Document:

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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

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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<PAGE>   1
                                                                    EXHIBIT 10.2

                                   MANAGEMENT

                                    AGREEMENT

                         FOR CLASS III GAMING ENTERPRISE

                                     BETWEEN

                                THE NIPMUC NATION
                          A FEDERALLY RECOGNIZED TRIBE

                                       AND

                                LAKES NIPMUC, LLC
                      A MINNESOTA LIMITED LIABILITY COMPANY

                               DATED: JULY 5, 2001

<PAGE>   2

         THIS MANAGEMENT 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 "Manager"), 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 operate a
gaming facility and enterprise on its own and desires to retain the services of
a manager, with knowledge and experience in the gaming industry, to manage and
operate a Class III Gaming facility and related resort facilities on property
acquired for the Project and held in trust for gaming purposes for the Tribe by
the United States.

         F. Manager has represented to the Tribe that it has the managerial
capacity to commence operation of the Enterprise, as defined herein; and the
Tribe has selected Manager, and Manager agrees, to provide the management
expertise necessary to the conducting of successful tribal gaming operations.

                                  Page 2 of 43
<PAGE>   3

         G. This Management Agreement shall become effective when all the
necessary approvals listed in Section 2.19 of this Management Agreement are
received (the "Effective Date") and shall continue for a term as described in
Section 2.19, unless otherwise provided in this Management Agreement.

         H. This Management Agreement is entered into pursuant to the Indian
Gaming Regulatory Act of 1988, P.L. 100-497, 25 U.S.C.ss.2701 et seq. (the
"IGRA") as that statute may be amended. All gaming conducted at the Facility
will at all times comply with the IGRA, applicable tribal law and the
Tribal-State Compact or gaming procedures issued by the Secretary, if any.

         J. Any dispute regarding this Management 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
Manager agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

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

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

         1.2 "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.

         1.3 "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.

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

                                  Page 3 of 43
<PAGE>   4

         1.5 "Costs of Gaming Operation" means the total of all expenses for the
operation of the Enterprise's Class III Gaming activities pursuant to Generally
Accepted Accounting Principles ("GAAP"), including but not limited to the
following: (1) fees imposed upon the Enterprise by the National Indian Gaming
Commission based upon its gross receipts from Class III Gaming; (2) any
contributions and license/regulatory fee reimbursements payable to the State
pursuant to a Tribal-State Compact; (3) the amount, if any, required by a
Tribal-State Compact to fund or support programs for the treatment and
assistance of compulsive gamblers and for the prevention of compulsive gambling;
(4) license or other fees for background investigations upon "key employees" and
"primary management officials" as defined in 25 C.F.R. ss. 502.14 and ss.
502.19; (5) depreciation and amortization applicable to the portion of the
Facility in which the Enterprise operates Class III Gaming based upon an assumed
life consistent with GAAP, and depreciation and amortization of all other assets
(including without limitation all capital replacements and improvements, and
fixtures, furnishings and equipment) located therein in accordance with GAAP;
(6) costs of administration, recruiting, hiring, firing and training employees
working in or for the Enterprise's Class III Gaming activities; (7) compensation
and benefits to Enterprise employees; (8) reasonable and customary regulatory
fees imposed on the Enterprise by the Gaming Commission (which amounts shall be
subject to the provisions of Section 5.1 contained herein), (9) management fees;
and (10) total gaming-related costs, fees and expenses, including, without
limitation: materials, supplies, inventory, utilities, repairs and maintenance
(excluding capital replacements, the costs of which shall be amortized as
hereinabove provided), insurance and bonding, marketing, advertising, annual
audits, accounting, legal or other professional and consulting services,
security or guard services, and such other costs, expenses or fees necessarily,
customarily and reasonably incurred in the operation of the Enterprise's Class
III Gaming, and reasonable and necessary travel expenses incurred subsequent to
the Commencement Date for officers and employees of Manager and authorized
representatives of the Tribe in connection with the Project; provided, however,
that "Costs of Gaming Operation" shall specifically not include any license fees
or costs of Manager or its employees in connection with licensing with either
the NIGC or Gaming Commission.

         1.6 "Costs of Incidental Operations" means all expenses and costs
pursuant to Generally Accepted Accounting Principles incurred in operating the
hotel, restaurants, food and beverage service, office space, swimming pool,
fitness center, childcare, kids arcade, golf course and other commercial
business areas comprising the Facility in which the Enterprise conducts neither
Class II Gaming nor Class III Gaming, including, without limitation: (1)
depreciation and amortization applicable to such non-gaming facilities based
upon an assumed life consistent with GAAP, and depreciation and amortization of
all other assets (including without limitation all capital replacements and
improvements, and fixtures, furnishings and equipment) located therein in
accordance with GAAP; ; (2) all employment costs relating to non-gaming
employees working in or for such commercial business facilities; (3) management
fees; (4) non-gaming supplies and materials, insurance and other non-gaming
costs reasonably and customarily incurred in operation of such portion of the
Enterprise in which neither Class II nor Class III Gaming may be conducted;
provided, however, that no non-commercial operations of the Tribe (including,
without limitation, any school, hospital or library) shall be directly or
indirectly included within the computation of the "Costs of Incidental
Operations".

                                  Page 4 of 43
<PAGE>   5

         1.7 "Development Agreement" shall mean the Gaming Development Agreement
for Class III Gaming Facility between the Tribe and Lakes Nipmuc, LLC executed
on even date herewith.

         1.8 "Dominion Account" shall have the meaning described in Section
2.8(a) herein.

         1.9 "Dominion Account Agreement" shall mean the Dominion Account
Agreement to be executed by the Tribe in favor of the Manager in the form of
Exhibit A attached hereto.

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

         1.11 "Enterprise" means the business enterprise of the Tribe created to
engage in 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.

         1.12 "Enterprise Accounts" shall have the meaning described in Section
2.8 herein.

         1.13 "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.

         1.14 "Facility Loan" shall have the meaning ascribed to it under the
Development Agreement between the parties.

         1.15 "Facility Note" means the promissory note evidencing the Facility
Loan as described under the Development Agreement between the parties, together
with all amendments, substitutions and renewals thereof.

         1.16 "Fiscal Year" means the accounting year used for the operation of
the Enterprise as agreed upon by Manager and the Tribe.

         1.17 "Furnishings and Equipment" shall have the meaning ascribed to it
under the Development Agreement between the parties.

         1.18 "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

                                  Page 5 of 43
<PAGE>   6

and which is a subordinate governmental entity of the Tribe and is entitled to
all sovereign governmental immunity of the Tribe.

         1.19 "Gaming Enterprise Site" shall mean the lands to be made Tribal
Lands and used as the site for constructing the Facility and operating the
Enterprise described on Exhibit A to the Development Agreement between the
Parties, 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.

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

         1.21 "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/Manager's
performance under this Memorandum of Agreement.

         1.22 "Gross Gaming Revenues" means the Enterprise's total revenue from
Class III Gaming activities (excluding any insurance proceeds received other
than business interruption insurance proceeds and insurance proceeds received to
reimburse the Enterprise for any claims included, or to be included, as Costs of
Gaming Operations).

         1.23 "Gross Incidental Revenues" means the Enterprise's total receipts
from the sale or rental of food, beverages, souvenirs, hotel facilities,
equipment and all other goods and services supplied for non-Class III Gaming
activities that are incidental to the operation of the Enterprise (excluding any
insurance proceeds received other than business interruption insurance proceeds
and insurance proceeds received to reimburse the Enterprise for any claims
included, or to be included, as Costs of Incidental Operations).

         1.24 "Gross Total Revenues" means the total of Gross Gaming Revenues
and Gross Incidental Revenues of the Enterprise.

         1.25 "Guaranty" shall mean the guaranty of Lakes Gaming, Inc. described
in Section 11.1 herein, in the form attached hereto as Exhibit E.

         1.26 "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.

                                  Page 6 of 43
<PAGE>   7

         1.27 "Initial Costs of Operation" means all Costs of Operation advanced
to the Tribe pursuant to Section 2.8 of the Development Agreement and 5.2 of
this Management Agreement, 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 reasonable
and necessary expenses incurred subsequent to the execution of this Management
Agreement for officers and employees of Manager and authorized representatives
of the Tribe in connection with the Project, and in obtaining regulatory
approval of this 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 Management Agreement).

         1.28 "Interim Promissory Note" means the promissory note evidencing the
Transition Loan as described under the Development Agreement between the
parties, together with all amendments, substitutions and renewals thereof.

         1.29 "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/Manager, the Tribal Lands, the Gaming
Site, the Facility, and the Enterprise, including without limitation, the IGRA,
the Tribal-State Compact, and the Tribe's Gaming Ordinance.

         1.30 "Lender or Other Lender" means any third party who makes the
Facility Loan to the Tribe under Section 2.5 of the Development Agreement
between the parties.

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

         1.32 "Limited Recourse" means that the Facility Loan and Transition
Loan advances, and all liabilities or obligations of the Tribe related to this
Management Agreement, the Development Agreement, the Land Acquisition Costs, the
Facility Loan or Facility Note, the Transition Loan or Interim Promissory Note,
the Operating Note, any UCC Financing Statements, any other Transaction
Documents and their applicable documentation, the Facility, or the Enterprise
contemplated by this Management 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 10.3(f) herein and by

                                  Page 7 of 43
<PAGE>   8

Paragraph 5(c) of the Resolution of Limited Waiver). In no event, except as
permitted under Section 10.13f) herein and by Paragraph 5(c) of the Resolution
of Limited Waiver, shall Manager or any 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 this 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).

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

         1.34 "Management Agreement" shall mean this Management Agreement for
Class III Gaming Enterprise between the parties that deals with the management
of the Enterprise and its operations, as the same may be amended or modified.

         1.35 "Material Breach"shall have the meaning described in Section 6.1
herein.

         1.36 "Minimum Guaranteed Monthly Payments" means the minimum monthly
amount payable to the Tribe, which amount shall be determined pursuant to
Section 5.3 hereof.

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

         1.38 "Net Gaming Revenues" means Gross Gaming Revenues less (1) amounts
paid out as, or paid for, prizes; and (2) Costs of Gaming Operation (excluding
management compensation as set forth in Section 5.5 herein).

         1.39 "Net Incidental Revenues" means Gross Incidental Revenues less
Costs of Incidental Operations (excluding management compensation as set forth
in Section 5.5 herein) .

         1.40 "Net Total Revenues" means the sum of Net Gaming Revenues plus Net
Incidental Revenues.

         1.41 "NIGC Approval" means (a) a determination by the NIGC that Manager
is suitable for licensing and (b) written approval by the NIGC Chairman of this
Management Agreement.

         1.42 "Operating Note" means the promissory note evidencing the Minimum
Guaranteed Payment Advances under Section 5.3(b) herein and the Working Capital
Advances under Section 5.7 herein made by Manager, substantially in the form
attached hereto as Exhibit E, together with all amendments, substitutions and
renewals thereof.

                                  Page 8 of 43
<PAGE>   9

         1.43 "Project" means the scope of the development project contemplated
by the Development Agreement between the parties.

         1.44 "Replacement"shall have the meaning described in Section 6.4(c)
herein.

         1.45 "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).

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

         1.47 "Security Agreement" shall mean the Security Agreement to be
executed by the Tribe in favor of the Manager in the form of Exhibit B attached
hereto.

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

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

         1.50 "Transaction Documents" shall have the meaning described in
Section 9.12(b) herein.

         1.51 "Transition Loan" shall have the meaning ascribed to it under the
Development Agreement between the parties.

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

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

         1.54 "Tribal-State Compact" means the agreement to be entered into
between the Tribe and the State in which the Gaming 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.

         1.55 "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.

         1.56 "UCC Financing Statements" means UCC-1 financing statements naming
Tribe as debtor and naming Manager as a secured party, in the form approved by
the parties.

                                  Page 9 of 43
<PAGE>   10

         1.57 "Working Capital Advances" shall have the meaning described in
Section 5.7 herein.

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

                                    ARTICLE 2
                          AUTHORITY AND DUTY OF MANAGER

         2.1 Appointment as Agent. Subject to the terms and conditions of this
Management Agreement, and provided that the Development Agreement has not been
terminated before the Commencement Date, the Tribe hereby appoints Manager to
act as the exclusive agent for the Tribe for all matters related to the
management of the operations of the Facility and the Enterprise during the term
of this Management Agreement. Manager's agency responsibilities shall include,
among other things, maintenance and improvement of the Facility, management and
operation of the Enterprise's Class III Gaming activities within the Facility,
and all other revenue producing activities that are conducted by the Enterprise,
such as the sale of food and beverages in the Facility. Manager accepts such
appointment as the Tribe's exclusive agent for the term of this Memorandum of
Agreement. Subject to the provisions of this Memorandum of Agreement and
specifically the restrictions in this Article 2 and the budget provisions in
Article 5 hereof, Manager shall have, and the Tribe does hereby grant to
Manager, the power and authority as agent for the Tribe, to exercise the rights
of the Tribe under and to execute, modify, or amend any contracts associated
with the operations of the Facility and Enterprise (excluding this Management
Agreement), including, without limitation, purchase orders, equipment and retail
leases, contracts for services, including utilities, and maintenance and repair
services, relating to the operation of the Facility and the Enterprise except
for real estate agreements and contracts (excluding retail leases), or compacts
or other agreements with the State or any other governmental agency, which shall
remain the sole and exclusive authority of the Tribe; provided, however, that in
no event shall Manager execute any contracts or agreements which require
payments exceeding $250,000 in the aggregate, or which have a term exceeding one
(1) year. The duties and authorities of Manager shall be subject in all events
to receipt of all necessary licenses, consents or approvals from the Gaming
Commission.

         2.2 Limitations. Manager shall have no authority to waive or impair the
Tribe's sovereign immunity. Except as stated herein, Manager shall have no
authority as the Tribe's agent under this Management Agreement without the prior
written approval of the Tribe (not to be unreasonably withheld): (a) to incur
costs which are materially in excess of the expenditures to be agreed upon in
the operating budget or the capital expenditure budget to be developed pursuant
to Section 5.1 hereof; (b) to sell, encumber or otherwise dispose of any
personal property or equipment located in the Facility, except for inventory
sold in the regular course of business and

                                  Page 10 of 43
<PAGE>   11

other items which must be replaced due to age, obsolescence, or wear and tear;
(c) to purchase any goods or services from Manager or any of Manager's
affiliated companies as a Cost of Gaming or Incidental Operations or Cost of
Construction unless such arrangement is specifically approved in writing by the
Tribal Council. Except as specifically authorized in this Article 2, Manager
shall not hold itself out to any third party as the agent or representative of
the Tribe.

         2.3 Manager's Authority and Responsibility.

         (a) Manager shall conduct and direct all business and affairs in
connection with the day-to-day operation, management and maintenance of the
Enterprise and the Facility, including the establishment of operating days and
hours. It is the parties' intention that the Enterprise be open 24 hours daily,
seven days a week. Manager is hereby granted the necessary power and authority
to act, through the Enterprise's general manager, in order to fulfill all of its
responsibilities under this Agreement. Nothing herein grants or is intended to
grant Manager a titled interest to the Facility or to the Enterprise. Manager
hereby accepts such retention and engagement. The Tribe shall have the sole
proprietary interest in and ultimate responsibility for the conduct of all Class
III Gaming conducted by the Enterprise, subject to the rights and
responsibilities of Manager under this Management Agreement.

         (b) In managing, operating, maintaining and repairing the Enterprise
and the Facility under this Management Agreement, Manager's duties shall
include, without limitation, the following: (i) Manager shall use reasonable
measures for the orderly physical administration, management, and operation of
the Enterprise and the Facility, including without limitation cleaning,
painting, decorating, plumbing, carpeting, grounds care and such other
maintenance and repair work as is reasonably necessary; (ii) Manager shall
comply with all duly enacted statutes, regulations and ordinances of the Tribe;
and (iii) Manager shall comply with all applicable provisions of the Internal
Revenue Code including, but not limited to, the prompt filing of any cash
transaction reports and W-2G reports that may be required by the Internal
Revenue Service of the United States or under the Tribal-State Compact.

         2.4 Compliance with Laws.

         (a) Manager shall assist the Tribe in compliance by the Tribe with all
terms and conditions of the Tribal-State Compact, the Gaming Ordinance, IGRA and
any gaming regulations (collectively, the "Governing Laws"), the violation of
which would materially impair the conduct of gaming permitted to be conducted
under IGRA by the Enterprise. Without limiting the foregoing, Manager shall also
supply the NIGC with all information necessary to comply with the National
Environmental Policy Act, as it may be amended from time to time, and comply
with the NIGC's regulations relating thereto. Manager shall also make all
reasonable arrangements on behalf of the Tribe as to requirements concerning the
reporting and withholding of taxes with respect to the winnings from gaming
operations pursuant to this Management Agreement, or other payments due by the
Tribe to any entity pursuant to a Tribal-State Compact or other agreement of the
Tribe hereafter entered into, if any; provided, however, that the Manager shall
have no other

                                  Page 11 of 43
<PAGE>   12

legal or financial responsibility for the Tribe's due performance and payment in
full of such obligations of the Tribe. The Tribe agrees that, through its Tribal
Council and any subsequent or delegated governing or administrative authority,
it shall take all reasonable actions necessary or advisable to ensure the
Tribe's compliance with the foregoing laws, regulations and requirements, it
being understood and agreed that the Manager shall not be liable for any
violation due to action or inaction by the Tribe. In managing and operating the
Facility and the Enterprise, Manager shall comply with all laws, rules,
regulations, ordinances, compacts and all other agreements affecting the same,
including without limitation the Governing Laws.

         (b) The parties shall use their best efforts to obtain all necessary
approvals of Governmental Authorities of this Management Agreement.

         2.5 Security. Manager shall provide for appropriate security for the
operation of the Enterprise. All aspects of Facility security shall be the
responsibility of Manager. Upon agreement of the Tribe and Manager, any security
officer may be bonded and insured in an amount commensurate with his or her
enforcement duties and obligations. The cost of any charge for security and
increased public safety services will be a Costs of Gaming Operations or Costs
of Incidental Operations, as appropriate.

         2.6 Accounting, Financial Records, and Audits.

         (a) Manager shall maintain full and accurate records and books of
account for operations of gaming activities and related operations managed by
Manager. Such records shall be maintained at Manager's office located within the
Facility and shall be made available for immediate inspection and verification
at all times as required by a Tribal-State Compact, the Tribal Council or its
designated representative, the Gaming Commission or IGRA. Inspection or
verification by the Governmental Authorities shall be coordinated through the
Gaming Commission.

         (b) At least three months prior to the Commencement Date, and subject
to the approval of the Tribal Council and the Gaming Commission, which approvals
shall not be unreasonably withheld and which shall occur prior to the
Commencement Date, Manager shall establish and maintain such approved accounting
systems and procedures that shall: (i) include procedures for internal
accounting controls; (ii) permit the preparation of financial statements in
accordance with GAAP ; (iii) be susceptible to audit; (iv) allow the Enterprise,
the Tribe and NIGC to calculate the annual fee under 25 CFR ss.514.1; (v) permit
the calculation of Manager's compensation under Section 5.5(b) herein; and ( vi)
provide for the allocation of operating expenses or overhead expenses among the
Tribe, the Enterprise and Manager, or any other user of shared facilities or
services. Supporting records and the agreed upon accounting system shall be
sufficiently detailed to permit the calculation and payment of Manager's fee
hereunder and to permit the performance of any fee or contribution computations
required under IGRA, a Tribal-State Compact and other applicable laws or
regulations.

                                  Page 12 of 43
<PAGE>   13

         (c) Net Gaming Revenues, Net Incidental Revenues, and Net Total
Revenues will be calculated by the Manager for purposes of distribution monthly
in accordance with Section 5.5 and copies of such calculations shall be promptly
supplied to the Tribal Council as required by Section 5.4 herein.

         (d) All records shall be maintained so as to permit the preparation of
financial statements in accordance with generally accepted accounting principles
consistently applied and in accordance with procedures to be mutually agreed
upon by the parties. Manager shall, as a Costs of Gaming Operations, furnish to
the Tribe and the Gaming Commission, monthly financial reports in accordance
with Section 5.4 herein. Such reports shall provide reasonable detail as
requested by the Tribe and the Gaming Commission with respect to revenues and
expenses of each profit center of the Enterprise. In addition, all gaming
operations conducted within the Facility shall be subject to special outside
annual audits, which the Gaming Commission may cause to be conducted, and all
contracts or subcontracts for supplies, services or concessions for a contract
amount in excess of $25,000 annually relating to gaming activities within
Facility shall be subject to audits, which audits the Gaming Commission may
cause to conducted by an independent certified public accountant from a Big Five
accounting firm with more than five (5) years experience in audits of gaming
enterprise operations selected and approved by the Gaming Commission. The audits
will be scheduled at times agreed upon by the Gaming Commission and Manager. The
cost of such audits and audit reports (including the annual audit under Section
5.6 herein) shall constitute Costs of Gaming Operation. The Manager shall make
any reports or presentations to the Tribal Council as are requested by the
Tribe.

         2.7. Cash Monitoring. Manager will promulgate, and all parties and
their respective employees, agents, and representatives will obey operational
policies consistent with the Gaming Ordinance respecting the handling of cash,
security systems, and access to cash cage, counting rooms, and other places
where cash is kept and handled. The tribe and the Gaming Commission and its
authorized representatives shall have the right to monitor and investigate
systems for cash management implemented by Manager and to verify daily Gross
Gaming Revenues, Gross Incidental Revenues, and Gross Total Revenues.

         2.8 Bank Accounts, Reserve Funds and Permitted Investments.

         (a) On or prior to the Commencement Date, the Tribe and Manager shall
execute the Dominion Account Agreement and create the Dominion Account
("Dominion Account") described therein. Gross Gaming Revenues and Gross
Incidental Revenues shall be deposited daily into the Dominion Account, which
shall be subject to the lien of the Dominion Account Agreement and established
at a commercial bank, of the Tribe's choice, organized under the laws of the
United States of America or any state thereof provided such bank is a member of
the Federal Deposit Insurance Corporation and has combined capital, undivided
profits and surplus of at least $500,000,000. Manager shall also establish other
segregated bank accounts with the approval of the Tribe for the operation of the
Enterprise (the "Enterprise Accounts"), which accounts must indicate the
custodial nature of the accounts. The signatures of authorized

                                  Page 13 of 43
<PAGE>   14

representatives of Manager shall be the only signatures required to make
withdrawals (by check or otherwise) from such accounts for single withdrawals of
less than $250,000, provided that the monies withdrawn by Manager are to be used
only for the purposes set forth herein and provided further that if the amount
of any single withdrawal exceeds $250,000 (excluding payout and prizes and
transfers to any designated payroll accounts, taxes, and purchases of currency,
or Manager's compensation under Section 5.5 herein), then the signature of the
Tribe's designated representative will also be required.

         (b) Manager agrees that subject to the terms of Sections 5.3(b) and
6.4(a) hereof, Manager shall make or permit timely transfers from the Dominion
Account to the Enterprise Accounts of all funds needed to pay (i) Costs of
Gaming Operations; (ii) Costs of Incidental Operations; (iii) required debt
service on the Transition Loan and the Facility Loan, as well as any other third
party loans to which Manager has consented in writing pursuant to the terms of
this Management Agreement or other agreement; (iv) the Minimum Guaranteed
Monthly Payment; (v) Minimum Guaranty Payment Advances; (vi) Working Capital
Advances and interest thereon; (vii) Manager's compensation under Section 5.5(b)
herein; (viii) any reasonable reserves created and approved by the Tribe and
Manager; and (ix) payments to the Tribe pursuant to Section 5.5(a)(ix) hereof.
Upon the termination of this Management Agreement and so long as: (a) any
amounts remain owing to Manager hereunder or with respect to any related
Transaction Documents, and (b) the Enterprise shall continue in operation
pursuant to the terms of Section 6.4 hereof, then Manager shall continue to
permit transfers from the Dominion Account to the Enterprise Accounts for
payment of the amounts described above, but shall specifically exclude any Costs
of Gaming Operations or Costs of Incidental Operations otherwise payable to the
Tribe or any political subdivision or other affiliate of the Tribe with the
exception of reasonable gaming license fees and any costs or expense associated
with the provision of reasonable supplies and/or services provided by the Tribe
to the Enterprise.

         (c) Surplus funds deposited in the Dominion Account and the Enterprise
Accounts may be invested by Manager in the following permitted investments: (i)
a money market mutual fund registered under the Investment Company Act of 1940
that invests exclusively in (1) marketable direct obligations issued or
unconditionally guaranteed by the United State Government or issued by an agency
thereof and backed by the full faith and credit of the United States, (2)
commercial paper having, at the time of acquisition, a rating of A-1 or P-1 or
better from either Standard & Poor's Corporation or Moody's Investors Service,
Inc., respectively; or (ii) other investments as may be directed by Manager with
the prior written consent of Tribe.

         2.9 Enforcement of Rights.

         (a) During the term of this Management Agreement, except as otherwise
provided in Section 2.9 (b) herein, the Tribe and Manager shall mutually agree
with respect to the handling of the defense, prosecution or settlement of civil
disputes with third parties relating to gaming and other management activities
conducted or contracts executed by Manager, as agent for the Tribe. The parties
will assist and cooperate with each other with respect to such third-party

                                  Page 14 of 43
<PAGE>   15

claims and disputes. All uninsured liabilities incurred or expenses incurred by
the Tribe and Manager or any of the employees, officers or directors of any
party in defending such claims by third parties or prosecuting claims against
third parties shall be considered either Costs of Gaming Operation or Costs of
Incidental Operations, depending upon the circumstances and nature of the claim,
except with respect to claims and liabilities resulting from criminal
misconduct, which shall be governed by Article 7 herein.

         (b) All claims brought against the Tribe or Manager or any of the
employees, officers or directors of any party arising out of or relating to
gaming or other operations conducted pursuant to this Management Agreement that
may be settled and released for a total settlement amount of less than $100,000
may be paid and settled by Manager on behalf of the Tribe and/or Manager in
accordance with Manager's good faith business judgment.

         2.10 Fire and Safety Services. Manager shall be responsible for
obtaining adequate coverage for fire and safety services and may, in its
discretion, have such services provided on a contractual basis by the local Fire
and Police Departments. The costs of any fire and safety protection services
shall be appropriately allocated between Costs of Gaming Operation and Costs of
Incidental Operations, and, if provided by a Department of the Tribe, shall not
exceed the actual cost to the Tribe of providing such services.

         2.11 Timely Payment of Costs of Gaming Operations and Costs of
Incidental Operations. Manager shall be responsible for paying Costs of Gaming
Operation and Costs of Incidental Operations on behalf of the Enterprise from
the bank account(s) established pursuant to Section 2.8 herein so as to avoid
any late-payment penalties, except those incurred as a result of good faith
payment disputes) to the extent funds of the Enterprise are available; provided,
however, that payment of all such costs (and taxes or similar payments arising
from Enterprise operations) shall be solely the legal responsibility of the
Enterprise.

         2.12 Acquisition of Gaming and Other Equipment.

         (a) All gaming equipment shall be acquired by Manager, as agent for the
Tribe, from Gaming Commission licensed distributors and manufacturers.

         (b) All acquisitions of new equipment after the public opening of the
Facility shall be purchased by Manager as agent for the Tribe on a cash on
delivery basis, unless otherwise agreed by the Tribe.

         2.13 Hours of Operation. Unless otherwise agreed by the parties, the
facility and Enterprise shall be operated seven days per week and twenty-four
hours per day, subject to any restrictions in the IGRA, the Gaming Ordinance and
a Tribal-State Compact.

         2.14 Access to Operations. Manager shall provide immediate access by
appropriate officials of the Gaming Commission and the Tribe's designated
representative to the gaming

                                  Page 15 of 43
<PAGE>   16

operation, including all books and records in addition to those listed in the
access requirements set forth in Sections 2.6 and 2.7 herein.

         2.15 Increased Public Safety Services. The parties agree that increased
actual costs of law enforcement and police protection services required as a
result of Class III Gaming in the Facility shall be paid as Costs of Gaming
Operation.

         2.16 Advertising. Manager shall contract for and place advertising,
subject to prior approval of the general concepts of the advertising by the
Tribe. Advertising costs will be included in the operating budgets prepared in
accordance with Article 5 herein.

         2.17 Certain Meetings. The parties agree that, to facilitate oversight
of the activities conducted pursuant to this Management Agreement and to
maintain communication generally between the individuals who will be involved in
supervising those activities, the Tribe or its designated representative and the
Manager's principal individuals will meet at least monthly to review operations
of the Facility and Enterprise and any current issues pertaining thereto.

         2.18 Maintenance. Manager will cause the Facility to be repaired and
maintained and operated in a clean, good and orderly condition. Repairs and
maintenance will be paid as Costs of Gaming Operation if related to the gaming
operations of the Enterprise, or as Costs of Incidental Operation if related to
the other operations of the Enterprise.

         2.19 Term. Notwithstanding the date of signature of the parties hereto,
this Management Agreement shall become effective automatically (without need of
amendment, ratification or other action of the parties) upon the last of the
following events to occur (the "Effective Date"): (i) final agency determination
by the United States government recognizing the Tribe as a federally recognized
tribe; (ii) publication of the final agency decision by the BIA to take the
Gaming Enterprise Site into trust for gaming purposes by the United States
government, as trustee for the Tribe; (iii) written approval of the Tribe's
Gaming Ordinance, this Management Agreement, the Operating Note, UCC Financing
Statements, the other Transaction Documents, and the Resolution of Limited
Waiver and issuance of final agency decision by the Chairman of the National
Indian Gaming Commission; (iv) approval by the Secretary and publication in the
federal register of the Tribal-State Compact or issuance of Secretarial
procedures for Class III Gaming; or (v) issuance by the Gaming Commission to
Manager of all applicable license(s) required by IGRA, the Tribe's Gaming
Ordinance or a Tribal-State Compact. The Commencement Date shall be the first
day upon which the Facility is open to the public to engage in Class III Gaming
activities. Unless sooner terminated as provided herein, this Management
Agreement shall continue for a term of seven (7) years from the Commencement
Date, provided however that: (a) the Security Agreement, Dominion Account
Agreement and the UCC Financing Statements, and (b) sections 2.8 and Article 7
hereof shall each survive and remain effective until terminated under Article 6
hereof and the amounts owing to Manager by the Tribe under this Management
Agreement have been paid in full.

                                  Page 16 of 43
<PAGE>   17

                                    ARTICLE 3
                                PERSONNEL MATTERS

         3.1 Employees. All employees involved with operation of the
Enterprise's Class III Gaming activities and related activities throughout the
Facility subject to management by Manager under this Management Agreement shall
be employees of the Tribe. Subject to the applicable requirements in the
Tribal-State Compact, the employment relationship shall be governed by Tribe
substantive law and any applicable federal law, subject to the Tribe's
reasonable Indian preference policies, and all matters will be subject to
dispute resolution procedures in the manner described in this Management
Agreement. Manager shall be solely responsible for the hiring, training,
promoting, and firing of all such employees except for the general manager as
agreed to by the Tribe and Manager, whose employment, advancement and
termination shall be subject to approval of the Tribe, such approval not to be
unreasonably withheld. Manager shall develop a policy and procedure in
conjunction with the Tribe, to implement an executive development program for
employees who are members of the Tribe whereby Tribe members will be prepared
through training and education to assume key management positions within the
gaming and non-gaming operations of the Enterprise. All salaries, wages,
employee insurance, worker compensation premiums, employment taxes, government
exactions of any kind related to employment, benefits, and overhead related to
the hiring, supervising, and discharge of employees, will be Costs of Gaming
Operations or Costs of Incidental Operations, as appropriate.

         3.2 Enterprise Employee Policies. Manager shall prepare a draft of
personnel policies and procedures (the "Enterprise Employee Policies"),
including a job classification system with salary levels and scales, which
policies and procedures shall be subject to approval by the Tribal Council. The
Enterprise Employee Policies shall include a grievance procedure in order to
establish fair and uniform standards for the Enterprise employees, which will
include procedures for the resolution of disputes between Manager and Enterprise
employees. Manager shall be responsible for administering the Enterprise
Employee Policies. Any material revisions to the Enterprise Employee Policies
shall not be effective unless they are approved by the Tribal Council. All such
actions shall comply with applicable tribal law, subject to the applicable
requirements in a Tribal-State Compact.

         3.3 Employee Background Checks. A background investigation shall be
conducted by the Gaming Commission in compliance with all Legal Requirements, to
the extent applicable, on each applicant for employment as soon as reasonably
practicable. No individual whose prior activities, criminal record, if any, or
reputation, habits and associations are known to pose a threat to the public
interest, the effective regulation of Class III Gaming, or to the gaming
licenses of Manager, or to create or enhance the dangers of unsuitable, unfair,
or illegal practices and methods and activities in the conduct of Enterprise
gaming activities, shall knowingly be employed by Manager or the Tribe. The
background investigation procedures employed by the Gaming Commission shall be
formulated in consultation with Manager and shall satisfy all regulatory
requirements independently applicable to Manager. Any cost associated with
obtaining such background investigations shall constitute Costs of Gaming
Operation.

                                  Page 17 of 43
<PAGE>   18

         3.4 Nipmuc and Indian Preference. Manager shall adhere in regard to
recruitment, employment, reduction in force, promotion, training and related
employment actions to a publicly announced policy and practice of Nipmuc Indian
Preference and/or any publicly announced policy of Indian preference, both of
which must be reasonably promulgated by the Tribe.

         3.5 Conflict of Interest.

         (a) Manager covenants that it will not unduly interfere with, or
attempt to influence the internal affairs or government decisions of the Tribe
for its gain or advantage.

         (b) Manager hereby certifies that no payments have been made or will be
made in the future by Manager to any Tribe official, member of the Tribal
Council, relative of any tribal official or tribal government employee for the
purpose of obtaining any special privilege, gain, advantage or consideration for
Manager, except for the fees payable to the Gaming Commission and amounts
payable to the Tribe pursuant to this Management Agreement. However, nothing in
this provision shall prohibit Manager from making contributions to community
organizations within the Tribe or to the Tribe for the purpose of funding
community activities.

         (c) No member of the Gaming Commission, or any tribal court official
may be employed by Manager or be a "Party in Interest" as defined in Section 8.1
(a) herein with respect to this Management Agreement or a gaming equipment
agreement or have any direct or indirect financial interest in the gaming to be
operated pursuant to this Management Agreement. Members of the Tribal Council
shall not be eligible for employment at the Facility and Enterprise, but will be
eligible to enter into contracts for the provision of goods or services for the
Facility and Enterprise.

         (d) Manager further agrees to comply with all conflict of interest
rules set forth in regulations or ordinances of the Tribe.

         3.6 Participation in Tribe Functions. Manager acknowledges that
personnel who are members of the Tribe have cultural and religious
responsibilities to perform in regard to Tribe rituals and similar activities.
Manager will schedule working hours and take other actions, with the assistance
and advice of the Tribe, to accommodate Tribe members in performing these
responsibilities without affecting their employment status or position.

                                    ARTICLE 4
                                    INSURANCE

         4.1 Duty to Maintain. Manager, acting as agent of the Tribe, shall
maintain during the course of this Management Agreement, appropriately allocated
as a Cost of Gaming Operation or a Cost of Incidental Operations, insurance
coverages in forms and amounts that will adequately protect the Tribe and
Manager, but in no case less than the amounts set forth in this Article, or as
required by a Tribal-State Compact.

                                  Page 18 of 43
<PAGE>   19

         4.2 Workers' Compensation. Manager, acting as agent of the Tribe, shall
maintain adequate workers' compensation insurance in accordance with all
applicable laws, including employer's liability insurance, in the amounts agreed
to by the Manager and Tribe, or as required by the Tribal-State Compact.

         4.3 Commercial General Liability. Manager, acting as agent of the
Tribe, shall maintain commercial general liability insurance covering operations
of the Enterprise, including blanket contractual liability coverage, broad form
property liability coverage, and personal injury coverage in the amount of
$1,000,000 per person/$3,000,000 per occurrence for bodily injury and $1,000,000
per person/$3,000,000 per occurrence for property damage, or as required by a
Tribal-State Compact or the Gaming Commission.

         4.4 Automobile. Manager, acting as agent of the Tribe, shall maintain
comprehensive automobile liability insurance covering operations of the
Enterprise, including all owned, hired and non-owned automobiles, trucks, buses,
trailers, motorcycles or other equipment licensed for highway use with limits
and coverage approved by the Manager and Tribe.

         4.5 Tribe and Manager to be Insured. Insurance set forth in Sections
4.3 and 4.4 hereof shall name the Tribe and Manager as insureds, and such
policies shall be endorsed to prohibit the insurer from raising tribal sovereign
immunity as a defense to the payment of claim by the insurer.

         4.6 Property Insurance. Manager shall also, acting a agent for the
Tribe, procure replacement value all-risk casualty and extended hazard insurance
in appropriate coverage amounts which shall insure the Facility and any
fixtures, improvements and contents located therein against lost or damage by
fire, theft and vandalism. Such casualty insurance policy or policies shall name
the Tribe and Manager, and the Facility and Transition Loan lenders as insureds.
All such casualty insurance proceeds shall be applied to the immediate
replacement of the applicable Facility part or fixture, improvements or contents
therein unless the parties agree otherwise. Subject to the terms of Sections 6.4
and 6.6 hereof, 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, provided however that such excess proceeds
(except business interruption insurance proceeds) shall be excluded from Net
Total Revenues for purposes of calculating the management compensation of
Manager under Section 5.5(b) hereof.

         4.7 Fidelity Bond. Manager, acting as agent of the Tribe, shall
maintain fidelity bonds on Enterprise employees and in such amounts as Manager
and the Tribe shall deem reasonable.

         4.8 Unemployment Insurance. Manager, acting as agent for the Tribe,
shall maintain adequate unemployment compensation/disability insurance with
respect to the Enterprise employees in compliance with a Tribal-State Compact.

                                  Page 19 of 43
<PAGE>   20

         4.9 Evidence of Insurance. Prior to the opening of the Facility to the
public and commencing operations of the Enterprise, and from time to time as
reasonably requested by the Tribe, Manager shall supply to the Tribe and any
necessary Governmental Authorities copies of the insurance policies applicable
to the Facility or Enterprise operations as required by this Article.

         4.10 Insurance Proceeds. Subject to the terms of Sections 6.4 and 6.6
hereof, any insurance proceeds received with respect to the Enterprise, except
as provided in Section 4.6 hereof, shall be deposited into the Dominion Account
and disbursed in accordance with the same terms and provisions applicable to
Gross Total Revenues, provided, however, that if there is any insurance recovery
for a claim related to the operation of the Enterprise for which either the
Tribe or Manager has previously paid from its own separate funds, then, to the
extent of amounts paid by either of such parties, the insurance proceeds will be
paid over to them and the balance shall be deposited into the Dominion Account
as above.

                                    ARTICLE 5
                     BUDGETS, COMPENSATION AND REIMBURSEMENT

         5.1 Projections and Budgets.

         (a) The parties shall use their best efforts to project expected
revenues and expenses for the first three (3) years of operation of the
Enterprise, reflecting possible alternative scopes of the Project and its stages
of development, and shall reasonably cooperate in prompt mutual choice of the
first stage for development of the Project.

         (b) Manager shall prepare a budget for the Initial Costs of Operation
and submit such budget to the Tribe for approval by the Tribal Council within
one hundred twenty (120) days of execution of this Management Agreement. Manager
shall also prepare an initial operating budget for the first Fiscal Year and
submit the same to the Tribe for approval by the Tribal Council at least ninety
(90) days prior to any Commencement Date. Annual operating budgets shall be
submitted by Manager to the Tribe thereafter by no later than thirty (30) days
prior to the commencement of the Fiscal Year. The proposed initial operating
budget and each subsequent annual operating budget shall be subject to approval
or disapproval within thirty (30) days of submission to the Tribe, such approval
not to be unreasonably withheld. The Tribal Council may approve or disapprove of
any item on such proposed budget. The parties recognize that mutually agreeable
adjustments may be made to previously approved operating budgets from time to
time during any Fiscal Year, to reflect the impact of unforeseen circumstances,
financial constraints, or other events. Manager agrees to keep the Tribal
Council informed regarding any items of revenue or expense that are reasonably
anticipated to cause a material change to the operating budget previously
approved by the Tribal Council. Manager shall operate the Enterprise and make
expenditures in connection therewith in accordance with such approved operating
budget. In the event the Tribal Council and Manager are unable to resolve any
disputed portions of the proposed operating budget before commencement of the
Fiscal Year, the undisputed portions of the operating budget shall be deemed
adopted and approved, and those line items in dispute shall be determined by
increasing the preceding Fiscal Year's actual expense for the corresponding line
items by an

                                  Page 20 of 43
<PAGE>   21

amount determined by Manager which does not exceed the increase in the Consumer
Price Index for All Urban Consumers published by the U.S. Bureau of Labor
Statistics, U.S. City Average, all items (1997-98=100), or any successor or
replacement index thereto, for the Fiscal Year prior to the Fiscal Year with
respect to which adjustment to the line item(s) is being calculated. The
resulting adjusted operating budget shall be deemed to be in effect for that
Fiscal Year until such time as the Tribal Council and Manager have resolved the
disputed items.

         (c) Manager shall prepare an annual capital expenditure budget and
submit such budget to the Tribe for approval by the Tribal Council at least
ninety (90) days prior to the Commencement Date. Annual capital expenditure
budgets shall be submitted by Manager to the Tribe thereafter by no later than
thirty (30) days prior to the commencement of each succeeding Fiscal Year. The
proposed capital expenditure budgets shall be subject to approval or disapproval
within thirty (30) days of submission to the Tribe for approval, such approval
not to be unreasonably withheld. The Tribal Council may approve or disapprove of
any item on such proposed budget. The parties recognize that mutually agreeable
adjustments may be made to previously approved capital expenditure budgets from
time to time during any budget year, to reflect the impact of unforeseen
circumstances, financial constraints, or other events. Manager agrees to keep
the Tribal Council informed and obtain Tribe's approval regarding any projects
or expenditures that are reasonably anticipated to cause a material change to
the capital expenditure budget previously approved by the Tribal Council.
Manager shall make capital expenditures in accordance with such approved capital
expenditure budget.

         5.2 Initial Costs of Operation. The budget for the Enterprise's Initial
Costs of Operation shall contain amounts approved by Manager and the Tribe,
which amounts shall be included as pre-opening costs and not as Costs of Gaming
Operations or Costs of Incidental Operations.

         5.3 Minimum Guaranteed Monthly Payments.

         (a) During the term of this Management Agreement, provided that the
Commencement Date has occurred, the Enterprise shall, subject to the provisions
of Section 5.3(b) below, pay the Tribe One Million Dollars ($1,000,000) per
month on a cumulative Fiscal Year basis (the "Minimum Guaranteed Monthly
Payment"), beginning on the Commencement Date and continuing for the remainder
of the term of the Management Agreement. The Minimum Guaranteed Monthly Payment
shall be payable to the Tribe in arrears on the twentieth (20th) day of each
calendar month following the month in which the Commencement Date occurs, which
payment shall have priority over the Operating Note, Facility Loan or Transition
Loan repayment and payment of Manager's compensation. If the Commencement Date
is a date other than the first day of a calendar month, the first payment will
be prorated from the Commencement Date to the end of the month. The Minimum
Guaranteed Monthly Payment shall be prorated if gaming is conducted at the
Facility for any other partial months.

         (b) Minimum Guaranteed Monthly Payments shall be charged against the
Tribe's monthly distributable share of Net Total Revenues under Section 5.5
hereof; provided, however, that if the Net Total Revenues in a given month are
less than $1,000,000, Manager shall

                                  Page 21 of 43
<PAGE>   22

advance the funds necessary to compensate for the deficiency from its own funds
(the "Minimum Guaranteed Payment Advances", which advances shall not accrue
interest but shall be evidenced by an Operating Note substantially in the form
attached hereto as Exhibit F), and provided further that the Minimum Guaranteed
Monthly Payments shall be reduced to $100,000 per month for the remaining months
in a Fiscal Year after the Tribe has received in such Fiscal Year Total Net
Revenue distributions of $12,000,000. Manager shall be entitled to recoup any
Minimum Guaranteed Payment Advances made under this subsection from the Net
Total Revenues of the Enterprise in succeeding months during the term hereof, as
provided in Section 5.5 hereof (and any amounts outstanding on account of
Minimum Guaranteed Payment Advances at the end of the term of this Management
Agreement shall be immediately due and payable by the Tribe). In no event shall
this recoupment payment for Minimum Guaranteed Payment Advances result in the
Tribe receiving less than its Minimum Guaranteed Monthly Payment in any month,
and in no event shall Manager be allowed or entitled to interest on any Minimum
Guaranteed Payment Advances. However, no Minimum Guaranteed Monthly Payments
shall be required with respect to any months (or portions thereof) that Class
III Gaming is suspended or terminated at the Facility, provided that the reason
or cause of such suspension or termination is beyond the reasonable control of
Manager. Further, no Minimum Guaranteed Monthly Payments shall accrue subsequent
to termination of this Management Agreement.

         (c) Any obligations owing by the Tribe under the Operating Note shall
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, repayment of the Operating Note obligations shall have
first priority on any Net Gaming and Net Incidental Revenues generated by the
Enterprise. The Tribe agrees to grant to Manager 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
Management Agreement attached hereto as Exhibit A), on any Net Gaming and Net
Incidental Revenues of the Enterprise in order to secure repayment of the
Operating Note, and such Operating Note shall also be secured on a first
priority and perfected basis by any Furnishings and Equipment financed by
proceeds of the Facility Loan and 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 Manager, which consent will not be
unreasonably withheld; except that the Tribe shall have the right without the
consent of Manager to grant security interests in the Enterprise's revenues
which are subordinate to Manager's, interests under this Management Agreement
and all related Transaction Documents pursuant to a subordination agreement in
form and substance acceptable to Manager. The Tribe agrees to enter into a
limited, transactional waiver of sovereign immunity and consent to jurisdiction
and arbitration as to Manager and in connection with the Operating Note, as
provided in the Resolution of Limited Waiver.

         5.4 Daily and Monthly Statements. Manager shall furnish to the Tribe's
designated representative financial statements identifying for each day the
Gross Gaming Revenues attributable to the Enterprise's Class III Gaming on each
day that such reports are normally available. Within fifteen (15) days after the
end of each calendar month, Manager shall provide verifiable financial

                                  Page 22 of 43
<PAGE>   23

statements in accordance with GAAP to the Tribe and the Gaming Commission
covering the preceding month's operations of the Enterprise, including operating
statements, balance sheets, income statements and statements reflecting the
amounts computed to be distributed in accordance with Section 5.5 hereof.

         5.5 Distribution of Net Total Revenues.

         (a) All Net Total Revenues shall be disbursed on a monthly basis as set
forth below, paid on the twentieth day of each calendar month for the preceding
month. Such Net Total Revenues shall be disbursed from the Enterprise Bank
Account(s) to the extent available for payment of the following accounts in the
following order of priority:

                  (i) The Minimum Guaranteed Monthly Payment described in
         Section 5.3 hereof;

                  (ii) All outstanding Minimum Guaranteed Payment Advances and
         Working Capital Advances (and accrued interest thereon) or any other
         amounts owing to Manager under the Operating Note;

                  (iii) Current principal, interest and any other payments due
         on Facility Loan;

                  (iv) Current principal, interest and any other payments due on
         the Transition Loan;

                  (v) Management compensation due Manager under Section 5.5(b)
         below; provide that if the distribution under this subsection in any
         month is insufficient to fund such payment in full, the unpaid amount
         shall be deferred and paid under subsection (vi) below;

                  (vi) Any amounts deferred (including interest on any deferred
         management compensation which interest shall accrue at the rate of the
         prime interest rate of Chase Manhattan Bank, N.A. (or any successor
         bank) plus two percent (2%) from the date the management compensation
         is deferred) under subsections (ii), (iii), (iv) and (v) above;

                  (vii) Any monthly capital replacement or other reserve
         contributions which have been created with the written approval of the
         Manager and the Tribe;

                  (viii) Any indemnification or other obligations then owing by
         the Tribe to Manager under any Transaction Document and not paid as
         Costs of Gaming Operations or Costs of Incidental Operations (provided
         Manager has

                                  Page 23 of 43
<PAGE>   24

         provided written notice to the Tribe that above amounts are owed under
         the Transaction Documents, and the Tribe has not disputed the same or
         such amounts have been determined to be owing through an arbitration
         proceeding under Article 10 hereof); and

                  (ix) All remaining Net Total Revenues shall be disbursed to
         the Tribe at the same time the Management compensation is paid, subject
         to the rights of the Manager under the Dominion Account Agreement upon
         the occurrence of a Material Breach by the Tribe.

         (b) As compensation for Manager's services, Manager shall receive
thirty-five percent (35%) of Net Total Revenues for the prior calendar month,
for so long as this Management Agreement shall remain in effect during the term
hereof, as provided in this Management Agreement. Any amounts owing to Manager
hereunder shall be Limited Recourse obligations of the Tribe and shall be
subject to the security provisions described in Section 5.3(c) hereof, including
the Dominion Account Agreement and Security Agreement.

         (c) Manager, on behalf of the Enterprise, is responsible for making the
Net Total Revenues disbursements to the appropriate party.

         5.6 Annual Audit. With respect to each Fiscal Year, Manager, on behalf
of the Enterprise, shall cause an audit to be conducted by an independent
certified public accountant from a Big Five accounting firm with more than five
(5) years experience in audits of gaming enterprise operations selected and
approved by the Tribe, and on or before one hundred twenty (120) days after the
end of such year, such accounting firm shall issue a report with financial
statements in accordance with GAAP with respect to the preceding Fiscal Year (or
portion of the year in the case of the first year) operations of the Enterprise,
including operating statements, balance sheets, income statements and statements
reflecting the amounts computed to be distributed in accordance with Section 5.5
hereof, such report to be approved at an annual meeting to be held at a location
mutually agreed upon by the parties. In addition, upon termination of this
Management Agreement in accordance with its terms, such accounting firm shall
conduct an audit, and on or before ninety (90) days after the termination date,
shall issue a report setting forth the same information as is required in the
annual report, in each case with respect to the portion of the Fiscal Year
ending on the termination date. If the Net Total Revenues or other amounts paid
to the Tribe or Manager in accordance with Section 5.5 (b) above for relevant
period are different from the amount which should have been paid to such party
based on the report prepared by the accounting firm and based upon the
provisions of this Management Agreement, then to the extent either party
received an overpayment, it shall repay and deposit the amount of such
overpayment into the bank account referenced in Section 2.8 (a) hereof within
twenty-five (25) days of the receipt by such party of the accountant's report,
and to the extent either party received an underpayment, it shall receive a
distribution from the bank account referenced in Section 2.8 (a) hereof of the
amount of such underpayment within ten (10) days of the receipt by such party of
the accountant's report. Manager may make adjustment to future payments to
correct a discrepancy if required distributions are not made.

                                  Page 24 of 43
<PAGE>   25

         5.7 Advances for Working Capital. Where amounts in bank accounts
established pursuant to Section 2.8 hereof are insufficient to meet Costs of
Gaming Operation or Costs of Incidental Operation, then after the first Fiscal
Year, Tribe and Manager shall advance monies to the Enterprise sufficient to
meet Costs of Gaming Operation and Costs of Incidental Operation on a prorated
basis equal to their percentage of Net Total Revenues distribution under Section
5.5(b) hereof. During the first Fiscal Year Manager shall advance monies to the
Enterprise sufficient to meet Costs of Gaming Operations and Costs of Incidental
Operations. If Manager makes any advances hereunder ("Working Capital Advances",
which advances shall be evidenced by an Operating Note substantially in the form
attached hereto as Exhibit F and shall accrue interest rate of the prime
interest rate of Chase Manhattan Bank, N.A. (or any successor bank) plus two
percent (2%) from the date the advances are made), Manager shall be repaid as
provided in Section 5.5 hereof (and any amounts outstanding on account of
Working Capital Advances at the end of the term of this Management Agreement
shall be immediately due and payable by the Tribe). Any Working Capital Advances
shall be Limited Recourse obligations of the Tribe and shall be subject to the
security provisions described in Section 5.3(c) hereof, including the Dominion
Account Agreement and Security Agreement. Any advances made by the Tribe
hereunder shall accrue interest at the same rate as applies to the Transition
Loan as described in Section 2.3(c) hereof.

         5.8 Development and Construction Cost Recoupment. The maximum dollar
amount for recoupment of development and construction costs for the Facility and
Enterprise shall be the total amount of the sums advanced by the Lender or
Developer to the Tribe pursuant to the Transition Loan under Section 2.3 and the
Facility Loan under Section 2.5 of the Development Agreement.

                                   ARTICLE 6
                          TERMINATION/MATERIAL BREACH

         6.1 Termination for Cause. Either party may terminate this Managemnt
Agreement if the other party commits or allows to be committed a Material Breach
(as hereinafter defined) of this Memorandum of Agreement and fails to cure such
breach within sixty (60) calendar days 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 Memorandum of 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, and provided further that Manager shall not be entitled to an
extension of such sixty-day cure period in the event of theft, embezzlement or
willful misconduct with respect to the handling of money or other property.
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
Memorandum of Agreement, a "Material Breach" is any of the following
circumstances: (i) failure of Manager to provide the Tribe with the monthly
Minimum Guaranteed Monthly Payments pursuant to Section

                                  Page 25 of 43
<PAGE>   26

5.3 hereof, unless suspended pursuant to the terms of Sections 5.3(b) or 6.4(b)
hereof, (ii) material failure of either party to perform a material obligation
hereunder, or under the Development Agreement, or any document or agreement
related hereto or thereto for reasons not excused under Section 9.6 hereof
(Force Majeure), (iii) if any of Manager's employees are found guilty of theft,
embezzlement or crime of moral turpitude by a final judgment of a court of
competent jurisdiction and if, after knowledge of such final judgment, Manager
does not remove such employee from connection with Class III Gaming operations
of the Enterprise, (iv) default under the Facility Note, the Interim Promissory
Note, the Operating Note, or any document or agreement related hereto or
thereto, or (v) any representation or warranty made pursuant to Section 9.11 or
9.12 hereof proves to be knowingly false or erroneous in any material way when
made. 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.

         6.2 Mutual Consent. This Management Agreement may be terminated at any
time upon the mutual written consent and approval of the parties.

         6.3 Involuntary Termination Due to Changes in Law or Tribal-State
Compact. The parties hereby agree to use their best efforts to conduct Class III
Gaming activities in accordance with this Management Agreement and to ensure
that such activities and this Management Agreement conform to and comply with
all applicable laws and a Tribal-State Compact. 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 Management Agreement that would
materially impair the rights of Manager under this Management Agreement. In the
event of any change in state or federal laws that results in a final
determination by the Secretary, the National Indian Gaming Commission, or a
court of competent jurisdiction that this Management Agreement is unlawful, the
Tribe and Manager shall use their respective good faith best efforts to amend
this Management 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 Management Agreement shall be
automatically suspended effective upon the date that performance of this
Management Agreement becomes unlawful by such final determination, and either
party shall have the right to terminate such suspended Management Agreement
(except the Notes and Security Provisions, as defined in Section 6.4 (b)) upon
written notice to the other party.

         6.4 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 Manager may suspend its
obligation to make any Minimum Guaranteed Payment Advances, until such time as
the default has been cured. Upon the occurrence of any Material Breach, the
Manager may suspend its obligation to make any Working Capital Advances until
such time as the Material Breach has been cured.

                                  Page 26 of 43
<PAGE>   27

         (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 Manager'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 Operating Note (if 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) Manager 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 Gaming or Incidental Operations) except as to
the security interests and liens recited above or as may be established
otherwise by a proceeding pursuant to Article 10 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 Operating Note (if not yet satisfied). Any and all
obligations and provisions contained in this Management Agreement concerning
indemnity obligations or repayment of the Operating Note and the security
therefor (collectively, the "Notes and Security Provisions"), shall survive
termination this Management Agreement. In the event of termination for any
reason, and subject to its rights under the dispute resolution provisions under
Article 10 herein, Manager shall cooperate with the Tribe in the orderly
transition of management of the Enterprise, and shall provide the Tribe or its
designee with any and all books, records, documents, contracts, and all other
information relating to the Facility or the Enterprise, whether such information
shall be in electronic, hard copy or any other form. In addition to any other
survival provisions set forth in this Management Agreement, upon the occurrence
of any termination of this Management Agreement, the terms and provisions of
Articles 6 and 7 and Sections 9.1, 9.3, 9.4, 9.5, 9.6, 9.7, 9.8, 9.9, 9.10,
9.11, 9.12, 9.13, 9.14, 9.15, 9.16, 9.17, 9.18, 9.19, 9.20, 9.22, 9.24 and 10.3
hereof shall survive such termination. If at the time of termination the Tribe's
obligations under the Operating 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 Manager 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, 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) hereof or otherwise; and the Tribe shall keep the Facility and Enterprise
and all related assets insured for the coverages and amounts required by this
Management Agreement and name Manager as an additional insured, loss payee and
mortgagee, as applicable and provide evidence thereof upon request until all
amounts owing to Manager 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

                                  Page 27 of 43
<PAGE>   28

in accordance with the same terms and provisions applicable to Gross Total
Revenues, 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) hereof or otherwise. As used
herein and in Section 6.6(d) hereof, 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 applicable to the operations in question.

         (c) Subject to the provisions of Section 6.1, in the event of
termination of this Management Agreement for any reason prior to the full
repayment to Manager of any amounts owed to it by the Tribe under the
Transaction Documents, including without limitation, the Operating 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 continue to operate
under Section 6.4(b) exists. The Tribe agrees to keep full and accurate
financial records of operations of the Enterprise by such Replacement and to
allow Manager to audit such records at reasonable times prior to full repayment
to Manager of any amounts owed to it by the Tribe under the Transaction
Documents, including without limitation, the Operating Note, and that Tribe's
compliance with this paragraph shall not preclude the Manager from exercising
any of its other rights and remedies hereunder or any document or agreement
related hereto, including, without limitation, rights under the Operating Note
and the Dominion Account Agreement.

         6.5 Notice of Termination. In the event of a proposed termination
pursuant to this Article, the Tribe shall provide notice of the termination to
the Secretary or other appropriate Governmental Authorities within ten (10) days
after the termination.

         6.6 Cessation of Class III Gaming at the Facility.

         (a) If, during the term of this Management Agreement, Class III Gaming
cannot be lawfully conducted at the Facility by reason of the application of any
legislation or court or administrative agency order or decree adopted or issued
by a governmental entity having the authority to do so, Manager shall, within 60
days after such legislation, order or decree becomes effective, elect to:

                  (i) retain Manager's interest in this Management Agreement and
         suspend Gaming operations until such date, if any, during the term of
         this Management Agreement on which Class III Gaming at the Facility
         becomes lawful (during which period the term of the Management
         Agreement will be tolled until Class III Gaming at the Facility becomes
         lawful or the parties mutually agreed otherwise); or

                  (ii) retain Manager's interest in this Management Agreement,
         suspend Class III Gaming operations until such date, if any, during the
         term of this Management Agreement on which Class III Gaming at the
         Facility becomes lawful

                                  Page 28 of 43
<PAGE>   29

         (during which period the term of the Management Agreement will be
         tolled until Class III Gaming at the Facility becomes lawful or the
         parties mutually agreed otherwise), and with the prior approval of the
         Tribe, which approval shall not be unreasonably withheld, use the
         Facility for any other lawful purpose pursuant to a use agreement
         containing terms reasonably acceptable to Manager and the Tribe; or

                  (iii) terminate Class III Gaming operations and terminate this
         Management Agreement.

         Manager shall give the Tribe written notice of Manager's election
within such 60-day period.

         (b) If Manager elects to retain its interest in this Management
Agreement under Section 6.6 (a)(i) or (ii) above, Manager shall have the right
(but not the obligation) to commence Class III Gaming operations within sixty
(60) days after the date on which Class III Gaming becomes lawful. Manager may
exercise such right by giving the Tribe written notice of such exercise within
thirty (30) days after the date on which Class III Gaming becomes lawful. Any
reasonable payment to any third party made during the period during which Class
III Gaming is unlawful to preserve or eliminate any leasehold or purchase
contract rights of the Facility shall be paid by Manager from Enterprise funds
after mutual approval of the Tribe and Manager as Costs of Gaming Operation or
Cost of Incidental Operations, as applicable, and reimbursed after Class III
Gaming is recommenced.

         (c) If, during the term of this Management Agreement, the Facility is
damaged by casualty or other occurrence to the extent, as reasonably determined
by Manager, that Class III Gaming cannot be conducted at the Facility, Manager
shall elect to:

                  (i) retain Manager's interest in this Management Agreement
         pending repair or reconstruction of the Facility, suspend Class III
         Gaming operations pending the repair or reconstruction of the Facility
         (during which period the term of the Management Agreement will be
         tolled until Class III Gaming can be conducted at the Facility or the
         parties mutually agreed otherwise), and arrange for such repair or
         reconstruction in the manner described in this Section 6.6; or

                  (ii) terminate this Management Agreement, such termination to
         be effective on the sixtieth (60th) day after written notice of
         termination shall have been delivered to the Tribe.

         Manager shall give the Tribe and Tribe written notice of Manager's
election under subsection within sixty (60) days after such casualty or
occurrence.

         (d) If Manager elects to retain its interest in this Management
Agreement under Section 6.6(c)(i) above, the Tribe shall be obligated to make
such repairs or reconstruction as the Manager shall reasonably determine should
be made to the Facility (to the extent that insurance

                                  Page 29 of 43
<PAGE>   30

proceeds are available or as otherwise mutually agreed by the Tribe and
Manager), and Manager shall promptly verify the amount of insurance proceeds
available to pay the cost of repair or reconstruction. If the Manager elects to
retain its interests under Section 6.6(c)(i) above, Manager is hereby granted
the authority to submit, adjust and settle, on behalf of the Tribe, all
insurance claims associated with the casualty or occurrence; provided, however,
that Manager shall obtain the Tribe's prior written consent (which consent shall
not be unreasonably withheld) to any settlement. Manager shall provide copies of
all settlement documents to the Tribe. If the Manager does not elect to retain
its interest under Section 6.6(c)(i) above and if the Tribe's obligations under
the Operating Note are not yet satisfied, then: (a) the Tribe shall have the
authority to submit, adjust and settle all insurance claims provided that any
final settlement shall be with the prior written consent of Manager which will
not be unreasonably withheld, and the Tribe shall provide copies of all
settlement documents to the Manager; (b) to the extent economically feasible (as
defined in Section 6.4(b), 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 Manager
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, 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) hereof or
otherwise; (c) the Tribe shall repair and reconstruct such operations that were
damaged and are to be continued; and (d) 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, 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) hereof or otherwise.

         (e) If Manager elects to terminate this Management Agreement under this
Section 6.6, the provisions of Section 6.4 above shall apply.

         6.7 Renewal Option.

         The parties by mutual agreement may decide to renew or extend the
Management Agreement of this Management Agreement. Any such renewal or extension
shall only become effective upon approval by the NIGC and appropriate licensing
by the Gaming Commission.

         6.8 Buyout Option.

         Following forty-eight (48) months of continuous operation of Class III
Gaming at the Enterprise, the Tribe shall have the option to buy out the
Manager's remaining rights under this Management Agreement for an amount equal
to the present value, using a discount rate of two percent above the prime
interest rate of Chase Manhattan Bank, N.A. or any successor bank, of the
Remaining Management Fees (as hereinafter defined). The term "Remaining
Management Fees"

                                  Page 30 of 43
<PAGE>   31

shall mean the total monthly compensation which would have been payable to
Manager under Section 5.5(b) hereof for the balance of the term of this
Agreement, assuming that such monthly compensation would be the average of the
compensation paid to Manager during the most recent operating twelve months
prior to such buy out.

         6.9 Cumulative Remedies.

         All rights or remedies of either the Tribe or Manager under this
Management 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 7
                              RELEASE AND INDEMNITY

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

         7.2 Indemnity from Manager. Notwithstanding Section 7.1, Manager 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 Manager, its officers and directors in connection with
Manager's performance of this Management Agreement, and no such damages, losses
or expenses shall be paid from the bank accounts established pursuant to Section
2.8 (a) hereof, nor shall such losses or expenses be considered Costs of Gaming
Operations or Costs of Incidental Operations.

         7.3 Indemnity from Tribe. Notwithstanding Section 7.1, Tribe shall upon
request indemnify and hold Manager, 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
Management Agreement, and no such damages, losses or expenses shall be
considered Costs of Gaming Operations or Costs of Incidental Operations.

                                  Page 31 of 43
<PAGE>   32

         7.4 Indemnity Against Unauthorized Debt and Liabilities. The parties
expressly agree that neither this Management 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.
Manager 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 Manager that Manager is not
authorized to undertake as agent for the Tribe pursuant to the terms of this
Management Agreement. The Tribe likewise agrees to indemnify and hold Manager
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 Gaming Operations or Costs of Incidental Operations pursuant to this
Management Agreement.

         7.5 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 to the Development Agreement as
Exhibit E.

                                    ARTICLE 8
                               PARTIES IN INTEREST

         8.1 Payment of Fees and Submission of Information for Background
Investigations.

         Upon execution of this Management Agreement, Manager shall pay the fees
required by federal and Tribe regulations for background investigations for the
"Parties in Interest" as defined herein, and it shall submit the information
required by this Section in duplicate to the National Indian Gaming Commission
and the Gaming Commission and update such information at any time that changes
occur in prior submissions so as to allow complete background investigations. In
no event shall the cost of background investigations under this Section relating
to Gaming Commission regulations exceed $25,000.

         (a) As used in this Section 8.1, the term, "Parties in Interest"
includes any person or entity with a financial interest in, or having management
responsibility for, this Management Agreement or for which background
investigations are required by 25 C.F.R. Part 537, and any amendments thereto.

         (b) Manager shall require sufficient information and identification
from each "Party in Interest" to perform a background investigation for the
purpose of determining the suitability of such persons for employment in a Class
III Gaming operation, including, at a minimum, the information required by the
National Indian Gaming Commission as set forth in 25 C.F.R. Part 537.

         (c) Without limiting the foregoing, Manager shall obtain a current set
of fingerprints on each person for whom background investigations are required
by the Gaming Commission and the National Indian Gaming Commission, using forms
supplied by the National Indian Gaming Commission and/or the Gaming Commission,
which shall be referred to the Federal

                                  Page 32 of 43
<PAGE>   33

Bureau of Investigation (FBI) Fingerprint Identification Division or other law
enforcement agency designated by the Gaming Commission.

         (d) The parties hereby certify that a listing of all "Parties in
Interest" as defined in Section 8.1 (a) above is set forth in Exhibit D hereto.
All such "Parties in Interest", as such listing shall be supplemented from time
to time, shall be required to furnish the information required by this Section
8.1 prior to obtaining such interest. All necessary Governmental Authorities
must approve any change in the "Parties in Interest". Any change of a person
listed in Exhibit D shall not constitute a change in persons with a financial
interest in or management responsibility for a management contract.

         8.2 Removal; Divestiture. Should the Gaming Commission or the National
Indian Gaming Commission, in a final non-appealable decision, find that any
person with a "direct or indirect financial interest" in this Management
Agreement (as defined in 25 C.F.R. ss. 502.17, and any amendments thereto) whose
prior activities, criminal record, if any, or reputation, habits, and
associations pose a threat to the public interest, or the tribal interest, or
the effective regulation of gaming, or create or enhance the dangers of
unsuitable, unfair, or illegal practices and methods and activities in the
conduct of gaming or the carrying on of related business and financial
arrangements, and should either agency notify Manager or the Tribe of such
finding, then Manager shall require such individual to divest his or her
interest in this Management Agreement and remove such person from all
association with operations under this Management Agreement within ten (10)
business days of receipt of such notice. In addition, if any person with "direct
or indirect financial interest" in this Management Agreement (as defined in 25
C.F.R. ss. 502.17, and any amendments thereto) that: (a) has been or is
subsequently convicted of a felony relating to gaming, (b) knowingly or
willfully provided materially false statements to the Tribe, the Gaming
Commission or the National Indian Gaming Commission, or refused to respond to
questions from either of such agencies, or (c) attempts to unduly interfere or
unduly influence for his or her gain or advantage any decision or process of
tribal government relating to Class III Gaming and if Manager becomes aware of
such conflicts or prohibited actions, then Manager shall notify Tribe of such
event and within seventy-two (72) hours cause such person to divest his or her
interest in this Management Agreement.

                                    ARTICLE 9
                                  MISCELLANEOUS

         9.1 Assignment and Subcontractors. The rights and obligations under
this Management Agreement shall not be assigned or subcontracted by any party
without the prior written consent of the other party and without first obtaining
prior approval by the National Indian Gaming Commission or the BIA, if
applicable, and any other necessary regulatory approvals. However, the Tribe
reserves the right to assign its rights and obligations under this Management
Agreement (together with all right, title and interests to the Enterprise assets
and the Development Agreement) to a tribally chartered entity or an IRA section
17 corporation that it wholly owns and controls, and the Manager reserves the
right to assign its rights and obligations under this Management Agreement to a
wholly owned subsidiary provided that the original Manager hereunder, or an

                                  Page 33 of 43
<PAGE>   34

affiliated entity reasonably satisfactory to the Tribe, remains obligated
hereunder by means of a guaranty or other accommodation reasonably satisfactory
to the Tribe, and further provided that Manager shall have received prior
approval from the National Indian Gaming Commission or the BIA, if applicable,
and any other necessary regulatory approvals. 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 or in Section 9.2 below, any attempted
assignment or subcontracting without such consent and approval shall be void.
Approval of any assignment or subcontract to any new party must be preceded by a
complete background investigation of the new party as required by Section 8.1.
Subject to the preceding requirements, this Management Agreement shall be
binding upon and shall inure to the benefit of the parties and their respective
successors and assigns.

         9.2 Change of Control in Ownership Interest. Any Change of Control (as
defined herein) in Manager shall require prior written consent of the Tribe and
be subject to Legal Requirements, or this Management Agreement shall be
terminated. For purposes of this Management Agreement, a "Change of Control"
means the acquisition by any person or affiliated group of persons not presently
members of Manager of beneficial ownership of 51% or more of membership interest
in Manager.

         9.3 Notices. Any notice, consent or any other communication permitted
or required by this Management 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 Manager:         Lakes Nipmuc, LLC
                                    130 Cheshire Lane
                                    Minnetonka, MN 55305
                                    Attention: Timothy J. Cope

                                  Page 34 of 43
<PAGE>   35

         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

                  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 shall be given to the Gaming Commission.

         9.4 Amendments. This Management 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.

         9.5 Counterparts. This Management 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.

         9.6 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 Management
Agreement; provided, however, that the forgoing shall not excuse any obligations
of the Tribe to make monetary payments to the Manager as and when required
hereunder or in any related document or agreement.

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

         9.8 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 Management Agreement.

         9.9 Severability. In the event that any provision of this Management
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 Management Agreement shall be enforced as if the Management 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 ManagmentAgreement
which will comply with the judicial order and maintain the originally
contemplated rights, duties and obligations of the parties hereunder.

                                  Page 35 of 43
<PAGE>   36

         9.10 Sovereign Immunity. Except for the Resolution of Limited Waiver
attached hereto as Exhibit C and incorporated herein by reference, nothing in
this Management 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 9.10
shall survive termination of this Management Agreement, regardless of the reason
for the termination.

         9.11 Representations and Warranties of Manager. The Manager hereby
represents and warrants as follows:

                  (a) This Management Agreement has been duly executed and
         delivered by Manager and, when approved by necessary Governmental
         Authorities as set forth (where applicable), will constitute a valid
         and binding obligation, enforceable against Manager in accordance with
         its terms.

                  (b) The execution and delivery of this Management Agreement,
         the performance by Manager of its obligations hereunder and the
         consummation by Manager of the transactions contemplated hereby will
         not violate any contract or agreement to which Manager 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) Manager has the full legal right, power and authority and
         has taken all action necessary to enter into this Management Agreement,
         to perform its obligations hereunder, and to consummate all other
         transactions contemplated by this Management Agreement.

         9.12 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 Management Agreement and its rights,
         liabilities obligations hereunder and any related document or agreement
         thereto 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 Management Agreement and authorize the
         Tribe to execute and deliver this Management Agreement, the

                                  Page 36 of 43
<PAGE>   37

         Operating Note, Dominion Account Agreement, Security 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 Management Agreement and the
         other Transaction Documents.

                  (c) This Management Agreement, the Operating Note, and the
         other Transaction Documents, when executed and delivered by Tribe and
         approved by necessary Governmental Authorities, including the Tribe,
         will constitute a valid and binding obligation, enforceable against
         Tribe in accordance with their terms.

                  (d) The execution and delivery of this Management Agreement,
         the Operating 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.

         9.13 Governing Law. This Management 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.

         9.14 Entire Agreement. This Management Agreement, including all
exhibits, represents the entire agreement between the parties and supersedes all
prior agreements relating to management of Class III Gaming conducted by the
Tribe at the Facility and the operations of the Enterprise.

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

         9.16 Limitations of Liability.

         Manager expressly agrees that the Tribe's total aggregate liability for
damages for breach of the Management Agreement shall be limited in accordance
with the Resolution of Limited Waiver attached hereto as Exhibit C and
incorporated herein by reference.

         9.17 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 Manager shall be deemed
to constitute approval by the Manager.

                                  Page 37 of 43
<PAGE>   38

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

         9.19 Request for NIGC Approval. The parties specifically request that
the NIGC, or the Secretary where appropriate, approve this Management Agreement
and the other Transaction Documents, if required or declare that such approval
is not required.

         9.20 Non-disclosure. The parties agree not to divulge to third parties
the terms of this Management Agreement or any other proprietary or confidential
information exchanged between the parties pursuant to this Management 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 Management 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 Management Agreement by such entities; provided, however, this
disclosure restriction shall not prohibit Manager making any SEC filings it
deems legally necessary. The parties agree to consult with each other and
cooperate regarding any press releases regarding this Management Agreement and
the relationships described herein.

         9.21 Non-Competition and Right of First Offer. Manager agrees that,
during the term of this Management Agreement and the Development Agreement,
neither Manager, nor any parent entity, subsidiary entity or otherwise
affiliated entity, shall manage or 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
Management Agreement or the Developement Agreement, the Tribe shall first offer
to Manager the right to develop and manage such facility upon the terms and
conditions proposed by the Tribe, with a prompt response by Manager required,
but in no event later than thirty (30) days after written notice from the Tribe.
In the event that Manager 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 Manager, and
(ii) such Class II or Class III Gaming shall not commence operations prior to
the opening of the Facility unless this Management Agreement or the Development
Agreement shall have been terminated. Manager and the Tribe acknowledge that
notwithstanding their mutual intent hereunder to conduct 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 Manager 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.

                                  Page 38 of 43
<PAGE>   39

         9.22 Other Business Opportunities. During the term of this Management
Agreement, or until Manager is repaid in full on the Operating Note, whichever
is later, the Tribe is free to pursue other real estate and development
opportunities; provided it grants to Manager the right of first refusal to
participate with the Tribe upon the terms and conditions proposed by the Tribe,
with a prompt response by Manager required, but in no event later than thirty
(30) days after written notice from the Tribe. In the event that Manager
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 Manager.

         9.23 Use of Trade Marks and Trade Names. To assure that the Tribe can
continue operation of the Facility and Enterprise without disruption in the
event that this Management Agreement is terminated or not renewed, Manager
agrees that, in identifying any portion of the Facility or Enterprise or
services offered within the Facility or Enterprise, Manager shall use only those
trade marks or trade names which are not owned by Manager or by any third party.
Manager agrees that it shall have no ownership interest in, nor shall it use for
its own account or the account of others, any trade name or trade mark,
copyrighted material or other intellectual property relating to the Tribe,
Facility or Enterprise, all of which shall remain the sole property of the
Tribe.

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

                                   ARTICLE 10
                               DISPUTE RESOLUTION

         10.1 Disputes Between the Enterprise and Patrons. Disputes that arise
between the Enterprise and any patron of the Facility shall be resolved in
accordance with the Tribal-State Compact and tribal ordinances, if applicable.

         10.2 Disputes Between the Enterprise and Enterprise Employees. The
Tribe and Manager shall jointly develop an employee dispute resolution policy
and the Manager shall implement and administer the employee dispute resolution
policy after its adoption.

         10.3 Disputes Between the Tribe and the Manager. Disputes between the
Tribe and Developer with respect to this Management Agreement, the Operating
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.

                                  Page 39 of 43
<PAGE>   40

         (b) If the dispute is not resolved to the satisfaction of the parties
within thirty (30) calendar days after the first meeting in Subsection 10.3(a)
above, then any claim, controversy or dispute arising out of or relating to this
Management Agreement, the Operating 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 Management Agreement, the Operating 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 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 11 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 Manager 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 may 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 Management Agreement, the Operating 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

                                  Page 40 of 43
<PAGE>   41

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 Manager, Guarantor, 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 Manager from enforcing the
Operating 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 Manager'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 Manager 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 Manager 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 Management Agreement, arbitration awards made
pursuant to this Article 11 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 11
                                    GUARANTY

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

                         [SIGNATURES ON FOLLOWING PAGE]

                                  Page 41 of 43
<PAGE>   42

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

         IN WITNESS WHEREOF, the parties hereto have executed this Management
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

As to the Management Agreement
Approved pursuant to 25 U.S.C.ss.2711

National Indian Gaming Commission

By:
   -----------------------------
Print Name:
Its Chairman

                                  Page 42 of 43
<PAGE>   43

                                LIST OF EXHIBITS

Exhibit A         Dominion Account Agreement

Exhibit B         Security Agreement

Exhibit C         Resolution of Limited Waiver of Immunity from Suit

Exhibit D         List of Manager's "Parties in Interest"

Exhibit E         Guaranty by Lakes Gaming, Inc.

Exhibit F         Operating Note Form

                                  Page 43 of 43

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