
</DIV>


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left"><FONT style="FONT-variant: SMALL-CAPS">LAKES ENTERTAINMENT, INC.</FONT><BR>
(Registrant)<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">Date: March 23, 2011&nbsp;</TD>

<TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/ Timothy J. Cope
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">Name:&nbsp;&nbsp;</TD>
    <TD colspan="2" align="left">Timothy J. Cope&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">Title:&nbsp;&nbsp;</TD>
    <TD colspan="2" align="left">President and Chief Financial Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>c63635exv10w1.htm
<DESCRIPTION>EX-10.1
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<TITLE>exv10w1</TITLE>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

</TABLE>

<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;10.1</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>SETTLEMENT AGREEMENT</B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>PARTIES. </B>The parties to this agreement are Cynthia Bridges, Secretary of the Department of
Revenue, State of Louisiana (hereinafter, the &#147;Plaintiff&#148; or the &#147;Department&#148;), and LAKES
ENTERTAINMENT, INC., formerly LAKES GAMING, INC. (hereinafter collectively referred to as &#147;the
Defendant&#148; or &#147;Lakes&#148;).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>RECITALS:</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>WHEREAS, </B>Plaintiff, exercising her rights and privileges pursuant to La. R.S. 47:1561, caused
her attorneys to file a petition, against the Defendant, for Louisiana corporation income and
franchise tax along with interest and attorney&#146;s fees for taxable periods ending January&nbsp;3, 1999
through December&nbsp;31, 2002 (the foregoing collectively referred to as the &#147;taxable years at issue&#148;),
such suit being entitled &#147;Cynthia Bridges, Secretary Department of Revenue State of Louisiana vs.
Lakes Entertainment, Inc. formerly Lakes Gaming, Inc.,&#148; 19<SUP style="FONT-size: 85%; vertical-align: text-top">th</SUP> JDC No.&nbsp;527,596, Div. &#147;23&#148;
(&#147;the Lawsuit&#148;), and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>WHEREAS, </B>Defendant answered the Department&#146;s petition, and the Parties have vigorously
litigated the Lawsuit for the past six (6)&nbsp;years, and Lakes contends that it owes no tax, penalty
or interest to Plaintiff for any of the taxable years at issue, and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>WHEREAS, </B>there exists a genuine legal dispute between the Department and the Defendant
regarding the amount due if any for the taxable years at issue in the Lawsuit, and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>WHEREAS, </B>the Parties are cognizant of the complex legal and factual issues in connection with
the above described Lawsuit as well as any lawsuits that could have been filed, and the hazards of
litigating and contesting these issues, the parties recognize and agree that it is in their
respective interests to reach an agreement disposing of all issues and differences pertaining to
and included in the actual and potential Lawsuit, and in order to avoid the time, expense and
uncertainty of contesting these issues and to fully resolve any and all disputes or claims of any
kind or nature, known or unknown, asserted or unasserted, with respect to the actual or potential
Lawsuit, the Department and the Defendant wish to enter into this Agreement in order to fully and
completely resolve each and every aspect of any and all disputes, claims or defenses, asserted or
unasserted, know or unknown, by the Department or the Defendant in connection with or on account of
any taxes, interest, penalties and attorney&#146;s fees claimed and/or asserted in connection with the
actual or potential Lawsuit for the taxable years at issue; and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>WHEREAS, </B>the Department and the Defendant agree that neither this Agreement nor any of its
terms, conditions, negotiations, nor proceedings in connection herewith shall constitute or be
construed or deemed to be evidence of an admission on the part of the Department or the Defendant.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>NOW, THEREFORE, </B>for and in consideration of the premises and mutual releases, settlements,
dismissals, covenants, and agreements by and between the Parties, and the mutual benefits accruing
to the Parties from the execution of this Agreement, and for other good and valuable consideration
the receipt and sufficiency of which are hereby acknowledged, and with
</DIV>




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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">no admission of liability on
the part of any party, each balancing the hope of gaining against the danger of losing with respect
to the claimed and/or asserted taxes, interest, penalties, attorney&#146;s
fees, and Lawsuit described hereinabove, and each preferring compromise and settlement to
resolve their claims, disputes and defenses relating to the Lawsuit,
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>NOW, THEREFORE, </B>the Parties hereby agree as follows:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left"><B>1.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>RELEASES:</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>1.1</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Releases by the Department.</B></U> The Department does hereby forever release,
acquit, waive and discharge the Defendant and each of its predecessors, successors,
assigns, parent corporations, affiliated corporations, subsidiary corporations (doing
business in their own names, and doing business under any other names), and its respective
officers, directors, partners, employees, agents, and attorneys, past and present,
(hereinafter referred to as the &#147;Defendant Releasees&#148;), from any and all taxes and other
claims, without limitation, asserted or assessed, which could have been asserted or
assessed, by the Department in the Lawsuit for the taxable years at issue therein. The
Department releases the Defendant Releasees from any and all past, present or future
Louisiana corporation income and franchise taxes, including interest or penalties
associated therewith, for the taxable years at issue in the Lawsuit. The Department agrees
to jointly dismiss with prejudice any and all claims asserted in the Lawsuit, subject to
the terms and conditions of this Agreement. The Department releases the Defendant
Releasees from any and all past, present or future taxes and claims for the taxable years
at issue in the Lawsuit.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>1.2</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Releases by Defendant.</B></U> The Defendant does hereby forever release, acquit,
waive and discharge the Department from any claims for overpayments, refund, offset or
credit an all related claims, without limitation, arising from the taxable years at issue,
asserted, or which could have been asserted, by the Defendant in the Lawsuit with the
Department or before the Louisiana Board of Tax Appeals. The Defendant hereby forever
releases and surrenders any and all rights to taxes, interest or penalties paid in
connection with, or related to the taxable years at issue.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left"><B>2.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>PAYMENTS, ATTORNEY FEES AND DISMISSALS:</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>2.1</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Payment of Negotiated Settlement Amount.</B></U> By March&nbsp;21, 2011, or as soon as
possible thereafter, the Defendant agrees to pay to the Department the sum of EIGHT MILLION
DOLLARS ($8,000,000.00). No part of this amount shall constitute penalties of any kind.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>2.2</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Payment of Attorney Fees.</B></U> On the same date that payment is made to the
Department, the Defendant shall pay to Stutes &#038; Lavergne, LLC (Tax I.D. No.&nbsp;20-2265428),
600 Broad Street, Lake Charles, Louisiana, 70601, the Department&#146;s counsel in the Lawsuit,
(with the approval and direction of the Department) the sum of ONE MILLION DOLLARS
($1,000,000), which shall constitute full and complete payment of all attorney fees due
Stutes &#038; Lavergne, LLC, or Perry, Atkinson, Balhoff, Mengis &#038; Burns, LLC, and any other
attorneys engaged individually and/or collectively by the</TD>
</TR>


</TABLE>
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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Department in connection with
representation of the Department in the Lawsuit and related matters. The firm receiving
such funds shall hold harmless and indemnify Defendant from and against any and all claims
for payment of attorneys&#146; fees by any lawyer who has represented the Department or
participated in this dispute as the Department&#146;s counsel.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>2.3</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Dismissal of the Lawsuit.</B></U> Within fifteen (15)&nbsp;days following receipt of above
mentioned settlement funds owed to the Department and its attorneys under this Agreement,
the Department agrees to cause its attorneys to file a joint motion to dismiss the Lawsuit
with prejudice, with no reference to any amount due or paid to the Department under this
Agreement. Each party shall bear its own court costs of the Lawsuit.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left"><B>3.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>ADMINISTRATIVE INFORMATION: </B>For internal Department purposes, this agreement may be
identified as follows:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Taxpayer&#146;s Revenue Account Number 1136084-001.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Suite title: &#147;Cynthia Bridges, Secretary Department of Revenue State of Louisiana vs.
Lakes Entertainment, Inc. Formerly Lakes Gaming, Inc.&#148; 19<SUP style="FONT-size: 85%; vertical-align: text-top">th</SUP> Judicial District
Court, No.&nbsp;527,596, Div. &#147;23&#148; (&#147;The Lawsuit&#148;),</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Audit Numbers: IA 20014178, IA20014179.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Legal File Number: 20040394.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Taxable periods included in the agreement: January&nbsp;3, 1998 through December&nbsp;31, 2002.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">f)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Tax type: corporation income and franchise tax</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left"><B>4.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Confidentiality. </B>The Department and the Defendant and their respective attorneys and
representatives hereby promise, represent and agree that they will keep each and every term of
this Agreement completely confidential, and will not publish, publicize, or disseminate, or
cause to be published, publicized, or disseminated in any manner or form, information relating
to the substance or contents of this Agreement, to any person or persons; except as (a)&nbsp;may be
required by law, (b)&nbsp;may become necessary to effect compliance with the law, (c)&nbsp;may be
ordered by a court of competent jurisdiction, or (d)&nbsp;agreed to in writing by the parties to
this agreement. Notwithstanding the foregoing, Defendant shall be permitted to issue a press
release stating that the Lawsuit has been settle and that Defendant will be issuing payment in
the amount of $9,000,000.00 in full and final settlement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left"><B>5.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Warranties. </B>Each party represents and warrants that it has the full and complete legal
authority to enter into this Agreement, and that the individuals executing this Agreement have
the legal authority to do so, and that this Agreement shall be binding and enforceable in
accordance with its terms when duly executed by both parties in the presence of the
undersigned witnesses.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left"><B>6.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Final Settlement; Precedential Value; No Admissions. </B>This Agreement represents a full,
complete, final, and binding settlement. The settlement of the Lawsuit and any issues settled
in this Agreement as between the Department and the Defendant shall be of no precedential
value and may not be cited, urged or promoted by either the Department or the Defendant to
support any particular position. This Agreement shall not be construed by either the</TD>
</TR>



</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Department of the Defendant as an admission by either party, concerning any claims or issues
asserted for any of the taxable years at issue.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left"><B>7.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Binding Agreement; Successors and Assigns. </B>This Agreement is binding on the Department and
its successor Secretaries or agencies: and on the Defendant, its past, present, and future
affiliates, subsidiaries, parent companies, and partners, its shareholders, insurers,
heirs, successors, and assigns, and all other persons, firms, corporations, associations,
partnerships, limited liability companies, and entities owned or controlled by the Defendant.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left"><B>8.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Full Agreement; Severability. </B>This Agreement sets forth the full terms of the compromise
and settlement of the Lawsuit, and the proposed assessments upon which the Lawsuit were based.
If any section of this Agreement is found to be invalid for any reason, such section shall be
severed from the Agreement and the remainder of the terms and conditions of this Agreement
shall be binding on the Department and the Defendant.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left"><B>9.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Construction. </B>This Agreement shall be deemed for all purposes prepared through the joint
efforts of the Department and the Defendant, and shall not be construed against one party or
the other as a result of the preparation, drafting, submittal or other event of negotiation,
drafting or execution of this agreement. Further, the provisions of Louisiana Civil Code
Article&nbsp;2056 shall not apply to either the Department or the Defendants.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left"><B>10.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Duplicate Originals. </B>This Agreement may be executed in duplicate originals, all of which
shall have the same effect as if the signature hereto and thereto were upon the same
instrument.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left"><B>11.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Agreement Supersedes; Entire Agreement. </B>This Agreement supersedes all prior and
contemporaneous oral and written agreements, understandings, negotiations, and discussions
among the parties hereto relating to the transactions covered by this agreement. This
Agreement constitutes the entire agreement between the Parties and both parties represent that
no oral or other written representations have been made. This Agreement may not be orally
amended, even by agreement of the parties.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left"><B>12.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Louisiana Law; Headings. </B>This Agreement shall be governed by, construed, and interpreted in
accordance with the laws of the State of Louisiana. The headings of sections or paragraphs of
this Agreement are merely for convenience of reference and have no substantive significance
and shall be disregarded in the interpretation of this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left"><B>13.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Cooperation. </B>All parties agree to cooperate fully and to execute any and all supplementary
documents and take all actions that may be necessary or appropriate to give full force and
effect to the basic terms and intent of this Agreement.</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Thus done and signed, in duplicate originals, on the 17<SUP style="FONT-size: 85%; vertical-align: text-top">th</SUP> day of March,
2011, by Cynthia Bridges, Secretary of the Department of Revenue, State of Louisiana,
Plaintiff, or her duly authorized and deputized representative, in the presence of the two
witnesses who hereunto fix their signatures:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="39%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="38%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<TR>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">WITNESSES:</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">Secretary of the Department <BR>
of Revenue, State of Louisiana</TD>
<TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
<TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Alanna S. Clanton
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Cynthia Bridges
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
<TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Lashaunda Blake
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
<TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Thus done and signed, in duplicate originals, on the 10<SUP style="FONT-size: 85%; vertical-align: text-top">th</SUP> day of March,
2011, by a duly authorized officer of the Defendants in the presence of the two witnesses
who hereunto fix their signatures:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="39%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="38%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>

</TR>
<TR>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">WITNESSES:</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">Lakes Entertainment, Inc.<BR>
formerly Lakes Gaming, Inc.</TD>
<TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
<TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top" style="border-bottom: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">/s/ Janice Saeugling
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-bottom: 1px solid #000000">/s/ Timothy J. Cope</TD>
<TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President and CFO</TD>
<TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
<TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Lisa M. Jolicoeur
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
<TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>



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