LAKES ENTERTAINMENT INC
BUYOUT AND RELEASE AGREEMENT
<DOCUMENT>
<TYPE>EX-10.68
<SEQUENCE>7
<FILENAME>c75214exv10w68.txt
<DESCRIPTION>BUYOUT AND RELEASE AGREEMENT
<TEXT>
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                                                                   EXHIBIT 10.68

                          BUYOUT AND RELEASE AGREEMENT
                                 (JAMUL PROJECT)

      THIS BUYOUT AND RELEASE AGREEMENT is made and entered into this 30th day
of January, 2003, by and among Kean Argovitz Resorts-Jamul, L.L.C. ("KAR"),
Lakes Kean Argovitz Resorts-California, L.L.C., a Delaware limited liability
company (the "Project Company"), Lakes Entertainment, Inc. f/k/a Lakes Gaming,
Inc. ("Lakes Entertainment"), and Lakes Jamul, Inc. (hereinafter referred to as
"LAJA" and which entity is a wholly owned subsidiary of Lakes Gaming and
Resorts, LLC which is a wholly owned subsidiary of Lakes Entertainment).

                                    RECITALS

WHEREAS, KAR (a limited liability company owned by Kevin M. Kean ("Kean") and
Jerry A. Argovitz ("Argovitz")) previously entered into a Development Agreement,
Management Agreement and related documents dated February 26, 1999 (the
"Development Documents") with the Jamul Indian Village (the "Tribe") related to
the design, construction and management of an Indian gaming facility on its
tribal lands (the "Project");

WHEREAS, pursuant to a letter agreement dated May 7, 1999 (the "Letter
Agreement") between KAR and Lakes Entertainment, such parties agreed to form a
joint venture to design, construct and manage the Project and in connection
therewith executed or caused to be executed each of the documents described
below (collectively with the Letter Agreement, the "Joint Venture Documents"):

      (i)   LAJA and KAR created and are the sole members of the Project Company
            pursuant to that certain Operating Agreement dated May 25, 1999 (the
            "Operating Agreement");

      (ii)  Pursuant to that certain Assignment and Assumption Agreement dated
            May 25, 1999 between LAJA and the Project Company, KAR assigned to
            the Project Company all of KAR's right, title and interest in and to
            the Development Documents;

      (iii) Pursuant to that certain Assignment and Assumption Agreement and
            Consent to Assignment and Assumption dated May 25, 1999, among Lakes
            Entertainment, LAJA and KAR, Lakes Entertainment assigned to LAJA
            all of Lakes Entertainment's right, title and interest in and to the
            Letter Agreement;

      (iv)  Pursuant to that certain Management Agreement dated May 25, 1999
            between LAJA and the Project Company (the "LAJA Management
            Agreement"), the parties agreed that LAJA would provide certain
            management services on behalf of the Project Company with respect to
            the Project;

      (v)   Pursuant to the Letter Agreement and the Operating Agreement, LAJA
            has


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            extended certain loans to the Project Company referred to as the
            "Development Loan" and "Equity Advance" which are evidenced by a
            certain Promissory Note dated May 25, 1999 made payable by the
            Project Company to LAJA in (the "Project Company Note"), which Note
            is secured by that certain Security Agreement dated May 25, 1999
            executed by the Project Company in favor of LAJA, pursuant to which
            the Project Company granted LAJA a security interest in all of its
            assets; such Note is also sometimes referred to as the "Interim
            Promissory Note"; and

      (vi)  LAJA extended a $970,000 loan to KAR the repayment of which is
            evidenced by certain Promissory Note dated May 25, 1999 made payable
            by KAR to LAJA in the original principal amount of $970,000 (the
            "KAR Note"), which Note is secured by that certain Pledge Agreement
            dated May 25, 1999 executed by KAR in favor of LAJA (the "KAR Pledge
            Agreement") pursuant to which KAR granted LAJA a security interest
            in all of KAR's membership interest and related rights in and to the
            Project Company;

WHEREAS, to achieve regulatory approvals in a timely manner for the Amended
Management Agreement and related documents and agreements, if necessary, related
to the Project from the National Indian Gaming Commission (the "NIGC") and other
applicable regulatory authorities (the "Regulatory Approvals"), KAR has agreed
to enter into this Agreement;

WHEREAS, KAR believes that its execution of this Agreement is in the best
interest of the Tribe to preserve and protect the Project, from which all tribal
members should benefit, and in order to move the Projects forward in a timely
manner without delay, the parties hereto desire to enter into this Agreement;
and

WHEREAS, Kean and Argovitz entered into a Settlement Agreement dated October 22,
2002 that resolved the disputes and litigation between them in order to minimize
the costs of litigation and the risk of economic loss to each of them
individually and to KAR (the "Argovitz Settlement Agreement");

WHEREAS, Lakes Entertainment and LAJA, to the best of their knowledge and based
upon conversations with staff of the NIGC, believe this Agreement will be
acceptable to the NIGC and the NIGC will take no affirmative action to nullify
or otherwise disrupt this Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties agree as follows:


1.    BUYOUT. For and in consideration of $1.00, KAR hereby absolutely sells and
conveys to LAJA all of KAR right, title and interest in the Project Company and
each of the Joint Venture Documents (the "Transferred Rights"). To induce and in
consideration for each of KAR, the Project Company, Lakes Entertainment and LAJA
executing this Agreement, the Project Company, LAJA and Lakes Entertainment will
contemporaneously with the execution of this




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Agreement be entering into separate agreements with Argovitz to provide him
certain rights of repurchase in and to the Project Company or in lieu thereof,
the payment of certain sale proceeds, and with Kean to, among other things,
provide certain loans, each as more specifically set forth therein
(collectively, the "Kean-Argovitz Agreements"). In addition KAR acknowledges,
agrees and consents that LAJA intends to cause the Development Documents to be
transferred from the Project Company to LAJA and upon the effective date of such
transfer, LAJA shall be deemed to be the "Project Company" for all purposes of
this Agreement and shall be deemed to have succeeded to and assumed all of the
Project Company's rights and obligations hereunder.

2.    KAR NOTE. LAJA hereby agrees to release KAR from its obligations under the
KAR Note and KAR Security Agreement (but is not otherwise satisfying or
canceling such obligations), which obligations may upon certain events be wholly
or partially assumed by Kean and/or Argovitz as more specifically provided under
their separate Kean-Argovitz Agreements. As of September 30, 2002, the parties
acknowledge that the outstanding principal and interest balances of the KAR Note
was $970,000 and $250,356respectively and that no payments have been made on
such Note since September 30, 2002.

3.    RELEASE. KAR hereby releases the Project Company, Lakes Entertainment,
Lakes Resorts, LAJA, all of their subsidiaries, and each of their directors,
officers, shareholders, employees, agents and attorneys (collectively, the
"Lakes Related Parties"), and the Lakes Related Parties hereby release KAR from
any claims or potential claims they have or may have against each other
concerning the Project, the Project Company, the Joint Venture Documents or any
of the Development Documents for acts or omissions occurring on or prior to the
effective date of this Agreement, but specifically excluding any claims arising
from any misrepresentation, act or omission or failure to perform any obligation
under this Agreement and any claims under Section 4 hereof.

4.    INDEMNIFICATION. KAR agrees to indemnify and hold harmless each of the
Lakes Related Parties from any and all loss, costs and expenses (including,
without limitation, all legal fees and costs) resulting from any
misrepresentation of KAR under this Agreement and any claims or potential claims
from third parties based on any prior dealings between such third parties and
any of KAR, Kean or Argovitz concerning the Project, the Project Company and the
subject matter of the Development Documents provided that the Project Company
shall remain responsible to perform its express obligations set forth in the
Development Documents. Each of the Lakes Related Parties agrees to indemnify and
hold harmless KAR from any and all loss, costs and expenses (including, without
limitation, all legal fees and costs) resulting from any misrepresentation made
by Lakes Entertainment or LAJA under this Agreement and any claims or potential
claims from third parties (excluding the rights and obligations set forth in the
Management Agreement dated February 26, 1999 with the Tribe and any agreement
expressly referred to therein) based on any prior dealings between such third
parties and any of the Lakes Related Parties concerning the Project, the Project
Company and the subject matter of the Development Documents which were not
permitted dealings thereunder or under the Joint Venture Documents.



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5.    NONCOMPETE/CONFIDENTIALITY. KAR agrees that (a) it shall and shall cause
each of its officers, directors, shareholders, equity owners, family members of
any of the foregoing and any entity in which it or any of the foregoing persons
shall directly or indirectly own equity interests (collectively, the "Noncompete
Parties"), to comply with each of the noncompetition and confidentiality
provisions set forth in the Development Documents to the same extent as if any
of such Noncompete Parties was the Project Company thereunder, each of which
provisions are hereby incorporated by reference, and (b) in addition to the
foregoing, that it shall not and shall cause each of the other Noncompete
Parties to not directly or indirectly solicit or enter into any consulting,
brokerage, management, financing or other similar agreement with any Indian
tribe with respect to its gaming enterprise or with any party seeking such an
agreement with such an Indian tribe or other gaming enterprise, related to a
gaming enterprise located or to be located (i) within any area south of the city
limits of Escondido, California, and/or (ii) within a fifty (50) mile radius of
each of the Jamul Tribe's gaming enterprise. The Project Company acknowledges
and agrees that neither Argovitz nor Kean have the ability to control what the
other individual may do in the future.

6.    REPRESENTATIONS AND WARRANTIES. KAR to the best of its knowledge hereby
represents and warrants that (a) KAR has transferred to the Project Company all
rights and assets held by KAR with respect to the Project, the Original
Development Documents and the Development Documents, (b) except for the Joint
Venture Documents, the Development Agreement and Management Agreement entered
into with the Tribe and any agreement expressly referred to therein and any
agreements referenced on Schedule 6(c) hereof, KAR has not entered into any
agreements or understandings with any party with respect to the Project, (c) KAR
has not taken any act or failed to take any act that would cause a default or
breach by the Project Company of its obligations under the Development
Documents, except those acts referenced on Schedule 6(c) hereof, (d) KAR has not
directly or indirectly assigned, conveyed, pledged or otherwise transferred to
any party any interest or rights in the Project, the Project Company or any
revenues or profits to be derived therefrom except for the KAR Pledge Agreement,
and (e) KAR has the full legal right and authority to execute, deliver and
perform this Agreement and the consent, authority or signature of no other party
is required in connection therewith.

7.    FURTHER ASSURANCES. Each of the parties hereto agree to execute such
additional documents and agreements as are necessary to effectuate the intents
and purposes of this Agreement.

8.    GOVERNING LAW. This Agreement will be governed by and interpreted in
accordance with Delaware law.

9.    DISPUTE RESOLUTION/ARBITRATION. In connection with any dispute hereunder,
the parties agree to negotiate in good faith for up to twenty days. If they are
unable to resolve the dispute in such period, then either party may demand and
such dispute shall be submitted to and resolve by binding arbitration in
accordance with the following terms:

            (a) Governing Rules. Any arbitration proceeding will (i) proceed in
      a location in Minneapolis Minnesota selected by the American Arbitration
      Association ("AAA");



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      (ii) be governed by the Federal Arbitration Act (Title 9 of the United
      States Code), notwithstanding any conflicting choice of law provision in
      any of the documents between the parties; and (iii) be conducted by the
      AAA, or such other administrator as the parties shall mutually agree upon,
      in accordance with the AAA's commercial dispute resolution procedures. Any
      party who fails or refuses to submit to arbitration following a demand by
      any other party shall bear all costs and expenses incurred by such other
      party in compelling arbitration of any dispute. The arbitration
      requirement does not limit the right of any party to obtain provisional or
      ancillary remedies such as replevin, injunctive relief, attachment or the
      appointment of a receiver or the exercise of any foreclosure or self-help
      remedies, before during or after the pendency of any arbitration
      proceeding.

            (b) Arbitrator Powers. The arbitrator will determine whether or not
      an issue is arbitratable and will give effect to the statutes of
      limitation in determining any claim. In any arbitration proceeding the
      arbitrator will decide (by documents only or with a hearing at the
      arbitrator's discretion) any pre-hearing motions which are similar to
      motions to dismiss for failure to state a claim or motions for summary
      adjudication. The arbitrator may grant any remedy or relief that a court
      of such state could order or grant within the scope hereof and such
      ancillary relief as is necessary to make effective any award. The
      arbitrator shall also have the power to award recovery of all costs and
      fees, to impose sanctions and to take such other action as the arbitrator
      deems necessary to the same extent a judge could pursuant to the Federal
      Rules of Civil Procedure, the Minnesota Rules of Civil Procedure or other
      applicable law. Judgment upon the award rendered by the arbitrator may be
      entered in any court having jurisdiction. The institution and maintenance
      of an action for judicial relief or pursuit of a provisional or ancillary
      remedy shall not constitute a waiver of the right of any party, including
      the plaintiff, to submit the controversy or claim to arbitration if any
      other party contests such action for judicial relief.

            (c) Miscellaneous. The arbitrator shall award all costs and expenses
      of the arbitration proceeding.To the maximum extent practicable, the AAA,
      the arbitrators and the parties shall take all action required to conclude
      any arbitration proceeding within 180 days of the filing of the dispute
      with the AAA. No arbitrator or other party to an arbitration proceeding
      may disclose the existence, content or results thereof, except for
      disclosures of information by a party required in the ordinary course of
      its business or by applicable law or regulation. If more than one
      agreement for arbitration by or between the parties potentially applies to
      a dispute, the arbitration provision most directly related to the
      documents between the parties or the subject matter of the dispute shall
      control. This arbitration provision shall survive termination, amendment
      or expiration of any of the documents or any relationship between the
      parties.

10.   ADVERSE NIGC ACTION. The parties acknowledge and agree that an important
purpose of this Agreement is to allow LAJA and the Project Company to become
immediately licensed by the NIGC and to immediately allow the Project to move
forward. Should the NIGC take any action to nullify or otherwise disrupt this
Agreement, then the parties shall immediately meet and negotiate in good faith
to agree to such modifications as may be necessary to obtain NIGC




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approval hereof while still maintaining the intents and purposes of this
Agreement, with any disputes related thereto resolved by arbitration under
Section 9 above.

11.   MISCELLANEOUS. Time is of the essence in the performance of this
Agreement. This Agreement and the Joint Venture Documents embody the entire
agreement and understanding between the parties with respect to the subject
matter hereof and thereof. This Agreement supersedes all prior agreements and
understandings relating to the subject matter hereof. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that KAR may not assign its rights or obligations
hereunder without the prior written consent of LAJA. This Agreement may be
executed in any number of counterparts and by facsimile, all of which taken
together shall constitute one and the same instrument, and any of the parties
hereto may execute this Agreement by signing any such counterpart, provided that
this Agreement shall not become effective until all parties have executed the
same.

12.   ACKNOWLEDGMENT OF EUGENE J. KEAN. By signing below, Eugene J. Kean joins
in this Agreement for the sole purposes of acknowledging and agreeing that he
either has no membership or other interest in KAR or consents and agrees to the
terms of Section 1 hereof including the transfer to LAJA of KAR's rights and
interests in the Project Company, and further that he shall have no further
rights, interests or claims against any of the Lakes Related Parties under this
Agreement or any of the Kean-Argovitz Agreements or otherwise in any manner with
respect to the Project, the Project Company, KAR, the Development Documents or
any other document or agreement.

         [The remainder of this page has been intentionally left blank]



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IN WITNESS WHEREOF, the parties have executed this agreement as of the date and
year first above written.

KEAN ARGOVITZ RESORTS-JAMUL, L.L.C.


By:  /s/ Kevin M. Kean
---------------------------------------
Name: Kevin M. Kean
Its: Manager and Member

And

By: /s/ Jerry A. Argovitz
---------------------------------------
Name:  Jerry A. Argovitz
Its Manager and Member


LAKES KEAN ARGOVITZ RESORTS-CALIFORNIA, L.L.C.
By: Kean Argovitz Resorts-Jamul, L.L.C.
Its: Member

         By: /s/ Jerry A. Argovitz
         ------------------------------
         Name:  Jerry A. Argovitz
         Its: Manager and Member

         and

         By: /s/ Kevin M. Kean
         ------------------------------
         Name:  Kevin M. Kean
         Its: Manager and Member

LAKES ENTERTAINMENT, INC.

By: /s/ Timothy J. Cope
---------------------------------------
Timothy J. Cope
Its: Chief Financial Officer


        [SIGNATURE PAGE TO BUYOUT AND RELEASE AGREEMENT - JAMUL PROJECT]

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LAKES JAMUL, INC.

By: /s/ Timothy J. Cope
---------------------------------------
Timothy J. Cope
Its: Chief Financial Officer



For purposes of agreeing to the terms of Section 12 above:


  /s/ Eugene J. Kean
---------------------------------------
EUGENE J. KEAN


        [SIGNATURE PAGE TO BUYOUT AND RELEASE AGREEMENT - JAMUL PROJECT]


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