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                                                                    EXHIBIT 10.1





                               GAMING DEVELOPMENT

                                    AGREEMENT

                          FOR CLASS III GAMING FACILITY

                                     BETWEEN

                                THE NIPMUC NATION
                          A FEDERALLY RECOGNIZED TRIBE

                                       AND

                                LAKES NIPMUC, LLC
                      A MINNESOTA LIMITED LIABILITY COMPANY



                               DATED: JULY 5, 2001


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         THIS DEVELOPMENT AGREEMENT, is made and entered into this 5th day of
July, 2001 by and between The Nipmuc Nation, which is or will be a federally
recognized Indian tribe (hereinafter referred to as "the Tribe"), located in the
Commonwealth of Massachusetts, with tribal offices located at 156
Worcester-Providence Road, Suite 28, Sutton Square Mall, Sutton, Massachusetts
01590 and Lakes Nipmuc, LLC, a Minnesota limited liability company (hereinafter
referred to as "Developer"), whose business office is located at 130 Cheshire
Lane, Minnetonka, Minnesota 55305.


                                    RECITALS

         A. The Tribe is or will be a federally recognized Indian tribe eligible
for the special programs and services provided by the United States to Indians
because of their status as Indians and is recognized as possessing powers of
self-government.

         B. The Tribe intends to acquire lands which the United States
government will hold in trust for gaming purposes for the benefit of the Tribe
("Tribal Lands") and over which the Tribe will possesses sovereign governmental
powers.

         C. In compliance with the Indian Gaming Regulatory Act of 1988, P.L.
100-497, 25 U.S.C. ss.2701 et seq. as it may from time to time be amended, the
Tribal Council of the Tribe will enact a tribal ordinance regulating the
operation of gaming activities on Tribal Lands (hereinafter referred to as the
"Gaming Ordinance"), creating the Nipmuc Gaming Commission, and authorizing
Class II and Class III gaming on its Tribal Lands subject to the provisions of
the Gaming Ordinance and a Tribal-State Compact or gaming procedures issued by
the Secretary of the U.S. Department of the Interior.

         D. The Tribe is committed to using any gaming activities to provide
employment and improve the social, economic, education, and health needs of its
members; to increase the revenues of the Tribe; and to enhance the Tribe's
economic self-sufficiency and self-determination.

         E. The Tribe presently lacks the resources to develop and construct a
gaming facility and enterprise on its own and desires to retain the services of
a developer, with knowledge and experience in the gaming industry, to assist the
Tribe with financing, developing, and constructing a Class III Gaming facility
and related resort facilities on property acquired for the Project and held in
trust for gaming purpose for the Tribe by the United States.

         F. The Developer has represented to the Tribe that it has the financial
capacity to provide and secure financing for the funds necessary to develop and
construct the Facility, as defined herein, and Developer agrees to assist the
Tribe in obtaining the capital investment necessary to the development of the
Facility.




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         G. This Development Agreement will commence on the date that this
Development Agreement is executed by the parties and, subject to the terms of
Section 2.14 hereof, shall continue for a term as described in Section 2.14,
unless otherwise provided herein.

         H. The Tribe and Developer desire to enter into agreements whereby the
preliminary Facility design and development work (but not the Facility
construction) may proceed prior to receipt of necessary regulatory approvals.

         I. The Tribe and Developer desire to take all steps reasonably possible
prior to the receipt of the necessary regulatory approvals: (i) to obtain a
preliminary commitment for financing of the Facility, (ii) to select and develop
the site for the Facility, (iii) to design the Facility, and (iv) to enter into
contracts to construct and equip the Facility so that the Facility can be opened
to the public as soon as possible after the receipt of all necessary regulatory
approvals.

         J. Developer desires to advance to the Tribe, subject to the terms and
conditions of the Transition Loan described herein, sums sufficient to finance
performance of the preliminary development work described immediately above and
for other purposes. The Tribe and Developer agree that all sums previously
advanced to the Tribe by Lakes Gaming and Resorts, LLC under their letter
agreements dated August 9, 2000 and February 1, 2001 (the "Letter Agreements")
shall constitute advances by Developer to the Tribe hereunder, be credited to
Developer's obligations hereunder, and shall be subject to and repayable under
the terms of the Transition Loan herein.

         K. The Tribe has selected Developer, and the Developer has agreed, to
assist the Tribe in obtaining permanent financing for the Project, subject to
the terms and conditions of the Facility Loan described herein, and to furnish
technical experience and expertise for the development and design of the
Project, and for contracting for the construction, furnishing and equipping of
the Project.

         L. Any dispute regarding this Development Agreement between the parties
or any other Transaction Documents is to be subject to the dispute resolution
and governing law provisions contained herein, as well as the Resolution of
Limited Waiver attached hereto.

         NOW, THEREFORE, in consideration of the hereinafter mutual promises and
covenants, and for other good and valuable consideration as set forth herein,
the receipt and sufficiency of which are expressly acknowledged, the Tribe and
Developer agree as follows:




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                                    ARTICLE 1
                                   DEFINITIONS

         As they are used in this Development Agreement, the terms listed below
shall have the meaning assigned to them in this Article:

         1.1 "Approved Construction Budget" means the budget prepared in the
manner set forth in Section 2.2(b) herein in connection with the development and
construction of the Facility, which has been approved by Developer and the
Tribe.

         1.2 "Architect"shall have the meaning described in Section 2.2(a)
herein.

         1.3 "BIA" means the United States Department of the Interior Bureau of
Indian Affairs.

         1.4 "Class II Gaming" means games as defined in 25 U.S.C ss.
2703(7)(A), as such law may be amended and as defined by the National Indian
Gaming Commission in 25 C.F.R. ss. 502.3 and amendments thereto, but only to the
extent such games are authorized by tribal ordinance and licensed by the Gaming
Commission.

         1.5 "Class III Gaming" means all gaming that is not Class I or Class II
Gaming as defined in the IGRA, including, but not limited to, the forms of
gaming listed as Class III games by the National Indian Gaming Commission in 25
C.F.R. ss. 502.4 and amendments thereto, but only to the extent such gaming is
allowed by a Tribal-State Compact or gaming procedures issued by the Secretary,
tribal ordinance, and licensed by the Gaming Commission.

         1.6 "Commencement Date" means the first day upon which the Facility is
open to the public to engage in Class III Gaming activities.

         1.7 "Completion" means the completion of the Facility, or portions
thereof, in substantial accordance with the Plans and Specifications, as
evidenced by a completion certificate from the Architect that the Facility, or
portions thereof, have been substantially completed in accordance with the Plans
and Specifications, and by the issuance of a certificate of occupancy by the
tribal governmental agency having jurisdiction, and certificates of such
professional designers, inspectors or consultants or opinions of counsel, as
Developer may reasonably determine to be appropriate, verifying construction and
furnishing of the Facility is in compliance with all Legal Requirements.

         1.8 "Construction Contract" means the contract between the Tribe and
the General Contractor described in Section 2.4(b) herein.

         1.9 "Costs of Construction" means the total of all hard and soft costs
incurred by the Tribe or Developer pursuant to this Development Agreement in the
aggregate to develop, construct and complete the Facility, including, without
limitation, labor, materials, all furniture, fixtures and equipment (including
gaming equipment) necessary for the opening of the Facility to




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the public, builder's risk insurance, surveys, permits, interest on the Facility
Loan or Transition Loan incurred prior to the opening of the Facility to the
public, payment and performance bonds, architectural and engineering plans and
services, legal and accounting services, and a resort feasibility study, but
excluding Initial Costs of Operation. The final amount of costs to be included
in the Costs of Construction shall be determined by mutual agreement of the
parties and shall be documented in the Approved Construction Budget.

         1.10 "Design Agreement" means the contract between the Tribe and the
Architect described in Section 2.2(a) herein.

         1.11 "Development Agreement" shall mean this Development Agreement that
deals with the development and construction of the Facility, as the same may be
amended or modified.

         1.13 "Developer" means Lakes Nipmuc, LLC, a Minnesota limited liability
company with its business office located at 130 Cheshire Lane, Minnetonka,
Minnesota 55305.

         1.14 "Dominion Account" shall have the meaning described in Section
2.8(a) of the Management Agreement.

         1.15 "Dominion Account Agreement" shall mean the Dominion Account
Agreement to be executed by the Tribe in favor of the Developer in the form of
Exhibit F attached hereto.

         1.16 "Effective Date" means the effective date of the Management
Agreement as determined pursuant to Section 2.19 of the Management Agreement.

         1.17 "Enterprise" means the business enterprise of the Tribe created to
engage in Class II and/or Class III Gaming at the Facility, and which shall
include any other lawful commercial activity allowed in or near the Facility
including, but not limited to, operating and managing office space, kids arcade,
child care facility, hotel with swimming pool and golf course, restaurant, RV
park, retail stores, entertainment facilities, or the sale of fuel, food,
beverages, alcohol, tobacco, gifts, and souvenirs.

         1.18 "Facility" means the permanent buildings, structures and
improvements used by the Enterprise for its gaming and incidental operations
located on the Gaming Enterprise Site and all Furnishings and Equipment.

         1.19 "Facility Loan" means the loan arranged by Developer for the
Tribe, as borrower, in the aggregate principal amount equal to the Initial Costs
of Operation and Costs of Construction, which Facility Loan shall be further
evidenced by the Facility Note if advanced by Developer and other loan
documentation as further defined herein.

         1.20 "Facility Note" means the promissory note evidencing the Facility
Loan substantially in the form attached hereto as Exhibit H, together with all
amendments, substitutions and renewals thereof.




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         1.21 "Furnishings and Equipment" shall mean all fixtures, furniture,
furnishings and equipment required for the operation of the Enterprise in
accordance with the standards set forth in this Development Agreement,
including, without limitation:

                  (i) cashier, money sorting and money counting equipment,
         surveillance and communication equipment, and security equipment;

                  (ii) slot machines, video games of chance, table games, keno
         equipment and other gaming equipment;

                  (iii)    office furnishings and equipment;

                  (iv) specialized equipment necessary for the operation of any
         portion of the Enterprise for accessory purposes, including equipment
         for kitchens, laundries, dry cleaning, cocktail lounges, restaurants,
         public rooms, commercial and parking spaces, and recreational
         facilities; and

                  (v) hotel equipment (to the extent a hotel is included in the
         Enterprise);

                  (vi) all other furnishings and equipment hereafter located and
         installed in or about the Facility which are used in the operation of
         the Enterprise in accordance with the standards set forth in this
         Development Agreement.

         1.22 "Gaming Commission" means the Nipmuc Gaming Commission
established, or to be established, by The Nipmuc Nation Gaming Ordinance, as
amended (which ordinance must be approved by the NIGC), with authority to
license and regulate gaming activities on Tribal Lands and which is a
subordinate governmental entity of the Tribe and is entitled to all sovereign
governmental immunity of the Tribe;.

         1.23 "Gaming Enterprise Site" shall mean the lands to be made Tribal
Lands and to be used as the site for constructing the Facility and operating the
Enterprise, described on attached Exhibit A, which will be in held by the United
States government in trust for gaming purposes for the Tribe, and which meets
the requirements of United States of America to be accepted in trust for the
Tribe for Class II and Class III Gaming purposes.

         1.24 "General Contractor" shall mean the person or entity selected by
the Tribe and approved by Developer pursuant to Section 2.4 herein to construct
the Facility.

         1.25 "Generally Accepted Accounting Principles" or "GAAP" means those
principles defined by the Financial Accounting Standards Board consistently
applied to the gaming industry practice.




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         1.26 "Governmental Authorities" means the United States federal
government, the BIA, the State, the State Gaming Agency, the Tribal Council, the
National Indian Gaming Commission, the Gaming Commission, and any court, agency,
department, commission, board, bureau or instrumentality, or any of them to the
extent each has legal jurisdiction over the Class II and Class III Gaming
activities to be conducted by the Enterprise, Tribal Lands, the construction and
operation of the Facility and Enterprise thereon, or Developer's performance
under this Development Agreement.

         1.27 "Guaranty" shall mean the guaranty of Lakes Gaming, Inc. described
in Section 7.1 herein in the form attached hereto as Exhibit I.

         1.28 "IGRA" means the Indian Gaming Regulatory Act of 1988, P.L.
100-497, as codified at 25 U.S.C.ss.ss.2701 et. seq., as such may be amended
from time to time.

         1.29 "Initial Costs of Operation" means all Costs of Operation advanced
to the Tribe pursuant to Section 2.8 herein, prior to the opening of the
Facility to the public, including, but not limited to, advance payments or
deposits to providers of goods and services, cash for bankrolls and slot
hoppers, pre-opening payroll, cash for payment of prizes, legal, licensing,
marketing, employee hiring and training, and all costs associated with grand
opening events and any "fun" nights held prior to the public opening of the
Facility. Initial Costs of Operation shall also include any costs incurred by
either party for the reasonable and necessary travel expenses incurred
subsequent to the execution of this Development Agreement until the Commencement
Date for officers and employees of Developer and authorized representatives of
the Tribe in connection with the Project, and in obtaining regulatory approval
of the Management Agreement (but not any license fees or costs of Manager or its
employees in connection with licensing with either the NIGC or Gaming
Commission, nor those costs incurred by the parties, prior to execution, in
negotiating this Development Agreement or the Management Agreement).

         1.30 "Interim Promissory Note" means the promissory note evidencing the
Transition Loan in the form attached hereto as Exhibit D, together with all
amendments, substitutions and renewals thereof.

         1.31 "Land Acquisition Costs" shall have the meaning described in
Section 2.1(b) herein.

         1.32 "Legal Requirements" means any and all present and future
judicial, administrative, and federal, state, local or tribal rulings or
decisions, and any and all present and future federal, state, local and tribal
laws, ordinances, rules, regulations, permits, licenses and certificates, in any
way applicable to the Tribe, Developer, the Tribal Lands, the Gaming Enterprise
Site, the Facility, and the Enterprise, including without limitation, the IGRA,
the Tribal-State Compact or gaming procedures issued by the Secretary, and the
Tribe's Gaming Ordinance.




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         1.33 "Lender or Other Lender" means any third party who makes the
Facility Loan to the Tribe under Section 2.5 herein.

         1.34 "Letter Agreements" shall mean those agreements dated August 9,
2000 and February 1, 2001 between the Tribe and Lakes Gaming and Resorts, LLC.

         1.35 "Limited Recourse" means that the Facility Loan and Transition
Loan advances, and all liabilities or obligations of the Tribe related to this
Development Agreement, the Land Acquisition Costs, the Facility Loan or Facility
Note, the Transition Loan or Interim Promissory Note, any UCC Financing
Statements, any other Transaction Documents and their applicable documentation,
the Facility, or the Enterprise contemplated by this Development Agreement, and
any related awards, judgments or decrees, shall be payable solely out of the
undistributed and future Net Total Revenues of the Enterprise and shall be a
limited recourse obligation of the Tribe, with no recourse to tribal assets
other than such undistributed and future Net Total Revenues (except as to: (i) a
security interest in the Furnishings and Equipment purchased with Facility Loan
or Transition Loan proceeds or other purchase money agreements, (ii) the
security interest in the Net Total Revenues pursuant to the Dominion Account
Agreement, and (iii) as permitted under Section 6.1(f) herein and by Paragraph
5(c) of the Resolution of Limited Waiver). In no event, except as permitted
under Section 6.1(f) herein and by Paragraph 5(c) of the Resolution of Limited
Waiver, shall Developer or any Other Lender or other claimant have recourse to
(a) the physical property of the Facility (other than Furnishings and Equipment
subject to the security interest securing the Facility Loan or Transition Loan
or other purchase money agreements), (b) Net Total Revenue distributions already
made to the Tribe in accordance with the Management Agreement and/or the
Dominion Account Agreement, (c) assets of the Tribe purchased with such Net
Total Revenue distributions, (d) revenues or assets of any other gaming facility
owned or operated by the Tribe, or (e) any other asset of the Tribe (other than
such undistributed and future Net Total Revenues of the Enterprise).

         1.36 "Management Agreement" shall mean the Management Agreement for
Class III Gaming Enterprise between the Tribe and Lakes Nipmuc, LLC executed on
even date herewith.

         1.37 "Material Breach"shall have the meaning described in Section 3.1
herein.

         1.38 "National Indian Gaming Commission"or "NIGC" means the commission
established pursuant to the IGRA.

         1.39 "Net Gaming Revenues" shall have the meaning ascribed to it under
the Management Agreement.

         1.40 "Net Incidental Revenues" shall have the meaning ascribed to it
under the Management Agreement.

         1.41 "Net Total Revenues" means the sum of Net Gaming Revenues plus Net
Incidental Revenues as defined in the Management Agreement.



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         1.42 "NIGC Approval" means: (a) a determination by the NIGC that the
manager listed in the Management Agreement is suitable for licensing, and (b)
written approval by the NIGC Chairman of the Management Agreement.

         1.43 "Operating Note" means the promissory note as described in the
Management Agreement.

         1.44 "Plans and Specifications" means the approved plans, drawings, and
specifications for the Facility pursuant to Section 2.2(b) herein.

         1.45 "Project" means the scope of the development project contemplated
by this Development Agreement, established in the Design Agreement and approved
by the parties pursuant to Section 2.2(a) herein.

         1.46 "Replacement" shall have the meaning described in Section 3.4(c)
herein.

         1.47 "Resolution of Limited Waiver" refers to the limited waiver of
sovereign immunity simultaneously herewith adopted by the Tribe in the form
attached hereto as Exhibit C and evidencing all approvals required pursuant to
the Tribe's governing documents and applicable law (it being understood and
agreed that the Tribe shall take such further actions to ratify, adopt and
enforce the attached form of Resolution of Limited Waiver as shall be required
by law or regulation due to future changes in its own legal or governing status
to fully preserve its stated intent).

         1.48 "Request for Advance" means any request by the Tribe for funds to
pay for Project expenses incurred in connection with either approved Costs of
Construction or Initial Costs of Operation pursuant to either Sections 2.5(a) or
2.5(b) herein.

         1.49 "Secretary" means the Secretary of the Interior of the United
States, or her appropriately designated representative/agent.

         1.50 "Security Agreement" shall mean the Security Agreement to be
executed by the Tribe in favor of the Developer in the form of Exhibit G
attached hereto.

         1.51 "State" means the State government wherein the Gaming Enterprise
Site is located.

         1.52 "Chairperson" means the duly elected chair of the Tribal Council
of the Tribe.

         1.53 "Transaction Documents" shall have the meaning described in
Section 5.11(b) herein.



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         1.54 "Transition Loan" means the loan or advances made to the Tribe
pursuant to Section 2.3 herein, evidenced by the Interim Promissory Note.

         1.55 "Tribal Council" means the governing body of the Tribe.

         1.56 "Tribal Lands" means all lands held in trust for gaming purposes
by the United States for the Tribe.

         1.57 "Tribal-State Compact" means the agreement to be entered into
between the Tribe and the State in which the Gaming Enterprise Site is located
concerning Class III Gaming and any amendments or other modifications thereto,
which agreement must be approved by the Secretary and published in the Federal
Register.

         1.58 "Tribe" means The Nipmuc Nation (or such other name as determined
by the BIA), which is or will be a recognized Indian tribe by the United States
government.

         1.59 "UCC Financing Statements" means UCC-1 financing statements naming
Tribe as debtor and naming the Lender and Developer as secured parties, in the
form approved by the parties.

         Any capitalized terms used but not defined herein and defined in the
Management Agreement shall have the meanings set forth therein.


                                    ARTICLE 2
          GAMING ENTERPRISE SITE SELECTION; CONSTRUCTION AND FINANCING


         2.1 Gaming Enterprise Site Selection.

         (a) It is understood that the Tribe does not currently have any
existing Tribal Lands, and that, to ensure the success of the Enterprise,
acquisition of land to be made Tribal Lands, to be used as the site for
constructing the Facility and operating the Enterprise ("Gaming Enterprise
Site"), will be necessary under applicable federal law. As soon as reasonably
possible after signing this Development Agreement, based upon the recommendation
and subject to the approval of the Developer, the Tribal Council will selected
the parcel of land it will acquire to be made Tribal Lands and which will be
used as the Gaming Enterprise Site. Once the Gaming Enterprise Site has been
selected, the parties agree to amend this Development Agreement by including the
legal description of the Gaming Enterprise Site on Exhibit A attached hereto.

         (b) The Developer, through its designees, nominees or members, may
acquire and hold interests in lands which the Tribe may select to acquire as its
Tribal Lands to be used as the Gaming Enterprise Site ("Potential Gaming Site
Lands"). The Developer agrees to transfer and the Tribe agrees to purchase the
Developer's interests in any and all Potential Gaming Site Lands



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upon the Effective Date of the Management Agreement or as when required by the
Secretary to be taken into trust under applicable federal law with respect to
the Tribe's use of any Potential Gaming Site Lands for gaming purposes in
connection with operation of the Enterprise. The purchase price shall be equal
to all amounts advanced by Developer to acquire its interest in and to insure
and maintain (but excluding any financing costs of Developer associated
therewith) any and all Potential Gaming Site Lands (such amounts, together with
interest thereon from the date incurred at the same rate of interest accruing on
the Transition Loan, shall be collectively referred to as the "Land Acquisition
Costs"), which Land Acquisition Costs shall be included as Costs of Construction
and reimbursed to Developer by the Tribe from proceeds of the Facility Loan from
a Lender on the day of the Tribe's receipt of the loan proceeds; if the Facility
Loan is not loaned by a Lender, then all amounts advanced by the Developer to
acquire its interest in the Potential Gaming Site Lands shall be secured and
repaid in accordance with the same terms applicable to the Transition Loan under
Section 2.3 below. The Tribe agrees and acknowledges that it shall have no legal
or equitable title to the Potential Gaming Site Lands until such time as they
have been sold to the Tribe by Developer. The Tribe agrees that it shall
indemnify and hold Developer harmless with respect to any environmental or other
claims or liabilities arising with respect to the Potential Gaming Site Lands
pursuant to the terms of the Indemnity Agreement attached hereto as Exhibit E
(the "Indemnity Agreement"), which obligations shall be Limited Recourse
obligations of the Tribe and shall be secured on a first priority and perfected
basis by the Furnishings and Equipment purchased with Facility Loan or
Transition Loan proceeds or other purchase money agreements, and undistributed
and future Net Total Revenues of the Enterprise, including the Dominion Account
Agreement and the Security Agreement.

         2.2 Architects, Studies, Plans and Specifications.

         (a) As soon as reasonably practical after signing this Development
Agreement, the Tribe, based upon the recommendation and subject to the approval
of Developer, shall select an architect (the "Architect") for the purpose of
performing certain services in connection with the design and construction of
the Facility, including site development engineering and environmental services.
The Tribe's agreement with the Architect shall be in the form of a contract (the
"Design Agreement") approved by Developer and the Tribal Council. The scope of
the project contemplated by this Development Agreement (the "Project"), shall be
stated and established in the Design Agreement, and shall be subject to the
mutual approval of the parties. It is contemplated the scope of the Project will
be substantially as described on Exhibit B, subject to such changes as may be
necessary or appropriate taking into account competitive conditions, financing
and other circumstances. The parties understand that market, Tribal-State
Compact, governmental or other conditions may change and it may be necessary to
expand or decrease the scope of the Project before construction is commenced.
The Design Agreement shall also provide for and establish appropriate design
packages, each pertaining to a discrete portion or phase of the Project. The
Design Agreement shall allow Developer the right and responsibility to
supervise, direct, control and administer the duties, activities and functions
of the Architect and the General Contractor, and to efficiently carry out its
covenants and obligations under this Development Agreement.




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         (b) The Architect shall be responsible for creating the plans and
specifications for the Facility ("the Plans and Specifications) and a budget for
all Costs of Construction ("Approved Construction Budget"), both of which shall
be subject to the mutual approval of the Tribal Council and Developer prior to
the commencement of construction of the Facility. The Costs of Construction
budget shall not be exceeded unless mutually agreed otherwise in writing by the
Tribe and Developer, except Developer may in its discretion reallocate part or
all of the amount budgeted with respect to any line item to another line item
and to make such other modifications to the Approved Construction Budget as
Developer deems necessary or appropriate. The Architect, subject to Developer's
right to supervise and direct all construction administration, shall also
supervise the completion of all construction, development and related activities
undertaken pursuant to the terms and conditions of the Construction Contract
with the General Contractor.

         (c) The Tribe, using funds advanced to it under the Facility Loan or
Transition Loan, shall provide funds necessary for the design, construction and
development of the Facility, including any costs incurred by the Tribe in
connection with the activities described in Sections 2.1 or 2.2 and all Costs of
Construction. The fee for the Architect's services shall: (i) be agreed to by
the Tribe and Developer; (ii) be advanced by Developer to the Tribe; and (iii)
be repaid by the Tribe to Developer according to the terms of the Interim
Promissory Note. Following Completion or in the event of a termination of this
Development Agreement, it is agreed between the parties hereto that the Plans
and Specifications and all other design documents shall be owned by the Tribe.

         (d) The Facility shall be designed and constructed so as to adequately
protect the environment and the public health and safety. The design,
construction and maintenance of the Facility shall, except to the extent a
particular requirement or requirements may be waived in writing by the Tribal
Council, meet or exceed all reasonable minimum standards pertaining to the Tribe
and national, State and local building codes, fire codes and safety and traffic
requirements (but excluding planning, zoning and Gaming Enterprise Site use
laws, ordinances, regulations and requirements), which would be imposed on the
Enterprise by existing State or federal statutes or regulations which would be
applicable if the Facility were located outside of the jurisdictional boundaries
of the Tribe, even though those requirements may not apply within the Tribe's
jurisdictional boundaries. To the extent that the Tribe has adopted or may in
the future adopt more stringent requirements, those requirements shall govern.
Nothing in this subsection shall grant to the State or any political subdivision
thereof any jurisdiction (including but not limited to, jurisdiction regarding
zoning or Gaming Enterprise Site use) over the Facility or Enterprise or its
development, management and operation.

         (e) Any costs incurred by the Tribe, or on its behalf and with its
approval by Developer, in connection with the activities described in Sections
2.1 or 2.2, shall be financed pursuant to Section 2.3 in advance of the Tribe
obtaining the Facility Loan for permanent financing of the Project by advances
from Developer to the Tribe, repayable under the Transition




                                  Page 12 of 38

<PAGE>   13


Loan on the terms and conditions described in Section 2.3 and evidenced by the
Interim Promissory Note.

         2.3 Pre-Construction Advances and Terms of Transition Loan.

         (a) Subject to the rights of Developer as described below, during the
term of this Development Agreement, Developer agrees to make the following
advances to the Tribe to fund the Tribe's Transition Expenses (as hereinafter
defined) (such advances, together with any Land Acquisition Costs that are not
repaid by the Facility Loan, being hereinafter collectively referred to as the
"Transition Loan"): (i) $55,000 previously paid upon execution of the August 9,
2000 Letter Agreement; (ii) $55,000 previously paid each month from May to
December 2000, and thereafter a monthly amount to be specified on a budget (a
"Transition Loan Budget") to be mutually agreed upon by Developer and the Tribe,
such monthly amounts being $83,000 as of the date hereof; (iii) an additional
$7,500 per month from August to December 2000 and $10,000 per month from January
2001 forward for distribution to Farsight Consultants for its Project services;
and (iv) advances for costs incurred in connection with the activities described
in Sections 2.1 or 2.2, as provided in such Sections. Each Transition Loan
Budget shall be sufficient to fund reasonable Transition Expenses, and shall be
prepared on an annual basis by mutual agreement of the parties, provided that
during any budget year the Tribe may from time to time request increases to or
other modifications of any Transition Loan Budget (collectively, "Amendments")
to fund reasonable Transition Expenses, which Amendments shall be mutually
agreed upon by the parties. In the event that the parties, after having used
good faith efforts, shall be unable to mutually agree upon a Transition Loan
Budget or an Amendment, such dispute shall be submitted to arbitration pursuant
to the provisions of Article 6 hereof. In the event that Developer shall suspend
or otherwise fail to make any of the Transition Loan disbursements described in
the foregoing clauses (ii), (iii) and (iv) for any reason (including without
limitation Developer's exercise of its suspension rights set forth in this
Section 2.3) for more than three (3) months, such suspension or failure shall be
deemed a Material Breach hereof; provided, however, that it shall not be a
Material Breach for Developer to suspend such disbursements for more than three
(3) months in the event that there shall be an uncured default hereunder by the
Tribe, including without limitation a failure by the Tribe to use diligent
efforts to obtain federal tribal recognition and to pursue the development of
the Facility.

         As used herein, "Transition Expenses" shall mean any and all reasonably
necessary expenses incurred by the Tribe directly or indirectly relating to the
Tribe's efforts to obtain federal recognition, to develop the Enterprise and/or
the Facility, and to establish an orderly system of self-government appropriate
for a federally recognized Indian tribe engaged in such economic development.
Subject to the foregoing limitations, Transition Expenses shall include, without
limitation: professional fees such as legal, consulting, research, public
relations and lobbying; travel and other costs incurred by the Tribe or its
professionals in connection with federal recognition and development of the
Enterprise and/or the Facility; costs of adopting, amending or implementing the
Constitution, laws, by-laws, charters, ordinances, referenda, resolutions or
regulations of the Tribe or any of its committees, bodies, agencies or political
subdivisions (such




                                  Page 13 of 38

<PAGE>   14


as the Tribal Council and the Gaming Commission); costs of conducting meetings,
elections and other business of the Tribe or any of its committees, bodies,
agencies or political subdivisions; and general overhead and administrative
expenses of the Tribe including but not limited to stipends to members of its
committees, bodies, agencies or political subdivisions, necessary vehicles and
related costs, and computer equipment and related costs.

         If the Tribe does not receive final federal recognition by January 31,
2002, the Tribe or Developer may, in their sole discretion, suspend the
pre-construction advance payments described in Section 2.3 (a)(ii), (iii) and
(iv) above. Developer, in its discretion, shall also be entitled to suspend the
pre-construction advance payments described in Section 2.3 (a)(ii), (iii) and
(iv) above following any annual meeting between the Tribe and Developer to
mutually review the Project's progress and to discuss and mutually agree upon
the amount to be paid monthly by Developer to the Tribe under Section 2.3(a)(ii)
above, such meetings to commence at any time after twelve (12) months from May
2000. The Tribe and Developer agree that all sums previously advanced to the
Tribe by Lakes Gaming and Resorts, LLC under the Letter Agreements shall
constitute advances by Developer to the Tribe hereunder, be credited to
Developer's obligations hereunder, and shall be subject to the terms of the
Transition Loan herein. The Tribe acknowledges that as of the date of this
Development Agreement the total previous advances made to the Tribe by Lakes
Gaming and Resorts, LLC under the Letter Agreements equals $___________ .

         (b) In the event that a Tribal-State Compact acceptable to Developer is
not entered into within three (3) years of the execution of this Development
Agreement, either the Tribe or Developer may, in their sole discretion, suspend
the pre-construction advance payments described in Section 2.3 (a)(ii), (iii)
and (iv) above until a Tribal-State Compact acceptable to Developer and the
Tribe has been entered.

         (c) The total amount of funds advanced to the Tribe directly from
Developer pursuant to Section 2.3(a) shall equal the total amount of the
Transition Loan. Developer shall make such advances during the term of this
Development Agreement, subject to the Tribe's and/or the Developer's right to
suspend the loan advances as hereinabove provided. The Transition Loan shall
accrue interest on each advance of the funds at the prime interest rate of Chase
Manhattan Bank, N.A. plus two percent (2%), fixed from the date the particular
funds are advanced to or on behalf of the Tribe; with repayment of principal and
interest to be made in equal monthly installments over a term of five (5) years
commencing on the thirtieth (30th) day after the first day upon which the
facility is open to the public to engage in Class III Gaming.

         (d) The Transition Loan shall (i) be subject to all the terms and
conditions of this Development Agreement; (ii) be evidenced by the Interim
Promissory Note executed by Tribe; and (iii) be repaid solely as a Limited
Recourse obligation of the Tribe without any cross collateralization from other
projects of Tribe and without any other liability or guarantee on the part of
the Tribe. Except for the Minimum Guaranteed Monthly Payment to the Tribe and
repayment of the Operating Note and Facility Loan, repayment of the Transition
Loan shall have




                                  Page 14 of 38

<PAGE>   15


first priority on any Net Gaming Revenues and Net Incidental Revenues generated
by the Enterprise. The Tribe agrees to grant to Developer a first priority and
perfected security interest, including a Dominion Account arrangement pursuant
to the Dominion Account Agreement (in a form consistent with the terms of this
Development Agreement attached hereto as Exhibit F ), on any Net Gaming Revenues
and Net Incidental Revenues of the Enterprise in order to secure repayment of
the Interim Promissory Note, and such Transition Loan shall also be secured on a
first priority and perfected basis by any Furnishings and Equipment financed by
proceeds of the Transition Loan or Facility Loan pursuant to the Security
Agreement. The Tribe agrees not to encumber any of the assets of the Facility or
the Enterprise without the written consent of Developer, which consent will not
be unreasonably withheld; except that the Tribe shall have the right without the
consent of Developer to grant security interests in the Enterprise's revenues
which are subordinate to Developer's and Other Lenders' interests under this
Development Agreement and all related Transaction Documents pursuant to a
subordination agreement in form and substance acceptable to Developer and any
Other Lender. The Tribe agrees to enter into a limited, transactional waiver of
sovereign immunity and consent to jurisdiction and arbitration as to Developer
and in connection with the Transition Loan, as provided in the Resolution of
Limited Waiver.

         (e) The Tribe shall retain the right to prepay the Transition Loan, in
whole or in part, without imposition of any prepayment penalty.

         (f) It is the understanding of the parties that the Transition Loan
will be the sole responsibility of Tribe, will be a Limited Recourse obligation
of the Tribe, and will not be subject to any other guarantee or obligation on
the part of the Tribe.

         2.4 Construction.

         (a) Developer shall arrange financing for the Costs of Construction
pursuant to Section 2.5.

         (b) As soon as reasonably possible after the approval of the Plans and
Specifications and the budget for the Costs of Construction by the Tribal
Council and Developer (the "Approved Construction Budget"), the Tribe, with the
assistance of the Architect, shall enter into a guaranteed maximum price
contract with a general contractor selected by the Tribe and approved by the
Developer (the "General Contractor") pertaining to the construction of the
Facility (the "Construction Contract"), subject to the approval of such contract
by Developer. The General Contractor must (i) exhibit the financial capability
to complete the work, (ii) have the ability to obtain adequate payment and
performance bonds and builder's risk insurance in amounts requested by Developer
and Tribe, (iii) provide an acceptable bid, as mutually agreed upon by Tribe and
Developer, (iv) be capable of meeting the construction schedule and (v)
construct quality facilities. The General Contractor shall be responsible for
providing, including through subcontractors, all material, equipment and labor
to construct and initially equip the Facility as necessary in conformance with
the Plans and Specifications, including site development.




                                  Page 15 of 38

<PAGE>   16


         (c) The Construction Contract shall contain such provisions for the
protection of the Tribe and Developer as the parties deem appropriate, and shall
provide that construction of the Facility shall commence within thirty days of
the parties receiving NIGC Approval, following and subject to the granting of
all approvals under Legal Requirements necessary to commence construction, and
the obtaining of the Facility Loan; and shall also provide that the General
Contractor, and all its subcontractors, shall exert its best efforts to complete
construction within such time as the Tribe and Developer agree, but which shall
not exceed one year following NIGC Approval. The Construction Contract shall
provide that: (i) Developer shall be responsible for all construction
administration during the construction phase of the Project; (ii) Developer
shall act as the Tribe's designated representative and shall have full power to
act on the Tribe's behalf in connection with the Construction Contract; (iii)
Developer shall have control and charge of any persons performing work on the
Project site, and shall interpret and decide on matters concerning performance
of any requirements of the Construction Contract; and (iv) Developer shall have
the right to reject work which does not conform to the Construction Contract.
The General Contractor shall, at a minimum, warrant its work to be performed
free of defects and unworkmanlike labor for at least one year after Completion
or not less than the maximum period subsequent to Completion customarily covered
by the liability and errors and omissions insurance policy a General Contractor
would usually obtain in the State, whichever is longer. The General Contractor
shall also be required to obtain before construction commences and maintain
until Completion a comprehensive general liability policy of insurance of at
least equal to the estimated Cost of Construction of the Facility naming the
Tribe and Developer as additional insureds; said policy to be issued by an
insurance company licensed by the State and having an AM Best rating of A7 or
better.

         (d) Construction change orders to the Plans and Specifications shall
require written approval of the Architect, Tribe and Developer and a
representative of the Gaming Commission if required by applicable law. It is
agreed that if completion of the construction, equipping and furnishing of the
Facility cannot be reasonably accomplished within the Approved Construction
Budget, then, Tribe, upon receiving advice from Developer and Architect, shall
promptly determine which components of the Facility shall be deleted or reduced
in size, such that the total expenditures for Costs of Construction shall not
exceed the Approved Construction Budget.

         (e) Developer (directly or through the use of an inspecting architect)
shall have the right under the Construction Contract, as a Cost of Construction,
to inspect the Facility prior to the disbursement of each requested advance of
funds, and (i) approve the progress and the workmanship of the construction;
(ii) verify compliance with the Plans and Specifications; (iii) verify the
percentage of the Completion as set forth in requests for advance; (iv) receive
lien waivers for the work and/or supplies provided to date; and (v) satisfy
itself that all work for which such advance is requested has been performed and
all materials for which such advance is requested are in place or, as to stored
materials, are owned by the Tribe and suitably safeguarded.




                                  Page 16 of 38

<PAGE>   17


Such inspection will be performed in a timely manner and not unreasonably delay
the disbursement of any advance.

         (f) Final acceptance of construction of the Facility shall not occur
until (i) evidence of Completion has been received and approved by Tribe, (ii) a
fully executed indemnity or release from liens is received from the General
Contractor and all subcontractors, (iii) any other documentation reasonably
requested by the Tribe, the Gaming Commission or Developer is received from the
General Contractor and (iv) all approvals have been received from all
Governmental Authorities from which approvals are required.

         (g) Developer, with the assistance of the Architect, shall submit to
the Tribal Council, for its review and approval, the specifications for
Furnishings and Equipment. Thereafter, Developer shall select and procure
vendors for purchase by the Tribe of Furnishings and Equipment required to
operate the Enterprise in conformity with such specifications. The cost of
Furnishings and Equipment shall be financed through the Facility Loan.
Alternatively, in the sole discretion of the Tribe, Developer may arrange for
the procurement of Furnishings and Equipment on lease terms consistent with the
terms provided as to the Facility Loan.

         (h) The Tribe shall keep the Facility and Gaming Enterprise Site free
and clear of all mechanic's and other liens resulting from the construction of
the Facility, which shall at all times remain the property of the Tribe. If such
lien is claimed or filed, it shall be the responsibility of the Enterprise to
discharge the lien within one hundred twenty days after receiving written notice
of such claim. Pursuant to the Indemnity Agreement, the Tribe shall indemnify
and hold Developer harmless for any and all claims and damages arising from any
pre-existing conditions on the Gaming Enterprise Site and from any other prior
agreements entered into by the Tribe with any persons or entities in connection
with development of the Facility and the Enterprise which obligations shall be
Limited Recourse obligations of the Tribe and shall be secured on a first
priority and perfected basis by the Furnishings and Equipment purchased with
Facility Loan or Transition Loan proceeds or other purchase money agreements,
and undistributed and future Net Total Revenues of the Enterprise, including the
Dominion Account Agreement and the Security Agreement. .

         2.5 Financing Obligation and Terms of Facility Loan.

         (a) Commencing on the Effective Date of the Management Agreement, and
subject to satisfaction of each of the conditions set forth in Section 2.6(a)
below, Developer will, upon Developer's approval of requests to advance funds
("Requests for Advance"), arrange for a Lender to loan to the Tribe under the
Facility Loan, or advance directly to the Tribe for the benefit of the Tribe,
funds for the actual Costs of Construction up to an aggregate of the Approved
Construction Budget approved by the parties. Such amounts loaned by a Lender or
advanced by Developer for Costs of Construction shall be payable and accrue
interest on terms as set forth in the Facility Note. All advances of Costs of
Construction shall be recorded by Developer on a schedule to be attached to the
Facility Note.




                                  Page 17 of 38

<PAGE>   18


         (b) Commencing on the Effective Date of the Management Agreement, and
subject to satisfaction of each of the conditions set forth in Section 2.6(b)
below, Developer will arrange to have a Lender loan to the Tribe under the
Facility Loan, or advance directly to the Tribe, funds up to the amount of the
approved budget to finance the Initial Costs of Operation. All amounts loaned by
a Lender or advanced by Developer for Initial Costs of Operation shall be
payable and accrue interest on terms as set forth in the Facility Note. All
advances of Initial Costs of Operations shall be recorded by Developer on a
schedule to be attached to the Facility Note.

         (c) The Costs of Construction and Initial Costs of Operation shall
equal the total cost of the Facility Loan. The total amount of the Facility
Loan, or advances if made directly by Developer, shall be in an amount up to but
not exceeding an amount estimated by reasonable mutual agreement of the Tribe
and Developer as appropriate for all costs of the Facility through the first day
upon which the Facility is open to the public to engage in Class III Gaming,
including its Initial Costs of Operation and Costs of Construction. The Facility
Loan, or total advances if made directly by Developer, shall accrue interest on
each advance of funds at the prevailing bond or bank market rate, fixed from the
date the particular funds are advanced to the Tribe; with repayment of principal
and interest to be made in equal monthly installments over a term of five (5)
years commencing on the thirtieth (30th) day after the Commencement Date. In the
event that Developer has made advances under this Section 2.5 and the Tribe
later obtains the Facility Loan financing from an Other Lender, then any
advances made by Developer under this Section 2.5 shall be repaid in full from
proceeds of the Other Lender's Facility Loan on the day of the Tribe's receipt
of the loan proceeds.

         (d) The Facility Loan, or total advances if made directly by Developer,
shall (i) be subject to all the terms and conditions of this Development
Agreement; (ii) be evidenced by the Facility Note executed by Tribe; and (iii)
be repaid solely as a Limited Recourse obligation of the Tribe without any cross
collateralization from other projects of Tribe and without any other liability
or guarantee on the part of the Tribe. Except for the Minimum Guaranteed Monthly
Payment to the Tribe and repayment of the Operating Note, repayment of the
Facility Loan, or total advances if made directly by Developer, shall have first
priority on any Net Gaming Revenues and Net Incidental Revenues generated by the
Enterprise. The Tribe agrees to grant to the Lender, or to Developer to the
extent Developer makes advances directly to the Tribe, a first priority and
perfected security interest, including a Dominion Account arrangement pursuant
to the Dominion Account Agreement (in a form consistent with the terms of this
Development Agreement attached hereto as Exhibit F), on any Net Gaming Revenues
and Net Incidental Revenues of the Enterprise in order to secure repayment of
the Facility Note, and such Facility Loan shall also be secured on a first
priority and perfected basis by any Furnishings and Equipment financed by
proceeds of the Facility Loan or Transition Loan pursuant to the Security
Agreement. The Tribe agrees not to encumber any of the assets of the Facility or
the Enterprise without the written consent of Developer and the holder of the
Facility Note, which consent will not be unreasonably withheld; except that the
Tribe shall have the right without the consent of Developer and such holder to
grant security interests in the Enterprise's revenues which are




                                  Page 18 of 38

<PAGE>   19


subordinate to Developer's or such holder's interests under this Development
Agreement and all related documents and agreements pursuant to a subordination
agreement in form and substance acceptable to Developer and any Other Lender.
The Tribe agrees to enter into a limited, transactional waiver of sovereign
immunity and consent to jurisdiction and arbitration as to the holder of the
Facility Note, or to Developer to the extent Developer makes advances directly
to the Tribe, as provided in the Resolution of Limited Waiver.

         (e) The Tribe shall retain the right to prepay the Facility Loan, or
total advances if made directly by Developer, in whole or in part, without
imposition of any prepayment penalty.

         (f) It is the understanding of the parties that the Facility Loan, or
total advances thereof if made directly by Developer, will be the sole
responsibility of Tribe, will be a Limited Recourse obligation of the Tribe, and
will not be subject to any other guarantee or obligation on the part of the
Tribe.

         2.6 Conditions Precedent to Facility Loan.

         (a) The obligation of Developer to arrange for the issuance of the
Facility Loan to the Tribe, or to make direct advances to the Tribe, for the
initial or any subsequent advance of Costs of Construction pursuant to Section
2.5(a) above is subject to the following conditions:

                  (i) The Facility Loan and related Facility Note, Dominion
         Account Agreement, Security Agreement, the Interim Promissory Note, UCC
         Financing Statements or other related documentation required shall be
         dated and duly executed and delivered by the Tribe, and shall have been
         approved by the BIA or National Indian Gaming Commission if required by
         applicable law.

                  (ii) The Management Agreement shall have become effective and
         Developer shall have received, to its satisfaction, an opinion of
         counsel for the Tribe concerning the enforceability of this Development
         Agreement and any related Transaction Documents, including the Facility
         Note and Interim Promissory Note against the Tribe, and the authority
         of the Tribe to execute this Development Agreement and any related
         Transaction Documents, including the Facility Note and Interim
         Promissory Note.

                  (iii) Developer and Tribe shall have received and approved the
         Plans and Specifications, the budget for the Costs of Construction, and
         the executed Construction Contract in accordance with Sections 2.2 and
         2.4.

                  (iv) Developer shall have received evidence that the Gaming
         Enterprise Site is held in trust by the United States of America, as
         trustee for the Tribe.




                                  Page 19 of 38

<PAGE>   20


                  (v) Developer shall have received and approved evidence of the
         bonds and insurance required of the General Contractor pursuant to
         Section 2.4(b).

                  (vi) Tribe shall have furnished to Developer an ALTA/ACSM
         survey of the Gaming Enterprise Site as required by the BIA, prepared
         by a BIA approved land surveyor, which survey shall locate, among other
         things, all property lines, existing access ways, building setback
         lines and easements affecting the Gaming Enterprise Site identified by
         book and page of recording, where applicable, water, electric and sewer
         lines, and other physical matters, including encroachments, if any,
         affecting the title and use of the Gaming Enterprise Site. The survey
         shall set forth the exact legal description of the Gaming Enterprise
         Site. Tribe further agrees to furnish to Developer a copy of the
         recorded plat, if any, applicable to the Gaming Enterprise Site. All
         surveys required hereunder shall contain a certificate in favor of, and
         in form and substance satisfactory to, Developer.

                  (vii) Developer shall have received satisfactory evidence that
         all permits or other authorizations, including, and without limitation,
         the building permit(s), required by any applicable Governmental
         Authority to authorize construction of the Facility have been issued
         and are in full force and effect. If all permits are not available
         prior to the closing of the Facility Loan, it shall be within
         Developer's discretion to arrange for the advance by a Lender of such
         sums under the Facility Loan for work for which all applicable permits
         have been received. At Developer's option, the Tribe shall furnish
         Developer reasonable evidence that all other permits required in order
         to construct the Facility in accordance with the Plans and
         Specifications, and within the Approved Construction Budget, will be
         available when necessary.

                  (viii) Developer shall have received satisfactory evidence of
         the availability of adequate water, electricity, telephone, sanitary
         sewer, and, if applicable, storm sewer service to the Facility to be
         provided as part of the Costs of Construction or otherwise as agreed to
         by the parties.

                  (ix) All representations and warranties of the Tribe shall be
         true and correct, this Development Agreement shall remain in effect,
         and the Tribe shall not be in default under this Development Agreement
         on the date of each advance.

                  (x) There shall be no pending or threatened litigation, claim
         or dispute which, in Developer 's good faith judgment, might materially
         adversely affect the ability of the Tribe to timely perform its
         obligations under this Development Agreement, including, without
         limitation, a ruling that the Tribal-State Compact is void for purposes
         of the IGRA. Further, Tribe shall not be the subject of any pending or
         threatened bankruptcy, insolvency, reorganization or similar
         proceedings which, in Developer 's good faith judgment, would
         materially



                                  Page 20 of 38

<PAGE>   21


         adversely affect the security for the Facility Loan or the Tribe's
         ability to perform its obligations under this Development Agreement or
         the Facility Note.

                  (xi) Developer shall have received satisfactory evidence that
         the Gaming Enterprise Site is free from environmental contamination of
         any nature whatsoever or any other environmental condition that would
         require any remediation pursuant to any applicable Legal Requirement.

         (b) The obligation of the Developer or Other Lender, as the case may
be, under Section 2.5(a) hereunder is subject to the conditions precedent set
forth above in subparagraphs 2.6(a) (i), (ii), (ix), (x) and (xi).

         2.7 Advances for Costs of Construction. Nothing herein contained shall
obligate Developer or Other Lender, as the case may be, to make any advances
under the Facility Loan for Costs of Construction for payment of any item not
included in or in an amount in excess of the Approved Construction Budget.

         (a) Subject to the provisions of Section 2.7 (c) relating to retainage,
Developer or Other Lender, as the case may be, shall make advances under the
Facility Loan to the Tribe for materials purchased by the Tribe and stored on or
off the Gaming Enterprise Site but not yet incorporated into the Facility only
if Tribe provides evidence satisfactory to Developer or Lender, as the case may
be, that such stored materials are protected against theft and damage.

         (b) Unless it otherwise agrees, Developer or Other Lender shall not be
required to make advances for Costs of Construction under the Facility Loan more
often than once monthly. Advances for Costs of Construction will be made based
upon the progress of construction as verified by Requests for Advance approved
and certified by the Architect.

         (c) Subject to the provisions of the Construction Contract, Developer
or the Lender, as applicable, may retain from each advance for payment of Costs
of Construction to the General Contractor an amount equal to ten percent (10%)
(or other lower retainage as may be agreed upon by Developer as applicable, and
set forth in the Construction Contract with the General Contractor) of the
amount of each Request for Advance. Upon Completion, any amounts remaining from
such retainage shall be paid to the Tribe or the Contractor for Costs of
Construction less such reasonable amount to be escrowed for payment of punchlist
items.

         (d) Neither Developer nor Other Lender, as the case may be, shall be
obligated to make the final advance directly to the Tribe, for Costs of
Construction until the following conditions have been satisfied: (i) all
conditions stated in this Section 2.7 and Section 2.4(f) shall have been
satisfied; and (ii) Developer shall have received the following: (1) evidence
that all work requiring inspection by any Governmental Authorities having
jurisdiction over the Facility has been inspected and approved by such
authorities and that all other required occupancy and other certificates and
approvals have been issued; (2) an as-built ALTA/ACSM survey showing the Gaming
Enterprise Site, the Facility, including, without limitation, the building,
parking areas




                                  Page 21 of 38

<PAGE>   22


(including parking spaces designated as regular, compact or handicapped spaces),
utilities, walkways, driveways, access ways to public streets, signs, and any
encroachments; and (3) a certificate from the Architect to the effect that the
Facility (including landscaping and on-site and any off-site improvements, but
excluding such landscaping or other items which should be completed at a later
date because of seasonal conditions ) have been completed substantially in
accordance with the Plans and Specifications and that direct connection has been
made to all appropriate utility facilities.

         2.8 Advances for Initial Costs of Operation. Advances under the
Facility Note for Initial Costs of Operation will be arranged by Developer with
a Lender, or made directly by Developer to the Tribe, within the budget for
Initial Costs of Operation approved pursuant to Section 5.1(b) of the Management
Agreement, and if supported by invoices or other documentation as Developer may
reasonably require. In addition, Developer is hereby authorized to make direct
payments for Initial Costs of Operation incurred by Developer in its role as
agent for the Tribe, subject to the budget, accounting and record keeping
provisions of Articles 2 and 5 of the Management Agreement. Developer shall
provide the Tribe with monthly reports of all advances for Initial Costs of
Operation that shall compare actual advances with the budget for Initial Costs
of Operation prepared pursuant to Section 5.1(b) of the Management Agreement.

         2.9 Title to Facility. The Facility, the Enterprise and all related
improvements and assets shall be the sole and exclusive property of the Tribe,
subject to no liens or encumbrances except for any UCC and other liens permitted
in favor of the Lender and Developer to be granted pursuant to the provisions of
this Development Agreement or any loan or other financing agreements between the
Lender or Developer and the Tribe entered into after the date the parties
execute this Development Agreement.

         2.10 No Liens. During the term of this Development Agreement, neither
the Tribe nor Developer shall act in any way whatsoever, either directly or
indirectly, to cause any other party to lease or to become a lienholder of the
Gaming Enterprise Site, Facility or the Enterprise, except as expressly agreed
to by the parties or permitted herein.

         2.11 Limited Waiver of Sovereign Immunity. By this Development
Agreement, the Tribe does not waive, limit, or modify its sovereign immunity
from unconsented suit except as to the matters and to the extent provided in the
Resolution of Limited Waiver as simultaneously executed, delivered and attached
hereto as Exhibit C. The Tribe understands that its agreement to adopt an
enforceable Resolution of Limited Waiver is a material inducement to the
Developer's execution of this Development Agreement and is a condition precedent
to any of the respective obligations of the parties under this Development
Agreement. The Tribe further agrees that it will not amend or alter or in any
way lessen the rights of the Lender or Developer as set forth in the Resolution
of Limited Waiver, which is attached hereto as Exhibit C and incorporated herein
by reference, including without limitation the covenant therein of the Tribe to
preserve its effective terms in the event of future changes in its legal status
or governance. This Section 2.11 shall survive the termination of this
Development Agreement, regardless of the reason for the termination.




                                  Page 22 of 38

<PAGE>   23


         2.12 Exclusivity. During the term of this Development Agreement, the
Tribe shall have an exclusive relationship with Developer regarding the
development of the Class III Gaming Facility. The Tribe agrees that during the
term of either this Development Agreement or the Management Agreement, it shall
have an exclusive relationship with Developer regarding the development of any
Class II Gaming facilities, will not develop or operate a Class II Gaming
facility within the Restricted Area (as defined in Section 5.19 herein) unless
it is first mutually agreed by the parties to build and operate the Class II
Gaming facility as part of the Enterprise, and that Developer or its affiliate
will manage the Class II Gaming facility for a term of seven (7) years and
pursuant to such other terms to which the parties shall mutually agree. The
parties shall mutually agree to the scope and size of any Class II Gaming
facility that they determine to build and operate as part of the Enterprise.
Except for the restrictions in Section 5.19, nothing herein shall be deemed to
restrict Developer's activities related to commercial or Indian gaming.

         2.13 Independent Agreement. The objective of the Tribe and Developer in
entering into and performing this Development Agreement is to provide a legally
enforceable procedure and agreement pursuant to which Developer will make
certain advances and loans to the Tribe for the development of the Facility
prior to NIGC Approval of the Management Agreement and the obtaining of any
other necessary approvals so that the Project can commence operation as soon as
possible; and to set forth the rights and obligations of the parties if approval
of the Management Agreement by the NIGC does not occur or if the Project is
unable to be developed for any other reason. This Development Agreement is
intended to be a legally enforceable agreement independent of the Management
Agreement, is not intended by the parties to be construed as a "management
agreement" within the meaning of IGRA, shall enter into effect when executed and
delivered by the parties, and be enforceable between the parties regardless of
whether or not the Management Agreement receives NIGC Approval. Together with
the Management Agreement, this Development Agreement and related Transaction
Documents supersede the Letter Agreements between the Tribe and Lakes Gaming and
Resorts, LLC in connection with the Project, which are hereby terminated and
declared null and void.

         2.14 Term of Development Agreement. The Development Agreement shall
become effective upon execution and delivery by both the Tribe and Developer.
Unless sooner terminated as provided in this Development Agreement, and provided
that the Management Agreement has not been terminated prior to the Commencement
Date, the term of the Development Agreement shall run from its execution date
until either (i) the first day upon which the Facility is open to the public to
engage in Class III Gaming; or (ii) five (5) years from August 9, 2000,
whichever, Developer, in its sole discretion, shall choose; provided however
that: (a) the loan repayment, cost reimbursement, indemnity and related
collateral provisions of this Development Agreement, (b) the Security Agreement,
Dominion Account Agreement and the UCC Financing Statements, and (c) Sections
2.4(h), 2.9, 2.10, 2.11, 2.12, 2.13, 2.14, and 2.15, shall each survive and
remain effective until terminated under Article 3 hereof and the loans and other
amounts owing to Developer by the Tribe have been paid in full; and provided
further that the Indemnity Agreement shall survive in accordance with its terms.




                                  Page 23 of 38

<PAGE>   24


         2.15 No Development Compensation. Developer acknowledges and agrees
that its sole compensation hereunder for services performed as Developer under
this Development Agreement shall be repayment of the Transition Loan as provided
under Section 2.3 and the Facility Loan as provided under Section 2.5 as set
forth herein. Without limiting the generality of the foregoing, Developer shall
not seek separate compensation for its services as Developer hereunder, whether
or not it receives compensation under Section 5.5 of the Management Agreement.

         2.16 Access to Information. Developer and the Tribe agree to cooperate
and exchange information with each other with respect to the development
activities set forth in this Development Agreement. Without limitation of the
foregoing sentence, Developer shall provide the Tribe with all information from
time to time in Developer's possession relating to the Gaming Enterprise Site,
or any lands which may hereafter become the Gaming Enterprise Site, such
information to include, without limitation, (a) plans, title documents,
engineering studies, environmental audits, and other due diligence materials;
and (b) draft and execution copies of all offers, letters of intent, options,
purchase agreements, and other agreements or documents relating to the
acquisition of such property.


                                    ARTICLE 3
                           TERMINATION/MATERIAL BREACH

         3.1 Termination for Cause. Either party may terminate this Development
Agreement if the other party commits or allows to be committed a Material Breach
(as hereinafter defined) of this Development Agreement and fails to cure such
breach within sixty (60) calendar days (or five (5) calendar days in the case of
a Material Breach under Section 2.3 hereof) after receipt of a written notice
from the non-breaching party identifying the nature of the Material Breach in
specific detail and its intention to terminate this Development Agreement;
provided, however, that if the nature of such breach (but specifically excluding
breaches curable by the payment of money) is such that it is not possible to
cure such breach within sixty (60) days, such sixty-day period shall be extended
for so long as the breaching party shall be using diligent efforts to effect a
cure thereof. Termination is not an exclusive remedy for claims of a Material
Breach, and the parties shall be entitled to other rights and remedies as may be
available pursuant to the terms hereof or under applicable law. For purposes of
this Development Agreement, a "Material Breach" is any of the following
circumstances: (i) material failure of either party to perform a material
obligation hereunder, or under the Management Agreement, or any document or
agreement related hereto or thereto for reasons not excused under Section 5.5
(Force Majeure), (ii) default by the Tribe under the Facility Note, the Interim
Promissory Note, or any document or agreement related hereto or thereto, or
(iii) any representation or warranty made pursuant to Section 5.10 or 5.11
proves to be knowingly false or erroneous in any material way when made.

         3.2 Mutual Consent/Automatic Termination. This Development Agreement
may be terminated at any time upon the mutual written consent and approval of
the parties. This Development Agreement shall automatically terminate if the
Management Agreement is terminated before the Commencement Date.




                                  Page 24 of 38

<PAGE>   25


         3.3 Involuntary Termination Due to Changes in Legal Requirements. The
parties hereby agree to use their best efforts to ensure this Development
Agreement conforms to and complies with all applicable laws and Legal
Requirements. The Tribe agrees that, except as may be required by federal law,
the Tribe will not enact or pass any new ordinances subsequent to the execution
of this Development Agreement that would materially impair the rights of
Developer under this Development Agreement. In the event of any change in state
or federal laws that results in a final determination by a court of competent
jurisdiction that this Development Agreement is unlawful, the Tribe and
Developer shall use their respective good faith best efforts to amend this
Development Agreement in a mutually satisfactory manner which will comply with
the change in applicable laws and not materially change the rights, duties and
obligations of the parties hereunder. In the event such amendment can not be
legally effected following exhaustion of all such good faith best efforts
(including the lapse of all legal proceedings and appeal periods without
favorable results) performance of this Development Agreement shall be
automatically suspended effective upon the date that performance of this
Development Agreement becomes unlawful by such final determination, and either
party shall have the right to terminate such suspended Development Agreement
(except the Notes and Security Provisions, as defined in Section 3.4 (b)) upon
written notice to the other party.

         3.4 Other Rights upon Material Breach; Ownership of Assets and
Repayment of Obligations on Termination.

         (a) Upon the occurrence of any Material Breach or upon the occurrence
of any event or circumstance which with the giving of notice or the passage of
time or both would constitute a Material Breach, the Developer may suspend its
obligation to make any advances with respect to the Transition Loan and the
Facility Loan until such time as the default has been cured.

         (b) Upon termination: (i) the Tribe will retain full ownership of the
Facility, Plans and Specifications therefor, and the Enterprise and its assets,
subject to Developer's and Lender's security interest in the Net Total Revenues
of the Enterprise pursuant to the Dominion Account Agreement and the Tribe's
Limited Recourse obligations under the Facility Note and Interim Promissory Note
(if either is not yet satisfied), or any security interests or liens in any
Furnishings and Equipment purchased with Facility Loan and Transition Loan
proceeds or other purchase money agreements, and (ii) Developer will have no
rights to the Enterprise and its assets or the Facility (or any equipment, books
and records, materials or furnishings therein that were purchased with Costs of
Construction) except as to the security interests and liens recited above or as
may be established otherwise by a proceeding pursuant to Article 6 hereof. In
the event of any termination (whether voluntary or involuntary), the Tribe shall
continue to have the obligation to pay unpaid principal and interest and other
amounts due under indemnity obligations or the Facility Note and Interim
Promissory Note (if either is not yet satisfied). Any and all obligations and
provisions contained in this Development Agreement concerning indemnity
obligations or repayment of the Facility Note and Interim Promissory Note, and
the security therefor (collectively, the "Notes and Security Provisions"), shall
survive termination of this Development Agreement. In the event of termination
for any reason, and subject to its rights under the dispute



                                  Page 25 of 38

<PAGE>   26


resolution provisions under Article 6 herein, Developer shall cooperate with the
Tribe in the orderly transition of the construction of the Facility, and shall
provide the Tribe or its designee with any and all books, records, documents,
contracts, and all other information relating to the Facility, whether such
information shall be in electronic, hard copy or any other form. In addition to
any other survival provisions set forth in this Development Agreement, upon the
occurrence of any termination of this Development Agreement, the terms and
provisions of Articles 3 and 4 and Sections 5.1, 5.2, 5.3, 5.4, 5.5, 5.6, 5.7,
5.8, 5.9, 5.10, 5.11, 5.12, 5.13, 5.14, 5.15, 5.16, 5.17, 5.18, 5.20, 5.21, and
6.1 shall survive such termination. If at the time of termination the Tribe's
obligations under the Facility Note and Interim Promissory Note remain
unsatisfied in full, then the Tribe may either pay the Note obligations in full,
or to the extent economically feasible (as hereinafter defined), the Tribe shall
have the obligation to continue to operate and maintain the Facility and
Enterprise in accordance with reasonable industry standards, and as to any
portions of the Facility and the Enterprise that are no longer economically
feasible to operate, the Tribe and the Developer shall conduct an orderly
liquidation of such assets and any liquidation proceeds (net of reasonable sale
costs) shall be deposited into the Dominion Account and disbursed in accordance
with the same terms and provisions applicable to Gross Total Revenues (as
defined and provided for in the Management Agreement); provided however, that
such liquidation proceeds shall be excluded from Net Total Revenues for purposes
of calculating the management compensation of any Replacement manager whether
under Section 5.5(b) of the Management Agreement or otherwise; and the Tribe
shall keep the Facility and Enterprise and all related assets insured for the
coverages and amounts required by Article 4 of the Management Agreement and name
Developer as an additional insured, loss payee and mortgagee, as applicable and
provide evidence thereof upon request until all amounts owing to Developer have
been paid in full, and if any portion of the Enterprise assets are damaged by
any casualty and it is economically feasible for the Tribe to continue to
operate such damaged assets, then the Tribe shall repair and reconstruct such
operations that were damaged and are to be continued, and any excess insurance
proceeds that are not used to repair and reconstruct the applicable damaged
Enterprise assets shall be deposited into the Dominion Account and disbursed in
accordance with the same terms and provisions applicable to Gross Total Revenues
(as defined and provided for in the Management Agreement), provided however that
such excess proceeds shall be excluded from Net Total Revenues for purposes of
calculating the management compensation of any Replacement manager whether under
Section 5.5(b) of the Management Agreement or otherwise; As used herein, the
term "economically feasible" shall mean that the gross revenues derived from any
applicable operations is in excess of that needed to pay the Costs of Gaming
Operations or Costs of Incidental Operations (as defined in the Management
Agreement), as applicable to the operations in question.

         (c) Subject to the provisions of Section 3.1, in the event of
termination of this Development Agreement or the Management Agreement for any
reason prior to the full repayment to Developer of any amounts owed to it by the
Tribe under the Transaction Documents, including without limitation, the
Facility Note or Interim Promissory Note, the Tribe shall, as promptly as
reasonably possible, appoint a person or entity qualified to manage the Facility
and operate the Enterprise (the "Replacement") and use its best efforts to
obtain approvals of all required Governmental Authorities for such Replacement,
provided the obligation to




                                  Page 26 of 38

<PAGE>   27


continue to operate under Section 3.4(b) exists. The Tribe agrees to keep full
and accurate financial records of operations of the Enterprise by such
Replacement and to allow Developer to audit such records at reasonable times
prior to full repayment to Developer of any amounts owed to it by the Tribe
under the Transaction Documents, including without limitation, the Facility Note
or Interim Promissory Note, and that Tribe's compliance with this paragraph
shall not preclude the Developer from exercising any of its other rights and
remedies hereunder or any document or agreement related hereto, including,
without limitation, rights under the Facility Note, Interim Promissory Note, and
the Dominion Account Agreement.

         (d) Notwithstanding any other term or provision in this Development
Agreement to the contrary, if this Development Agreement is terminated prior to
the occurrence of the Effective Date of the Management Agreement, then Developer
shall not have any obligation to sell the Potential Gaming Site Lands to the
Tribe and the Tribe shall not have any obligation to Developer with respect to
the Land Acquisition Costs under the terms of the Transaction Documents. The
Tribe acknowledges and agrees that it shall have no legal or equitable title to
the Potential Gaming Site Lands until such time as such lands have been sold to
the Tribe by Developer.

         3.5 Notice of Termination. Any final notice of termination hereunder
shall be in writing detailing the reason the party considers the Material Breach
not to be cured and must be delivered to the other party before such termination
becomes effective.


         3.6 Renewal Option.

         The parties by mutual agreement may decide to renew or extend this
Development Agreement.

         3.7 Cumulative Remedies.

         All rights or remedies of either the Tribe or Developer under this
Development Agreement or any other Transaction Documents shall be cumulative and
may be exercised singularly in any order or concurrently, at such party's
respective option, and the exerciser or enforcement of any such right or remedy
shall neither be a condition to nor bar to the exercise or enforcement of any
other right or remedy.


                                    ARTICLE 4
                              RELEASE AND INDEMNITY

         4.1 Third-Party Claims. Except for Section 2.4(h), neither party shall
be entitled to recover from, and expressly releases, the other party, its
agents, directors, officers and employees, from or for any third-party damages,
claims, causes of action, losses and/or expenses of whatever kind or nature,
except claims resulting from the other party's own gross negligence or willful





                                  Page 27 of 38

<PAGE>   28


or criminal misconduct, including attorneys' fees and expenses incurred in
defending such claims in connection with the lawful design and construction of
the Facility in accordance with the terms of this Development Agreement; and
such claims, damages, losses or expenses shall be considered either Costs of
Gaming Operation or Costs of Incidental Operations (as defined in the Management
Agreement), depending on the circumstances and nature of the claim, payable from
the bank accounts established pursuant to Section 2.8(a) of the Management
Agreement.

         4.2 Indemnity from Developer. Notwithstanding Section 4.1, Developer
shall indemnify and hold the Tribe, its agents, directors, officers and
employees, harmless against any and all damages, claims, losses or expenses of
whatever kind or nature, including reasonable attorneys' fees and expenses
incurred in defending such claims, resulting from the gross negligence or
willful or criminal misconduct of Developer, its officers and directors in
connection with Developer's performance of this Development Agreement, and no
such damages, losses or expenses shall be paid from the bank accounts
established pursuant to Section 2.8 (a) of the Management Agreement, nor shall
such losses or expenses be considered Costs of Gaming Operations or Costs of
Incidental Operations (as defined in the Management Agreement).

         4.3 Indemnity from Tribe. Notwithstanding Section 4.1, Tribe shall
indemnify and hold Developer, its agents, directors, officers and employees,
harmless against any and all damages, claims, losses or expenses of whatever
kind or nature, including reasonable attorneys' fees and expenses incurred in
defending such claims, resulting from the gross negligence or willful or
criminal misconduct of the Tribe, its officers, directors, or tribal government
employees, in connection with the Tribe's performance of this Development
Agreement, and no such damages, losses or expenses shall be considered Costs of
Gaming Operations or Costs of Incidental Operations (as defined in the
Management Agreement).

         4.4 Indemnity Against Unauthorized Debt and Liabilities. The parties
expressly agree that neither this Development Agreement nor its performance
creates or implies a partnership between the parties or authorizes either party
to act as agent for the other except to the extent expressly provided herein.
Developer hereby agrees to indemnify and hold the Tribe harmless from any
third-party claims, actions and liabilities, including reasonable attorneys'
fees on account of obligations or debts of Developer that Developer is not
authorized to undertake as agent for the Tribe pursuant to the terms of this
Development Agreement. The Tribe likewise agrees to indemnify and hold Developer
harmless from any third-party claims, actions and liabilities on account of any
of the separate obligations or debts of the Tribe that are not authorized Costs
of Construction pursuant to this Development Agreement.

         4.5 Indemnity Agreement. In connection with any indemnity obligations
hereunder, the parties agree they will comply with the terms and conditions set
forth in the Indemnity Agreement attached hereto as Exhibit E.




                                  Page 28 of 38

<PAGE>   29


                                    ARTICLE 5
                                  MISCELLANEOUS

         5.1 Assignment and Subcontractors. The rights and obligations under
this Development Agreement shall not be assigned or subcontracted by any party
without the prior written consent of the other party and any other necessary
regulatory approvals. However, the Tribe reserves the right to assign its rights
and obligations under this Development Agreement (together with all right, title
and interests to any Enterprise assets and the Management Agreement) to a
tribally chartered entity or an IRA section 17 corporation that it wholly owns
and controls, and the Developer reserves the right to assign its rights and
obligations under this Development Agreement to a wholly owned subsidiary
provided that the original Developer hereunder, or an affiliated entity
reasonably satisfactory to the Tribe, remains obligated hereunder by means of a
guaranty or other accommodation reasonably satisfactory to the Tribe. Any
assigning party engaging in a permitted assignment described above shall and
shall cause its assignee to execute and deliver to the other party such
assignment and assumption agreements together with evidence of the due
authorization, execution, delivery and enforceability of such assignment
documents as may be reasonably requested. Other than as expressly provided
herein, any attempted assignment or subcontracting without such consent and
approval shall be void. Subject to the preceding requirements, this Development
Agreement shall be binding upon and shall inure to the benefit of the parties
and their respective successors and assigns.

         5.2 Notices. Any notice, consent or any other communication permitted
or required by this Development Agreement shall be in writing and shall be
effective on the date sent and shall be delivered by personal service, via
telecopier with reasonable evidence of transmission, express delivery or by
certified or registered mail, postage prepaid, return receipt requested, and,
until written notice of a new address or addresses is given, shall be addressed
as follows:

         If to the Tribe:           The Nipmuc Nation Tribal Council
                                    156 Worcester-Providence Highway
                                    Suite 28
                                    Sutton Square Mall
                                    Sutton, MA 01590
                                    Attention: Chairman

         With a copy to:            Christopher P. Sullivan, Esq.
                                    Robins, Kaplan, Miller & Ciresi L.L.P.
                                    222 Berkeley Street
                                    Boston, MA 02116

         If to the Developer:       Lakes Nipmuc, LLC
                                    130 Cheshire Lane
                                    Minnetonka, MN 55305
                                    Attention: Timothy J. Cope

         With a copy to:            Kevin C. Quigley, Esq.
                                    Johnson Hamilton Quigley Twait & Foley PLC
                                    W1450 First National Bank Building
                                    332 Minnesota Street
                                    St. Paul, MN 55101-1314




                                  Page 29 of 38

<PAGE>   30


                  and               Brian Klein, Esq.
                                    Maslon, Edelman, Borman & Brand, LLP
                                    3300 Wells Fargo Center
                                    90 South Seventh Street
                                    Minneapolis, MN 55402-4140

         Copies of any notices given to one party shall be given to all parties.

         5.3 Amendments. This Development Agreement may be amended only by
written instrument duly executed by all of the parties hereto and with any and
all necessary regulatory approvals previously obtained.

         5.4 Counterparts. This Development Agreement may be executed in two or
more counterparts and by facsimile, each of which shall be deemed an original,
but all of which together shall constitute one and the same agreement.

         5.5 Force Majeure. No party shall be in default in performance due
hereunder if such failure or performance is due to causes beyond its reasonable
control, including acts of God, war, fires, floods, or accidents causing damage
to or destruction of the Facility or property necessary to operate the Facility,
or any other causes, contingencies, or circumstances not subject to its
reasonable control which prevent or hinder performance of this Development
Agreement; provided, however, that the forgoing shall not excuse any obligations
of the Tribe to make monetary payments to the Developer as and when required
hereunder or in any related document or agreement.

         5.6 Time is Material. The parties agree that time is of the essence and
the time and schedule requirements set forth in this Development Agreement are
material terms of this Development Agreement.

         5.7 Further Assurances. The parties hereto agree to do all acts and
deliver necessary documents as shall from time to time be reasonably required to
carry out the terms and provisions of this Development Agreement.

         5.8 Severability. In the event that any provision of this Development
Agreement is, by final order of a court of competent jurisdiction or Government
Authority, held to be illegal or void, the validity of the remaining portions of
the Development Agreement shall be enforced as if the Development Agreement did
not contain such illegal or void clauses or provisions, and the parties shall
use their best efforts to negotiate an amendment to this Development Agreement
which will comply with the judicial order and maintain the originally
contemplated rights, duties and obligations of the parties hereunder.




                                  Page 30 of 38

<PAGE>   31


         5.9 Sovereign Immunity. Except for the Resolution of Limited Waiver
attached hereto as Exhibit C and incorporated herein by reference, nothing in
this Development Agreement shall be deemed or construed to constitute a waiver
of sovereign immunity of the Tribe and the only applicable waivers of sovereign
immunity shall be those expressly provided and executed by the Tribe's duly
authorized representative and substantially conforming to the form as approved
by the parties. The parties agree that they will not amend or alter the
Resolution of Limited Waiver which will in any way lessen the rights of any
party as set forth in the Resolution of Limited Waiver, including without
limitation the covenant therein of the Tribe to preserve its effective terms in
the event of future changes in its legal status or governance. This Section 5.9
shall survive termination of this Development Agreement, regardless of the
reason for the termination.

         5.10 Representations and Warranties of Developer. The Developer hereby
represents and warrants as follows:

                  (a) This Development Agreement has been duly executed and
         delivered by Developer and will constitute a valid and binding
         obligation, enforceable against Developer in accordance with its terms.

                  (b) The execution and delivery of this Development Agreement,
         the performance by Developer of its obligations hereunder and the
         consummation by Developer of the transactions contemplated hereby will
         not violate any contract or agreement to which Developer or any of its
         affiliated companies is a party or any law, regulation, rule or
         ordinance or any order, judgment or decree of any federal, state,
         tribal or local court or require any regulatory approval beyond those
         contemplated herein.

                  (c) Developer has the full legal right, power and authority
         and has taken all action necessary to enter into this Development
         Agreement, to perform its obligations hereunder, and to consummate all
         other transactions contemplated by this Development Agreement.

         5.11 Representations and Warranties of Tribe. The Tribe hereby
represents and warrants as follows:

                  (a) The Tribe is a duly organized Indian tribe under the
         Constitution of the Tribe and laws of the United States. The Tribe
         agrees that it shall ratify this Development Agreement and its rights,
         liabilities obligations hereunder and any related document or agreement
         thereto, including the Resolution of Limited Waiver incorporated
         herein, within ten (10) days of final agency determination by the
         United States government recognizing the Tribe as a federally
         recognized tribe.

                  (b) The Tribe has full legal right, power and authority under
         the laws for the Tribe and has taken all official Tribal Council action
         necessary: (i) to enter into this Development Agreement and authorize
         the Tribe to execute and deliver this Development Agreement, the
         Facility Loan documentation, Facility Note, Interim Promissory Note,
         Indemnity Agreement, Dominion Account Agreement, Security Agreement,




                                  Page 31 of 38

<PAGE>   32


Management Agreement, and any and all other documents and agreements related
thereto or contemplated thereby (collectively, the "Transaction Documents"),
(ii) to perform its obligations hereunder and thereunder, and (iii) to
consummate all other transactions contemplated by this Development Agreement and
the other Transaction Documents.

                  (c) This Development Agreement, the Facility Loan
         documentation and Facility Note, the Interim Promissory Note, and the
         other Transaction Documents, when executed and delivered by Tribe will
         constitute a valid and binding obligation, enforceable against Tribe in
         accordance with their terms.

                  (d) The execution and delivery of this Development Agreement,
         the Facility Loan documentation and Facility Note, the Interim
         Promissory Note, and the other Transaction Documents, the performance
         by Tribe of its obligations hereunder and the consummation by Tribe of
         the transactions contemplated hereby will not violate any contract or
         agreement to which Tribe is a party, law, regulation, rule or ordinance
         or any order judgment or decree of any federal, state, tribal or local
         court, or require any approval by Governmental Authorities beyond those
         contemplated herein.

         5.12 Governing Law. This Development Agreement has been negotiated,
made and executed at the Tribe's office located in the Commonwealth of
Massachusetts and shall be governed by and construed in accordance with the laws
of the Commonwealth of Massachusetts, without regard to its conflict of laws
provisions, and applicable federal laws.

         5.13 Entire Agreement. This Development Agreement, including all
exhibits, represents the entire agreement between the parties and supersedes all
prior agreements (except the Management Agreement and its exhibits) relating to
the subject matter of construction and development of a Class III Gaming
Facility by the Tribe.

         5.14 Representatives of Tribe. The Tribal Council shall furnish to
Developer a list of the authorized representatives who are empowered to act on
behalf of the Tribe for the purposes of this Development Agreement and the Tribe
shall keep such list current.

         5.15    Limitations of Liability.

         (a) Developer expressly agrees that the Tribe's total aggregate
liability for damages for breach of the Development Agreement shall be limited
in accordance with the Resolution of Limited Waiver attached hereto as Exhibit C
and incorporated herein by reference. The Tribe shall bear no liability for
further damages.

         (b) The Tribe expressly agrees that the Developer/Manager shall not be
liable for any indirect or consequential damages in connection with its
obligations, acts or omissions under the Development Agreement.




                                  Page 32 of 38

<PAGE>   33


         5.16 Approvals. Unless otherwise provided herein, all approvals or
consents required by either party hereunder shall not be unreasonably withheld
or delayed. Unless otherwise provided herein, approval by the Tribal Council or
its duly authorized representative shall be deemed to constitute approval by the
Tribe and approval by the Chief Executive Officer of the Developer shall be
deemed to constitute approval by the Developer.

         5.17 Best Efforts. Except as otherwise provided herein, Developer and
the Tribe shall use their best efforts to perform and fulfill their obligations
under this Development Agreement in the manner required by this Development
Agreement.

         5.18 Non-disclosure. The parties agree not to divulge to third parties
the terms of this Development Agreement or any other proprietary or confidential
information exchanged between the parties pursuant to this Development
Agreement, unless (i) the information is required to be disclosed pursuant to
judicial order or Legal Requirements, (ii) the information is at the time of
disclosure already in the public domain, or (iii) to the extent required in
order to obtain financing. This prohibition shall not apply to disclosures by
either party to their attorneys, accountants, or other professional advisers. In
situations where disclosure of the terms of this Development Agreement to
regulatory, governmental or judicial entities is required by law or regulations,
the parties will make reasonable efforts to secure confidential treatment of the
economic terms of this Development Agreement by such entities; provided,
however, this disclosure restriction shall not prohibit Developer making any SEC
filings it deems legally necessary. The parties agree to consult with each other
and cooperate regarding any press releases regarding this Development Agreement
and the relationships described herein.

         5.19 Non-Competition and Right of First Offer. Developer agrees that,
during the term of this Development Agreement and the Management Agreement
neither Developer, nor any parent entity, subsidiary entity or otherwise
affiliated entity, shall have any direct or indirect ownership or other interest
in, or consult with or otherwise provide any financing or services to, any
facility (other than the Facility) where Class II or Class III Gaming is
conducted within the States of Massachusetts, Connecticut or Rhode Island (the
"Restricted Area") without the prior written consent of the Tribe. In the event
that the Tribe desires to conduct Class II or Class III Gaming within the
Restricted Area (other than at the Facility) during the term of this Development
Agreement or the Management Agreement, the Tribe shall first offer to Developer
the right to develop and manage such facility upon the terms and conditions
proposed by the Tribe, with a prompt response by Developer required, but in no
event later than thirty (30) days after written notice from the Tribe. In the
event that Developer declines to accept such offer upon such terms and
conditions, the Tribe shall have the right to pursue such Class II or Class III
Gaming provided that (i) the Tribe may not offer to an unrelated third party
terms and conditions which are more favorable than those offered to Developer,
and (ii) such Class II or Class III Gaming shall not commence operations prior
to the opening of the Facility unless this Development Agreement or the
Management Agreement shall have been terminated. Developer and the Tribe
acknowledge that notwithstanding their mutual intent hereunder to develop Class
III Gaming, the parties may mutually agree to conduct Class II Gaming at the
Facility while conducting Class III Gaming at the Facility. In such event, the
Tribe agrees that Developer or its affiliate will manage the Class II Gaming
facility for a term of seven (7) years and pursuant to




                                  Page 33 of 38

<PAGE>   34


such other terms to which the parties shall mutually agree. The parties shall
mutually agree to the scope and size of any Class II Gaming facility that they
determine to build and operate as part of the Enterprise.

         5.20 Other Business Opportunities. During the term of this Development
Agreement, or until Developer is repaid in full on the Transition Loan and the
Facility Loan, whichever is later, the Tribe is free to pursue other real estate
and development opportunities; provided it grants to Developer the right of
first refusal to participate with the Tribe upon the terms and conditions
proposed by the Tribe, with a prompt response by Developer required, but in no
event later than thirty (30) days after written notice from the Tribe. In the
event that Developer declines to participate with the Tribe upon such terms and
conditions, the Tribe shall have the right to pursue such opportunity but may
not offer to an unrelated third party terms and conditions which are more
favorable than those offered to Developer.

         5.21 Recitals. The recitals at the beginning of this Development
Agreement are true and are incorporated by reference herein.


                                    ARTICLE 6
                               DISPUTE RESOLUTION

         6.1 Disputes Between the Tribe and the Developer. Disputes between the
Tribe and Developer with respect to this Development Agreement, the Interim
Promissory Note, the Facility Note, or any other Transaction Documents, or a
party's performance hereunder or thereunder, shall be resolved by the following
dispute resolution process and pursuant to the Resolution of Limited Waiver
attached hereto.

         (a) The parties shall first meet and confer in a good faith attempt to
resolve the dispute through negotiations not later than ten (10) calendar days
after receipt of written notice of the dispute, unless both parties agree in
writing to an extension of time.

         (b) If the dispute is not resolved to the satisfaction of the parties
within thirty (30) calendar days after the first meeting in Subsection 6.1(a)
above, then any claim, controversy or dispute arising out of or relating to this
Development Agreement, the Facility Note, the Interim Promissory Note, or any
other Transaction Document, or any alleged default thereunder or breach of any
provisions thereof shall be submitted to binding arbitration in accordance with
the Commercial Arbitration Rules of the American Arbitration Association in
effect at the time of submission; except that: (a) the question whether or not a
dispute is arbitrable under this Development Agreement, the Facility Note, the
Interim Promissory Note, or any other Transaction Document shall be a matter for
binding arbitration by the arbitrators, such question shall not be determined by
any court and, in determining any such question, all doubts shall be resolved in
favor of arbitrability; and (b) discovery shall be permitted in accordance with
the Federal Rules of Civil Procedure, subject to supervision as to scope and
appropriateness by the arbitrators. Judgment on any arbitration award may be
entered in any court having jurisdiction




                                  Page 34 of 38

<PAGE>   35


over the parties pursuant to the Resolution of Limited Waiver attached hereto as
Exhibit C and incorporated herein by reference.

         (c) Unless the parties hereto otherwise agree in writing prior of the
submission of such claim, controversy or dispute to arbitration, arbitration
proceedings under this Article 6 shall be held in Boston, Massachusetts.

         (d) Either party may, at any time prior to the selection of an
arbitrator or arbitrators, require that the arbitrator or arbitrators selected
be an attorney or attorneys licensed to practice law in the United States and
that the attorneys have experience in Indian gaming regulatory and development
issues.

         (e) Unless the parties hereto otherwise agree in writing, any matter to
be arbitrated shall be submitted to a panel of three arbitrators. One arbitrator
shall be selected by the Tribe, one arbitrator shall be selected by Developer
and the third arbitrator shall be selected by mutual agreement of the two
arbitrators selected by the parties hereto.

         (f) The arbitration award shall be in writing signed by each of the
arbitrators, and shall state the basis for the award. The arbitration award
shall be set forth in reasonable detail as to its findings of fact and law, and
basis of determination of award form and amount. In connection with any
arbitration award, the arbitrators shall be empowered to take the actions and
enforce the judicial remedies described in Paragraph 5 of the Resolution of
Limited Waiver; provided however, that although the arbitrators may award
damages in the event the Tribe or the Gaming Commission choose not to comply
with the award, the arbitrators may not require the Tribe or the Gaming
Commission to take or modify any governmental legislative decision or action
which the arbitrators have determined has resulted in the dispute between the
parties and is contrary to the parties rights, liabilities and obligations under
this Development Agreement, the Facility Note, the Interim Promissory Note, or
any other Transaction Document ("Specific Performance Restriction"). Provided
further, that: (a) should the arbitrators determine that the governmental
legislative decision or action by the Tribe or the Gaming Commission in dispute
has been made in an unreasonable manner and if the Tribe shall not reverse such
governmental legislative decision or action, then the arbitrators shall award
treble damages to Developer, Guarantor, Lender, or other claimant, as
applicable, for damages suffered as a consequence of the Tribe's or Gaming
Commission's governmental legislative decision or action; (b) that such Specific
Performance Restriction shall not prevent Developer from enforcing the Facility
Note, the Interim Promissory Note, the Security Agreement, the Dominion Account
Agreement, or the liens and security interests granted thereunder, nor from
realizing on collateral encumbered thereby; and (c) if the unreasonably imposed
governmental action involves a tax or other governmental imposition directly or
indirectly on the revenues generated from the Enterprise and such tax or
imposition has a material adverse impact (as determined by the arbitrators) on
Developer's ability to collect or realize upon the obligations owing by the
Tribe and/or the collateral securing such obligations, then the arbitrators
shall have the authority to grant Developer the right to seek recourse against
all tribal assets (including, without limitation, the Limited Recourse assets)
with respect to the payment of any arbitration award granted to




                                  Page 35 of 38

<PAGE>   36


Developer and the Tribe hereby agrees to the granting of such expanded recourse
rights.

         (g) Except to the extent such enforcement will be inconsistent with a
specific provision of this Development Agreement, arbitration awards made
pursuant to this Article 6 shall be enforceable under Title 9 of the United
States Code and any applicable tribal, federal or state law governing the
enforcement of arbitration awards.

         (h) In addition to any basis for appeal of an arbitration award stated
in Title 9 of the United States Code or any applicable law governing the
enforcement of arbitration awards, either party hereto may appeal an arbitration
award on the basis that the arbitrator or arbitrators incorrectly decided a
question of law in making the award, or the award was made in an arbitrary or
capricious manner or in manifest disregard of the factual evidence.

         (i) Either party hereto, without having to exhaust any tribal remedies
first, shall have the right to seek and obtain a court order from a court having
jurisdiction over the parties requiring that the circumstances specified in the
order be maintained pending completion of the arbitration proceeding, to the
extent permitted by applicable law.


                                    ARTICLE 7
                                    GUARANTY

         7.1 As a material inducement to the Tribe's execution and delivery
hereof, contemporaneously herewith Developer has delivered to the Tribe a
guaranty of Developer's obligations hereunder (the "Guaranty") substantially in
the form of Exhibit I attached hereto and made a part hereof. The Guaranty has
been executed by Lakes Gaming, Inc., which owns all of the membership interests
in Developer through its wholly-owned subsidiary Lakes Gaming and Resorts, LLC.


                         [SIGNATURES ON FOLLOWING PAGE]



                                  Page 36 of 38

<PAGE>   37


  SIGNATURE PAGE FOR GAMING DEVELOPMENT AGREEMENT FOR CLASS III GAMING FACILITY
                 BETWEEN THE NIPMUC NATION AND LAKES NIPMUC, LLC


         IN WITNESS WHEREOF, the parties hereto have executed this Development
Agreement, under seal, as of the above written date.


The Nipmuc Nation                      Lakes Nipmuc, LLC


By: /s/ Robert Hazzard                 By: /s/ Lyle Berman
   -----------------------------          -----------------------------
    Its: Chair                             Its: CEO


ATTEST:

By: /s/ Arthur Selden
   -----------------------------
    Its: Vice Chair




                                 Page 37 of 38
<PAGE>   38


                                LIST OF EXHIBITS


Exhibit A         Legal Description of Gaming Enterprise Site

Exhibit B         Initial Scope of Development Project

Exhibit C         Resolution of Limited Waiver of Immunity from Suit

Exhibit D         Interim Promissory Note

Exhibit E         Indemnity Agreement

Exhibit F         Dominion Account Agreement

Exhibit G         Security Agreement

Exhibit H         Facility Note Form

Exhibit I         Guaranty by Lakes Gaming, Inc.




                                 Page 38 of 38