8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 25, 2015

Lakes Entertainment, Inc.

(Exact name of registrant as specified in its charter)

Minnesota	0-24993	41-1913991
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

130 Cheshire Lane, Suite 101, Minnetonka, Minnesota	55305
(Address of principal executive offices)	(Zip Code)
Registrant’s telephone number, including area code:	(952) 449-9092

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[X]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01     Entry into a Material Definitive Agreement

Merger Agreement

On January 25, 2015, Lakes Entertainment, Inc., a Minnesota corporation (the “Company”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with LG Acquisition Corporation, a Nevada corporation and wholly-owned subsidiary of the Company (the “Merger Subsidiary”), Sartini Gaming, Inc., a Nevada corporation (“Golden Gaming”), and The Blake L. Sartini and Delise F. Sartini Family Trust, as sole shareholder of Golden Gaming (the “Sartini Trust”), pursuant to which, on and subject to the terms and conditions set forth in the Merger Agreement, the Merger Subsidiary will merge with and into Golden Gaming, with Golden Gaming surviving as a wholly-owned subsidiary of the Company (the “Merger”).

Under the terms of the Merger Agreement, the Company is valued at $9.57 per share (representing an approximate 37% premium to the closing share price for Company common stock on January 23, 2015), subject to working capital and various other adjustments under the Merger Agreement. The value of Golden Gaming under the Merger Agreement will be determined by multiplying 7.5 times Golden Gaming’s trailing twelve-month consolidated earnings before interest, taxes, depreciation and amortization (adjusted for non-cash or non-recurring expenses, losses and charges and certain other expenses), less the aggregate principal amount of Golden Gaming’s indebtedness, subject to working capital and various other adjustments under the Merger Agreement.  Based on current September 30, 2015 financial estimates and assumptions, the Sartini Trust would be issued 7,858,145 shares of Company common stock under the Merger Agreement, which would represent approximately 35.7% of the total fully diluted post-merger shares of Company common stock. The Company’s current shareholders (assuming the exercise of all outstanding options to acquire Company common stock) would retain approximately 64.3% of the total post-merger shares of Company common stock.

The Company has made certain customary representations, warranties and covenants in the Merger Agreement, including, among others, (i) not to (A) solicit proposals relating to alternative business combination transactions or (B) subject to certain exceptions, engage or participate in negotiations or discussions concerning, or provide non-public information in connection with, alternative business combination transactions, (ii) to cause a meeting of the Company’s shareholders to be held to consider the issuance of shares of Company common stock under the Merger Agreement, and (iii) subject to certain exceptions, that the Company’s Board of Directors will recommend that the Company’s shareholders vote to approve the issuance of shares of Company common stock under the Merger Agreement.

The representations and warranties of Golden Gaming in the Merger Agreement survive the closing of the transaction, and a portion of the shares of Company common stock to be issued to the Sartini Trust under the Merger Agreement will be placed into escrow to satisfy the indemnification obligations of the Sartini Trust described in the Merger Agreement.

Completion of the Merger is subject to various customary closing conditions, including, but not limited to, (i) approval by the Company’s shareholders of the issuance of shares of Company common stock under the Merger Agreement, (ii) the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iii) certain gaming approvals having been obtained from the relevant gaming authorities, (iv) the absence of any order or injunction prohibiting the consummation of the Merger, (v) no material adverse effect or other specified adverse events occurring with respect to the Company or Golden Gaming, (vi) the refinancing of certain indebtedness of Golden Gaming, (vii) subject to certain exceptions, the accuracy of the representations and warranties of the parties, and (viii) performance and compliance in all material respects with agreements and covenants contained in the Merger Agreement.

The Merger Agreement also contains certain termination rights for each of the Company and Golden Gaming, including if the Merger is not consummated by November 3, 2015 (subject to automatic extension to February 1, 2016 if all conditions to closing other than specified gaming approvals have been satisfied or waived). The Merger Agreement further provides that, upon termination of the Merger Agreement under specified circumstances, the Company is required to pay Golden Gaming a cash termination fee of $5,000,000 or reimburse Golden Gaming’s transaction expenses up to $500,000. In addition, the Merger Agreement provides that, upon termination of the Merger Agreement under specified circumstances, Golden Gaming will be required to reimburse the Company’s transaction expenses up to $500,000.

The Merger is expected to be consummated prior to the end of 2015. The Company will call a shareholders’ meeting at which the issuance of shares of Company common stock in connection with the Merger Agreement will be submitted to the Company’s shareholders for approval.

The Company’s Board of Directors has approved the Merger Agreement and determined that the Merger Agreement and the Merger were in the best interests of the Company and its shareholders, and has recommended that shareholders vote in favor of the issuance of shares of Company common stock in connection with the Merger Agreement.

In connection with the entry into the Merger Agreement, and as an inducement to Golden Gaming’s and the Sartini Trust’s willingness to enter into the Merger Agreement, on January 25, 2015, the Company entered into (i) a Voting and Support Agreement with Golden Gaming, Lyle A. Berman and certain other shareholders of the Company, under which the Company shareholders party thereto have agreed to support and vote their shares of Company common stock in favor of the issuance of shares of Company common stock under the Merger Agreement and certain other matters, and (ii) a Shareholders’ Agreement with the Sartini Trust, Mr. Berman and certain other shareholders of the Company with respect to representation on the Board of Directors of the Company after the consummation of the Merger and certain other matters.

The foregoing descriptions of the Merger Agreement, the Voting and Support Agreement and the Shareholders’ Agreement do not purport to be complete and are qualified in their entirety by the full text of the Merger Agreement, the Voting and Support Agreement and the Shareholders’ Agreement, which are filed as Exhibit 2.1, Exhibit 10.1 and Exhibit 10.2 hereto, respectively, and incorporated herein by reference.

The representations, warranties and covenants of each party set forth in the Merger Agreement have been made only for purposes of, were and are solely for the benefit of the parties to, the Merger Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement and not establishing these matters as facts, and may be subject to standards of materiality and knowledge applicable to the contracting parties that differ from those applicable to investors. In addition, such representations and warranties were made as of a specified date, and may be subject to a contractual standard of materiality different from what might be viewed as material by shareholders, or may have been used for the purposes of allocating risk between the parties. Accordingly, the representations, warranties and covenants in the Merger Agreement should not be relied on by persons as characterizations of the actual state of facts or conditions of the Company, Golden Gaming or any of their respective subsidiaries or affiliates at the time they were made or otherwise. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures. Accordingly, the Merger Agreement is included with this filing only to provide investors and security holders with information regarding the terms of the Merger Agreement. It is not intended to be a source of ongoing financial, business or operational information, or provide any other factual information, about the Company, Golden Gaming or their respective subsidiaries or affiliates to be relied on by investors. The Merger Agreement should not be read alone, but should instead be read in conjunction with the other information regarding the Company, Golden Gaming, their respective affiliates or their respective businesses, the Merger Agreement and the Merger that will be contained in, or incorporated by reference into, a proxy statement of the Company, as well as in the Forms 10-K, Forms 10-Q and other filings that the Company makes with the Securities and Exchange Commission (the “SEC”).

Amended and Restated Rights Plan

Effective as of January 25, 2015, in connection with the entry into the Merger Agreement, the Company entered into an Amended and Restated Rights Agreement with Wells Fargo Shareowner Services, a division of Wells Fargo Bank, National Association, as rights agent (the “Amended Rights Agreement”), to amend and restate the Rights Agreement, dated as of December 12, 2013 between the Company and Wells Fargo Shareowner Services, a division of Wells Fargo Bank, National Association, as rights agent (the “Rights Agreement”), in order to preserve its ability to utilize its existing net operating loss carryforwards and to exempt the transactions contemplated by the Merger Agreement from the provisions of the Rights Agreement.

As of September 28, 2014, the Company had approximately $89.1 million of federal net operating loss carryforwards, which will begin to expire in 2032 (the “NOLs”), which the Company views as a valuable asset. The Company’s Board of Directors has determined that the expected issuance of shares of Company common stock in the Merger will significantly increase the risk of an “ownership change,” as defined in Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), occurring. If the Company were to experience an “ownership change” within the meaning of Section 382 of the Code, the Company’s ability to utilize its NOLs to offset future taxable income could be significantly limited or lost altogether. Accordingly, the amendments to the Rights Agreement in the Amended Rights Agreement are designed to deter acquisitions of shares of Company common stock that would result in a shareholder owning 4.99% or more of the Company common stock (as calculated under Section 382 of the Code) or any existing holder of 4.99% or more of the Company common stock acquiring additional shares (either of which could result in an “ownership change” under Section 382 of the Code) and thereby preserve the Company’s ability to utilize its NOLs to offset future taxable income following the consummation of the Merger. There is no guarantee, however, that the Amended Rights Agreement will prevent the Company from experiencing an “ownership change” under Section 382 of the Code.

The changes to the Rights Agreement effected by the Amended Rights Agreement include lowering the voting securities ownership threshold of an “Acquiring Person” from 15% to 4.99% and removing associated “acting in concert” provisions, defining “Beneficial Ownership” by reference to Section 382 of the Code, and providing that the Sartini Trust will not become an “Acquiring Person” under the Amended Rights Agreement as a result of the issuance of shares of Company common stock to the Sartini Trust under the Merger Agreement.

The foregoing description of the Amended Rights Agreement does not purport to be complete and is qualified in its entirety by the full text of the Amended Rights Agreement, which is filed as Exhibit 4.1 hereto and incorporated herein by reference.

Item 3.03     Material Modification to Rights of Security Holders

The information set forth in Item 1.01 under the heading “Amended and Restated Rights Plan” is incorporated into this Item 3.03 by reference.

Item 5.03     Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

Effective as of January 25, 2015, the Company’s Board of Directors amended the Company’s First Amended Bylaws to add a new Article 10, Forum for Adjudication of Disputes, which provides that, unless the Company consents in writing to the selection of an alternative forum, Minnesota state and federal courts will be the sole and exclusive forum for certain specified corporate law based lawsuits involving the Company. The foregoing summary is qualified in its entirety by the full text of the Second Amended Bylaws, which are filed as Exhibit 3.1 hereto and are incorporated herein by reference.

Item 8.01     Other Events

Agreement and Plan of Merger

The Company and Golden Gaming issued a joint press release on January 26, 2015 announcing the execution of the Merger Agreement. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Sale of Rock Ohio Ventures Interest

The Company sold all of its interest in Rock Ohio Ventures, LLC to an unrelated third party pursuant to a Membership Interest Purchase Agreement, dated effective as of January 25, 2015, between the Company and DG Ohio Ventures, LLC (the "Purchase Agreement") for $750,000. The Purchase Agreement contains customary representations, warranties and covenants.

Letter to Company Employees

On January 26, 2015, the Company distributed a letter from the Company’s President, Timothy J. Cope, to the Company’s employees. A copy of the letter to employees is attached hereto as Exhibit 99.2 and is incorporated by reference herein.

* * *

Forward-Looking Statements

Statements in this Current Report on Form 8-K and the exhibits filed herewith include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among others, statements regarding the estimated value of the Company and Golden Gaming in connection with the Merger; the amount of shares to be issued to the Sartini Trust under the Merger Agreement and the expected post-closing shareholdings of legacy Company shareholders and the Sartini Trust; the expected benefits of a potential combination of the Company and Golden Gaming and expectations about future business plans, prospective performance and opportunities; the expected timing of the completion of the transaction; the obtaining of required regulatory approvals and approval by the Company’s shareholders; and the ability of the Company to utilize its NOLs to offset future taxable income. These forward-looking statements may be identified by the use of words such as “expect,” “anticipate,” “believe,” “estimate,” “potential,” “should”, “will” or similar words intended to identify information that is not historical in nature. These forward-looking statements are based on current expectations and assumptions of management of the Company and Golden Gaming and are subject to risks, uncertainty and changes in circumstances that could cause the actual events and results in future periods to differ materially from the expectations of the Company and Golden Gaming and those expressed or implied by these forward-looking statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. These risks, uncertainties and changes in circumstances include (a) the possibility that the Merger does not close when expected or at all; (b) the ability and timing to obtain required regulatory approvals (including approval from gaming regulators) and the Company’s shareholder approval, and to satisfy or waive other closing conditions, including expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, or that the parties to the Merger Agreement may be required to modify aspects of the transaction to achieve regulatory approval; (c) the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement or could otherwise cause the Merger to fail to close; (d) the ability of the Company and Golden Gaming to promptly and effectively integrate their respective businesses; (e) the outcome of any legal proceedings that may be instituted in connection with the transaction; (f) the receipt of an unsolicited offer from another party for an alternative business transaction that could interfere with the proposed Merger; (g) the Company’s ability to monetize non-core assets prior to the closing of the transaction, (h) the ability to retain key employees of the Company and Golden Gaming; (i) that there may be a material adverse change affecting the Company or Golden Gaming, or that the respective businesses of the Company or Golden Gaming may suffer as a result of uncertainty surrounding the transaction; (j) the occurrence of an “ownership change,” as defined in Section 382 of the Code; and (k) the risk factors disclosed in the Company’s filings with the SEC, including its Annual Report on Form 10-K, which was filed on March 14, 2014. Forward-looking statements reflect the Company’s and Golden Gaming’s management’s analysis and expectations only as of the date of this Current Report on Form 8-K, and neither the Company nor Golden Gaming undertake to update or revise these statements, whether written or oral, to reflect subsequent developments, except as required under the federal securities laws. Readers are cautioned not to place undue reliance on any of these forward-looking statements.

Additional Information and Where to Find It

This filing may be deemed to be solicitation material for the shareholder vote with respect to the issuance of shares of Company common stock under the Merger Agreement. In connection with the Merger Agreement, the Company intends to file relevant materials with the SEC, including a preliminary proxy statement and a definitive proxy statement. The definitive proxy statement will be mailed to the Company's shareholders. This filing does not constitute a solicitation of any vote or proxy from any shareholder of the Company. INVESTORS ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT IN ITS ENTIRETY WHEN IT BECOMES AVAILABLE AND ANY OTHER DOCUMENTS OR MATERIALS TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED MERGER OR INCORPORATED BY REFERENCE IN THE DEFINITIVE PROXY STATEMENT BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY, GOLDEN GAMING AND THE PROPOSED MERGER. Investors may obtain free copies of the definitive proxy statement, and other relevant materials and documents filed with the SEC (when they become available), without charge, at the SEC’s web site at www.sec.gov. In addition, investors may obtain free copies of the definitive proxy statement, and other relevant materials and documents filed with the SEC by directing a written request to Investor Relations, Lakes Entertainment, Inc., 130 Cheshire Lane, Suite #101, Minnetonka, MN 55305, or by accessing the Company’s website at www.lakesentertainment.com under the heading “Investors” and then “SEC Filings.”

Participants in the Solicitation

The Company, Golden Gaming and their respective directors, executive officers and certain other members of management and employees may be deemed to be “participants” in the solicitation of proxies from shareholders of the Company in connection with the proposed transaction, including with respect to the issuance of shares of Company common stock under the Merger Agreement. Information about the Company’s directors and executive officers is available in the Company’s definitive proxy statement, dated July 23, 2014, for its 2014 annual meeting of shareholders. Additional information regarding participants in the proxy solicitation and a description of their interests in the proposed transaction will be contained in the proxy statement that the Company will file with the SEC in connection with the proposed transaction and other relevant documents or materials to be filed with the SEC regarding the proposed transaction.

Item 9.01             Financial Statements and Exhibits.

(d)               Exhibits

2.1 Agreement and Plan of Merger, dated as of January 25, 2015, by and among Lakes Entertainment, Inc., LG Acquisition Corporation, Sartini Gaming, Inc. and The Blake L. Sartini and Delise F. Sartini Family Trust¹

3.1 Second Amended Bylaws of Lakes Entertainment, Inc.

4.1 Amended and Restated Rights Agreement, dated as of January 25, 2015, by and between Lakes Entertainment, Inc. and Wells Fargo Shareowner Services, a division of Wells Fargo Bank, National Association

10.1 Voting and Support Agreement, dated as of January 25, 2015, by and among Lakes Entertainment, Inc., Sartini Gaming, Inc., Lyle A. Berman and certain other shareholders of Lakes Entertainment, Inc.

10.2 Shareholders’ Agreement, dated as of January 25, 2015, by and among Lakes Entertainment, Inc., The Blake L. Sartini and Delise F. Sartini Family Trust, Lyle A. Berman and certain other shareholders of Lakes Entertainment, Inc.

99.1 Joint Press Release issued by Lakes Entertainment, Inc. and Sartini Gaming, Inc., dated January 26, 2015

99.2 Letter from Timothy Cope to Lakes Entertainment, Inc. employees, dated January 26, 2015  

¹ Schedules to the Agreement and Plan of Merger have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	LAKES ENTERTAINMENT, INC.
	(Registrant)
Date: January 26, 2015	/s/ Timothy J. Cope
	Name: Timothy J. Cope
	Title:   President and Chief Financial Officer

EXHIBIT INDEX

Exhibit Number		Description
	2.1	Agreement and Plan of Merger, dated as of January 25, 2015, by and among Lakes Entertainment, Inc., LG Acquisition Corporation, Sartini Gaming, Inc. and The Blake L. Sartini and Delise F. Sartini Family Trust
	3.1	Second Amended Bylaws of Lakes Entertainment, Inc.
	4.1	Amended and Restated Rights Agreement, dated as of January 25, 2015, by and between Lakes Entertainment, Inc. and Wells Fargo Shareowner Services, a division of Wells Fargo Bank, National Association
	10.1	Voting and Support Agreement, dated as of January 25, 2015, by and among Lakes Entertainment, Inc., Sartini Gaming, Inc., Lyle A. Berman and certain other shareholders of Lakes Entertainment, Inc.
	10.2	Shareholders’ Agreement, dated as of January 25, 2015, by and among Lakes Entertainment, Inc., The Blake L. Sartini and Delise F. Sartini Family Trust, Lyle A. Berman and certain other shareholders of Lakes Entertainment, Inc.
	99.1	Joint Press Release issued by Lakes Entertainment, Inc. and Sartini Gaming, Inc., dated January 26, 2015
	99.2	Letter from Timothy Cope to Lakes Entertainment, Inc. employees, dated January 26, 2015

EX-2

Exhibit 2.1

EXECUTION VERSION

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

LAKES ENTERTAINMENT, INC.,

LG ACQUISITION CORPORATION,

SARTINI GAMING, INC.,

AND

THE BLAKE L. SARTINI AND DELISE F. SARTINI FAMILY TRUST

DATED AS OF JANUARY 25, 2015

TABLE OF CONTENTS
			Page
ARTICLE 1 THE MERGER			2
	1.1	The Merger	2
	1.2	Effective Time of the Merger	2
	1.3	Effects of the Merger	2
	1.4	Closing	2
	1.5	Articles of Incorporation	3
	1.6	Bylaws	3
	1.7	Parent Articles of Incorporation and Bylaws	3
	1.8	Directors and Officers of the Company	3
	1.9	Directors and Officers of Parent	3
	1.10	Three Year Initial Board Composition	4
	1.11	Headquarters	4
ARTICLE 2 CONVERSION OF SECURITIES			5
	2.1	Conversion of Securities	5
	2.2	Merger Consideration Shares	5
	2.3	Exchange Procedures	10
	2.4	No Further Rights in Company	10
	2.5	Lost Certificates	10
	2.6	Further Assurances	10
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY			11
	3.1	Corporate Organization and Power	11
	3.2	Articles of Incorporation of Company; Minutes	11
	3.3	Subsidiaries and Other Entities	11
	3.4	Authorization	12
	3.5	Capitalization of the Company	13
	3.6	Non-Contravention	13
	3.7	Consents and Approvals	13
	3.8	Proxy Statement Information	14
	3.9	Financial Statements; Undisclosed Liabilities	14
	3.10	Absence of Certain Changes	15
	3.11	Assets and Properties	15
	3.12	Compliance with Applicable Law	16
	3.13	Permits	16
	3.14	Litigation	17
	3.15	Material Contracts	17
	3.16	Benefit Plans	18
	3.17	Labor and Employment Matters	20
	3.18	Intellectual Property	21
	3.19	Environmental Compliance	23

 i

	3.20	Insurance	24
	3.21	Tax Matters	24
	3.22	Bank Accounts	27
	3.23	Brokers	27
	3.24	Licensability	27
	3.25	Compliance with Gaming Laws	28
	3.26	Relations with Suppliers	28
	3.27	Investment Intent	29
	3.28	Investigation by Parent	29
	3.29	Exclusive Representations and Warranties	29
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PARENT			29
	4.1	Corporate Organization and Power	29
	4.2	Articles of Incorporation of Parent and Merger Subsidiary; Minutes	30
	4.3	Subsidiaries	30
	4.4	Authorization	30
	4.5	Capitalization	31
	4.6	Valid Issuance of Parent Common Stock	33
	4.7	Non-Contravention	33
	4.8	Consents and Approvals	33
	4.9	Parent SEC Documents; Financial Reports	33
	4.10	Proxy Statement Information	36
	4.11	Absence of Certain Changes	36
	4.12	Assets and Properties	36
	4.13	Intellectual Property	37
	4.14	Compliance with Applicable Law	38
	4.15	Permits	39
	4.16	Litigation	39
	4.17	Material Contracts	39
	4.18	Environmental Compliance	40
	4.19	Insurance	42
	4.20	Tax Matters	42
	4.21	Parent Benefit Plans	44
	4.22	Labor and Employment Matters	46
	4.23	Brokers	47
	4.24	Bank Accounts	47
	4.25	Listing and Maintenance Requirements	47
	4.26	Licensability	47
	4.27	Compliance with Gaming Laws	48
	4.28	Relations with Suppliers	49
	4.29	Investigation by Company	49
	4.30	Exclusive Representations and Warranties	49
ARTICLE 5 COVENANTS			49
	5.1	Conduct of Business	49

 ii

	5.2	No Control of Other Party’s Business	55
	5.3	Full Access	55
	5.4	Confidentiality	55
	5.5	Limit to Access and Disclosure	56
	5.6	Regulatory Approvals; Consents	56
	5.7	Credit Facilities	58
	5.8	Further Assurances; Cooperation; Notification	59
	5.9	Proxy Statement; Parent Special Meeting	60
	5.10	NASDAQ Listing	61
	5.11	Acquisition Proposal; No Solicitation	61
	5.12	Public Announcements	65
	5.13	State Takeover Statutes	66
	5.14	Stockholder Litigation	66
	5.15	Restrictions on Transfer of Parent Common Stock	66
	5.16	Indemnification and Exculpation	66
	5.17	Compensation and Employee Benefits Matters	68
	5.18	Schedule Updates	68
	5.19	Support of Committees	69
	5.20	Big Sky Gaming	69
	5.21	Company Information Technology Systems	69
	5.22	Jamul Dispositions	69
	5.23	Issuance of Options	72
	5.24	Nevada Business Tax Change	72
ARTICLE 6 CONDITIONS TO PARENT’S AND MERGER SUBSIDIARY’S OBLIGATIONS			72
	6.1	Representations and Warranties	73
	6.2	Performance	73
	6.3	Required Approvals and Consents	73
	6.4	No Injunctions or Legal Restraints; Illegality	73
	6.5	Subsequent Events	73
	6.6	Officer’s Certificate	73
	6.7	Articles of Incorporation; Good Standing	74
	6.8	Escrow Agreement	74
	6.9	NOL Preservation Agreement; Shareholders’ Agreement	74
	6.10	Key Individual Noncompetition Agreement	74
	6.11	Company Debt	74
	6.12	Golden Gaming Warrants	74
	6.13	Information Technology Upgrades	74
	6.14	Stockholder Investment Representations	74
ARTICLE 7 CONDITIONS TO COMPANY’S OBLIGATIONS			74
	7.1	Representations and Warranties	74
	7.2	Performance	75
	7.3	Required Approvals and Consents	75

 iii

	7.4	No Injunctions or Legal Restraints; Illegality	75
	7.5	Subsequent Events	75
	7.6	Officer’s Certificate	75
	7.7	Articles of Incorporation; Good Standing	75
	7.8	Escrow Agreement	75
	7.9	Registration Rights Agreement	76
	7.10	Listing of Parent Common Stock	76
	7.11	NOL Preservation Agreement; Shareholders’ Agreement	76
	7.12	Parent Key Individual Noncompetition Agreement	76
	7.13	Parent Closing Funds	76
	7.14	Sale of Office Building	76
ARTICLE 8 TERMINATION			76
	8.1	Methods of Termination	76
	8.2	Effect of Termination	78
	8.3	Fees and Expenses	79
ARTICLE 9 TAX MATTERS			80
	9.1	Reorganization	80
	9.2	Transactional Taxes	81
	9.3	Filing of Tax Returns	81
	9.4	Tax Contests	82
ARTICLE 10 SURVIVAL; INDEMNIFICATION			82
	10.1	Survival of Representations and Warranties	82
	10.2	Stockholders’ Indemnification	82
	10.3	Limitations on Liability	83
	10.4	Indemnification Procedures	85
	10.5	Indemnification Shares; Sole Source	86
	10.6	Stockholder Acknowledgment	87
	10.7	Adjustment to Purchase Price	87
	10.8	Independent Board Committee	87
ARTICLE 11 DEFINITIONS			88
	11.1	Definitions	88
	11.2	Interpretation	105
ARTICLE 12 MISCELLANEOUS			106
	12.1	Notices	106
	12.2	Amendments; No Waivers	107
	12.3	Successors and Assigns	108
	12.4	Governing Law	108
	12.5	Counterparts; Effectiveness	108

 iv

12.6	Entire Agreement	108
12.7	Captions	109
12.8	Severability	109
12.9	Construction	109
12.10	Cumulative Remedies	109
12.11	Third Party Beneficiaries	109
12.12	Specific Performance	109
12.13	Privilege	110

Exhibit Table

Exhibit A – Form of Shareholders’ Agreement

Exhibit B – Form of Voting and Support Agreement

Exhibit C – Form of NOL Preservation Agreement

Exhibit D – Form of Escrow Agreement

Exhibit E – Form of Key Individual Noncompetition Agreement

Exhibit F – Form of Registration Rights Agreement

Exhibit G – Description of Jamul Land

 v

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of January 25, 2015, is entered into by and among Lakes Entertainment, Inc., a Minnesota corporation (“Parent”), LG Acquisition Corporation, a Nevada corporation and a wholly-owned subsidiary of Parent (“Merger Subsidiary”), Sartini Gaming, Inc., a Nevada corporation (the “Company”), and The Blake L. Sartini and Delise F. Sartini Family Trust (the “Stockholder,” and, together with Parent, Merger Subsidiary and the Company, the “Parties” and each a “Party”). Reference is made to Section 11.1 for the definition of certain terms used but not otherwise defined in this Agreement.

WHEREAS, the Parties wish to provide for the merger of Merger Subsidiary with and into the Company, with the Company being the surviving corporation following such merger (the “Merger”);

WHEREAS, for federal income tax purposes, the Merger is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code and the rules and regulations promulgated thereunder and this Agreement will be, and is, adopted as a “plan of reorganization” within the meaning of Treasury Regulations Sections 1.368-2(g) and 1.368-3;

WHEREAS, the Board of Directors of each of Parent and Merger Subsidiary have (i) determined that the Merger is fair to and in the best interests of Parent and Merger Subsidiary and their respective shareholders, and (ii) approved and adopted this Agreement, the Merger and the other transactions contemplated hereby, and Parent has approved and adopted this Agreement, the Merger and the other transactions contemplated hereby as the sole shareholder of Merger Subsidiary;

WHEREAS, the Board of Directors of the Company has (i) determined that the Merger is fair to and in the best interests of the Company and the Stockholder, and (ii) approved and adopted this Agreement, the Merger and the other transactions contemplated hereby;

WHEREAS, the Stockholder holds of record all authorized, issued and outstanding shares of capital stock of the Company, which capital stock consists exclusively of Company Common Stock, and has voted such shares in favor of this Agreement, the Merger and the other transactions contemplated hereby;

WHEREAS, simultaneously with the execution of this Agreement and as an inducement to Parent’s and Merger Subsidiary’s willingness to enter into this Agreement, the Stockholder has entered into a shareholders’ agreement with Parent and the Restricted Stockholders with respect to Parent board representation following the Merger in the form attached hereto as Exhibit A (the “Shareholders’ Agreement”);

WHEREAS, simultaneously with the execution of this Agreement and as an inducement to the Company’s and the Stockholder’s willingness to enter into this Agreement, the Restricted Stockholders and Parent have entered into the Shareholders’ Agreement and a voting and support agreement with the Company under which the Restricted Stockholders have agreed to support and vote their shares in favor of the issuance of shares of Parent Common Stock to the Stockholder in connection with the Merger and the other transactions contemplated hereby and such other matters to be voted upon under the Proxy Statement in the form attached hereto as Exhibit B (together with the Shareholders’ Agreement, the “Parent Voting Agreements”); and

WHEREAS, the Parties desire to make certain representations, warranties and agreements in connection with the Merger and also to prescribe various conditions to the Merger.

NOW, THEREFORE, in consideration of the premises and the representations, warranties, covenants and agreements herein contained, and intending to be legally bound hereby, the Company, Parent, Merger Subsidiary and the Stockholder hereby agree as follows:

ARTICLE 1
THE MERGER

1.1           The Merger. Upon the terms and subject to the conditions hereof, in accordance with Chapter 78 of the Nevada Revised Statutes (as amended, the “NRS”), at the Effective Time, Merger Subsidiary shall be merged with and into the Company (the “Merger”), with the Company as the surviving corporation in the Merger (the “Surviving Corporation”), which shall continue its corporate existence under the laws of the State of Nevada. At the Effective Time, the separate existence of Merger Subsidiary shall thereupon cease and the Merger will have the effects specified in the NRS. As a result of the Merger, the Company will thereafter be a wholly-owned subsidiary of Parent. The name of the Surviving Corporation shall be Golden Holdings, Inc. References herein to the Company with respect to the period from and after the Effective Time shall be deemed to be references to the Surviving Corporation.

1.2           Effective Time of the Merger. The Parties shall cause the Merger to be consummated by filing articles of merger of the Company and Merger Subsidiary (the “Certificate of Merger”) with the Secretary of State of the State of Nevada on the Closing Date in such form as required by, and executed in accordance with, the relevant provisions of Section 92A.200 of the NRS. The Merger shall become effective upon such filing of the Certificate of Merger with the Secretary of State of the State of Nevada; provided, that, upon the mutual written consent of Parent and the Company, the Certificate of Merger may provide for a later time or date of effectiveness of the Merger (the date and time the Merger becomes effective being hereinafter referred to as the “Effective Time”).

1.3           Effects of the Merger. At the Effective Time, the Merger shall have the effects set forth in the applicable provisions of the NRS. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time all of the property, rights, privileges, powers and franchises of the Company and Merger Subsidiary shall vest in the Surviving Corporation, and all debts, liabilities and duties of the Company and Merger Subsidiary shall become the debts, liabilities and duties of the Surviving Corporation.

1.4           Closing. Upon the terms and subject to the conditions set forth in this Agreement, the closing (the “Closing”) will take place at the offices of Gray, Plant, Mooty, Mooty & Bennett, P.A., 500 IDS Center, 80 South Eighth Street, Minneapolis, Minnesota 55402, at 10:00 a.m. on the last day of the calendar month in which the conditions set forth in Articles 6 and 7 shall have been satisfied or (to the extent permitted hereunder and by Applicable Law) waived (excluding conditions that, by their nature, are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions at the Closing); provided, that, if the date on which such conditions are satisfied or waived is less than three Business Days prior to the end of any calendar month, the Closing will take place on the last day of the immediately following calendar month; provided, further, that, in the event that the last day of the applicable month is not a Business Day, the Closing will take place on the next Business Day, in each case unless this Agreement has been theretofore terminated pursuant to its terms or unless another place, time or date is mutually agreed to by the Parties in writing (the date of the Closing, the “Closing Date”).

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1.5           Articles of Incorporation. At the Effective Time, the Articles of Incorporation of the Company shall be amended and restated in their entirety in the form of the Articles of Incorporation of Merger Subsidiary as in effect immediately prior to the Effective Time (except that Article 1 of such Articles of Incorporation shall be amended to read as follows: “The name of the Corporation is: Golden Holdings, Inc.”), and as so amended shall be the Articles of Incorporation of the Surviving Corporation until duly amended in accordance with the terms thereof and of the NRS.

1.6           Bylaws. At the Effective Time, the Bylaws of the Company shall be amended and restated in their entirety in the form of the Bylaws of Merger Subsidiary as in effect immediately prior to the Effective Time, and as so amended shall be the Bylaws of the Surviving Corporation until duly amended in accordance with the terms thereof and of the NRS.

1.7           Parent Articles of Incorporation and Bylaws. At or prior to the Effective Time, Parent shall take all actions as may be necessary to cause the Articles of Incorporation of Parent to be amended and restated in their entirety in a form mutually agreed to by Parent and the Company (the “Articles Amendment”) and the First Amended By-Laws of Parent to be amended and restated in their entirety in a form mutually agreed to by Parent and the Company, including such amendments as may be required to effect the provisions of Sections 1.9 and 1.10 and such amendment as may be required to change the name of Parent to Golden Entertainment, Inc., and as so amended shall be the Articles of Incorporation and By-Laws of Parent.

1.8           Directors and Officers of the Company. Unless otherwise mutually agreed by Parent and the Company, from and after the Effective Time: (a) the directors of the Surviving Corporation shall be the directors set forth on Annex I attached hereto, and (b) the officers of the Company shall continue to be the officers of the Surviving Corporation, in each case until their respective successors are duly elected or appointed and qualified.

1.9           Directors and Officers of Parent. Prior to the Effective Time, Parent shall take all actions as may be necessary (including obtaining any required resignations from Parent incumbent directors to permit the Parent Board of Directors composition contemplated below) to cause at the Effective Time:

(a) the number of directors constituting the Parent Board of Directors to be seven;

(b) the Parent Board of Directors at the Effective Time to be composed of the following individuals: (i) Lyle Berman and Timothy Cope, or, if any such person is unable or unwilling to serve as a director of Parent, then such other Person or Persons as may be designated by Parent, (ii) Blake L. Sartini, or, if he is unable or unwilling to serve as a director of Parent, then such other Person as may be designated by the Stockholder, (iii) one other Person as may be designated by Parent within 45 days after the date of this Agreement (who shall qualify as an “independent director” (as such term is defined in NASDAQ Equity Rule 5605(a)(2)) with respect to Parent), (iv) two other Persons as may be designated by the Stockholder within 45 days after the date of this Agreement (each of whom shall qualify as an “independent director” with respect to Parent), and (v) one other Person as may be jointly designated by Parent and the Stockholder within 45 days after the date of this Agreement (who shall qualify as an “independent director” with respect to Parent) (all such persons who are not members of the Parent Board of Directors as of the date hereof, the “New Parent Directors”); provided, however, that each of the Persons specified in clauses (iii), (iv) and (v) above shall also meet the minimum requirements to serve on Parent’s audit committee and compensation committee under NASDAQ Marketplace Rules; and provided further, that at any time prior to the Closing Date, each of Parent and the Stockholder, as applicable, shall be entitled to designate another Person to serve in such Person’s stead in the event that any Person previously so designated to serve on the Parent Board of Directors is unable or unwilling to serve in such position or Parent or the Stockholder, as applicable, otherwise determines that such replacement is appropriate;

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(c) Mr. Sartini (or, if Mr. Sartini is unable or unwilling to serve in such position, then such other member of the Parent Board of Directors as the Stockholder shall choose in its discretion) shall be elected to serve as Chairman of the Parent Board of Directors for a period of at least three years following the Effective Time (subject to Mr. Sartini being elected as a director by Parent’s shareholders on an annual basis); and

(d) the individuals designated as “officers” in Annex II attached hereto to be the officers of Parent, to serve from and after the Effective Time until their respective successors are duly elected or appointed and qualified in accordance with Applicable Law.

1.10         Three Year Initial Board Composition. Parent shall cause each of the Persons designated pursuant to Section 1.09(b) (or their respective replacements designated by Parent or the Stockholder, as applicable, in the event that any Person previously so designated to serve on the Parent Board of Directors is or becomes unable or unwilling to serve in such position) to be re-nominated for election to the Parent Board of Directors at each of the annual meetings of Parent’s shareholders that occurs during the 36 months following the Effective Time.

1.11         Headquarters. Following the Effective Time, the corporate headquarters and related corporate functions for Parent and its Subsidiaries will be located in the Las Vegas, Nevada metropolitan area.

ARTICLE 2
CONVERSION OF SECURITIES

2.1           Conversion of Securities. At the Effective Time, by virtue of the Merger and without any action on the part of Parent, the Company, Merger Subsidiary or the Stockholder:

(a) Treasury Stock. All shares of Company Common Stock that are held by the Company as treasury stock or that are owned by the Company, Parent or any of its Subsidiaries (other than those held in a fiduciary capacity for the benefit of third parties) immediately prior to the Effective Time shall cease to be outstanding and shall be canceled and retired and shall cease to exist and no Parent Common Stock or other consideration shall be delivered in exchange therefor.

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(b) Company Capital Stock. Each share of Company Common Stock that is issued and outstanding immediately prior to the Effective Time (other than shares canceled pursuant to Section 2.1(a)) shall be canceled and converted into the right to receive such number of validly issued, fully paid and nonassessable shares of Parent Common Stock as is determined by dividing (i) the aggregate number of Merger Consideration Shares by (ii) the aggregate number of such shares of Company Common Stock. For purposes of clarity, the Parties acknowledge that, at the Effective Time, all shares of Company Common Stock issued and outstanding immediately prior to the Effective Time shall cease to be outstanding and shall be canceled and retired and shall cease to exist, and each holder of a Company Certificate that immediately prior to the Effective Time represented any such shares of Company Common Stock shall thereafter cease to have any rights with respect to such shares of Company Common Stock, except the right to receive the Merger Consideration Shares to be issued in consideration therefor upon surrender of such Company Certificates as provided in Section 2.3 below.

(c) Capital Stock of Merger Subsidiary. Each share of capital stock of Merger Subsidiary that is issued and outstanding immediately prior to the Effective Time shall be canceled and converted into and become one validly issued, fully paid and nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation. The stock certificate(s) evidencing Parent’s ownership of such shares of common stock of the Surviving Corporation shall bear such legends as are required by the NRS and applicable Gaming Laws.

2.2           Merger Consideration Shares.

(a) Merger Consideration Shares. “Merger Consideration Shares” means such number of validly issued, fully paid and nonassessable shares of Parent Common Stock (rounded to the nearest whole share) as is equal to (i) the product of (x) the aggregate number of Post-Closing Parent Shares multiplied by (y) the Company Stockholder Percentage, less (ii) the Warrantholder Shares (if any).

(b) Definitions. For purposes of this calculation,

(i) “Post-Closing Parent Shares” means such number of shares of Parent Common Stock as shall equal the Fully Diluted Pre-Closing Parent Shares divided by the Parent Stockholder Percentage.

(ii) “Fully Diluted Pre-Closing Parent Shares” means 14,132,195 shares of Parent Common Stock; provided, that if such number of shares is different than the sum of all shares of Parent Common Stock issued and outstanding immediately prior to the Effective Time plus all shares of Parent Common Stock issuable upon exercise, vesting, conversion or exchange of all Parent Stock Options (excluding the Parent Stock Options exercisable for 12,500 shares of Parent Common Stock at an exercise price of $12.85 per share outstanding on the date hereof and excluding any Parent Stock Options redeemed prior to or contemporaneously with the Closing as permitted by the Parent Stock Option Plan) and Parent Convertible Securities that are outstanding immediately prior to the Effective Time, such number of Fully Diluted Pre-Closing Parent Shares shall be adjusted to such sum.

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(iii) “Parent Stockholder Percentage” means the percentage of the Post-Closing Parent Shares to be held by the pre-Merger shareholders of Parent following the Merger or to be issuable upon the exercise of outstanding Parent Stock Options or the conversion, exercise, vesting or exchange of outstanding Parent Convertible Securities, which percentage shall be determined by dividing the Parent Pre-Merger Value by the Total Post-Merger Value; provided, that, in no event shall the Parent Stockholder Percentage be less than the Minimum Percentage, it being understood and agreed that, if the Parent Stockholder Percentage, as determined in accordance with this provision, would otherwise result in a percentage less than the Minimum Percentage, then the Parent Stockholder Percentage will be the Minimum Percentage.

(iv) “Company Stockholder Percentage” means the percentage of the Post-Closing Parent Shares to be held by the Stockholder following the Merger (together with any Warrantholder Shares held by any Warrantholders following the Merger), which percentage shall be determined by dividing the Company Pre-Merger Value by the Total Post-Merger Value; provided, that, in no event shall the Company Stockholder Percentage be greater than the Maximum Percentage, it being understood and agreed that, if the Company Stockholder Percentage, as determined in accordance with this provision, would otherwise result in a percentage greater than the Maximum Percentage, then the Company Stockholder Percentage will be the Maximum Percentage.

(v) “Total Post-Merger Value” means the sum of the Parent Pre-Merger Value and the Company Pre-Merger Value.

(vi) “Parent Pre-Merger Value” means the equity value of Parent and its Subsidiaries, determined on a consolidated basis, immediately prior to the Effective Time, as determined on a preliminary basis in accordance with the terms of Schedule 2.2(b) and adjusted after the Effective Time pursuant to Schedule 2.2(d).

(vii) “Company Pre-Merger Value” means the equity value of the Company and its Subsidiaries, determined on a consolidated basis, immediately prior to the Effective Time, determined on a preliminary basis in accordance with the terms of Schedule 2.2(b) and adjusted after the Effective Time pursuant to Schedule 2.2(d).

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(viii) “Merger Share Price” means the price per share derived by dividing (x) the Parent Pre-Merger Value by (y) the number of Fully Diluted Pre-Closing Parent Shares.

(c) Escrowed Merger Consideration. At the Effective Time, Parent shall deliver to the Escrow Agent pursuant to the Escrow Agreement share certificates in the name of the Stockholder representing such number of Merger Consideration Shares equal to: (i) 5% of the Merger Consideration Shares (as calculated prior to adjustment pursuant to Section 2.2(d), and rounded to the nearest whole share) (the “Adjustment Shares”) and (ii) 10% of the Merger Consideration Shares (as calculated prior to adjustment pursuant to Section 2.2(d), and rounded to the nearest whole share) (the “Indemnification Shares”), which shares shall be deducted from the shares of Parent Common Stock issued and delivered to the Stockholder pursuant to Section 2.3(b). The Parties agree to treat the Adjustment Shares and the Indemnification Shares as received and owned by the Stockholder for federal income tax purposes, in all cases to the extent not released to Parent pursuant to Section 2.2(d)(i) or Section 10.5, and to file all Tax Returns on a basis consistent with such treatment. For avoidance of doubt, the Stockholder shall have the right to vote the Adjustment Shares and the Indemnification Shares held in escrow, and any dividends or distributions paid on the Adjustment Shares or Indemnification Shares held in escrow shall be paid to the Stockholder.

(d) Post-Closing Adjustment. The Parent Pre-Merger Value and the Company Pre-Merger Value will each be subject to final adjustment (the “Post-Closing Adjustment”) in accordance with the terms of Schedule 2.2(d). Within ten Business Days after the determination of the Post-Closing Adjustment:

(i) in the event that the Merger Consideration (calculated prior to the Post-Closing Adjustment) exceeds the Merger Consideration (calculated after giving effect to the Post-Closing Adjustment), then: (A) an amount of Adjustment Shares with a value (based on the Merger Share Price) equal to such excess shall be released to Parent from escrow under the Escrow Agreement, and (B) all Adjustment Shares (if any) remaining in escrow under the Escrow Agreement shall be released to the Stockholder; provided, that, in the event that after the release of all of the Adjustment Shares to Parent pursuant to clause (A), a portion of such excess amount remains outstanding, the Stockholder shall transfer to Parent that number of additional shares of Parent Common Stock with a value (based on the Merger Share Price) equal to such shortfall; and

(ii) in the event that the Merger Consideration (calculated after giving effect to the Post-Closing Adjustment) exceeds the Merger Consideration (calculated prior to the Post-Closing Adjustment), then: (A) Parent shall issue and deliver to Stockholder an amount of validly issued, fully paid and nonassessable shares of Parent Common Stock with a value (based on the Merger Share Price) equal to such excess (provided, that, if the issuance of such additional shares would cause the Stockholder’s post-Closing ownership percentage to exceed the Maximum Percentage then only such number of shares of Parent Common Stock as will cause the Stockholder to own the Maximum Percentage), and (B) all Adjustment Shares in escrow under the Escrow Agreement shall be released to the Stockholder.

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(e) In the event that the Company Stockholder Percentage is limited to the Maximum Percentage by operation of the provisos in Section 2.2(b)(iv) or Section 2.2(d)(ii)(A), then the Parties shall negotiate in good faith to agree on additional consideration (such additional consideration is not required to be in the form of cash or shares of Parent Common Stock) to be transferred by Parent to the Stockholder at the Closing (or in connection with the Post-Closing Adjustment, as applicable) with a fair market value equivalent to the product of (i) the Company Stockholder Percentage (calculated without giving effect to the proviso in Section 2.2(b)(iv)) minus the Maximum Percentage multiplied by (ii) the Total Post-Merger Value (such consideration, the “Additional Consideration”), but only to the extent that such Additional Consideration will not cause the Merger to fail to qualify as a “reorganization” within the meaning of Section 368(a) of the Code.

(f) Quest Adjustment. In the event that (i) subsequent to the Effective Time, Parent has continued to use commercially reasonable efforts to defend the Quest Litigation (including payment of litigation-related fees and expenses) and there is a Quest Litigation Resolution, and (ii) the Merger Consideration (calculated pursuant to Section 2.2(d) and Schedule 2.2(d) after giving effect to the Quest Litigation Resolution as if the Quest Litigation Resolution occurred immediately prior to the Effective Time with all amounts payable with respect thereto payable by Parent and its Subsidiaries after the Closing Date) exceeds the Merger Consideration (calculated pursuant to Section 2.2(d) and Schedule 2.2(d)), Parent shall issue and deliver to the Stockholder a number of validly issued, fully paid and nonassessable shares of Parent Common Stock with a value (based on the Merger Share Price) equal to such excess (rounded to the nearest whole share); provided, that, if the issuance of such additional shares would cause the Stockholder’s post-Closing ownership percentage to exceed the Maximum Percentage, then Parent shall pay the Stockholder in immediately available funds an amount equal to the value of such incremental shares (based on the Merger Share Price) that if issued would otherwise cause the Stockholder to exceed the Maximum Percentage, but only to the extent that such cash payment will not cause the Merger to fail to qualify as a “reorganization” within the meaning of Section 368(a) of the Code.

(g) Office Building Adjustment. In the event that the sale of the Office Building closes on or after the 60^th day after the Effective Time, then:

(i) in the event that the Merger Consideration (as calculated pursuant to Section 2.2(d) and Schedule 2.2(d)) exceeds the Merger Consideration (calculated pursuant to Section 2.2(d) and Schedule 2.2(d) after giving effect to the sale of the Office Building as if it had occurred immediately prior to the Closing), then the Stockholder shall transfer to Parent shares of Parent Common Stock with a value (based on the Merger Share Price) equal to the amount of such excess (rounded to the nearest whole share); and

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(ii) in the event that the Merger Consideration (calculated pursuant to Section 2.2(d) and Schedule 2.2(d) after giving effect to the sale of the Office Building as if it had occurred immediately prior to the Closing) exceeds the Merger Consideration (as calculated pursuant to Section 2.2(d) and Schedule 2.2(d)), then Parent shall issue and deliver to the Stockholder an amount of validly issued, fully paid and nonassessable shares of Parent Common Stock with a value (based on the Merger Share Price) equal to such excess (rounded to the nearest whole share); provided, that, if the issuance of such additional shares would cause the Stockholder’s post-Closing ownership percentage to exceed the Maximum Percentage, then Parent shall pay the Stockholder in immediately available funds an amount equal to the value of such incremental shares (based on the Merger Share Price) that if issued would otherwise cause the Stockholder to exceed the Maximum Percentage, but only to the extent that such cash payment will not cause the Merger to fail to qualify as a “reorganization” within the meaning of Section 368(a) of the Code.

(h) Tax Refunds. In the event that (i) Parent has not received Tax Refunds with respect to tax receivables of Parent in existence as of the Closing in an aggregate amount equal to or greater than $2,155,000 prior to the second anniversary of the Closing Date and (ii) the Merger Consideration (calculated pursuant to Section 2.2(d) and Schedule 2.2(d) after excluding from the Parent Net Working Capital Balance and Parent Current Assets all tax receivables except those for which Tax Refunds were received by Parent prior to the second anniversary of the Closing Date) exceeds the Merger Consideration (as calculated pursuant to Section 2.2(d) and Schedule 2.2(d)), then Parent shall issue and deliver to the Stockholder an amount of validly issued, fully paid and nonassessable shares of Parent Common Stock with a value (based on the Merger Share Price) equal to such excess (rounded to the nearest whole share); provided, that, if the issuance of such additional shares would cause the Stockholder’s post-Closing ownership percentage to exceed the Maximum Percentage, then Parent shall pay the Stockholder in immediately available funds an amount equal to the value of such incremental shares (based on the Merger Share Price) that if issued would otherwise cause the Stockholder to exceed the Maximum Percentage, but only to the extent that such cash payment will not cause the Merger to fail to qualify as a “reorganization” within the meaning of Section 368(a) of the Code.

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2.3           Exchange Procedures.

(a) On the Closing Date, the Stockholder shall surrender to Parent for cancellation such Company Certificate or Company Certificates which immediately prior to the Effective Time represented all outstanding shares (other than shares canceled pursuant to Section 2.1(a)) of Company Common Stock, together with executed stock powers and such other administrative documents as may be reasonably required by Parent in connection with such surrender.

(b) In connection with such surrender, except as set forth in Section 2.2(c), Parent shall issue and deliver to the Stockholder share certificates in the name of the Stockholder representing the Merger Consideration Shares. Until surrendered as contemplated by this Section 2.3, each Company Certificate will be deemed at all times after the Effective Time for all purposes to represent only the right to receive upon such surrender the applicable portion of the Merger Consideration with respect to the shares of Company Capital Stock formerly represented thereby, subject to the provisions of Section 2.2(c).

(c) Following the Effective Time, there will be no further registration of transfers on the stock transfer books of the Surviving Corporation of the shares of Company Capital Stock that were outstanding immediately prior to the Effective Time. From and after the Effective Time, the Stockholder will cease to have any rights as a stockholder of the Surviving Corporation, except as provided by Applicable Law.

2.4           No Further Rights in Company. All shares of Parent Common Stock issued to the Stockholder upon conversion of shares of Company Capital Stock in accordance with the terms of this Article 2 shall be deemed to have been issued or paid in full satisfaction of all obligations of Parent and the Company pertaining to the shares of Company Capital Stock.

2.5           Lost Certificates. If any Company Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Stockholder and an indemnity by the Stockholder against any claims that may be made against Parent with respect to such Company Certificate, Parent will deliver in exchange for such lost, stolen or destroyed Company Certificate the applicable Merger Consideration with respect to the Company Capital Stock formerly represented thereby, subject to the provisions of Section 2.2(c).

2.6           Further Assurances. At and after the Effective Time, the officers and directors of the Surviving Corporation shall be authorized to execute and deliver, in the name and on behalf of the Surviving Corporation, any deeds, bills of sale, assignments or assurances and to take and do, in the name and on behalf of the Surviving Corporation, any other actions and things necessary to vest, perfect or confirm of record or otherwise in the Surviving Corporation any and all right, title and interest in, to and under any of the rights, properties or assets acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as set forth in the Disclosure Schedule delivered by the Company to Parent and Merger Subsidiary on the date hereof (the “Company Disclosure Schedule”) and any Schedule Update thereto, the Company hereby represents and warrants to Parent and Merger Subsidiary as follows (the Company Disclosure Schedule is arranged in sections corresponding to the sections and subsections of this Article 3, and disclosure in one section of the Company Disclosure Schedule shall constitute disclosure for all other sections of the Company Disclosure Schedule only to the extent to which the applicability of such disclosure is reasonably apparent):

3.1 Corporate Organization and Power.

(a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada.

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(b) The Company has all requisite corporate power and authority to carry on its business as now conducted and to own, lease and operate the assets and properties of the Company as now owned, leased and operated. The Company is duly qualified or licensed to do business as a foreign corporation and is in good standing in every jurisdiction in which the character or location of its properties and assets owned, leased or operated by it or the nature of the business conducted by it requires such qualification or licensing, except where the failure to be so qualified, licensed or in good standing in such other jurisdiction would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company and its Subsidiaries (taken as a whole). The Stockholder is a trust formed under the laws of the State of Nevada.

3.2           Articles of Incorporation of Company; Minutes. The Company has heretofore made available to Parent complete and accurate copies of its Articles of Incorporation and Bylaws, as currently in effect. The minute books and stock or equity records of the Company and its Subsidiaries, all of which have been made available to Parent, are complete and correct in all material respects. At the Closing, all such books and records will be in the possession of the Company and its Subsidiaries.

3.3           Subsidiaries and Other Entities. Section 3.3 of the Company Disclosure Schedule sets forth a true and complete list of all of the Subsidiaries of the Company. Each outstanding share of capital stock or other equity interest in each Subsidiary of the Company is duly authorized, validly issued, fully paid, nonassessable and free of preemptive rights and, except for the Golden Gaming Warrants, is owned, beneficially and of record, by the Company or one of its wholly-owned Subsidiaries. Each Subsidiary of the Company and each of the Big Sky Entities is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or formation, as the case may be and has all requisite entity power and authority to carry on its business as now conducted and to own, lease and operate its assets and properties as now owned, leased and operated, except where the failure to be so organized, existing or in good standing in such jurisdiction would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company and its Subsidiaries (taken as a whole). Each such Subsidiary and any of the Big Sky Entities is duly qualified or licensed to do business as a foreign corporation and is in good standing in every jurisdiction in which the character or location of its properties and assets owned, leased or operated by it or the nature of the business conducted by it requires such qualification or licensing, except where the failure to be so qualified, licensed or in good standing in such other jurisdiction would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company and its Subsidiaries (taken as a whole). Except as set forth in Section 3.3 of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries own any equity, partnership, membership or similar interest in any other Person.

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3.4           Authorization.

(a) The Company has all requisite corporate power and authority to execute and deliver this Agreement, to perform and comply with its obligations hereunder and to consummate the transactions contemplated herein. The execution and delivery by the Company of this Agreement, the performance and compliance by the Company with its obligations hereunder and the consummation by the Company of the transactions contemplated herein have been duly authorized by all necessary corporate action on the part of the Company and no other corporate proceedings or shareholder votes on the part of the Company are necessary to authorize this Agreement or the consummation by the Company of the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by the Company and, assuming due authorization, execution and delivery by Parent, the Stockholder, and Merger Subsidiary of this Agreement, constitutes the legal, valid and binding obligations of the Company, enforceable against it in accordance with the respective terms, subject to laws of general application relating to bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and rules of law governing specific performance, injunctive relief or other equitable remedies. The Stockholder has all requisite power and authority to execute and deliver this Agreement, to perform and comply with its obligations hereunder and to consummate the transactions contemplated herein. The execution and delivery by the Stockholder of this Agreement, the performance and compliance by the Stockholder with its obligations hereunder and the consummation by the Stockholder of the transactions contemplated herein have been duly authorized. This Agreement has been duly and validly executed and delivered by the Stockholder and, assuming due authorization, execution and delivery by Parent, the Company, and Merger Subsidiary of this Agreement, constitutes the legal, valid and binding obligations of the Stockholder, enforceable against it in accordance with the respective terms, subject to laws of general application relating to bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and rules of law governing specific performance, injunctive relief or other equitable remedies.

(b) The Company has taken all appropriate actions so that the restrictions on business combinations contained in any “Fair Price,” “Control Share Acquisition,” “Business Combination” or other anti-takeover statute, or similar statute or regulation, or any similar provision of the Articles of Incorporation or Bylaws of the Company will not apply to this Agreement, the Merger or any of the other transactions contemplated hereby.

3.5           Capitalization of the Company. The authorized capital stock of the Company consists of 2,500 shares of Company Common Stock. As of the date hereof, there are 711 shares of Company Common Stock issued and outstanding and no shares of Company Common Stock held in treasury. All of the issued and outstanding shares of Company Common Stock are duly authorized, validly issued, fully paid, nonassessable and free of preemptive rights. All issued and outstanding shares of Company Common Stock are owned by the Stockholder. Except for the Golden Gaming Warrants and except as otherwise set forth in Section 3.5 of the Company Disclosure Schedule, there are no other outstanding (x) shares of capital stock or other voting securities of the Company or any of its Subsidiaries, (y) securities of the Company or any of its Subsidiaries convertible into or exchangeable for shares of capital stock or voting securities of the Company or any of its Subsidiaries, or (z) options, warrants, conversion privileges, rights of first refusal, contracts, understandings, agreements or other rights to purchase or acquire from the Company or any of its Subsidiaries, and, no obligations of the Company or any of its Subsidiaries to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of the Company or any of its Subsidiaries (collectively, “Company Securities”). Except as set forth in Section 3.5 of the Company Disclosure Schedule, there are no outstanding obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any Company Securities. Except as set forth in Section 3.5 of the Company Disclosure Schedule, there are no shareholder agreements, voting trusts or other agreements or understandings to which the Company or any of its Subsidiaries is a party or by which it is bound relating to the voting or registration of any shares of capital stock of the Company or any of its Subsidiaries.

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3.6           Non-Contravention. Neither the execution, delivery and performance by the Company of this Agreement nor the consummation of the transactions contemplated hereby: (a) contravene or conflict with the Articles of Incorporation or Bylaws or other equivalent governing document, as the case may be, of the Company or any of its Subsidiaries, (b) assuming all of the Consents described in Section 3.7 are obtained or made, contravene or conflict with or constitute a violation of any provision of any Applicable Law binding upon or applicable to the Company or any of its Subsidiaries or any of the assets of the Company or any of its Subsidiaries, (c) result in the creation or imposition of any Lien on any of the assets of the Company or any of its Subsidiaries, other than Permitted Liens, or (d) assuming all of the Consents described in Section 3.7 are obtained or made, conflict with, constitute (with or without due notice or lapse of time or both) a default under, result in the loss of any material benefit under, or give rise to any right of termination, cancellation, increased payments or acceleration under any terms, conditions or provisions of any Contract to which the Company or any of its Subsidiaries is a party, or by which any properties or assets of the Company or any of its Subsidiaries may be bound, except, in the cases of clauses (b), (c) or (d), where such conflicts, violations, Liens, defaults or other occurrences would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company and its Subsidiaries (taken as a whole).

3.7           Consents and Approvals. The execution and delivery of this Agreement by the Company and the consummation by the Company of the Merger and the other transactions contemplated hereby do not require any consent, approval, order or authorization of or from, or registration, notification, declaration or filing with (hereinafter sometimes separately referred to as a “Consent” and sometimes collectively as “Consents”) any Governmental Authority or other Person, other than (a) such filings as may be required under applicable requirements of the Exchange Act, Securities Act, any state securities, takeover and “blue sky” laws and the rules and regulations of NASDAQ, (b) the filings required under the HSR Act, (c) the filing of the Certificate of Merger with the Secretary of State of the State of Nevada in accordance with the requirements of the NRS, (d) such filings and other actions as are necessary to obtain all required Gaming Approvals, (e) the Consents set forth in Section 3.7 of the Company Disclosure Schedule, and (f) such other Consents which, if not obtained or made, would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company and its Subsidiaries (taken as a whole).

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3.8           Proxy Statement Information. The material, information, financial statements and exhibits, taken as a whole, with respect to the Company supplied in writing by the Company to Parent (and its legal counsel and accounting advisors) for inclusion in the proxy statement prepared by Parent for the Parent Special Meeting (such proxy statement, the “Proxy Statement”), or any amendments thereof or supplements thereto, will not, at the time of the mailing of the Proxy Statement or any such amendment or supplement to the holders of Parent Common Stock and at the time of the Parent Special Meeting contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

3.9           Financial Statements; Undisclosed Liabilities.

(a) The Company has made available to Parent true, correct and complete copies of (i) the unaudited consolidated balance sheet, as of October 31, 2014 of the Company and its Subsidiaries (the “Latest Balance Sheet”) and the related unaudited consolidated statements of income and cash flows of the Company and its Subsidiaries for the ten-month period ended October 31, 2014 (collectively, the “Latest Financial Statements”) and (ii) the audited consolidated balance sheets, as of December 31, 2012 and 2013 of the Company and its Subsidiaries and the related audited consolidated statements of income and cash flows of the Company for each of the years ended December 31, 2012 and 2013 (collectively, the “Annual Financial Statements”). The Latest Financial Statements and the Annual Financial Statements have been prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present in all material respects the consolidated financial position of the Company as of the dates thereof and the consolidated results of operations of the Company for the periods referred to therein, subject in the case of any unaudited interim financial statements to normal year-end adjustments and the absence of notes.

(b) The Company and its Subsidiaries maintain a system of internal accounting controls sufficient, in the judgment of the Company, to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

(c) Except as and to the extent reflected in the Latest Balance Sheet, the Company and its Subsidiaries have no Liabilities of a type required to be reflected or reserved for on a consolidated balance sheet of the Company prepared in accordance with GAAP, except (i) Liabilities incurred in the ordinary course of business and not required to be set forth in the Latest Balance Sheet, (ii) Liabilities that have arisen after the date of the Latest Balance Sheet in the ordinary course of business, consistent with past practice, (iii) Liabilities disclosed on Section 3.9(c) of the Company Disclosure Schedule, (iv) Liabilities arising out of or in connection with this Agreement, the Merger or the transactions contemplated hereby, (v) Liabilities included in the computation of the Post-Closing Adjustment, or (vi) Liabilities incurred in the ordinary course of business that are not in excess of the materiality level established for the most recent Annual Financial Statements by the Company’s independent accountant.

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(d) There is no outstanding indebtedness payable by any director or officer of the Company or any of its Subsidiaries to the Company or any of its Subsidiaries.

3.10         Absence of Certain Changes. Except as otherwise authorized or contemplated by this Agreement, since December 31, 2013 through the date of this Agreement: (a) the Company and its Subsidiaries have owned and operated their assets, properties and businesses in the ordinary course of business and consistent with past practice, (b) there has not been any change, effect, event, occurrence, state of facts or development that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect on the Company and its Subsidiaries (taken as a whole) and (c) except as disclosed in Section 3.10 of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries has taken or agreed to take any action that would have constituted a breach of, or required Parent’s consent pursuant to, Sections 5.1(c)(iii), (v), (vi), (ix), (x), (xi), (xii) or (xiii) hereof had such covenants applied since December 31, 2013.

3.11         Assets and Properties.

(a) Except with respect to Intellectual Property (which is the subject of representations and warranties set forth in Section 3.18): (i) except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company and its Subsidiaries (taken as a whole), each of the Company and its Subsidiaries has good and valid right, title and interest in and to or, in the case of leased properties or properties held under license, good and valid leasehold or license interests in, all of its assets and properties, and (ii) each of the Company and its Subsidiaries holds title to its material owned assets and properties free and clear of all Liens, except Permitted Liens.

(b) To the Company’s knowledge, (i) the current use and operation of all real property by the Company and its Subsidiaries is in compliance in all material respects with all public and private covenants and restrictions and (ii) utilities, access and parking, if any, for such real property are adequate for the current use and operation of such real property. To the Company’s knowledge, there are no zoning, building code, occupancy restriction or other land-use regulation proceedings or any proposed change in any Applicable Law, which could materially detrimentally affect the use or operation of such real property, nor has the Company or any of its Subsidiaries received any notice of any material special assessment proceedings affecting such real property, or applied for any material change to the zoning or land use status of such real property.

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3.12         Compliance with Applicable Law. Except with respect to ERISA, Benefit Plan and labor matters, Environmental Laws, Tax matters and Gaming Laws (which are the subject of representations and warranties set forth in Sections 3.16, 3.17, 3.19, 3.21, 3.24 and 3.25, respectively):

(a) The Company and its Subsidiaries are in compliance with all Applicable Laws, except where such non-compliance would not reasonably be expected to have a Material Adverse Effect on the Company and its Subsidiaries (taken as a whole).

(b) The Company has no knowledge of any actual or threatened (i) notice or allegation of non-compliance with any Applicable Laws, (ii) enforcement action, or (iii) investigation, in any case by any Governmental Authority against the Company or any of its Subsidiaries.

(c) All material reports, documents, claims and notices required to be filed with, maintained for or furnished to any Governmental Authority by the Company or its Subsidiaries have been so filed, maintained or furnished by the Company or its Subsidiaries, as applicable, except where the failure to so file, maintain or furnish such report, document, claim, or notice would not reasonably be expected to have a Material Adverse Effect on the Company and its Subsidiaries (taken as a whole), and all such reports, documents, claims and notices were complete and accurate in all material respects on the date filed or furnished (or were corrected in or supplemented by a subsequent filing), such that no liability exists with respect to such filing, except for any such liability that would not reasonably be expected to have a Material Adverse Effect on the Company and its Subsidiaries (taken as a whole).

(d) Neither the Company nor any of its Subsidiaries nor, to its knowledge, any officers, managers, directors, governors and employees of the Company or any of its Subsidiaries have made or offered any payment, gratuity or other thing of value that is prohibited by any Applicable Law to personnel of any Governmental Authority.

3.13         Permits. Section 3.13 of the Company Disclosure Schedule sets forth each of the Company Permits as of the date of this Agreement. Each Company Permit is valid and in full force and effect and no Company Permit will be terminated, revoked, modified or become terminable or impaired in any respect by reason of the Merger, except where the failure to have or maintain such Company Permits would not have a Material Adverse Effect on the Company or any of its Subsidiaries (taken as a whole). Each of the Company and its Subsidiaries has conducted its business in compliance with all terms and conditions of the Company Permits, except where such non-compliance would not reasonably be expected to have a Material Adverse Effect on the Company and its Subsidiaries (taken as a whole).

3.14         Litigation. Except as disclosed in Section 3.14 of the Company Disclosure Schedule there are no (a) Actions that have been brought by any Governmental Authority or any other Person, nor any claims or any investigations or reviews by any Governmental Authority against or affecting the Company or any of its Subsidiaries, pending or, to the Company’s knowledge, threatened, against or by the Company or any of its Subsidiaries or any of their respective assets or properties or which seek to enjoin or rescind the transactions contemplated by this Agreement; and (b) existing Governmental Orders naming the Company or any of its Subsidiaries as an affected party or, to the knowledge of the Company, otherwise affecting any of the assets or the business of the Company or any of its Subsidiaries, in each case except as would not reasonably be expected to have a Material Adverse Effect on the Company and its Subsidiaries (taken as a whole).

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3.15         Material Contracts.

(a) Section 3.15(a) of the Company Disclosure Schedule lists the following Contracts to which the Company or any of its Subsidiaries is a party or is subject, or by which any of the assets of the Company or any of its Subsidiaries are bound (collectively, the “Company Material Contracts”):

(i) Each Contract providing for the lease of material real property by the Company or any of its Subsidiaries that is used by the Company or any of its Subsidiaries in connection with the operation of its business.

(ii) Each Contract that, by its terms, requires payments by the Company or any of its Subsidiaries in excess of $100,000 in any given calendar year, other than Contracts that are terminable by the Company or any of its Subsidiaries in its discretion and without penalty upon notice of 60 days or less.

(iii) Each Contract relating to, or evidences of, or guarantees of, or providing security for, indebtedness for borrowed money or the deferred purchase price of property (whether incurred, assumed, guaranteed or secured by any asset) in each case in excess of $50,000, other than trade payables.

(iv) All acquisition, partnership, joint venture, teaming arrangements or other similar Contracts.

(v) Each Contract under which the Company or any of its Subsidiaries has agreed not to compete or has granted to a third party an exclusive right that restricts or otherwise adversely affects the ability of the Company or any of its Subsidiaries to engage in any line of business, or in any market or geographic area.

(vi) Each Contract between the Company or any of its Subsidiaries, on the one hand, and any of their respective officers, directors or the Stockholder, on the other hand (other than employment, consulting or management services agreements or Benefit Plans).

(b) The Company has made available to Parent true and correct copies (or summaries, in the case of any oral Contracts) of each Company Material Contract. Each Company Material Contract is a legal, valid and binding obligation of the Company or any of its Subsidiaries, as the case may be (and, to the knowledge of the Company, each other party thereto), and is enforceable against the Company or any of its Subsidiaries, as the case may be (and, to the knowledge of the Company, each other party thereto) in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and subject to general principles of equity. Neither the Company or any of its Subsidiaries, as the case may be, nor, to the knowledge of the Company, any other party thereto is in breach, violation or default of any Company Material Contract except for such breach, violation or default as would not, either individually or in the aggregate, have a Material Adverse Effect on the Company and its Subsidiaries (taken as a whole).

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3.16         Benefit Plans.

(a) The term “Company Plan” means every plan, fund, Contract, program and arrangement that the Company or any Subsidiary sponsors, maintains or contributes to, is required to contribute to, that provides present or former employees of the Company and/or its Subsidiaries (the “Employees”) with: (i) medical, surgical, health care, hospitalization, dental, vision, life insurance, death, disability, legal services, severance, sickness, accident or other welfare benefits (whether or not defined in Section 3(1) of ERISA), (ii) pension, profit sharing, stock bonus, retirement, supplemental retirement or deferred compensation benefits (whether or not tax qualified and whether or not defined in Section 3(2) of ERISA), (iii) bonus, incentive compensation, option, stock appreciation right, phantom stock or stock purchase benefits or (iv) salary continuation, paid time off, supplemental unemployment, current or deferred compensation (other than current salary or wages paid in the form of cash), termination pay, vacation or holiday benefits (whether or not defined in Section 3(3) of ERISA). “ERISA” means the Employee Retirement Income Security Act of 1974, as amended. “ERISA Affiliates” means each trade or business (whether or not incorporated) that is part of the same controlled group under, common control with, or part of an affiliated service group that includes the Company within the meaning of Code Section 414(b), (c), (m) or (o).

(b) Section 3.16(b) of the Company Disclosure Schedule sets forth each Company Plan by name.

(c) There are no Company Plans subject to Title IV of ERISA or Code Section 412 and neither the Company nor any of its Subsidiaries has ever maintained a Plan subject to Title IV of ERISA or Code Section 412 for which a liability remains outstanding. The Company has no liability contingent or otherwise under Title IV of ERISA with respect to any ERISA Affiliate.

(d) No employer other than the Company or an ERISA Affiliate is permitted to participate or participates in the Company Plans. No leased employees (as defined in Section 414(n) of the Code) or independent contractors are eligible for, or participate in, any Company Plan.

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(e) There are no Company Plans which promise or provide health, life or other welfare benefits to retirees or former employees of the Company and/or its ERISA Affiliates, except as otherwise required by Code Section 4980B or comparable state statute or other law which provides for continuing health care coverage.

(f) With respect to all Company Plans, to the extent that the following documents exist, the Company has made available to Parent true and complete copies of: (i) the most recent determination letter, if any, received by the Company and/or its ERISA Affiliates from the IRS, (ii) all pending applications for rulings, determinations, opinions, no action letters and the like filed with any governmental agency (including the DOL and the IRS), (iii) the Annual Report/Return (Form Series 5500) with financial statements, if any, and attachments for the three most recent plan years, (iv) Company Plan documents, summary plan descriptions, trust agreements, insurance Contracts, service agreements and all related Contracts and documents (including any employee summaries and material employee communications) and (v) all closing letters, audit finding letters, revenue agent findings and similar documents issued by a Governmental Authority.

(g) Each Company Plan has at all times been operated in material compliance with ERISA, the Code, any other applicable law (including all reporting and disclosure requirements thereby) and the terms of such Company Plan. With respect to each Company Plan that is intended to be qualified under Section 401(a) of the Code, each such Company Plan has been determined by the IRS to be so qualified, and each trust forming a part thereof has been determined by the IRS to be exempt from Tax pursuant to Section 501(a) of the Code. To the knowledge of the Company, no reason exists which would cause such qualified status to be revoked. To the knowledge of the Company, no non-exempt prohibited transactions under Section 406 or 407 of ERISA or Section 4975 of the Code have occurred with respect to any Company Plan that would reasonably be expected to subject such Company Plan or the Company or any of its Subsidiaries to any material penalty under the Code or ERISA.

(h) All material contributions, premiums, fees or charges due and owing to or in respect of any Company Plan for periods on or before the Closing have been or will be paid in full by the Company and its Subsidiaries prior to the Closing in accordance with the terms of such Company Plan and all Applicable Law, and no material Taxes are owing on the part of the Company as a result of any Company Plan.

(i) The Company and its ERISA Affiliates have not committed to make any material increase in contributions or benefits under any Company Plan that would become effective either on or after the Closing Date.

(j) No Company Plan is currently under audit or examination by the IRS or the DOL. There are no pending or, to the Company’s knowledge, threatened, audits, investigations, claims, suits, grievances or other proceedings.

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(k) The events contemplated in this Agreement will not trigger, or entitle any current or former employee of the Company or any of its Subsidiaries to, severance, termination, change in control payments or accelerated vesting under any Company Plan, and will not result in any material Tax or other liability payable by any Company Plan or, with respect to any Company Plan, by the Company or any of its Subsidiaries.

(l) To the knowledge of the Company, there are no facts or circumstances that could reasonably be expected to, directly or indirectly, subject the Company or any of its Subsidiaries to any (i) material excise Tax or other liability under Chapters 43, 46 or 47 of Subtitle D of the Code, (ii) material penalty Tax or other liability under Chapter 68 of Subtitle F of the Code or (iii) material civil penalty, damages or other liabilities arising under Section 502 of ERISA.

(m) All Nonqualified Deferred Compensation Plans (as defined in Code Section 409A(d)(1)) of the Company are in material compliance with Code Section 409A.

3.17         Labor and Employment Matters.

(a) To the Company’s knowledge, no executive employee of the Company or any of its Subsidiaries has any plans to terminate his or her employment. Each of the Company and its Subsidiaries is in compliance in all material respects with all Applicable Law relating to employment and employment practices and those relating to the calculation and payment of wages (including compensability of time, overtime pay, maximum hours of work and child labor restrictions), equal employment opportunity (including laws prohibiting discrimination and/or harassment or requiring accommodation on the basis of race, color, national origin, religion, gender, disability, age, sexual orientation or other protected characteristic), affirmative action and other hiring practices, occupational safety and health, workers compensation, unemployment, the payment of social security and other taxes, and collective bargaining or concerted activity or other conduct protected under or matters subject to the National Labor Relations Act or applicable state labor relations or collective bargaining law. Except as set forth in Section 3.17(a) of the Company Disclosure Schedule, there are no material workers’ compensation claims pending against the Company or any of its Subsidiaries.

(b) Each of the Company and its Subsidiaries has received approval from the Department of Labor and the Immigration and Naturalization Service for any temporary work authorizations including H-1B, L-1, F-1 or J-1 visas or work authorizations required in connection with the retention of any employee of the Company or any of its Subsidiaries.

(c) Except as listed on Section 3.17(c) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is bound by any oral or written employee collective bargaining agreement, and to the extent any such agreements exist, copies have been provided by the Company to Parent prior to the date hereof.

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(d) Each of the Company and its Subsidiaries is in compliance in all material respects with all applicable employee licensing requirements and has used its reasonable best efforts to ensure that each employee, consultant, contractor or other non-employee service provider who is required to have a gaming or other license under any Gaming Law or other Applicable Law maintains such license in current and valid form.

(e) Each of the Company and its Subsidiaries is in compliance in all material respects with all Applicable Law, Governmental Orders, and Contracts (if any) respecting the WARN Act or any other comparable Applicable Law that applies to mass layoffs and/or plant closings to which the Company or any of its Subsidiaries is subject in each of the jurisdictions in which it conducts operations.

3.18         Intellectual Property.

(a) The term “Intellectual Property” means the following: (i) all inventions, methods and processes, and the subject matter of all patents and patent applications; (ii) trademarks, service marks, trade names, trade dress, material logos, material slogans, material tag lines, and other material designators of origin (all whether registered or not); (iii) uniform resource locators, Internet domain name registrations, Internet domain name applications (“Internet Names”); (iv) works of authorship and the subject matter of all copyright applications and registered copyrighted works (including without limitation, proprietary software, product documentation, and website content); (v) material trade secrets; (vi) material know-how, and (vii) any intellectual property or other proprietary rights in or to any of the foregoing. The term “Company Intellectual Property” means Intellectual Property owned by the Company or any of its Subsidiaries. Section 3.18(a) of the Company Disclosure Schedule sets forth a full and complete listing and description of all Company Intellectual Property that is registered with a Governmental Authority by or on behalf of the Company or any of its Subsidiaries (“Registered Company Intellectual Property”), with the owner name, country(ies) or regional scope, and any applicable registration and application numbers and dates indicated.

(b) Neither the Company nor any of its Subsidiaries is in breach in any material respect of any Contract pursuant to which the Company or any of its Subsidiaries has licensed material Company Intellectual Property to a third party or pursuant to which the Company or any of its Subsidiaries has licensed any material Intellectual Property from a third party.

(c) To the Company’s knowledge, the Company Intellectual Property together with any Intellectual Property licensed to the Company or any of its Subsidiaries or which the Company or any of its Subsidiaries otherwise has a right to use constitutes all of the material Intellectual Property necessary for the business of the Company or any of its Subsidiaries as now conducted (without taking into account the transactions contemplated hereby).

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(d) Each of the Company and its Subsidiaries owns and possesses all right, title and interest in and to all Company Intellectual Property free and clear of Liens, except for Permitted Liens and except for licenses of Company Intellectual Property to third parties granted in the ordinary course of business. Each of the Company or its Subsidiaries is the sole owner of record with the applicable Governmental Authority of all Registered Company Intellectual Property. There are no royalties, fees or other payments payable by the Company or any of its Subsidiaries to any Person by reason of the ownership, development, modification, use, license, sublicense, or sale of the Registered Company Intellectual Property other than salaries and sales commissions paid to employees and sales agents in the ordinary course of its business.

(e) All personnel, including employees, agents, consultants and contractors, who have contributed to or participated in the conception or development, or both, of the Company Intellectual Property either (i) have been a party to “work-for-hire” arrangements or agreements with the Company or a Subsidiary in accordance with applicable national and state law that has accorded the Company or such Subsidiary ownership of all tangible and intangible contributions to the Company Intellectual Property, or (ii) have executed appropriate instruments of assignment in favor of the Company or a Subsidiary as assignee that have conveyed to the Company or such Subsidiary effective and exclusive ownership of all tangible and intangible contributions to the Company Intellectual Property, except for immaterial failures of clause (i) or (ii) above.

(f) To the Company’s knowledge, all of the Registered Company Intellectual Property that has been issued is valid and enforceable. To the Company’s knowledge, the Company Intellectual Property is not currently being infringed by other Persons. Neither the Company nor any Subsidiary has received a written claim by any third party contesting the validity of any Company Intellectual Property during the three year period immediately preceding the date of this Agreement. Without limiting the generality of the foregoing, the Company or a Subsidiary has taken all actions required as of the Closing Date to keep rights in the Registered Company Intellectual Property pending or in effect, including the payment of filing, examination, annuity, and maintenance fees and the filing of renewals or statements of use, in each case except for such rights that the Company or a Subsidiary has intentionally abandoned or let lapse. To Company’s knowledge, no Registered Company Intellectual Property rights are the subject of any interference, opposition, cancellation, nullity, re-examination or other similar proceeding before a Governmental Authority placing in question the validity or scope of such rights. The Company and its Subsidiaries have used reasonable secrecy measures to protect its material trade secrets.

(g) Except as set forth in Section 3.18(g) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries has received during the three year period immediately preceding the date of this Agreement any written notice of any infringement, misappropriation or violation by it of any rights in Intellectual Property of a third party.

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(h) Each of the Company and its Subsidiaries has taken commercially reasonable steps to provide for the remote-site back-up of data and information critical to the conduct of its business.

3.19         Environmental Compliance.

(a) No Third-Party Environmental Claim or Regulatory Action is pending or, to the Company’s knowledge, threatened against the Company or any of its Subsidiaries.

(b) All transfer, transportation, generation, treatment, containment, handling, location, use, manufacture, processing, storage or disposal of Hazardous Materials, and arranging therefor, by the Company or any of its Subsidiaries has been in compliance with applicable Environmental Law, except where the failure to be in compliance with such Environmental Law would not have or reasonably be expected to have a Material Adverse Effect on the Company and its Subsidiaries (taken as a whole).

(c) To the knowledge of the Company, except for Route Account Sites, no Property has ever been used as a regulated or unregulated landfill, dump or disposal area, or as a transfer, handling or treatment area for wastes regulated under either the Resource Conservation and Recovery Act, 42 U.S.C. §§6901 et seq., or solid waste laws.

(d) To the knowledge or the Company, except as set forth in Section 3.19(d) of the Company Disclosure Schedule and except for Route Account Sites: (i) no Property is being used or has ever been used as a gasoline service station, or as a facility for selling, dispensing, storing, or transferring of 250 gallons or more of petroleum or petroleum products at any one time, and (ii) there are no underground storage tanks currently located at any Property except tanks that have been property closed in place under any applicable Environment Law.

(e) To the knowledge of the Company, except for Route Account Sites, there has not been any Release on, under, about, from or in connection with the Property, including the presence of any Hazardous Materials that have come to be located on or under the Property from another location, except as would not have or reasonably be expected to have a Material Adverse Effect on the Company and its Subsidiaries (taken as a whole).

(f) The Company and its Subsidiaries are in compliance with all applicable Environmental Law, except where the failure to so comply would not reasonably be expected to have a Material Adverse Effect on the Company and its Subsidiaries (taken as a whole).

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(g) Each of the Company and its Subsidiaries has obtained all material Permits required by Environmental Law for operation of the business of the Company and its Subsidiaries as currently conducted, and each such Permit will be valid and in full force and effect upon consummation of the transactions contemplated by this Agreement, in each case except as would not reasonably be expected to have a Material Adverse Effect on the Company and its Subsidiaries (taken as a whole). All such Permits held by the Company and its Subsidiaries as of the date of this Agreement are listed on Section 3.19(g) of the Company Disclosure Schedule. Each of the Company and its Subsidiaries has filed all reports and notifications required to be filed under and pursuant to all applicable Environmental Law, except where the failure to so comply would not have or reasonably be expected to have a Material Adverse Effect on the Company and its Subsidiaries (taken as a whole).

(h) The most recent Phase I Environmental Site Assessments and Phase II assessments (if any) in the possession of the Company or any of its Subsidiaries with respect to the Property are listed on Section 3.19(h) of the Company Disclosure Schedule.

(i) No Lien (other than Permitted Liens) has been attached or filed against the Company or any of its Subsidiaries in favor of any Person for: (i) any liability under or violation of any applicable Environmental Law; (ii) any Release of Hazardous Materials; or (iii) any imposition of Environmental Costs.

(j) Notwithstanding any provision of this Agreement to the contrary, the representations and warranties in this Section 3.19 are the sole and exclusive representations of the Company relating to environmental matters, including with respect to Environmental Law, Permits issued thereunder or Hazardous Materials.

3.20         Insurance. Section 3.20 of the Company Disclosure Schedule contains an accurate and complete list of all insurance policies owned or held by the Company or any of its Subsidiaries as of the date of this Agreement, including, but not limited to, fire and other casualty, general liability, theft, life, workers’ compensation, health, directors and officers, business interruption and other forms of insurance owned or held by it, specifying the insurer, the policy number, and the term of the coverage. Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company and its Subsidiaries (taken as a whole), (i) all present policies are in full force and effect and all premiums with respect thereto have been paid, and (ii) the Company and its subsidiaries have not been denied any form of insurance and no policy of insurance has been revoked or rescinded during the past three years.

3.21         Tax Matters.

(a) Each of the Company and its Subsidiaries has (i) timely filed (or has had timely filed on its behalf) all material Tax Returns required to be filed, and all such Tax Returns are true, correct and complete in all material respects; (ii) timely and properly paid all material Taxes due and payable for all Tax periods or portions thereof, whether or not shown on such Tax Returns; (iii) established in their books of account, in accordance with GAAP and consistent with past practices, adequate reserves for the payment of any Taxes not yet due and payable; and (iv) complied with all Applicable Law relating to the withholding of Taxes and the payment thereof in all material respects.

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(b) There are no material Liens (other than Permitted Liens) for Taxes upon any assets of the Company or any of its Subsidiaries.

(c) No deficiency for any material Taxes has been proposed, asserted or assessed against the Company or any of its Subsidiaries that has not been resolved and paid in full. No waiver, extension or comparable consent given by the Company or any of its Subsidiaries regarding the application of the statute of limitations with respect to any material Taxes or Tax Return is outstanding, nor is any request for any such waiver or consent pending. There is no pending Tax audit or other administrative proceeding or court proceeding with regard to any material Taxes or Tax Return for any Tax year of the Company or any of its Subsidiaries, nor has there been any written notice to the Company or any of its Subsidiaries by any Governmental Authority regarding any such Tax audit or other proceeding, nor, to the Company’s knowledge, is any such Tax audit or other proceeding threatened with regard to any material Taxes or Tax Returns of the Company or any of its Subsidiaries.

(d) Neither the Company nor any of its Subsidiaries has any material Liability for Taxes in a jurisdiction where it does not file a Tax Return, nor has the Company or any of its Subsidiaries received written notice from a Taxing Authority in such a jurisdiction that it is or may be subject to taxation by that jurisdiction.

(e) All transactions that could give rise to an underpayment of Tax (within the meaning of Section 6662 of the Code) were reported by the Company or a Subsidiary of the Company in a manner for which there is substantial authority or were adequately disclosed on the Tax Returns as required in accordance with Section 6662(d)(2)(b) of the Code.

(f) Neither the Company nor any of its Subsidiaries is a party to any agreement, contract, arrangement or plan that has resulted or could result, separately or in the aggregate, in connection with this Agreement, in the payment of any “excess parachute payments” within the meaning of Section 280G of the Code, and the consummation of the transactions contemplated by this Agreement will not be a factor causing payments to be made that are not deductible (in whole or in part) as a result of the application of Section 280G of the Code.

(g) Neither the Company nor any of its Subsidiaries has been a member of any joint venture, partnership, contract or other arrangement that is treated as a “partnership” for federal, state, local or foreign income Tax purposes. Neither the Company nor any of its Subsidiaries owns any interest in an entity that is classified as an entity that is “disregarded as an entity separate from its owner” under Treasury Regulations Section 301.7701-3(b).

(h) Neither the Company nor any of its Subsidiaries (i) has been a member of an affiliated group filing a consolidated Tax Return, and (ii) has any Liability for the Taxes of any Person (other than itself) under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor, by contract or otherwise.

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(i) Neither the Company nor any of its Subsidiaries is required to include in income any adjustment under Section 481(a) of the Code by reason of a voluntary change in accounting method initiated by it, and the IRS has not proposed any such adjustment or change in accounting method.

(j) Neither the Company nor any of its Subsidiaries is, or has been at any time, a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code.

(k) Neither the Company nor any of its Subsidiaries is a party to or bound by any obligations under any Tax sharing, Tax allocation, Tax indemnity or similar agreement or arrangement (other than customary gross-up or indemnification provisions in credit agreements, leases and similar agreements entered into in the ordinary course of business not primarily related to Taxes).

(l) Neither the Company nor any of its Subsidiaries has engaged in any listed transaction as defined under Section 6011 of the Code and the Treasury Regulations promulgated thereunder or under any similar provision of state law.

(m) Neither the Company nor any of its Subsidiaries has constituted either a “distributing corporation” or a “controlled corporation” in a distribution of stock intended to qualify for tax-free treatment under Section 355 of the Code (i) in the two years prior to the date of this Agreement or (ii) in a distribution which could otherwise constitute a part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in conjunction with the transactions contemplated by this Agreement.

(n) The Company (and any predecessor of the Company) has been a validly electing S corporation within the meaning of Sections 1361 and 1362 of the Code at all times during its existence and the Company will be an S corporation up to and including the day before the Closing Date. The Company has no potential liability for any Tax under Section 1374 of the Code or any similar provision under state or local law. Each of the Subsidiaries is, and has at all times been, an entity disregarded as separate from its owner under Treasury Regulations Section 301.7701-3 for U. S. federal and, to the extent applicable, state, local or foreign income Tax purposes.

(o) True, correct and complete copies of all income Tax returns, material Tax examination reports and statements of deficiencies assessed against, or agreed to with respect to the Company or any of its Subsidiaries with respect to the last three years with the IRS or any other Taxing Authority have been made available.

(p) Neither the Company nor any of its Subsidiaries will be required to include any material item of income, or exclude any material item of deduction, for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (i) change in method of accounting for a taxable period ending on or prior to the Closing Date; (ii) “closing agreement” as described in Section 7121 of the Code executed on or prior to the Closing Date; (iii) installment sale or open transaction disposition made on or prior to the Closing Date; or (iv) prepaid amount or advance payment received on or prior to the Closing Date.

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(q) The Company has no knowledge of any facts or circumstances that would cause the Merger to fail to qualify as a reorganization within the meaning of Section 368(a) of the Code.

3.22         Bank Accounts. All bank accounts of the Company and its Subsidiaries have been duly authorized by the holder thereof.

3.23         Brokers. Except as provided in Section 3.23 of the Company Disclosure Schedule, neither the Company, nor any of its Subsidiaries, nor any directors, officers, managers or employees of the Company or any of its Subsidiaries has employed any broker, finder, or financial advisor or incurred any liability for any brokerage fee or commission, finder’s fee or financial advisory fee, in connection with the transactions contemplated hereby.

3.24         Licensability. Except as disclosed in Section 3.24 of the Company Disclosure Schedule, none of the Company, its Subsidiaries, any of their respective officers, managers, directors, partners, members, principals or Affiliates which may reasonably be considered in the process of determining the suitability of the Company and its Subsidiaries for a Gaming Approval by a Gaming Authority, or, to the Company’s knowledge, any holders of the Company’s capital stock or other equity interests who will be required to be licensed or found suitable under applicable Gaming Laws (the foregoing Persons, collectively, the “Company Licensing Affiliates”), has ever abandoned or withdrawn (in each case in response to a communication from a Gaming Authority regarding a likely or impending denial, suspension or revocation) or been denied or had suspended or revoked a Gaming Approval, or an application for a Gaming Approval, by a Gaming Authority. The Company, its Subsidiaries, and each of their respective Company Licensing Affiliates which is licensed or holds any Gaming Approval pursuant to applicable Gaming Laws (collectively, the “Company Licensed Parties”) is in good standing in each of the jurisdictions in which such Company Licensed Party owns, operates, or manages gaming facilities. To the Company’s knowledge, there are no facts which, if known to any Gaming Authority, would be reasonably likely to (a) result in the denial, revocation, limitation or suspension of a Gaming Approval of any of the Company Licensed Parties, or (b) result in a negative outcome to any finding of suitability proceedings of any of the Company Licensed Parties currently pending, or under the suitability proceedings necessary for the consummation of the Merger.

3.25         Compliance with Gaming Laws.

(a) Each of the Company Licensed Parties, and to the Company’s knowledge, each of the Company Licensed Parties’ respective directors, officers, managers, partners, members, principals, key employees and Persons performing management functions similar to those performed by officers, partners, or managers (collectively, “Company Management Principals”), holds all Gaming Approvals and all such Permits as are necessary to conduct the business and operations of the Company Licensed Parties as currently conducted, each of which is in full force and effect in all respects, and no event has occurred which permits, or upon giving of notice or passage of time or both would permit, revocation, non-renewal, modification, suspension, limitation or termination of any Permit that currently is in effect, the loss of which, either individually or in the aggregate, would be reasonably likely to impair or delay the Closing. Each of the Company Licensed Parties, and to the knowledge of the Company, each of the Company Licensed Parties’ respective Company Management Principals, is in compliance with the terms of such Permits, except for such failures to comply which would not, individually or in the aggregate, be reasonably likely to impair or delay the Closing. None of the Company or its Subsidiaries, or any of their respective Company Licensing Affiliates, has received notice of any investigation or review by any Gaming Authority or other Governmental Authority with respect to the Company, its Subsidiaries, or any of their respective Company Licensing Affiliates or Company Management Principals that is pending, and, to the knowledge of the Company, no investigation or review is threatened, nor has any Gaming Authority or other Governmental Authority indicated any intention to conduct the same, other than those the outcome of which would not impair or delay the Closing.

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(b) No Company Licensed Party, and no Company Licensing Affiliate or Company Management Principal of any Company Licensed Party, has received any written claim, demand, notice, complaint, court order or administrative order from any Gaming Authority or other Governmental Authority in the past three years under, or relating to any violation or possible violation of, any Gaming Law which did or would be reasonably likely to result in an individual fine or penalty of $25,000 or more. To the knowledge of the Company, there are no facts which if known to any Gaming Authority could reasonably be expected to result in the revocation, limitation or suspension of a Gaming Approval or other license, finding of suitability, registration, permit or approval of the Company Licensed Parties, or any of their respective Company Licensing Affiliates or Company Management Principals. None of the Company Licensed Parties, and none of their respective Company Licensing Affiliates or Company Management Principals, has suffered a suspension, denial, non-renewal, limitation or revocation of any such Permit.

3.26         Relations with Suppliers. No current supplier from which the Company and its Subsidiaries, taken as a whole, purchased more than 5% of the goods and services they purchased during the last full fiscal year has canceled any contract or order for provision of, and to the knowledge of the Company there has been no threat by any such supplier not to provide, products, supplies or services to the business of the Company and its Subsidiaries, taken as a whole, either prior to or following the Effective Time.

3.27         Investment Intent. The shares of Parent Common Stock to be acquired by the Stockholder hereunder are being acquired solely for purposes of investment for the Stockholder’s own account and not with a view to, or for offer or sale in connection with, any distribution thereof. The investment representations of the Stockholder in the Stockholder Investment Representations are true and accurate.

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3.28         Investigation by Parent. Notwithstanding anything to the contrary in this Agreement, (a) no investigation by Parent shall affect the representations and warranties of the Company under this Agreement or contained in any other writing to be furnished to Parent in connection with the transactions contemplated hereunder, and (b) such representations and warranties shall not be affected or deemed waived by reason of the fact that Parent knew or should have known that any of the same is or might be inaccurate in any respect.

3.29         Exclusive Representations and Warranties. Except for the representations and warranties contained in this Article 3, neither the Company, the Stockholder nor any other Person on their respective behalf makes any express or implied representation or warranty with respect to the Company, its Subsidiaries, the Business or the transactions contemplated by this Agreement, and the Company disclaims any other representations or warranties, whether express, statutory or implied.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PARENT

Except as set forth in the Disclosure Schedule delivered by Parent to the Company on the date hereof (the “Parent Disclosure Schedule”) and any Schedule Update thereto, and except as otherwise specifically disclosed in the Parent SEC Reports (as defined below) filed by Parent prior to the date of this Agreement, including its Form 10-K filed with respect to the fiscal year ended December 29, 2013 (but in all cases excluding (i) any forward-looking disclosures contained in the “Forward-Looking Statements” and “Risk Factors” sections of the Parent SEC Reports and any other disclosures therein to the extent they are primarily predictive, cautionary or forward-looking in nature and (ii) information included in, or incorporated by reference as, exhibits and schedules to any Parent SEC Reports), Parent hereby represents and warrants to the Company as follows (the Parent Disclosure Schedule is arranged in sections corresponding to the sections and subsections of this Article 4, and disclosure in one section of the Parent Disclosure Schedule shall constitute disclosure for all other sections of the Parent Disclosure Schedule only to the extent to which the applicability of such disclosure is reasonably apparent):

4.1           Corporate Organization and Power. Each of Parent and Merger Subsidiary is a corporation duly organized, validly existing and in good standing under the laws of the State of its incorporation and has all requisite corporate power and authority to carry on its business as now conducted and to own, lease and operate their respective assets and properties as now owned, leased and operated. Each of Parent and Merger Subsidiary is duly qualified or licensed to do business as a foreign corporation and is in good standing in every jurisdiction in which the character or location of its properties and assets owned, leased or operated by it or the nature of the business conducted by it requires such qualification or licensing, except where the failure to be so qualified, licensed or in good standing in such other jurisdiction would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Parent and its Subsidiaries (taken as a whole). Merger Subsidiary is a recently formed Nevada corporation that was formed solely for the purpose of engaging in the Merger and has not conducted, and prior to the Effective Time will not conduct, any activities other than those incident to its formation and in connection with the consummation of the Merger.

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4.2           Articles of Incorporation of Parent and Merger Subsidiary; Minutes. Each of Parent and Merger Subsidiary has heretofore made available to the Company complete and accurate copies of (i) its Articles of Incorporation and Bylaws, as currently in effect, and (ii) the minutes (or in the case of minutes that have not yet been finalized, a brief summary of the meeting) of all meetings of the shareholders of Parent, the Parent Board of Directors and each committee of the Parent Board of Directors since December 29, 2013.

4.3           Subsidiaries. Section 4.3 of the Parent Disclosure Schedule sets forth a true and complete list of all of the Subsidiaries of Parent. Each outstanding share of capital stock of other equity interest in each Subsidiary of Parent is duly authorized, validly issued, fully paid, nonassessable and free of preemptive rights and is owned, beneficially and of record, by Parent or one of its wholly-owned Subsidiaries. Each Subsidiary of Parent is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or formation, as the case may be, and has all requisite entity power and authority to carry on its business as now conducted and to own, lease and operate its assets and properties as now owned, leased and operated, except where the failure to be so organized, existing or in good standing in such jurisdiction would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Parent and its Subsidiaries (taken as a whole). Each such Subsidiary is duly qualified or licensed to do business as a foreign corporation and is in good standing in every jurisdiction in which the character or location of its properties and assets owned, leased or operated by it or the nature of the business conducted by it requires such qualification or licensing, except where the failure to be so qualified, licensed or in good standing in such other jurisdiction would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Parent and its Subsidiaries (taken as a whole). Except as set forth in Section 4.3 of the Company Disclosure Schedule, neither Parent nor any of its Subsidiaries own any equity, partnership, membership or similar interest in any other Person. Parent has been the sole stockholder and controlling party of Merger Subsidiary since the formation of Merger Subsidiary and Parent will be the sole stockholder and controlling party of Merger Subsidiary immediately prior to and as of the Effective Time.

4.4           Authorization.

(a) Each of Parent and Merger Subsidiary has all requisite corporate power and authority to execute and deliver this Agreement, to perform and comply with its obligations hereunder and, subject to the receipt of the Parent Shareholder Approval, to consummate the transactions contemplated herein. The execution and delivery by each of Parent and Merger Subsidiary of this Agreement, the performance and compliance by each of Parent and Merger Subsidiary with its obligations hereunder and the consummation by each of Parent and Merger Subsidiary of the transactions contemplated herein have been duly authorized by all necessary corporate action on the part of by each of Parent and Merger Subsidiary, subject to receipt of the Parent Shareholder Approval, and no other corporate proceedings or shareholder votes on the part of Parent or Merger Subsidiary are necessary to authorize this Agreement or the consummation by Parent and Merger Subsidiary of the transactions contemplated hereby. Assuming the presence of a quorum at the Parent Special Meeting, this Agreement and the Merger will be adopted upon the receipt of the Parent Shareholder Approval. No other vote or consent of the holders of any class or series of capital stock of Parent is necessary to approve this Agreement or the Merger or the other transactions contemplated hereby. The vote or consent of Parent as the sole stockholder of Merger Subsidiary (which occurred prior to the date hereof) is the only vote or consent of the holders of any class or series of capital stock of Merger Subsidiary necessary to approve this Agreement and the Merger and the other transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Parent and Merger Subsidiary, as applicable, and, assuming due authorization, execution and delivery by the Company and the Stockholder of this Agreement, constitutes the legal, valid and binding obligation of Parent and Merger Subsidiary, enforceable against each in accordance with its terms, subject to laws of general application relating to bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and rules of law governing specific performance, injunctive relief or other equitable remedies.

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(b) Parent has taken all appropriate actions so that the restrictions on business combinations contained in any “Fair Price,” “Control Share Acquisition,” “Business Combination” or other anti-takeover statute, or similar statute or regulation, or any similar provision of the Articles of Incorporation or Bylaws of Parent will not apply to this Agreement, the Merger or any of the other transactions contemplated hereby.

(c) The Stockholder, the Company and each of their respective Affiliates are exempt from the definition of “Acquiring Person” contained in the Parent Rights Agreement, and no “Stock Acquisition Date,” “Acquisition Event” or “Distribution Date” (as such terms are defined in the Parent Rights Agreement) will occur as a result of the execution of this Agreement or the consummation of the transactions contemplated hereby, including the Merger. Parent has previously provided the Company with a true and complete copy of the Parent Rights Agreement and all amendments thereto. The Parent Rights Agreement has not been further amended or modified. Other than the Parent Rights Agreement, Parent has no rights plan, “poison-pill” or other comparable agreement or arrangement designed to have the effect of delaying, deferring or discouraging any Person from acquiring control of Parent.

4.5           Capitalization.

(a) The authorized capital stock of Parent consists of (i) 100,000,000 shares of Parent Common Stock, and (ii) 7,500,000 shares of Series A Convertible Preferred Stock, par value $0.01 per share (“Parent Preferred Stock”). As of the date hereof, there are 13,389,078 shares of Parent Common Stock issued and outstanding, no shares of Parent Preferred Stock issued and outstanding, and no shares of Parent Common Stock or Parent Preferred Stock held in treasury. All of the issued and outstanding shares of Parent Common Stock are duly authorized, validly issued, fully paid and nonassessable and free of preemptive rights.

(b) As of the date hereof, Parent has no shares of Parent Common Stock or Parent Preferred Stock reserved for issuance, except for (i) no shares of Parent Common Stock reserved for issuance pursuant to the Parent Rights Agreement, (ii) 755,617 shares of Parent Common Stock subject to outstanding Parent Stock Options under the Parent Stock Option Plan, (iii) no shares of Parent Common Stock subject to outstanding Parent Restricted Stock Units under the Parent Stock Option Plan, and (iv) 506,883 shares of Parent Common Stock reserved for future issuance under the Parent Stock Option Plan for awards not yet granted.

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(c) Section 4.5(c)(i) of the Parent Disclosure Schedule sets forth a true and complete list, as of the date hereof, of, for each Parent Stock Option: (i) the number of shares of Parent Common Stock subject to such Parent Stock Option (i.e., the original amount less exercises and any forfeitures), and (ii) the exercise price and expiration date of such Parent Stock Option. All Parent Stock Options are evidenced by stock option agreements forms of which have been made available to the Company, and no stock option agreement contains any terms that are inconsistent with or in addition to such forms in any material respect. None of the Parent Stock Options are “incentive stock options” within the meaning of Section 422 of the Code.

(d) Except as set forth in Section 4.5(a)-(b) or as set forth in Section 4.5(d) of the Parent Disclosure Schedule, there are no other outstanding (i) shares of capital stock or other voting securities of Parent or any of its Subsidiaries, (ii) securities of Parent or any of its Subsidiaries convertible into or exchangeable for shares of capital stock or voting securities of Parent or any of its Subsidiaries, or (iii) options, warrants, conversion privileges, contracts, understandings, agreements or other rights to purchase or acquire from Parent or any of its Subsidiaries, and, no obligations of Parent or any of its Subsidiaries to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of Parent or any of its Subsidiaries (collectively, “Parent Securities”). There are no outstanding obligations of Parent or any of its Subsidiaries to repurchase, redeem or otherwise acquire any Parent Securities. Except for the Parent Voting Agreements, and except as otherwise set forth in Section 4.5(d) of the Parent Disclosure Schedule, there are no shareholder agreements, voting trusts or other agreements or understandings to which Parent or any of its Subsidiaries is a party or by which it is bound relating to the voting or registration of any shares of capital stock of Parent or any of its Subsidiaries.

(e) The authorized capital stock of Merger Subsidiary consists of 1,000 shares of common stock, par value $0.001 per share, all of which are duly authorized, validly issued, fully paid and nonassessable and free of any preemptive rights in respect thereof and all of which are owned by Parent.

4.6           Valid Issuance of Parent Common Stock. The shares of Parent Common Stock to be issued under this Agreement, when issued and delivered in accordance with the terms hereof, will be duly and validly issued, fully paid and nonassessable and will be issued in compliance with all applicable federal and state securities laws; provided, however, that such shares of Parent Common Stock will be subject to restrictions on transfer of shares of capital stock imposed by the rules and regulations of the Securities Act, the Exchange Act or state securities laws.

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4.7            Non-Contravention. Neither the execution, delivery and performance by Parent and Merger Subsidiary of this Agreement nor the consummation of the transactions contemplated hereby: (a) assuming the Parent Shareholder Approval is obtained, contravene or conflict with the Articles of Incorporation, Bylaws or other equivalent governing document, as the case may be, of Parent, Merger Subsidiary, or any other Subsidiary of Parent; (b) assuming all of the Consents described in Section 4.8 are obtained or made, contravene or conflict with or constitute a violation of any provision of any Applicable Law binding upon or applicable to Parent, Merger Subsidiary or any other Subsidiary of Parent or any of the assets of Parent, Merger Subsidiary or any other Subsidiary of Parent; (c) result in the creation or imposition of any Lien on any of the assets of Parent, Merger Subsidiary or any other Subsidiary of Parent, other than Permitted Liens; or (d) assuming all of the Consents described in Section 4.8 are obtained or made, conflict with, constitute (with or without due notice or lapse of time or both) a default under, result in the loss of any material benefit under, or give rise to any right of termination, cancellation, increased payments, or acceleration under any terms, conditions, or provisions of any Contract to which Parent, Merger Subsidiary or any other Subsidiary of Parent is a party, or by which it or any properties or assets of Parent, Merger Subsidiary or any other Subsidiary of Parent may be bound, except, in the cases of clauses (b), (c) or (d), where such conflicts, violations, Liens, defaults, or other occurrences would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Parent and its Subsidiaries (taken as a whole).

4.8           Consents and Approvals. The execution and delivery of this Agreement by Parent and Merger Subsidiary and the consummation by Parent and Merger Subsidiary of the Merger and the other transactions contemplated hereby do not require any Consent of, with or from any Governmental Authority or other Person, other than (a) such filings as may be required under applicable requirements of the Exchange Act, Securities Act, any state securities, takeover and “blue sky” laws and the rules and regulations of NASDAQ, (b) the filings required under the HSR Act, (c) the filing of the Certificate of Merger with the Secretary of State of the State of Nevada in accordance with the requirements of the NRS, (d) such filings and other actions as are necessary to obtain all required Gaming Approvals, (e) the Parent Shareholder Approval, (f) the Consents set forth in Section 4.8 of the Parent Disclosure Schedule, and (g) such other Consents which, if not obtained or made, would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Parent or any of its Subsidiaries (taken as a whole).

4.9           Parent SEC Documents; Financial Reports.

(a) Parent has filed or furnished with the SEC, at or prior to the time due, and has heretofore made available to the Company true and complete copies of, all forms, reports, schedules, statements, registration statements, prospectuses, definitive proxy statements and other documents required to be filed by it with the SEC under Applicable Law for the three years preceding the date hereof (the “Parent SEC Reports”). None of the Subsidiaries of Parent is required to make any filings with the SEC. As of their respective filing dates or, if amended, as of the date of the last such amendment, the Parent SEC Reports complied as to form in all material respects with the requirements of the Exchange Act or the Securities Act, as the case may be, applicable to such Parent SEC Reports as in effect on the date so filed. As of their respective filing dates (or, if amended, as of the date of the last such amendment), as of the Closing Date and as of the date any information from such Parent SEC Reports has been incorporated by reference, the Parent SEC Reports did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. As of the date hereof, there are no outstanding or unresolved comments in comment letters received from the SEC staff with respect to any of the Parent SEC Reports.

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(b) Each of the financial statements of Parent (including the related notes) included or incorporated by reference in the Parent SEC Reports (including any similar documents filed after the date of this Agreement) comply as to form and content in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with GAAP (except, in the case of unaudited statements, as permitted in Form 10-Q under the Exchange Act) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present in all material respects the consolidated financial position of Parent as of the dates thereof and the consolidated results of operations and cash flows of Parent for the periods referred to therein, subject in the case of any unaudited interim financial statements to normal year-end adjustments and the absence of notes.

(c) Parent maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) designed to ensure that material information relating to Parent, including its Subsidiaries, is made known to the chief executive officer and the chief financial officer of Parent by others within those entities and that all material information required to be disclosed by Parent in the reports that it files or furnishes under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.

(d) Parent maintains a system of internal control over financial reporting sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Parent’s management has completed an assessment of the effectiveness of Parent’s system of internal control over financial reporting in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act for the fiscal year ended December 29, 2013, and such assessment concluded that such controls were effective and Parent’s independent registered accountant has issued (and not subsequently withdrawn or qualified) an attestation report concluding that Parent maintained effective internal control over financial reporting as of December 29, 2013. To the knowledge of Parent, since December 30, 2013, none of Parent, its Subsidiaries or Parent’s independent registered accountant has identified or been made aware of: (A) any significant deficiency or material weakness in the design or operation of internal control over financial reporting utilized by Parent and its Subsidiaries, (B) any illegal act or fraud related to the operations or business of Parent or its Subsidiaries, whether or not material, that involves Parent’s management, or (C) any claim or allegation regarding any of the foregoing.

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(e) Except as and to the extent reflected in the consolidated balance sheet of Parent as of September 28, 2014 (the “Parent Latest Balance Sheet”) included in the Form 10-Q filed by Parent with respect to the fiscal quarter ended September 28, 2014, the Parent and its Subsidiaries have no Liabilities of a type required to be reflected or reserved for on a consolidated balance sheet of Parent prepared in accordance with GAAP, except (i) Liabilities incurred in the ordinary course of business and not required to be set forth in the Parent Latest Balance Sheet, (ii) Liabilities that have arisen after the date of the Parent Latest Balance Sheet in the ordinary course of business, consistent with past practice, (iii) Liabilities disclosed on Section 4.9(e) of the Parent Disclosure Schedule, (iv) Liabilities arising out of or in connection with this Agreement, the Merger or the transactions contemplated hereby, (v) Liabilities included in the computation of the Post-Closing Adjustment, or (iv) Liabilities incurred in the ordinary course of business that are not in excess of the materiality level established for the most recent audited annual financial statements of Parent established by the Parent’s independent registered public accounting firm.

(f) Neither Parent nor any of its Subsidiaries is a party to, or has any Contract to become a party to, any joint venture, off-balance sheet partnership or any similar Contract, including any Contract relating to any transaction or relationship between or among Parent or any of its Subsidiaries, on the one hand, and any unconsolidated affiliate, including any structured finance, special purpose or limited purpose entity or Person, on the other hand, or any off-balance sheet arrangements (as defined in Item 303(a) of Regulation S-K of the SEC) where the purpose of such Contract is to avoid disclosure of any material transaction involving, or material liabilities of, Parent in Parent’s published financial statements or any Parent SEC Reports.

(g) To the knowledge of Parent, no employee of Parent or any of its subsidiaries has provided or is providing information to any law enforcement agency regarding the commission or possible commission of any crime or the violation or possible violation of any applicable legal requirements of the type described in Section 806 of the Sarbanes-Oxley Act by Parent or any of its Subsidiaries.

(h) There is no outstanding indebtedness payable by any director or officer of Parent or any of its Subsidiaries to Parent or any of its Subsidiaries.

(i) Parent has heretofore furnished or made available to the Company complete and correct copies of all amendments and modifications that have not been filed by Parent with the SEC to all agreements, documents and other instruments that previously had been filed by Parent with the SEC and are currently in effect.

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4.10         Proxy Statement Information. The material information, financial statements and exhibits, taken as a whole, with respect to Parent or its Subsidiaries included in the Proxy Statement, or any amendments thereof or supplements thereto, will not, at the time of the mailing of the Proxy Statement or any such amendments or supplements thereto to the holders of Parent Common Stock and at the time of the Parent Special Meeting contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except that no representation is made by Parent or Merger Subsidiary with respect to information supplied in writing by the Company or any Affiliate of the Company specifically for inclusion in the Proxy Statement. The Proxy Statement will comply as to form and content in all material respects with the provisions of the Exchange Act and the Securities Act, as applicable, and other Applicable Law.

4.11         Absence of Certain Changes. Except as otherwise authorized or contemplated by this Agreement, since September 28, 2014 through the date of this Agreement: (a) Parent and its Subsidiaries have owned and operated their assets, properties and businesses in the ordinary course of business and consistent with past practice, (b) there has not been any change, effect, event, occurrence, state of facts or development that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect on Parent and its Subsidiaries (taken as a whole) and (c) neither Parent nor any of its Subsidiaries has taken or agreed to take any action that would have constituted a breach of, or required the Company’s consent pursuant to, Sections 5.1(d) (iii), (v), (vi), (ix), (x), (xi), (xii) or (xiii) hereof had such covenants applied since September 28, 2014.

4.12         Assets and Properties.

(a) Except with respect to Intellectual Property (which is the subject of representations and warranties set forth in Section 4.13): (i) except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Parent and its Subsidiaries (taken as a whole), each of Parent and its Subsidiaries has good and valid right, title and interest in and to or, in the case of leased properties or properties held under license, good and valid leasehold or license interests in, all of its assets and properties, and (ii) each of Parent and its Subsidiaries holds title to its material owned assets and properties free and clear of all Liens, except Permitted Liens. Merger Subsidiary owns no property or assets.

(b) To Parent’s knowledge, (i) the current use and operation of all real property by Parent and its Subsidiaries is in compliance in all material respects with all public and private covenants and restrictions and (ii) utilities, access and parking, if any, for such real property are adequate for the current use and operation of such real property. To Parent’s knowledge, there are no zoning, building code, occupancy restriction or other land-use regulation proceedings or any proposed change in any Applicable Law, which could materially detrimentally affect the use or operation of such real property, nor has Parent or any of its Subsidiaries received any notice of any material special assessment proceedings affecting such real property, or applied for any material change to the zoning or land use status of such real property.

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4.13         Intellectual Property.

(a) The term “Parent Intellectual Property” means Intellectual Property owned by Parent or any of its Subsidiaries. Section 4.13(a) of the Parent Disclosure Schedule sets forth a full and complete listing and description of all Parent Intellectual Property that is registered with a Governmental Authority by or on behalf of Parent or any of its Subsidiaries (“Registered Parent Intellectual Property”), with the owner name, country(ies) or regional scope, and any applicable registration and application numbers and dates indicated.

(b) Neither Parent nor any of its Subsidiaries is in breach in any material respect of any Contract pursuant to which Parent or any of its Subsidiaries has licensed material Parent Intellectual Property to a third party or pursuant to which Parent or any of its Subsidiaries has licensed any material Intellectual Property from a third party.

(c) To Parent’s knowledge, the Parent Intellectual Property together with any Intellectual Property licensed to Parent or any of its Subsidiaries or which Parent or any of its Subsidiaries otherwise has a right to use constitutes all of the material Intellectual Property necessary for the business of Parent or any of its Subsidiaries as now conducted (without taking into account the transactions contemplated hereby).

(d) Each of Parent and its Subsidiaries owns and possesses all right, title and interest in and to all Parent Intellectual Property free and clear of Liens, except for Permitted Liens and except for licenses of Parent Intellectual Property to third parties granted in the ordinary course of business. Each of Parent or its Subsidiaries is the sole owner of record with the applicable Governmental Authority of all Registered Parent Intellectual Property. There are no royalties, fees or other payments payable by Parent or any of its Subsidiaries to any Person by reason of the ownership, development, modification, use, license, sublicense, or sale of the Registered Parent Intellectual Property other than salaries and sales commissions paid to employees and sales agents in the ordinary course of its business.

(e) All personnel, including employees, agents, consultants and contractors, who have contributed to or participated in the conception or development, or both, of the Parent Intellectual Property either (i) have been a party to “work-for-hire” arrangements or agreements with Parent or a Subsidiary in accordance with applicable national and state law that has accorded Parent or such Subsidiary ownership of all tangible and intangible contributions to the Parent Intellectual Property, or (ii) have executed appropriate instruments of assignment in favor of Parent or a Subsidiary as assignee that have conveyed to Parent or such Subsidiary effective and exclusive ownership of all tangible and intangible contributions to the Parent Intellectual Property, except for immaterial failures of clause (i) or (ii) above.

(f) To Parent’s knowledge, all of the Registered Parent Intellectual Property that has been issued is valid and enforceable. To the Parent’s knowledge, the Parent Intellectual Property is not currently being infringed by other Persons. Neither Parent nor any Subsidiary has received a written claim by any third party contesting the validity of any Parent Intellectual Property during the three year period immediately preceding the date of this Agreement. Without limiting the generality of the foregoing, Parent or a Subsidiary has taken all actions required as of the Closing Date to keep rights in the Registered Parent Intellectual Property pending or in effect, including the payment of filing, examination, annuity, and maintenance fees and the filing of renewals or statements of use, in each case except for such rights that Parent or a Subsidiary has intentionally abandoned or let lapse. To Parent’s knowledge, no Registered Parent Intellectual Property rights are the subject of any interference, opposition, cancellation, nullity, re-examination or other similar proceeding before a Governmental Authority placing in question the validity or scope of such rights. Parent and its Subsidiaries have used reasonable secrecy measures to protect its material trade secrets.

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(g) Neither Parent nor any of its Subsidiaries has received during the three year period immediately preceding the date of this Agreement any written notice of any infringement, misappropriation or violation by it of any rights in Intellectual Property of a third party.

(h) Each of Parent and its Subsidiaries has taken commercially reasonable steps to provide for the remote-site back-up of data and information critical to the conduct of its business.

4.14         Compliance with Applicable Law. Except with respect to Environmental Laws, Tax matters, ERISA, Benefit Plan and labor matters, and Gaming Laws (which are the subject of representations and warranties set forth in Sections 4.18, 4.20, 4.21, 4.22, 4.26 and 4.27, respectively):

(a) Parent and its Subsidiaries are in compliance with all Applicable Laws, except where such non-compliance would not reasonably be expected to have a Material Adverse Effect on Parent and its Subsidiaries (taken as a whole).

(b) Parent has no knowledge of any actual or threatened enforcement action or investigation by any Governmental Authority against Parent or any of its Subsidiaries.

(c) All material reports, documents, claims and notices required to be filed with, maintained for or furnished to any Governmental Authority by Parent or its Subsidiaries have been so filed, maintained or furnished by Parent or its Subsidiaries, as applicable, except where the failure to so file, maintain or furnish such report, document, claim, permit or notice would not reasonably be expected to have a Material Adverse Effect on Parent and its Subsidiaries (taken as a whole), and all such reports, documents, claims and notices were complete and accurate in all material respects on the date filed or furnished (or were corrected in or supplemented by a subsequent filing), such that no liability exists with respect to such filing, except for any such liability that would not reasonably be expected to have a Material Adverse Effect on Parent and its Subsidiaries (taken as a whole).

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(d) Neither Parent or any of its Subsidiaries nor, to its knowledge, any officers, managers, directors, governors and employees of Parent or any of its Subsidiaries have made or offered any payment, gratuity or other thing of value that is prohibited by any Applicable Law to personnel of any Governmental Authority.

4.15         Permits. Section 4.15 of the Parent Disclosure Schedule sets forth each of the Parent Permits as of the date of this Agreement. Each Parent Permit is valid and in full force and effect and no Parent Permit will be terminated, revoked, modified or become terminable or impaired in any respect by reason of the Merger, except where the failure to have or maintain such Parent Permits would not have a Material Adverse Effect on Parent or any of its Subsidiaries (taken as a whole). Each of Parent and its Subsidiaries has conducted its business in compliance with all terms and conditions of the Parent Permits, except where such non-compliance would not reasonably be expected to have a Material Adverse Effect on Parent and its Subsidiaries (taken as a whole).

4.16         Litigation. Except as disclosed on the Parent Disclosure Schedule, there are no (a) Actions that have been brought by any Governmental Authority or any other Person, nor any claims or any investigations or reviews by any Governmental Authority against or affecting Parent, Merger Subsidiary, or any other Subsidiary of Parent pending or, to Parent’s knowledge, threatened, against or by Parent, Merger Subsidiary, or any other Subsidiary of Parent or any of their respective assets or properties or which seek to enjoin or rescind the transactions contemplated by this Agreement; and (b) existing Governmental Orders naming Parent, Merger Subsidiary, or any other Subsidiary of Parent as an affected party or, to the knowledge of Parent, otherwise affecting any of the assets or the business of Parent, Merger Subsidiary, or any other Subsidiary of Parent, in each case except as would not reasonably be expected to have a Material Adverse Effect on Parent and its Subsidiaries (taken as a whole).

4.17         Material Contracts.

(a) All Contracts required to be filed as exhibits to the Parent SEC Reports have been so filed in a timely manner. Section 4.17(a) of the Parent Disclosure Schedule lists the following Contracts to which Parent or any of its Subsidiaries is a party or is subject, or by which any of the assets of Parent or any of its Subsidiaries are bound, in each case (collectively, the “Parent Material Contracts”):

(i) Each Contract that is a “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the Exchange Act) or required to be disclosed pursuant to Item 404 of Regulation S-K of the Exchange Act.

(ii) Each Contract providing for the lease of material real property by Parent or any of its Subsidiaries that is used by Parent or any of its Subsidiaries in connection with the operation of its business.

(iii) Each Contract that, by its terms, requires payments by Parent or any of its Subsidiaries in excess of $100,000 in any given calendar year, other than Contracts that are terminable by Parent or any of its Subsidiaries in its discretion and without penalty upon notice of 60 days or less.

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(iv) Each Contract relating to, or evidences of, or guarantees of, or providing security for, indebtedness for borrowed money or the deferred purchase price of property (whether incurred, assumed, guaranteed or secured by any asset) in each case in excess of $50,000, other than trade payables.

(v) All acquisition, partnership, joint venture, teaming arrangements or other similar Contracts.

(vi) Each Contract under which Parent or any of its Subsidiaries has agreed not to compete or has granted to a third party an exclusive right that restricts or otherwise adversely affects the ability of Parent or any of its Subsidiaries to engage in any line of business, or in any market or geographic area.

(vii) Each Contract between Parent or any of its Subsidiaries, on the one hand, and any of their respective officers or directors or any shareholders beneficially owning 5% of more of the issued and outstanding Parent Common Stock, on the other hand (other than employment, consulting or management services agreements or Benefit Plans).

(b) Parent has made available to the Company true and correct copies (or summaries, in the case of any oral Contracts) of each Parent Material Contract. Each Parent Material Contract is a legal, valid and binding obligation of Parent or any of its Subsidiaries, as the case may be (and, to the knowledge of Parent, each other party thereto), and is enforceable against Parent or any of its Subsidiaries, as the case may be (and, to the knowledge of Parent, each other party thereto) in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and subject to general principles of equity. Neither Parent or any of its Subsidiaries, as the case may be, nor, to the knowledge of Parent, any other party thereto is in breach, violation or default of any Parent Material Contract except for such breach, violation or default as would not, either individually or in the aggregate, have a Material Adverse Effect on Parent and its Subsidiaries (taken as a whole).

4.18         Environmental Compliance.

(a) No Third-Party Environmental Claim or Regulatory Action is pending or, to Parent’s knowledge, threatened against Parent or any of its Subsidiaries.

(b) All transfer, transportation, generation, treatment, containment, handling, location, use, manufacture, processing, storage or disposal of Hazardous Materials, and arranging therefor, by Parent or any of its Subsidiaries has been in compliance with applicable Environmental Law, except where the failure to be in compliance with such Environmental Law would not have or reasonably be expected to have a Material Adverse Effect on Parent and its Subsidiaries (taken as a whole).

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(c) To the knowledge of Parent, no Property has ever been used as a regulated or unregulated landfill, dump or disposal area, or as a transfer, handling or treatment area for wastes regulated under either the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq, or solid waste laws.

(d) To the knowledge of Parent, no Property is being used or has ever been used as a gasoline service station, or as a facility for selling, dispensing, storing or transferring of 250 gallons or more of petroleum or petroleum products at any one time, and to the knowledge of Parent, there are no underground storage tanks currently located at any Property except tanks that have been properly closed in place under applicable Environmental Law.

(e) To the knowledge of Parent, there has not been any Release on, under, about, from or in connection with the Property, including the presence of any Hazardous Materials that have come to be located on or under the Property from another location, except as would not have or reasonably be expected to have a Material Adverse Effect on Parent and its Subsidiaries (taken as a whole).

(f) Parent and its Subsidiaries are in compliance with all applicable Environmental Law, except where the failure to so comply would not reasonably be expected to have a Material Adverse Effect on Parent and its Subsidiaries (taken as a whole).

(g) Each of Parent and its Subsidiaries has obtained all material Permits required by Environmental Law for operation of the business of Parent and its Subsidiaries as currently conducted, and each such Permit will be valid and in full force and effect upon consummation of the transactions contemplated by this Agreement, in each case except as would not reasonably be expected to have a Material Adverse Effect on Parent and its Subsidiaries (taken as a whole). All such Permits held by Parent and its Subsidiaries as of the date of this Agreement are listed on Section 4.18(g) of the Parent Disclosure Schedule. Each of Parent and its Subsidiaries has filed all reports and notifications required to be filed under and pursuant to all applicable Environmental Law, except where the failure to so comply would not have or reasonably be expected to have a Material Adverse Effect on Parent and its Subsidiaries (taken as a whole).

(h) The most recent Phase I Environmental Site Assessments and Phase II assessments (if any) in the possession of Parent or any of its Subsidiaries with respect to the Property are listed on Section 4.18(h) of the Parent Disclosure Schedule.

(i) No Lien (other than Permitted Liens) has been attached or filed against Parent or any of its Subsidiaries in favor of any Person for: (i) any liability under or violation of any applicable Environmental Law; (ii) any Release of Hazardous Materials; or (iii) any imposition of Environmental Costs.

(j) Notwithstanding any provision of this Agreement to the contrary, the representations and warranties in this Section 4.18 are the sole and exclusive representations of Parent relating to environmental matters, including with respect to Environmental Law, Permits issued thereunder or Hazardous Materials.

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4.19         Insurance. Section 4.19 of the Parent Disclosure Schedule contains an accurate and complete list of all insurance policies owned or held by Parent, Merger Subsidiary, or any other Subsidiary of Parent as of the date of this Agreement, including, but not limited to, fire and other casualty, general liability, theft, life, workers’ compensation, health, directors and officers, business interruption and other forms of insurance owned or held by it, specifying the insurer the policy number, and the term of the coverage. Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Parent and its Subsidiaries (taken as a whole), (i) all present policies are in full force and effect and all premiums with respect thereto have been paid, and (ii) Parent and its subsidiaries have not been denied any form of insurance and no policy of insurance has been revoked or rescinded during the past three years.

4.20         Tax Matters.

(a) Each of Parent and its Subsidiaries has (i) timely filed (or has had timely filed on its behalf) all material Tax Returns required to be filed, and all such Tax Returns are true, correct and complete in all material respects; (ii) timely and properly paid all material Taxes due and payable for all Tax periods or portions thereof, whether or not shown on such Tax Returns; (iii) established in its books of account, in accordance with GAAP and consistent with past practices, adequate reserves for the payment of any Taxes not yet due and payable; and (iv) complied with all Applicable Law relating to the withholding of Taxes and the payment thereof in all material respects.

(b) There are no material Liens (other than Permitted Liens) for Taxes upon any assets of Parent or any of its Subsidiaries.

(c) No deficiency for any material Taxes has been proposed, asserted or assessed against Parent or any of its Subsidiaries that has not been resolved and paid in full. No waiver, extension or comparable consent given by Parent or any of its Subsidiaries regarding the application of the statute of limitations with respect to any material Taxes or Tax Return is outstanding, nor is any request for any such waiver or consent pending. Except as set forth in Section 4.20(c) of the Parent Disclosure Schedule, there is no pending Tax audit or other administrative proceeding or court proceeding with regard to any material Taxes or Tax Return for any Tax year of Parent or any of its Subsidiaries, nor has there been any written notice to Parent or any of its Subsidiaries by any Governmental Authority regarding any such Tax audit or other proceeding, nor, to Parent’s knowledge, is any such Tax audit or other proceeding threatened with regard to any material Taxes or Tax Returns of Parent or any of its Subsidiaries.

(d) Neither Parent nor any of its Subsidiaries has any material Liability for Taxes in a jurisdiction where it does not file a Tax Return, nor has Parent or any of its Subsidiaries received written notice from a Taxing Authority in such a jurisdiction that it is or may be subject to taxation by that jurisdiction.

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(e) All transactions that could give rise to an underpayment of Tax (within the meaning of Section 6662 of the Code) were reported by Parent or a Subsidiary of Parent in a manner for which there is substantial authority or were adequately disclosed on the Tax Returns as required in accordance with Section 6662(d)(2)(b) of the Code.

(f) Neither Parent nor any of its Subsidiaries is a party to any agreement, contract, arrangement or plan that has resulted or could result, separately or in the aggregate, in connection with this Agreement or any change of control of Parent or any of its Subsidiaries, in the payment of any “excess parachute payments” within the meaning of Section 280G of the Code, and the consummation of the transactions contemplated by this Agreement will not be a factor causing payments to be made that are not deductible (in whole or in part) as a result of the application of Section 280G of the Code.

(g) Neither Parent nor any of its Subsidiaries has been a member of any joint venture, partnership, contract or other arrangement that is treated as a “partnership” for federal, state, local or foreign income Tax purposes. Neither Parent nor any of its Subsidiaries owns any interest in an entity that is classified as an entity that is “disregarded as an entity separate from its owner” under Treasury Regulations Section 301.7701-3(b).

(h) Neither Parent nor any of its Subsidiaries (i) has been a member of an affiliated group filing a consolidated Tax Return, and (ii) has any Liability for the Taxes of any Person (other than itself) under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor, by contract or otherwise.

(i) Neither Parent nor any of its Subsidiaries is required to include in income any adjustment under Section 481(a) of the Code by reason of a voluntary change in accounting method initiated by it, and the IRS has not proposed any such adjustment or change in accounting method.

(j) Neither Parent nor any of its Subsidiaries is, or has been at any time, a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code.

(k) Neither Parent nor any of its Subsidiaries is a party to or bound by any obligations under any Tax sharing, Tax allocation, Tax indemnity or similar agreement or arrangement (other than customary gross-up or indemnification provisions in credit agreements, leases and similar agreements entered into in the ordinary course of business not primarily related to Taxes).

(l) Neither Parent nor any of its Subsidiaries has engaged in any listed transaction as defined under Section 6011 of the Code and the Treasury Regulations promulgated thereunder or under any similar provision of state law.

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(m) Neither Parent nor any of its Subsidiaries has constituted either a “distributing corporation” or a “controlled corporation” in a distribution of stock intended to qualify for tax-free treatment under Section 355 of the Code (i) in the two years prior to the date of this Agreement or (ii) in a distribution which could otherwise constitute a part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in conjunction with the transactions contemplated by this Agreement.

(n) Parent has no knowledge of any facts or circumstances that would cause the Merger to fail to qualify as a reorganization within the meaning of Section 368(a) of the Code.

4.21         Parent Benefit Plans.

(a) The term “Parent Plan” means every plan, fund, Contract, program and arrangement that Parent or any Subsidiary sponsors, maintains or contributes to, is required to contribute to, that provides present or former employees of Parent and/or its Subsidiaries (the “Parent Employees”) with: (i) medical, surgical, health care, hospitalization, dental, vision, life insurance, death, disability, legal services, severance, sickness, accident or other welfare benefits (whether or not defined in Section 3(1) of ERISA), (ii) pension, profit sharing, stock bonus, retirement, supplemental retirement or deferred compensation benefits (whether or not tax qualified and whether or not defined in Section 3(2) of ERISA), (iii) bonus, incentive compensation, option, stock appreciation right, phantom stock or stock purchase benefits or (iv) salary continuation, paid time off, supplemental unemployment, current or deferred compensation (other than current salary or wages paid in the form of cash), termination pay, vacation or holiday benefits (whether or not defined in Section 3(3) of ERISA). “Parent ERISA Affiliates” means each trade or business (whether or not incorporated) that is part of the same controlled group under, common control with, or part of an affiliated service group that includes Parent within the meaning of Code Section 414(b), (c), (m) or (o).

(b) Section 4.21(b) of the Disclosure Schedule sets forth each Parent Plan by name.

(c) There are no Parent Plans subject to Title IV of ERISA or Code Section 412 and neither Parent nor any of its Subsidiaries has ever maintained a Parent Plan subject to Title IV of ERISA or Code Section 412 for which a liability remains outstanding. Parent has no liability contingent or otherwise under Title IV of ERISA with respect to any Parent ERISA Affiliate.

(d) No employer other than Parent or a Parent ERISA Affiliate is permitted to participate or participates in the Parent Plans. No leased employees (as defined in Section 414(n) of the Code) or independent contractors are eligible for, or participate in, any Parent Plan.

(e) There are no Parent Plans which promise or provide health, life or other welfare benefits to retirees or former employees of Parent and/or its Parent ERISA Affiliates, except as otherwise required by Code Section 4980B or comparable state statute or other law which provides for continuing health care coverage.

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(f) With respect to all Parent Plans, to the extent that the following documents exist, Parent has made available to the Company true and complete copies of: (i) the most recent determination letter, if any, received by Parent and/or its Parent ERISA Affiliates from the IRS, (ii) all pending applications for rulings, determinations, opinions, no action letters and the like filed with any governmental agency (including the DOL and the IRS), (iii) the Annual Report/Return (Form Series 5500) with financial statements, if any, and attachments for the three most recent plan years, (iv) Parent Plan documents, summary plan descriptions, trust agreements, insurance Contracts, service agreements and all related Contracts and documents (including any employee summaries and material employee communications) and (v) all closing letters, audit finding letters, revenue agent findings and similar documents issued by a Governmental Authority.

(g) Each Parent Plan has at all times been operated in material compliance with ERISA, the Code, any other applicable law (including all reporting and disclosure requirements thereby) and the terms of such Parent Plan. With respect to each Parent Plan that is intended to be qualified under Section 401(a) of the Code, each such Parent Plan has been determined by the IRS to be so qualified, and each trust forming a part thereof has been determined by the IRS to be exempt from Tax pursuant to Section 501(a) of the Code. To the knowledge of Parent, no reason exists which would cause such qualified status to be revoked. To the knowledge of Parent, no non-exempt prohibited transactions under Section 406 or 407 of ERISA or Section 4975 of the Code have occurred with respect to any Parent Plan that would reasonably be expected to subject such Parent Plan or Parent or any of its Subsidiaries to any material penalty under the Code or ERISA.

(h) All material contributions, premiums, fees or charges due and owing to or in respect of any Parent Plan for periods on or before the Closing have been paid in full by Parent and its Subsidiaries prior to the Closing in accordance with the terms of such Parent Plan and all Applicable Law, and no material Taxes are owing on the part of Parent as a result of any Parent Plan.

(i) Parent and its Parent ERISA Affiliates have not committed to make any material increase in contributions or benefits under any Parent Plan that would become effective either on or after the Closing Date.

(j) No Parent Plan is currently under audit or examination by the IRS or the DOL. There are no pending or, to Parent’s knowledge, threatened, audits, investigations, claims, suits, grievances or other proceedings.

(k) The events contemplated in this Agreement will not trigger, or entitle any current or former employee of Parent or any of its Subsidiaries to, severance, termination, change in control payments or accelerated vesting under any Parent Plan, and will not result in any material Tax or other liability payable by any Parent Plan or, with respect to any Parent Plan, by Parent or any of its Subsidiaries.

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(l) To the knowledge of Parent, there are no facts or circumstances that could reasonably be expected to, directly or indirectly, subject Parent or any of its Subsidiaries to any (i) material excise Tax or other liability under Chapters 43, 46 or 47 of Subtitle D of the Code, (ii) material penalty Tax or other liability under Chapter 68 of Subtitle F of the Code or (iii) material civil penalty, damages or other liabilities arising under Section 502 of ERISA.

(m) All Nonqualified Deferred Compensation Plans (as defined in Code Section 409A(d)(1)) of Parent are in material compliance with Code Section 409A.

(n) The exercise price of each Parent Stock Option granted under the Parent Stock Option Plan is not less than the fair market value, determined in accordance with Section 409A of the Code, of a Share of the underlying Parent Common Stock on the date such Parent Stock Option was granted. No Parent Stock Option granted under the Parent Stock Option Plan provides for a deferral of compensation under Section 409A of the Code and Treasury Regulations Section 1.409A-1(b)(5).

(o) With respect to each Parent Plan, Parent has operated each Parent Plan in material compliance with all laws and regulations applicable to employee benefit plans of public companies, including, without limitation, Section 162(m) of the Code and Sarbanes-Oxley Act of 2002, and no material liability or loss of Tax deduction has resulted from any noncompliance.

4.22         Labor and Employment Matters.

(a) Each of Parent and its Subsidiaries is in compliance in all material respects with all Applicable Law relating to employment and employment practices and those relating to the calculation and payment of wages (including compensability of time, overtime pay, maximum hours of work and child labor restrictions), equal employment opportunity (including laws prohibiting discrimination and/or harassment or requiring accommodation on the basis of race, color, national origin, religion, gender, disability, age, sexual orientation or other protected characteristic), affirmative action and other hiring practices, occupational safety and health, workers compensation, unemployment, the payment of social security and other taxes, and collective bargaining or concerted activity or other conduct protected under the National Labor Relations Act or applicable state labor relations or collective bargaining law. There are no material workers’ compensation claims pending against Parent or any of its Subsidiaries.

(b) Each of Parent and its Subsidiaries has received approval from the Department of Labor and the Immigration and Naturalization Service for any temporary work authorizations including H-1B, L-1, F-1 or J-1 visas or work authorizations required in connection with the retention of any employee of Parent or any of its Subsidiaries.

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(c) Except as listed on Section 4.22(c) of the Parent Disclosure Schedule, neither Parent nor any of its Subsidiaries is bound by any oral or written employee collective bargaining agreement, and to the extent any such agreements exist, copies have been provided by Parent to the Company prior to the date hereof.

(d) Each of Parent and its Subsidiaries is in compliance in all material respects with all applicable employee licensing requirements and has used its reasonable best efforts to ensure that each employee, consultant, contractor or other non-employee service provider who is required to have a gaming or other license under any Gaming Law or other Applicable Law maintains such license in current and valid form.

(e) Each of Parent and its Subsidiaries is in compliance in all material respects with all Applicable Law, Governmental Orders, and Contracts (if any) respecting the WARN Act or any other comparable Applicable Law that applies to mass layoffs and/or plant closings to which Parent or any of its Subsidiaries is subject in each of the jurisdictions in which it conducts operations.

4.23         Brokers. Neither Parent, Merger Subsidiary, or any other Subsidiary of Parent, nor any of their directors, officers, managers or employees has employed any broker, finder, or financial advisor or incurred any liability for any brokerage fee or commission, finder’s fee or financial advisory fee, in connection with the transactions contemplated hereby, other than to Macquarie Capital (USA) Inc.

4.24         Bank Accounts. All bank accounts of Parent and its Subsidiaries have been duly authorized by the holder thereof.

4.25         Listing and Maintenance Requirements. Parent has not, in the twelve (12) months preceding the date hereof, received any notice from any trading market or stock quotation system on which Parent Common Stock is or has been listed or quoted to the effect that Parent is not in compliance with the listing or maintenance requirements of such trading market or stock quotation system. Parent is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all applicable rules, regulations and listing and maintenance requirements of NASDAQ.

4.26         Licensability. None of Parent, its Subsidiaries, any of their respective officers, managers, directors, partners, members, principals or Affiliates which may reasonably be considered in the process of determining the suitability of Parent and its Subsidiaries for a Gaming Approval by a Gaming Authority, or, to Parent’s knowledge, any holders of Parent’s capital stock or other equity interests who will be required to be licensed or found suitable under applicable Gaming Laws (the foregoing Persons, collectively, the “Parent Licensing Affiliates”), has ever abandoned or withdrawn (in each case in response to a communication from a Gaming Authority regarding a likely or impending denial, suspension or revocation) or been denied or had suspended or revoked a Gaming Approval, or an application for a Gaming Approval, by a Gaming Authority. Parent, its Subsidiaries, and each of their respective Parent Licensing Affiliates which is licensed or holds any Gaming Approval pursuant to applicable Gaming Laws (collectively, the “Parent Licensed Parties”) is in good standing in each of the jurisdictions in which such Parent Licensed Party owns, operates, or manages gaming facilities. To Parent’s knowledge, there are no facts which, if known to any Gaming Authority, would be reasonably likely to (a) result in the denial, revocation, limitation or suspension of a Gaming Approval of any of the Parent Licensed Parties, or (b) result in a negative outcome to any finding of suitability proceedings of any of the Parent Licensed Parties currently pending, or under the suitability proceedings necessary for the consummation of the Merger.

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4.27         Compliance with Gaming Laws.

(a) Each of the Parent Licensed Parties, and to Parent’s knowledge, each of the Parent Licensed Parties’ respective directors, officers, managers, partners, members, principals, key employees and Persons performing management functions similar to those performed by officers, partners, or managers (collectively, “Parent Management Principals”), holds all Gaming Approvals and all such Permits as are necessary to conduct the business and operations of the Parent Licensed Parties as currently conducted, each of which is in full force and effect in all respects, and no event has occurred which permits, or upon giving of notice or passage of time or both would permit, revocation, non-renewal, modification, suspension, limitation or termination of any Permit that currently is in effect, the loss of which, either individually or in the aggregate, would be reasonably likely to impair or delay the Closing. Each of the Parent Licensed Parties, and to the knowledge of Parent, each of the Parent Licensed Parties’ respective Parent Management Principals, is in compliance with the terms of such Permits, except for such failures to comply which would not, individually or in the aggregate, be reasonably likely to impair or delay the Closing. None of Parent or its Subsidiaries, or any of their respective Parent Licensing Affiliates, has received notice of any investigation or review by any Gaming Authority or other Governmental Authority with respect to Parent, its Subsidiaries, or any of their respective Parent Licensing Affiliates or Parent Management Principals that is pending, and, to the knowledge of Parent, no investigation or review is threatened, nor has any Gaming Authority or other Governmental Authority indicated any intention to conduct the same, other than those the outcome of which would not impair or delay the Closing.

(b) No Parent Licensed Party, and no Parent Licensing Affiliate or Parent Management Principal of any Parent Licensed Party, has received any written claim, demand, notice, complaint, court order or administrative order from any Gaming Authority or other Governmental Authority in the past three years under, or relating to any violation or possible violation of, any Gaming Law which did or would be reasonably likely to result in an individual fine or penalty of $25,000 or more. To the knowledge of Parent, there are no facts which if known to any Gaming Authority could reasonably be expected to result in the revocation, limitation or suspension of a Gaming Approval or other license, finding of suitability, registration, permit or approval of the Parent Licensed Parties, or any of their respective Parent Licensing Affiliates or Parent Management Principals. None of the Parent Licensed Parties, and none of their respective Parent Licensing Affiliates or Parent Management Principals, has suffered a suspension, denial, non-renewal, limitation or revocation of any such Permit.

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4.28         Relations with Suppliers. No current supplier from which Parent and its Subsidiaries, taken as a whole, purchased more than 5% of the goods and services they purchased during the last full fiscal year has canceled any contract or order for provision of, and to the knowledge of Parent there has been no threat by any such supplier not to provide, products, supplies or services to the business of Parent and its Subsidiaries, taken as a whole, either prior to or following the Effective Time.

4.29         Investigation by Company. Notwithstanding anything to the contrary in this Agreement, (a) no investigation by the Company shall affect the representations and warranties of Parent under this Agreement or contained in any other writing to be furnished to the Company in connection with the transactions contemplated hereunder, and (b) such representations and warranties shall not be affected or deemed waived by reason of the fact that the Company knew or should have known, that any of the same is or might be inaccurate in any respect.

4.30         Exclusive Representations and Warranties. Except for the representations and warranties contained in this Article 4, neither Parent, Merger Subsidiary nor any other Person on their respective behalf makes any express or implied representation or warranty with respect to Parent, its Subsidiaries, their business or the transactions contemplated by this Agreement, and Parent disclaims any other representations or warranties, whether express, statutory or implied.

ARTICLE 5
COVENANTS

5.1           Conduct of Business.

(a) Except (x) as contemplated by this Agreement or as required by a Gaming Authority or Applicable Law, (y) as set forth in Section 5.1(a) of the Company Disclosure Schedule, or (z) to the extent that Parent otherwise consents in writing (not to be unreasonably withheld, conditioned or delayed), during the period from the date of this Agreement until the earlier of the termination of this Agreement or the Effective Time (the “Interim Period”): (i) the Company shall maintain and shall cause each of its Subsidiaries to maintain its assets and properties and carry on its business and operations in the ordinary course consistent with past practice; and (ii) the Company shall use and shall cause each of its Subsidiaries to use its commercially reasonable efforts to preserve intact its business organizations (including maintaining existing material business relationships to the extent necessary therefor); provided, however, that no action by the Company or its Subsidiaries with respect to matters specifically addressed by any provision of Section 5.1(c) shall be deemed a breach of this Section 5.1(a) unless such action constitutes a breach of such provision of Section 5.1(c).

(b) Except (x) as contemplated by this Agreement or as required by a Gaming Authority or Applicable Law, (y) as set forth in Section 5.1(b) of the Parent Disclosure Schedule, or (z) to the extent that the Company otherwise consents in writing, not to be unreasonably withheld, conditioned or delayed, during the Interim Period, each of Parent and Merger Subsidiary shall maintain and Parent shall cause each of its other Subsidiaries to maintain its assets and properties and carry on its business and operations in the ordinary course consistent with past practice; and each of Parent and Merger Subsidiary shall use and Parent shall cause each of its other Subsidiaries to use its commercially reasonable efforts to preserve intact its business organizations (including maintaining existing material business relationships to the extent necessary therefor); provided, however, that no action by Parent or its Subsidiaries with respect to matters specifically addressed by any provision of Section 5.1(d) shall be deemed a breach of this Section 5.1(b) unless such action constitutes a breach of such provision of Section 5.1(d).

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(c) Except (x) as contemplated by this Agreement or as required by a Gaming Authority or Applicable Law, (y) as set forth in Section 5.1(c) of the Company Disclosure Schedule, or (z) to the extent that Parent otherwise consents in writing (not to be unreasonably withheld, conditioned or delayed), during the Interim Period, the Company shall not and shall not permit any of its Subsidiaries to:

(i) amend or otherwise change its Articles of Incorporation or Bylaws (or other similar governing instruments);

(ii) issue, deliver, sell, pledge, dispose of or encumber any shares of its capital stock, or grant to any Person any right to acquire any shares of its capital stock;

(iii) declare, set aside, make or pay any dividend or other distribution (other than Tax distributions and distributions to the Stockholder in an aggregate amount equal to the principal amount of any and all Warrantholder Loans), payable in cash, stock, property or otherwise, with respect to any of its capital stock (except for any dividend or distribution by a Subsidiary of the Company to the Company or to other Subsidiaries);

(iv) adjust, split, combine, redeem, repurchase or otherwise acquire any shares of capital stock of the Company, or reclassify, combine, split, subdivide or otherwise amend the terms of its capital stock;

(v) merge or consolidate the Company or any of its Subsidiaries with any Person or adopt a plan of complete or partial liquidation or resolutions providing for a complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries;

(vi) (A) acquire (whether by merger, consolidation or acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or substantially all of the assets of any of the foregoing, other than Permitted Company Acquisitions and Investments and other than purchases of inventory and other assets in the ordinary course of business or pursuant to existing Contracts; or (B) sell or otherwise dispose of (whether by merger, consolidation or divestiture of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any assets, other than (1) sales or dispositions of inventory and other assets in the ordinary course of business, (2) sales or dispositions pursuant to Contracts existing as of the date hereof, and (3) sales or dispositions of other assets having an aggregate fair value not in excess of $100,000;

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(vii) other than in the ordinary course of business, enter into, materially amend or terminate any Company Material Contract;

(viii) commit to any new capital expenditure in excess of $100,000, except to the extent reflected in the Company’s capital expenditure budget disclosed to Parent prior to the date hereof;

(ix) (A) other than the extension of credit to customers in the ordinary course of business, make any loans, advances or capital contributions to, or investments in, any other Person (other than a Subsidiary of the Company), or (B) incur, assume or guarantee any indebtedness for borrowed money or issue any debt securities in excess of $100,000 individually or $1,000,000 in the aggregate, other than the incurrence of indebtedness in the ordinary course of business under the Company’s existing credit facilities, which aggregate amount outstanding under the Company’s existing credit facilities shall in no event exceed the limitations set forth in such facilities as of the date hereof, or redeem or repurchase any indebtedness for borrowed money; provided, however, that, for the avoidance of doubt, amounts under the Company’s existing credit facilities may be repaid and/or re-borrowed provided the above amount is not exceeded;

(x) except in the ordinary course of business consistent with past practice, (A) increase or commit to increase the compensation or benefits of any senior executive or other key employee of the Company or any of its Subsidiaries, (B) establish, adopt or amend any Benefit Plan with or for the benefit of its employees or directors (other than any such adoption or amendment that does not increase the cost to the Company or any of its Subsidiaries of maintaining the applicable Benefit Plan and other than offer letters that contemplate “at will” employment), (C) grant to any director, officer, employee or consultant of the Company or any of its Subsidiaries any severance or termination pay or benefits or any increase in severance, change of control or termination pay or benefits, in each case except in connection with actual termination of any such Person to the extent required under Applicable Laws or the existing plans, policies, agreements or arrangements of the Company and its Subsidiaries, (D) accelerate the vesting of, or the lapsing of restrictions with respect to, any stock options, restricted stock units or other stock-based compensation or (E) enter into any collective bargaining agreement or similar agreement with respect to the Company or any of its Subsidiaries;

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(xi) implement or adopt any material change in its methods of accounting, except as may be appropriate to conform to changes in Law or regulatory accounting rules or GAAP or regulatory requirements with respect thereto;

(xii) change any material Tax election, change any material Tax accounting method, file any material amended Tax Return or surrender any right to claim a material refund of Taxes (other than by the passage of time);

(xiii) compromise, settle or agree to settle any Action (including any Action relating to this Agreement or the transactions contemplated hereby), or consent to the same, other than compromises, settlements or agreements in the ordinary course of business;

(xiv) create or assume any Lien other than Permitted Liens;

(xv) enter into any joint venture, partnership or similar agreement with any Person; or

(xvi) agree to take any of the actions described in Sections 5.1(c)(i) through 5.1(c)(xv).

(d) Except (x) as contemplated by this Agreement or as required by a Gaming Authority or Applicable Law, (y) as set forth in Section 5.1(d) of the Parent Disclosure Schedule, or (z) to the extent that the Company otherwise consents in writing (not to be unreasonably withheld, conditioned or delayed), during the Interim Period, Parent shall not and shall not permit any of its Subsidiaries to:

(i) amend or otherwise change its Articles of Incorporation or Bylaws (or other similar governing instruments);

(ii) issue, deliver, sell, pledge, dispose of or encumber any shares of its capital stock, or grant to any Person any right to acquire any shares of its capital stock (other than the issuance of shares of Parent Common Stock upon the exercise of Parent Stock Options outstanding on the date hereof in accordance with their terms);

(iii) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock (except for a Parent Permitted Distribution completed prior to the Closing Date or any dividend or distribution by a Subsidiary of Parent to Parent or to other Subsidiaries), or enter into any agreement with respect to the voting or registration of its capital stock;

(iv) adjust, split, combine, redeem, repurchase or otherwise acquire any shares of capital stock of Parent, or reclassify, combine, split, subdivide or otherwise amend the terms of its capital stock (except for the redemption of Parent Stock Options prior to or contemporaneously with the Closing as permitted by the Parent Stock Option Plan);

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(v) merge or consolidate Parent or any of its Subsidiaries with any Person or adopt a plan of complete or partial liquidation or resolutions providing for a complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of Parent or any of its Subsidiaries;

(vi) (A) acquire (whether by merger, consolidation or acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or substantially all of the assets of any of the foregoing, other than purchases of inventory and other assets in the ordinary course of business or pursuant to existing Contracts; or (B) sell or otherwise dispose of (whether by merger, consolidation or divestiture of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any assets, other than (1) Parent Permitted Dispositions, (2) sales or dispositions of inventory and other assets in the ordinary course of business, (3) sales or dispositions pursuant to Contracts existing as of the date hereof, and (4) sales or dispositions of assets having an aggregate fair value not in excess of $100,000;

(vii) other than in the ordinary course of business, enter into, materially amend or terminate any Parent Material Contract;

(viii) commit to any new capital expenditure in excess of $100,000, except to the extent reflected in Parent’s capital expenditure budget disclosed to the Company prior to the date hereof;

(ix) (A) other than the extension of credit to customers in the ordinary course of business, make any loans, advances or capital contributions to, or investments in, any other Person (other than a Subsidiary of Parent), or (B) incur, assume or guarantee any indebtedness for borrowed money or issue any debt securities in excess of $100,000 individually or $1,000,000 in the aggregate, other than the incurrence of indebtedness in the ordinary course of business under Parent’s existing credit facilities, which aggregate amount outstanding under Parent’s existing credit facilities shall in no event exceed the limitations set forth in such facilities as of the date hereof, or redeem or repurchase any indebtedness for borrowed money; provided, however, that, for the avoidance of doubt, amounts under Parent’s existing credit facilities may be repaid and/or re-borrowed provided the above amount is not exceeded;

(x) except in the ordinary course of business consistent with past practice, (A) increase or commit to increase the compensation or benefits of any senior executive or other key employee of Parent or any of its Subsidiaries, (B) establish, adopt or amend any Benefit Plan with or for the benefit of its employees or directors (other than any such adoption or amendment that does not increase the cost to Parent or any of its Subsidiaries of maintaining the applicable Benefit Plan and other than offer letters that contemplate “at will” employment), (C) grant to any director, officer, employee or consultant of Parent or any of its Subsidiaries any severance or termination pay or benefits or any increase in severance, change of control or termination pay or benefits, in each case except in connection with actual termination of any such Person to the extent required under Applicable Law or the existing plans, policies, agreements or arrangements of Parent and its Subsidiaries (other than severance or termination pay or benefits that constitute Parent Merger Expenses), (D) accelerate the vesting of, or the lapsing of restrictions with respect to, any stock options, restricted stock units or other stock-based compensation (other than acceleration of Parent Stock Options pursuant to the terms of Parent Plans as in effect on the date hereof) or (E) enter into any collective bargaining agreement or similar agreement with respect to Parent or any of its Subsidiaries;

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(xi) implement or adopt any material change in its methods of accounting, except as may be appropriate to conform to changes in Law or regulatory accounting rules or GAAP or regulatory requirements with respect thereto;

(xii) change any material Tax election, change any material Tax accounting method, file any material amended Tax Return or surrender any right to claim a material refund of Taxes (other than by the passage of time);

(xiii) compromise, settle or agree to settle any Action (including any Action relating to this Agreement or the transactions contemplated hereby), or consent to the same, other than (A) compromises, settlements or agreements in the ordinary course of business or (B) settlement of the Quest Litigation;

(xiv) create or assume any Lien other than Permitted Liens;

(xv) enter into any joint venture, partnership or similar agreement with any Person; or

(xvi) agree to take any of the actions described in Sections 5.1(d)(i) through 5.1(d)(xv).

(e) Without limiting the foregoing, Parent shall, and shall cause its Subsidiaries to, operate their business at all times in a manner that will ensure that Parent has Parent Closing Funds of at least $60,000,000.

5.2           No Control of Other Party’s Business. Nothing contained in this Agreement shall give Parent, directly or indirectly, the right to control or direct the Company’s or its Subsidiaries’ operations prior to the Effective Time, and nothing contained in this Agreement shall give the Company, directly or indirectly, the right to control or direct Parent’s or its Subsidiaries’ operations prior to the Effective Time. Prior to the Effective Time, each of the Company and Parent shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its Subsidiaries’ respective operations.

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5.3           Full Access. During the Interim Period, upon reasonable prior written notice, each Party shall afford to each other Party and its Representatives, at such other Party’s expense, reasonable access during regular business hours to its officers, key management employees, facilities, properties, books and records and shall promptly furnish the other Party with all financial, operating and other data and information as the first Party shall reasonably request in writing; provided, however, that (i) any such investigation shall be conducted in such a manner as not to interfere unreasonably with the business operations of any Party, (ii) any such additional financial, operating and other data and information shall be furnished only if such data or information may be obtained without unreasonable expense, and (iii) the foregoing shall not permit such other Party or its Representatives to conduct any environmental testing or sampling or other invasive testing; provided, further, that any such investigation shall not affect or otherwise diminish or obviate in any respect any of the representations and warranties of any Party provided herein.

5.4           Confidentiality. Each of the Parties agrees that it will not use, or permit the use of, any of the information relating to any other Party hereto or its Affiliates furnished or made available to it in connection with the transactions contemplated herein (“Information”) for any purpose or in any manner other than solely in connection with its evaluation or consummation of the transactions contemplated by this Agreement, and that it will not disclose, divulge, provide or make accessible (collectively, “Disclose,” with “Disclosure” to have a correlative meaning), or permit the Disclosure of, any of the Information to any Person, other than (w) solely to its Affiliates or its or their directors, officers, employees, investment advisors, accountants, counsel and other authorized representatives and agents (collectively, such Party’s “Representatives”), in each case who have a “need to know” to carry out the purposes of this Agreement, (x) Disclosures necessary to be made in connection with the enforcement of any right or remedy relating to this Agreement or the transactions contemplated hereby, (y) Disclosure of any information required to be included in filings, presentations or document productions required to be made under applicable Gaming Law or in connection with obtaining any Gaming Approvals, or (z) except as may be required by judicial or administrative process or, in the opinion of such Party’s counsel, by other requirements of Applicable Law. Each Party shall be responsible for any breach of this Section 5.4 by any of its Representatives. The term “Information” as used herein shall not include any information relating to a Party which the Party receiving such information can show: (i) to have been rightfully in its possession prior to its receipt from another Party hereto; (ii) to be now or to later become generally available to the public through no fault of the receiving Party; (iii) to have been received separately by the receiving Party in an unrestricted manner from a Person entitled to disclose such information; or (iv) to have been developed independently by the receiving Party without regard to any Information received in connection with this transaction. Each Party also agrees to promptly return to the Party from whom originally received all original and duplicate copies of materials containing Information and to destroy any summaries, analyses or extracts thereof or based thereon (whether in hard copy form or intangible media) should the transactions contemplated herein not occur. The provisions of this Section 5.4 shall survive any termination of this Agreement for a period of five years.

5.5           Limit to Access and Disclosure. Notwithstanding the provisions of the foregoing Sections 5.3 and 5.4, no Party shall be required to provide access to or to otherwise Disclose Information where the same would (i) breach any agreement with any third party, (ii) constitute a waiver of or jeopardize the attorney-client or other privilege held by the Party, or (iii) otherwise violate any Applicable Law, including Gaming Laws; provided, that in each case where a Party withholds Information under this Section 5.5, (x) such Party shall provide the other Party with a written description of the information that it has elected not to disclose and the reason for such election, and (y) such Party shall use commercially reasonable efforts to allow the release of such information to the other Party as soon as reasonably practicable of all such information so withheld.

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5.6           Regulatory Approvals; Consents.

(a) Upon the terms and subject to the conditions of this Agreement, each of the Parties shall use its commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, and cooperate with each other in order to do, all things necessary, proper or advisable under Applicable Law (including under any Antitrust Law and under any applicable Gaming Law) to consummate the transactions contemplated by this Agreement at the earliest practicable date, including: (i) causing the preparation and filing of all forms, registrations and notices required to be filed to consummate the Merger and the taking of such actions as are necessary to obtain any requisite expiration or termination of any applicable waiting period under the HSR Act, (ii) taking the steps necessary or desirable to obtain all consents, approvals (including Gaming Approvals) or actions of, make all filings with and give all notices to any Governmental Authority or any other Person required in order to permit consummation of the transactions contemplated by this Agreement, (iii) defending all lawsuits and other proceedings by or before any Governmental Authority challenging this Agreement or the consummation of the Merger, (iv) resolving any objection asserted with respect to the transactions contemplated under this Agreement under any Antitrust Law raised by any Governmental Authority, and (v) preventing the entry of any court order, and vacating, lifting, reversing or overturning any injunction, decree, ruling, order or other action of any Governmental Authority that would prevent, prohibit, restrict or delay the consummation of the transactions contemplated by this Agreement.

(b) In furtherance and not in limitation of the provisions of Section 5.6(a), each of the Parties, as applicable, agrees to prepare and file as promptly as practicable, and in any event by no later than 20 Business Days from the date of this Agreement, an appropriate Notification and Report Form pursuant to the HSR Act, if required.

(c) In furtherance and not in limitation of the provisions of Section 5.6(a), Parent and the Company agree to, and agree to cause their Affiliates and their respective directors, officers, partners, managers, members, principals and shareholders to, prepare and submit to the Gaming Authorities all applications and supporting documents necessary to obtain all required Gaming Approvals as promptly as practicable, and in any event no later than 45 days from the date of this Agreement, other than with respect to the New Parent Directors, for whom such applications and supporting documents shall be submitted no later than 90 days from the date of this Agreement.

(d) If a Party receives a request for information or documentary material from any Governmental Authority with respect to this Agreement or any of the transactions contemplated hereby, including a Request for Additional Information or Documentary Material under the HSR Act or requests for supporting, supplemental, or additional documentation from any Gaming Authorities, then such Party shall in good faith make, or cause to be made, as soon as reasonably practicable a response which is, at a minimum, in substantial compliance with such request. To the extent any such request is substantive in nature, as reasonably determined by the Party to whom the request was made, such Party shall consult with the other Party prior to providing the response.

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(e) The Parties shall keep each other apprised of the status of matters relating to the completion of the transactions contemplated by this Agreement and work cooperatively in connection with obtaining the approvals of or clearances from each applicable Governmental Authority, including:

(i) cooperating with each other in connection with filings required to be made by any Party under any Antitrust Law or applicable Gaming Law and liaising with each other in relation to each step of the procedure before the relevant Governmental Authorities and as to the contents of all communications with such Governmental Authorities;

(ii) furnishing to the other Party all information within its possession that is required for any application or other filing to be made by the other Party pursuant to applicable Law in connection with the transactions contemplated by this Agreement;

(iii) promptly notifying each other of any communications (and, unless precluded by Applicable Law, providing copies of any such communications that are in writing) from or with any Governmental Authority with respect to the transactions contemplated by this Agreement and allowing, to the extent permitted by Applicable Law or Governmental Authority and to the extent reasonably practicable under the circumstances, each of the Parties to attend any meetings with or other appearances before any Governmental Authority with respect to the transactions contemplated by this Agreement, unless a Party has a reasonable basis to object to the presence of the other Party at any such meetings or appearances;

(iv) consulting and cooperating with one another in connection with all analyses, appearances, presentations, memoranda, briefs, arguments, opinions and proposals made or submitted by or on behalf of any Party hereto in connection with proceedings under or relating to any Antitrust Laws or in connection with public hearings under applicable Gaming Laws; and

(v) without prejudice to any rights of the Parties hereunder, consulting and cooperating in all respects with the other in defending all lawsuits and other proceedings by or before any Governmental Authority challenging this Agreement or the consummation of the transactions contemplated by this Agreement.

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(f) In addition, Parent and the Company shall take, or cause to be taken, all other action and do, or cause to be done, all other things necessary, proper or advisable under all Antitrust Laws and/or applicable Gaming Laws to consummate the transactions contemplated by this Agreement as promptly as practicable, including using its reasonable best efforts to obtain as promptly as practicable the expiration or termination of all waiting periods and obtain all Permits and all other approvals and any other consents required to be obtained in order for the Parties to consummate the transactions contemplated by this Agreement.

(g) No actions taken pursuant to this Section 5.6 shall be considered for purposes of determining whether a Material Adverse Effect has occurred.

(h) Notwithstanding the foregoing, commercially, competitively and/or personally sensitive information and materials of a Party will be provided to the other Party on an outside counsel-only basis, provided that the Parties shall cooperate to enable appropriate communications to be made available to the other Party with respect to such commercially or competitively sensitive information redacted if necessary.

5.7           Credit Facilities.

(a) Prior to the Closing Date, the Company shall use commercially reasonable efforts to enter into an agreement with one or more lenders to refinance or amend the indebtedness under the Company Credit Agreement (either with the existing or new lenders), on such terms and subject to such conditions as shall have been reasonably approved by Parent (such approval not to be unreasonably withheld, conditioned or delayed) (the “Refinancing”).

(b) Without limiting the foregoing, prior to the Closing Date, Parent shall provide, and shall use its commercially reasonable efforts to cause any attorney, accountant or other advisor, agent or representative retained by Parent or any of its Subsidiaries to provide, such reasonable cooperation in connection with the arrangement of the Refinancing as may be reasonably requested by the Company, including (i) using commercially reasonable efforts to furnish the Company and the providers of such Refinancing (the “Debt Financing Sources”) with financial and other pertinent information regarding Parent and its Subsidiaries as may be reasonably requested by the Company to market and consummate the Refinancing, and (ii) reasonably assisting the Company and its Debt Financing Sources in the preparation of customary offering documents or memoranda (or similar documents) for any portion of the Refinancing; provided, however, that in no event shall Parent or any of its Subsidiaries be required to (1) pledge any assets as collateral, make any equity capital contribution to the Company, pay any commitment, funding or other similar fee, or incur any other liability in connection with the Refinancing, prior to the Closing, or (2) take any action that would reasonably be expected to conflict with, or result in any violation or breach of, or default (with or without notice or lapse of time, or both) under Parent’s articles of incorporation or bylaws, any Applicable Laws or any Parent Material Contract.

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5.8           Further Assurances; Cooperation; Notification.

(a) Each Party shall, before, at and after Closing, execute and deliver such instruments and take such other actions as the other Party or Parties, as the case may be, may reasonably require in order to carry out the purposes and intent of this Agreement including the satisfaction of all conditions contained in Articles 6 and 7 of this Agreement.

(b) Without limiting the foregoing, at the written request of the Stockholder, Parent will execute one or more warrant purchase agreements with the Stockholder, the Company, Golden Gaming and the Warrantholders designated by the Stockholder in the form presented by the Stockholder and reasonably approved by Parent (such approval not to be unreasonably withheld, conditioned or delayed) (each, a “Warrant Purchase Agreement”), providing for, at each Warrantholder’s election, either the purchase of the applicable Golden Gaming Warrants by the Company in exchange for cash or the purchase of the applicable Golden Gaming Warrants by Parent in exchange for the issuance by Parent to such Warrantholders of validly issued, fully paid and nonassessable shares of Parent Common Stock, in each case effective immediately prior to (but conditional upon) the consummation of the Merger. With respect to each Warranthholder who elects to receive shares of Parent Common Stock under a Warrant Purchase Agreement, the Warrant Purchase Agreement will contain customary private placement representations from such Warrantholder substantially in the form of the Stockholder Investment Representations and a waiver by such Warrantholder of the right to receive its pro rata share of any Jamul Distributions otherwise distributable with respect to Warrantholder Shares held by Warrantholders on the record date for such Jamul Distribution.

(c) During the Interim Period, subject to Applicable Law, the Parties shall cooperate with each other to promptly develop plans for the management of the businesses of Parent and the Surviving Corporation after the Closing, including without limitation plans relating to productivity, marketing, operations and improvements, and the Parties shall further cooperate with each other to provide for the implementation of such plans as soon as practicable after the Closing. During the Interim Period, subject to Applicable Law, the Parties shall confer with each other on a regular and reasonable basis to report on material operational matters and the general status of ongoing operations of such Party.

(d) During the Interim Period, each Party shall promptly notify the other Party in writing of the occurrence of any event which it reasonably believes will or is reasonably likely to result in a failure by such Party to satisfy the conditions specified in Articles 6 or 7 of this Agreement, as applicable.

(e) After the determination of the number of Merger Consideration Shares and prior to the Effective Time, the Parent Board of Directors, or an appropriate committee of non-employee directors thereof, shall adopt such resolutions as may be reasonably requested by the Stockholder to cause any acquisitions of Parent Common Stock under this Agreement by the Stockholder to be exempt under Rule 16b-3 promulgated under the Exchange Act.

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5.9           Proxy Statement; Parent Special Meeting.

(a) As promptly as reasonably practicable, but in any event within 90 days, following the date of this Agreement, Parent shall, with the assistance of the Company, prepare the Proxy Statement and file the Proxy Statement with the SEC. Parent and the Company will cooperate with each other in the preparation of the Proxy Statement. Without limiting the generality of the foregoing, the Company will furnish to Parent in writing the information relating to it required by the Securities Act and the rules and regulations promulgated thereunder to be set forth in the Proxy Statement. Parent shall use its reasonable best efforts to resolve all SEC comments with respect to the Proxy Statement as promptly as practicable after receipt thereof. Each of Parent and the Company will promptly correct any information provided by it for use in the Proxy Statement, if and to the extent that it shall have become false or misleading in any material respect prior to the Parent Special Meeting. Parent shall cause the Proxy Statement, as so corrected, to be filed with the SEC and to be disseminated to its shareholders, in each case, as and to the extent required by applicable federal securities laws.

(b) The Company and its counsel shall be given a reasonable opportunity to review and comment on the Proxy Statement before it is filed with the SEC, and Parent shall give good faith and reasonable consideration to any material substantive comments made by the Company or its counsel. Parent shall promptly notify and provide to the Company and its counsel any comments Parent or its counsel receives from the SEC with respect to the Proxy Statement and any request by the SEC for any amendment to the Proxy Statement or for additional information.

(c) As promptly as reasonably practicable and, in any event, no later than 40 days after (i) the tenth day after the preliminary Proxy Statement has been filed with the SEC if by such date the SEC has not informed Parent that it intends to review the Proxy Statement or (ii) if the SEC has by such date informed Parent that it intends to review the Proxy Statement, the date on which the SEC confirms that it has no further comments on the Proxy Statement, Parent, acting through the Parent Board of Directors, shall, in accordance with Applicable Law and its Articles of Incorporation and Bylaws, duly call, give notice of, convene and hold a special meeting of its shareholders (the “Parent Special Meeting”) for the purpose of obtaining the Parent Shareholder Approval. The Parent Board of Directors shall not postpone, recess or adjourn the Parent Special Meeting except to the extent required by Applicable Law or, if as of the time for which the Parent Special Meeting is originally scheduled (as set forth in the Proxy Statement) there are insufficient shares of Parent Common Stock represented (either in person or by proxy) to constitute a quorum necessary to conduct the business of the Parent Special Meeting or there are an insufficient number of shares of Parent Common Stock voting “FOR” the proposals submitted to the Parent shareholders to obtain the Parent Shareholder Approval.

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(d) The Parent Board of Directors shall take all lawful action to solicit, and, subject to Section 5.11, shall recommend the approval of the issuance of Parent Common Stock under this Agreement (for all purposes of this Agreement, references to the issuance of Parent Common Stock under this Agreement (or to such shares issuable under or pursuant to this Agreement) shall be deemed to include the issuance of shares of Parent Common Stock under the Warrant Purchase Agreements) and the approval of the Articles Amendment. Parent shall include in the Proxy Statement a statement that the Parent Board of Directors (x) has determined that the issuance of Parent Common Stock under this Agreement and the adoption of the Articles Amendment are advisable and (y) recommends that Parent’s shareholders vote to approve the issuance of Parent Common Stock under this Agreement and to approve the Articles Amendment at the Parent Special Meeting and vote in favor of the Parent Shareholder Approval. In the event that subsequent to the date of this Agreement, the Parent Board of Directors makes an Adverse Recommendation Change, Parent nevertheless shall continue to solicit proxies and submit the issuance of Parent Common Stock under this Agreement and the adoption of the Articles Amendment to its shareholders for approval at the Parent Special Meeting unless this Agreement shall have been terminated in accordance with its terms prior to the Parent Special Meeting.

5.10         NASDAQ Listing. Parent shall cause the Merger Consideration Shares and any other shares of Parent Common Stock issuable under this Agreement or under the Warrant Purchase Agreements to be approved for listing on the NASDAQ Global Market, subject to official notice of issuance, prior to the Effective Time (or, with respect to any additional shares of Parent Common Stock to be issued to the Stockholder pursuant to Sections 2.2(d)(ii), 2.2(f), 2.2(g), 2.2(h), 8.1(b) or 10.3(c), as soon as reasonably practicable following the determination of the applicable adjustment or the receipt of the applicable proceeds or amounts, respectively).

5.11         Acquisition Proposal; No Solicitation.

(a) Except as set forth in this Section 5.11, during the Interim Period, Parent agrees that neither it nor any of its Subsidiaries shall, and that it shall not authorize or permit its and their respective Representatives to, directly or indirectly, (i) initiate, solicit, facilitate or knowingly encourage any inquiries, proposals or offers with respect to, or the making or completion of, an Acquisition Proposal, (ii) engage or participate in any negotiations or discussions (other than to state that they are not permitted to have discussions) concerning, or provide or cause to be provided any non-public information or data relating to Parent or any of its Subsidiaries in connection with, an Acquisition Proposal, (iii) approve, endorse or recommend any Acquisition Proposal or (iv) approve, endorse or recommend, or execute or enter into any letter of intent, agreement in principle, merger agreement, acquisition agreement or other similar agreement relating to an Acquisition Proposal; provided, however, it is understood and agreed that any determination or action by the Parent Board of Directors permitted under Section 5.11(b) or (c) shall not be deemed to be a breach of this Section 5.11(a). Parent agrees that it will immediately cease and cause to be terminated, and cause its Representatives to cease and cause to be terminated, any existing activities, discussions or negotiations with any Persons conducted heretofore with respect to any Acquisition Proposal. Parent agrees that any violation of the foregoing restrictions by any of Parent’s Subsidiaries or its or their respective Representatives will be a breach of this Section 5.11(a) by Parent. Parent agrees that it shall not terminate, amend, release, modify or knowingly fail to enforce any provisions of, or grant any permission, waiver or request under, any confidentiality, “standstill,” non-solicitation or similar agreement to which Parent is or becomes a party or under which Parent has or acquires any rights, entered into in respect of or in contemplation of a possible Acquisition Proposal (other than to the extent the Parent Board of Directors determines in good faith after consultation with its outside legal counsel that failure to take any of such actions would be inconsistent with its fiduciary duties under Applicable Law). Parent also will promptly request each Person that has executed a confidentiality agreement in connection with its consideration of a possible Acquisition Proposal to return or destroy in accordance with the terms of such confidentiality agreement all confidential information heretofore furnished to such Person by or on behalf of Parent.

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(b) Notwithstanding anything to the contrary in Section 5.11(a), at any time after the date of this Agreement and prior to obtaining the Parent Shareholder Approval, Parent may, in response to an unsolicited bona fide written Acquisition Proposal that did not result from a breach of Section 5.11(a) and that the Parent Board of Directors determines, in its good faith judgment (after consultation with its outside legal counsel and its financial advisor) constitutes or may reasonably be expected to lead to a Superior Proposal, and subject to complying with Section 5.11(d), (i) furnish information with respect to Parent and its Subsidiaries to the Person making such Acquisition Proposal pursuant to a customary confidentiality agreement and standstill on terms no less restrictive to such Person than those contained in the Confidentiality Agreement (except for such changes specifically necessary in order for Parent to be able to comply with its obligations under this Agreement); provided, however, that Parent shall provide or make available to the Company any non-public information concerning Parent or any of its Subsidiaries that is provided to the Person making such Acquisition Proposal or its Representatives which was not previously provided or made available to the Company; and (ii) participate in discussions or negotiations with such Person and its Representatives regarding such Acquisition Proposal; provided, further, that the Parent Board of Directors or any committee thereof may take the actions described in subsections (i) and (ii) above only if the Parent Board of Directors or any committee thereof determines in its good faith judgment (after consultation with its outside legal counsel and its financial advisor) that the failure to take such action would reasonably be expected to breach its fiduciary duties under Applicable Law.

(c) Except as set forth in this Section 5.11(c), until the termination of this Agreement in accordance with the terms hereof, neither the Parent Board of Directors nor any committee thereof shall: (i) (A) withdraw, modify or amend or publicly propose to withdraw, modify or amend, in any manner adverse to the Company, or fail to make, its recommendation to approve the issuance of Parent Common Stock under this Agreement and to approve the Articles Amendment at the Parent Special Meeting (the “Parent Board Recommendation”), (B) fail to make a statement in opposition and recommend to Parent’s shareholders rejection of a tender or exchange offer for Parent’s securities initiated by a third party pursuant to Rule 14e-2 promulgated under the Exchange Act within ten Business Days after such tender or exchange offer shall have been announced or commenced by such third party, or (C) approve or recommend, or publicly propose to approve or recommend, any Acquisition Proposal (any of the foregoing in clauses (A)-(C), an “Adverse Recommendation Change”), or (ii) adopt or recommend, or publicly propose to adopt or recommend, or allow Parent or any Subsidiary thereof to execute or enter into, any letter of intent, memorandum of understanding, agreement in principle, merger agreement, acquisition agreement, option agreement, joint venture agreement, partnership agreement or other similar Contract constituting or related to, or that is intended to or would reasonably be expected to lead to, any Acquisition Proposal (other than a confidentiality agreement referred to in Section 5.11(b)) (any of the foregoing, an “Acquisition Agreement”). Notwithstanding anything to the contrary contained in this Agreement, at any time prior to obtaining the Parent Shareholder Approval, the Parent Board of Directors may, in response to a bona fide unsolicited written Acquisition Proposal that was made after the date hereof, that did not result from a breach of this Section 5.11, and that the Parent Board of Directors determines in good faith (after consultation with outside legal counsel and its financial advisor) constitutes a Superior Proposal (x) make an Adverse Recommendation Change if the Parent Board of Directors has determined in good faith (after consultation with its outside legal counsel) that, in light of the receipt of such Superior Proposal, the failure to make such Adverse Recommendation Change would reasonably be expected to breach its fiduciary duties under Applicable Law, or (y) cause Parent to terminate this Agreement pursuant to Section 8.1(h) and concurrently with such termination enter into an Acquisition Agreement if the Parent Board of Directors has concluded in good faith (after consultation with its outside legal counsel) that, in light of the receipt of such Superior Proposal, the failure to effect such termination would reasonably be expected to breach its fiduciary duties under Applicable Law; provided, however, that Parent shall not be entitled to terminate this Agreement pursuant to the foregoing clause (y), and any purported termination pursuant to the foregoing clause (y) shall be void and of no force or effect, unless, prior to or simultaneously with such termination, Parent pays by wire transfer of immediately available funds the Termination Fee in accordance with Section 8.3; provided, further, that the Parent Board of Directors shall not be entitled to make an Adverse Recommendation Change in respect of any such Superior Proposal or terminate this Agreement pursuant to Section 8.1(h) in respect of any such Superior Proposal, and any purported termination pursuant to the foregoing clause (y) shall be void and of no force or effect, unless:

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(i) Parent has provided to the Company four Business Days’ prior written notice that it intends to take a such action (a “Notice of Designated Superior Proposal”), which notice shall describe in reasonable detail the terms and conditions of any Superior Proposal (including the identity of the party making such Superior Proposal) that is the basis of the proposed action by the Parent Board of Directors (a “Designated Superior Proposal”) and attach the most current form or draft of any written agreement providing for the transaction contemplated by such Designated Superior Proposal and all other contemplated transaction documents (including any agreements with any stockholders, directors or employees) (it being understood and agreed that any amendment to the financial terms or any other material term of such Superior Proposal shall require a new Notice of Designated Superior Proposal, and a new two Business Day period); and

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(ii) at the end of such initial four Business Day period or subsequent two Business Day period, such Acquisition Proposal has not been withdrawn and the Parent Board of Directors determines in good faith that such Acquisition Proposal continues to constitute a Superior Proposal (taking into account any changes to the terms of this Agreement agreed to or proposed by the Company in a binding written offer in response to a Notice of Designated Superior Proposal which is capable of being accepted by Parent).

(d) Parent shall promptly (and in any event within two Business Days) advise the Company orally and in writing of (i) any written Acquisition Proposal and (ii) any written request for non-public information relating to Parent or its Subsidiaries by a Person with whom Parent enters into a confidentiality agreement pursuant to Section 5.11(b), other than requests for information not reasonably expected to be related to an Acquisition Proposal, including in each case the identity of the Person making any such Acquisition Proposal or request and the material terms of any such Acquisition Proposal or request and attach a copy of any such written Acquisition Proposal. Parent shall keep the Company reasonably and promptly informed in all material respects of the status and details (including any material change or proposed material change to the terms thereof) of any Acquisition Proposal. Parent shall provide the Company with prior notice of any meeting of the Parent Board of Directors or any committee thereof at which the Parent Board of Directors or any committee thereof is expected to consider any Acquisition Proposal or any such inquiry or to consider providing information to any person or group in connection with an Acquisition Proposal or any such inquiry.

(e) Nothing set forth in this Agreement shall prevent Parent or the Parent Board of Directors from (i) taking and disclosing to its stockholders a position contemplated by Rule 14e-2(a), Rule 14d-9 or Item 1012(a) of Regulation M-A promulgated under the Exchange Act (or any similar communication to stockholders in connection with the making or amendment of a tender offer or exchange offer), or (ii) from making any required disclosure to Parent’s shareholders if, in the good faith judgment of the Parent Board of Directors, after consultation with outside legal counsel, failure to disclose such information would reasonably be expected to breach its fiduciary duties under Applicable Law; provided, however, that in the case of both clause (i) and clause (ii), any such disclosure, other than a “stop, look and listen” communication or similar communication of the type contemplated by Section 14d-9(f) of the Exchange Act, may still be deemed to be an Adverse Recommendation Change pursuant to Section 5.11(c) unless the Parent Board of Directors expressly publicly reaffirms the Parent Board Recommendation in such disclosure.

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(f) During the Interim Period, the Company agrees that neither it nor any of its Subsidiaries shall, and that it shall not authorize or permit its and their respective Representatives to, directly or indirectly, (i) initiate, solicit, facilitate or knowingly encourage any inquiries, proposals or offers with respect to, or the making or completion of, a Company Acquisition Proposal, (ii) engage or participate in any negotiations or discussions (other than to state that they are not permitted to have discussions) concerning, or provide or cause to be provided any non-public information or data relating to the Company or any of its Subsidiaries in connection with, a Company Acquisition Proposal, (iii) approve, endorse or recommend any Company Acquisition Proposal or (iv) approve, endorse or recommend, or execute or enter into any letter of intent, agreement in principle, merger agreement, acquisition agreement or other similar agreement relating to a Company Acquisition Proposal.

5.12         Public Announcements. None of the Parties shall make any public announcement with respect to this Agreement, the Merger or the other transactions contemplated herein without the prior written consent of the other Parties, which consent shall not be unreasonably withheld or delayed, except as required by Applicable Law. Without limiting the foregoing, each Party shall, to the extent reasonably practicable, consult with the other Parties before issuing, and give each other Party a reasonable opportunity to review and comment upon, any press release or other public statements with respect to this Agreement, the Merger and the other transactions contemplated hereby. Parent and the Company agree that the press release announcing the execution and delivery of this Agreement shall be a joint release of Parent and the Company. Notwithstanding the foregoing, Parent and the Company may make public statements in response to (i) inquiries from any Gaming Authorities or as otherwise required by Applicable Law, or (ii) questions from the press, analysts, investors or those attending industry conferences so long as such statements are substantially consistent with press releases, public disclosures or public statements previously issued or made by Parent or the Company, as applicable, in compliance with this Section 5.12.

5.13         State Takeover Statutes. Parent, its Board of Directors, the Company, and the Stockholder shall (a) take all reasonable actions necessary to ensure that no “Fair Price,” “Control Share Acquisition,” “Business Combination” or other anti-takeover statute, or similar statute or regulation, is or becomes applicable to this Agreement, the Merger or any of the other transactions contemplated hereby and (b) if any “Fair Price,” “Control Share Acquisition,” “Business Combination” or other anti-takeover statute, or similar statute or regulation, becomes applicable to this Agreement, the Merger or any other transaction contemplated hereby, take such commercially reasonable actions as may be necessary to render such statute or regulation inapplicable to this Agreement, the Merger and the other transactions contemplated hereby, or to ensure that the Merger and the other transactions contemplated hereby may be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise to eliminate or minimize the effect of such statute or regulation on this Agreement, the Merger and the other transactions contemplated hereby.

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5.14         Stockholder Litigation. The Parties shall cooperate and consult with one another, to the fullest extent possible, in connection with any stockholder litigation against any of them or any of their respective directors or officers with respect to the transactions contemplated by this Agreement. In furtherance of and without in any way limiting the foregoing, each of the Parties shall use its respective commercially reasonable efforts to prevail in such litigation so as to permit the consummation of the transactions contemplated by this Agreement in the manner contemplated by this Agreement. Notwithstanding the foregoing, no Party shall compromise or settle any litigation commenced against it or its directors or officers relating to this Agreement or the transactions contemplated hereby (including the Merger) without the prior written consent of each other Party (not to be unreasonably withheld, conditioned or delayed).

5.15         Restrictions on Transfer of Parent Common Stock. The Stockholder shall, and Parent shall cause each Person listed on Annex IV attached hereto (each such Person, a “Restricted Stockholder”) to, execute and deliver to Parent on or prior to the Closing Date the NOL Preservation Agreement in substantially the form attached hereto as Exhibit C (the “NOL Preservation Agreement”).

5.16         Indemnification and Exculpation.

(a) Without limiting any additional rights that any employee may have under any agreement or Company Plan, from the Effective Time through the sixth anniversary of the date on which the Effective Time occurs, Parent shall, or shall cause the Company to, indemnify and hold harmless each present (as of the Effective Time) and former officer, director, manager or employee of the Company and its Subsidiaries (collectively, the “Indemnified Parties”), as applicable against all claims, losses, liabilities, damages, judgments, inquiries, fines and reasonable fees, costs and expenses, including attorneys’ fees and disbursements (collectively, “Costs”), incurred in connection with any Action, whether civil, criminal, administrative or investigative, arising out of or pertaining to (i) the fact that the Indemnified Party is or was an officer, director, manager, employee, fiduciary or agent of the Company or any of its Subsidiaries or (ii) matters existing or occurring at or prior to the Effective Time (including this Agreement and the transactions and actions contemplated hereby), whether asserted or claimed prior to, at or after the Effective Time, to the fullest extent permitted under applicable Law and the Company’s Articles of Incorporation and Bylaws, each as at the date hereof (collectively, the “Constituent Documents”). In the event of any such Action, (A) each Indemnified Party shall be entitled to advancement of expenses incurred in the defense of any Action from Parent or the Company, as applicable, to the fullest extent permitted under applicable Law and the applicable Constituent Documents, within ten Business Days of receipt by Parent or the Company, as applicable, from the Indemnified Party of a request therefor; provided, that any Person to whom expenses are advanced provides an unsecured undertaking to repay such advances if it is ultimately determined that such Person is not entitled to indemnification, (B) none of Parent or the Company shall settle, compromise or consent to the entry of any judgment in any proceeding or threatened action, suit, proceeding, investigation or claim (and in which indemnification could be sought by such Indemnified Party hereunder), unless such settlement, compromise or consent includes an unconditional release of such Indemnified Party from all liability arising out of such action, suit, proceeding, investigation or claim or such Indemnified Party otherwise consents, and (C) the Company shall cooperate in the defense of any such matter. Parent and the Company shall be jointly and severally liable for the obligation to provide indemnification to the Indemnified Parties.

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(b) Except as may be required by Applicable Law, Parent and the Company agree that all rights to indemnification and exculpation from liabilities for acts or omissions occurring at or prior to the Effective Time and rights to advancement of expenses relating thereto now existing in favor of any Indemnified Party as provided in the Articles of Incorporation or Bylaws (or comparable organizational documents) of the Company and its Subsidiaries or in any indemnification agreement (or form thereof) identified in Section 5.16(b) of the Company Disclosure Schedule and in effect immediately prior to the Effective Time between such Indemnified Party and the Company or any of its Subsidiaries shall survive the Merger and continue in full force and effect, and shall not be amended, repealed or otherwise modified in any manner that would adversely affect any right thereunder of any such Indemnified Party.

(c) Notwithstanding anything herein to the contrary, if any Action (whether arising before, at or after the Effective Time) is instituted against any Indemnified Party on or prior to the sixth anniversary of the Effective Time, the provisions of this Section 5.16 shall continue in effect until the final disposition of such Action.

(d) The indemnification provided for herein shall not be deemed exclusive of any other rights to which an Indemnified Party is entitled, whether pursuant to Applicable Law, Contract or otherwise. The provisions of this Section 5.16 shall survive the consummation of the Merger and, notwithstanding any other provision of this Agreement that may be to the contrary, expressly are intended to benefit, and shall be enforceable by, each of the Indemnified Parties and their respective heirs and legal representatives.

(e) In the event that the Company or Parent or any of their respective successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers or conveys all or a majority of its properties and assets to any Person, then, and in each such case, proper provision shall be made so that the successors and assigns of the Company or Parent, as the case may be, shall succeed to the obligations set forth in this Section 5.16.

5.17         Compensation and Employee Benefits Matters.

(a) Except as set forth in this Section 5.17, Parent shall assume or shall cause the Surviving Corporation to assume all Company Plans, which shall continue in accordance with their terms following the Effective Time.

(b) Parent and the Company shall work together to develop common employee compensation and benefit programs as soon as practicable following the Effective Time, recognizing that a period of time may be necessary for the transition of existing employee benefit programs.

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(c) Nothing contained in this Section 5.17, express or implied (i) shall be construed to establish, amend, or modify any employee benefit plan, program, agreement or arrangement, (ii) shall alter or limit the ability of Parent, the Company or any of their respective Affiliates to amend, modify or terminate any employee benefit or employment plan, program, agreement, or arrangement after the Effective Time, (iii) is intended to confer or shall confer upon any current or former employee any right to employment or continue employment, or constitute or create an employment agreement with any employee, or (iv) is intended to confer or shall confer upon any individual or any legal representative of any individual (including employee, retirees, or dependents or benefits of employees or retirees) any right as a third-party beneficiary of this Agreement.

(d) Parent shall cause each of its Subsidiaries, for a period commencing at the Effective Time and ending 90 days thereafter, not to effectuate a “plant closing” or “mass layoff” as those terms are defined in the WARN Act affecting in whole or in part any site of employment, facility, operating unit or Company employee, and shall cause each of its Subsidiaries not to take any such action after such 90-day period without complying with all provisions of the WARN Act, or any similar provision of applicable foreign Law.

5.18         Schedule Updates.

(a) Not earlier than the tenth Business Day prior to the Closing Date nor later than the fifth Business Day prior to the Closing Date, the Company shall supplement or amend the Company Disclosure Schedule and Parent shall supplement or amend the Parent Disclosure Schedule to reflect or disclose any occurrence or any event which occurs or arises after the date of this Agreement (or, with respect to representations and warranties qualified with knowledge, where the Company or Parent, as applicable, acquired knowledge of such occurrence or event after the date of this Agreement) that would result in or cause such schedule to be incorrect if the same were not supplemented or amended (each, a “Schedule Update”).

(b) Each Schedule Update shall be deemed to have amended the Company Disclosure Schedule or the Parent Disclosure Schedule, as applicable, and to qualify the representations and warranties set forth herein for all purposes hereunder.

5.19         Support of Committees     

(a) Parent agrees to provide the Special Committee with (i) access to information reasonably required for the Special Committee to perform its duties under Article 10 and otherwise under this Agreement, (ii) to notify the Special Committee promptly of any reasonable bases for claims for indemnification following the time they become known to Parent, and (iii) the resources reasonably necessary to perform its duties under Article 10 and otherwise under this Agreement, including payment for consultants and advisors reasonably required in connection therewith.

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(b) Parent agrees to provide the Jamul Disposition Committee with (i) access to information reasonably required for the Jamul Disposition Committee to perform its duties under Section 5.22 and otherwise under this Agreement, and (ii) the resources reasonably necessary to perform its duties under Section 5.22 and otherwise under this Agreement, including payment for consultants and advisors reasonably required in connection therewith.

5.20         Big Sky Gaming. The Company and the Stockholder shall (a) promptly following the date of this Agreement, make such filings as are reasonably necessary to obtain any Gaming Approvals needed to transfer all of the membership interests in Big Sky Gaming, LLC and Big Sky Gaming Management, LLC (the “Big Sky Entities”) to the Company or a Subsidiary thereof, and (b) cause all of the membership interests in the Big Sky Entities to be transferred to the Company or a Subsidiary thereof at the Closing or, if later, promptly following the date of receipt of all Gaming Approvals necessary to effect such transfer. During the Interim Period, the Stockholder shall not pursue any business opportunities or make any investments, in each case, through the Big Sky Entities other than as reasonably required or advisable to obtain the requisite Gaming Approvals to effect the transfer of the membership interests in the Big Sky Entities to the Company or a Subsidiary thereof.

5.21         Company Information Technology Systems. The Company shall (a) substantially complete all material required PCI upgrades or improvements to its information technology systems that are identified in a vulnerability assessment and penetration testing report to be prepared by a mutually agreed third party on behalf of the Company after the date hereof (the “PCI Upgrades”) and (b) substantially complete the information technology projects set forth in Section 5.21(b) of the Company Disclosure Schedule (the “Company Technology Projects”).

5.22         Jamul Dispositions

(a) Parent shall cause any unconsummated Jamul Disposition that is subject to an executory contract as of the Closing Date to be consummated in accordance with the terms of such contract (but subject in all cases to (i) the satisfaction of the conditions precedent set forth therein, (ii) such consummation not contravening or conflicting with, or constituting a violation of, (A) Applicable Law or (B) any Contract of Parent or any of its Subsidiaries in effect immediately prior to the Closing, and (iii) the readiness and willingness of each other counterparty to such executory contract to consummate such Jamul Disposition on the applicable closing date).

(b) At the Effective Time, the Parent Board of Directors shall form a three-member standing committee composed of (i) the members of the Parent Board of Directors designated pursuant to Sections 1.9(b)(i) and 1.9(b)(iii) (the “Jamul Disposition Committee”). The Jamul Disposition Committee shall take action by majority vote (whether by meeting or in writing). The functions of the Jamul Disposition Committee shall include such responsibilities as are delegated to the Jamul Disposition Committee in accordance with the provisions of this Section 5.22. The Jamul Disposition Committee shall perform all such functions on behalf of and in the best interests of Parent and its shareholders, and Parent shall use commercially reasonable efforts to effect the instructions of the Jamul Disposition Committee with respect to any Jamul Disposition.

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(c) For a period of three years from and after the Closing Date (the “Distribution Period”), the Jamul Disposition Committee is empowered to, and will have the sole authority to (i) authorize and negotiate on behalf of Parent the terms of, any Jamul Disposition, and (ii) authorize any officer or agent to execute any contract relating to such a Jamul Disposition on behalf of Parent. In connection with the Jamul Disposition Committee’s exercise of this function, Parent agrees to provide support to the Jamul Disposition Committee in accordance with the provisions of Section 5.19.

(d) With respect to any Jamul Disposition pursuant to a contract entered into during the Distribution Period, whether or not the proceeds of such Jamul Disposition are received within the Distribution Period, (i) Parent agrees to make a Jamul Distribution (provided, however, that, subject to the effectiveness of the waiver in clause (ii) below as set forth below, no such Jamul Distribution shall be made with respect to any Stockholder Owned Shares, and the amount that would be distributable with respect to Stockholder Owned Shares but for such waiver shall be reallocated to such holders of Parent Common Stock as have not so waived the right to participate in such Jamul Distribution), and (ii) the Stockholder, as the initial holder of the Stockholder Owned Shares, hereby irrevocably agrees that, with respect to any such Jamul Disposition, the Stockholder waives its right to receive and hereby declines its pro rata share of any Jamul Distribution otherwise distributable with respect to the Stockholder Owned Shares arising from such Jamul Disposition; provided, however, that, in the event that a Private Letter Ruling has not been obtained prior to any Jamul Distribution, the provisions of clause (e) below shall apply. Parent shall use its reasonable best efforts to obtain a Private Letter Ruling prior to such time as it reasonably anticipates that a Jamul Distribution is likely to occur.

(e) If a Private Letter Ruling has not been obtained prior to any Jamul Distribution, then (i) the Stockholder’s waiver pursuant to Section 5.22(d)(ii) shall only be effective with respect to an amount equal to the excess of the Stockholder’s pro rata share of such Jamul Distribution over the Unwaived Jamul Distribution Amount and the Stockholder shall be entitled to receive the Unwaived Jamul Distribution Amount at the time of such Jamul Distribution and the Stockholder shall file its income Tax Return for the year of the Jamul Distribution reporting the Constructive Receipt Gross Income as income, and (ii) if the Jamul Disposition Committee determines that there is a realistic possibility that the position that the Stockholder is not in constructive receipt of income in connection with such Jamul Distribution will be sustained on the merits under Applicable Law, the Jamul Disposition Committee may request, after the Stockholder has submitted its income Tax Return for the fiscal year in which such Jamul Distribution was made, the Stockholder to file (and promptly following such request the Stockholder will so file) with the applicable Taxing Authorities a claim for a cash refund of all Taxes paid as a result of the Stockholder being in constructive receipt of income in connection with such Jamul Distribution, and Parent shall indemnify, defend and hold harmless the Stockholder for all reasonable expenses incurred by the Stockholder in preparing and pursuing such refund claim. The Stockholder shall diligently and in good faith pursue such refund claim and keep Parent reasonably informed of the progress of such Tax refund proceeding and shall not settle or otherwise compromise such refund claim without Parent’s prior written consent, which shall not be unreasonably withheld, conditioned or delayed. In the event that the Stockholder actually receives a Tax refund in cash from a Taxing Authority pursuant to a refund claim filed in accordance with clause (ii) above, the Stockholder shall, as promptly as practicable, pay over to Parent (x) such Tax refund (including any interest thereon paid by the relevant Taxing Authority) so received, net of any reasonable expenses and costs (including Taxes) attributable to the obtaining and receipt of such refund (and provide, contemporaneously with such payment, a summary of such expenses and costs if requested by the Jamul Disposition Committee), and (y) any Tax Benefit that is Actually Received by the Stockholder from any payment to Parent pursuant to this Section 5.22(e) for the taxable year in which such Tax refund is paid over to Parent pursuant to clause (x) above and the five immediately following taxable years; provided, however, that Parent, upon the request of the Stockholder, shall repay to the Stockholder any amount paid over pursuant to clause (x) or (y) above (plus any penalties, interest or other charges imposed by the relevant Taxing Authority with respect thereto) in the event that the Stockholder is required to repay such Tax refund described in clause (x) to such Taxing Authority or is denied any such Tax Benefit described in clause (y) by such Taxing Authority. For purposes of this provision, “Tax Benefit” shall mean any reduction in the amount of Taxes which otherwise would have been paid by the Stockholder, taking into account (a) any item of Tax deduction or loss attributable to any payment made to Parent by the Stockholder pursuant to this Section 5.22(e) that is allowed under applicable Tax law (and assuming such item is the last item available for use) and (b) the effects of state and local Taxes, and a Tax Benefit is “Actually Received” by the Stockholder with respect to any taxable year when the Stockholder files its Tax Return for such year claiming such Tax Benefit (except to the extent that such Tax Return indicates that the Stockholder is to receive a refund, in which case the Stockholder shall be deemed to have Actually Received a Tax Benefit to the extent of such refund when the Stockholder receives such refund).

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(f) Stockholder acknowledges and agrees that the Stockholder Owned Shares may not be transferred to any Stockholder Related Party unless such transferee of Stockholder Owned Shares acknowledges and agrees in writing to be bound by the provisions of this Section 5.22 with respect to such Stockholder Owned Shares, following which such Stockholder Related Party shall have the rights and obligations of the Stockholder under this Section 5.22 with respect to the Stockholder Owned Shares so transferred.

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5.23         Issuance of Options. Parent will not issue any rights, options or warrants to subscribe for, purchase or otherwise acquire Parent Common Stock or evidences of indebtedness, shares of capital stock or other securities convertible into or exchangeable for Parent Common Stock (collectively, “Derivative Securities”) that are exercisable, exchangeable or convertible into Parent Common Stock or other Derivative Securities at any time that is prior to the date that is three years from and after the Closing Date (in each case other than as a result of an event that would qualify as a “Change in Control” under the 2007 Stock Option and Compensation Plan of Parent or similar event).

5.24         Nevada Business Tax Change. In the event that a Nevada Business Tax Change occurs prior to the Closing and, based on the Preliminary Parent Closing Report and Preliminary Company Closing Report (as updated for such Nevada Business Tax Change, as applicable), the Company Stockholder Percentage would be (a) equal to or greater than 30.0% if the Pro Forma Adjustments are excluded from the calculation of Company Adjusted EBITDA, and (b) less than 30.0% if the Pro Forma Adjustments are included in the calculation of Company Adjusted EBITDA, then the Stockholder shall be entitled to deliver a notice in writing to Parent (a “Company Tax Event Notice”) requiring the Parties to negotiate in good faith to amend this Agreement to provide for a mutually agreed minimum Company Stockholder Percentage or for additional consideration (but only to the extent that such additional consideration will not cause the Merger to fail to qualify as a “reorganization” within the meaning of Section 368(a) of the Code) to be issued or paid to the Stockholder hereunder (and to any Warrantholder receiving Warrant Shares, as applicable) to offset the impact of such Nevada Business Tax Change on the calculation of the Company Stockholder Percentage hereunder, with a view to entering into such mutually agreed amendment to the Merger Agreement within 20 days after the date of such Company Tax Event Notice.

ARTICLE 6
CONDITIONS TO PARENT’S AND MERGER SUBSIDIARY’S OBLIGATIONS

The obligations of Parent and Merger Subsidiary to effect the Merger and the other transactions contemplated herein shall be subject to the satisfaction at or prior to the Closing of each of the following conditions, any of which may (to the extent permitted by Applicable Law and except as set forth below) be waived in writing by Parent:

6.1           Representations and Warranties. The representations and warranties of the Company set forth in this Agreement, as supplemented or amended by any Schedule Update of the Company, shall be true and correct in all respects as of the Closing as though made on and as of the Closing (except that representations and warranties that by their terms speak specifically as of an earlier date shall be true and correct as of such date), except in each case for any inaccuracy or omission that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company and its Subsidiaries (taken as a whole).

6.2           Performance. The Company shall have performed and complied in all material respects with all agreements, covenants, obligations and conditions required by this Agreement to be performed or complied with by the Company on or prior to the Effective Time.

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6.3           Required Approvals and Consents.

(a) The Parent Shareholder Approval shall have been obtained.

(b) Any applicable waiting period (and any extension thereof) under the HSR Act relating to the transactions contemplated by this Agreement shall have expired or been terminated.

(c) All Gaming Approvals set forth in Section 6.3(c) of the Parent Disclosure Schedule shall have been duly obtained and shall be in full force and effect.

(d) The Consents from the Governmental Authorities and other Persons set forth in Section 6.3(d) of the Parent Disclosure Schedule shall have been delivered, made or obtained, and Parent shall have received copies thereof.

6.4           No Injunctions or Legal Restraints; Illegality. No temporary restraining order, preliminary or permanent injunction or other judgment, order or decree issued by any court of competent jurisdiction or other legal restraint or prohibition shall be in effect, and no Law shall have been enacted, entered, promulgated, enforced or deemed applicable by any Governmental Authority that, in any case, prohibits or makes illegal the consummation of the Merger.

6.5           Subsequent Events.

(a) Since the date of this Agreement there shall not have occurred any fact, event or circumstance which would constitute a Material Adverse Effect on the Company and its Subsidiaries (taken as a whole).

(b) The Schedule Update to the Company Disclosure Schedule shall not disclose any Company Schedule Adverse Event.

6.6           Officer’s Certificate. Parent shall have received a certificate signed by an officer of the Company, in a form and substance reasonably satisfactory to Parent, dated the Closing Date, certifying as to the matters set forth in Sections 6.1 and 6.2.

6.7           Articles of Incorporation; Good Standing. Parent shall have received (a) a copy of the Articles of Incorporation of the Company, certified by the Secretary of State of the State of Nevada, and (b) a Certificate of Good Standing with respect to the Company from the Secretary of State of the State of Nevada.

6.8           Escrow Agreement. The Stockholder and the Escrow Agent shall have executed and delivered the Escrow Agreement.

6.9           NOL Preservation Agreement; Shareholders’ Agreement. The Stockholder shall have executed and delivered the NOL Preservation Agreement. The Shareholders’ Agreement shall be in full force and effect.

6.10         Key Individual Noncompetition Agreement. Blake Sartini shall have executed and delivered a Key Individual Noncompetition Agreement.

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6.11         Company Debt. On or prior to the Closing Date the Company shall have completed a Refinancing; provided, that Parent shall not be permitted to waive this condition without the prior written consent of the Company if the Merger and the consummation of the transactions contemplated hereby would result in a default or event of default under the Company Credit Agreement, as then in effect (unless the indebtedness under the Company Credit Agreement will be repaid and discharged in full on the Closing Date).

6.12         Golden Gaming Warrants. All Golden Gaming Warrants shall have been purchased and cancelled or redeemed (provided, that the condition in this Section 6.12 shall be deemed satisfied in the event that Parent fails to comply with Section 5.8(b) or any Warrant Purchase Agreement in any material respect).

6.13         Information Technology Upgrades. The Company shall have completed the PCI Upgrades and the Company Technology Projects.

6.14         Stockholder Investment Representations. Stockholder shall have executed and delivered the Stockholder Investment Representations.

ARTICLE 7
CONDITIONS TO COMPANY’S OBLIGATIONS

The obligation of the Company to effect the Merger and the other transactions contemplated herein shall be subject to the satisfaction at or prior to the Closing of each of the following conditions, any of which may (to the extent permitted by Applicable Law) be waived in writing by the Company:

7.1           Representations and Warranties. The representations and warranties of Parent contained in this Agreement, as supplemented or amended by any Schedule Update of Parent, shall be true and correct in all respects as of the Closing as though made on and as of the Closing (except that representations and warranties that by their terms speak specifically as of an earlier date shall be true and correct as of such date), except in each case for any inaccuracy or omission that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Parent and its Subsidiaries (taken as a whole).

7.2           Performance. Parent and Merger Subsidiary shall have performed and complied in all material respects with all agreements, covenants, obligations and conditions required by this Agreement to be performed or complied with by Parent and Merger Subsidiary at or prior to the Closing.

7.3           Required Approvals and Consents.

(a) The Parent Shareholder Approval shall have been obtained.

(b) Any applicable waiting period (and any extension thereof) under the HSR Act relating to the transactions contemplated by this Agreement shall have expired or been terminated.

(c) All Gaming Approvals set forth in Section 7.3(c) of the Company Disclosure Schedule shall have been duly obtained and shall be in full force and effect.

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(d) The Consents from the Governmental Authorities and other Persons set forth in Section 7.3(d) of the Company Disclosure Schedule shall have been delivered, made or obtained, and the Company shall have received copies thereof.

7.4           No Injunctions or Legal Restraints; Illegality. No temporary restraining order, preliminary or permanent injunction or other judgment, order or decree issued by any court of competent jurisdiction or other legal restraint or prohibition shall be in effect, and no Law shall have been enacted, entered, promulgated, enforced or deemed applicable by any Governmental Authority that, in any case, prohibits or makes illegal the consummation of the Merger.

7.5           Subsequent Events.

(a) Since the date of this Agreement there shall not have occurred any fact, event or circumstance which would constitute a Material Adverse Effect on Parent and its Subsidiaries (taken as a whole).

(b) The Schedule Update to the Parent Disclosure Schedule shall not disclose any Parent Schedule Adverse Event.

7.6           Officer’s Certificate. The Company shall have received a certificate signed by an officer of each of Parent and Merger Subsidiary, in a form and substance reasonably satisfactory to the Company, dated the Closing Date, certifying as to the matters set forth in Sections 7.1 and 7.2.

7.7           Articles of Incorporation; Good Standing. The Company shall have received (a) copies of the Articles of Incorporation of Parent and Merger Subsidiary, certified by the Secretary of State of the state of incorporation of Parent and Merger Subsidiary, respectively, and (b) a Certificate of Good Standing with respect to Parent from the Secretary of State of Minnesota and a Certificate of Good Standing with respect to Merger Subsidiary from the Secretary of State of the State of Nevada

7.8           Escrow Agreement. Parent and the Escrow Agent shall have executed and delivered the Escrow Agreement.

7.9           Registration Rights Agreement. Parent shall have executed and delivered the Registration Rights Agreement.

7.10         Listing of Parent Common Stock. The shares of Parent Common Stock issuable under this Agreement shall have been approved for listing on the NASDAQ Global Market.

7.11         NOL Preservation Agreement; Shareholders’ Agreement. Each of the Restricted Stockholders shall have executed and delivered the NOL Preservation Agreement. The Shareholders’ Agreement shall be in full force and effect.

7.12         Parent Key Individual Noncompetition Agreement. Parent and Lyle Berman shall have executed and delivered a Key Individual Noncompetition Agreement.

7.13         Parent Closing Funds. As of the Closing, Parent shall have Parent Closing Funds of not less than $60,000,000, and Parent shall have furnished the Company with a certificate of Parent’s Chief Financial Officer, in a form reasonably satisfactory to the Company, dated as of the Closing Date, to such effect.

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7.14         Sale of Office Building. As of the Closing, Parent shall have sold, have contracted to sell, or scheduled for auction within 90 days of Closing, the Office Building, in each case with all proceeds from such sale to be received within 120 days after the Closing Date.

ARTICLE 8
TERMINATION

8.1           Methods of Termination. Subject to the other provisions of this Article 8, this Agreement may be terminated and the transactions contemplated herein may be abandoned at any time, whether before or after the Parent Shareholder Approval has been obtained, at any time prior to the Closing:

(a) By mutual written consent of Parent and the Company; or

(b) By either Parent or the Company, on 30 days’ written notice to the other Party, if the Merger shall not have been consummated prior to the Termination Date; provided, that the terminating Party is not then in material breach of its covenants or other agreements contained in this Agreement; provided, further, that, if Parent is the terminating Party and the condition set forth in Section 6.5(b) is the sole condition in Article 6 that has not been satisfied or waived as of such date (excluding conditions that, by their nature, are to be satisfied at the Closing and that the Company is capable of satisfying at the Closing), then, if within such 30 day notice period the Stockholder agrees in writing to (i) indemnify Parent in accordance with Article 10 for the Company Schedule Adverse Event and (ii) increase the number of Indemnification Shares under Section 2.2(c) (by deducting additional Merger Consideration Shares from the shares of Parent Common Stock to be issued and delivered to the Stockholder pursuant to Section 2.3(b)) by an amount equal to the total reasonably anticipated impact of the Company Schedule Adverse Event divided by the Merger Share Price (rounded to the nearest whole share) (which additional Indemnification Shares shall be placed in a separate escrow account which shall be solely available for indemnification for the Company Schedule Adverse Event in accordance with Article 10 and released in accordance with Section 10.5): (A) the condition set forth in Section 6.5(b) shall be deemed satisfied, and (B) such notice of termination shall be deemed to have been revoked and withdrawn by Parent; and provided, further, that, if the Company is the terminating Party and the condition set forth in Section 7.5(b) is the sole condition in Article 7 that has not been satisfied or waived as of such date (excluding conditions that, by their nature, are to be satisfied at the Closing and that Parent is capable of satisfying at the Closing), then, if within such 30 day notice period the Parent agrees in writing to issue and deliver to Stockholder (at the Closing, or, if later, promptly after the determination of the amount of the impact of the Parent Schedule Adverse Event incurred by Parent or any of its Subsidiaries) a number of validly issued, fully paid and nonassessable shares of Parent Common Stock equal to the reasonably anticipated impact of the Parent Schedule Adverse Event causing such condition to fail divided by the Merger Share Price (rounded to the nearest whole share): (A) the condition set forth in Section 7.5(b) shall be deemed satisfied, and (B) such notice of termination shall be deemed to have been revoked and withdrawn by the Company. Notwithstanding the foregoing, if the issuance of such additional shares would cause the Stockholder’s post-Closing ownership percentage to exceed the Maximum Percentage, then Parent shall pay the Stockholder in immediately available funds an amount equal to the value of such incremental shares (based on the Merger Share Price) that if issued would otherwise cause the Stockholder to exceed the Maximum Percentage, but only to the extent that such cash payment will not cause the Merger to fail to qualify as a “reorganization” within the meaning of Section 368(a) of the Code; or

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(c) By Parent if the Company has breached any representation, warranty, covenant or agreement set forth in this Agreement, which breach (i) would result in the failure of a condition set forth in Section 6.1 or Section 6.2, and (ii) remains uncured for 30 days after Parent shall have given the Company written notice of such breach (which notice shall state Parent’s intention to terminate this Agreement pursuant to this Section 8.1(c) if not so cured); provided that Parent shall not be permitted to terminate this Agreement pursuant to this Section 8.1(c) if Parent or Merger Subsidiary is then in material breach of any of their respective representations, warranties, covenants or other agreements contained in this Agreement; or

(d) By the Company if Parent or Merger Subsidiary has breached any representation, warranty, covenant or agreement set forth in this Agreement, which breach (i) would result in the failure of a condition set forth in Section 7.1 or Section 7.2, and (ii) remains uncured for 30 days after the Company shall have given Parent written notice of such breach (which notice shall state the Company’s intention to terminate this Agreement pursuant to this Section 8.1(d) if not so cured); provided that the Company shall not be permitted to terminate this Agreement pursuant to this Section 8.1(d) if the Company is then in material breach of any of its representations, warranties, covenants or other agreements contained in this Agreement; or

(e) By Parent or the Company if any court of competent jurisdiction or any other Governmental Authority has issued a judgment, order, injunction, decree or ruling or taken any other action, in each case permanently enjoining, restraining or otherwise prohibiting the transactions contemplated hereby and such judgment, order, injunction, decree, ruling or other action shall have become final and non-appealable; provided, that neither Parent nor the Company shall have the right to terminate this Agreement pursuant to this Section 8.1(e) if any action of such Party or failure of such Party to perform or comply with the covenants and agreements of such Party set forth in this Agreement shall have been the primary cause of, or resulted primarily in, any such judgment, order, injunction, decree, ruling or other action; or

(f) By Parent or the Company if any Party receives a definitive written notice or determination from any Gaming Authority or the staff of any Gaming Authority that any of the Gaming Approvals set forth on Section 6.3(c) of the Parent Disclosure Schedule or Section 7.3(c) of the Company Disclosure Schedule will not be granted; provided, that neither Parent or the Company shall have the right to terminate this Agreement pursuant to this Section 8.1(f) if any action of such Party or failure of such Party to perform or comply with the covenants and agreements of such Party set forth in this Agreement shall have been the primary cause of, or resulted primarily in, any such Gaming Authority’s refusal to grant such Gaming Approval; or

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(g) By the Company if (i) the Parent Shareholder Approval is not obtained at the Parent Special Meeting, or (ii) a Triggering Event has occurred at any time prior to receipt of the Parent Shareholder Approval; or

(h) By Parent, if prior to receipt of the Parent Shareholder Approval: (i) the Parent Board of Directors has received a Superior Proposal, (ii) Parent has complied with the provisions of Section 5.11, and (iii) prior to or concurrently with such termination, Parent pays the Termination Fee to the Company in accordance with Section 8.3; or

(i) By the Company if at Closing the Company Shareholder Percentage (calculated without giving effect to the proviso in Section 2.2(b)(iv))) would exceed the Maximum Percentage and the Parties have not executed an amendment or supplement to this Agreement to effect the transfer of Additional Consideration to the Stockholder at the Closing.

(j) By the Company if the Stockholder has delivered a Company Tax Event Notice to Parent and the Parties have not amended the Merger Agreement as contemplated by Section 5.24 within 20 days after the date of such Company Tax Event Notice.

8.2           Effect of Termination.

(a) In the event of termination of this Agreement, this Agreement shall forthwith become void and have no effect, without any liability or obligation on the part of any Party, except that if there has been any material and willful, intentional or knowing failure of any Party to perform its covenants, agreements or obligations hereunder, then such Party will be fully liable for any liabilities or damages suffered by the other Parties hereto as a result of such failure or breach.

(b) Notwithstanding anything to the contrary in Section 8.2(a) above, in the event of termination of this Agreement, the provisions of Sections 5.4, 5.12, 8.2, 8.3 and 10.3(b) and Articles 11 and 12 of this Agreement shall survive the termination hereof.

8.3           Fees and Expenses.

(a) Except as otherwise provided in this Section 8.3, all fees and expenses incurred in connection with this Agreement, the Merger and the other transactions contemplated hereby shall be paid by the party incurring such fees or expenses, whether or not the Merger is consummated, except that the expenses incurred in connection with the filing, printing and mailing of the Proxy Statement (including applicable SEC filing fees) and the solicitation of the Parent Shareholder Approval shall be paid by Parent.

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(b) If:

(i) this Agreement is terminated by the Company pursuant to Section 8.1(g)(ii) or by Parent pursuant to Section 8.1(h); or

(ii) (A) an Acquisition Proposal shall have been made directly to Parent’s shareholders or otherwise publicly disclosed prior to the taking of the vote to receive the Parent Shareholder Approval at the Parent Special Meeting or any adjournment or postponement thereof, (B) this Agreement is thereafter terminated by either the Company or Parent pursuant to Sections 8.1(b), 8.1(d) or 8.1(g)(i), and (C) within 12 months of the date of such termination of this Agreement, Parent or any of its Subsidiaries enters into any definitive agreement with respect to, or consummates, any Acquisition Proposal with such party or its Affiliates,

then, in such case, Parent shall pay the Company a termination fee of $5,000,000.00 in cash (the “Termination Fee”), it being understood that in no event shall Parent be required to pay the Termination Fee on more than one occasion. Payment of the Termination Fee shall be made by wire transfer of same day funds to the account or accounts designated by the Company (i) as promptly as practicable, but in any event no later than two Business Days, after termination of this Agreement by the Company, or (ii) prior to or simultaneously with such termination of this Agreement by Parent, as applicable; provided, that if Parent shall have previously paid to the Company the Company Expense Reimbursement, the amount of the Termination Fee shall be reduced by the amount of the Company Expense Reimbursement previously paid to the Company. Notwithstanding anything to the contrary in this Agreement, if this Agreement is terminated and the Termination Fee is payable to the Company pursuant to this Section 8.3(b), then, in such instances, the Company’s right to receive the Termination Fee (if and to the extent actually paid) shall be deemed to be liquidated damages for any and all losses or damages suffered or incurred by the Company and its Affiliates in connection with this Agreement and the transactions contemplated hereby and shall be the sole and exclusive remedy of the Company and its Affiliates against Parent and its Subsidiaries.

(c) If this Agreement is terminated by the Company pursuant to either Section 8.1(d) or Section 8.1(g)(i), then Parent shall as promptly as practicable, but in any event no later than two Business Days, after the termination of this Agreement, reimburse the Company for all of its fees and expenses actually incurred in connection with the transactions contemplated by this Agreement, up to a maximum reimbursement of $500,000 in cash (the “Company Expense Reimbursement”). If this Agreement is terminated by Parent pursuant to Section 8.1(b) at a time when the condition set forth in Section 6.12 remains the only unsatisfied condition to the Closing (excluding conditions that, by their nature, are to be satisfied at the Closing, provided that such other conditions are reasonably capable of being satisfied) (whether the failure of such condition to be satisfied is as a result of Parent’s reasonably withholding, conditioning or delaying its approval of any Warrant Purchase Agreement or otherwise) or Section 8.1(c), or by the Company pursuant to Section 8.1(j), then the Company shall as promptly as practicable, but in any event no later than two Business Days, after the termination of this Agreement, reimburse Parent for all of its fees and expenses actually incurred in connection with the transactions contemplated by this Agreement, up to a maximum reimbursement of $500,000 in cash.

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(d) Each Party acknowledges that the agreements contained in Section 8.3 are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, the other Parties hereto would not enter into this Agreement; accordingly, if a Party fails promptly to pay any amounts due pursuant to Section 8.3, and, in order to obtain such payment, the other Party commences a suit that results in a judgment against such Party for the amounts set forth in Section 8.3, such Party shall pay the other Party its costs and expenses (including reasonable attorneys’ fees and expenses) in connection with such suit, together with interest on the amounts due pursuant to the applicable provisions of this Section 8.3 from the date such payment was required to be made until the date of payment at the prime lending rate as published in The Wall Street Journal in effect on the date such payment was required to be made.

ARTICLE 9
TAX MATTERS

9.1           Reorganization. The Merger is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and this Agreement is intended to constitute a “plan of reorganization” within the meaning of Treasury Regulations Sections 1.368-2(g) and 1.368-3. Prior to the closing, each of the Company, the Stockholder, and Parent shall use its best efforts to cause the Merger to qualify as a reorganization under Section 368(a) of the Code, and shall not take any action independent of the transactions contemplated by this Agreement that are reasonably likely to cause the Merger to not so qualify. Parent shall not take, or cause or permit the Surviving Corporation to take, any action after the Closing that would reasonably be expected to cause the Merger not to qualify as a reorganization under Section 368(a) of the Code unless otherwise required by a Taxing Authority. None of the Company, the Stockholder, or Parent will take any position on any Tax Return that is inconsistent with the treatment of the Merger as a reorganization for U.S. federal income Tax purposes. The Stockholder, the Company and Parent shall each comply with the record keeping and information reporting requirements of Treasury Regulations Section 1.368-3. Notwithstanding the foregoing, and notwithstanding any statement or inference to the contrary in any other provision of this Agreement or any other agreement contemplated by this Agreement, it is agreed that no Party shall be considered to have made any representation or warranty to any other Party as to the qualification of the transactions contemplated by this Agreement as a reorganization under Section 368(a) of the Code. Each Party agrees that it has obtained independent tax advice in respect of the proper treatment of the Merger for federal income Tax purposes.

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9.2           Transactional Taxes. Notwithstanding any other provision of this Agreement, all transfer, documentary, recording, notarial, sales, use, registration, stamp and other similar Taxes or fees imposed by any Taxing Authority in connection with the transactions contemplated by this Agreement will be borne by Parent.

9.3           Filing of Tax Returns.

(a) The Stockholder shall prepare and timely file (i) all Tax Returns required to be filed (taking into account any applicable extension) on or before the Closing Date in respect of the Company and its Subsidiaries and (ii) all income Tax Returns of the Company and its Subsidiaries that relate to Tax periods ending on or before the Closing Date. At least 15 Business Days prior to the date on which each such Tax Return is filed, the Stockholder shall provide a copy of such Tax Return to Parent and consider in good faith any reasonable comments made by Parent. Except to the extent required by Applicable Law, such Tax Returns shall be prepared in a manner consistent with prior practice of the Company and its Subsidiaries.

(b) Parent shall prepare and file (i) all Tax Returns in respect of the Company and its Subsidiaries for Tax periods ending on or before the Closing Date but that are required to be filed after the Closing Date and (ii) all Tax Returns in respect of the Company and its Subsidiaries that relate to a Straddle Period, in each case of (i) and (ii), other than any income Tax Returns to be prepared and filed by the Stockholder pursuant to Section 9.3(a) above. At least 15 Business Days prior to the due date (taking into account any applicable extension) for filing any such Tax Return, Parent shall provide a copy of such Tax Return to the Stockholder and consider in good faith any reasonable comments made by the Stockholder.

(c) Cooperation on Tax Matters. Parent, the Company and the Stockholder shall reasonably cooperate, as and to the extent reasonably requested by the other Party, in connection with the filing of Tax Returns pursuant to this Agreement and any Tax Contest. Such cooperation shall include the retention and (upon the other Party’s request) the provision of records and information which are reasonably relevant to any such Tax Return or Tax Contest and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.

9.4           Tax Contests. Parent and the Company, on the one hand, and the Stockholder, on the other hand, shall promptly notify each other upon receipt by such Party of written notice of any Tax Contest. The Stockholder shall have sole control of the conduct of all Tax Contests involving income Taxes of the Company with respect to any Tax period ending on or before the Closing Date, including any settlement or compromise thereof, provided, however, that, if such Tax Contest could reasonably be expected to have an adverse effect on the Company or Parent in a post-closing Tax period, the Stockholder shall keep Parent reasonably informed of the progress of any such Tax Contest, and shall provide Parent with the right to participate in any such Tax Contest at Parent’s expense, and shall not affect any settlement or compromise without Parent’s prior written consent, which shall not be unreasonably withheld or delayed. Parent shall have sole control with respect to all other Tax Contests and shall keep the Stockholder reasonably informed of the progress of any such Tax Contest, shall provide the Stockholder with the right to participate in any such Tax Contest at Stockholder’s expense, and shall not affect any settlement or compromise that would give rise to an indemnification obligation of the Stockholder without obtaining the Stockholder’s prior written consent thereto, which shall not be unreasonably withheld or delayed. In the event of any conflict or overlap between the provisions of this Section 9.4 and Article 10, the provisions of this Section 9.4 shall control.

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ARTICLE 10
SURVIVAL; INDEMNIFICATION

10.1          Survival of Representations and Warranties.

(a) Company Representations and Warranties. The representations and warranties of the Company contained in this Agreement shall survive the Closing for a period of 12 months from the Effective Time; provided, that, with respect to any specific representation or warranty under which Parent shall have made a claim for indemnification hereunder in accordance with this Article 10 prior to the first anniversary of the Effective Time where such claim has not been completely and finally resolved prior to the first anniversary of the Effective Time, such representation and warranty shall survive with respect to such claim for the period of time beyond the first anniversary of the Effective Time sufficient to resolve, completely and finally, the claim relating to such representation or warranty.

(b) Parent Representations and Warranties. The representations and warranties of Parent contained in this Agreement shall not survive beyond the Effective Time.

10.2         Stockholders’ Indemnification. From and after the Effective Time, the Stockholder agrees to indemnify in full Parent, the Company, and their respective officers, directors, employees, agents, shareholders and Subsidiaries (collectively, the “Parent Indemnified Parties”) and hold them harmless against any loss, liability, deficiency, damage, expense or cost (including reasonable legal expenses), suffered, incurred or paid (collectively, “Losses”) by the Parent Indemnified Parties as a result of (i) any breach or inaccuracy of any of the representations and warranties of the Company contained in this Agreement or in any certificate delivered by the Company pursuant to the terms of this Agreement (in each case as supplemented or amended by any Schedule Update of the Company), or (ii) any breach of, or failure to perform, any covenant or agreement of the Stockholder or (prior to the Closing) the Company contained in this Agreement. Solely for purposes of determining the dollar amount of Losses with respect to any claim resulting from any breach or inaccuracy of a representation or warranty (but not for purposes of determining whether a breach or inaccuracy has occurred), all “material”, “materiality”, “in all material respects”, or “Material Adverse Effect” qualifications or exceptions in such representation or warranty shall be disregarded.

10.3         Limitations on Liability.

(a) Notwithstanding anything to the contrary contained in this Agreement, in no event shall the Stockholder be obligated to indemnify the Parent Indemnified Parties:

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(i) with respect to any individual claim or series of related claims for indemnification pursuant to Section 10.2 (other than with respect to fraud or for breach or inaccuracy of a Fundamental Representation), unless the indemnifiable Losses relating thereto are in excess of $25,000 (any items less than such threshold shall not be aggregated for the purposes of clause (ii) below);

(ii) with respect to any individual claim for indemnification pursuant to Section 10.2 (other than with respect to fraud or for breach or inaccuracy of a Fundamental Representation), unless the aggregate indemnifiable Losses to all Parent Indemnified Parties with respect to all such claims exceeds $500,000, whereupon (subject to the provisions of clauses (i) and (iii) of this Section 10.3(a) and Section 10.5(a)) the Stockholder shall be obligated to indemnify the Parent Indemnified Parties for all indemnifiable Losses; and

(iii) for aggregate indemnifiable Losses with respect to all claims for indemnification pursuant to Section 10.2 in excess of an amount equal to the Company Pre-Merger Value (but subject to Section 10.5(a) with respect to all claims other than for breach or inaccuracy of a Fundamental Representation, it being understood that Parent shall be entitled to indemnity for claims for a breach or inaccuracy of a Fundamental Representation up to the amount of the Company Pre-Merger Value in accordance with Section 10.5(a)(ii)).

(b) Notwithstanding anything to the contrary contained in this Agreement, no Party shall be liable for special, punitive, exemplary, incidental, consequential or indirect damages or lost profits, whether based on contract, tort, strict liability, other law or otherwise and whether or not arising from the other Party’s sole, joint or concurrent negligence, strict liability or other fault for any matter relating to this Agreement and the transactions contemplated hereby.

(c) The amount which the Stockholder is liable for pursuant to this Article 10 shall be reduced (retroactively, if necessary) by any insurance proceeds or other amounts (including third party indemnification or reimbursement payments) actually received by such Parent Indemnified Party related to the related indemnifiable Losses. If Parent shall have received any payment required by this Article 10 in respect of indemnifiable Losses and any Parent Indemnified Party shall subsequently receive insurance proceeds or other amounts, in each case in respect of such indemnifiable Losses, then Parent shall promptly issue and deliver to Stockholder an amount of validly issued, fully paid and nonassessable shares of Parent Common Stock equal to the amount of such insurance proceeds or other amounts actually received by any Parent Indemnified Party divided by the Merger Share Price (rounded to the nearest whole share). The Stockholder shall be subrogated to any right of action that any Parent Indemnified Party may have against any other Person with respect to any matter giving rise to a claim for indemnification hereunder.

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(d) In calculating the amount of indemnifiable Losses with respect to any Parent Indemnified Party, such amount shall be determined without duplication of any other indemnifiable Losses paid hereunder with respect to any other indemnification claim or to any other Parent Indemnified Party.

(e) No Parent Indemnified Party shall be entitled to indemnification under Article 10 to the extent a Liability or reserve relating to the matter giving rise to the indemnifiable Losses has been included or reflected in the calculation of the Post-Closing Adjustment.

(f) Each Parent Indemnified Party shall be obligated in connection with any claim for indemnification under this Article 10 to use commercially reasonable efforts to mitigate its Losses upon and after becoming aware of any event which could reasonably be expected to give rise to indemnifiable Losses.

(g) The indemnification provided in this Article 10 shall be the exclusive post-Closing remedy available to Parent, Merger Subsidiary and the Parent Indemnified Parties with respect to any breach by the Stockholder or the Company of any representation, warranty, covenant or agreement in this Agreement or in the certificates delivered at Closing, or otherwise in respect of the transactions contemplated by this Agreement, except in the case of fraud. The provisions of and the limited remedies provided in this Article 10 were specifically bargained for among the Parties and were taken into account by the Parties in arriving at the Merger Consideration.

10.4         Indemnification Procedures.

(a) In the event that any of the Parent Indemnified Parties believes that a claim, demand or other circumstance exists that has given or may reasonably be expected to give rise to a right of indemnification under this Article 10, the Parent Indemnified Party shall give written notice thereof (a “Claim Notice”) to the Stockholder: (i) if the event or occurrence giving rise to such claim for indemnification is or relates to an Action brought by a third party (a “Third Party Claim”), within ten Business Days following receipt of notice of such Third Party Claim, or (ii) if the event or occurrence giving rise to such claim for indemnification is not and does not relate to a Third Party Claim, as promptly as practicable after the discovery by the Parent Indemnified Party of the circumstances giving rise to such claim for indemnity; provided, that in each case in clauses (i) and (ii), that the failure to notify or delay in notifying the Stockholder of such indemnification claim will not relieve the Stockholder of its obligations pursuant to this Article 10, except to the extent that the Stockholder is prejudiced as a result thereof.

(b) Each Claim Notice shall set forth a description of the claim in reasonable detail, the basis for the Parent Indemnified Party’s indemnification claim hereunder, a good faith estimate (if then known) of the amount of indemnifiable Losses arising therefrom and, with respect to any Third Party Claim, a copy of all papers served with respect thereto. Each Parent Indemnified Party shall make available to the Stockholder all information, books and records, documents and work papers reasonably available to such Parent Indemnified Party relating to the matters that are the subject of the Claim Notice, except as may be prohibited by Applicable Law, as well as any of its representatives that are responsible for or have personal knowledge of such matters.

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(c) Following receipt by the Stockholder of a Claim Notice in respect of a Third Party Claim, the Stockholder shall be entitled if it gives notice of its intention to do so to the Parent Indemnified Party within 20 Business Days after the receipt of such Claim Notice to (i) assume and have sole control over the defense of such Third Party Claim; and (ii) negotiate a settlement or compromise of such Third Party Claim; provided, that the Stockholder shall not settle or compromise such Third Party Claim without the written consent of the Parent Indemnified Party (not to be unreasonably withheld, conditioned or delayed), unless such settlement or compromise (x) includes a full and unconditional waiver and release by the claimant of the Parent Indemnified Party, (y) does not impose any non-monetary equitable sanction or obligation on the Parent Indemnified Party, and (z) does not contain any sanction or restriction upon the conduct of any business by the Parent Indemnified Party or its Affiliates or otherwise adversely affect the future operation of the business of the Parent Indemnified Party or of any of its Affiliates. If the Stockholder does not elect to assume the defense of such Third Party Claim within 20 Business Days after the receipt of such Claim Notice, the applicable Parent Indemnified Party may, at its option, defend, settle or otherwise compromise or pay such Third Party Claim; provided, that the Parent Indemnified Party shall not settle or compromise such Third Party Claim without the written consent of the Stockholder (not to be unreasonably withheld, conditioned or delayed). The Stockholder and the Parent Indemnified Parties shall render to each other such assistance as may reasonably be requested in order to ensure the proper and adequate defense of any such Third Party Claim, and the party in charge of the defense shall keep the other parties fully apprised at reasonable intervals as to the status of the defense or any settlement negotiations with respect thereto. If the Stockholder timely elects to defend any such Third Party Claim in accordance with this Section 10.4(c), then the Parent Indemnified Party shall be entitled to participate in such defense at such Parent Indemnified Party’s sole cost and expense.

(d) The amount of indemnification to which a Parent Indemnified Party shall be entitled under this Article 10 shall be determined: (i) by the written agreement between the Parent Indemnified Party and the Stockholder; (ii) by a final judgment or decree of a Governmental Authority (which may be subject to appeal, provided that the payment of any amount in respect of such indemnification shall in no way be an admission that such amount is due and shall not prejudice the Stockholder’s right to appeal any such judgment or decree); or (iii) by any other means to which the Parent Indemnified Party and the Stockholder shall agree. The Parent Indemnified Party shall have the burden of proof in establishing the amount of indemnifiable Losses suffered by it.

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10.5         Indemnification Shares; Sole Source.

(a) Any amount of indemnification to which a Parent Indemnified Party has been determined to be entitled in accordance with this Article 10 shall be satisfied solely by the release of Indemnification Shares from escrow to Parent (with each Indemnification Share valued at the Merger Share Price) and the Indemnification Shares then remaining in escrow shall serve as the sole and exclusive source of payment for any indemnification for which the Stockholder is determined to be liable pursuant to Article 10; provided, that, notwithstanding the foregoing:

(i) the Stockholder shall have the option, in its sole discretion, to pay Parent any such amount in whole or in part in cash, in which event: (A) the number of Indemnification Shares released from escrow to Parent for such claim shall be reduced by that number of shares equal to the amount so paid in cash divided by the Merger Share Price (rounded to the nearest whole number) (the “Cashed-Out Shares”), and (B) an amount of Indemnification Shares equal to the Cashed-Out Shares shall be concurrently released from escrow to the Stockholder; and

(ii) with respect to amounts of indemnification to which a Parent Indemnified Party has been determined to be entitled in accordance with this Article 10 pursuant to a claim for indemnification under Section 10.2(i) for a breach or inaccuracy of a Fundamental Representation, if such amounts exceed the then-remaining Indemnification Shares (with each Indemnification Share valued at the Merger Share Price), then Stockholder shall pay Parent an amount in immediately available funds (or, at Stockholder’s sole discretion, transfer to Parent shares of Parent Common Stock (valued at the Merger Share Price) or a combination of such funds and shares of Parent Common Stock) in an aggregate amount equal to such shortfall.

(b) The Escrow Agreement shall specify that all Indemnification Shares then remaining in escrow shall be released to the Stockholder on the first anniversary of the Effective Time (or, if such day is not a Business Day, on the first Business Day thereafter); provided, however, that if any indemnification claim pursuant to Article 10 shall have been properly and validly asserted by any Parent Indemnified Party in accordance with this Article 10 on or prior to the first anniversary of the Effective Time (any such claim, a “Pending Claim”), then: (i) the Indemnification Shares released to the Stockholder in accordance with this Section 10.5(b) shall be reduced by that number of Indemnification Shares equal to the aggregate amount of such Pending Claim divided by the Merger Share Price (rounded to the nearest whole number), and any Indemnification Shares so withheld in respect of such Pending Claim that remain in escrow shall be released to the Stockholder promptly upon resolution or (if applicable) satisfaction of such Pending Claim.

10.6         Stockholder Acknowledgment. The Stockholder hereby acknowledges and agrees that, in the event that the Stockholder becomes liable pursuant to the terms of this Article 10 to indemnify any Parent Indemnified Party, the Stockholder shall have no rights to make and shall make no claim for indemnification against Parent, the Company or the Surviving Corporation with respect to the Loss requiring such indemnification.

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10.7         Adjustment to Purchase Price. Any indemnification payable under this Article 10 shall be, to the extent permitted by Applicable Law, an adjustment to the Merger Consideration for Tax purposes.

10.8         Independent Board Committee.

(a) At the Effective Time, the Parent Board of Directors shall form a three-member standing committee composed of (i) the member of the Parent Board of Directors designated by Parent pursuant to Section 1.9(b)(iii), (ii) one of the members of the Parent Board of Directors designated by the Stockholder pursuant to Section 1.9(b)(iv), and (iii) the member of the Parent Board of Directors designated jointly by Parent and the Stockholder pursuant to Section 1.9(b)(v) (the “Special Committee”). The Special Committee shall take action by majority vote (whether by meeting or in writing). The functions of the Special Committee shall include responsibility for: (i) the evaluation of potential claims for Losses and enforcement of the indemnification rights under this Article 10 (including as to whether Parent should assume the defense, settlement and compromise of any Third Party Claims), (ii) the determination on behalf of Parent of the Post-Closing Adjustment, and (iii) the exercise or waiver of any of Parent’s rights, benefits or remedies under this Agreement. The Special Committee shall perform all such functions on behalf of and in the best interests of Parent and its shareholders (but excluding the Stockholder). After the Effective Time, the Stockholder shall deal exclusively with the Special Committee on all matters relating to the Post-Closing Adjustment and indemnification matters under this Article 10.

(b) The Stockholder acknowledges and agrees that the Special Committee will be established for the purpose of administering the terms and conditions of this Agreement on behalf of Parent after the Closing and that, in performing such functions, the Special Committee shall solely represent Parent and shall act on behalf of and in the best interests of Parent and its shareholders (but excluding the Stockholder). Accordingly, the Stockholder acknowledges and agrees that the members of the Special Committee will owe no fiduciary duties to the Stockholder (in its capacity as a shareholder of Parent) in connection with performing such functions. Without limiting the generality of the foregoing, the Stockholder (in its capacity as a shareholder of Parent) hereby waives any claim against the Special Committee or any of its members for a breach of any such duties to the Stockholder.

ARTICLE 11
DEFINITIONS

11.1         Definitions. The following terms, as used herein, have the following meanings:

“Action” means any action, suit, claim, hearing, arbitration, proceeding (public or private) or governmental investigation.

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“Acquisition Agreement” shall have the meaning set forth in Section 5.11(c).

“Acquisition Proposal” means any inquiry, proposal or offer from any Person or group of Persons other than the Company or one of its Subsidiaries for (a) a merger, reorganization, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution or similar transaction involving an acquisition of Parent (or any Subsidiary or Subsidiaries of Parent whose business constitutes 15% or more of the net revenues, net income or assets of Parent and its Subsidiaries, taken as a whole) or (b) the acquisition in any manner, directly or indirectly, of over 15% of the equity securities or consolidated total assets of Parent and its Subsidiaries, in each case other than the Merger.

“Actually Received” shall have the meaning set forth in Section 5.22(e).

“Additional Consideration” shall have the meaning set forth in Section 2.2(e).

“Adjustment Shares” shall have the meaning set forth in Section 2.2(c).

“Adverse Recommendation Change” shall have the meaning set forth in Section 5.11(c).

“Affiliate” means, with respect to any Person, any Person directly or indirectly controlling, controlled by or under direct or indirect common control with such other Person, through the ownership of all or part of any Person.

“Agreement” shall have the meaning set forth in the Preamble.

“Annual Financial Statements” shall have the meaning set forth in Section 3.9(a).

“Antitrust Law” means the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the Federal Trade Commission Act, as amended, and all other Applicable Laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or lessening of competition through merger or acquisition.

“Applicable Law” means, with respect to any Person, any domestic or foreign, federal, state or local common law or duty, case law or ruling, statute, law, ordinance, policy, guidance, rule, administrative interpretation, regulation, code, order, writ, injunction, directive, judgment, decree or other requirement of any Governmental Authority applicable to such Person or any of its Affiliates or any of their respective properties, assets, officers, directors, employees, consultants or agents (in connection with such officer’s, director’s, employee’s, consultant’s or agent’s activities on behalf of such Person or any of its Affiliates), including Gaming Laws.

“Articles Amendment” shall have the meaning set forth in Section 1.7.

“Benefit Plan” means any Pension Plan, Welfare Plan or Compensation Plan.

“Big Sky Entities” shall have the meaning set forth in Section 5.20.

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“Business” means the business of the Company and its Subsidiaries (taken as a whole) as conducted on the date of this Agreement.

“Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in Minneapolis, Minnesota are authorized or required by law to close.

“Cash” means cash and cash equivalents.

“Cashed-Out Shares” shall have the meaning set forth in Section 10.5(a)(i).

“Certificate of Merger” shall have the meaning set forth in Section 1.2.

“Claim Notice” shall have the meaning set forth in Section 10.4(a).

“Closing” shall have the meaning set forth in Section 1.4.

“Closing Date” shall have the meaning set forth in Section 1.4.

“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, as set forth in Section 4980B of the Code, part 6 of Title I of ERISA and applicable regulations issued thereunder.

“Code” means the United States Internal Revenue Code of 1986, as amended.

“Company” shall have the meaning set forth in the Preamble.

“Company Acquisition Proposal” means any inquiry, proposal or offer from any Person or group of Persons other than Parent or one of its Subsidiaries for (a) a merger, reorganization, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution or similar transaction involving an acquisition of the Company (or any Subsidiary or Subsidiaries of the Company whose business constitutes 15% or more of the net revenues, net income or assets of the Company and its Subsidiaries, taken as a whole) or (b) the acquisition in any manner, directly or indirectly, of over 15% of the equity securities or consolidated total assets of the Company and its Subsidiaries, in each case other than the Merger.

“Company Adjusted EBITDA” shall have the meaning set forth in Schedule 2.2(b).

“Company Certificate” and “Company Certificates” mean, individually and collectively, any certificate representing shares of Company Common Stock.

“Company Common Stock” means the common stock of the Company.

“Company Credit Agreement” means, collectively, (i) that certain First Lien Credit Agreement dated as of September 16, 2013, among Golden Gaming, Golden Gaming, LLC, OneWest Bank, FSB, and the Lenders thereto, and (ii) the Amended and Restated Second Lien Credit Agreement dated as of September 16, 2013, among Golden Gaming, Golden Gaming, LLC, ABC Funding, LLC, and the Lenders party thereto.

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“Company Disclosure Schedule” shall have the meaning set forth in the preamble to Article 3.

“Company Expense Reimbursement” shall have the meaning set forth in Section 8.3(c).

“Company Intellectual Property” shall have the meaning set forth in Section 3.18(a).

“Company Licensed Parties” shall have the meaning set forth in Section 3.24.

“Company Licensing Affiliates” shall have the meaning set forth in Section 3.24.

“Company Management Principals” shall have the meaning set forth in Section 3.25.

“Company Material Contracts” shall have the meaning set forth in Section 3.15(a).

“Company Permits” means each Permit held by the Company or its Subsidiaries that is necessary to conduct its business and own and operate its properties as currently conducted, other than (i) Permits the absence of which to have would not have a Material Adverse Effect on the Company and its Subsidiaries (taken as a whole), and (ii) Permits relating to ERISA, Benefit Plan or labor matters, Environmental Laws, Tax matters and Gaming Laws (which are the subject of representations and warranties set forth in Sections 3.16, 3.17, 3.19, 3.21, 3.24 and 3.25, respectively).

“Company Schedule Adverse Event” means any fact, event, or circumstance that (i) was not originally disclosed in the Company Disclosure Schedule, (ii) if not so disclosed, would result in a breach or inaccuracy of a representation or warranty of the Company as of the Closing Date, and (iii) which results, or would reasonably be expected to result, in an adverse impact on the business, properties, condition (financial or otherwise) or assets (net of any insurance proceeds or third party indemnification or reimbursement payments reasonably expected to be available therefor) of the Company and its Subsidiaries in excess of $1,000,000, but in each case excluding (x) any fact, event or circumstance resulting from or arising out of: (A) the announcement, execution or delivery of this Agreement or the consummation of the transactions contemplated hereby, (B) any actions expressly required to be taken in accordance with this Agreement or consented to in writing by Parent, (C) any actions permitted by Section 5.1(c), and (D) changes in Applicable Law or U.S. GAAP or interpretations thereof, and (y) any amounts that are included or reflected in the calculation of the Post-Closing Adjustment.

“Company Stockholder Percentage” shall have the meaning set forth in Section 2.2(b).

“Company Tax Event Notice” shall have the meaning set forth in Section 5.24.

“Company Technology Projects shall have the meaning set forth in Section 5.21.

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“Compensation Plan” means any material benefit or arrangement that is not either a Pension Plan or a Welfare Plan, including, without limitation, (i) each employment or consulting agreement, (ii) each arrangement providing for insurance coverage or workers’ compensation benefits, (iii) each bonus, incentive bonus or deferred bonus arrangement, (iv) each arrangement providing termination allowance, severance or similar benefits, (v) each equity compensation plan, (vi) each current or deferred compensation agreement, arrangement or policy, (vii) each compensation policy and practice maintained by the applicable Party or any ERISA Affiliate (with respect to the Company) or Parent ERISA Affiliate (with respect to Parent) covering the employees, former employees, directors and former directors of such Party and the beneficiaries of any of them, and (viii) each agreement, arrangement or plan that provides for the payment of compensation to any person who provides services to the applicable Party or any of its Subsidiaries and who is not an employee, former employee, director or former director of such Party or any of its Subsidiaries.

“Confidentiality Agreement” means that certain Confidentiality Letter Agreement dated April 1, 2014 between Golden Gaming, LLC and Lakes Entertainment, Inc.

“Consent” or “Consents” shall have the meaning set forth in Section 3.7.

“Constituent Documents” shall have the meaning set forth in Section 5.16(a).

“Constructive Receipt Gross Income” means the amount of gross income that would be realized by the Stockholder (or any Stockholder Related Party) as a result of such Person being in constructive receipt of the Jamul Distribution (without giving effect to Section 5.22(e)).

“Contracts” means all legally binding contracts, agreements, options, leases, licenses, sales and accepted purchase orders, commitments and other instruments of any kind, whether written or oral.

“Costs” shall have the meaning set forth in Section 5.16(a).

“Debt Financing Sources” shall have the meaning set forth in Section 5.7(b).

“Deemed Available Pre-Merger NOLs” means, with respect to the taxable year of a Jamul Disposition, the amount of Parent’s net operating losses determined in accordance with the Code and the regulations thereunder (including Section 382 of the Code) and based on the following assumptions: (i) the amount of the net operating losses of Parent immediately prior to the Effective Time is deemed to be $30,000,000, and (ii) Parent and its Subsidiaries are deemed to have no income, gain, loss, deduction or credit other than any income or gain realized upon the Jamul Disposition in each taxable year ending after the Closing Date up to (and including) the taxable year of the Jamul Disposition.

“Deemed Jamul Tax Cost” means, with respect to a Jamul Disposition, an amount equal to the greater of (a) zero, or (b) the product of (x) (i) any income or gain realized by Parent or its Subsidiaries from the Jamul Disposition, minus (ii) the Deemed Available Pre-Merger NOLs for the taxable year of the Jamul Disposition, multiplied by (y) the combined highest marginal effective U.S. federal, state and local income Tax rate applicable to a corporate resident in Nevada at the time of such Jamul Distribution.

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“Designated Person” shall have the meaning set forth in Section 12.13.

“Designated Superior Proposal” shall have the meaning set forth in Section 5.11(c)(i).

“Disclose” shall have the meaning set forth in Section 5.4.

“Distribution Period” shall have the meaning set forth in Section 5.22.

“DOL” means the United States Department of Labor.

“Effective Time” shall have the meaning set forth in Section 1.2.

“Employee” shall have the meaning set forth in Section 3.16(a).

“Environmental Costs” means any and all costs and expenditures, including any fees and expenses of attorneys and of environmental consultants or engineers incurred in connection with investigating, defending, remediating or otherwise responding to any Release of Hazardous Materials, any violation or alleged violation of Environmental Law, any fees, fines, penalties or charges associated with any Governmental Authorization relating to any Environmental Law or any actions necessary to comply with any Environmental Law.

“Environmental Law” means any law, Governmental Authorization or Governmental Order relating to pollution, contamination, Hazardous Materials or protection of the environment.

“ERISA” shall have the meaning set forth in Section 3.16(a).

“ERISA Affiliates” shall have the meaning set forth in Section 3.16(a).

“Escrow Agent” means Wilmington Trust, National Association.

“Escrow Agreement” means that certain Escrow Agreement to be executed at the Closing among Parent, the Stockholder and the Escrow Agent substantially in the form attached hereto as Exhibit D.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Fully Diluted Pre-Closing Parent Shares” shall have the meaning set forth in Section 2.2(b).

“Fundamental Representations” means the representations of the Company in Sections 3.1(a), 3.4(a), 3.5, and 3.21.

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“Gaming Approvals” means all licenses, permits, approvals, authorizations, registrations, findings of suitability, franchises, entitlements, waivers and exemptions issued by any Gaming Authority or under Gaming Laws necessary for or relating to conduct of gaming and related activities or the manufacture, distribution, service or sale of alcoholic beverages, the ownership or the operation, management and development of any gaming operations, and, in the case of the Company, including the ownership, operation, management and development of the Business, and, in the case of Parent, including the ownership, operation, management and development of the business of Parent and its Subsidiaries.

“Gaming Authorities” means any Governmental Authorities with regulatory control and authority or jurisdiction over casino or other gaming activities and operations, or the manufacture, distribution, service or sale of alcoholic beverages, including the Nevada Gaming Control Board, the Illinois Gaming Board, the Montana Gambling Control Division, the Maryland Lottery and Gaming Commission, and the Ohio Casino Control Commission.

“Gaming Law” means any foreign, federal, tribal, state, county or local statute, ordinance, rule, regulation, permit, consent, approval, finding of suitability, license, judgment, order, decree, injunction or other authorization governing or relating to gaming and related activities and operations or the manufacture, distribution, service or sale of alcoholic beverages, including the rules and regulations of the Gaming Authorities.

“GAAP” means generally accepted accounting principles in the United States.

“Golden Gaming” means 77 Golden Gaming, LLC, a Nevada limited liability company.

“Golden Gaming Warrants” means the warrants issued and outstanding under that certain Warrant Purchase Agreement, dated as of February 29, 2012, by and among the Stockholder, Golden Gaming, Golden Gaming, LLC, the Company and the purchasers named therein, as amended by that certain Amendment to Warrant Purchase Agreement, dated as of September 16, 2013.

“Governmental Authority” means any foreign, domestic, federal, territorial, state or local governmental or regulatory authority, quasi-governmental authority, instrumentality, court, government or self-regulatory organization, commission, tribunal or organization or any regulatory, administrative or other agency, or any political or other subdivision, department or branch of any of the foregoing, including without limitation, any stock exchange and any Gaming Authority.

“Governmental Authorization” means any approval, consent, license, permit, waiver, registration or other authorization that is binding upon the Company and issued, granted, given, made available or otherwise required by any Governmental Authority with jurisdiction over the Company or pursuant to law.

“Governmental Order” means any judgment, injunction, writ, order, ruling, award or decree by any Governmental Authority or arbitrator.

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“Hazardous Materials” means any dangerous, toxic or hazardous pollutant, contaminant, chemical, waste, material or substance as defined in or governed by any law relating to such substance or otherwise relating to the environment or human health or safety, including any waste, material, substance, pollutant or contaminant that might cause any injury to human health or safety or to the environment or might subject the owner or operator of any real property to any Environmental Costs or liability under any Environmental Law.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

“Indemnification Shares” shall have the meaning set forth in Section 2.2(c).

“Indemnified Parties” shall have the meaning set forth in Section 5.16(a).

“Information” shall have the meaning set forth in Section 5.3.

“Intellectual Property” shall have the meaning set forth in Section 3.18(a).

“Interim Period” shall have the meaning set forth in Section 5.1(a).

“Internet Names” shall have the meaning set forth in Section 3.18(a).

“IRS” means the Internal Revenue Service.

“Jamul Debt” means the Consolidated Restated Promissory Note of Jamul Indian Village, a federally recognized Indian tribe, dated April 24, 2014, effective as of August 29, 2012, in aggregate principal amount of $60,000,000, issued in favor of Lakes Jamul Development, LLC, a Minnesota limited liability company.

“Jamul Debt Proceeds” means the gross cash proceeds received by Parent or its Subsidiaries from the sale or other disposition of the Jamul Debt (but only to the extent that such proceeds are received prior to the third anniversary of the opening of the Jamul Indian Village casino), net of Jamul Related Expenses.

“Jamul Disposition” means a sale or other disposition of the Jamul Debt on terms and conditions that do not give rise to any material Liabilities of Parent or any of its Subsidiaries after the consummation thereof, except for Liabilities that are expressly contemplated in connection therewith under this Agreement.

“Jamul Disposition Committee” shall have the meaning set forth in Section 5.22.

“Jamul Distribution” means a dividend to the holders of Parent Common Stock, effected in accordance with Applicable Law, in an amount equal to the Jamul Debt Proceeds.

“Jamul Land” means the property legally described in Exhibit G attached hereto.

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“Jamul Land Proceeds” means the gross cash proceeds received by Parent or its Subsidiaries prior to the Closing from the sale or other disposition of the Jamul Land.

“Jamul Related Expenses” means the sum of: (a) costs and other expenses incurred by Parent or any of its Subsidiaries to protect, preserve or administer the Jamul Debt (including with respect to any amendment, waiver, consent, exercise of rights or enforcement thereof or thereunder) or in connection with any Jamul Disposition, including transaction costs, plus (b) the Deemed Jamul Tax Cost.

“Key Individual Noncompetition Agreements” means noncompetition agreements to be executed by and between Parent and each of Lyle Berman and Blake Sartini in substantially the form attached hereto as Exhibit E.

“knowledge” means, when used with respect to any Person, the actual knowledge of any executive officer of such Person after reasonable inquiry of his or her direct reports.

“Latest Balance Sheet” shall have the meaning set forth in Section 3.9(a).

“Latest Financial Statements” shall have the meaning set forth in Section 3.9(a).

“Liability” or “Liabilities” means any liabilities, obligations or claims of any kind whatsoever whether absolute, accrued or un-accrued, fixed or contingent, matured or un-matured, asserted or unasserted, known or unknown, direct or indirect, contingent or otherwise and whether due or to become due.

“Lien” means, with respect to any property or asset, any mortgage, title defect or objection, lien, pledge, charge, security interest, hypothecation, encumbrance, adverse claim or charge of any kind in respect of such property or asset.

“Losses” shall have the meaning set forth in Section 10.2(a).

“Material Adverse Effect” means, with respect to the Company or Parent, in either case as applicable, an individual or cumulative adverse change, condition, event, effect, occurrence, state of facts or development (collectively “Changes or Effects”) which, when combined with all such other Changes or Effects with respect to the Company or Parent, in either case as applicable, has, or could reasonably be expected to have, a materially adverse effect on (i) the business, properties, condition (financial or otherwise) or assets of such Party and its Subsidiaries taken as a whole; or (ii) the ability of such Party to consummate the transactions contemplated hereby, but excluding any change, condition, event, effect, occurrence, state of facts or development resulting from or arising out of: (A) any changes, conditions or events that are generally applicable to the industry in which the Company, Parent or the Merger Subsidiary, as applicable, operates, (B) any changes in the U.S. or global economy in general, financial, banking or securities markets or general regulatory or political conditions, (C) any acts of war, armed hostilities or terrorism, (D) the announcement of the transactions contemplated by this Agreement, (E) any natural disasters or acts of God or other natural occurrences beyond the control of the affected Party, (F) changes in Applicable Law or U.S. GAAP or interpretations thereof, (G) the announcement, execution or delivery of this Agreement or the consummation of the transactions contemplated hereby, or (H) any actions expressly required to be taken in accordance with this Agreement or consented to in writing by the other Party; except, in the case of clauses (A), (B), (C) or (E) above, to the extent that any such Changes or Effects have a substantially disproportionate effect on the Company or Parent, as applicable, relative to other businesses in the industries in which they operate.

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“Maximum Percentage” means 49.9%.

“Merger” shall have the meaning set forth in Section 1.1.

“Merger Consideration” means the aggregate number of Merger Consideration Shares together with any cash payments and Additional Consideration paid to the Stockholder hereunder as a result of the operation of the Maximum Percentage.

“Merger Consideration Shares” shall have the meaning set forth in Section 2.2(a).

“Merger Share Price” shall have the meaning set forth in Section 2.2(b)(ix).

“Merger Subsidiary” shall have the meaning set forth in the Preamble.

“Minimum Percentage” means 50.1%.

“NASDAQ” means The NASDAQ Stock Market LLC.

“Net Cash” means Cash, less Normalized Working Capital Cash, in each case as of the close of business on the Closing Date.

“Nevada Business Tax Change” means a change in Nevada law that has been approved by both the Nevada Assembly and the Nevada Senate and signed into law by the Governor of Nevada, that (i) increases the Business License Fee payable under NRS 76.100(1) with respect to the operations of the Company and its Subsidiaries (other than ordinary course or inflation-related increases), (ii) changes the structure of gaming taxes payable in the State of Nevada such that the Company and its Subsidiaries would be required to pay a “gross gaming revenue” tax on revenues derived from their aggregate slot routes as, or in a manner comparable to, a “nonrestricted location” or “nonrestricted operation” under applicable Nevada gaming tax statutes, or (iii) otherwise materially increases the taxes payable by the Company and its Subsidiaries in the State of Nevada in a manner that would adversely impact Company Adjusted EBITDA after the Closing.

“New Parent Directors” shall have the meaning set forth in Section 1.9(b).

“NOL Preservation Agreement” shall have the meaning set forth in Section 5.15.

“Normalized Working Capital Cash” means, in the case of Parent, $4,000,000, and in the case of the Company, $23,200,000.

“Notice of Designated Superior Proposal” shall have the meaning set forth in Section 5.11(c)(i).

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“NRS” shall have the meaning set forth in Section 1.1.

“Office Building” means the office building located at 130 Cheshire Lane, Minnetonka, Minnesota.

“Other Land” means (a) the real property located at s2810 HWY BD, City of Delton, WI, (b) the real property referenced by Tax ID 1954, Section 4, Town of Bass Lake, WI, (c) the real property located at 4033 Highway 61 South, Vicksburg, MS, and (d) the real property located at 4065 Highway 61 South, Vicksburg, MS.

“Parent,” as set forth in the Preamble, means Lakes Entertainment, Inc., a Minnesota corporation, which in accordance with the provisions of Section 1.7 will be known as Golden Entertainment, Inc., from and after the Effective Time.

“Parent Board of Directors” means the board of directors of Parent at any given time.

“Parent Board Recommendation” shall have the meaning set forth in Section 5.11(c).

“Parent Closing Funds” means Net Cash of Parent and its Subsidiaries as of the Effective Time.

“Parent Common Stock” means the common stock, $0.01 par value per share, of Parent.

“Parent Convertible Securities” means all Parent Restricted Stock Units or other debt or equity securities, rights, warrants or options that are convertible into or exercisable or exchangeable for Parent Common Stock.

“Parent Disclosure Schedule” shall have the meaning set forth in the preamble to Article 4.

“Parent Employees” shall have the meaning set forth in Section 4.21(a).

“Parent ERISA Affiliates” shall have the meaning set forth in Section 4.21(a).

“Parent Indemnified Parties” shall have the meaning set forth in Section 10.2.

“Parent Intellectual Property” shall have the meaning set forth in Section 4.13(a).

“Parent Latest Balance Sheet” shall have the meaning set forth in Section 4.9(e).

“Parent Licensed Parties” shall have the meaning set forth in Section 4.26.

“Parent Licensing Affiliates” shall have the meaning set forth in Section 4.26.

“Parent Material Contracts” shall have the meaning set forth in Section 4.17(a).

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“Parent Management Principals” shall have the meaning set forth in Section 4.27.

“Parent Permits” means each Permit held by Parent or its Subsidiaries that is necessary to conduct its business and own and operate its properties as currently conducted, other than (i) Permits the absence of which to have would not have a Material Adverse Effect on Parent and its Subsidiaries (taken as a whole), and (ii) Permits relating to Environmental Laws, Tax matters, ERISA, Benefit Plan or labor matters and Gaming Laws (which are the subject of representations and warranties set forth in Sections 4.18, 4.20, 4.21, 4.22, 4.26 and 4.27, respectively).

“Parent Permitted Dispositions” means sale or disposition by Parent or its Subsidiaries, solely for cash, completed prior to the Closing Date of (a) ownership in Rock Ohio Ventures, LLC, (b) the Office Building, (c) the Jamul Debt, (d) the Jamul Land, or (e) the Other Land, in each case on terms and conditions that do not give rise to any material Liabilities of Parent or any of its Subsidiaries after the consummation thereof.

“Parent Permitted Distribution” means a cash dividend to the holders of Parent Common Stock, effected in accordance with Applicable Law, of any or all of the cash proceeds received by Parent or its Subsidiaries from any Parent Permitted Disposition (other than with respect to the Office Building); provided, that, in the case of a sale or other disposition of Jamul Debt, such proceeds shall be net of Jamul Related Expenses.

“Parent Plan” shall have the meaning set forth in Section 4.21(a).

“Parent Preferred Stock” shall have the meaning set forth in Section 4.5(a).

“Parent Restricted Stock Unit” means a restricted stock unit granted pursuant to the Parent Stock Option Plan.

“Parent Rights” means purchase rights with respect to Parent Common Stock issued pursuant to the Parent Rights Agreement.

“Parent Rights Agreement” means that certain Amended and Restated Rights Agreement, dated January 25, 2015, by and between Parent and Wells Fargo Shareowner Services, a division of Wells Fargo Shareowner Services, a division of Wells Fargo Bank, National Association, as Rights Agent.

“Parent Schedule Adverse Event” means any fact, event, or circumstance that (i) was not originally disclosed in the Parent Disclosure Schedule, (ii) if not so disclosed, would result in a breach or inaccuracy of a representation or warranty of Parent as of the Closing Date, and (iii) which results, or would reasonably be expected to result, in an adverse impact on the business, properties, condition (financial or otherwise) or assets (net of any insurance proceeds or third party indemnification or reimbursement payments reasonably expected to be available therefor) of Parent and its Subsidiaries in excess of $1,000,000, but in each case excluding (x) any fact, event or circumstance resulting from or arising out of: (A) the announcement, execution or delivery of this Agreement or the consummation of the transactions contemplated hereby, (B) any actions expressly required to be taken in accordance with this Agreement or consented to in writing by the Company, (C) any actions permitted by Section 5.1(d), and (D) changes in Applicable Law or U.S. GAAP or interpretations thereof, and (y) any amounts that are included or reflected in the calculation of the Post-Closing Adjustment.

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“Parent SEC Reports” shall have the meaning set forth in Section 4.9(a).

“Parent Securities” shall have the meaning set forth in Section 4.4(a).

“Parent Shareholder Approval” means the affirmative vote of a majority of the outstanding shares of Parent Common Stock entitled to vote thereon, in person or by proxy, at the Parent Special Meeting, to: (a) approve the issuance of Parent Common Stock under this Agreement and (b) if required by Applicable Law, approve the Articles Amendment.

“Parent Special Meeting” shall have the meaning set forth in Section 5.9(c).

“Parent Stock Option” means an option to purchase a share of Parent Common Stock granted pursuant to the Parent Stock Option Plan.

“Parent Stock Option Plan” means the 2007 Stock Option and Compensation Plan of Parent.

“Parent Stockholder Percentage” shall have the meaning set forth in Section 2.2(b).

“Parent Voting Agreements” shall have the meaning set forth in the Recitals hereto.

“Parties” shall have the meaning set forth in the Preamble.

“PCI Upgrades” shall have the meaning set forth in Section 5.21.

“Pending Claim” shall have the meaning set forth in Section 10.5(b).

“Pension Plan” means an “employee pension benefit plan” as such term is defined in Section 3(2) of ERISA.

“Permit” means any certificate, license, registration, franchise, order or other authorization of a Governmental Authority, including any Gaming Authority.

“Permitted Company Acquisitions and Investments” means, with respect to the Company or any of its Subsidiaries, the organization of any new subsidiary, the acquisition of any capital stock or other equity securities or other ownership interest in, or assets of, any Person or otherwise any investment by purchase of stock or securities, contributions to capital, property transfer or purchase of any properties or assets of any Person, so long as, and only to the extent that, amounts expended or obligations incurred in connection therewith do not in the aggregate exceed $5,000,000 from and after October 31, 2014 through and including the Effective Time.

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“Permitted Liens” means, as to any specified Person, (i) Liens for Taxes or governmental assessments, charges or claims the payment of which is not yet delinquent, or for Taxes the validity of which are being contested in good faith by appropriate proceedings; (ii) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and other similar Persons and other Liens imposed by Applicable Law incurred in the ordinary course of business; (iii) Liens relating to deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security or to secure the performance of leases, trade contracts or other similar agreements; (iv) with respect to the Company and its Subsidiaries, Liens specifically identified in the Latest Balance Sheet; (v) Liens securing executory obligations under any lease that constitutes an “operating lease” under GAAP; (vi) Liens granted in connection with purchase money obligations; (vii) zoning, entitlement, building and other land use regulations imposed by Governmental Authorities having jurisdiction over such Person’s owned or leased real property; (viii) covenants, conditions, restrictions, easements, rights-of-way, encumbrances, imperfections of title and other similar Liens affecting title to such Person’s owned or leased real property, which do not materially impair the occupancy or use of such real property for the purposes for which it is currently used in connection with such Person’s businesses; (ix) any right of way or easement related to public roads and highways, which do not materially impair the occupancy or use of such real property for the purposes for which it is currently used in connection with such Person’s businesses; (x) Liens arising under workers’ compensation, unemployment insurance, social security, retirement and similar legislation; (xi) Liens securing indebtedness and other obligations under the Company Credit Agreement and associated security documents or incurred in connection with any Refinancing, (xii) other Liens set forth on the Company Disclosure Schedule or the Parent Disclosure Schedule, as the case may be, and (xiii) other Liens that do not secure indebtedness and do not materially interfere with such Person’s ability to conduct its business as currently conducted.

“Person” means an individual, corporation, partnership, limited liability company, association, trust, estate or other entity or organization, including a Governmental Authority.

“Plan” shall have the meaning set forth in Section 3.16(a).

“Plan Affiliate” means, with respect to any Person, any Benefit Plan sponsored by, maintained by or contributed to by such Person, and with respect to any Benefit Plan, any Person sponsoring, maintaining or contributing to such plan or arrangement.

“Post-Closing Parent Shares” shall have the meaning set forth in Section 2.2(b).

“Private Letter Ruling” means a private letter ruling from the IRS to the effect that the waiver by the Stockholder (and any Stockholder Related Party, if applicable) of its pro rata share of any Jamul Distribution otherwise distributable with respect to the Stockholder Owned Shares will not result in gross income to the Stockholder (or such Stockholder Related Party, if applicable).

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“Privileged Information” shall have the meaning set forth in Section 12.13.

“Pro Forma Adjustments” shall have the meaning set forth in Schedule 2.2(b).

“Program” shall have the meaning set forth in Section 3.13.

“Property” means real property owned, leased, controlled or occupied by the Company or any Subsidiary, or Parent or any Subsidiary, as the case may be, at any time, excluding any public storage facilities.

“Proxy Statement” shall have the meaning set forth in Section 3.8.

“Quest Litigation” means Quest Media Group, LLC vs Lakes Ohio Development, LLC and Lakes Entertainment, Inc., et. al.

“Quest Litigation Resolution” means a settlement or other resolution of the Quest Litigation that involves Quest Payments.

“Quest Payments” means any amounts (i) owing to the plaintiff pursuant to or in connection with a judgment in the Quest Litigation or (ii) payable to the plaintiff in the Quest Litigation pursuant to or in connection with a settlement approved by the Parent Board of Directors (including the unanimous approval of the members of the Parent Board of Directors appointed pursuant to Section 1.9(b)(i) and (iii)).

“Refinancing” shall have the meaning set forth in Section 5.7(a).

“Registered Company Intellectual Property” shall have the meaning set forth in Section 3.18(a).

“Registered Parent Intellectual Property” shall have the meaning set forth in Section 4.13(a).

“Registration Rights Agreement” means that certain Registration Rights Agreement to be executed at the Closing between Parent and the Stockholder substantially in the form attached hereto as Exhibit F.

“Regulatory Action” means any notice of violation, notice of potentially responsible party status, complaint, order, litigation or administrative proceeding brought, issued or instigated by any Governmental Authority in connection with any Environmental Cost, Release or Environmental Law.

“Release” means the spilling, leaking, disposing, discharging, emitting, depositing, ejecting, leaching, escaping or any other release or threatened release, however defined, whether intentional or unintentional, of any Hazardous Material.

“Representatives” shall have the meaning set forth in Section 5.3.

“Restricted Stockholder” shall have the meaning set forth in Section 5.15.

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“Route Account Site” means any third party premises with respect to which the Company or any of its Subsidiaries has a space lease or other space usage rights for the placement and operation of one or more slot or gaming machines on such premises.

“Schedule Update” shall have the meaning set forth in Section 5.18(a).

“Securities Act” means the Securities Act of 1933, as amended.

“SEC” means the Securities and Exchange Commission.

“Shareholders’ Agreement” shall have the meaning set forth in the Recitals hereto.

“Special Committee” shall have the meaning set forth in Section 10.8(a).

“Stockholder” shall have the meaning set forth in the Preamble.

“Stockholder Effective Tax Rate” means the combined highest marginal effective U.S. federal, state and local income tax rate applicable to an individual resident in Las Vegas, Nevada.

“Stockholder Investment Representations” means that certain Stockholder Investment Representations Letter executed by the Stockholder and dated as of even date herewith.

“Stockholder Owned Shares” means any shares of Parent Common Stock issued to the Stockholder under this Agreement that are, at the time of determination, beneficially owned by any Stockholder Related Party (provided, that, in the event that the Stockholder or any Stockholder Related Party sells or otherwise disposes of any such shares and subsequently acquires shares of Parent Common Stock, the lesser of the amount of shares so sold and the amount of such shares so subsequently acquired shall be included in the computation of Stockholder Owned Shares).

“Stockholder Related Party” means Stockholder, any Affiliates of Stockholder, any grantor or beneficiary of Stockholder, or any immediate family members of any such Affiliate, grantor, or beneficiary.

“Straddle Period” means any Tax period beginning on or prior to the Closing Date and ending after the Closing Date.

“Subsidiary” or “Subsidiaries” mean each corporation or other legal entity as to which more than 50% of the outstanding equity securities having ordinary voting rights or power at the time of determination is being made is owned or controlled, directly or indirectly, by a Person.

“Superior Proposal” means any Acquisition Proposal (A) on terms which the Parent Board of Directors determines, in its good faith judgment, after consultation with Parent’s outside legal counsel and financial advisors, to be more favorable from a financial point of view to Parent’s shareholders than the Merger, taking into account all the terms and conditions of such proposal, and this Agreement (including any adjustment to this Agreement proposed by the Company in response to such Acquisition Proposal) and (B) that the Parent Board of Directors believes is reasonably likely to be completed, taking into account all financial (including economic and financing terms), regulatory (which may include the relative likelihood and timeliness of obtaining the required Gaming Approvals), legal and other aspects of such proposal as the Parent Board of Directors, in the good faith performance, discharge and exercise of its fiduciary duties, deems relevant; provided, that for purposes of the definition of “Superior Proposal,” the references to “15%” in the definition of Acquisition Proposal shall be deemed to be references to “50.1%.”

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“Surviving Corporation” shall have the meaning set forth in Section 1.1.

“Tax” or “Taxes” means any federal, state, local and foreign taxes, charges, fees, levies, or other assessments or liabilities of any kind payable to any Governmental Authority, including, without limitation, all net income, alternative, minimum, profits or excess profits, franchise, license, gross income, adjusted gross income, transfer, employment, social security, Medicare, unemployment, withholding, disability, workers’ compensation, payroll, occupation, estimated, severance, real or personal property, ad valorem, sales, use, excise, stamp, value added, service, premium, environmental, or customs duties, whether computed on a separate or consolidated, unitary or combined basis or in any other manner, whether disputed or not, and including, without limitation, all interest and penalties thereon, and additions to Tax or additional amounts imposed by Governmental Authority (domestic or foreign) responsible for the imposition of any such tax.

“Tax Benefit” shall have the meaning set forth in Section 5.22(e).

“Tax Contest” means any inquiry, claim, assessment, audit or similar event with respect to Taxes of the Company or any of its Subsidiaries relating to a Tax period ending on or before the Closing Date or a Straddle Period.

“Tax Refund” means a Tax refund actually received by Parent in cash from a Taxing Authority with respect to any income Taxes paid by Parent for any Tax period ending on or before the Closing Date.

“Tax Return” means any return, declaration, report, estimate, claim for refund or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof, filed with or submitted to, or required to be filed with or submitted to, any Governmental Authority in connection with the determination, assessment, collection, or payment of any Tax or in connection with the administration, implementation, or enforcement of or compliance with any legal requirement relating to any Tax.

“Taxing Authority” shall mean any Governmental Authority having jurisdiction with respect to any Tax.

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“Term Sheet” means the Draft Non-Binding Discussion Term Sheet dated October 16, 2014, with respect to the proposed terms of the transactions contemplated by this Agreement.

“Termination Date” means November 3, 2015; provided, that, if as of such date the receipt of the Gaming Approvals set forth on Section 6.3(c) of the Parent Disclosure Schedule or Section 7.3(c) of the Company Disclosure Schedule remains the only unsatisfied condition to the Closing (excluding conditions that, by their nature, are to be satisfied at the Closing, provided that such other conditions are reasonably capable of being satisfied), then either Parent or the Company may unilaterally extend the Termination Date for an additional 90 days upon written notice to the other by the Termination Date, in which case the Termination Date shall be deemed for all purposes to be so extended; and provided, further, that, if a Nevada Business Tax Change occurs during the 20 Business Day period prior to the then-applicable Termination Date, the Termination Date shall be extended until the first Business Day after the last day of full calendar month occurring after the date of such Nevada Business Tax Change (or, if the last day of such calendar month is not a Business Day, the next Business Day).

“Termination Fee” shall have the meaning set forth in Section 8.3(b).

“Third Party Claim” shall have the meaning set forth in Section 10.4(a).

“Third-Party Environmental Claim” means any claim, cause of action, litigation, arbitration, mediation or other proceeding (other than a Regulatory Action) based on negligence, trespass, strict liability, nuisance, toxic tort or any other cause of action or theory of Liability relating to any Environmental Cost, Release or Environmental Law.

“Transfer” shall have the meaning set forth in Section 5.15(a).

“Triggering Event” means any of the following: (a) the Parent Board of Directors (or any committee thereof) shall effect an Adverse Recommendation Change, (b) Parent shall fail to include in the Proxy Statement, or shall have amended the Proxy Statement to exclude, the Parent Board Recommendation, (c) Parent (or any Subsidiary thereof) or the Parent Board of Directors (or any committee thereof) shall approve, adopt, endorse, recommend or enter into any Acquisition Agreement, (d) Parent shall have breached any of its obligations under Section 5.11 in any material respect, or (e) Parent (or any Subsidiary thereof) or the Parent Board of Directors (or any committee thereof) shall authorize or publicly propose any of the foregoing.

“Unwaived Jamul Distribution Amount” means an amount equal to the product of (a) Constructive Receipt Gross Income, multiplied by (b) the Stockholder Effective Tax Rate.

“Warrant Purchase Agreement” shall have the meaning set forth in Section 5.8(b).

“Warrantholder” means a holder of a Golden Gaming Warrant.

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“Warrantholder Loan” means any and all loans required to be made by the Stockholder to one or more Warrantholders pursuant to the Warrant Purchase Agreements.

“Warrantholder Shares” means any and all shares of Parent Common Stock issued by Parent to Warrantholders as consideration for the purchase of Golden Gaming Warrants pursuant to the Warrant Purchase Agreements (provided, that, in the event that a Warrantholder sells or otherwise disposes of any such shares and subsequently acquires shares of Parent Common Stock, the lesser of the amount of shares so sold and the amount of such shares so subsequently acquired shall be included in the computation of Warrantholder Shares).

“WARN Act” means the Worker Adjustment and Retraining Notification Act, 29 U.S.C. §2101.

“Welfare Plan” means an “employee welfare benefit plan” as such term is defined in Section 3(1) of ERISA (including without limitation a plan excluded from coverage by Section 4 of ERISA).

11.2         Interpretation. When a reference is made in this Agreement to a Section, Article, Schedule, Annex or Exhibit, such reference shall be to a Section, Article, Schedule, Annex or Exhibit of this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement or in any Schedule or Exhibit are for convenience of reference purposes only and shall not effect in any way the meaning or interpretation of this Agreement. All words used in this Agreement will be construed to be of such gender or number as the circumstances require. Any capitalized terms used in any Schedule or Exhibit but not otherwise defined therein shall have the meaning set forth in this Agreement. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth herein. The word “including” and words of similar import when used in this Agreement will mean “including without limitation” unless otherwise specified.

ARTICLE 12
MISCELLANEOUS

12.1         Notices. All notices, requests, demands, claims and other communications hereunder shall be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given (a) if personally delivered, when so delivered, (b) if mailed, two Business Days after having been sent by registered or certified mail, return receipt requested, postage prepaid and addressed to the intended recipient as set forth below, (c) if sent by facsimile, upon confirmation of successful transmission (provided that if given by facsimile such notice, request, demand, claim or other communication shall be followed up within one (1) Business Day by dispatch pursuant to one of the other methods described in this Section 12.1), or (d) if sent through an overnight delivery service in circumstances to which such service guarantees next Business Day delivery, the Business Day following being so sent:

If to the Company:

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To: Sartini Gaming, Inc.
6595 S Jones Blvd
Las Vegas, NV 89118
Attn: Matthew Flandermeyer
Email: MFlandermeyer@ggilv.com
Fax: (702) 891-4201

With a copy (which shall not constitute notice) to:

Latham & Watkins LLP
12670 High Bluff Dr.
San Diego, CA 92130
Attn: Barry M. Clarkson
Email: Barry.Clarkson@lw.com
Fax: (858) 523-5450

If to the Stockholder:

To: The Blake L. Sartini and Delise F. Sartini Family Trust
6595 S Jones Blvd
Las Vegas, NV 89118
Attn: Joe Stone
Email: jstone@ggilv.com
Fax: (702) 891-4289

With a copy (which shall not constitute notice) to:

Latham & Watkins LLP
12670 High Bluff Dr.
San Diego, CA 92130
Attn: Barry M. Clarkson
Email: Barry.Clarkson@lw.com
Fax: (858) 523-5450

If to Parent or Merger Subsidiary:

To: Lakes Entertainment, Inc.
130 Cheshire Lane
Minnetonka, MN 55305
Attn: Timothy Cope and Damon Schramm
Email: tcope@lakesentertainment.com; dschramm@lakesentertainment.com
Fax: (952) 449-9353

With a copy (which shall not constitute notice) to:

Gray, Plant, Mooty, Mooty & Bennett, P.A.
500 IDS Center
80 South Eighth Street
Minneapolis, MN 55402
Attn: Daniel R. Tenenbaum
Email: Daniel.Tenenbaum@gpmlaw.com
Fax: (612) 632-4050

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Any Party may give any notice, request, demand, claim or other communication hereunder using any other means (including ordinary mail or electronic mail), but no such notice, request, demand, claim or other communication shall be deemed to have been duly given unless and until it actually is received by the individual for whom it is intended. Any Party may change the address to which notices, requests, demands, claims and other communications hereunder are to be delivered by giving the other Parties notice in the manner herein set forth.

12.2         Amendments; No Waivers.

(a) This Agreement may not be amended except by an instrument in writing signed on behalf of each of the Parties hereto.

(b) Each Party may, by an instrument in writing signed on behalf of such Party, waive compliance by any other Party with any term or provision of this Agreement that such other Party was or is obligated to comply with or perform.

(c) No waiver by a Party of any default, misrepresentation or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent occurrence. No failure or delay by a Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

12.3         Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. No Party may assign either this Agreement or any of its rights, interests or obligations hereunder without the prior written approval of each other Party.

12.4         Governing Law. This Agreement shall be governed by, construed and enforced in accordance with the internal laws of the State of Minnesota (regardless of the laws that might otherwise govern under applicable principles of conflicts of law); provided, however, that provisions that are required pursuant to the internal laws of the State of Nevada to be governed by the laws of the State of Nevada (including those relating to the procedures regarding the Merger) shall be governed by the applicable internal laws of the State of Nevada. Each of the Parties hereby irrevocably submits to the exclusive jurisdiction of the Courts of the State of Minnesota sitting in Hennepin County or in the absence of jurisdiction, of any federal court sitting in Hennepin County in the State of Minnesota with respect to any action or proceeding arising out of or relating to this Agreement; agrees that all claims with respect to any such action or proceeding may be heard and determined in such respective courts; and waives any objection, including, any objection to the laying of venue or based on the grounds of forum non conveniens, which it may now or hereafter have to the bringing of such action or proceeding in such respective jurisdictions.  Each of the Parties irrevocably consents to the service of any and all process in any such action or proceeding brought in the such Courts of the State of Minnesota or in the absence of jurisdiction, such federal courts, by the delivery of copies of such process to the Party at its address specified for notices to be given hereunder, or by certified mail directed to such address.

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12.5         Counterparts; Effectiveness. This Agreement may be signed in any number of counterparts and signatures may be delivered by facsimile or electronic image scan transmission, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each Party shall have received a counterpart hereof signed by the other Parties.

12.6         Entire Agreement. This Agreement (including the Exhibits and Schedules hereto and other agreements delivered pursuant hereto) constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior agreements, understandings and negotiations, both written and oral, between the Parties with respect to the subject matter of this Agreement, including the Term Sheet. Neither this Agreement nor any provision hereof is intended to confer upon any Person other than the Parties any rights or remedies hereunder.

12.7         Captions. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. Unless the context otherwise requires, all references to an Article or Section include all subparts thereof.

12.8         Severability. If any provision of this Agreement, or the application thereof to any Person, place or circumstance, shall be held by a court of competent jurisdiction to be invalid, unenforceable or void: (a) the remainder of this Agreement and such provisions as applied to other Persons, places and circumstances shall remain in full force and effect, and (b) an appropriate and equitable provision shall be substituted therefor in order to carry out, so far as may be valid or enforceable, such provision.

12.9         Construction. The Parties intend that each representation, warranty and covenant contained herein shall have independent significance. If any Party has breached any representation, warranty or covenant contained herein in any respect, the fact that there exists another representation, warranty or covenant relating to the same subject matter (regardless of the relative levels of specificity) that the Party has not breached shall not detract from or mitigate the fact that the Party is in breach of the first representation, warranty or covenant.

12.10       Cumulative Remedies. Except as otherwise provided herein, the rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law or equity.

12.11       Third Party Beneficiaries. No provision of this Agreement shall create any third party beneficiary rights in any Person, including any employee or former employee of Parent, Merger Subsidiary or the Company or any Affiliate thereof (including any beneficiary or dependent thereof), other than the Indemnified Parties, who shall be intended third party beneficiaries with respect to Section 5.16.

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12.12       Specific Performance. The Parties hereto agree that if any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached, irreparable damage would occur, no adequate remedy at law would exist and damages would be difficult to determine, and that the Parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to specific performance of the terms hereof, without necessity of posting bond or other security (any requirements therefor being expressly waived). The Parties further agree not to assert that a remedy of specific enforcement is unenforceable, invalid, contrary to law or inequitable for any reason, nor to assert that a remedy of monetary damages would provide an adequate remedy. To the extent any Party hereto brings an Action to enforce specifically the performance of the terms and provisions of this Agreement (other than an Action to enforce specifically any provision that expressly survives termination of this Agreement), the Termination Date shall automatically be extended to (a) the 20^th Business Day following the resolution of such Action or (b) such other time period established by the court presiding over such Action.

12.13       Privilege. Parent and (after the Effective Time) the Company shall not assert, and shall cause their respective Affiliates not to assert, any attorney-client privilege with respect to any communication between the Company and its Subsidiaries (prior to the Closing) or the Stockholder or any of the Stockholder’s Affiliates or any of their respective officers, employees, managers or directors (any such person, a “Designated Person”), on the one hand, and any legal counsel currently or formerly representing a Designated Person in connection with this Agreement, the Merger or any of the other agreements or transactions contemplated hereby or thereby (collectively, “Privileged Information”), including in connection with a dispute between any Designated Person and one or more of Parent, the Company and their respective Affiliates, it being the intention of the Parties hereto that all rights to such attorney-client privilege and to control such attorney-client privilege shall be retained by the Stockholder. Furthermore, Parent acknowledges and agrees that no Privileged Information is subject to any joint privilege (whether or not the Company or any of its Subsidiaries also received such advice or communication) and that all Privileged Information shall be owned solely by the Stockholder. All books and records of the Company and its Subsidiaries to the extent containing any such Privileged Information shall be excluded from the transaction, and shall be distributed (or deemed to have been distributed) to the Stockholder immediately prior to the Effective Time, with no copies retained by the Company or any of its Subsidiaries. Other than as explicitly set forth in this Section 12.13, the Parties acknowledge that any attorney-client, attorney work product, common interest, joint defense and any other available privilege attaching as a result of legal counsel representing the Company and its Subsidiaries prior to the Closing shall survive the Closing and continue to be a privilege of the Company, and not the Stockholder, after the Effective Time.

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

PARENT:	LAKES ENTERTAINMENT, INC.
	By:	/s/ Timothy Cope
	Timothy J. Cope
	President and Chief Financial Officer

MERGER SUBSIDIARY:	LG ACQUISITION CORPORATION
	By:	/s/ Timothy Cope
	Timothy J. Cope
	President and Chief Financial Officer

COMPANY:	SARTINI GAMING, INC.
	By:	/s/ Blake L. Sartini
	Blake L. Sartini
	Chief Executive Officer

STOCKHOLDER:	THE BLAKE L. SARTINI AND DELISE F. SARTINI FAMILY TRUST
	By:	/s/ Blake L. Sartini
	Blake L. Sartini
	Trustee
	By:	/s/ Delise F. Sartini
	Delise F. Sartini
	Trustee

Signature Page to Agreement and Plan of Merger

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ANNEX I

Directors of the Surviving Corporation

Blake L. Sartini

Matt Flandermeyer

Steve Arcana

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ANNEX II

Post-Closing Officers of Parent

President and Chief Executive Officer	Blake L. Sartini
Chief Financial Officer	Matt Flandermeyer
Chief Operating Officer	Steve Arcana

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ANNEX III

List of New Tavern Acquisitions

Tavern located at 11930 Southern Highlands Pkwy, Las Vegas, NV 89141 (leased by Golden-PT’s Pub Molly Malone’s 53, LLC)

Tavern located at 3920 W. Ann Rd., North Las Vegas, NV 89031 (leased by Golden-PT’s Pub Kavanaugh’s 54, LLC)

Tavern located at 8255 W. Flamingo Rd., Las Vegas, NV 89147 (leased by Golden-PT’s Pub Sean Patrick’s 55, LLC)

Tavern located at 6788 N. 5^th Street, North Las Vegas, NV 89084 (leased by Golden-PT’s Pub Morrissey’s 56, LLC)

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ANNEX IV

Restricted Stockholders

Lyle A. Berman

Berman Consulting Corporation

Berman Consulting Corporation Profit Sharing Plan

Lyle A. Berman Revocable Trust

Bradley Berman Irrevocable Trust

Julie Berman Irrevocable Trust

Amy Berman Irrevocable Trust

Jessie Lynn Berman Irrevocable Trust

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Schedule 2.2(b)

Preliminary Determination
of Parent Pre-Merger Value and Company Pre-Merger Value

This Schedule 2.2(b) is attached to and made a part of that certain Agreement and Plan of Merger, dated as of January 25, 2015, by and among Lakes Entertainment, Inc., LG Acquisition Corporation, Sartini Gaming, Inc., and The Blake L. Sartini and Delise F. Sartini Family Trust (the “Merger Agreement”). Unless otherwise defined herein, all capitalized and undefined terms used in this Schedule 2.2(b) shall have the meaning given such terms in the Merger Agreement.

1.             Determination of Parent Pre-Merger Value.

(a)     The Parent Pre-Merger Value will be determined by adjusting the Estimated Parent Pre-Merger Value in accordance with the provisions of this Schedule 2.2(b). A sample calculation of such adjustment is attached hereto as Appendix I, which calculation is intended to be illustrative only and not indicative of the actual numbers.

(b)     For purposes of this determination:

“Estimated Parent Pre-Merger Value” means (i) $9.57 per share, multiplied by (ii) 14,132,195 shares; provided that if Parent or any of its Subsidiaries has completed the sale of the Jamul Land prior to the Closing Date, the Estimated Parent Pre-Merger Value shall be reduced by $5,500,000.

“Office Building Adjustment” means the amount by which (i) the Office Building Value exceeds $4,000,000, in which case the Office Building Adjustment shall be a positive number equal to such excess amount, or (ii) $4,000,000 exceeds the Office Building Value, in which case the Office Building Adjustment shall be a negative number equal to such excess amount.

“Office Building Net Cash Proceeds” means the cash proceeds received by Parent from the sale of the Office Building, net of commissions, Taxes, fees and other transaction costs.

“Office Building Value” means, if the sale of the Office Building closes prior to the 60^th day after the Effective Time, the Office Building Net Cash Proceeds of such sale.

“Parent Current Assets” means accounts and notes receivable, prepaid assets, inventories and other current assets, all as determined on a consolidated basis in accordance with GAAP; provided, that Current Assets shall (i) exclude Cash (other than the Normalized Working Capital Cash amounts), and (ii) only include income tax receivables up to a maximum of $2,155,000 in the aggregate.

“Parent Current Liabilities” means accrued expenses, payroll, accounts payable and other current liabilities, all as determined on a consolidated basis in accordance with GAAP; provided, that Current Liabilities shall exclude (i) the current portions (if any) of all Parent Outstanding Debt, (ii) all Parent Merger Expenses, and (iii) any amounts payable by Parent or any of its Subsidiaries after the Closing Date in connection with the settlement or other resolution of the Quest Litigation prior to the Effective Time.

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“Parent Excess Cash” means (i) the Net Cash of Parent and its Subsidiaries as of the Closing Date (but excluding (x) any and all cash proceeds received by Parent or any of its Subsidiaries from the Office Building Value and the Pre-Closing Stock Option Exercises and (y) any Jamul Land Proceeds in excess of $5,500,000) plus (ii) all Parent Merger Expenses paid on or prior to the Closing Date plus (iii) all legal and other advisor fees, commitment fees, funding fees, arranging fees, prepayment penalties or premiums and other fees, costs, charges and expenses paid by Parent or any of its Subsidiaries on or prior to the Closing Date in connection with the Refinancing.

“Parent Excess Cash Adjustment” means the amount by which (i) Parent Excess Cash exceeds $77,500,000, in which case the Parent Excess Cash Adjustment shall be a positive number equal to such excess amount, or (ii) $77,500,000 exceeds Parent Excess Cash, in which case the Parent Excess Cash Adjustment shall be a negative number equal to such excess amount.

“Parent Indebtedness” means, with respect to Parent or any of its Subsidiaries, (i) indebtedness for borrowed money, (ii) obligations evidenced by bonds, debentures, notes or similar instruments, (iii) obligations in respect of letters of credit, surety bonds or other similar instruments (or reimbursement agreements in respect thereof) or banker’s acceptances, in each case only to the extent drawn upon and not reimbursed, (iv) obligations to pay the deferred and unpaid purchase price of property or services (other than trade accounts payable), (v) capitalized lease or sale-leaseback obligations, (vi) indebtedness of third parties which is guaranteed by Parent or any of its Subsidiaries or secured by a lien or security interest on the assets or property of Parent or any of its Subsidiaries, and (vii) obligations of Parent for accrued interest payable on outstanding indebtedness.

“Parent Merger Expenses” means the aggregate amount of severance payments, transition payments, legal and other advisor fees and any other fees, costs or expenses incurred by Parent or any of its Subsidiaries in connection with the Merger Agreement and the Merger, whether or not paid on or prior to the Closing Date or the date of determination.

“Parent Merger Expenses Adjustment” means (i) the amount by which Parent Merger Expenses exceed $5,000,000, in which case the Parent Merger Expenses Adjustment shall be a negative number equal to such excess amount, or (ii) the amount by which $5,000,000 exceeds Parent Merger Expenses, in which case the Parent Merger Expenses Adjustment shall be a positive number equal to such excess amount.

“Parent Net Working Capital Balance” means an amount equal to all Parent Current Assets less all Parent Current Liabilities, determined as of the close of business on the Closing Date (but without giving effect to the consummation of the Merger).

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“Parent Outstanding Debt” means the aggregate outstanding principal amount of Parent Indebtedness outstanding at the Closing.

“Parent Outstanding Debt Adjustment” means the amount by which (i) Parent Outstanding Debt exceeds $12,500,000, in which case the Parent Outstanding Debt Adjustment shall be a negative number equal to such excess amount or (ii) $12,500,000 exceeds Parent Outstanding Debt, in which case the Parent Outstanding Debt Adjustment shall be a positive number equal to such excess amount.

“Parent Working Capital Target” means $2,457,000.

“Pre-Closing Stock Option Exercises” means any and all exercises of outstanding Parent Stock Options by the holders thereof on or after the date hereof but on or prior to the Closing Date.

(c)     Not less than 20 Business Days prior to the Closing Date, Parent shall prepare and deliver to the Company for its review a report (the “Preliminary Parent Closing Report”) setting forth (i) an estimated unaudited consolidated balance sheet as of the Closing Date of Parent and its Subsidiaries prepared in accordance with GAAP on a basis consistent with the Parent Latest Balance Sheet, (ii) a statement with Parent’s calculations of cash proceeds received from Pre-Closing Stock Option Exercises, the Jamul Land Proceeds and the Office Building Value, as well as Parent’s good faith estimates of Parent Excess Cash, Parent Outstanding Debt and Parent Merger Expenses (including the amount of Parent Merger Expenses paid on or prior to the Closing Date), in each case together with reasonable supporting documentation.

(d)     The preliminary Parent Pre-Merger Value shall equal the value determined as follows (but subject to further adjustment after the Effective Time pursuant to Schedule 2.2(d):

(i) the Estimated Parent Pre-Merger Value, plus

(ii) each of the Office Building Adjustment, the Parent Excess Cash Adjustment, the Parent Outstanding Debt Adjustment, and the Parent Merger Expenses Adjustment (which may be a positive or negative number), plus

(iii) the Parent Net Working Capital Balance less the Parent Working Capital Target (which may be a positive or negative number), less

(iv) any amounts payable by Parent or any of its Subsidiaries after the Closing Date in connection with any settlement or other resolution of the Quest Litigation prior to the Effective Time.

2.             Determination of Company Pre-Merger Value.

(a)     The Company Pre-Merger Value will be determined by adjusting the Estimated Company Pre-Merger Value in accordance with the provisions of this Schedule 2.2(b). A sample calculation of such adjustment is attached hereto as Appendix I, which calculation is intended to be illustrative only and not indicative of the actual numbers.

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(b)     For purposes of this determination:

“Estimated Company Pre-Merger Value” means (i) Company Adjusted EBITDA multiplied by 7.5, plus (ii) the amount of any and all Permitted Company Acquisitions and Investments.

“Adjusted EBITDA” shall mean, with respect to any period, the net income (loss) generated by the Company and its Subsidiaries for such period, plus the sum (without duplication, and to the extent deducted in calculating the net income (loss) of the Company and its Subsidiaries for such period) of (a) all interest, fees, charges and related expenses paid or payable for such period in connection with borrowed money (including any obligations for fees, charges and related expenses payable to the issuer of any letter of credit) or the deferred purchase price of assets and the portion of rent paid or payable (without duplication) for such period under any capital lease that should be treated as interest in accordance with Financial Accounting Standards Board Codification No. 840, (b) all expenses for income taxes paid or accrued, (c) depreciation, (d) amortization, (e) all non-cash or non-recurring expenses, losses or charges, (f) fees, costs, expenses, discounts, premiums and commissions incurred, paid or deducted in connection with the refinancing of Company Indebtedness, any dispositions or acquisitions (whether or not consummated), and any restructuring, integration, severance or retention costs, accruals or reserves related to or resulting from any acquisition, and (g) any severance payments, transition payments, legal and other advisor fees and any other expenses incurred by the Company or any of its Subsidiaries in connection with the Merger, the Merger Agreement, and the transactions contemplated thereby; provided¸ that, in the event that a Nevada Business Tax Change has occurred prior to the Closing Date, then Adjusted EBITDA will be calculated on a pro forma basis to give effect to (x) such Nevada Business Tax Change, (y) any and all renegotiations, modifications or amendments to any Contract of the Company or any of its Subsidiaries prior to the Closing designed or intended to offset (in whole or in part) or mitigate the adverse impact to the Company or any of its Subsidiaries resulting from such Nevada Business Tax Change, and (z) any and all reasonable business adjustments put in place by the Company or any of its Subsidiaries prior to the Closing in response to such Nevada Business Tax Change, in each case as if such Nevada Business Tax Change, Contract renegotiations, modifications or amendments and business adjustments had occurred or taken effect on the first day of the applicable Measurement Period (the adjustments set forth in clauses (x), (y) and (z), collectively, the “Pro Forma Adjustments”).

“Company Adjusted EBITDA” means, Adjusted EBITDA calculated for the Company and its Subsidiaries for the Measurement Period, all as determined on a consolidated basis for the Company and its Subsidiaries in accordance with GAAP on a basis consistent with the Latest Financial Statements; provided, that, with respect to New Tavern Acquisitions, actual results will be annualized for the Measurement Period for purposes of calculating Company Adjusted EBITDA (in the case of each such tavern by multiplying such results by a factor equal to 365 divided by the number of days such tavern has been in operation during the Measurement Period).

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“Company Current Assets” means accounts and notes receivable, prepaid assets, inventories and other current assets, all as determined on a consolidated basis in accordance with GAAP; provided, that Current Assets shall exclude Cash (other than the Normalized Working Capital Cash amounts).

“Company Current Liabilities” means accrued expenses, payroll, accounts payable and other current liabilities, all as determined on a consolidated basis in accordance with GAAP; provided, that Current Liabilities shall (a) exclude (i) the current portions (if any) of all Company Outstanding Debt, (ii) all Company Merger Expenses, and (iii) all legal and other advisor fees, commitment fees, funding fees, arranging fees, prepayment penalties or premiums and other fees, costs, charges and expenses incurred by the Company or any of its Subsidiaries in connection with the Refinancing, and (b) include all payments (other than payments in the form of shares of Parent Common Stock or payments made with Cash of the Company or any of its Subsidiaries on or prior to the Closing Date) required to be made by the Company or any of its Subsidiaries to Warrantholders pursuant to the Warrant Purchase Agreements (which payments, for the avoidance of doubt, will not be considered to be Company Merger Expenses).

“Company Excess Cash” means the Net Cash of the Company and its Subsidiaries as of the Closing Date, plus (ii) all Company Merger Expenses paid on or prior to the Closing Date, plus (iii) all legal and other advisor fees, commitment fees, funding fees, arranging fees, prepayment penalties or premiums and other fees, costs, charges and expenses paid by the Company or any of its Subsidiaries on or prior to the Closing Date in connection with the Refinancing.

“Company Indebtedness” means, with respect to the Company or any of its Subsidiaries, (i) indebtedness for borrowed money, (ii) obligations evidenced by bonds, debentures, notes or similar instruments, (iii) obligations in respect of letters of credit, surety bonds or other similar instruments (or reimbursement agreements in respect thereof) or banker’s acceptances, in each case only to the extent drawn upon and not reimbursed, (iv) obligations to pay the deferred and unpaid purchase price of property or services (other than trade accounts payable), (v) capitalized lease or sale-leaseback obligations, (vi) indebtedness of third parties which is guaranteed by the Company or any of its Subsidiaries or secured by a lien or security interest on the assets or property of the Company or any of its Subsidiaries, (vii) obligations of the Company for accrued interest payable on outstanding indebtedness, and (viii) the present value (using a discount rate of 12%) of the lease payments payable after the Effective Time for the remainder of the term of the lease under that certain Shopping Center Lease, dated as of February 2, 2004, by and between Serene Plaza, LLC, a Nevada limited liability company, and Sparky’s South Meadows 8, LLC, a Nevada limited liability company (as amended through the Closing Date), with respect to approximately 5,500 square feet located at 748 S. Meadows Parkway, Suite A13, Reno, NV 89521.

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“Company Merger Expenses” means the aggregate amount of severance payments, transition payments, legal and other advisor fees and any other fees, costs or expenses incurred by the Company or any of its Subsidiaries in connection with the Merger Agreement and the Merger, whether or not paid on or prior to the Closing Date or the date of determination.

“Company Merger Expenses Adjustment” means (i) the amount by which Company Merger Expenses exceed $500,000, in which case the Company Merger Expenses Adjustment shall be a negative number equal to such excess amount, or (ii) the amount by which $500,000 exceeds Company Merger Expenses, in which case the Company Merger Expenses Adjustment shall be a positive number equal to such excess amount.

“Company Net Working Capital Balance” means an amount equal to all Company Current Assets less all Company Current Liabilities, determined as of the close of business on the Closing Date (but without giving effect to the consummation of the Merger).

“Company Outstanding Debt” means the aggregate outstanding principal amount of Company Indebtedness outstanding at the Closing.

“Company Working Capital Target” means $20,830,000.

“Measurement Period” means the period of 12 consecutive calendar months as of the last full month ended at least 30 days prior to the Closing Date.

“New Tavern Acquisitions” means taverns acquired after the commencement of the Measurement Period and owned and operated by the Company or any of its Subsidiaries in operation as of October 31, 2014, all of which are identified on Annex III.

(c)     Not less than 20 Business Days prior to the Closing Date, the Company shall prepare and deliver to Parent for its review a report (the “Preliminary Company Closing Report”) setting forth (i) an estimated unaudited consolidated balance sheet as of the Closing Date of the Company and its Subsidiaries prepared in accordance with GAAP on a basis consistent with the Latest Balance Sheet, (ii) an estimated unaudited consolidated statement of income for the Measurement Period of the Company and its Subsidiaries prepared in accordance with GAAP on a basis consistent with the Latest Financial Statements, together with the Company’s calculation of Company Adjusted EBITDA and Estimated Company Pre-Merger Value, (iii) in the event that a Nevada Business Tax Change has occurred, a separate calculation of Company Adjusted EBITDA that excludes from such calculation all Pro Forma Adjustments, (iv) a statement of the Company’s good faith estimates of Company Excess Cash, Company Merger Expenses (including the amount of Company Merger Expenses paid on or prior to the Closing Date), and Company Outstanding Debt, in each case together with reasonable supporting documentation. In the event that a Nevada Business Tax Change occurs during the period between the delivery of the Preliminary Company Closing Report and the Closing Date, the Company shall deliver an updated Preliminary Company Closing Report to reflect such event.

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(d)     The preliminary Company Pre-Merger Value shall equal the value determined as follows (but subject to further adjustment after the Effective Time pursuant to Schedule 2.2(d)):

(i) the sum of (A) Estimated Company Pre-Merger Value, plus (B) Company Excess Cash, less

(ii) Company Outstanding Debt, plus

(iii) the Company Merger Expenses Adjustment (which may be a positive or negative number), plus

(iv) the Company Net Working Capital Balance less the Company Working Capital Target (which may be a positive or negative number).

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APPENDIX I

ILLUSTRATIVE CALCULATION ONLY
NOT INDICATIVE OF ACTUAL NUMBERS

Sample Calculations of Parent Pre-Merger Value and Company Pre-Merger Value

Assuming Closing Date of September 30, 2015

Determination of Parent Pre-Merger Value	9/30/2015
Estimated Value / Share	$	9.57
Fully diluted Parent shares at signing		14,132,195
Estimated Parent Pre-Merger Value	$	135,245,106	(1)
(+/-) Office Building Adjustment		--	(2)
(+/-) Parent Excess Cash Adjustment		2,723,000
(+/-) Parent Outstanding Debt Adjustment		2,086,475
(+/-) Parent Merger Expenses Adjustment		(4,445,453	)
(+) Parent Net Working Capital Balance		2,457,000
(-) Parent Working Capital Target		(2,457,000	)
(-) Amounts payable after the Closing Date re Quest Litigation		--
A. Preliminary Parent Pre-Merger Value	$	135,609,129

Determination of Company Pre-Merger Value	9/30/2015
Company Adjusted EBITDA	$	35,785,672
Company Adjusted EBITDA Multiple	7.5x
Subtotal	$	268,392,541
(+) Permitted Company Acquisitions and Investments		--
Estimated Company Pre-Merger Value	$	268,392,541
(+) Company Excess Cash		1,645,511
(-) Company Outstanding Debt		(187,933,189	)
(+/-) Company Merger Expenses Adjustment		--	(3)
(+) Company Net Working Capital Balance		14,130,000	(4)
(-) Company Working Capital Target		(20,830,000	)
B. Preliminary Company Pre-Merger Value	$	75,404,864

C. Preliminary Total Post-Merger Value (A + B)	$	211,013,992
D. Parent Stockholder Percentage (A /C)		64.3	%
E. Company Stockholder Percentage (B / C)		35.7	%
F. Fully Diluted Pre-Closing Parent Shares		14,132,195
G. Post-Closing Parent Shares (F / D)		21,990,340
Merger Consideration Shares (E x G)		7,858,145

(1) Assumes no sale of Jamul Land prior to the Closing.                          

(2) Assumes no sale of the Office Building for more or less than $4,000,000 prior to the 60th day after the Effective Time.

(3) Assumes $500,000 of Company Merger Expenses.                         

(4) Assumes all Golden Gaming Warrants are redeemed by Golden Gaming in exchange for an obligation to pay $6,700,000 in cash.          

1

Schedule 2.2(d)

Post-Closing Adjustment

This Schedule 2.2(d) is attached to and made a part of that certain Agreement and Plan of Merger, dated as of January 25, 2015, by and among Lakes Entertainment, Inc., LG Acquisition Corporation, Sartini Gaming, Inc., and The Blake L. Sartini and Delise F. Sartini Family Trust (the “Merger Agreement”). Unless otherwise defined herein, all capitalized and undefined terms used in this Schedule 2.2(d) shall have the meaning given such terms in the Merger Agreement (or Schedule 2.2(b) thereof).

1.     Post-Closing Adjustment. The preliminary Parent Pre-Merger Value and the preliminary Company Pre-Merger Value set forth in the Preliminary Parent Closing Report and the Preliminary Company Closing Report, respectively, (and, accordingly, the Merger Consideration and number of Merger Consideration Shares) will be subject to adjustment after the Effective Time as set forth in this Schedule 2.2(d).

2.     Pre-Merger Values.

(a) The final Parent Pre-Merger Value shall equal the value determined as follows:

(i) the Estimated Parent Pre-Merger Value, plus

(ii) each of the Office Building Adjustment, the Parent Excess Cash Adjustment, the Parent Outstanding Debt Adjustment, and the Parent Merger Expenses Adjustment (which may be a positive or negative number), plus

(iii) the Parent Net Working Capital Balance less the Parent Working Capital Target (which may be a positive or negative number); less

(iv) any amounts payable by Parent or any of its Subsidiaries after the Closing Date in connection with any settlement or other resolution of the Quest Litigation prior to the Effective Time.

(b) The final Company Pre-Merger Value shall equal the value determined as follows:

(i) the sum of (A) Estimated Company Pre-Merger Value, plus (B) Company Excess Cash, less

(ii) Company Outstanding Debt, plus

(iii) The Company Merger Expenses Adjustment (which may be a positive or negative number), plus

(iv) the Company Net Working Capital Balance less the Company Working Capital Target (which may be either a positive or negative number).

2

3.     Closing Report.

(a) As soon as reasonably practicable following the Effective Time, and in any event within 60 days thereof, Parent shall prepare and deliver to the Stockholder and the Special Committee a report (the “Closing Report”) setting forth:

(i) the unaudited consolidated balance sheet as of the close of business on the Closing Date (but without giving effect to the consummation of the Merger) of Parent and its Subsidiaries, prepared in accordance with GAAP on a basis consistent with the Parent Latest Balance Sheet (but without giving effect to the consummation of the Merger);

(ii) the unaudited consolidated balance sheet as of the close of business on the Closing Date of the Company and its Subsidiaries, prepared in accordance with GAAP on a basis consistent with the Latest Balance Sheet (but without giving effect to the consummation of the Merger);

(iii) the unaudited consolidated statement of income for the Measurement Period of the Company and its Subsidiaries, prepared in accordance with GAAP on a basis consistent with the Latest Financial Statements, together with its calculation of actual Company Adjusted EBITDA and Estimated Company Pre-Merger Value;

(iv) a statement of the actual Office Building Value (if applicable), the Jamul Land Proceeds, Parent Excess Cash, Parent Outstanding Debt, Parent Merger Expenses, Company Excess Cash, Company Merger Expenses and Company Outstanding Debt, together with reasonable supporting documentation;

(v) a statement of the Net Working Capital Balance of each of Parent and the Company, together with reasonable supporting documentation;

(vi) its calculation of the final Parent Pre-Merger Value and Company Pre-Merger Value; and

(vii) its calculation of the final Parent Stockholder Percentage, Company Stockholder Percentage, Merger Share Price and Merger Consideration.

(b) Following the Effective Time, Parent shall give each of the Stockholder and the Special Committee and their respective Representatives access to the records, properties, personnel and (subject to the execution of customary work paper access letters if requested) auditors of Parent, the Company and their respective Subsidiaries relating to the preparation of the Closing Report and shall cause the personnel of Parent, the Company and its Subsidiaries to cooperate with the Stockholder and the Special Committee in connection with their respective review of the Closing Report.

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(c) If either the Stockholder or the Special Committee shall disagree with any calculation or matter set forth in the Closing Report, it shall notify Parent and the other party in writing of such disagreement within 30 days after its receipt of the Closing Report (a “Dispute Notice”), which Dispute Notice shall set forth in reasonable detail the particulars of such disagreement. If neither the Stockholder nor the Special Committee timely delivers a Dispute Notice within such 30-day period, then the Stockholder and the Special Committee shall be deemed to have agreed with the Closing Report and the calculations set forth therein, and such calculations (including as to the amount of Merger Consideration) shall be deemed to be final, binding and conclusive for all purposes under the Merger Agreement as of the expiration of such 30-day period.

(d) In the event that either the Stockholder or the Special Committee timely delivers a Dispute Notice within such 30-day period, Parent, the Stockholder and the Special Committee shall use reasonable best efforts for a period of 30 days (or such longer period as they may mutually agree) to resolve the disagreements set forth in all such Dispute Notices; provided, that the Stockholder and the Special Committee shall be deemed to have agreed upon all items in the Closing Report that were not disputed in such Dispute Notices for all purposes under the Merger Agreement. If, at the end of such period, they are unable to resolve all such disagreements, then any such remaining disagreements shall be resolved by a nationally recognized independent public accountant selected by Parent and reasonably agreed to by the Stockholder and the Special Committee (the “Auditor”); provided, that if the Parent, the Stockholder and the Special Committee have not agreed on such Auditor within 20 days following the expiration of such dispute resolution period, then at the written request of any of the Parent, the Stockholder or the Special Committee delivered to the American Arbitration Association and each other party, the Auditor shall be appointed as promptly as practicable thereafter by the American Arbitration Association in Las Vegas, Nevada. The Auditor shall act as an expert and not an arbitrator. The Auditor shall be instructed to make a determination only as to those matters still in dispute, and shall make its determination as soon as reasonably possible, and in any event within 60 days following the day on which the disagreement is referred to the Auditor. The Auditor shall have no power to modify or amend any term or provision of the Merger Agreement (including Schedule 2.2(b) and this Schedule 2.2(d)) or to modify any item previously agreed to or not previously disputed by the Stockholder and the Special Committee. The determination of the Auditor as to all such disputed items shall be final, binding and conclusive for all purposes under the Merger Agreement. The fees and expenses of the Auditor shall be paid by Parent.

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EX-3

Exhibit 3.1

SECOND AMENDED BYLAWS

OF

LAKES ENTERTAINMENT, INC.

ARTICLE 1

OFFICES

1.1     Registered Office. The registered office of the Corporation shall be located within the State of Minnesota as set forth in the Articles of Incorporation. The Board of Directors shall have authority to change the registered office of the Corporation and a statement evidencing any such change shall be filed with the Secretary of State of Minnesota as required by law.

1.2     Offices. The Corporation may have other offices, including its principal business office, either within or without the State of Minnesota.

ARTICLE 2

CORPORATE SEAL

2.1     Corporate Seal. The Board of Directors shall determine whether or not the Corporation will adopt a corporate seal. If a corporate seal is adopted, inscribed on the corporate seal shall be the name of the Corporation and the words “Corporate Seal,” and when so directed by the Board of Directors, a duplicate of the seal may be kept and used by the Secretary of the Corporation.

ARTICLE 3

SHAREHOLDERS

3.1     Regular Meetings. Regular meetings of the shareholders shall be held at the Corporation’s registered office or at such other place within or without the State of Minnesota as is designated by the Board of Directors. Regular meetings may be held annually or on a less frequent periodic basis, as established by a resolution of the Board of Directors, or may be held on call by the Board of Directors from time to time as and when the Board determines. At each regular meeting, the shareholders shall elect, as provided in the Articles of Incorporation and these By-laws, qualified successors for directors who serve for an indefinite term or whose terms have expired or are due to expire within six (6) months after the date of the meeting, and may transact such other business which properly comes before them. Notwithstanding the foregoing, if a regular meeting of the shareholders has not been held for a period of fifteen (15) months, a shareholder or group of shareholders holding three percent (3%) or more of the issued and outstanding voting shares of the Corporation may demand that a regular meeting of the shareholders be held by giving written notice to the President or Treasurer of the Corporation. Within thirty (30) days after receipt of the notice, the Board shall cause a regular meeting of the shareholders to be called and held within ninety (90) days after receipt of the notice. Any regular meeting held pursuant to such a demand by a shareholder or shareholders shall be held within the county where the principal executive office of the Corporation is located.

3.2     Special Meeting. Special meetings of the shareholders may be called by the Chief Executive Officer, by a Vice-President in the absence of the Chief Executive Officer, by the Chief Financial Officer, or by the Board of Directors or any two or more members thereof. Special meetings may also be called by one or more shareholders holding ten percent (10%) or more of the issued and outstanding voting shares of the Corporation by delivering to the Chief Executive Officer or Chief Financial Officer a written demand for a special meeting, which demand shall state the purposes of such meeting. Within thirty (30) days after receipt of the written demand, the Board of Directors shall call a special meeting of the shareholders to be held within ninety (90) days after receipt of the written demand. Any special meeting held pursuant to such written demand shall be held within the county where the principal executive office of the Corporation is located.

3.3     Quorum. Business may be transacted at any duly held meeting of the shareholders at which a quorum is present. The holders of a majority of the voting power of the shares entitled to vote at a meeting are a quorum. The shareholders present at the meeting may continue to transact business until adjournment, even though a number of shareholders withdraw leaving less than a quorum. If a quorum is not present at any meeting, those shareholders present have the power to adjourn the meeting from time to time until the requisite number of voting shares are present. The date, time and place of the reconvened meeting shall be announced at the time of adjournment and notice of the reconvened meeting shall be given to all shareholders who were not present at the time of adjournment. Any business which might have been transacted at the meeting which was adjourned may be transacted at the reconvened meeting.

3.4     Voting. At each shareholders’ meeting, every shareholder having the right to vote is entitled to vote in person or by proxy. Shareholders have one (1) vote for each share having voting power standing in their name on the books of the Corporation, unless otherwise provided in the Articles of Incorporation, or these By-Laws, or in the terms of the shares. All elections and questions shall be decided by a majority vote of the number of shares entitled to vote and represented at any meeting at which there is a quorum, except as otherwise required by statute, the Articles of Incorporation, these By-Laws, or by agreement among the shareholders.

3.5     Notice of Meeting. Notice of regular or special meetings of the shareholders shall be given by an officer or agent of the Corporation to each shareholder shown on the books of the Corporation to be the holder of record of shares entitled to vote at the meeting. If the notice is to be mailed, then the notice must be mailed to each shareholder at the shareholder’s address as shown on the books of the Corporation at least five (5) calendar days prior to the meeting. If the notice is not mailed, then the notice must be given at least forty-eight (48) hours prior to the meeting. The notice must contain the date, time and place of the meeting, and in the case of a special meeting, must also contain a statement of the purpose of the meeting. In no event shall notice be given more than sixty (60) days prior to the meeting. If a plan of merger, exchange, sale or other disposition of all or substantially all of the assets of the Corporation is to be considered at a meeting of shareholders, notice of such meeting shall be given to every shareholder, whether or not entitled to vote, not less than fourteen (14) days prior to the date of such meeting.

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3.6     Proxies. At all meetings of shareholders, a shareholder may vote by proxy executed in writing by the shareholder or by his duly authorized attorney-in-fact. Such proxies must be filed with an officer of the Corporation before or at the time of the meeting. No proxy shall be valid after eleven (11) months from the date of its execution, unless otherwise provided in the proxy.

3.7     Closing Transfer Books. The Board of Directors may close the stock transfer books for a period of time which does not exceed sixty (60) days preceding any of the following: the date of any meeting of shareholders; the payment of dividends; the allotment of rights; or the change, conversion, or exchange of shares.

3.8     Record Date. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date, not exceeding sixty (60) days preceding the date of any of the events described in Section 3.7, as a record date for the determination of which shareholders are entitled (i) to notice of and to vote at any meeting and any meeting subsequent to adjournment, (ii) to receive any dividend or allotment of rights, or (iii) to exercise the rights in respect to any change, conversion, or exchange of shares. If a record date is fixed by the Board of Directors, only those shareholders of record on the record date shall be entitled to receive notice of and to vote at the meeting and any meeting subsequent to adjournment or to exercise such rights, as the case may be, notwithstanding any transfer of any shares on the books of the Corporation after the record date so fixed. If the share transfer books are not closed and no record date is fixed for determination of the shareholders of record, then the date on which notice of the meeting is mailed or the date of adoption of a resolution of the Board of Directors declaring a dividend, allotment of rights, change, conversion or exchange of shares, as the case may be, shall be the record date for such determination.

3.9     Presiding Officer. The Chief Executive Officer of the Corporation shall preside over all meetings of the shareholders. In the absence of the Chief Executive Officer, the shareholders may choose any person present to act as presiding officer.

3.10     Written Action by Shareholders. Any action which may be taken at a meeting of the shareholders may be taken without a meeting and notice if a consent in writing, setting forth the action so taken, is signed by all of the shareholders entitled to notice of a meeting for such purpose.

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3.11     Advance Notice of Shareholder Proposals. At any regular meeting of shareholders, only such business (other than the nomination and election of directors, which shall be subject to Section 3.12) may be conducted as shall be appropriate for consideration at the meeting of shareholders and as shall have been brought before the meeting (i) by or at the direction of the Board of Directors or (ii) by any shareholder entitled to vote at the meeting who complies with the notice procedures hereinafter set forth in this Section 3.11.

(a) Timing of Notice. For such business to be properly brought before any regular meeting by a shareholder, the shareholder must be a beneficial owner both at the time of proposal and the time of the meeting and have given timely notice thereof in writing, not less than 90 days before the first anniversary of the date of the preceding year’s annual meeting; provided, however, that (i) in the event the date of the annual meeting is more than 30 days before or after such anniversary date, notice by a shareholder shall be timely only if so received not less than 90 days before such annual meeting or, if later, within 10 days after the first public announcement of the date of such annual meeting, and (ii) with respect to the Corporation’s 2009 annual meeting of shareholders, notice by a shareholder shall be timely only if so received within 10 days after the first public announcement of the date of such annual meeting. To be timely, a shareholder’s notice of any such business to be conducted at a regular meeting other than an annual meeting must be delivered to the Secretary of the Corporation or mailed and received at the principal executive office of the Corporation within 10 days after the first public announcement of the date of such regular meeting. Except to the extent otherwise required by law, the adjournment of a regular meeting of shareholders shall not commence a new time period for the giving of a shareholder’s notice as required above. For the purposes of this Section 3.11 and Section 3.12 below, “public announcement” means disclosure (i) when made in a press release reported by the Associated Press or comparable national news service, (ii) when filed in a document publicly filed by the Corporation with the Securities and Exchange Commission, or (iii) when mailed as notice of the meeting as provided in Section 3.5 above.

(b) Content of Notice. A shareholder’s notice to the corporation shall set forth as to each matter the shareholder proposes to bring before the regular meeting:

(i) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting;

(ii) the name and address, as they appear on the corporation’s books, of the shareholder proposing such business;

(iii) the class or series (if any) and number of shares (including, without limitation, derivative securities, swaps or other transaction or series of transactions engaged in, directly or indirectly, by such shareholder the purpose or effect of which is to provide such shareholder with economic risk similar to ownership of shares of any class or series of the Corporation) that are owned beneficially or of record by the shareholder;

(iv) a description of all arrangements or understandings between such shareholder and any other person or persons (including their names) in connection with the proposal of such business by such shareholder and any material interest of the shareholder in such business; and

(v) a representation that the shareholder is a holder of record of shares entitled to vote at the meeting and intends to appear in person or by proxy at the meeting to make the proposal.

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(c) Consequences of Failure to Satisfy Advance Notice Procedures. The officer of the Corporation chairing the meeting shall, if the facts warrant, determine that business was not properly brought before the meeting in accordance with the procedures described in this Section 3.11 and, if such officer should so determine, such officer shall so declare to the meeting, and any such business not properly brought before the meeting shall not be transacted. Nothing in this Section 3.11 shall be deemed to preclude discussion by any shareholder of any business properly brought before the meeting in accordance with these By-Laws.

3.12     Nomination of Director Candidates. Only persons who are nominated in accordance with the procedures set forth in this Section 3.12 shall be eligible for election as directors. Nominations of persons for election of the Board of Directors may be made at a meeting of shareholders (i) by or at the direction of the Board of Directors or a committee designated by the Board of Directors or (ii) by any shareholder of the Corporation entitled to vote for the election of directs at the meeting who complies with the notice procedures set forth in this Section 3.12.

(a) Timing of Notice. Nominations by shareholders shall be made pursuant to timely notice in writing to the Secretary of the Corporation. To be timely, the shareholder must be a beneficial owner both at the time of nomination and the time of the meeting and have given timely notice thereof in writing, not less than 90 days before the first anniversary of the date of the preceding year’s annual meeting; provided, however, that (i) in the event the date of the annual meeting is more than 30 days before or after such anniversary date, notice by a shareholder shall be timely only if so received not less than 90 days before such annual meeting or, if later, within 10 days after the first public announcement of the date of such annual meeting, and (ii) with respect to the Corporation’s 2009 annual meeting of shareholders, notice by a shareholder shall be timely only if so received within 10 days after the first public announcement of the date of such annual meeting. If a special meeting of shareholders is called in accordance with Section 3.2 for the purpose of electing one or more members to the Corporation’s Board of Directors, for a shareholder’s notice of nominations to be timely it must be delivered to the Secretary of the Corporation, or mailed and received at the principal executive office of the Corporation within 10 days after the first public announcement of the date of such special meeting. Except to the extent otherwise required by law, the adjournment of a regular meeting of shareholders shall not commence a new time period for the giving of a shareholder’s notice as required above.

(b) Content of Notice. A shareholder’s notice to the Corporation of nominations for a regular or special meeting of shareholders shall set forth:

(i) as to each person whom the shareholder proposes to nominate for election or re-election as a director:

(A) such person’s name, age, business address and residence address and principal occupation or employment;

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(B) the class and series (if any) and number of shares (including, without limitation, derivative securities, swaps or other transaction or series of transactions engaged in, directly or indirectly, by such person the purpose or effect of which is to provide such person with economic risk similar to ownership of shares of any class or series of the Corporation) that are owned beneficially or of record by the person;

(C) all other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or that is otherwise required, pursuant to the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (collectively the “Exchange Act”);

(D) such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected; and

(E) a representation from such person that such person is not and will not become a party to any agreement, arrangement, or understanding with, and has not given any commitment or assurance to, any person or entity (1) as to how such person, if elected as a director of the Corporation will act of vote on any issue or question or (2) that could limit or interfere with such person’s ability to comply, if elected as a director of the Corporation, with such person’s fiduciary duties under applicable law.

(ii) as to the shareholder giving the notice:

(A) the name and address, as they appear on the Corporation’s books, or such shareholder;

(B) the class or series (if any) and number of shares (including, without limitation, derivative securities, swaps or other transaction or series of transactions engaged in, directly or indirectly, by such person the purpose or effect of which is to provide such person with economic risk similar to ownership of shares of any class or series of the Corporation) that are owned beneficially or of record by the shareholder;

(C) a description of all arrangement or understandings between such shareholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such shareholder;

(D) all other information relating to such shareholder that is required to be disclosed in solicitations of proxies for election of directors, or that is otherwise required, pursuant to the Exchange Act; and

(E) a representation that the shareholder is a holder of record of shares of the Corporation entitled to vote for the election of directors and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice.

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At the request of the Board of Directors, any person nominated by the Board of Directors for election as a director shall furnish to the Secretary of the Corporation the information required to be set forth in a shareholder’s notice of nomination that pertains to a nominee.

(c) Consequences of Failure to Satisfy Nominating Procedures. The officer of the Corporation chairing the meeting shall, if the facts warrant, determine that a nomination was not made in accordance with the procedures prescribed in this Section 3.12 and, if such officer should so determine, such officer shall so declare to the meeting, and the defective nomination shall be disregarded.

(d) Compliance with Law. Notwithstanding the foregoing provisions of Sections 3.11 and 3.12 above, a shareholder shall also comply with all applicable requirements of Minnesota law and the Exchange Act with respect to the matters set forth in such Sections. for purposes of clarity, the requirements of Sections 3.11 and 3.12 apply to proposals made or brought or sought to be made or brought at any regular meeting, whether or not such proposals are, or are required to be, included in the Corporation’s proxy statement pursuant to the federal proxy rules set forth in the Exchange Act.

ARTICLE 4

DIRECTORS

4.1     General Powers. The property, affairs and business of the Corporation shall be managed by the Board of Directors which shall initially consist of eight (8) directors. In addition to the powers and authorities by these By-Laws expressly conferred upon it, the Board may exercise all such powers of the Corporation and do all such lawful acts and things as are not by law, the Articles of Incorporation or these By-Laws directed or required to be exercised or done by the shareholders.

4.2     Number. The number of directors may be either increased or decreased by resolution of the shareholders at their regular meetings or at a special meeting called for that purpose. The number of directors may be increased by resolution adopted by the affirmative vote of a majority of the Board of Directors. Any newly created directorships established by the Board of Directors shall be filled by a majority vote of the directors serving at the time of increase.

4.3     Qualifications and Term of Office. Directors need not be shareholders or residents of the State of Minnesota. The Board of Directors shall be elected by the shareholders at their regular meeting and at any special shareholders’ meeting called for that purpose. A director shall hold office until the annual meeting for the year in which his or her term expires and until the director’s successor is elected and qualifies, or until the earlier death, resignation, removal, or disqualification of the director.

4.4     Quorum. A majority of the Board of Directors constitutes a quorum for the transaction of business; provided, however, that if any vacancies exist by reason of death, resignation, or otherwise, a majority of the remaining directors constitutes a quorum. If less than a quorum is present at any meeting, a majority of the directors present may adjourn the meeting from time to time without further notice.

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4.5     Action of Directors. The acts of a majority of the directors present at a meeting at which a quorum is present are the acts of the Board of Directors.

4.6     Meetings. Meetings of the Board of Directors may be held from time to time at any place, within or without the State of Minnesota, that the Board of Directors may select. If the Board of Directors fails to select a place for a meeting, the meeting shall be held at the principal executive office of the Corporation. The Chief Executive Officer or any director may call a meeting of the Board of Directors by giving notice to all directors of the date, time and place of the meeting. If the notice is to be mailed, then the notice must be mailed to each director at least five (5) calendar days prior to the meeting. If the notice is not to be mailed, then the notice must be given at least forty-eight (48) hours prior to the meeting. If the date, time and place of the meeting of the Board of Directors has been announced at a previous meeting of the Board of Directors, no additional notice of such meeting is required, except that notice shall be given to all directors who were not present at the previous meeting. Notice of the meeting of the Board of Directors need not state the purpose of the meeting. A director may orally or in writing waive notice of the meeting. Attendance by a director at a meeting of the Board of Directors also constitutes a waiver of notice of such meeting, unless the director objects at the beginning of the meeting to the transaction of business because the meeting allegedly is not lawfully called or convened and such director does not participate thereafter in the meeting.

4.7     Meeting by Electronic Communications. A conference among directors by any means of communication through which the directors may simultaneously hear each other during the conference constitutes meeting of the Board of Directors if the number of directors participating in the conference would be sufficient to constitute a quorum at a meeting, and if the same notice is given of the conference as would be required for a Board of Directors meeting under these By-Laws. In any Board of Directors meeting, a director may participate by any means of communication through which the director, other directors so participating, and all directors physically present at the meeting may simultaneously hear each other during the meeting.

4.8     Compensation. Directors may receive such compensation as may be determined from time to time by resolution of the Board of Directors.

4.9     Committee. By the affirmative vote of a majority of the directors, the Board of Directors may establish a committee or committees having the authority of the Board of Directors in the management of the business of the Corporation to the extent provided in the resolution adopted by the Board of Directors. A committee shall consist of one or more persons, who need not be directors, that have been appointed by affirmative vote of a majority of the directors present. A majority of the members of the committee present at any meeting of the committee is a quorum for the transaction of business, unless a larger or smaller proportion or number is provided in the resolution approved by the Board of Directors. Minutes of any meetings of committees created by the Board of Directors shall be available upon request to members of the committee and to any director.

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4.10     Action by Absent Director. A director may give advance written consent or opposition to a proposal to be acted upon at a Board of Directors meeting by giving a written statement to the Chief Executive Officer, Chief Financial Officer, or any director which sets forth the proposal to be voted on and contains a statement of the director’s voting preference with regard to the proposal. An advance written statement does not constitute presence of the director for purposes of determining a quorum, but the advance written statement shall be counted in the vote on the subject proposal provided that the proposal acted on at the meeting is substantially the same or has substantially the same effect as the proposal set forth in the advance written statement. The advance written statement by a director on a proposal shall be included in the records of the Board of Directors’ action on the proposal.

4.11     Removal of Directors by Board of Directors. Any director who has been elected by the Board of Directors to fill a vacancy on the Board of Directors, or to fill a directorship created by action of the Board of Directors, and who has not subsequently been reelected by the shareholders, may be removed by a majority vote of all directors constituting the Board, exclusive of the director whose removal is proposed.

4.12     Vacancies. Any vacancy on the Board of Directors may be filled by vote of the remaining directors, even though less than a quorum.

4.13     Written Action by Less than All of the Directors. Any action which may be taken at a meeting of the Board of Directors may be taken without a meeting and notice thereof if a consent in writing setting forth the action taken is signed by the number of directors required to take the same action at a duly held meeting of the Board of Directors at which all of the directors are present. If a written action is signed by less than all the directors, any director not signing the action will be notified as soon as reasonably possible of the content of the action and the effective date of the action. Failure to provide the notice does not invalidate the written action. A director who does not sign or consent to the written action has no liability for the action or actions so taken.

4.14     Dissent from Action. A director of the Corporation who is present at a meeting of the Board of Directors at which any action is taken shall be presumed to have assented to the action taken unless the director objects at the beginning of the meeting to the transaction of business because the meeting is not lawfully called or convened and does not participate thereafter, or unless the director votes against the action at the meeting, or is prohibited from voting on the action.

4.15     Disclosure to Gaming Regulatory Authorities. Each director must agree to provide such background information, including a financial statement, and consent to such background investigation, as may be required by gaming regulatory authorities, and must agree to respond to questions from gaming regulatory authorities.

ARTICLE 5

OFFICERS

5.1     Election of Officers. The Board of Directors shall from time to time, elect a Chief Executive Officer, President, and a Chief Financial Officer, who may also be designated as Treasurer. The Board of Directors may elect, but shall not be required to elect, a Secretary, one or more Vice Presidents, and a Chairman of the Board. In addition, the Board of Directors may elect such other officers and agents as it may deem necessary. The officers shall exercise such powers and perform such duties as are prescribed by applicable statutes, the Articles of Incorporation, the By-Laws, or as may be determined from time to time by the Board of Directors. Any number of offices may be held by the same person.

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5.2     Term of Office. The officers shall hold office until their successors are elected and qualify; provided, however, that any officer may be removed with or without cause by the affirmative vote of a majority of the directors present at a Board of Directors meeting at which a quorum is present.

5.3     Chief Executive Officer. The Chief Executive Officer shall:

(a) Have general active management of the business of the Corporation;

(b) When present, preside at all meetings of the shareholders;

(c) When present, and if there is not a Chairman of the Board, preside at all meetings of the Board of Directors; and

(d) Maintain records of and, whenever necessary, certify all proceedings of the Board of Directors and the shareholders.

All other officers shall be subject to the direction and authority of the Chief Executive Officer.

5.4     Chief Financial Officer. The Chief Financial Officer shall:

(a) Keep accurate financial records for the Corporation;

(b) Deposit all money, drafts and checks in the name of and to the credit of the Corporation in the banks and depositories designated by the Board of Directors;

(c) Endorse for deposit all notes, checks and drafts received by the Corporation as ordered by the Board of Directors, making proper vouchers therefor;

(d) Disburse corporate funds and issue checks and drafts in the name of the Corporation, as ordered by the Board of Directors;

(e) Render to the Chief Executive Officer and the Board of Directors, whenever requested, an account of all transactions by the Chief Financial Officer and of the financial condition of the Corporation; and

(f) Perform all other duties prescribed by the Board of Directors or by the Chief Executive Officer.

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5.5     President. The President shall:

(a) Subject to direction of the Chief Executive Officer, be responsible for the day-to-day operations of the Corporation, and oversee the activities and responsibilities of all officers and employees other than the Chairman of the Board and the Chief Executive Officer;

(b) See that all orders and resolutions of the Board of Directors are carried into effect;

(c) Sign and deliver in the name of the Corporation any deeds, mortgages, bonds, contracts or other instruments pertaining to the business of the Corporation, except in cases in which the authority to sign and deliver is required by law to be exercised by another person or is expressly delegated by the Articles of Incorporation or Bylaws or by the Board of Directors to some other officer or agent of the Corporation; and

(d) Perform all other duties presented by the Board of Directors.

5.6     Vice President. Each Vice President, if any, shall have such powers and perform such duties as may be specified in these By-Laws or prescribed by the Board of Directors. If the Chief Executive Officer is absent or disabled, the Vice President shall succeed to the Chief Executive Officer’s powers and duties. If there are two or more Vice Presidents, the order of succession shall be determined by seniority of election or as otherwise prescribed by the Board of Directors.

5.7     Secretary. The Secretary, if any, shall attend all meetings of the shareholders and the Board of Directors. The Secretary shall act as clerk and shall record all the proceedings of the meetings in the minute book of the Corporation and shall give proper notice of meetings of shareholders and the Board of Directors. The Secretary shall keep the seal of the Corporation, if any, and shall affix the seal to any instrument requiring it and shall attest the seal, and shall perform such other duties as may be prescribed from time to time by the Board of Directors.

5.8     Chairman of the Board. The Chairman of the Board, if any, shall preside at all meetings of the Board of Directors and shall perform such other duties as may from time to time be assigned by the Board of Directors.

5.9     Assistant Officers. In the event of absence or disability of any Vice President, Secretary or the Chief Financial Officer, the assistant to such officer, if any, shall succeed to the powers and duties of the absent officer until the principal officer resumes his duties or a replacement is elected by the Board of Directors. If there are two or more assistants, the order of succession shall be determined through seniority by the order in which elected or as otherwise prescribed by the Board of Directors. The assistant officers shall exercise such other powers and duties as may be delegated to them from time to time by the Board of Directors or the principal officer under whom they serve, but at all times shall remain subordinate to the principal officers they are designated to assist.

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ARTICLE 6

INDEMNIFICATION

The Corporation shall indemnify its officers, directors, employees and agents to the full extent permitted by the laws of the State of Minnesota, as now in effect, or as the same may be hereafter modified.

ARTICLE 7

SHARES AND THEIR TRANSFER

7.1     Certificates of Shares. Unless the Board of Directors has provided that the Corporation’s shares are to be uncertified, every owner of shares of the Corporation shall be entitled to a certificate, to be in such form as the Board of Directors prescribes, certifying the number of shares owned by such shareholder. The certificates for shares shall be numbered in the order in which they are issued and shall be signed in the name of the Corporation by the Chief Executive Officer or a Vice President and by the Secretary or Assistant Secretary, or the Chief Financial Officer, or any other officer of the Corporation authorized by the Board of Directors and shall have the corporate seal, if any, affixed thereto. A record shall be kept of the name of the person owning the shares represented by each certificate, the respective issue dates thereof, and in the case of cancellation, the respective dates of cancellation. Except as provided in Section 7.5 of this Article 7, every certificate surrendered to the Corporation for exchange or transfer shall be canceled, and no other certificate shall be issued in exchange for any existing certificate until such existing certificate is cancelled.

7.2     Uncertificated Shares. The Board of Directors by a majority vote of directors present at a duly called meeting may provide that any or all shares of classes or series of shares are to be uncertificated shares. In that case, any shareholder who is issued uncertificated shares shall be provided with the information legally required to be disclosed in a certificate.

7.3     Issuance of Shares. The Board of Directors is authorized to issue shares of the capital stock of the Corporation up to the number of shares authorized by the Articles of Incorporation. Shares may be issued for any consideration (including, without limitation, money or other tangible or intangible property received by the Corporation or to be received by the Corporation under a written agreement, or services rendered to the Corporation or to be rendered to the Corporation under a written agreement) which is authorized by a resolution approved by the affirmative vote of a majority of the directors present, valuing all nonmonetary consideration and establishing a price in money or other consideration, or a minimum price, or a general formula or method by which the price will be determined. Upon authorization by resolution approved by the affirmative vote of a majority of the directors present, the Corporation may, without any new or additional consideration, issue shares of its authorized and unissued capital stock in exchange for or in conversion of its outstanding shares, or issue its own shares pro rata to its shareholders or the shareholders of one or more classes or series, to effectuate share dividends or splits, including reverse share splits. No shares of a class or series shall be issued to the holder of the shares of another class or series, unless issuance is either expressly provided for in the Articles of Incorporation or is approved at a meeting by the affirmative vote of the holders of a majority of the voting power of all shares of the same class or series as the shares to be issued.

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7.4     Transfer of Shares. Transfer of shares on the books of the Corporation may be authorized only by the shareholder named in the certificates or the shareholder’s representative or duly authorized attorney-in-fact and only upon surrender for cancellation of the certificate for such shares. The shareholder in whose name shares stand on the books of the Corporation shall be considered the owner thereof for all purposes regarding the Corporation.

7.5     Lost Certificates. Any shareholder claiming a certificate for shares has been lost or destroyed shall make an affidavit or affirmation of that fact in such form as the Board of Directors may require and shall, if the directors so require, give the Corporation a bond of indemnity in form and with one or more sureties satisfactory to the Board of Directors and in an amount determined by the Board of Directors, to indemnify the Corporation against any claim that may be made against it on account of the alleged loss or destruction of the certificate. A new certificate may then be issued in the same tenor for the same number of shares as the one alleged to have been lost or destroyed.

7.6     Transfer Agent and Registrar. The Board of Directors may appoint one or more transfer agents or transfer clerks and one or more registrars and may require all certificates for shares to bear the signature or signatures of any of them.

7.7     Facsimile Signature. When any certificate is manually signed by a transfer agent, a transfer clerk, or a registrar appointed by the Board of Directors to perform such duties, a facsimile or engraved signature of the officers and a facsimile corporate seal, if any, may be inscribed on the certificate in lieu of the actual signatures and seal.

ARTICLE 8

FINANCIAL AND PROPERTY MANAGEMENT

8.1     Checks. All checks, drafts, other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by the Chief Executive Officer or Chief Financial Officer, or any other officer or officers, agent or agents of the Corporation, as may from time to time be determined by resolution of the Board of Directors.

8.2     Deposits. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies, or other depositories as the Board of Directors may select.

8.3     Voting Securities Held by Corporation. The Chief Executive Officer, or other officer or agent designated by the Board of Directors, shall have full power and authority on behalf of the Corporation to attend, act at, and vote at any meeting of security or interest holders of other corporations or entities in which the Corporation may hold securities or interests. At the meeting, the Chief Executive Officer or other designated agent shall possess and exercise any and all rights and powers incident to the ownership of the securities or interest which the Corporation holds.

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ARTICLE 9

AMENDMENTS

The Board of Directors of the Corporation is expressly authorized to make By-Laws of the Corporation and from time to time to adopt, amend or repeal By-Laws so made to the extent and in the manner prescribed in the Minnesota Statutes. The Board of Directors shall not adopt, amend, or repeal a By-Law fixing a quorum for meetings of shareholders, prescribing procedures for removing directors or filling vacancies in the Board of Directors, or fixing the number of directors or their classifications, qualifications, or terms of office, but may adopt or amend a By-Law to increase the number of directors. The authority in the Board of Directors is subject to the power of the voting shareholders to adopt, change or repeal the By-Laws by a vote of shareholders holding a majority of the shares entitled to vote and present or represented at any regular meeting or special meeting called for that purpose.

ARTICLE 10

FORUM FOR ADJUDICATION OF DISPUTES

Unless the Corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s shareholders, (iii) any action asserting a claim arising pursuant to any provision of the Minnesota Business Corporation Act, or (iv) any action asserting a claim governed by the internal affairs doctrine, shall be a state or federal court located within the state of Minnesota, in all cases subject to the court’s having personal jurisdiction over the indispensable parties named as defendants.

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EX-4

Exhibit 4.1

LAKES ENTERTAINMENT, INC.

and

WELLS FARGO SHAREOWNER SERVICES, A DIVISION OF

WELLS FARGO BANK, NATIONAL ASSOCIATION

Rights Agent

______

Amended and Restated

Rights Agreement

Dated as of January 25, 2015

TABLE OF CONTENTS

Section		Page
1.	Certain Definitions	2
2.	Appointment of Rights Agent	6
3.	Issue of Rights Certificates.	7
4.	Form of Rights Certificates.	9
5.	Countersignature and Registration.	10
6.	Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.	11
7.	Exercise of Rights; Purchase Price; Expiration Date of Rights.	11
8.	Cancellation and Destruction of Rights Certificates	14
9.	Availability of Common Stock.	14
10.	Common Stock Record Date	15
11.	Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights	15
12.	Certificate of Adjusted Purchase Price or Number of Shares	21
13.	Consolidation, Merger or Sale or Transfer of Assets or Earning Power.	22
14.	Fractional Rights and Fractional Shares.	24
15.	Rights of Action	25
16.	Agreement of Rights Holders	25
17.	Rights Certificate Holder Not Deemed a Stockholder	26
18.	Concerning the Rights Agent.	26
19.	Merger or Consolidation or Change of Name of Rights Agent.	27
20.	Duties of Rights Agent	27
21.	Change of Rights Agent	29
22.	Issuance of New Rights Certificates	30
23.	Redemption and Termination.	30
24.	Exchange.	31
25.	Notice of Certain Events	32
26.	Notices	33
27.	Supplements and Amendments	34
28.	Process to Seek Exemption Prior to Trigger Event	34
29.	Waiver Subsequent to Stock Acquisition Date	35
30.	Successors	36
31.	Benefits of this Agreement	36
32.	Administration of Agreement	36
33.	Severability	37
34.	Governing Law	37
35.	Counterparts	37
36.	Descriptive Headings	37

i 

AMENDED AND RESTATED RIGHTS AGREEMENT

This AMENDED AND RESTATED RIGHTS AGREEMENT, dated effective as of January 25, 2015 (the “Agreement”), is by and between Lakes Entertainment, Inc., a Minnesota corporation (the “Company”), and Wells Fargo Shareowner Services, a division of Wells Fargo Bank, National Association (the “Rights Agent”).

WHEREAS, the parties to this Agreement have previously entered into that certain rights agreement dated as of December 12, 2013 (the “Original Agreement”);

WHEREAS, if the Company experiences an “ownership change,” as defined in Section 382 of the Internal Revenue Code of 1986, as amended, or any successor statute (the “Code”), its ability to utilize its existing net operating loss carryovers, capital loss carryovers, general business credit carryovers, alternative minimum tax credit carryovers, foreign tax credit carryovers, and any net unrealized “built-in loss” within the meaning of Sections 382 and 383 of the Code, or any successor or replacement provisions and the Treasury Regulation promulgated thereunder, of the Company or any of its Subsidies and any other tax attribute the benefit of which is subject to possible limitation under Section 382 (as defined below) (collectively, “NOLs”), for income tax purposes could be substantially limited or lost altogether;

WHEREAS, the Company views the NOLs as highly valuable assets of the Company, which are likely to inure to the benefit of the Company and its stockholders, and the Company believes that it is in the best interests of the Company and its stockholders that the Company, concurrently with the Company entering into that certain Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, Lakes Golden Acquisition Corporation, Sartini Gaming, Inc. and The Blake L. Sartini and Delise F. Sartini Family Trust (the “Sartini Trust”) and related agreements, provide for the protection of the NOLs and ensures that the Company can continue to utilize its NOLs, as provided in this Agreement;

WHEREAS, the Board of Directors of the Company (the “Board”) desires to take measures to positively impact shareholder returns and to ensure the Company’s ability to utilize the NOLs; and

WHEREAS, in furtherance of such objectives, on January 25, 2015, the Board of Directors of the Company (the “Board”), as permitted pursuant to Section 27 of the Original Agreement, approved the modification of terms described in this Agreement as they relate to the previously declared dividend distribution of one Right (as hereinafter defined) for each outstanding share of common stock, par value $.01 per share, of the Company which was outstanding on December 23, 2013 (the “Record Date”), each Right initially representing the right to purchase one share of Common Stock upon the terms and subject to the conditions hereinafter set forth (the “Rights”) and has previously authorized and directed the issuance of one Right (subject to adjustment as provided herein) with respect to each share of Common Stock that shall become outstanding between the Record Date and the earlier of the Distribution Date and the Expiration Date; provided, however, that Rights may be issued with respect to shares of Common Stock that shall become outstanding after the Distribution Date in accordance with Section 22;

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NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereby amend and restate the Original Agreement and agree as follows:

Section 1.     Certain Definitions. For purposes of this Agreement, the following terms have the meanings indicated:

(a)  “Acquiring Person” shall mean any Person who or which, shall become the Beneficial Owner of 4.99% or more of the Common Stock of the Company then outstanding or who was such a Beneficial Owner at any time after the date hereof, whether or not such person continues to be the Beneficial Owner of 4.99% or more of the Common Stock of the Company then outstanding. Notwithstanding the foregoing, the term Acquiring Person shall not include (i) the Company, any Subsidiary of the Company, or any of the officers and directors thereof acting in their fiduciary capacities, (ii) any employee benefit plan of the Company or of any Subsidiary of the Company, or any entity organized, appointed or established by the Company for or pursuant to the terms of any such plan, (iii) any Person deemed to be an “exempt person” in accordance with Section 28 or Section 29, or (iv) a Grandfathered Person, unless and until such time as such Grandfathered Person shall, after the first public announcement of this Agreement, become the Beneficial Owner of one or more additional shares of the Common Stock of the Company (other than by acquisition of such shares directly from the Company) unless upon acquiring such Beneficial Ownership, such Grandfathered Person does not Beneficially Own 4.99% or more of the Common Stock of the Company then outstanding. No Person shall be deemed to be an Acquiring Person either (X) as a result of the acquisition of Common Stock by the Company which, by reducing the number of shares of Common Stock outstanding, increases the proportionate number of shares Beneficially Owned by such Person; except that if (i) such Person would become an Acquiring Person (but for the operation of this subclause (X)) as a result of the acquisition of Common Stock by the Company, and (ii) after such share acquisition by the Company, such Person becomes the Beneficial Owner of any additional shares of Common Stock (other than pursuant to a stock split, stock dividend, or similar transaction), then such Person shall be deemed an Acquiring Person or (Y) if (i) the Board determines in good faith that such Person inadvertently becomes the Beneficial Owner of 4.99% or more of the outstanding shares of Common Stock, and (ii) promptly upon becoming aware of such inadvertent event (as determined, in good faith, by the Board), (a) notifies the Board of Directors thereof and (b) as soon as practicable thereafter, divests or enters into an irrevocable commitment to divest as promptly as practicable and thereafter divests a sufficient number of shares of Common Stock so that such Person is the Beneficial Owner of less than 4.99% of the outstanding shares of Common Stock. For purposes of this Agreement, any calculation of the number of shares of Common Stock outstanding at any particular time, including for purposes of determining the particular percentage of such outstanding shares of Common Stock of which any Person is the Beneficial Owner, shall be made pursuant to and in accordance with Section 382 and the Treasury Regulations promulgated thereunder.

(c)     “Acquisition Event” shall mean either the event described in Section 11(a)(ii) or Section 13(a) hereof.

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(d)     “Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations (the “Rules”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as in effect on the date of this Agreement and, to the extent not included within the foregoing, shall also include, with respect to any Person, any other Person whose Stock or other securities (i) would be deemed constructively owned by such first Person for purposes of Section 382, (ii) would be deemed owned by a single “entity” as defined in Treasury Regulation § 1.382-3(a)(1) in which both such first Person and such other Person are included or (iii) otherwise would be deemed aggregated with the Stock or other securities owned by such first Person pursuant to the provisions of Section 382; provided that no Person who is a member of the Board of Directors or an officer of the Company shall be deemed an Affiliate or an Associate of any other member of the Board of Directors or officer of the Company solely as a result of his or her position as a member of the Board of Directors or officer of the Company.

(e)       A Person shall be deemed the “Beneficial Owner” of, and shall be deemed to “beneficially own”, any securities:

(i)     which such Person, directly or indirectly, has or shares the right to vote or dispose of, or otherwise has “beneficial ownership” of (as defined under Rule 13d-3 of the Rules under the Exchange Act); provided, however, that Beneficial Ownership arising solely as a result of any such Person’s participation in a “group” (within the meaning of Rule 13d-5(b) of the General Rules and Regulations under the Exchange Act) shall be determined under Section 1(e)(iii) of this Agreement and not under this Section 1(e)(i);

(ii)     which such Person has the right or obligation to acquire (whether directly or indirectly and whether such right or obligation is exercisable or effective immediately or only after the passage of time, compliance with regulatory requirements, fulfillment of a condition or otherwise or whether within the control of such Person) pursuant to any agreement, arrangement or understanding, whether or not in writing (other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of securities), including, without limitation, for the avoidance of doubt, through any agreement to enter into an agreement that would permit a Person to purchase or otherwise acquire such securities, or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; provided, however, that a Person shall not be deemed the “Beneficial Owner” of, or to “beneficially own,” (1) securities (including rights, options or warrants) which are convertible or exchangeable into or exercisable for Common Stock until such time as such securities are converted or exchanged into or exercised for Common Stock except to the extent the acquisition or transfer of securities (including rights, options or warrants) would be treated as exercised on the date of its acquisition or transfer under Section 1.382-4(d) of the Treasury Regulations promulgated under Section 382; (2) securities tendered pursuant to a tender or exchange offer made by or on behalf of such Person until such tendered securities are accepted for purchase or exchange; (3) securities issuable upon the exercise of the Rights at any time prior to the occurrence of an Acquisition Event; or (4) securities issuable upon exercise of Rights from and after the occurrence of an Acquisition Event, which Rights were acquired by such Person prior to the Distribution Date or pursuant to Sections 3(a), 11(i) or 22 hereof; or

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(iii)     of which any other Person is the Beneficial Owner, if such Person has any agreement, arrangement or understanding (whether or not in writing) with such other Person with respect to acquiring, holding, voting or disposing of such securities of the Company, but only if the effect of such agreement, arrangement or understanding is to treat such Persons as an “entity” under Section 1.382-3(a)(1) of the Treasury Regulations; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to Beneficially Own, any security (A) if such Person has the right to vote such security pursuant to an agreement, arrangement or understanding (whether or not in writing) which (1) arises solely from a revocable proxy given to such Person in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations of the Exchange Act and (2) is not also then reportable on Schedule 13D or Schedule 13G under the Exchange Act (or any comparable or successor report), or (B) if such beneficial ownership arises solely as a result of such Person’s status as a “clearing agency,” as defined in Section 3(a)(23) of the Exchange Act; provided, further, that nothing in this Section 1(e)(iii) shall cause a Person engaged in business as an underwriter of securities or member of a selling group to be the Beneficial Owner of, or to Beneficially Own, any securities acquired through such Person’s participation in good faith in an underwriting syndicate until the expiration of 40 calendar days after the date of such acquisition, and then only if such securities continue to be owned by such Person at the expiration of such 40 calendar days, or such later date as the Board of the Company may determine in any specific case.

Notwithstanding anything herein to the contrary, to the extent not within the foregoing provisions of this Section 1(e), a Person shall be deemed the Beneficial Owner of, and shall be deemed to Beneficially Own, Stock held by any other Person that such Person would be deemed to constructively own or that otherwise would be aggregated with Stock owned by such Person pursuant to Section 382, or any successor provision or replacement provision and the Treasury Regulations thereunder.

(f)     “Board of Directors” means the Company’s Board of Directors.

(g)     “Book Entry” means an uncertificated book entry for the Common Stock.

(h)     “Business Day” shall mean any day other than a Saturday, Sunday or a day on which banking institutions in the State of Minnesota are authorized or obligated by law or executive order to close.

(i)      “Close of Business” on any given date shall mean 5:00 P.M., Minneapolis, Minnesota time, on such date; provided, however, that if such date is not a Business Day it shall mean 5:00 P.M., Minneapolis, Minnesota time, on the next succeeding Business Day.

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(j)     “Common Stock” when used in reference to the Company shall mean the common stock, par value $.01 per share, of the Company or any other shares of capital stock of the Company into which such stock shall be reclassified or changed, except that “Common Stock,” when used with reference to any Person other than the Company, organized in corporate form, shall mean (i) the capital stock or other equity interest of such Person with the greatest voting power, (ii) the equity securities or other equity interest having power to control or direct the management of such Person or (iii) if such Person is a Subsidiary of another Person, the Person or Persons which ultimately control such first-mentioned Person and which have issued any such outstanding capital stock, equity securities or equity interest. “Common Stock” when used with reference to any Person not organized in corporate form shall mean units of beneficial interest which (x) shall represent the right to participate generally in the profits and losses of such Person (including, without limitation, any flow-through tax benefits resulting from an ownership interest in such Person) and (y) shall be entitled to exercise the greatest voting power of such Person or, in the case of a limited partnership, shall have the power to remove or otherwise replace the general partner or partners.

(k)     “Grandfathered Person” means any Person who or which (i) immediately prior to the first public announcement of the adoption of this Agreement, is the Beneficial Owner of 4.99% or more of the shares of Common Stock of the Company then outstanding or (ii) becomes the Beneficial Owner of 4.99% or more of the shares of Common Stock of the Company then outstanding as a result of shares of the Common Stock of the Company issued to such Person under the Merger Agreement and related transactions.

(l)      “Person” shall mean any individual, firm, corporation, partnership, limited liability company, association, joint stock company, trust, business trust, government or political subdivision, unincorporated organization, or other entity, or any group of such “Persons” having a formal or informal understanding among themselves to make a “coordinated acquisition” of shares within the meaning of Treasury Regulation § 1.382-3(a)(1) or who are otherwise treated as an “entity” within the meaning of Treasury Regulation § 1.382-3(a)(1), including any successor (by merger or otherwise) thereof or thereto.

(m)     “Related Persons” shall mean, as to any Person, any Affilates or Associates of such Person.

(n)     “Section 382” means Section 382 of the Code or any successor or replacement provisions and the Treasury Regulation promulgated thereunder.

(o)     “Stock” means with respect to any Person, such Person’s (i) common stock, (ii) preferred shares (other than preferred shares described in Section 1504(a)(4) of the Code) and (iii) any other interest that would be treated as “stock” of such Person pursuant to Treasury Regulation § 1.382-2T(f)(18).

(p)     “Stock Acquisition Date” shall mean the first date of public announcement (which, for purposes of this definition, shall include the filing of a report pursuant to Section 13(d) of the Exchange Act or pursuant to a comparable successor statute) by the Company or an Acquiring Person that an Acquiring Person has become such or that discloses information which reveals the existence of an Acquiring Person or such earlier date as a majority of the Board shall become aware of the existence of an Acquiring Person.

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(q)     “Subsidiary” shall mean, with reference to any Person, any corporation or other entity of which securities or other ownership interests having ordinary voting power sufficient, in the absence of contingencies, to elect a majority of the board of directors or other persons performing similar functions of such corporation or other entity are at the time directly or indirectly Beneficially Owned or otherwise controlled by such Person, either alone or together, with one or more Affiliates of such Person.

(r)     “Stockholder Approval” shall mean the approval of this Agreement by the affirmative vote of the holders of a majority of the voting power of the outstanding shares of Common Stock (or other shares that vote together with the Common Stock as one class for purposes of such an approval) that are present in person or by proxy at a Stockholder Meeting and entitled to vote on the proposal to approve this Agreement

(s)     “Stockholder Meeting” shall mean a meeting of stockholders of the Company, or any adjournment thereof, duly held in accordance with the First Amended Bylaws of the Company, as amended from time to time, the Articles of Incorporation of the Company, as amended from time to time, and applicable law.

(t)      “Treasury Regulations” means the final and temporary regulations promulgated by the United States Department of the Treasury under the Code as amended or superseded from time to time.

Any determination required by the definitions contained in this Section 1 shall be made by the Board of Directors in its good faith judgment, which determination shall be final and binding on the Rights Agent.

Section 2.      Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act as agent for the Company and the holders of the Rights (who, in accordance with Section 3 hereof, shall prior to the Distribution Date also be the holders of the Common Stock) in accordance with the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The Company may from time to time appoint such “co-Rights Agents” as it may deem necessary or desirable. In the event the Company appoints one or more co-Rights Agents, the respective duties of the Rights Agent and any co-Rights Agent shall be as the Company shall determine.

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Section 3.     Issue of Rights Certificates.

(a)     From and after the date hereof until the earlier of (i) the Close of Business on the tenth Business Day after the Stock Acquisition Date, or (ii) the Close of Business on the tenth Business Day (or such later date, if any, as the Board of Directors may determine in its sole discretion) after the date of the commencement of, or first public announcement of the intent of any Person to commence (which intention to commence remains in effect for five Business Days after such announcement) a tender or exchange offer which would result in such person becoming an Acquiring Person (including any such date which is after the date of this Agreement and prior to the issuance of the Rights), (the earlier of such dates being herein referred to as the “Distribution Date”), (x) the Rights will be evidenced (subject to the provisions of paragraph (b) of this Section 3) by the certificates for Common Stock registered in the names of the holders of the Common Stock or by Book Entry in respect of such Common Stock and not by separate certificates, and (y) the Rights (and the right to receive certificates therefor) will be transferable only in connection with the transfer of the underlying shares of Common Stock (including a transfer to the Company). The preceding sentence notwithstanding, (A) prior to the occurrence of a Distribution Date specified as a result of an event described in clauses (i) or (ii) (or such later Distribution Date as the Board may select pursuant to this sentence), the Board may postpone, one or more times, the Distribution Date in order to make a determination pursuant to Sections 7(a)(v), 7(a)(vi), 28 or 29 or (B) prior to the occurrence of a Distribution Date specified as a result of an event described in clause (ii) (or such later Distribution Date as the Board may select pursuant to this sentence), the Board may postpone, one or more times, the Distribution Date which would occur as a result of an event described in clause (ii) beyond the date set forth in such clause (ii). As soon as practicable after the Distribution Date, the Rights Agent will send by first-class, postage prepaid mail, to each record holder of the Common Stock as of the close of business on the Distribution Date (other than any Acquiring Person or any Affiliate or Associate of an Acquiring Person), at the address of such holder shown on the records of the Company, one or more rights certificates, in substantially the form of Exhibit A hereto (the “Rights Certificates”), evidencing one Right for each share of Common Stock so held, subject to adjustment as provided herein. As of and after the Distribution Date, the Rights will be evidenced solely by such Rights Certificates and the Rights shall be transferable separately from the shares of Common Stock of the Company.

(b)     The Company made available, as promptly as practicable following the Record Date, a copy of a Summary of Rights, in substantially the form of Exhibit B attached to the Original Agreement. With respect to certificates for the Common Stock or Book Entry shares outstanding as of the Record Date, until the Distribution Date, the Rights will be evidenced by such certificates for the Common Stock or Book Entry shares and the registered holders of the Common Stock shall also be the registered holders of the associated Rights. Until the earlier of the Distribution Date or the Expiration Date (as such term is defined in Section 7 hereof), the surrender for transfer of any of the certificates for the Common Stock or Book Entry shares outstanding on the Record Date shall also constitute the transfer of the Rights associated with the Common Stock represented by such certificate or Book Entry shares.

(c)     With respect to certificates for the Common Stock outstanding as of the Record Date, until the Distribution Date, the Rights will be evidenced by such certificates for the Common Stock or by Book Entry in respect of such Common Stock and the registered holders of the Common Stock shall also be the registered holders of the associated Rights. Until the earlier of the Distribution Date or the Expiration Date (as such term is defined in Section 7 hereof), the surrender for transfer of any of the certificates for the Common Stock outstanding on the Record Date shall also constitute the transfer of the Rights associated with the Common Stock represented by such certificate.

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(d)       Certificates for the Common Stock

(i)     issued after the Record Date, but prior to the effective date of this Agreement, shall be deemed also to be certificates for Rights, and shall bear the following legend:

This certificate also evidences and entitles the holder hereof to certain Rights as set forth in the Rights Agreement between Lakes Entertainment, Inc. and Wells Fargo Shareowner Services, a division of Wells Fargo Bank, National Association dated effective as of December 12, 2013 (the “Rights Agreement”), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal offices of Lakes Entertainment, Inc. Under certain circumstances, as set forth in the Rights Agreement, such Rights will be evidenced by separate certificates and will no longer be evidenced by this certificate. Lakes Entertainment, Inc. will mail to the holder of this certificate a copy of the Rights Agreement without charge promptly after receipt of a written request therefor. Under certain circumstances, Rights issued to, or held by, Acquiring Persons, or Related Persons (as defined in the Rights Agreement) and any subsequent holder of such Rights may become null and void. The Rights shall not be exercisable, and shall be void so long as held, by a holder in any jurisdiction where the requisite qualification, if any, to the issuance to such holder, or the exercise by such holder, of the Rights in such jurisdiction shall not have been obtained or be obtainable.

(ii)     issued after the effective date of this Agreement, but prior to the earlier of the Distribution Date or the Expiration Date, shall be deemed also to be certificates for Rights, and shall bear the following legend:

This certificate also evidences and entitles the holder hereof to certain Rights as set forth in the Amended and Restated Rights Agreement between Lakes Entertainment, Inc. and Wells Fargo Shareowner Services, a division of Wells Fargo Bank, National Association dated effective as of January 25, 2015 (the “Rights Agreement”), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal offices of Lakes Entertainment, Inc. Under certain circumstances, as set forth in the Rights Agreement, such Rights will be evidenced by separate certificates and will no longer be evidenced by this certificate. Lakes Entertainment, Inc. will mail to the holder of this certificate a copy of the Rights Agreement without charge promptly after receipt of a written request therefor. Under certain circumstances, Rights issued to, or held by, Acquiring Persons, or Related Persons (as defined in the Rights Agreement) and any subsequent holder of such Rights may become null and void. The Rights shall not be exercisable, and shall be void so long as held, by a holder in any jurisdiction where the requisite qualification, if any, to the issuance to such holder, or the exercise by such holder, of the Rights in such jurisdiction shall not have been obtained or be obtainable.

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With respect to any Book Entry shares of Common Stock, such legend shall be included in a notice to the registered holder of such shares in accordance with applicable law. With respect to certificates or notices containing the foregoing legend, until the earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights associated with the Common Stock represented by such certificates or Book Entry shares shall be evidenced by such certificates or Book Entry shares alone and the registered holders of Common Stock shall also be the registered holders of the associated Rights, and the surrender for transfer of any of such certificates or Book Entry shares shall also constitute the transfer of the Rights associated with the Common Stock represented thereby. In the event that the Company purchases or acquires any shares of Common Stock of the Company after the Record Date but prior to the Distribution Date, any Rights associated with such Common Stock of the Company shall be deemed canceled and retired so that the Company shall not be entitled to exercise any Rights associated with the shares of Common Stock of the Company which are no longer outstanding. The failure to print the foregoing legend on any such certificate or to include such legend in a notice to the registered holder or any defect therein shall not affect in any manner whatsoever the application or interpretation of the provisions hereof.

Section 4.     Form of Rights Certificates.

(a)     The Rights Certificates (and the forms of election to exercise and of assignment to be printed on the reverse thereof) shall each be substantially in the form attached hereto as Exhibit A and may have such marks of identification or designation and such legends, summaries or endorsements printed thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which the Rights may from time to time be listed, or to conform to customary usage. Subject to the provisions of Section 11 and Section 22 hereof, the Rights Certificates, whenever distributed, shall be dated as of the Record Date and on their face shall entitle the holders thereof to purchase such number of shares of Common Stock as shall be set forth therein at the price per share set forth therein (the “Purchase Price”), but the number of such shares and the Purchase Price shall be subject to adjustment as provided herein.

(b)     Any Rights Certificate issued pursuant to Section 3(a) or Section 22 hereof that represents Rights beneficially owned by: (i) an Acquiring Person or any Related Persons who become a transferee after the Acquiring Person becomes such, (ii) a transferee of an Acquiring Person or Related Persons who becomes a transferee after the Acquiring Person or Related Persons becoming such, or (iii) a transferee of an Acquiring Person or Related Persons who becomes a transferee prior to or concurrently with the Acquiring Person or Related Persons becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person to or on behalf of holders of equity interests in such Acquiring Person or to any Person with whom the Acquiring Person has any continuing agreement, arrangement or understanding (whether or not in writing) regarding the transferred Rights, the shares of Common Stock associated with such Rights or the Company or (B) a transfer which the Board of Directors otherwise concludes in good faith (as determined in its discretion by the vote of a majority of the Directors then in office) is part of a plan, arrangement or understanding which has as a primary purpose or effect avoidance of Section 7(e) hereof, and any Rights Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer, exchange, replacement or adjustment of any other Rights Certificate referred to in this sentence, shall contain (to the extent feasible and reasonably identifiable as such) the following legend:

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The Rights represented by this Rights Certificate are or were beneficially owned by a Person who was or became an Acquiring Person or Related Persons (as such terms are defined in that certain Amended and Restated Rights Agreement between Lakes Entertainment, Inc. and Wells Fargo Shareowner Services, a division of Wells Fargo Bank, National Association dated effective as of January 25, 2015 (the “Rights Agreement”). Accordingly, this Rights Certificate and the Rights represented hereby may become void in certain circumstances specified in the Rights Agreement.

The Company shall give notice to the Rights Agent promptly after it becomes aware of the existence and identity of any Acquiring Person. The Company shall instruct the Rights Agent in writing of the Rights which should be so legended. The failure to print the foregoing legend on any such Right Certificate or any defect therein shall not affect in any manner whatsoever the application or interpretation of the provisions of Section 7(e) hereof.

Section 5.     Countersignature and Registration.

(a)     The Rights Certificates shall be executed on behalf of the Company by its Chairman of the Board of Directors, its Chief Executive Officer, or its President or Chief Financial Officer, either manually or by facsimile signature, which shall be attested by the Secretary or an Assistant Secretary of the Company, either manually or by facsimile signature. The Rights Certificates shall be countersigned, either manually or by facsimile signature, by an authorized signatory of the Rights Agent and shall not be valid for any purpose unless so countersigned and such countersignature upon any Rights Certificates shall be conclusive evidence, and the only evidence, that such Rights Certificates have been duly countersigned as required hereunder. In case any officer of the Company who shall have signed any of the Rights Certificates shall cease to be such officer of the Company before countersignature by the Rights Agent and issuance and delivery by the Company, such Rights Certificates, nevertheless, may be countersigned by the an authorized signatory of the Rights Agent, and issued and delivered by the Company with the same force and effect as though the person who signed such Rights Certificates had not ceased to be such officer of the Company; and any Rights Certificates may be signed on behalf of the Company by any person who, at the actual date of the execution of such Rights Certificate, shall be a proper officer of the Company to sign such Rights Certificate, although at the date of the execution of this Rights Agreement any such person was not such an officer.

(b)     Following the Distribution Date, the Rights Agent will keep or cause to be kept, at its offices in St. Paul, Minnesota, books for registration and transfer of the Rights Certificates issued hereunder. Such books shall show the names and addresses of the respective holders of the Rights Certificates, the number of Rights evidenced on its face by each of the Rights Certificates and the date of each of the Rights Certificates.

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Section 6.     Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.

(a)     Subject to the provisions of Sections 4(b), 7(e) and 14 hereof, at any time after the Close of Business on the Distribution Date, and at or prior to the Close of Business on the Expiration Date, any Rights Certificate or Certificates may be transferred, split up, combined or exchanged for another Rights Certificate or Certificates, entitling the registered holder to purchase a like number of shares of Common Stock as the Rights Certificate or Certificates surrendered then entitled such holder to purchase. Any registered holder desiring to transfer, split up, combine or exchange any Rights Certificate shall make such request in writing delivered to the Rights Agent, and shall surrender the Rights Certificate or Rights Certificates to be transferred, split up, combined or exchanged at the office or offices of the Rights Agent designated for such purpose. The Rights shall only be transferable on the registry books of the Rights Agent. Neither the Rights Agent nor the Company shall be obligated to take any action whatsoever with respect to the transfer of any such surrendered Rights Certificate until the registered holder shall have completed and signed the certificate contained in the form of assignment on the reverse side of such Rights Certificate and shall have provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) as the Company shall reasonably request. Thereupon the Rights Agent shall countersign and deliver to the Person entitled thereto a Rights Certificate or Rights Certificates, as the case may be, as so requested. The Company may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer, split up, combination or exchange of Rights Certificates.

(b)     Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Rights Certificate, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to them, and reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of the Rights Certificate if mutilated, the Company will execute and deliver a new Rights Certificate of like tenor to the Rights Agent for countersignature and delivery to the registered owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.

Section 7.     Exercise of Rights; Purchase Price; Expiration Date of Rights.

(a)     Subject to Section 7(e), the registered holder of any Rights Certificate may exercise the Rights evidenced thereby (except as otherwise provided herein) in whole or in part at any time after the Distribution Date upon surrender of the Rights Certificate, with the form of election to exercise on the reverse side thereof duly executed, to the Rights Agent at the office or offices of the Rights Agent designated for such purpose, together with payment of the Purchase Price for each share of Common Stock (or, if applicable, such other number of shares, other securities, or cash or other assets) as to which the Rights are then exercised, at or prior to the time (the “Expiration Date”) that is the earliest of (i) the close of business on the third anniversary of the closing of the merger pursuant to the Merger Agreement (the “Final Expiration Date”), (ii) the time at which the Rights are redeemed as provided in Section 23 hereof (the “Redemption Date”), (iii) the time at which such Rights are exchanged, as provided in Section 24 hereof (the “Exchange Date”), (iv) the close of business on January 25, 2016, if Stockholder Approval has not been obtained by that date, (v) the close of business on the effective date of the repeal of Section 382 if the Board determines that this Agreement is no longer necessary or desirable for the preservation of the NOLs, or (vi) the time at which the Board determines that the NOLs are fully utilized or no longer available under Section 382 or that an ownership change under Section 382 would not adversely impact in any material respect the time period in which the Company could use the NOLs, or materially impair the amount of the NOLs that could be used by the Company in any particular time period, for applicable tax purposes. Except as set for in Section 7(e) below, any Person who prior to the Distribution Date becomes a record holder of shares of Common Stock may exercise all of the rights of a registered holder of a Rights Certificate with respect to the Rights associated with such shares of Common Stock in accordance with and subject to the provisions of this Agreement as of the date such Person becomes a record holder of shares of Common Stock.

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(b)     The Purchase Price for each share of Common Stock pursuant to the exercise of a Right shall as of the effective date of this Agreement be Thirty Dollars ($30), taking into account the reverse split of the Company’s Common Stock which was effective between the Record Date and the effective date of this Agreement, and shall be subject to adjustment from time to time as provided in Section 11 hereof and shall be payable in lawful money of the United States of America in accordance with Section 7(c) below.

(c)      Upon receipt of a Rights Certificate representing exercisable Rights, with the form of election to exercise duly executed, accompanied by payment (in cash, or by certified check or bank draft payable to the order of the Company) of the Purchase Price for the shares (or other securities, property, cash or other assets, as the case may be) to be purchased and an amount equal to any applicable transfer tax, the Rights Agent shall thereupon promptly (i) (A) requisition from any transfer agent of the shares of Common Stock (or make available, if the Rights Agent is the transfer agent for such shares) certificates for the number of shares of Common Stock to be purchased and the Company hereby irrevocably authorizes its transfer agent to comply with all such requests, or (B) if the Company, in its sole discretion, shall have elected to deposit the shares of Common Stock issuable upon exercise of the Rights hereunder into a depositary, requisition from the depositary agent depositary receipts representing such number of shares of Common Stock as are to be purchased (in which case certificates for the shares of Common Stock represented by such receipts shall be deposited by the transfer agent with the depositary agent) and the Company will direct the depositary agent to comply with such request, (ii) when necessary to comply with this Agreement, requisition from the Company the amount of cash, if any, to be paid in lieu of fractional shares in accordance with Section 14 hereof, (iii) after receipt of such certificates or depositary receipts, cause the same to be delivered to or upon the order of the registered holder of such Rights Certificate, registered in such name or names as may be designated by such holder, and (iv) when appropriate, after receipt thereof, deliver such cash, if any, to or upon the order of the registered holder of such Rights Certificate. In the event that the Company is obligated to issue other securities of the Company, pay cash and/or distribute other property pursuant to Section 11(a)(iii) hereof, the Company will make all arrangements necessary so that such other securities, cash, and/or property are available for distribution by the Rights Agent, if and when appropriate. In addition, in the case of an exercise of the Rights by a holder pursuant to Section 11(a)(ii), the Rights Agent shall return such Rights Certificate to the registered holder thereof after imprinting, stamping or otherwise indicating thereon that the Rights represented by such Rights Certificate no longer include the Rights provided by Section 11(a)(ii) of the Rights Agreement and if less than all the Rights represented by such Rights Certificate were so exercised, the Rights Agent shall indicate on the Rights Certificate the number of Rights represented thereby which continue to include the Rights provided by Section 11(a)(ii).

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(d)     In case the registered holder of any Rights Certificate shall exercise (except pursuant to Section 11(a)(ii)) less than all the Rights evidenced thereby, a new Rights Certificate evidencing Rights equivalent to the Rights remaining unexercised shall be issued by the Rights Agent and delivered to the registered holder of such Rights Certificate or to such holder’s duly authorized assigns, subject to the provisions of Section 14 hereof.

(e)     Notwithstanding anything in this Agreement to the contrary, from and after the first occurrence of the event described in Section 11(a)(ii) or an event described in Section 13, any Rights beneficially owned by (i) an Acquiring Person or a Related Persons, (ii) except as provided below, a transferee of an Acquiring Person or Related Persons who becomes a transferee after the Acquiring Person becomes such, or (iii) except as provided below, a transferee of an Acquiring Person or Related Persons who becomes a transferee prior to or concurrently with the Acquiring Person becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person to or on behalf of holders of equity interests in such Acquiring Person or to any Person with whom the Acquiring Person has any continuing agreement, arrangement or understanding regarding the transferred Rights or (B) a transfer which the Board of Directors has determined is part of a plan, arrangement or understanding which has as a primary purpose or effect of avoidance of this Section 7(e), shall become null and void without any further action, and no holder of such Rights shall thereupon have any rights whatsoever with respect to such Rights, whether under any provision of this Agreement or otherwise. The Board of Directors may, in appropriate circumstances, waive application of this Section 7(e) and Section 4(b) hereof are complied with but shall have no liability to any holder of Rights for the inability to make any determinations with respect to an Acquiring Person or Related Persons or transferees hereunder.

(f)     Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor the Company shall be obligated to undertake any action with respect to a registered holder of any Rights Certificate upon the occurrence of any purported exercise as set forth in this Section 7 unless such registered holder shall have (i) properly completed and duly executed the certificate contained in the form of election to purchase set forth on the reverse side of the Right Certificate surrendered for such exercise, and (ii) provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company or the Rights Agent shall reasonably request.

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Section 8.     Cancellation and Destruction of Rights Certificates. All Rights Certificates surrendered for the purpose of exercise, transfer, split up, combination or exchange shall, if surrendered to the Company or any of its agents, be delivered to the Rights Agent for cancellation or in canceled form, or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Agreement. The Company shall deliver to the Rights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any other Rights Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent shall deliver all canceled Rights Certificates to the Company or, at the written request of the Company, destroy all such canceled Rights Certificates and certify in writing to the Company that it has done so.

Section 9.     Availability of Common Stock.

(a)     In the event that, as of the Distribution Date, there shall not be sufficient authorized but unissued shares of Common Stock to permit full exercise of any outstanding Rights, the Company shall use its best efforts to have the stockholders of the Company take such action as may be necessary to authorize additional shares of Common Stock for issuance upon exercise of Rights.

(b)     If the Company's Common Stock is listed on any national securities exchange, the Company shall use its best efforts to cause, from and after such time as the Rights become exercisable, all shares reserved for issuance upon the exercise of the Rights to be listed on such exchange upon official notice of issuance upon such exercise.

(c)     The Company shall use its best efforts to (i) file, as soon as practicable following the Distribution Date, a registration statement under the Securities Act of 1933 (the “Act”), with respect to the Rights and the securities purchasable upon exercise of the Rights on an appropriate form, (ii) cause such registration statement to become effective as soon as practicable after such filing, and (iii) cause such registration statement to remain effective (with a prospectus at all times meeting the requirements of the Act) until the date of the Expiration Date. The Company will also take such action as may be appropriate under the blue sky laws of the various states in connection with the exercisability of the Rights. The Company may temporarily suspend, for a period of time not to exceed ninety (90) days, the exercisability of the Rights in order to prepare and file any required registration statement and permit it to become effective. Upon any such suspension, the Company shall issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect, in each case with prompt written notice to the Rights Agent. Notwithstanding any provision of this Agreement to the contrary, the Rights shall not be exercisable in any jurisdiction unless the requisite qualification in such jurisdiction shall have been obtained.

(d)     The Company covenants and agrees that it will take all such action as may be necessary to ensure that all shares of Common Stock delivered upon exercise of Rights shall, at the time of delivery of the certificates for such shares (subject to payment of the Purchase Price), be duly and validly authorized and issued, fully paid, and nonassessable.

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(e)     The Company further covenants and agrees that it will pay when due and payable any and all federal and state transfer taxes and charges which may be payable in respect of the issuance or delivery of the Rights Certificates and of any certificates for shares of Common Stock upon the exercise of Rights. The Company shall not, however, be required to pay any transfer tax which may be payable in respect of any transfer or delivery of Rights Certificates to a Person other than, or the issuance or delivery of the shares of Common Stock in respect of a name other than that of, the registered holder of the Rights Certificates evidencing Rights surrendered for exercise or to issue or deliver any certificates for shares of Common Stock in a name other than that of the registered holder upon the exercise of any Rights until such tax shall have been paid (any such tax being payable by the holder of such Rights Certificate at the time of surrender) or until it has been established to the Company's satisfaction that no such tax is due.

Section 10.     Common Stock Record Date. Each Person in whose name any certificate for shares of Common Stock (or other securities, as the case may be) is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of the shares of Common Stock (or other securities, as the case may be) represented thereby on, and such certificate shall be dated, the date upon which the Rights Certificate evidencing such Rights was duly surrendered and payment of the Purchase Price (and any applicable transfer taxes) was made; provided, however, that if the date of such surrender and payment is a date upon which the Common Stock (or other securities, as the case may be) transfer books of the Company are closed, such person shall be deemed to have become the record holder of such shares on, and such certificate shall be dated, the next succeeding Business Day on which the Common Stock transfer books of the Company are open, and further provided that, if delivery of shares of Common Stock is delayed pursuant to Section 9(c), such Person shall be deemed to have become the record holder of such shares of Common Stock only when such shares first become deliverable. Prior to the exercise of the Rights evidenced thereby, the holder of a Rights Certificate shall not be entitled to any rights of a stockholder of the Company with respect to shares for which the Rights shall be exercisable, including, without limitation, the right to vote, to receive dividends or other distributions or to exercise any preemptive rights, and shall not be entitled to receive any notice of any proceedings of the Company, except as provided herein.

Section 11.      Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights. The Purchase Price, the number and kind of shares covered by each Right and the number of Rights outstanding are subject to adjustment from time to time as provided in this Section 11.

(a)     (i)     In the event the Company shall at any time after the effective date of this Agreement (A) declare a dividend on the Common Stock payable in shares of Common Stock, (B) subdivide the outstanding Common Stock, (C) combine the outstanding Common Stock into a smaller number of shares, or (D) issue any shares of its capital stock in a reclassification or recapitalization of the Common Stock (including any such reclassification or recapitalization in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), except as otherwise provided in this Section 11(a) and in Section 7(e) hereof, the Purchase Price in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination, reclassification, or recapitalization and the number and kind of shares of Common Stock or capital stock, as the case may be, issuable on such date, shall be proportionately adjusted so that the holder of any Right exercised after such time shall be entitled to receive the aggregate number and kind of shares of Common Stock or capital stock, as the case may be, which, if such Right had been exercised immediately prior to such date and at a time when the Common Stock transfer books of the Company were open, such holder would have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision, combination, reclassification, or recapitalization. If an event occurs which would require an adjustment under both Section 11(a)(i) and Section 11(a)(ii), the adjustment provided for in this Section 11(a)(i) shall be in addition to, and shall be made prior to any adjustment required pursuant to Section 11(a)(ii).

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(ii)     In the event any Person shall become an Acquiring Person, then, except as provided below and in Section 7(e) hereof, the holder of any Right which has not theretofore been exercised shall thereafter be entitled to receive, upon exercise of such Right at the then current Purchase Price in accordance with the terms of this Agreement, such number of shares of Common Stock of the Company equal to the result obtained by (1) multiplying the then current Purchase Price by one (or by such other number of shares of Common Stock then acquirable upon the exercise of a Right, giving effect to any adjustment in such number as provided herein) and (2) dividing that product by 50% of the current market price (determined pursuant to Section 11(d) hereof) per share of Common Stock as of the Stock Acquisition Date in question; provided, however, that if the transaction that would otherwise give rise to the foregoing adjustment also constitutes an event described in Section 13(a), then only the provisions of Section 13 shall apply and no adjustment shall be made pursuant to this Section 11(a)(ii).

(iii)    In lieu of issuing shares of Common Stock in accordance with Section 11(a)(ii) hereof, the Company’s Board of Directors may, if the Board of Directors determines in its discretion that such action is necessary or appropriate and not contrary to the interests of holders of Rights, elect to issue or pay, upon the exercise of the Rights, cash (including an offset against the Purchase Price), property, shares of Common Stock, preferred stock, or other securities or any combination thereof having an aggregate value equal to the value of the shares of Common Stock which otherwise would have been issuable pursuant to Section 11(a)(ii), which value shall be determined by a reputable investment banking firm selected by the Company’s Board of Directors. For purposes of the preceding sentence, the value of any preferred stock which the Board of Directors determines to be a “common stock equivalent” shall be deemed to have the same value as the Common Stock. Any such election by the Board of Directors must be made and publicly announced within 90 days of the relevant Stock Acquisition Date. Following the occurrence of an event described in Section 11(a)(ii), the Board of Directors may (as determined in its discretion by the vote of a majority of the Directors then in office) suspend the exercisability of the Rights for a period of up to 90 days following the occurrence of such event to the extent that the Board of Directors has not determined whether to exercise its rights of election under this paragraph (a)(iii). In the event of any such suspension, the Company shall issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect.

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(b)     If the Company fixes a record date for the issuance of rights, options or warrants to all holders of Common Stock entitling them to subscribe for or purchase (for a period expiring within forty-five (45) calendar days after such record date) Common Stock (or securities convertible into Common Stock) at a price per share of Common Stock (or having a conversion price per share of Common Stock, if a security convertible into Common Stock) less than the current market price (as determined pursuant to Section 11(d) hereof) per share of Common Stock on such record date, the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding on such record date, plus the number of shares of Common Stock which the aggregate offering price of the total number of shares of Common Stock so offered for subscription or purchase (and/or the aggregate initial conversion price of the convertible securities so to be offered) would purchase at such current market price and the denominator of which shall be the number of shares of Common Stock outstanding on such record date, plus the number of additional shares of Common Stock to be offered for subscription or purchase (or into which the convertible securities so to be offered are initially convertible). In case such subscription price may be paid in a consideration part or all of which shall be in a form other than cash, the value of such consideration shall be as determined in good faith by the Board of Directors whose determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent. Shares of Common Stock owned by or held for the account of the Company shall not be deemed outstanding for the purpose of any such computation. Such adjustment shall be made successively whenever such a record date is fixed; and in the event that such rights or warrants are not so issued, the Purchase Price shall be adjusted to be the Purchase Price which would then be in effect if such record date had not been fixed.

(c)     In case the Company shall fix a record date for a distribution to all holders of Common Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing corporation) of evidences of indebtedness, cash (other than a regular quarterly cash dividend out of the earnings or retained earnings of the Company), assets (other than a dividend payable in Common Stock, but including any dividend payable in stock other than Common Stock) or subscription rights or warrants (excluding those referred to in Section 11(b)), the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the current market price (as determined pursuant to Section 11(d) hereof) per share of Common Stock on such record date, less the fair market value, as determined in good faith by the Board of Directors whose determination shall be described in a statement filed with the Rights Agent, of the portion of the cash, assets or evidences of indebtedness so to be distributed or of such subscription rights or warrants applicable to a share of Common Stock and the denominator of which shall be such current market price (as determined pursuant to Section 11(d) hereof) per share of Common Stock. Such adjustments shall be made successively whenever such a record date is fixed; and in the event that such distribution is not so made, the Purchase Price shall be adjusted to be the Purchase Price which would have been in effect if such record date had not been fixed.

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(d)     For the purpose of any computation hereunder, the “current market price” of any share of Common Stock or any other stock or any Right or other security shall be deemed to be the average of the daily closing prices of such for the thirty (30) consecutive Trading Days (as such term is hereinafter defined) immediately prior to such date; provided, however, that in the event that the current market price of the security is determined during a period following the announcement by the issuer of such security of (A) a dividend or distribution on such security payable in shares of Common Stock or securities convertible into shares of such Common Stock (other than the Rights), or (B) any subdivision, combination, reclassification, or recapitalization of such security, and prior to the expiration of the thirty (30) Trading Day period after the ex-dividend date for such dividend or distribution, or the record date for such subdivision, combination, reclassification, or recapitalization then, and in each such case, the “current market price” shall be properly adjusted to take into account ex-dividend trading. The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the NASDAQ Stock Market or, if the securities are not listed or admitted to trading on the NASDAQ Stock Market, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the shares of Common Stock are listed or admitted to trading or, if the securities are not listed or admitted to trading on any national securities exchange, the last quoted sale price or, if not so quoted, the average of the last quoted high bid and low asked prices in the over-the-counter market, as reported by the OTC Bulletin Board or the “Pink Sheets” or such other system then in use, or, if on any such date the securities are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the securities selected by the Board of Directors. If on any such date no market maker is making a market in the securities, the fair value of such securities on such date, as determined in good faith by the Board of Directors, shall be used; provided that, if at the time of such determination there is an Acquiring Person, the current market price of such security on such date shall be determined by a reputable investment banking firm selected by the Board of Directors, which determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and the holders of the Rights. The term “Trading Day” shall mean a day on which the principal national securities exchange on which the shares of Common Stock are listed or admitted to trading is open for the transaction of business or, if the shares of Common Stock are not listed or admitted to trading on any national securities exchange, a Business Day. If the Common Stock is not publicly held or not so listed or traded, “current market price” per share shall mean the fair value per share as determined in good faith by the Board of Directors provided that, if at the time of such determination there is an Acquiring Person, the current market price of such security on such date shall be determined by a reputable investment banking firm selected by the Board of Directors, which determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and the holders of the Rights, whose determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes.

(e)     Anything herein to the contrary notwithstanding, no adjustment in the Purchase Price shall be required unless such adjustment would require an increase or decrease of at least one percent (1%) in the Purchase Price; provided, however, that any adjustments which by reason of this Section 11(e) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 11 shall be made to the nearest cent or to the nearest ten-thousandth of a share of Common Stock, as the case may be. Notwithstanding the first sentence of this Section 11(e), any adjustment required by this Section 11 shall be made no later than the earlier of (i) three (3) years from the date of the transaction which mandates such adjustment, or (ii) the Expiration Date.

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(f)     If as a result of any adjustment made pursuant to Section 11(a) or Section 13, the holder of any Right thereafter exercised shall become entitled to receive any shares of capital stock other than Common Stock, thereafter the number of such other shares so receivable upon exercise of any Right shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions contained in Sections 11(a), (b), (c), (d), (e), (g), (h), (i), (j), (k) and (m), inclusive, and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the Common Stock shall apply on like terms to any such other shares.

(g)     All Rights originally issued by the Company subsequent to any adjustment made to the Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the number of shares of Common Stock purchasable from time to time hereunder upon exercise of the Rights, all subject to further adjustment as provided herein.

(h)     Unless the Company shall have exercised its election as provided in Section 11(i), upon each adjustment of the Purchase Price as a result of the calculations made in Sections 11(b) and (c), each Right outstanding immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of shares (calculated to the nearest ten-thousandth) of Common Stock obtained by (i) multiplying (x) the number of shares covered by the Right immediately prior to this adjustment, by (y) the Purchase Price in effect immediately prior to such adjustment of the Purchase Price, and (ii) dividing the product so obtained by the Purchase Price in effect immediately after such adjustment of the Purchase Price.

(i)     The Company may elect on or after the date of any adjustment of the Purchase Price to adjust the number of Rights, in substitution for any adjustment in the number of shares of Common Stock purchasable upon the exercise of a Right. Each of the Rights outstanding after the adjustment in the number of Rights shall be exercisable for the number of shares of Common Stock for which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the number of Rights shall become that number of Rights (calculated to the nearest ten-thousandth) obtained by dividing the Purchase Price in effect immediately prior to the adjustment of the Purchase Price by the Purchase Price in effect immediately after adjustment of the Purchase Price. The Company shall make a public announcement of its election to adjust the number of Rights, indicating the record date for the adjustment, and, if known at the time, the amount of the adjustment to be made. This record date may be the date on which the Purchase Price is adjusted or any day thereafter, but, if the Rights Certificates have been issued, shall be at least ten (10) days later than the date of the public announcement. If Rights Certificates have been issued, upon each adjustment of the number of Rights pursuant to this Section 11(i), the Company shall, as promptly as practicable, cause to be distributed to holders of record of Rights Certificates on such record date Rights Certificates evidencing, subject to Section 14 hereof, the additional Rights to which such holders shall be entitled as a result of such adjustment, or, at the option of the Company, shall cause to be distributed to such holders of record in substitution and replacement for the Rights Certificates held by such holders prior to the date of adjustment, and upon surrender thereof, if required by the Company, new Rights Certificates evidencing all the Rights to which such holders shall be entitled after such adjustment. Rights Certificates so to be distributed shall be issued, executed and countersigned in the manner provided for herein (and may bear, at the option of the Company, the adjusted Purchase Price) and shall be registered in the names of the holders of record of Rights Certificates on the record date specified in the public announcement.

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(j)     Irrespective of any adjustment or change in the Purchase Price or the number of shares of Common Stock issuable upon the exercise of the Rights, the Rights Certificates theretofore and thereafter issued may continue to express the Purchase Price per share and the number of shares which were expressed in the initial Rights Certificates issued hereunder, without prejudice to any adjustment or change.

(k)     Before taking any action that would cause an adjustment reducing the Purchase Price below the then par value, if any, of the shares of Common Stock issuable upon exercise of the Rights, the Company shall take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock at such adjusted Purchase Price.

(l)     In any case in which this Section 11 shall require that an adjustment in the Purchase Price be made effective as of a record date for a specified event, the Company may elect to defer until the occurrence of such event the issuance to the holder of any Right exercised after such record date the shares of Common Stock and other capital stock or securities of the Company, if any, issuable upon such exercise over and above the shares of Common Stock and other capital stock or securities of the Company, if any, issuable upon such exercise on the basis of the Purchase Price in effect prior to such adjustment; provided, however, that the Company shall deliver to such holder a due bill or other appropriate instrument evidencing such holder's right to receive such additional shares upon the occurrence of the event requiring such adjustment.

(m)    Anything in this Section 11 to the contrary notwithstanding, the Company shall be entitled to make such reductions in the Purchase Price, in addition to those adjustments expressly required by this Section 11, as and to the extent that the Board of Directors shall determine in its discretion to be advisable in order that any (i) consolidation or subdivision of the Common Stock, (ii) issuance wholly for cash of any shares of Common Stock at less than the current market price, (iii) issuance wholly for cash of shares of Common Stock or securities which by their terms are convertible into or exchangeable for shares of Common Stock, (iv) stock dividends or (v) issuance of rights, options or warrants referred to above in this Section 11, hereafter made by the Company to holders of its Common Stock shall not be taxable to such stockholders.

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(n)     The Company covenants and agrees that it shall not, at any time after the Distribution Date and so long as the Rights have not been redeemed pursuant to Section 23 hereof or exchanged pursuant to Section 24 hereof, (i) consolidate with (other than a Subsidiary of the Company in a transaction that complies with the proviso at the end of this sentence), (ii) merge with or into, or (iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one or a series of related transactions, assets or earning power aggregating more than 50% of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to, any other Person or Persons (other than the Company and/or any of its Subsidiaries in one or more transactions each of which complies with the proviso at the end of this sentence) if at the time of or immediately after such consolidation, merger or sale (x) there are any rights, warrants or other instruments or securities outstanding or agreements in effect which would substantially diminish or otherwise eliminate the benefits intended to be afforded by the Rights or (y) there are not sufficient unissued, unreserved shares of Common Stock of the Company to permit the exercise in full of the Rights (except to the extent cash, property, or other securities have been substituted pursuant to Section 11(a)(iii)) or (z) prior to, simultaneously with or immediately after such consolidation, merger or sale the shareholders of a Person who constitutes, or would constitute, the “Principal Party” for the purposes of Section 13(a) hereof shall have received a distribution of Rights previously owned by such Person or any of its Affiliates and Associates; provided that, this Section 11(n) shall not affect the ability of any subsidiary of the Company to consolidate with, or merge with or into, or sell or transfer assets or earning power to any other Subsidiary of the Company.

(o)     The Company covenants and agrees that, after the Stock Acquisition Date, it will not, except as permitted by Section 23, 24 or 27 hereof, take (or permit any Subsidiary to take) any action the purpose or effect of which is to diminish substantially or otherwise eliminate the benefits intended to be afforded by the Rights.

(p)     The exercise of Rights under Section 11(a) (ii) shall only result in the loss of rights under Section 11(a) (ii) with respect to Rights to the extent so exercised and neither such exercise nor any exchange of Rights pursuant to Section 24 hereof shall otherwise affect the rights represented by unexercised Rights under this Rights Agreement, including the rights represented by Section 13.

Section 12.      Certificate of Adjusted Purchase Price or Number of Shares. If, at any time after the effective date of this Agreement, an adjustment is made as provided in Sections 11 or 13 hereof, the Company shall (a) promptly prepare a certificate setting forth such adjustment and a brief statement of the facts accounting for such adjustment, (b) promptly file with the Rights Agent and with each transfer agent for the Common Stock a copy of such certificate, and (c) mail a brief summary thereof to each holder of a Rights Certificate (or, if prior to the Distribution Date, to each holder of a certificate representing shares of Common Stock or Book Entry shares) in accordance with Section 26 hereof. The Rights Agent shall be fully protected in relying on any such certificate and on any adjustment therein contained.

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Section 13.     Consolidation, Merger or Sale or Transfer of Assets or Earning Power.

(a)    In the event that, following the Stock Acquisition Date, directly or indirectly, (x) the Company shall consolidate with, or merges into, any other Person (other than a Subsidiary of the Company in a transaction which is not prohibited by Section 11(n) hereof), and the Company shall not be the continuing or surviving corporation of such consolidation or merger, (y) any Person (other than a Subsidiary of the Company in a transaction which is not prohibited by Section 11(n) hereof) shall consolidate with, or merge into, the Company, and the Company shall be the continuing or surviving corporation of such consolidation or merger and, in connection with such consolidation or merger, all or part of the outstanding shares of Common Stock shall be changed into or exchanged for stock or other securities of any other Person or cash or any other property, or (z) the Company shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise transfer), in one transaction or a series of related transactions, assets or earning power aggregating 50% or more of the assets, cash flow, or earning power of the Company and its Subsidiaries (taken as a whole) to any Person or Persons (other than the Company or any Subsidiary of the Company in one or more transactions, each of which is not prohibited by Section 11(n) hereof), then, and in each such case, proper provision shall be made so that: (i) following the Distribution Date, each holder of a Right, shall thereafter have the right to receive, upon the exercise thereof at the then current Purchase Price in accordance with the terms of this Agreement, such number of validly authorized and issued, fully paid, non-assessable and freely tradeable shares of Common Stock of the Principal Party (as hereinafter defined), free and clear of liens, rights of call or first refusal, encumbrances, transfer restrictions, or other adverse claims, as shall be equal to the result obtained by (1) multiplying the then current Purchase Price by one (or by such other number of shares of Common Stock then acquirable upon the exercise of a Right, giving effect to any adjustment in such number as provided herein, without giving effect to the occurrence, if any, of any transaction described in Section 11(a)(ii) hereof) and (2) dividing that product by 50% of the current market price (determined pursuant to Section 11(d) hereof) per share of the Common Stock of such Principal Party on the date of consummation of such consolidation, merger, sale or transfer; (ii) such Principal Party shall thereafter be liable for, and shall assume, by virtue of such consolidation, merger, sale or transfer, all the obligations and duties of the Company pursuant to this Agreement; (iii) the term “Company” shall thereafter be deemed to refer to such Principal Party, it being specifically intended that the provisions of Section 11 hereof shall apply to such Principal Party; (iv) such Principal Party shall take such steps (including, but not limited to, the reservation of a sufficient number of shares of its Common Stock) in connection with the consummation of any such transaction as may be necessary to assure that the provisions hereof shall thereafter be applicable, as nearly as reasonably may be possible, in relation to its shares of Common Stock thereafter deliverable upon the exercise of the Rights; and (v) the provisions of Section 11(a)(ii) hereof shall be of no force and effect following the occurrence of the first Section 13 event.

(b)     “Principal Party” shall mean:

(i)     in the case of any transaction described in clause (x) or (y) of the first sentence of Section 13(a), the Person that is the issuer of any securities into which shares of Common Stock of the Company are converted in such merger or consolidation, and if no securities are so issued, the Person that is the other party to such merger or consolidation; and

(ii)     in the case of any transaction described in clause (z) of the first sentence in Section 13(a), the Person that is the party receiving the greatest portion of the assets, cash flow, or earning power transferred pursuant to such transaction or transactions;

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provided, however, that in any such case described in (i) or (ii) above, (1) if the Common Stock of such Person is not at such time and has not been continuously over the preceding twelve (12) month period registered under Section 12 of the Exchange Act, and such Person is a direct or indirect Subsidiary of another Person, the Common Stock of which is and has been so registered, “Principal Party” shall refer to such other Person; (2) in case such Person is a Subsidiary, directly or indirectly, of more than one Person, the Common Stocks of two or more of which are and have been so registered, “Principal Party” shall refer to whichever of such Persons is the issuer of the Common Stock having the greatest current market value; and (3) in case such Person is owned, directly or indirectly, by a joint venture formed by two or more Persons that are not owned, directly or indirectly, by the same Person, the rules set forth in (1) and (2) above shall apply to each of the chains of ownership having an interest in such joint venture as if such party were a “Subsidiary” of both or all of such joint venturers and the Principal Parties in each such chain shall bear the obligations set forth in this Section 13 in the same ratio as their direct or indirect interests in such Person bear to the total of such interests.

(c)     The Company shall not consummate any such consolidation, merger, sale or transfer unless prior thereto (x) the Principal Party shall have a sufficient number of authorized shares of its Common Stock which have not been issued or reserved for issuance to permit the exercise in full of the Rights in accordance with this Section 13 and (y) the Company and Principal Party and each other Person who may become a Principal Party as a result of such consolidation, merger, sale or transfer shall have executed and delivered to the Rights Agent a supplemental agreement providing for the terms set forth in paragraphs (a) and (b) of this Section 13 and further providing that, as soon as practicable after the date of any consolidation, merger, sale or transfer of assets mentioned in paragraph (a) of this Section 13, the Principal Party will:

(i)     prepare and file a registration statement under the Act, with respect to the Rights and the securities purchasable upon exercise of the Rights on an appropriate form, and will use its best efforts to cause such registration statement to (A) become effective as soon as practicable after such filing and (B) remain effective (with a prospectus at all times meeting the requirements of the Act) until the Expiration Date;

(ii)     use its best efforts to qualify or register the Rights and the securities purchasable upon exercise of the Rights under the blue sky laws of such jurisdictions as may be necessary or appropriate;

(iii)    use its best efforts to list (or continue the listing of) the Rights and the securities purchasable upon exercise of the Rights on a national securities exchange or to meet the eligibility requirements for quotation on a stock quotation system; and

(iv)    deliver to holders of the Rights historical financial statements for the Principal Party and each of its Affiliates which comply in all material respects with the requirements for registration on Form 10 under the Exchange Act.

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(d)     In case the Principal Party which is to be a party to a transaction referred to in this Section 13 has a provision in any of its authorized securities or in its certificate of incorporation (or equivalent constituent document) or by-laws or other instrument governing its affairs, which provision would have the effect of (i) causing such Principal Party to issue (other than to holders of Rights pursuant to this Section 13), in connection with, or as a consequence of, the consummation of a transaction referred to in this Section 13, shares of Common Stock of such Principal Party at less than the then current market price (determined pursuant to Section 11(d)) or securities exercisable for, or convertible into, Common Stock of such Principal Party at less than such current market price, or (ii) providing for any special payment, tax or similar provisions in connection with the issuance of the Common Stock of such Principal Party pursuant to the provisions of this Section 13, then, in such event, the Company shall not consummate any such transaction unless prior thereto the Company and such Principal Party shall have executed and delivered to the Rights Agent a supplemental agreement providing that the provision in question of such Principal Party shall have been canceled, waived or amended, or that the authorized securities shall be redeemed, so that the applicable provision will have no effect in connection with, or as a consequence of the consummation of the proposed transaction.

The provisions of this Section 13 shall similarly apply to successive mergers, consolidations, and sales or other transfers. If an adjustment under Section 13(a) occurs at any time after an adjustment under Section 11(a)(ii), the Rights that have not theretofore been exercised will thereafter become exercisable in the manner described in Section 13(a).

Section 14.     Fractional Rights and Fractional Shares.

(a)     The Company shall not be required to issue fractions of Rights or to distribute Rights Certificates which evidence fractional Rights. In lieu of such fractional Rights, there shall be paid to the registered holders of the Rights Certificates with regard to which such fractional Rights would otherwise be issuable, an amount in cash equal to the same fraction of the current market value of a whole Right.

(b)     The Company shall not be required to issue fractions of shares of Common Stock upon exercise of the Rights or to distribute certificates which evidence fractional shares of Common Stock. In lieu of fractional shares of Common Stock, the Company may pay to the registered holders of Rights Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market value of a share of Common Stock. For purposes of this Section 14(b), the current market value of a share of Common Stock shall be the closing sale price of a share of Common Stock (as determined pursuant to Section 11(d) hereof) for the Trading Day immediately prior to the date of such exercise.

(c)     Following the occurrence of an Acquisition Event, the Company shall not be required to issue fractions of shares of Common Stock upon exercise of the Rights or to distribute certificates which evidence fractional shares of Common Stock. In lieu of fractional shares of Common Stock, the Company may pay to the registered holders of Rights Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market value of one (1) share of Common Stock. For purposes of this Section 14(c), the current market value of one (1) share of Common Stock shall be the closing sale price of a share of Common Stock (as determined pursuant to Section 11(d) hereof) for the Trading Day immediately prior to the date of such exercise.

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(d)     The holder of a Right by the acceptance of the Rights expressly waives such holder’s right to receive any fractional Rights or any fractional shares upon exercise of a Right, except as permitted by this Section 14.

Section 15.     Rights of Action. All rights of action in respect of this Agreement are vested in the respective registered holders of the Rights Certificates (and, prior to the Distribution Date, the registered holders of the Common Stock); and any registered holder of any Rights Certificate (or, prior to the Distribution Date, of the Common Stock), without the consent of the Rights Agent or of the holder of any other Rights Certificate (or, prior to the Distribution Date, of the Common Stock), may in such holder’s own behalf and for such holder’s own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company to enforce, or otherwise act in respect of, such holder’s right to exercise the Rights evidenced by such Rights Certificate in the manner provided in such Rights Certificate and in this Agreement. Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any breach of this Agreement and shall be entitled to specific performance of the obligations hereunder and injunctive relief against actual or threatened violations of the obligations hereunder of any Person subject to this Agreement.

Section 16.     Agreement of Rights Holders. Every holder of a Right by accepting the same consents and agrees with the Company and the Rights Agent and with every other holder of a Right that:

(a)     prior to the Distribution Date, the Rights will be transferable only in connection with the transfer of Common Stock;

(b)     after the Distribution Date, the Rights Certificates are transferable only on the registry books of the Rights Agent if surrendered at the office or offices of the Rights Agent designated for such purposes, duly endorsed or accompanied by a proper instrument of transfer;

(c)      subject to Section s 6(a) and 7(f), the Company and the Rights Agent may deem and treat the person in whose name a Rights Certificate (or, prior to the Distribution Date, the associated Common Stock certificate or Book Entry shares) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Rights Certificates or the associated Common Stock certificate or Book Entry shares made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent shall be affected by any notice to the contrary; and

(d)      notwithstanding anything in this Agreement to the contrary, neither the Company nor the Rights Agent shall have any liability to any holder of a Right or other Person as the result of its inability to perform any of its obligations under this Agreement by reason of any preliminary or permanent injunction or other order, judgment, decree or ruling issued (whether interlocutory or final) by a court of competent jurisdiction or by a governmental, regulatory, self- regulatory or administrative agency or commission, or any statute, rule, regulation or executive order promulgated or enacted by any governmental authority prohibiting or otherwise restraining performance of such obligations; provided that the Company must use its best efforts to have any such injunction, order, judgment, decree or ruling lifted or otherwise overturned as soon as possible.

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Section 17.     Rights Certificate Holder Not Deemed a Stockholder. No holder, as such, of any Rights Certificate shall be entitled to vote, receive dividends or be deemed for any purpose the holder of the shares of Common Stock or any other securities of the Company which may at any time be issuable on the exercise of the Rights represented thereby, nor shall anything contained herein or in any Rights Certificate be construed to confer upon the holder of any Rights Certificate, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in Section 25 hereof), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by such Rights Certificate shall have been exercised in accordance with the provisions hereof.

Section 18.     Concerning the Rights Agent.

(a)     The Company agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable expenses and counsel fees and disbursements and other disbursements incurred in the administration and execution of this Agreement and the exercise and performance of its duties hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability, or expense, incurred without gross negligence or willful misconduct on the part of the Rights Agent, for anything done or omitted by the Rights Agent in connection with the acceptance and administration of this Agreement. Notwithstanding anything to the contrary in this Agreement or otherwise, the Rights Agent’s aggregate liability to the Company, or any of the Company’s representatives or agents, under this Section 18(a) or under any other term or provision of this Agreement, whether in contract, tort, or otherwise, is expressly limited to, and shall not exceed in any circumstances, the aggregate amount actually received by the Rights Agent as fees and charges under this Agreement, but not including reimbursable expenses previously reimbursed to the Rights Agent by the Company hereunder. The provisions of this Section 18(a) and Section 20 shall survive the expiration of the Rights and the termination of this Agreement.

(b)     The Rights Agent shall be fully protected and shall incur no liability for or in respect of any action taken, suffered or omitted by it in connection with its administration of this Agreement in reliance upon any Rights Certificate or certificate for Common Stock or for other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement, or other paper or document believed by it in good faith to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper Person or Persons.

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Section 19.     Merger or Consolidation or Change of Name of Rights Agent.

(a)     Any corporation into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any corporation resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any corporation succeeding to the corporate trust business of the Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto; provided, however, that such corporation would be eligible for appointment as a successor Rights Agent under the provisions of Section 21 hereof. In case at the time such successor Rights Agent shall succeed to the agency created by this Agreement, any of the Rights Certificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of a predecessor Rights Agent and deliver such Rights Certificates so countersigned; and in case at that time any of the Rights Certificates shall not have been countersigned, any successor Rights Agent may countersign such Rights Certificates either in the name of the predecessor or in the name of the successor Rights Agent; and in all such cases such Rights Certificates shall have the full force provided in the Rights Certificates and in this Agreement.

(b)     In case at any time the name of the Rights Agent shall be changed and at such time any of the Rights Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Rights Certificates so countersigned; and in case at that time any of the Rights Certificates shall not have been countersigned, the Rights Agent may countersign such Rights Certificates either in its prior name or in its changed name; and in all such cases such Rights Certificates shall have the full force provided in the Rights Certificates and in this Agreement.

Section 20.     Duties of Rights Agent. The Rights Agent undertakes the duties and obligations imposed by this Agreement upon the following terms and conditions, by all of which the Company and the holders of Rights Certificates, by their acceptance thereof, shall be bound:

(a)     The Rights Agent may consult with legal counsel selected by it (who may be legal counsel for the Company), and the opinion of such counsel shall be full and complete authorization and protection to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with such opinion.

(b)     Whenever in the performance of its duties under this Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter (including, without limitation, the identity of any Acquiring Person and the determination of “current market price”) be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by the Chairman of the Board, the Chief Executive Officer, the President, the Secretary, or the General Counsel of the Company and delivered to the Rights Agent; and such certificate shall be full authorization to the Rights Agent for any action taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such certificate.

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(c)     The Rights Agent shall be liable hereunder only for its own gross negligence or willful misconduct.

(d)     The Rights Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Rights Certificates or be required to verify the same (except as to its countersignature on such Rights Certificates), but all such statements and recitals are and shall be deemed to have been made by the Company only.

(e)     The duties and obligations of the Rights Agent shall only be as such as are specifically set forth in this Agreement, as it may from time to time be amended, and no implied duties or obligations shall be read into this Agreement against the Rights Agent. Further, the Rights Agent shall not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution hereof by the Rights Agent) or in respect of the validity or execution of any Rights Certificate (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Rights Certificate; nor shall it be responsible for any adjustment required under the provisions of Sections 11 or 13 hereof or responsible for the manner, method or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment (except with respect to the exercise of Rights evidenced by Right Certificates after actual notice of any such adjustment); nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Common Stock to be issued pursuant to this Agreement or any Rights Certificate or as to whether any shares of Common Stock will, when so issued, be validly authorized and issued, fully paid and nonassessable.

(f)     The Company agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Agreement.

(g)     The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from the Chairman of the Board, the Chief Executive Officer, the President, the Secretary, or the General Counsel of the Company, and to apply to such officers for advice or instructions in connection with its duties, and it shall not be liable for any action taken or suffered to be taken by it in good faith in accordance with instructions of any such officer.

(h)     The Rights Agent and any stockholder, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity for the Company or for any other legal entity.

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(i)     No provision of this Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of its rights if there shall be reasonable grounds for believing that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it.

Section 21.     Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this Agreement upon at least thirty (30) days’ notice in writing mailed to the Company, and to each transfer agent of the Common Stock. The Company may remove the Rights Agent or any successor Rights Agent upon at least thirty (30) days’ notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, to each transfer agent of the Common Stock, and by giving notice to the holders of the Rights Certificates by any means reasonably determined by the Company to inform such holders of such removal (including, without limitation, by including such information in one or more of the Company’s reports to shareholders or reports or filings with the Securities and Exchange Commission). If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company shall fail to make such appointment within a period of thirty (30) days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Rights Certificate (who shall, with such notice, submit his Rights Certificate for inspection by the Company), then the registered holder of any Rights Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, shall be either (a) a corporation organized and doing business under the laws of the United States or of the State of Minnesota (or of any other state of the United States so long as such corporation is authorized to do business as a banking institution in the State of Minnesota), in good standing, having a principal office in the State of Minnesota, which is authorized under such laws to exercise corporate trust powers and is subject to supervision or examination by federal or state authority and which has at the time of its appointment as Rights Agent a combined capital and surplus of at least $250,000,000, or (b) an Affiliate of a Person described in clause (a) of this sentence. After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of any such appointment, the Company shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Common Stock, and giving notice to the holders of the Rights Certificates by any means reasonably determined by the Company to inform such holders of such removal (including, without limitation, by including such information in one or more of the Company’s reports to shareholders or reports or filings with the Securities and Exchange Commission). Failure to give any notice provided for in this Section 21, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be.

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Section 22.     Issuance of New Rights Certificates. Notwithstanding any of the provisions of this Agreement or of the Rights to the contrary, the Company may, at its option, issue new Rights Certificates evidencing Rights in such form as may be approved by the Board of Directors to reflect any adjustment or change in the Purchase Price per share and the number or kind or class of shares or other securities or property purchasable under the Rights Certificates made in accordance with the provisions of this Agreement. In addition, in connection with the issuance or sale of shares of Common Stock following the Distribution Date and prior to the Final Expiration Date, the Company (a) will, with respect to shares of Common Stock so issued or sold pursuant to the exercise of stock options or under any employee plan or arrangement, granted or awarded as of the Distribution Date, or upon the exercise, conversion, or exchange of securities issued by the Company, and (b) may, in any other case, if deemed necessary or appropriate by the Board of Directors, issue Rights Certificates representing the appropriate number of Rights in connection with such issuance or sale; provided, however, that (y) no such Rights Certificate will be issued if, and to the extent that, the Company is advised by counsel that such issuance would create a significant risk of material adverse tax consequences to the Company or the Person to whom such Rights Certificate would be issued, and (z) no such Rights Certificate will be issued if, and to the extent that, appropriate adjustment has otherwise been made in lieu of the issuance of such Rights Certificate.

Section 23.     Redemption and Termination.

(a)     The Board of Directors of the Company may:

(i)      at its option, at any time prior to the earlier of the Stock Acquisition Date or the Final Expiration Date, (x) redeem all but not less than all of the then outstanding Rights at a redemption price of $0.001 per Right, as such amount may be appropriately adjusted to reflect any stock split, stock dividend, combination of the outstanding shares of Common Stock of the Company or similar event or transaction occurring after the date of this Agreement (such redemption price, as adjusted from time to time, being hereinafter referred to as the “Redemption Price”) or (y) amend this Agreement to change the Final Expiration Date to another date, including an earlier date.

(ii)     In addition, the Board of Directors may redeem all, but not less than all, of the then outstanding Rights at the Redemption Price following the occurrence of a Stock Acquisition Date but prior to any event described in Section 13(a) either (x) if each of the following shall have occurred and remain in effect: (1) a Person who is an Acquiring Person shall have transferred or otherwise disposed of a number of shares of Common Stock in a transaction, or series of transactions, such that such Person is thereafter a Beneficial Owner of voting securities having 4.99% or less of the voting power of the Company; and (2) there are no other Persons, immediately following the occurrence of the event described in clause (1), who are Acquiring Persons or (y) in connection with any event specified in Section 13(a), not involving an Acquiring Person or an Affiliate or Associate of an Acquiring Person.

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(b)      Immediately upon the action of the Board of Directors ordering the redemption of the Rights in accordance with this Section 23, and without any further action and without any notice, the right to exercise the Rights shall terminate and the only right thereafter of the holders of Rights shall be to receive the Redemption Price for each Right so held. Promptly after the action of the Board of Directors ordering the redemption of the Rights in accordance with this Section 23, the Company shall give notice of such redemption to the Rights Agent and the holders of the then outstanding Rights by mailing such notice to the Rights Agent and to all such holders at their last addresses as they appear upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the transfer agent for the Common Stock of the Company. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of redemption shall state the method by which the payment of the Redemption Price will be made.

(c)      The Company may, at its option, pay the Redemption Price in cash, shares of Common Stock of the Company (based on the current market price of the Common Stock of the Company as of the time of redemption) or any other form of consideration deemed appropriate by the Board of Directors.

Section 24. Exchange.

(a)     The Board of Directors of the Company may, at its option, at any time on or after the occurrence of a Section 11(a)(ii) Event, exchange all or part of the then outstanding and exercisable Rights (which shall not include Rights that have become void pursuant to the provisions of Section 7(e) hereof) for shares of Common Stock at an exchange ratio of one share of Common Stock per Right, appropriately adjusted to reflect any stock split, stock dividend, combination of the outstanding shares of Common Stock or similar event or transaction occurring after the effective date of this Agreement (such exchange ratio being hereinafter referred to as the “Exchange Ratio”). Notwithstanding the foregoing, the Board of Directors shall not be empowered to effect such exchange at any time after any Acquiring Person, together with all Affiliates and Associates of such Person, becomes the Beneficial Owner of shares of Common Stock representing 50% or more of the Common Stock then outstanding.

(b)     Immediately upon the action of the Board of Directors of the Company ordering the exchange of any Rights pursuant to subsection (a) of this Section 24 and without any further action and without any notice, the right to exercise such Rights shall terminate and the only right thereafter of a holder of such Rights shall be to receive that number of shares of Common Stock equal to the number of such Rights held by such holder multiplied by the Exchange Ratio. The Company shall promptly give public notice of any such exchange; provided, however, that the failure to give, or any defect in, such notice shall not affect the validity of such exchange. The Company shall promptly mail a notice of any such exchange to all of the holders of the then outstanding Rights at their last address as they appear upon the registry books of the Rights Agent. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of exchange will state the method by which the exchange of the shares of Common Stock for Rights will be effected and, in the event of any partial exchange, the number and kind of Rights which will be exchanged. Any partial exchange shall be effected pro rata based on the number of Rights being exchanged (other than Rights which have become null and void pursuant to the provisions of Section 7(e) hereof) and the number of Rights held by each holder.

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(c)     In the event that there shall not be sufficient Common Shares issued but not outstanding, or authorized but unissued, to permit any exchange of Rights as contemplated in accordance with this Section 24, the Company shall take all such action as may be necessary to authorize additional Common Shares for issuance upon exchange of the Rights.

(d)     The Company shall not be required to issue fractions of Common Stock of the Company or to distribute certificates which evidence fractional shares of Common Stock of the Company. If the Company elects not to issue such fractional shares of Common Stock of the Company, the Company shall pay, in lieu of such fractional shares of Common Stock of the Company, to the registered holders of the Right Certificates with regard to which such fractional shares of Common Stock of the Company would otherwise be issuable, an amount in cash equal to the same fraction of the current market price of a whole share of Common Stock of the Company for the Trading Day immediately prior to the date of exchange pursuant to this Section 24.

(e)     The failure to give any notice required by this Section 24 or any defect therein shall not affect the validity of the action taken by the Company or the vote upon any such action.

Section 25.     Notice of Certain Events. In case the Company shall propose, at any time after the Distribution Date, (a) to pay any dividend payable in stock of any class to the holders of Common Stock or to make any other distribution to the holders of Common Stock (other than a regular quarterly cash dividend out of earnings or retained earnings of the Company), or (b) to offer to the holders of Common Stock rights or warrants to subscribe for or to purchase any additional shares of Common Stock or shares of stock of any class or any other securities, rights or options, or (c) to effect any reclassification of its Common Stock (other than a reclassification involving only the subdivision of outstanding shares of Common Stock), or (d) to effect any consolidation or merger into or with, or to effect any sale or other transfer (or to permit one or more of its Subsidiaries to effect any sale or other transfer), in one transaction or a series or related transactions, of 50% or more of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to, any other Person (other than a Subsidiary of the Company in one or more transactions each of which is not prohibited by the proviso at the end of Section 11(n) hereof), (e) to effect the liquidation, dissolution or winding up of the Company, or (f) to declare or pay any dividend on the Common Stock payable in Common Stock or to effect a subdivision, combination or consolidation of the Common Stock (by reclassification or otherwise than by payment of dividends in Common Stock), then, in each such case, the Company shall give to each holder of a Rights Certificate, to the extent feasible and in accordance with Section 26 hereof, a notice of such proposed action, which shall specify the record date for the purposes of such stock dividend, distribution of rights or warrants, or the date on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution, or winding up is to take place and the date of participation therein by the holders of the shares of Common Stock, if any such date is to be fixed, and such notice shall be so given in the case of any action covered by clause (a) or (b) above at least ten (10) days prior to the record date for determining holders of the shares of Common Stock for purposes of such action, and in the case of any such other action, at least ten (10) days prior to the date of the taking of such proposed action or the date of participation therein by the holders of the shares of Common Stock whichever shall be the earlier; provided no such notice shall be required pursuant to this Section 25 as a result of any Subsidiary of the Company effecting a consolidation or merger with or into, or effecting a sale or other transfer of assets or earnings power to, any other Subsidiary of the Company in a manner not inconsistent with the provisions of this Agreement.

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In case of the occurrence of the event set forth in Section 11(a)(ii) of this Agreement, (i) the Company shall as soon as practicable thereafter give to each holder of a Rights Certificate, to the extent feasible and in accordance with Section 26 hereof, a notice of the occurrence of such event, which shall specify the event and the consequences of the event to holders of Rights under Section 11(a)(ii) hereof, and (ii) all references in the preceding paragraph to Common Stock shall be deemed thereafter to refer to Common Stock and/or, if appropriate, other securities.

Section 26.     Notices. Notices or demands authorized by this Agreement to be given or made by the Rights Agent or by the holder of any Rights Certificate to or on the Company shall be sufficiently given or made if sent by first-class mail, postage prepaid, by facsimile transmission or by nationally-recognized overnight courier addressed (until another address is filed in writing with the Rights Agent) as follows:

Lakes Entertainment, Inc.

130 Cheshire Lane

Minnetonka, Minnesota 55305

Attention:     President

Subject to the provisions of Section 21, any notice or demand authorized by this Agreement to be given or made by the Company or by the holder of any Rights Certificate to or on the Rights Agent shall be sufficiently given or made if sent by first-class mail, postage prepaid, by facsimile transmission or by nationally-recognized overnight courier addressed (until another address is filed in writing with the Company) as follows:

Wells Fargo Shareowner Services, a division of

Wells Fargo Bank, National Association

1110 Centre Pointe Curve, Suite 101

Mendota Heights, MN 55120-4100

Attention: Relationship Manager

Notices or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the holder of any Rights Certificate (or, prior to the Distribution Date, to the holder of any certificate representing shares of Common Stock) shall be sufficiently given or made if sent by first-class mail, postage prepaid, by facsimile transmission or by nationally-recognized overnight courier addressed to such holder at the address of such holder as shown on the registry books of the Company.

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Section 27.     Supplements and Amendments. The Company and the Rights Agent shall from time to time, if the Company so directs, supplement or amend this Agreement without the approval of any holders of Rights Certificates (or, prior to the Distribution Date, the associated Common Stock certificates) in order to (i) cure any ambiguity, (ii) correct or supplement any provision contained herein which may be defective or inconsistent with any other provisions herein, (iii) extend the period for redemption provided in Section 23 or the Final Expiration Date, notwithstanding anything to the contrary provided in clause (v) hereof, (iv) prior to the Distribution Date, change or supplement any of the provisions hereunder which the Company may deem necessary or desirable to effectuate the purposes of this Agreement, or (v) following the Distribution Date, change or supplement any of the provisions hereunder in any manner which the Company may deem necessary or desirable and which shall not adversely affect the interests of the holders of Rights Certificates (other than an Acquiring Person or an Affiliate or Associate of an Acquiring Person); provided, however, that this Agreement shall not be supplemented or amended (A) in any way following the Distribution Date unless such amendment is approved by the Board of Directors whose determination shall be final and, (B) to lengthen the time period relating to when the Rights may be redeemed to such time as (I) the Rights are not then redeemable or (II) any other time period, unless such lengthening is for the purposes of protecting, enhancing or clarifying the rights of and the benefits to, the holder of the Rights (other than an Acquiring Person or an Affiliate or Associate of an Acquiring Person). Upon the delivery of a certificate from an appropriate officer of the Company which states that the proposed supplement or amendment is in compliance with the terms of this Section 27, the Rights Agent shall execute such supplement or amendment unless the Rights Agent shall have determined in good faith that such supplement or amendment would adversely affect its interests under this Agreement. Prior to the Distribution Date, the interests of the holders of Rights shall be deemed coincident with the interests of the holders of Common Stock.

Section 28.      Process to Seek Exemption Prior to Trigger Event. Any Person who desires to effect any acquisition of Common Stock that would, if consummated, result in such Person beneficially owning 4.99% or more of the then outstanding Common Stock (a “Requesting Person”) may, prior to the Stock Acquisition Date and in accordance with this Section 28, request that the Board grant an exemption with respect to such acquisition under this Agreement so that such Person would be deemed to be an “exempt person” under subsection (iii) of Section 1(a) hereof for purposes of this Agreement (an “Exemption Request”). An Exemption Request shall be in proper form and shall be delivered by overnight delivery service or first-class mail, postage prepaid, to the Secretary of the Company at the principal executive office of the Company. The Exemption Request shall be deemed made upon receipt by the Secretary of the Company. To be in proper form, an Exemption Request shall set forth (i) the name and address of the Requesting Person, (ii) the number and percentage of shares of Common Stock then Beneficially Owned by the Requesting Person, together with all Affiliates and Associates of the Requesting Person, and (iii) a reasonably detailed description of the transaction or transactions by which the Requesting Person would propose to acquire Beneficial Ownership of Common Stock aggregating 4.99% or more of the then outstanding Common Stock and the maximum number and percentage of shares of Common Stock that the Requesting Person proposes to acquire. The Board shall make a determination whether to grant an exemption in response to an Exemption Request as promptly as practicable (and, in any event, within ten (10) Business Days) after receipt thereof; provided, that the failure of the Board to make a determination within such period shall be deemed to constitute the denial by the Board of the Exemption Request. The Requesting Person shall respond promptly to reasonable and appropriate requests for additional information from the Board and its advisors to assist the Board in making its determination. For purposes of considering the Exemption Request, any calculation of the number of shares of Common Stock outstanding at any particular time, including for purposes of determining the particular percentage of such outstanding Common Stock of which any Person is the Beneficial Owner, shall be made pursuant to and in accordance with Section 382. The Board shall only grant an exemption in response to an Exemption Request if the Board determines in its sole discretion that the acquisition of Beneficial Ownership of Common Stock by the Requesting Person (A) will not adversely impact in any material respect the time period in which the Company could use the NOLs or limit or impair the availability to the Company of the NOLs or (B) is in the best interests of the Company despite the fact that it may adversely impact in a material respect the time period in which the Company could use the NOLs or limit or impair the availability to the Company of the NOLs. Any exemption granted hereunder may be granted in whole or in part, and may be subject to limitations or conditions (including a requirement that the Requesting Person agree that it will not acquire Beneficial Ownership of shares of Common Stock in excess of the maximum number and percentage of shares approved by the Board), in each case as and to the extent the Board shall determine necessary or desirable to provide for the protection of the NOLs. Any Exemption Request may be submitted on a confidential basis and, except to the extent required by applicable law, the Company shall maintain the confidentiality of such Exemption Request and the Board’s determination with respect thereto, unless the information contained in the Exemption Request or the Board’s determination with respect thereto otherwise becomes publicly available. The Exemption Request shall be considered and evaluated by directors serving on the Board, or a duly constituted committee thereof, who are independent of the Company and the Requesting Person and disinterested with respect to the Exemption Request, and the action of a majority of such independent and disinterested directors shall be deemed to be the determination of the Board for purposes of such Exemption Request.

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Section 29.     Waiver Subsequent to Stock Acquisition Date. The Board may, of its own accord or upon the request of a stockholder (a “Waiver Request”), subsequent to a Stock Acquisition Date and prior to the Distribution Date, and in accordance with this Section 29, grant an exemption with respect to any Acquiring Person under this Agreement so that such Acquiring Person would be deemed to be an “exempt person” under subsection (iii) of Section 1(a) hereof for purposes of this Agreement. A Waiver Request shall be in proper form and shall be delivered by overnight delivery service or first-class mail, postage prepaid, to the Secretary of the Company at the principal executive office of the Company. The Waiver Request shall be deemed made upon receipt by the Secretary of the Company. To be in proper form, a Waiver Request shall set forth (i) the name and address of the Acquiring Person, (ii) the number and percentage of shares of Common Stock then Beneficially Owned by the Acquiring Person, together with all Affiliates and Associates of the Acquiring Person, and (iii) a reasonably detailed description of the transaction or transactions by which the Acquiring Person acquired Beneficial Ownership of Common Stock aggregating 4.99% or more of the then outstanding Common Stock and the maximum number and percentage of shares of Common Stock that the Acquiring Person proposes to acquire. The Board shall make a determination whether to grant an exemption in response to a Waiver Request as promptly as practicable (and, in any event, within ten (10) Business Days) after receipt thereof; provided, that the failure of the Board to make a determination within such period shall be deemed to constitute the denial by the Board of the Waiver Request. The Acquiring Person shall respond promptly to reasonable and appropriate requests for additional information from the Board and its advisors to assist the Board in making its determination. For purposes of considering the Waiver Request, any calculation of the number of shares of Common Stock outstanding at any particular time, including for purposes of determining the particular percentage of such outstanding Common Stock of which any Person is the Beneficial Owner, shall be made pursuant to and in accordance with Section 382. The Board shall only grant an exemption for an Acquiring Person if the Board determines in its sole discretion that the acquisition of Beneficial Ownership of Common Stock by such Acquiring Person does not adversely impact in any material respect the time period in which the Company could use the NOLs or limit or impair the availability to the Company of the NOLs. Any exemption granted hereunder may be granted in whole or in part, and may be subject to limitations or conditions (including a requirement that such Acquiring Person agree that it will not acquire Beneficial Ownership of shares of Common Stock in excess of the maximum number and percentage of shares approved by the Board), in each case as and to the extent the Board shall determine necessary or desirable to provide for the protection of the Company’s NOLs. The facts and circumstances with respect to the Trigger Event, including whether to grant an exemption, shall be considered and evaluated by directors serving on the Board, or a duly constituted committee thereof, who are independent of the Company and such Acquiring Person and disinterested with respect to the Trigger Event, and the action of a majority of such independent and disinterested directors shall be deemed to be the determination of the Board for purposes of any exemption granted pursuant to this Section 29.

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Section 30.     Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective successors and assigns hereunder.

Section 31.     Benefits of this Agreement. Nothing in this Agreement shall be construed to give to any Person other than the Company, the Rights Agent and the registered holders of the Rights Certificates (and, prior to the Distribution Date, registered holders of the Common Stock) any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the Rights Certificates (and, prior to the Distribution Date, registered holders of the Common Stock).

Section 32.     Administration of Agreement. The Board of Directors shall have the exclusive power and authority to administer this Agreement and to exercise all rights and powers specifically granted to the Board of Directors or the Company or as may be necessary or advisable in the administration of this Agreement, including without limitation the right and power to interpret the Agreement and to make all determinations deemed necessary or advisable for the administration of this Agreement. All such acts, interpretations and determinations done or made by the Board of Directors in good faith shall be final, conclusive and binding on the Company, the Rights Agent and the holders of the Rights. Accordingly, the Board shall not be liable to the holders of Rights Certificates or any other party for any determination made, action taken, or action omitted to be taken pursuant to the terms of this Agreement, if such determination, action or omitted action was made or taken in good faith.

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Section 33.     Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated, provided, however, that notwithstanding anything in this Agreement or the Rights to the contrary, if any such term, provision, covenant, or restriction is held by such court or authority to be invalid, void, or unenforceable and the Board of Directors determines in its good faith judgment that severing the invalid language from this Agreement would adversely affect the purpose or effect of this Agreement, the right of redemption set forth in Section 23 shall be reinstated and shall not expire until the close of business on the 15th calendar day following the date of such determination.

Section 34.     Governing Law. This Agreement, each Right and each Rights Certificate issued hereunder shall be deemed to be a contract made under the laws of the State of Minnesota and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts made and to be performed entirely within such State.

Section 35.     Counterparts. This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

Section 36.     Descriptive Headings. Descriptive headings of the several Sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof.

[The remainder of this page is intentionally left blank.]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed effective as of the day and year first above written.

LAKES ENTERTAINMENT, INC.

By      /s/ Timothy Cope                                                                                                  

   Its      President / CFO                                                                                                  

WELLS FARGO SHAREOWNER SERVICES, A DIVISION OF WELLS FARGO BANK, NATIONAL ASSOCIATION

By      /s/ Andrea Severson                                                                                            

   Its      AVP-Client Services                                                                                          

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Exhibit A

[Form of Rights Certificate]

Certificate No. R-   __________ Rights

NOT EXERCISABLE AFTER ___________ OR EARLIER IF REDEEMED BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT REFERRED TO HEREIN. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]¹

Rights Certificate

LAKES ENTERTAINMENT, INC.

This certifies that __________________________, or registered assigns, is the registered owner of the number of Rights set forth above, each of which entitles the owner thereof, subject to the terms, provisions and conditions of the Amended and Restated Rights Agreement, dated as of January 25, 2015 (the “Rights Agreement”), between Lakes Entertainment, Inc., a Minnesota corporation (the “Company”), and Wells Fargo Shareowner Services, a division of Wells Fargo Bank, National Association (the “Rights Agent”), to purchase from the Company at any time after the Distribution Date (as such term is defined in the Rights Agreement) and prior to 5:00 P.M. (Minneapolis, Minnesota time) on December 12, 2020 at the office or offices of the Rights Agent designated for such purpose, or its successors as Rights Agent, one fully paid, non-assessable share of Common Stock (the “Common Stock”) of the Company, at a purchase price of $30 per share (the “Purchase Price”), taking into account the reverse split of the Company’s Common Stock which was effective between the Record Date and the effective date of the Rights Agreement, subject to adjustment as provided in the Rights Agreement, upon presentation and surrender of this Rights Certificate with the Form of Election to Exercise duly executed. The number of Rights evidenced by this Rights Certificate (and the number of shares which may be purchased upon exercise thereof) set forth above, and the Purchase Price per share set forth above, are the number and Purchase Price as of December 12, 2013, based on the Common Stock as constituted at such date.

¹ The portion of the legend in brackets shall be inserted only if applicable and shall replace the preceding sentence.

A-1

If the Rights evidenced by this Rights Certificate are beneficially owned by (i) an Acquiring Person or a Related Persons (as such terms are defined in the Rights Agreement), (ii) transferees of any such Acquiring Person or Related Persons, or (iii) under certain circumstances, transferees of persons who became an Acquiring Person or Related Persons following such transfer, such Rights shall become null and void and no holder hereof shall have any right with respect to such Rights.

As provided in the Rights Agreement, the Purchase Price and the number and kind of shares of Common Stock or other securities which may be purchased upon the exercise of the Rights evidenced by this Rights Certificate are subject to modification and adjustment upon the happening of certain events.

This Rights Certificate is subject to all of the terms, provisions and conditions of the Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and made a part hereof and to which Rights Agreement reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of the Rights Agent, the Company and the holders of the Rights Certificates, which limitations of rights include the temporary suspension of the exercisability of such Rights under certain circumstances specified in such Rights Agreement. Copies of the Rights Agreement are on file at the office of the Rights Agent and are also available upon written request to the Rights Agent.

This Rights Certificate, with or without other Rights Certificates, upon surrender at the office or offices of the Rights Agent designated for such purpose, may be exchanged for another Rights Certificate or Rights Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like aggregate number of shares of Common Stock as the Rights evidenced by the Rights Certificate or Rights Certificates surrendered shall have entitled such holder to purchase. If this Rights Certificate shall be exercised (other than pursuant to Section 11(a)(ii) of the Rights Agreement) in part, the holder shall be entitled to receive upon surrender hereof another Rights Certificate or Rights Certificates for the number of whole Rights not exercised. If this Rights Certificate shall be exercised in whole or in part pursuant to Section 11(a)(ii) of the Rights Agreement, the holder shall be entitled to receive this Rights Certificate duly marked to indicate that such exercise has occurred as set forth in the Rights Agreement.

Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate may be redeemed by the Company at its option at a redemption price of $.001 per Right.

No fractional shares of Common Stock will be issued upon the exercise of any Right or Rights evidenced hereby, but in lieu thereof a cash payment will be made, as provided in the Rights Agreement.

A-2

No holder of this Rights Certificate shall be entitled to vote or receive dividends or be deemed for any purpose the holder of shares of Common Stock or of any other securities of the Company which may at any time be issuable on the exercise hereof, nor shall anything contained in the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in the Rights Agreement), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by this Rights Certificate shall have been exercised as provided in the Rights Agreement.

This Rights Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Rights Agent.

WITNESS the facsimile signature of the proper officers of the Company.

Dated as of _________________, 20__

ATTEST:	LAKES ENTERTAINMENT, INC.
	By:
Secretary		Title:

Countersigned:

WELLS FARGO SHAREOWNER SERVICES,

A DIVISION OF WELLS FARGO BANK, NATIONAL ASSOCIATION

By________________________

Authorized Signature

A-3

[Form of Reverse Side of Rights Certificate]

FORM OF ASSIGNMENT

(To be executed by the registered holder if such

holder desires to transfer the Rights Certificate.)

FOR VALUE RECEIVED ___________________________________ hereby sells, assigns and transfers unto

__________________________________________________________

(Please print name and address of transferee)

this Rights Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint ____________________ Attorney, to transfer the within Rights Certificate on the books of the within-named Company, with full power of substitution.

The undersigned hereby certifies (after due inquiry and to the best of its knowledge) by checking the appropriate boxes that:

(1)     this Rights Certificate

[    ] is

or

[    ] is not

being sold, assigned and transferred by or on behalf of a Person who is or was an Acquiring Person or Related Persons (as such terms are defined in the Rights Agreement); and

A-4

(2)      the undersigned

[    ] did

or

[    ] did not

acquire the Rights evidenced by this Rights Certificate from any person who is, was or subsequently became an Acquiring Person or Related Persons.

Dated: ____________, 20__
	______________________________________
	Signature

Signature Guaranteed:

THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEED MEDALLION PROGRAM).

NOTICE

The signature to the foregoing Assignment must correspond to the name as written upon the face of this Rights Certificate in every particular, without alteration or enlargement or any change whatsoever.

A-5

FORM OF ELECTION TO EXERCISE

(To be executed if holder desires to

exercise Rights represented by the

Rights Certificate.)

To:     LAKES ENTERTAINMENT, INC.:

The undersigned hereby irrevocably elects to exercise ____________ Rights represented by this Rights Certificate to purchase the shares of Common Stock issuable upon the exercise of the Rights (or such other securities of the Company or of any other person which may be issuable upon the exercise of the Rights) and requests that certificates for such shares be issued in the name of:

(Please print name and address)

(Please insert social security

or other identifying number)

The Rights Certificate indicating the balance, if any, of such Rights which may still be exercised pursuant to Section 11(a)(ii) of the Rights Agreement shall be returned to the undersigned unless such person requests that the Rights Certificate be registered in the name of and delivered to: (complete only if Rights Certificate is to be registered in a name other than the undersigned)

(Please print name and address)

(Please insert social security

or other identifying number)

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The undersigned hereby certifies (after due inquiry and to the best of its knowledge) by checking the appropriate boxes that:

(1) the Rights evidenced by this Rights Certificate

[    ] are

or

[    ] are not

being exercised by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such terms are defined in the Rights Agreement); and

(2)     the undersigned

[    ] did

or

[    ] did not

acquire the Rights evidenced by this Rights Certificate from any person who is, was or subsequently became an Acquiring Person or an Affiliate or Associate of an Acquiring Person.

Dated: ____________, 20__	____________________________________
	Signature

Signature Guaranteed:

THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEED MEDALLION PROGRAM). PURSUANT TO S.E.C. RULE 17AD-15.

A-7

NOTICE

The signature to the foregoing Election to Exercise must correspond to the name as written upon the face of this Rights Certificate in every particular, without alteration or enlargement or any change whatsoever.

A-8

EX-10

Exhibit 10.1

VOTING AND SUPPORT AGREEMENT

THIS VOTING AND SUPPORT AGREEMENT (this “Agreement”), dated as of January 25, 2015, is entered into by and among Lakes Entertainment, Inc., a Minnesota corporation (“Parent”), each of the shareholders of Parent listed on Schedule I to this Agreement (each, a “Shareholder” and collectively, the “Shareholders”) and Sartini Gaming, Inc., a Nevada corporation (the “Company”).

WHEREAS, contemporaneously with the execution of this Agreement, Parent, LG Acquisition Corporation, a Nevada corporation and a wholly owned subsidiary of Parent (“Merger Subsidiary”), the Company and The Blake L. Sartini and Delise F. Sartini Family Trust (the “Company Stockholder”), are entering into an Agreement and Plan of Merger, dated as of the date hereof (the “Merger Agreement”), providing, among other things, for the merger of Merger Subsidiary with and into the Company (the “Merger”);

WHEREAS, each Shareholder is the beneficial owner of such number of shares of common stock, $0.01 par value per share, of Parent (the “Parent Common Stock”) as set forth opposite such Shareholder’s name on Schedule I attached hereto (each, a Shareholder’s “Owned Shares”); and

WHEREAS, as a condition of and inducement to the Company’s and the Company Stockholder’s willingness to enter into the Merger Agreement, the Company and the Company Stockholder have required that Parent and the Shareholders enter into this Agreement.

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth in this Agreement and in the Merger Agreement, and intending to be legally bound hereby, the parties hereto agree as follows:

1.     Definitions. For the purposes of this Agreement, capitalized terms used and not otherwise defined herein shall have the respective meanings ascribed to them as set forth below, or if not set forth below, as set forth in the Merger Agreement:

“Additional Owned Shares” means all shares of Parent Common Stock and any other equity securities of the Parent that are (i) beneficially owned by a Shareholder or any of its Affiliates and (ii) acquired after the date hereof and prior to the termination of this Agreement.

“Affiliate” has the meaning set forth in the Merger Agreement; provided, however, that Parent shall be deemed not to be an Affiliate of any Shareholder.

“beneficial ownership” (and related terms such as “beneficially owned” or “beneficial owner”) has the meaning set forth in Rule 13d-3 under the Exchange Act.

“Code” means the Internal Revenue Code of 1986, as amended.

“Covered Shares” means, with respect to a Shareholder, such Shareholder’s Owned Shares and Additional Owned Shares.

“Disclosed Owned Shares” has the meaning set forth in Section 5(a).

“Margining of Shares” means the pledge of Covered Shares as collateral for indebtedness but not the subsequent exercise of rights with respect to such collateral following a call of such indebtedness.

“MBCA” means the Minnesota Business Corporation Act, as amended.

“Pro Forma Ownership Change” means, with respect to any Transfer, the “ownership change” within the meaning of Section 382 of the Code that the Company would undergo as a result of such Transfer if both (i) the issuance of Parent Common Stock upon exercise of all outstanding Parent Stock Options and (ii) the consummation of the Merger and the issuance of Parent Common Stock under the Merger Agreement were each given effect as if such issuances had occurred immediately prior to such Transfer.

“Proxy” has the meaning set forth in Section 2(b).

“Representatives” has the meaning set forth in Section 3(b).

“Restricted Period” means the period from the date hereof through the date that the Parent Shareholder Approval is obtained.

“Tax Benefits” means the net operating loss carryovers, capital loss carryovers, general business credit carryovers, alternative minimum tax credit carryovers, foreign tax credit carryovers, research and development credit carryovers and any loss or deduction attributable to a “net unrealized built-in loss” within the meaning of Section 382 of the Code and the Treasury Regulations promulgated thereunder, of Parent, any direct or indirect subsidiary thereof, or any consolidated or combined tax filing group of which Parent is a member.

“Transfer” means, with respect to a security, the transfer, pledge, hypothecation, encumbrance, assignment or other disposition (whether by sale, merger, consolidation, liquidation, dissolution, dividend, distribution or otherwise) of such security or the beneficial ownership thereof, the offer to make such a transfer or other disposition, and each option, agreement, arrangement or understanding, whether or not in writing, to effect any of the foregoing (other than with respect to the Margining of Shares in compliance with Section 3(c)), whether voluntary or involuntary, by operation of law or otherwise, or any attempt to do any of the foregoing. A Transfer shall also include the creation or grant of an option or an interest similar to an option (within the meaning of Treasury Regulations Section 1.382-2T(h)(4)(v)). As a verb, “Transfer” shall have a correlative meaning.

“Treasury Regulation” means a Treasury regulation promulgated under the Code.

2.     Voting Agreement.

(a)     Shareholder Vote. At any meeting of the shareholders of Parent, however called, or at any adjournment thereof, or in any other circumstance in which the vote, consent or other approval of the shareholders of Parent is sought, each Shareholder shall, and shall cause any other holder of record of its Covered Shares to, (x) appear at each such meeting or otherwise cause all of such Shareholder’s Covered Shares that it beneficially owns as of the record date for such vote to be counted as present thereat for purposes of calculating a quorum and (y) vote (or cause to be voted), or execute and deliver a written consent (or cause a written consent to be executed and delivered) covering, all of such Shareholder’s Covered Shares:

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(i)       in favor of the approval of the Articles Amendment, the issuance of Parent Common Stock pursuant to the Merger Agreement, and any actions required in furtherance thereof;

(ii)      against any Acquisition Proposal or any proposal relating to an Acquisition Proposal;

(iii)     against any merger agreement or merger (other than the Merger Agreement and the Merger), consolidation, combination, sale of substantial assets, reorganization, recapitalization, dissolution, liquidation or winding up of or by Parent; and

(iv)     against any proposal, action or agreement that would (1) impede, frustrate, prevent or nullify any provision of this Agreement, the Merger Agreement or the Merger, (2) result in a breach in any respect of any covenant, representation, warranty or any other obligation or agreement of Parent under the Merger Agreement, (3) result in any of the conditions set forth in Article 7 of the Merger Agreement not being fulfilled or (4) except as expressly contemplated by the Merger Agreement, change in any manner the dividend policy or capitalization of, including the voting rights of any class of capital stock of, Parent.

Each Shareholder shall not commit or agree to take any action inconsistent with the foregoing. The parties agree that this Agreement is a voting agreement created under Section 302A.455 of the MBCA.

3.      No Disposition or Solicitation.

(a)     No Disposition or Adverse Act. Each Shareholder hereby covenants and agrees that, except as contemplated by this Agreement and the Merger Agreement, such Shareholder shall not (i) during the Restricted Period, offer to Transfer, Transfer or consent to any Transfer of any or all of such Shareholder’s Covered Shares or any interest therein without the prior written consent of the Company, (ii) during the Restricted Period, enter into any contract, option or other agreement or understanding with respect to any Transfer of any or all of such Shareholder’s Covered Shares or any interest therein, (iii) offer to Transfer, Transfer or consent to any Transfer of, or enter into any contract, option or other agreement or understanding with respect to any Transfer of, any or all of such Shareholder’s Covered Shares or any interest therein, where such Transfers, upon consummation, could, singly or in the aggregate, reasonably be expected to result in a Pro Forma Ownership Change that would limit Parent’s ability to utilize its Tax Benefits to reduce its potential future U.S. federal income tax liabilities, (iv) except for the proxies granted pursuant to the Parent Voting Agreements, grant any proxy, power-of-attorney or other authorization or consent in or with respect to any or all of such Shareholder’s Covered Shares, (v) deposit any or all of such Shareholder’s Covered Shares into a voting trust or, except for a Parent Voting Agreement, enter into a voting agreement or arrangement with respect to any or all of such Shareholder’s Covered Shares or (vi) take any other action that would make any representation or warranty of such Shareholder contained herein untrue or incorrect or in any way restrict, limit or interfere with the performance of such Shareholder’s obligations hereunder or the transactions contemplated hereby or by the Merger Agreement. Any attempted Transfer of any Shareholder’s Covered Shares or any interest therein in violation of this Section 3(a) shall be null and void.

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(b)     Nothing in Section 3(a) (but without prejudice to Section 3(a)(iii), which shall in all circumstances apply) shall prohibit a Transfer of a Shareholder’s Covered Shares by such Shareholder: (i) if such Shareholder is an individual: (A) to any member of such Shareholder’s immediate family or to a trust for the benefit of such Shareholder or any member of any such Shareholder’s immediate family, but solely for estate planning purposes; or (B) upon the death of such Shareholder; or (ii) if such Shareholder is a partnership or limited liability company, to one or more partners or members of such Shareholder or to an affiliated corporation under common control with such Shareholder; provided, however, that a Transfer referred to in this Section 3(b) shall be permitted only if the transferee agrees in writing, reasonably satisfactory in form and substance to the Company, to be bound by the terms of this Agreement.

(c)     Each of the Shareholders hereby agrees that it shall not at any time pledge any Covered Shares held by it other than the pledge of up to 25% of the total value as of the time of such pledge of any Covered Shares held by it as of record as collateral for indebtedness, subject to compliance with the Second Amended and Restated Lakes Entertainment, Inc. Policy on Avoidance of Insider Trading.

4.      Additional Agreements.

(a)     Certain Events. In the event of any stock split, stock dividend, merger, reorganization, recapitalization or other change in the capital structure of Parent affecting any Shareholder’s Covered Shares or the acquisition of Additional Owned Shares or other securities or rights of Parent by any Shareholder or any of its Affiliates, (i) the type and number of such Shareholder’s Covered Shares shall be adjusted appropriately and (ii) this Agreement and the obligations hereunder shall automatically attach to any additional Covered Shares or other securities or rights of Parent issued to or acquired by such Shareholder or any of its Affiliates.

(b)     Waiver of Appraisal and Dissenters’ Rights and Actions. Each Shareholder hereby (i) waives and agrees not to exercise any rights of appraisal or rights to dissent from the Merger that such Shareholder may have (if any) and (ii) agrees not to commence or participate in, and to take all actions necessary to opt out of any class in any class action with respect to, any claim, derivative or otherwise, against Parent, Merger Subsidiary, the Company, the Company Stockholder or any of their respective successors relating to the negotiation, execution or delivery of this Agreement or the Merger Agreement or the consummation of the Merger, including any claim (x) challenging the validity of, or seeking to enjoin the operation of, any provision of this Agreement or (y) alleging a breach of any fiduciary duty of the Board of Directors of Parent in connection with the Merger Agreement or the transactions contemplated thereby.

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(c)     Communications. Unless required by applicable law, each Shareholder shall not, and shall cause its Representatives not to, make any press release, public announcement or other communication with respect to the business or affairs of the Company, Parent or Merger Subsidiary, including this Agreement and the Merger Agreement and the transactions contemplated hereby and thereby, without the prior written consent of the Company. Each Shareholder hereby (i) consents to and authorizes the publication and disclosure by Parent or the Company of such Shareholder’s identity and holding of such Shareholder’s Covered Shares, and the nature of such Shareholder’s commitments, arrangements and understandings under this Agreement, and any other information that Parent and the Company reasonably determine to be necessary or desirable in any press release or any other disclosure document in connection with the Merger or any other transactions contemplated by the Merger Agreement and (ii) agrees as promptly as practicable to notify the Company of any required corrections with respect to any written information supplied by such Shareholder specifically for use in any such disclosure document.

(d)     Additional Owned Shares. Each Shareholder hereby agrees to notify the Company promptly in writing of the number and description of any Additional Owned Shares of such Shareholder or its Affiliates.

5.      Representations and Warranties of Shareholders. Each Shareholder hereby represents and warrants, severally and not jointly, to the Company and the Company Stockholder as follows:

(a)     Title. Such Shareholder is the sole record and beneficial owner of the shares of Parent Common Stock set forth on Schedule I (the “Disclosed Owned Shares”). The Disclosed Owned Shares constitute all of the capital stock and any other equity securities of the Parent owned of record or beneficially by such Shareholder and its Affiliates on the date hereof and neither such Shareholder nor any of its Affiliates is the beneficial owner of, or has any right to acquire (whether currently, upon lapse of time, following the satisfaction of any conditions, upon the occurrence of any event or any combination of the foregoing) any shares of Parent Common Stock or any other equity securities of Parent or any securities convertible into or exchangeable or exercisable for shares of Parent Common Stock or such other equity securities, in each case other than the Disclosed Owned Shares. Such Shareholder has sole voting power, sole power of disposition and sole power to issue instructions with respect to the matters set forth in Sections 3 and 4 hereof and all other matters set forth in this Agreement, in each case with respect to all of the Owned Shares with no limitations, qualifications or restrictions on such rights, subject to applicable securities laws and the terms of this Agreement. Except as permitted by this Agreement including, without limitation, the provisions of Section 3(c) above, the Owned Shares and the certificates representing such shares, if any, are now, and at all times during the Restricted Period will be, held by such Shareholder, or by a nominee or custodian for the benefit of such Shareholder, free and clear of any and all liens, pledges, claims, options, proxies, voting trusts or agreements, security interests, understandings or arrangements or any other encumbrances whatsoever on title, transfer or exercise of any rights of a shareholder in respect of the Owned Shares (other than as created by this Agreement).

(b)     Organization and Qualification. If such Shareholder is not an individual, such Shareholder is duly organized and validly existing in good standing under the laws of the state of its organization.

(c)     Authority. Such Shareholder has all necessary power and authority and legal capacity to execute, deliver and perform all of such Shareholder’s obligations under this Agreement, and consummate the transactions contemplated hereby, and no other proceedings or actions on the part of such Shareholder, or its governing body, are necessary to authorize the execution, delivery or performance of this Agreement or the consummation of the transactions contemplated hereby.

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(d)     Due Execution and Delivery. This Agreement has been duly and validly executed and delivered by such Shareholder and, assuming due authorization, execution and delivery hereof by the other parties hereto, constitutes a legal, valid and binding agreement of such Shareholder, enforceable against such Shareholder in accordance with its terms. If such Shareholder is married, and any of such Shareholder’s Covered Shares constitute community property or spousal approval is otherwise necessary for this Agreement to be legal, binding and enforceable, this Agreement has been duly authorized, executed and delivered by, and constitutes the legal, valid and binding obligation of, such Shareholder’s spouse, enforceable against such Shareholder’s spouse in accordance with its terms.

(e)     No Filings; No Conflict or Default. Except for filings under the Exchange Act, no filing with, and no permit, authorization, consent or approval of, any Governmental Authority or any other person is necessary for the execution and delivery of this Agreement by such Shareholder, the consummation by such Shareholder of the transactions contemplated hereby and the compliance by such Shareholder with the provisions hereof. None of the execution and delivery of this Agreement by such Shareholder, the consummation by such Shareholder of the transactions contemplated hereby or compliance by such Shareholder with any of the provisions hereof will (i) result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any third party right of termination, cancellation, modification or acceleration) under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, permit, contract, commitment, arrangement, understanding, agreement or other instrument or obligation of any kind, including any voting agreement, proxy arrangement, pledge agreement, shareholders agreement or voting trust, to which such Shareholder is a party or by which such Shareholder or any of such Shareholder’s properties or assets may be bound, (ii) violate any judgment, order, writ, injunction, decree or award of any court, administrative agency or other Governmental Authority that is applicable to such Shareholder or any of such Shareholder’s properties or assets, (iii) constitute a violation by such Shareholder of any law or regulation of any jurisdiction, (iv) render any state takeover statute or similar statute or regulation, applicable to the Merger or any other transaction involving the Company, or (v) if applicable, contravene or conflict with such Shareholder’s certificate of incorporation and bylaws, trust agreement or other organizational documents, in each case, except for any conflict, breach, default or violation described above which would not adversely affect the ability of such Shareholder to perform its obligations hereunder or consummate the transactions contemplated hereby.

(f)     No Litigation. There is no suit, claim, action, investigation or proceeding pending or, to the knowledge of such Shareholder, threatened against such Shareholder at law or in equity before or by any Governmental Authority that could reasonably be expected to impair the ability of such Shareholder to perform its obligations hereunder or consummate the transactions contemplated hereby.

(g)     No Fees. No broker, investment banker, financial advisor or other person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of such Shareholder.

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(h)     Receipt; Reliance. Such Shareholder has received and reviewed a copy of the Merger Agreement. Such Shareholder understands and acknowledges that the Company and the Company Stockholder are entering into the Merger Agreement in reliance upon such Shareholder’s execution, delivery and performance of this Agreement.

6.      Term. The term of this Agreement shall commence on the date hereof and shall continue in effect until, and shall automatically terminate on, the earlier of (i) the Effective Time and (ii) the effective date of termination of the Merger Agreement in accordance with its terms; provided that (A) nothing herein shall relieve any party hereto from liability for any breach of this Agreement and (B) this Section 6 and Section 8 shall survive any termination of this Agreement.

7.      No Limitation. Nothing in this Agreement shall be construed to prohibit any Shareholder or any Shareholder’s Representatives who is an officer or member of the Board of Directors of Parent from taking any action solely in his or her capacity as an officer or member of the Board of Directors of Parent or from taking any action with respect to any Acquisition Proposal as an officer or member of such Board of Directors.

8.      Miscellaneous.

(a)     Entire Agreement. This Agreement (together with Schedule I) constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, among the parties hereto with respect to the subject matter hereof.

(b)     Reasonable Efforts. Subject to the terms and conditions of this Agreement, each of the parties hereto agrees to use all reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws to consummate and make effective the transactions contemplated hereby. At any other party’s reasonable request and without further consideration, each party hereto shall execute and deliver such additional documents and take all such further lawful action as may be necessary or desirable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated hereby.

(c)     No Assignment. This Agreement shall not be assigned by operation of law or otherwise without the prior written consent of the other parties hereto; provided that the Company may assign its rights and obligations hereunder to any of its Subsidiaries, but no such assignment shall relieve the Company of its obligations hereunder.

(d)     Binding Successors. Without limiting any other rights the Company may have hereunder in respect of any Transfer of any Shareholder’s Covered Shares, each Shareholder agrees that this Agreement and the obligations hereunder shall attach to such Shareholder’s Covered Shares beneficially owned by such Shareholder and its Affiliates and shall be binding upon any person to which legal or beneficial ownership of such Shareholder’s Covered Shares shall pass, whether by operation of law or otherwise, including, without limitation, such Shareholder’s heirs, guardians, administrators, representatives or successors.

7 

(e)     Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly received) (i) upon receipt, if delivered personally or by first class mail, postage pre-paid, (ii) on the date of transmission, if sent by facsimile transmission (with confirmation of receipt), or (iii) on the Business Day after dispatch, if sent by nationally recognized, documented overnight delivery service, as follows:

If to any Shareholder:

At the address and facsimile number set forth against such Shareholder’s name on Schedule I hereto.

If to Parent:

Lakes Entertainment, Inc.

130 Cheshire Lane

Minnetonka, MN 55305

Attn: Timothy Cope and Damon Schramm

Email: tcope@lakesentertainment.com; dschramm@lakesentertainment.com

Fax: (952) 449-9353

Copy to (which shall not constitute notice):

Gray, Plant, Mooty, Mooty & Bennett, P.A.

500 IDS Center

80 South Eighth Street

Minneapolis, MN 55402

Attn: Daniel R. Tenenbaum

Email: Daniel.Tenenbaum@gpmlaw.com

Fax: (612) 632-4050

If to the Company:

Sartini Gaming, Inc.

6595 S Jones Blvd
Las Vegas, NV 89118
Attn: Matthew Flandermeyer
Fax: (702) 891-4201

Copy to (which shall not constitute notice):

Latham & Watkins LLP

12670 High Bluff Dr.

San Diego, CA 92130

Attn: Barry M. Clarkson

Fax: (858) 523-5450

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or to such other address or facsimile number as the person to whom notice is given may have previously furnished to the other parties hereto in writing in the manner set forth above.

(f)     Consent Required to Amend, Terminate or Waive. This Agreement may be amended or terminated and the observance of any term hereof may be waived (either generally or in a particular instance and either retroactively or prospectively) only by a written instrument executed by (i) Parent, (ii) the Company and (iii) Shareholders holding a majority of the total number of Covered Shares then held by the Shareholders. Notwithstanding the foregoing:

 (i)     this Agreement may not be amended or terminated and the observance of any term of this Agreement may not be waived with respect to any Shareholder without the written consent of such Shareholder unless such amendment, termination or waiver applies to all Shareholders in the same fashion; and

 (ii)    any provision hereof may be waived by the waiving party on such party’s own behalf, without the consent of any other party.

Parent shall give reasonably prompt written notice of any amendment, termination or waiver hereunder to any Shareholder that did not consent in writing thereto. Any amendment, termination or waiver effected in accordance with this Section 8(f) shall be binding on each party and all of such party’s successors and permitted assigns, whether or not any such party, successor or assignee entered into or approved such amendment, termination or waiver.

(g)     Severability. This Agreement shall be deemed severable; the invalidity, illegality or unenforceability of any term or provision of this Agreement shall not affect the validity, legality or enforceability of the balance of this Agreement or of any other term hereof, which shall remain in full force and effect. If any of the provisions hereof are determined to be invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible.

(h)     Remedies. All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise of any such right, power or remedy by any party hereto shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party.

(i)     Specific Performance. Each party acknowledges and agrees that each party hereto will be irreparably damaged in the event that any of the provisions of this Agreement are not performed by the parties in accordance with their specific terms or are otherwise breached, and that each such party would not have an adequate remedy at law for money damages in such event. Accordingly, it is agreed that the Company, Parent and each Shareholder, without posting any bond or other undertaking, shall be entitled to an injunction to prevent breaches of this Agreement, and to specific enforcement of this Agreement and its terms and provisions in any action instituted in any court of the United States or any state having subject matter jurisdiction, this being in addition to any other remedy which any such party is entitled at law or in equity.

9 

(j)     No Waiver. The failure of any party hereto to exercise any right, power or remedy provided under this Agreement or otherwise available in respect hereof at law or in equity, or to insist upon compliance by any other party hereto with such party’s obligations hereunder, and any custom or practice of the parties at variance with the terms hereof, shall not constitute a waiver by such party of such party’s right to exercise any such or other right, power or remedy or to demand such compliance.

(k)    No Third Party Beneficiaries. This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to confer upon any other person any rights or remedies of any nature whatsoever under or by reason of this Agreement.

(l)     Governing Law. This Agreement, and all matters arising hereunder or in connection herewith, shall be governed by, and construed in accordance with, the internal laws of the State of Minnesota without giving effect to the principles of conflict of laws.

(m)   Submission to Jurisdiction. Each party to this Agreement hereby irrevocably and unconditionally (i) consents to the submission to the exclusive jurisdiction of the courts of the State of Minnesota sitting in Hennepin County or in the absence of jurisdiction, of any federal court sitting in Hennepin County in the State of Minnesota for any actions, suits or proceedings arising out of or relating to this Agreement or the transaction contemplated hereby, (ii) agrees not to commence any action, suit or proceeding relating thereto except in such courts and in accordance with the provisions of this Agreement, (iii) agrees that service of any process, summons, notice or document by U.S. registered mail, or otherwise in the manner provided for notices in Section 8(f) hereof, shall be effective service of process for any such action, suit or proceeding brought against it in any such court, (iv) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any such action, suit or proceeding in such courts and (v) agrees not to plead or claim in any court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum. Each of the parties hereto agrees that a final judgment in any such action, suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

(n)     Waiver of Jury Trial. EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (C) IT MAKES SUCH WAIVERS VOLUNTARILY AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10(m).

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(o)    Interpretation. The descriptive headings used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. The words “include,” “includes” and “including” shall be deemed to be followed by “without limitation” whether or not they are in fact followed by such words or words of like import. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. No provision of this Agreement shall be interpreted for or against any party hereto because that party or its legal representatives drafted the provision. The words “hereof,” “hereto,” “hereby,” “herein,” “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not any particular section in which such words appear.

(p)    Further Assurances. At any time or from time to time after the date hereof, the parties agree to cooperate with each other, and at the request of any other party, to execute and deliver any further instruments or documents and to take all such further action as the other party may reasonably request in order to evidence or effectuate the consummation of the transactions contemplated hereby and to otherwise carry out the intent of the parties hereunder.

(q)    Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

(r)     Expenses. Except as otherwise provided herein, each party shall pay such party’s own expenses incurred in connection with this Agreement.

(s)    Spousal Consent. If any individual Shareholder is married on the date of this Agreement and is a resident of Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin or the Commonwealth of Puerto Rico, such Shareholder’s spouse shall execute and deliver to Parent a consent of spouse in the form of Exhibit A hereto (“Consent of Spouse”), effective on the date hereof. If any individual Shareholder should marry or remarry subsequent to the date of this Agreement and, at such time, is a resident of Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin, such Shareholder shall within 30 days thereafter obtain his/her new spouse’s acknowledgement of and consent to the existence and binding effect of all restrictions contained in this Agreement by causing such spouse to execute and deliver a Consent of Spouse acknowledging the restrictions and obligations contained in this Agreement and agreeing and consenting to the same. Notwithstanding the execution and delivery thereof, such consent shall not be deemed to confer or convey to the spouse any rights in such Shareholder’s Covered Shares that do not otherwise exist by operation of law or the agreement of the parties.

(t)     No Ownership Interest. Nothing contained in this Agreement shall be deemed, upon execution, to vest in the Company or Parent any direct or indirect ownership or incidence of ownership of or with respect to any Shareholder’s Covered Shares. All rights, ownership and economic benefits of and relating to each Shareholder’s Covered Shares shall remain vested in and belong to such Shareholder, and neither the Company nor Parent shall have any authority to or exercise any power or authority to direct any Shareholder in the voting of any of such Shareholder’s Covered Shares, except as otherwise provided herein.

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[Signature Pages Follow]

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IN WITNESS WHEREOF, each of the parties hereto have caused this Voting and Support Agreement to be duly executed as of the day and year first above written.

LAKES ENTERTAINMENT, INC.
By:	/s/ Timothy Cope
Name: Timothy Cope
Title: President/CFO
SARTINI GAMING, INC.
By:	/s/ Blake L. Sartini
Name: Blake L. Sartini
Title: Chief Executive Officer

IN WITNESS WHEREOF, each of the parties hereto have caused this Voting and Support Agreement to be duly executed as of the day and year first above written.

LYLE A. BERMAN
	/s/ Lyle A. Berman
BERMAN CONSULTING CORPORATION
By:	/s/ Lyle A. Berman
Name: Lyle A. Berman
Title: President, CEO, CFO

BERMAN CONSULTING CORPORATION PROFIT SHARING PLAN
By:	/s/ Lyle A. Berman
Name: Lyle A. Berman
Title: Sole Proprietor
LYLE A. BERMAN REVOCABLE TRUST
By:	/s/ Lyle A. Berman
Name:     Lyle A. Berman
Title:      Trustee

IN WITNESS WHEREOF, each of the parties hereto have caused this Voting and Support Agreement to be duly executed as of the day and year first above written.

BRADLEY BERMAN IRREVOCABLE TRUST
By:	/s/ Neil I. Sell
Name:     Neil I. Sell
Title:      Trustee

JULIE BERMAN IRREVOCABLE TRUST
By:	/s/ Neil I. Sell
Name:     Neil I. Sell
Title:      Trustee

AMY BERMAN IRREVOCABLE TRUST
By:	/s/ Neil I. Sell
Name:     Neil I. Sell
Title:      Trustee

JESSIE LYNN BERMAN IRREVOCABLE TRUST
By:	/s/ Neil I. Sell
Name:     Neil I. Sell
Title:      Trustee

SCHEDULE I

Name and Contact Information for Shareholder	Number of Shares of Parent Common Stock Beneficially Owned as of the Date Hereof
Lyle A. Berman One Hughes Center Drive, Unit 606 Las Vegas, NV 89169 Email: lberman@lakesentertainment.com Fax: (952) 449-7033	211,739
Berman Consulting Corporation One Hughes Center Drive, Unit 606 Las Vegas, NV 89169 Attention: Lyle Berman, President Email: lberman@lakesentertainment.com Fax: (952) 449-7033	211,403
Berman Consulting Corporation Profit Sharing Plan One Hughes Center Drive, Unit 606 Las Vegas, NV 89169 Attention: Lyle Berman Email: lberman@lakesentertainment.com Fax: (952) 449-7033	161,500
Lyle A. Berman Revocable Trust One Hughes Center Drive, Unit 606 Las Vegas, NV 89169 Attention: Lyle Berman, Trustee Email: lberman@lakesentertainment.com Fax: (952) 449-7033	1,830,833

Bradley Berman Irrevocable Trust Maslon Edelman Borman & Brand, LLP 3300 Wells Fargo Center 90 South Seventh Street Minneapolis, MN 55402 Attention: Neil I. Sell, Trustee Email: Neil.Sell@maslon.com Fax: (612) 642-8337 and/or 554 Canosa Ave. Las Vegas NV 89104 Attn: Douglas Dalton, Trustee Email: dldpoker702@gmail.com Fax: N/A	334,425
Julie Berman Irrevocable Trust Maslon Edelman Borman & Brand, LLP 3300 Wells Fargo Center 90 South Seventh Street Minneapolis, MN 55402 Attention: Neil I. Sell, Trustee Email: Neil.Sell@maslon.com Fax: (612) 642-8337 and/or 554 Canosa Ave. Las Vegas NV 89104 Attn: Douglas Dalton, Trustee Email: dldpoker702@gmail.com Fax: N/A	334,425

Amy Berman Irrevocable Trust Maslon Edelman Borman & Brand, LLP 3300 Wells Fargo Center 90 South Seventh Street Minneapolis, MN 55402 Attention: Neil I. Sell, Trustee Email: Neil.Sell@maslon.com Fax: (612) 642-8337 and/or 554 Canosa Ave. Las Vegas NV 89104 Attn: Douglas Dalton, Trustee Email: dldpoker702@gmail.com Fax: N/A	293,172
Jessie Lynn Berman Irrevocable Trust Maslon Edelman Borman & Brand, LLP 3300 Wells Fargo Center 90 South Seventh Street Minneapolis, MN 55402 Attention: Neil I. Sell, Trustee Email: Neil.Sell@maslon.com Fax: (612) 642-8337 and/or 554 Canosa Ave. Las Vegas NV 89104 Attn: Douglas Dalton, Trustee Email: dldpoker702@gmail.com Fax: N/A	293,172
	293,172

EXHIBIT A

CONSENT OF SPOUSE

I, ____________________, spouse of ______________, acknowledge that I have read the Voting and Support Agreement, dated as of __________________, 2015, to which this Consent is attached as Exhibit A (the “Agreement”), and that I know the contents of the Agreement. I am aware that the Agreement contains provisions regarding the voting and transfer of shares of capital stock of Parent that my spouse may own, including any interest I might have therein.

I hereby agree that my interest, if any, in any shares of capital stock of Parent subject to the Agreement shall be irrevocably bound by the Agreement and further understand and agree that any community property interest I may have in such shares of capital stock of Parent shall be similarly bound by the Agreement.

I am aware that the legal, financial and related matters contained in the Agreement are complex and that I am free to seek independent professional guidance or counsel with respect to this Consent. I have either sought such guidance or counsel or determined after reviewing the Agreement carefully that I will waive such right.

Dated:
	Name of Shareholder’s Spouse

EX-10

Exhibit 10.2

SHAREHOLDERS’ AGREEMENT

THIS Shareholders’ Agreement, (this “Agreement”), dated as of January 25, 2015, is entered into by and among Lakes Entertainment, Inc., a Minnesota corporation (“Parent”), The Blake L. Sartini and Delise F. Sartini Family Trust (the “Company Stockholder”) and each of the shareholders of Parent listed on Schedule I to this Agreement (collectively, the “Parent Shareholders” and, together with the Company Stockholder, the “Shareholders”).

WHEREAS, contemporaneously with the execution of this Agreement, Parent, LG Acquisition Corporation, a Nevada corporation and a wholly owned subsidiary of Parent (“Merger Subsidiary”), Sartini Gaming, Inc., a Nevada corporation (the “Company”) and the Company Stockholder, are entering into an Agreement and Plan of Merger, dated as of the date hereof (the “Merger Agreement”), providing, among other things, for the merger of Merger Subsidiary with and into the Company (the “Merger”);

WHEREAS, as more fully described in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), outstanding shares of the Company’s capital stock, including those held by the Company Stockholder, are being converted into the right to receive shares of common stock, $0.01 par value per share, of Parent (the “Parent Common Stock”), on the terms and conditions set forth in the Merger Agreement;

WHEREAS, as a condition of and an inducement to the Parent’s and Merger Subsidiary’s willingness to enter into the Merger Agreement, Parent and Merger Subsidiary have required that the Company Stockholder enter into this Agreement;

WHEREAS, as a condition of and an inducement to the Company’s and the Company Stockholder’s willingness to enter into the Merger Agreement, the Company and the Company Stockholder have required that Parent and the Parent Shareholders enter into this Agreement; and

WHEREAS, Parent, the Company Stockholder and each Parent Shareholder desire, for their mutual benefit and protection, to enter into this Agreement to set forth their respective rights and obligations with respect to the affairs of Parent following the Merger.

NOW, THEREFORE, in consideration of the premises and the mutual promises and covenants contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

Section 1.       Definitions. For the purposes of this Agreement, capitalized terms used and not otherwise defined herein shall have the respective meanings ascribed to them as set forth below, or if not set forth below, as set forth in the Merger Agreement:

“Additional Owned Shares” means all shares of Parent Common Stock and any other equity securities of the Parent that are (i) beneficially owned by a Shareholder or any of its Affiliates and (ii) acquired after the Effective Time and prior to the termination of this Agreement.

“Affiliate” has the meaning set forth in the Merger Agreement; provided, however, that Parent shall be deemed not to be an Affiliate of any Shareholder.

“beneficial ownership” (and related terms such as “beneficially owned” or “beneficial owner”) has the meaning set forth in Rule 13d-3 under the Exchange Act.

“Board” means the board of directors of Parent.

“Covered Shares” means, with respect to a Shareholder, such Shareholder’s Owned Shares and Additional Owned Shares.

“Director Designee” means, as of the Effective Time, the Initial Designees, and thereafter the individuals designated pursuant to and in accordance with Section 2(c).

“Independent” means, when used to describe a person, that such person qualifies as an “independent director” (as such term is defined in NASDAQ Equity Rule 5605(a)(2)) with respect to Parent and meets the minimum requirements to serve on Parent’s audit committee and compensation committee under NASDAQ Marketplace Rules, in each case as amended from time to time.

“Initial Designees” has the meaning set forth in Section 2(b).

“Margining of Shares” means the pledge of Covered Shares as collateral for indebtedness but not the subsequent exercise of rights with respect to such collateral following a call of such indebtedness.

“MBCA” means the Minnesota Business Corporation Act, as amended.

“Nominating Committee” means the Corporate Governance Committee of Parent, or any successor committee thereof responsible for the nomination of candidates for election to the Board.

“Owned Shares” means all shares of Parent Common Stock and any other equity securities of the Parent which are beneficially owned by a Shareholder or any of its Affiliates as of the Effective Time.

“Proxy” has the meaning set forth in Section 3(b).

“Transfer” means, with respect to a security, the transfer, pledge, hypothecation, encumbrance, assignment or other disposition (whether by sale, merger, consolidation, liquidation, dissolution, dividend, distribution or otherwise) of such security or the beneficial ownership thereof, the offer to make such a transfer or other disposition, and each option, agreement, arrangement or understanding, whether or not in writing, to effect any of the foregoing (other than with respect to the Margining of Shares in compliance with Section 3(f)). As a verb, “Transfer” shall have a correlative meaning.

Section 2.         Board Composition.

(a)     Size of the Board. From and after the Effective Time for the remainder of the term of this Agreement, the Board shall be comprised of seven directors.

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(b)     Board Nominees. At the Effective Time, Parent shall appoint to the Board the seven directors designated pursuant to, and in accordance with, Section 1.9 of the Merger Agreement (the “Initial Designees”). Parent shall, beginning with Parent’s 2015 annual meeting of shareholders and continuing for the term of this Agreement, subject to applicable law, include each of the Director Designees in the slate of nominees recommended by the Board to the shareholders of Parent, and included in the related Parent proxy statement (if applicable), for election to the Board at any annual or special meeting of shareholders of Parent at which directors are to be elected.

(c)     Director Designees.

 (i)     From and after the Effective Time for the remainder of the term of this Agreement:

(A)     Lyle Berman shall (I) designate Timothy Cope (or another director designated by Mr. Berman in the event that Mr. Cope is no longer willing or able to be designated for nomination) and (II) have the right to designate two (but not more than two) additional individuals, one of whom may be Mr. Berman (except as provided in Section 3 of the NOL Preservation Agreement), for nomination by the Board for election as directors of Parent (at least one of whom shall be Independent); provided, that, in the absence of any such designation, the Initial Designees appointed pursuant to Sections 1.9(b)(i) and (iii) of the Merger Agreement (or any replacement thereof designated pursuant to this Section 2(c)(i)(A)) shall be nominated if still eligible to serve;

(B)     the Company Stockholder shall have the right to designate three (but not more than three) individuals for nomination by the Board for election as directors of Parent (at least two of whom shall be Independent); provided, that, in the absence of any such designation, the Initial Designees appointed pursuant to Sections 1.9(b)(ii) and (iv) of the Merger Agreement (or any replacement thereof designated pursuant to this Section 2(c)(i)(B)) shall be nominated if still eligible to serve; and

(C)     Mr. Berman and the Company Stockholder shall have the right to jointly designate one (but not more than one) individual for nomination by the Board for election as a director of Parent (who shall be Independent); provided, that, in the absence of any such designation, the Initial Designee appointed pursuant to Section 1.9(b)(v) of the Merger Agreement (or any replacement thereof designated pursuant to this Section 2(c)(i)(C)) shall be nominated if still eligible to serve.

provided further, that, notwithstanding the foregoing, in the event that in the future Mr. Berman is unwilling or unable to provide his designees as provided above, Mr. Berman’s rights of designation pursuant to Section 2(c)(i) shall thereafter be exercised by the Nominating Committee.

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(ii)     With respect to each person designated pursuant to Section 2(c)(i), each Director Designee and the designating party shall promptly provide to the Nominating Committee completed director questionnaires and any other information that the Nominating Committee may reasonably request. In the event the Nominating Committee determines reasonably and in good faith that a Director Designee that is required to be Independent under Section 2(c)(i) is not Independent, or that any Director Designee is otherwise ineligible to serve, the Nominating Committee will inform the designating party and the Director Designee of its determination and the basis therefor in writing and in reasonable detail and will allow a reasonable opportunity for the designating party and the Director Designee to evaluate the determination, including through meetings and discussions with the Nominating Committee regarding the circumstances of the Director Designee’s Independence or eligibility to serve, as applicable. Following such discussions, if the Nominating Committee, acting reasonably and in good faith and not in any manner constrained from exercising its fiduciary duties, has not reversed its determination that the Director Designee is not Independent or is otherwise ineligible to serve, then, (x) in the case of a Director Designee who has been submitted for nomination, the designating party shall submit a replacement Director Designee for consideration by the Nominating Committee in accordance with the requirements of Section 2(c)(i) promptly after notification from the Nominating Committee that a replacement Director Designee is required, or (y) in the case of a Director Designee who is an incumbent director, such Director Designee will, if requested by the Nominating Committee, promptly tender his or her resignation from the Board, and the resulting vacancy will be filled pursuant to Section 2(c)(i) or 2(d), as applicable.

(d)     Board Vacancies. From and after the Effective Time for the remainder of the term of this Agreement, if at any time between annual meetings of shareholders of Parent, a director seat to which a Director Designee has been appointed or elected becomes vacant (whether due to the resignation, removal or death of a director), Parent shall use its commercially reasonable efforts to cause such vacancy to be filled by another Director Designee designated by the applicable designating party in accordance with Section 2(c).

(e)     Board Chairman. From and after the Effective Time for the remainder of the term of this Agreement, Parent shall, subject to applicable law and the requirements of NASDAQ, cause Blake Sartini to be elected to serve as Chairman of the Board to the extent that Mr. Sartini continues to serve as a director of Parent.  In such capacity, Mr. Sartini shall have the duties and powers commonly incident to the position of chairman of the board of a public company as specified in the By-Laws of Parent (as amended from time to time) and shall also perform such other duties and have such other powers as the Board shall designate from time to time.

(f)     No Liability for Election of Recommended Directors. No Shareholder, nor any Affiliate of any Shareholder, shall have any liability as a result of designating a person for election as a director for any act or omission by such designated person in his or her capacity as a director of Parent, nor shall any Shareholder have any liability as a result of voting for any such designee in accordance with the provisions of this Agreement.

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Section 3.        Voting Agreement.

(a)     Shareholder Vote. From and after the Effective Time for the remainder of the term of this Agreement, at any meeting of the shareholders of Parent, however called, or at any adjournment thereof, or in any other circumstance in which the vote, consent or other approval of the shareholders of Parent is sought in respect of the election or removal of directors, each Shareholder shall, and shall cause any other holder of record of its Covered Shares to, (x) appear at each such meeting or otherwise cause all of such Shareholder’s Covered Shares that it beneficially owns as of the record date for such vote to be counted as present thereat for purposes of calculating a quorum and (y) vote (or cause to be voted), or execute and deliver a written consent (or cause a written consent to be executed and delivered) covering, all of such Shareholder’s Covered Shares:

(i)      in favor of any nominee or director recommended by the Board to be nominated for election to the Board; and

(ii)      against the removal from the Board of any director previously nominated for election by the Board (unless such removal is recommended by the Board in compliance with the terms of this Agreement).

(b)     Irrevocable Proxy. Concurrently with the execution of this Agreement, each Shareholder agrees to execute and deliver to Parent an irrevocable proxy in the form attached as Exhibit A hereto (subject to the proviso to this sentence, each, a “Proxy”), which shall be irrevocable to the extent permitted by applicable law, covering all such Shareholder’s Covered Shares; provided, however, that, in the event that the number of such Shareholder’s Covered Shares are modified, including due to the acquisition of Additional Owned Shares, such Shareholder may (and, promptly upon any request by Parent, shall) execute and deliver to Parent an irrevocable proxy in the form attached as Exhibit A hereto, except that the definition of “Covered Shares” therein will be updated accordingly, and, upon delivery of such new proxy to Parent, Parent will destroy the existing Proxy and such new proxy will be deemed the Proxy for the purposes of this Agreement. Each Shareholder hereby represents to Parent that, except for the proxies pursuant to the Parent Voting Agreements, any proxies heretofore given in respect of such Shareholder’s Covered Shares are not irrevocable and that any such proxies are hereby revoked, and such Shareholder agrees to promptly notify Parent of such revocation. Each Shareholder hereby affirms that its Proxy is given in connection with the execution of the Merger Agreement and that such irrevocable proxy is given to secure the performance of the duties of such Shareholder under this Agreement. Each Shareholder hereby further affirms that its Proxy is coupled with an interest and may under no circumstances be revoked. Each Shareholder hereby ratifies and confirms all that such irrevocable proxy may lawfully do or cause to be done by virtue hereof. Without limiting the generality of the foregoing, such irrevocable proxy is executed and intended to be irrevocable in accordance with the provisions of Section 302A.449 of the MBCA. If for any reason the proxy granted herein is not irrevocable, each Shareholder agrees to vote such Shareholder’s Covered Shares in accordance with Section 3(a) hereof.

(c)     The parties agree that this Agreement is a voting agreement created under Section 302A.455 of the MBCA.

(d)     Other Matters. Except as expressly set forth in Sections 3(a), 3(b) and 3(c), the Shareholders will be entitled to vote their Covered Shares in their discretion on any other matter submitted to or acted upon by the shareholders of Parent.

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(e)     No Disposition or Adverse Act. Each Shareholder hereby covenants and agrees that, except as contemplated by this Agreement and the Merger Agreement, such Shareholder shall not (i) Transfer or enter into any agreement for or consent to any Transfer of any or all of such Shareholder’s Covered Shares or any interest therein without providing five (5) Business Days’ prior written notice of such proposed Transfer to the Parent (and, prior to the Effective Time, the Company) specifying that such Transfer complies with this Agreement and all applicable securities laws, (ii) except for the proxies granted pursuant to the Parent Voting Agreements, grant any proxy, power-of-attorney or other authorization or consent in or with respect to any or all of such Shareholder’s Covered Shares, (iii) deposit any or all of such Shareholder’s Covered Shares into a voting trust or, except for a Parent Voting Agreement, enter into a voting agreement or arrangement with respect to any or all of such Shareholder’s Covered Shares or (iv) take any other action that would in any way restrict, limit or interfere with the performance of such Shareholder’s obligations hereunder or the transactions contemplated hereby or by the Merger Agreement. Any attempted Transfer of any Shareholder’s Covered Shares or any interest therein in violation of this Section 3(e) shall be null and void. Nothing in this Section 3(e) shall prohibit a Transfer of a Shareholder’s Covered Shares by such Shareholder: (i) if such Shareholder is an individual: (A) to any member of such Shareholder’s immediate family or to a trust for the benefit of such Shareholder or any member of any such Shareholder’s immediate family, but solely for estate planning purposes; or (B) upon the death of such Shareholder; or (ii) if such Shareholder is a partnership or limited liability company, to one or more partners or members of such Shareholder or to an affiliated corporation under common control with such Shareholder; provided, however, that any Transfer referred to in this Section 3(e) shall be permitted only if the transferee agrees in writing, reasonably satisfactory in form and substance to the Parent (and, prior to the Effective Time, the Company), to be bound by the terms of this Agreement. Notwithstanding the foregoing limitations, after receipt of the Parent Shareholder Approval, any Shareholder will be permitted, subject to compliance with any other contract or agreement executed by such Shareholder in connection with the Merger Agreement, including the NOL Preservation Agreement and that certain Voting and Support Agreement, dated as of even date with, by and among Parent, the Parent Shareholders and the Company, at any time and from time to time to Transfer Shareholder’s Covered Shares pursuant to a bona fide sale into the public market in compliance with applicable securities laws.

(f)     Margining of Shares. Each Shareholder hereby agrees that it shall not at any time pledge any Covered Shares held by it other than the pledge of up to 25% of the total value as of the time of such pledge of any Covered Shares held by it as of record as collateral for indebtedness, subject to compliance with the Second Amended and Restated Lakes Entertainment, Inc. Policy on Avoidance of Insider Trading.

Section 4.     Additional Agreements.

(a)     Certain Events. In the event of any stock split, stock dividend, merger, reorganization, recapitalization or other change in the capital structure of Parent affecting any Shareholder’s Covered Shares or the acquisition of Additional Owned Shares or other securities or rights of Parent by any Shareholder or any of its Affiliates, (i) the type and number of such Shareholder’s Covered Shares shall be adjusted appropriately and (ii) this Agreement and the obligations hereunder shall automatically attach to any additional Covered Shares or other securities or rights of Parent issued to or acquired by such Shareholder or any of its Affiliates.

(b)     Additional Owned Shares. Each Shareholder hereby agrees to notify Parent promptly in writing of the number and description of any Additional Owned Shares of such Shareholder or its Affiliates (other than Additional Owned Shares issued to such Shareholder by Parent).

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Section 5.       Term. This Agreement shall be effective as of the date hereof and shall continue in effect until, and shall automatically terminate on, the earlier of (i) the effective date of termination of the Merger Agreement in accordance with its terms prior to the Effective Time and (ii) the date that is three years after the Effective Time; provided, that (A) nothing herein shall relieve any party hereto from liability for any breach of this Agreement and (B) this Section 5 and Section 6 shall survive any termination of this Agreement.

Section 6.       Miscellaneous.

(a)     Entire Agreement. This Agreement (together with Schedule I and Exhibit A) and the Proxies constitute the entire agreement among the parties hereto with respect to the subject matter hereof and supersede all other prior agreements and understandings, both written and oral, among the parties hereto with respect to the subject matter hereof.

(b)     Reasonable Efforts. Subject to the terms and conditions of this Agreement, each of the parties hereto agrees to use all reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws to consummate and make effective the transactions contemplated hereby. At any other party’s reasonable request and without further consideration, each party hereto shall execute and deliver such additional documents and take all such further lawful action as may be necessary or desirable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated hereby. Without limiting the foregoing, each Shareholder shall execute and deliver to the Parent and any of its designees any additional proxies, including with respect to its Additional Owned Shares, reasonably requested by the Parent in furtherance of this Agreement.

(c)     Assignment; Parties in Interest. A Shareholder shall not assign any of such Shareholder’s rights under this Agreement, in whole or in part, to any Person, without first obtaining the prior written consent of Parent (acting with the approval of its chief executive officer or the Board); provided, however, that prior to the Effective Time of the Merger, any such assignment may only be made with the prior written consent of the Company, which is an express third party beneficiary of this Agreement. This Agreement shall be binding upon and inure solely to the benefit of the Parties and their respective successors and assigns, and except as provided elsewhere in this Agreement and in this Section 6(c) with respect to the Company, nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

(d)     Binding Successors. Without limiting any other rights Parent may have hereunder in respect of any Transfer of any Shareholder’s Covered Shares, each Shareholder agrees that this Agreement and such Shareholder’s Proxy and the obligations hereunder and thereunder shall attach to such Shareholder’s Covered Shares beneficially owned by such Shareholder and its Affiliates and shall be binding upon any person to which legal or beneficial ownership of such Shareholder’s Covered Shares shall pass, whether by operation of law or otherwise, including, without limitation, such Shareholder’s heirs, guardians, administrators, representatives or successors.

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(e)     Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly received) (i) upon receipt, if delivered personally or by first class mail, postage pre-paid, (ii) on the date of transmission, if sent by facsimile transmission (with confirmation of receipt), or (iii) on the Business Day after dispatch, if sent by nationally recognized, documented overnight delivery service, as follows:

If to the Company Stockholder:

The Blake L. Sartini and Delise F. Sartini Family Trust

6595 S Jones Blvd
Las Vegas, NV 89118

Attn: Joe Stone

Fax: (702) 891-4289

If to any Parent Shareholder:

At the address and facsimile number set forth against such Parent Shareholder’s name on Schedule I hereto.

If to Parent (prior to the Effective Time):

Lakes Entertainment, Inc.

130 Cheshire Lane

Minnetonka, MN 55305

Attn: Timothy Cope and Damon Schramm

Email: tcope@lakesentertainment.com; dschramm@lakesentertainment.com

Fax: (952) 449-7068

Copy to (which shall not constitute notice):

Gray, Plant, Mooty, Mooty & Bennett, P.A.

500 IDS Center

80 South Eighth Street

Minneapolis, MN 55402

Attn: Daniel R. Tenenbaum

Email: Daniel.Tenenbaum@gpmlaw.com

Fax: (612) 632-4050

If to Parent (after the Effective Time):

Golden Entertainment, Inc.

6595 S Jones Blvd
Las Vegas, NV 89118

Attn: Matthew Flandermeyer

Fax: (702) 891-4201

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or to such other address or facsimile number as the person to whom notice is given may have previously furnished to the other parties hereto in writing in the manner set forth above.

(f)     Consent Required to Amend, Terminate or Waive. This Agreement may be amended or terminated and the observance of any term hereof may be waived (either generally or in a particular instance and either retroactively or prospectively) only by a written instrument executed by (i) Parent, (ii) the Company Stockholder and (iii) Parent Shareholders holding a majority of the total number of Covered Shares then held by the Parent Shareholders. Notwithstanding the foregoing:

(i)     this Agreement may not be amended or terminated and the observance of any term of this Agreement may not be waived with respect to any Parent Shareholder without the written consent of such Parent Shareholder unless such amendment, termination or waiver applies to all Parent Shareholders in the same fashion; and

  (ii)     any provision hereof may be waived by the waiving party on such party’s own behalf, without the consent of any other party.

Parent shall give reasonably prompt written notice of any amendment, termination or waiver hereunder to any Parent Shareholder that did not consent in writing thereto. Any amendment, termination or waiver effected in accordance with this Section 6(f) shall be binding on each party and all of such party’s successors and permitted assigns, whether or not any such party, successor or assignee entered into or approved such amendment, termination or waiver.

(g)     Severability. This Agreement shall be deemed severable; the invalidity, illegality or unenforceability of any term or provision of this Agreement shall not affect the validity, legality or enforceability of the balance of this Agreement or of any other term hereof, which shall remain in full force and effect. If any of the provisions hereof are determined to be invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible.

(h)     Remedies. All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise of any such right, power or remedy by any party hereto shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party.

(i)     Specific Performance. Each party acknowledges and agrees that each party hereto will be irreparably damaged in the event any of the provisions of this Agreement are not performed by the parties in accordance with their specific terms or are otherwise breached, and that such party would not have an adequate remedy at law for money damages in such event. Accordingly, it is agreed that Parent and each Shareholder, without posting any bond or other undertaking, shall be entitled to an injunction to prevent breaches of this Agreement, and to specific enforcement of this Agreement and its terms and provisions in any action instituted in any court of the United States or any state having subject matter jurisdiction, this being in addition to any other remedy which any such party is entitled at law or in equity.

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(j)     No Waiver. The failure of any party hereto to exercise any right, power or remedy provided under this Agreement or otherwise available in respect hereof at law or in equity, or to insist upon compliance by any other party hereto with such party’s obligations hereunder, and any custom or practice of the parties at variance with the terms hereof, shall not constitute a waiver by such party of such party’s right to exercise any such or other right, power or remedy or to demand such compliance.

(k)     Governing Law. This Agreement, and all matters arising hereunder or in connection herewith, shall be governed by, and construed in accordance with, the internal laws of the State of Minnesota without giving effect to the principles of conflict of laws.

(l)     Submission to Jurisdiction. Each party to this Agreement hereby irrevocably and unconditionally (i) consents to the submission to the exclusive jurisdiction of the courts of the State of Minnesota sitting in Hennepin County or in the absence of jurisdiction, of any federal court sitting in Hennepin County in the State of Minnesota for any actions, suits or proceedings arising out of or relating to this Agreement or the transaction contemplated hereby, (ii) agrees not to commence any action, suit or proceeding relating thereto except in such courts and in accordance with the provisions of this Agreement, (iii) agrees that service of any process, summons, notice or document by U.S. registered mail, or otherwise in the manner provided for notices in Section 6(f) hereof, shall be effective service of process for any such action, suit or proceeding brought against it in any such court, (iv) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any such action, suit or proceeding in such courts and (v) agrees not to plead or claim in any court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum. Each of the parties hereto agrees that a final judgment in any such action, suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

(m)     Waiver of Jury Trial. EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (C) IT MAKES SUCH WAIVERS VOLUNTARILY AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 6(m).

(n)     No Limitation. Nothing in this Agreement shall be construed to prohibit Mr. Sartini, Mr. Berman, any Director Designee or other person who is an officer or member of the Board from taking any action solely in his or her capacity as an officer or member of the Board or from taking any action consistent with his or her fiduciary duties in such capacity.

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(o)    Interpretation. The descriptive headings used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. The words “include,” “includes” and “including” shall be deemed to be followed by “without limitation” whether or not they are in fact followed by such words or words of like import. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. No provision of this Agreement shall be interpreted for or against any party hereto because that party or its legal representatives drafted the provision. The words “hereof,” “hereto,” “hereby,” “herein,” “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not any particular section in which such words appear.

(p)    Further Assurances. At any time or from time to time after the date hereof, the parties agree to cooperate with each other, and at the request of any other party, to execute and deliver any further instruments or documents and to take all such further action as the other party may reasonably request in order to evidence or effectuate the consummation of the transactions contemplated hereby and to otherwise carry out the intent of the parties hereunder.

(q)    Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

(r)     Expenses. Each party shall pay such party’s own expenses incurred in connection with this Agreement.

(s)    Spousal Consent. If any individual Shareholder is married on the date of this Agreement and is a resident of Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin or the Commonwealth of Puerto Rico, such Shareholder’s spouse shall execute and deliver to Parent a consent of spouse in the form of Exhibit B hereto (“Consent of Spouse”), effective on the date hereof. If any individual Shareholder should marry or remarry subsequent to the date of this Agreement and, at such time, is a resident of Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin, such Shareholder shall within 30 days thereafter obtain his/her new spouse’s acknowledgement of and consent to the existence and binding effect of all restrictions contained in this Agreement by causing such spouse to execute and deliver a Consent of Spouse acknowledging the restrictions and obligations contained in this Agreement and agreeing and consenting to the same. Notwithstanding the execution and delivery thereof, such consent shall not be deemed to confer or convey to the spouse any rights in such Shareholder’s Covered Shares that do not otherwise exist by operation of law or the agreement of the parties.

(t)     No Ownership Interest. Nothing contained in this Agreement shall be deemed, upon execution, to vest in Parent any direct or indirect ownership or incidence of ownership of or with respect to any Shareholder’s Covered Shares. All rights, ownership and economic benefits of and relating to each Shareholder’s Covered Shares shall remain vested in and belong to such Shareholder, and Parent shall have no authority to or exercise any power or authority to direct any Shareholder in the voting of any of such Shareholder’s Covered Shares, except as otherwise provided herein.

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[Signature Pages Follow]

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IN WITNESS WHEREOF, the parties hereto have duly executed this Shareholders’ Agreement as of the date first above written.

LAKES ENTERTAINMENT, INC.
By:	/s/ Timothy Cope
	Name: Timothy Cope
	Title: President/CFO
THE BLAKE L. SARTINI AND DELISE F. SARTINI FAMILY TRUST
By:	/s/ Blake L. Sartini
Blake L. Sartini
Trustee
By:	/s/ Delise F. Sartini
Delise F. Sartini
Trustee

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IN WITNESS WHEREOF, the parties hereto have duly executed this Shareholders’ Agreement as of the date first above written.

/s/ Lyle A. Berman                                

Lyle A. Berman

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IN WITNESS WHEREOF, the parties hereto have duly executed this Shareholders’ Agreement as of the date first above written.

BERMAN CONSULTING CORPORATION
By:	/s/ Lyle A. Berman
	Name:	Lyle A. Berman
	Title:	President, CEO, CFO

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IN WITNESS WHEREOF, the parties hereto have duly executed this Shareholders’ Agreement as of the date first above written.

BERMAN CONSULTING CORPORATION PROFIT SHARING PLAN
By:	/s/ Lyle A. Berman
	Name:	Lyle A. Berman
	Title:	Sole Proprietor

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IN WITNESS WHEREOF, the parties hereto have duly executed this Shareholders’ Agreement as of the date first above written.

LYLE A. BERMAN REVOCABLE TRUST
By:	/s/ Lyle A. Berman
	Name:	Lyle A. Berman
	Title:	Trustee

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IN WITNESS WHEREOF, the parties hereto have duly executed this Shareholders’ Agreement as of the date first above written.

BRADLEY BERMAN IRREVOCABLE TRUST
By:	/s/ Neil I. Sell
	Name:	Neil I. Sell
	Title:	Trustee

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IN WITNESS WHEREOF, the parties hereto have duly executed this Shareholders’ Agreement as of the date first above written.

JULIE BERMAN IRREVOCABLE TRUST
By:	/s/ Neil I. Sell
	Name:	Neil I. Sell
	Title:	Trustee

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IN WITNESS WHEREOF, the parties hereto have duly executed this Shareholders’ Agreement as of the date first above written.

AMY BERMAN IRREVOCABLE TRUST
By:	/s/ Neil I. Sell
	Name:	Neil I. Sell
	Title:	Trustee

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IN WITNESS WHEREOF, the parties hereto have duly executed this Shareholders’ Agreement as of the date first above written.

JESSIE LYNN BERMAN IRREVOCABLE TRUST
By:	/s/ Neil I. Sell
	Name:	Neil I. Sell
	Title:	Trustee

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SCHEDULE I

Name and Contact Information for Shareholder	Number of Shares of Parent Common Stock Beneficially Owned as of the Date Hereof
Lyle A. Berman One Hughes Center Drive, Unit 606 Las Vegas, NV 89169 Email: lberman@lakesentertainment.com Fax: (952) 449-7033	211,739
Berman Consulting Corporation One Hughes Center Drive, Unit 606 Las Vegas, NV 89169 Attention: Lyle Berman, President Email: lberman@lakesentertainment.com Fax: (952) 449-7033	211,403
Berman Consulting Corporation Profit Sharing Plan One Hughes Center Drive, Unit 606 Las Vegas, NV 89169 Attention: Lyle Berman Email: lberman@lakesentertainment.com Fax: (952) 449-7033	161,500
Lyle A. Berman Revocable Trust One Hughes Center Drive, Unit 606 Las Vegas, NV 89169 Attention: Lyle Berman, Trustee Email: lberman@lakesentertainment.com Fax: (952) 449-7033	1,830,833

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Bradley Berman Irrevocable Trust Maslon Edelman Borman & Brand, LLP 3300 Wells Fargo Center 90 South Seventh Street Minneapolis, MN 55402 Attention: Neil I. Sell, Trustee Email: Neil.Sell@maslon.com Fax: (612) 642-8337 and/or 554 Canosa Ave. Las Vegas NV 89104 Attn: Douglas Dalton, Trustee Email: dldpoker702@gmail.com Fax: N/A	334,425
Julie Berman Irrevocable Trust Maslon Edelman Borman & Brand, LLP 3300 Wells Fargo Center 90 South Seventh Street Minneapolis, MN 55402 Attention: Neil I. Sell, Trustee Email: Neil.Sell@maslon.com Fax: (612) 642-8337 and/or 554 Canosa Ave. Las Vegas NV 89104 Attn: Douglas Dalton, Trustee Email: dldpoker702@gmail.com Fax: N/A	334,425

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Amy Berman Irrevocable Trust Maslon Edelman Borman & Brand, LLP 3300 Wells Fargo Center 90 South Seventh Street Minneapolis, MN 55402 Attention: Neil I. Sell, Trustee Email: Neil.Sell@maslon.com Fax: (612) 642-8337 and/or 554 Canosa Ave. Las Vegas NV 89104 Attn: Douglas Dalton, Trustee Email: dldpoker702@gmail.com Fax: N/A	293,172
Jessie Lynn Berman Irrevocable Trust Maslon Edelman Borman & Brand, LLP 3300 Wells Fargo Center 90 South Seventh Street Minneapolis, MN 55402 Attention: Neil I. Sell, Trustee Email: Neil.Sell@maslon.com Fax: (612) 642-8337 and/or 554 Canosa Ave. Las Vegas NV 89104 Attn: Douglas Dalton, Trustee Email: dldpoker702@gmail.com Fax: N/A	293,172

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EXHIBIT A

FORM OF IRREVOCABLE PROXY

Effective as of the Effective Time (as defined below), the undersigned shareholder (“Shareholder”) of Lakes Entertainment, Inc., a Minnesota corporation (to be renamed Golden Entertainment, Inc. at the Effective Time, “Parent”), hereby (i) irrevocably grants to, and appoints, Parent, and any person designated in writing by Parent, and each of them individually, as Shareholder’s proxy and attorney-in-fact (with full power of substitution), for and in the name, place and stead of Shareholder, to vote all of Shareholder’s Covered Shares or grant a consent or approval in respect of Shareholder’s Covered Shares, in accordance with the terms of this Proxy and (ii) revokes any and all proxies given prior to the Effective Time in respect of Shareholder’s Covered Shares.

This Proxy is granted, effective as of the Effective Time, pursuant to that certain Shareholders’ Agreement, dated as of the date hereof, by and among Parent, Shareholder and the other parties thereto (the “Shareholders’ Agreement”). For the purposes of this Proxy, “Covered Shares” means (i) all shares of common stock, par value $0.01 per share, of Parent (“Parent Common Stock”) and any other equity securities of Parent which are beneficially owned by Shareholder or any of its Affiliates (as defined in the Shareholders’ Agreement) as of the Effective Time and (ii) all shares of Parent Common Stock and any other equity securities of Parent which are beneficially owned by Shareholder or any of its Affiliates and are acquired after the Effective Time and prior to the termination of the Shareholders’ Agreement. Shareholder’s Covered Shares as of the date hereof are set forth on the signature page hereof.

Shareholder hereby affirms that the irrevocable proxy set forth in this Proxy is given in connection with the execution of that certain Agreement and Plan of Merger (the “Merger Agreement”), dated as of the date hereof, by and among Parent, Lakes Golden Acquisition Corporation, a Nevada corporation and a wholly owned subsidiary of Parent (“Merger Subsidiary”), Sartini Gaming, Inc., a Nevada corporation (“Sartini Gaming”), and The Blake L. Sartini and Delise F. Sartini Family Trust, providing, among other things, for the merger of Merger Subsidiary with and into Sartini Gaming (the “Merger”), and that such irrevocable proxy is given to secure the performance of the duties of Shareholder under the Shareholders’ Agreement. References herein to the “Effective Time” refer to the effective time of the Merger. Shareholder hereby further affirms that the irrevocable proxy set forth in this Proxy is coupled with an interest and may under no circumstances be revoked. Shareholder hereby ratifies and confirms all that such irrevocable proxy may lawfully do or cause to be done by virtue hereof. Without limiting the generality of the foregoing, this Proxy is executed and intended to be irrevocable in accordance with the provisions of Section 302A.449 of the Minnesota Business Corporation Act.

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The attorneys-in-fact and proxies named above are hereby authorized and empowered by the undersigned at any time after the Effective Time and prior to the termination of the Shareholders’ Agreement to act as the undersigned’s attorney-in-fact and proxy to vote Shareholder’s Covered Shares, and to exercise all voting, consent and similar rights of the undersigned with respect to Shareholder’s Covered Shares (including, without limitation, the power to execute and deliver written consents), at every annual, special, adjourned or postponed meeting of the shareholders of Parent and in every written consent in lieu of such a meeting:

(A) in favor of any nominee or director recommended by the Board to be nominated for election to the Board, and

(B) against the removal from the Board of any director previously nominated for election by the Board (unless such removal is recommended by the Board in compliance with the terms of this Agreement).

All obligations of the undersigned hereunder shall attach to Shareholder’s Covered Shares and shall be binding upon any person to which legal or beneficial ownership of such Shareholder’s Covered Shares shall pass, whether by operation of law or otherwise, including, without limitation, Shareholder’s heirs, guardians, administrators, representatives or successors.

[Signature Page Follows]

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Dated:                                                

[SHAREHOLDER]

Signature

Printed Name                            

Address

Covered Shares:

Pursuant to the requirements set forth in Section 302A.449, subd. 1 of the Minnesota Business Corporation Act, Lakes Entertainment, Inc. acknowledges receipt of this Irrevocable Proxy.

LAKES ENTERTAINMENT, INC.

By:                                          

Name:

Title:

[Signature Page to Irrevocable Proxy (Shareholders’ Agreement)]

EXHIBIT B

CONSENT OF SPOUSE

I, ____________________, spouse of ______________, acknowledge that I have read the Shareholders’ Agreement, dated as of __________________, 2015, to which this Consent is attached as Exhibit B (the “Agreement”), and that I know the contents of the Agreement. I am aware that the Agreement contains provisions regarding the voting and transfer of shares of capital stock of Parent that my spouse may own, including any interest I might have therein.

I hereby agree that my interest, if any, in any shares of capital stock of Parent subject to the Agreement shall be irrevocably bound by the Agreement and further understand and agree that any community property interest I may have in such shares of capital stock of Parent shall be similarly bound by the Agreement.

I am aware that the legal, financial and related matters contained in the Agreement are complex and that I am free to seek independent professional guidance or counsel with respect to this Consent. I have either sought such guidance or counsel or determined after reviewing the Agreement carefully that I will waive such right.

Dated:
	Name of Shareholder’s Spouse

EX-99

Exhibit 99.1

NEWS RELEASE Lakes Entertainment, Inc. 130 Cheshire Lane, Suite 101 Minnetonka, MN 55305 952-449-9092 952-449-9353 (fax) www.lakesentertainment.com (NASDAQ: LACO) Golden Gaming, LLC 6595 South Jones Blvd. Las Vegas, NV 89118 702-893-7777 702-891-4202 (fax) www.ggilv.com

FOR FURTHER INFORMATION CONTACT:

Lakes Entertainment, Inc.	Golden Gaming, LLC
Timothy Cope 952-449-7030	Jesse Scott, The Firm, 702-739-9933 ext. 228

FOR IMMEDIATE RELEASE:

January 26, 2015

LAKES ENTERTAINMENT AND GOLDEN GAMING

ANNOUNCE MERGER AGREEMENT

MINNEAPOLIS, January 26, 2015 - Lakes Entertainment, Inc. (LACO) and Sartini Gaming, Inc. (“Golden Gaming”), which owns and operates Golden Gaming, LLC, announced today that they have entered into an Agreement and Plan of Merger (the “Merger Agreement”). Golden Gaming is a leading owner and operator of distributed gaming, taverns and casinos, all of which are focused on the Nevada local gaming market. At closing, Golden Gaming will combine with a wholly-owned subsidiary of Lakes Entertainment, Inc. (“Lakes”) with Golden Gaming surviving as a wholly-owned subsidiary of Lakes. Lakes will remain publicly traded and be renamed Golden Entertainment, Inc. upon closing.

Under the terms of the Merger Agreement, Lakes is valued at $9.57 per share (representing an approximate 37% premium to the closing share price for Lakes common stock on January 23, 2015), subject to working capital and various other adjustments under the Merger Agreement. The value of Golden Gaming under the Merger Agreement will be determined by multiplying 7.5 times Golden Gaming’s trailing twelve-month consolidated earnings before interest, taxes, depreciation and amortization, less debt and subject to working capital and various other adjustments.  Based on current September 30, 2015 financial estimates and assumptions, the legacy Golden Gaming shareholder would be issued 7,858,145 shares of Lakes common stock under the Merger Agreement, which would represent approximately 35.7% of the total fully diluted post-merger shares of Lakes common stock. Lakes’ current shareholders (assuming the exercise of all outstanding options to acquire Lakes common stock) would retain approximately 64.3% of the total post-merger shares of Lakes common stock.

In addition, Lakes will seek to monetize non-core assets prior to closing. Lakes sold all of its interest in Rock Ohio Ventures, LLC to an unrelated third party pursuant to a Membership Interest Purchase Agreement, dated effective as of January 25, 2015, between Lakes and DG Ohio Ventures, LLC for $750,000. Additionally, Lakes shareholders (other than the legacy Golden Gaming shareholder, except with respect to taxes) will be entitled to a possible cash dividend related to any net proceeds the combined company receives from monetizing Lakes’ existing note receivable from the Jamul Indian Village, provided that the combined company enters into an agreement to monetize the note within three years after the merger closes, and receives any amounts due thereunder no later than three years after the Jamul casino opens.

Contemporaneous with entering into the Merger Agreement, Lakes has also amended and restated its Rights Agreement dated as of December 12, 2013, to preserve its ability to utilize approximately $89 million of federal net operating tax loss carryforwards by, among other things, lowering the voting securities ownership threshold of an acquiring person from 15% to 4.99%, and making such other changes which Lakes deemed necessary to effectuate the purposes of the Rights Agreement in light of the transactions contemplated by the Merger Agreement.

Blake L. Sartini, currently Chief Executive Officer of Golden Gaming, will be named the Chairman and Chief Executive Officer of the combined company at closing.  Lyle Berman, currently Chairman and Chief Executive Officer of Lakes, will continue as a board member of, and will sign a three-year consulting agreement with, the combined company. Tim Cope, currently President and Chief Financial Officer of Lakes, will also continue as a board member of, and consultant to, the combined company.

“We are excited to announce this transaction, and are thrilled to partner with Golden Gaming, which has done an outstanding job of building a premier diversified gaming company in the state of Nevada,” said Mr. Berman. “The combination of our strong balance sheet and Rocky Gap asset, and Golden Gaming’s casinos and distributed gaming platform, makes the combined company truly unique in the marketplace. Lakes’ cash on hand will facilitate Golden Gaming’s pursuit of growth opportunities and the refinancing of its debt. We believe the combined company will be well positioned to expand not only in Nevada, which has the most stable tax and regulatory record in the country, but also into other jurisdictions.”

“We believe that this transaction establishes a truly diversified gaming company, uniquely positioned to capitalize on a wide spectrum of opportunities,” added Mr. Sartini. “Golden Gaming is the market leader in distributed gaming as well as tavern operations throughout Nevada, and is well positioned with our market leading casino resorts in Nye County. As a result, this merger with Lakes provides the opportunity to expand our business dramatically, both in and outside of Nevada, with the support of a strong balance sheet, the Rocky Gap asset in Maryland and an aggressive and experienced management team.”

Together, the combined company will operate approximately 9,250 slot machines and video lottery terminals in Nevada and Maryland across four casino properties, 48 taverns and over 600 route locations. Lakes and Golden Gaming estimate that on a combined pro forma basis 2015 annual net revenues and adjusted EBITDA will be $348.1 million and $42.5 million, respectively, including $3.0 million of anticipated cost synergies. Additionally, it is estimated that combined pro forma 2015 operating free cash flow and adjusted net income will be $33.7 million and $13.3 million, respectively, including a full year of the anticipated benefit of refinancing Lakes and Golden Gaming indebtedness.

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The merger is anticipated to close by year-end 2015 and is subject to customary regulatory and other closing conditions being satisfied, including approval by Lakes’ shareholders of the issuance of the Lakes shares in connection with the merger.

Macquarie Capital is serving as Lakes’ exclusive financial advisor. Gray, Plant, Mooty, Mooty & Bennett, P.A. is serving as legal counsel to Lakes.  Union Gaming Advisors, LLC is serving as Golden Gaming's financial advisor. Latham & Watkins LLP is serving as legal counsel to Golden Gaming.

Conference Call

Lakes and Golden Gaming management will conduct a conference call to discuss the proposed transaction on Wednesday, January 28, 2015, at 12:00 p.m. Central Time.  Interested parties may participate in the call by dialing 866-515-2910 and entering participant passcode 93064412.

The conference call will be webcast live via the Investor section of Lakes’ website at www.lakesentertainment.com.  To listen to the live webcast please go to the website at least 15 minutes early to register, download and install any necessary audio software. 

If you are unable to listen live, the conference call will be archived on the Investor section of the Lakes’ website at www.lakesentertainment.com and on Golden Gaming’s website at www.ggilv.com. If you do not have Internet access and want to listen to an audio replay, call 888-286-8010 and enter conference call passcode 62599403. The conference call archives and the audio replay will be available beginning at 1:00 p.m. Central Time, January 30, 2015 until 12:00 p.m. Central Time, February 4, 2015.

About Lakes Entertainment, Inc.

Lakes Entertainment, Inc. currently owns the Rocky Gap Casino Resort near Cumberland, Maryland. For more information, please visit www.lakesentertainment.com.

About Golden Gaming, LLC

Golden Gaming has three distinct business lines: (1) Golden Route Operations (“GRO”), which is Nevada’s largest slot route operator with more than 7,600 machines in approximately 600 locations throughout the state. Originally founded in 1986 as Southwest Services, GRO is a licensed, established local route operator of gaming devices for bars, taverns, convenience and grocery stores; (2) Golden Casino Group (“GCG”), which currently owns and operates three casinos: Pahrump Nugget Hotel & Casino, Gold Town Casino and Lakeside Casino & RV Park. GCG employs more than 500 team members, making it the largest employer in Nye County; and (3) PT’s Entertainment Group (“PTEG”), which is Nevada’s largest tavern operator with 48 establishments. PTEG’s Southern Nevada holdings include PT’s, Sierra Gold and Sean Patrick’s. PTEG operates under two brands in Northern Nevada: Sierra Gold and Sierra Junction. For more information, please visit www.ggilv.com.

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Forward-Looking Statements

Statements in this press release include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among others, statements regarding the estimated value of Lakes and Golden Gaming in connection with the merger; the amount of shares to be issued to the legacy Golden Gaming shareholder under the Merger Agreement and the expected post-closing shareholdings of legacy Company and Golden Gaming shareholders; the expected benefits of a potential combination of Lakes and Golden Gaming and expectations about future business plans, prospective performance (including estimated combined pro forma financial performance for 2015) and opportunities; the expected timing of the completion of the transaction; the obtaining of required regulatory approvals and approval by Lakes’ shareholders; the monetization of non-core assets and the note receivable from the Jamul Indian Village; and the ability of Lakes to utilize its NOLs to offset future taxable income. These forward-looking statements may be identified by the use of words such as “expect,” “anticipate,” “believe,” “estimate,” “potential,” “should”, “will” or similar words intended to identify information that is not historical in nature. These forward-looking statements are based on current expectations and assumptions of management of Lakes and Golden Gaming and are subject to risks, uncertainty and changes in circumstances that could cause the actual events and results in future periods to differ materially from the expectations of Lakes and Golden Gaming and those expressed or implied by these forward-looking statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. These risks, uncertainties and changes in circumstances include (a) the possibility that the merger does not close when expected or at all; (b) the ability and timing to obtain required regulatory approvals (including approval from gaming regulators) and Lakes’ shareholder approval, and to satisfy or waive other closing conditions, including expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, or that the parties to the Merger Agreement may be required to modify aspects of the transaction to achieve regulatory approval; (c) the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement or could otherwise cause the merger to fail to close; (d) the ability of Lakes and Golden Gaming to promptly and effectively integrate their respective businesses; (e) the outcome of any legal proceedings that may be instituted in connection with the transaction; (f) the receipt of an unsolicited offer from another party for an alternative business transaction that could interfere with the proposed merger; (g) Lakes’ ability to monetize non-core assets prior to the closing of the transaction and to monetize the Jamul Indian Village note on terms that generate net cash proceeds to the Company or at all; (h) the ability to retain key employees of Lakes and Golden Gaming; (i) that there may be a material adverse change affecting Lakes or Golden Gaming, or that the respective businesses of Lakes or Golden Gaming may suffer as a result of uncertainty surrounding the transaction; (j) the occurrence of an “ownership change,” as defined in Section 382 of the Internal Revenue Code; and (k) the risk factors disclosed in Lakes’ filings with the Securities and Exchange Commission ("the SEC"), including its Annual Report on Form 10-K, which was filed on March 14, 2014. Forward-looking statements reflect Lakes’ and Golden Gaming’s management’s analysis and expectations only as of the date of this press release, and neither Lakes nor Golden Gaming undertake to update or revise these statements, whether written or oral, to reflect subsequent developments, except as required under the federal securities laws. Readers are cautioned not to place undue reliance on any of these forward-looking statements.

Additional Information and Where to Find It

This press release may be deemed to be solicitation material for the shareholder vote with respect to the issuance of shares of Lakes common stock under the Merger Agreement. In connection with the Merger Agreement, Lakes intends to file relevant materials with the SEC, including a preliminary proxy statement and a definitive proxy statement. The definitive proxy statement will be mailed to the Lakes’ shareholders. This press release does not constitute a solicitation of any vote or proxy from any shareholder of Lakes. INVESTORS ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT IN ITS ENTIRETY WHEN IT BECOMES AVAILABLE AND ANY OTHER DOCUMENTS OR MATERIALS TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED MERGER OR INCORPORATED BY REFERENCE IN THE DEFINITIVE PROXY STATEMENT BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT LAKES, GOLDEN GAMING AND THE PROPOSED MERGER. Investors may obtain free copies of the definitive proxy statement, and other relevant materials and documents filed with the SEC (when they become available), without charge, at the SEC’s web site at www.sec.gov. In addition, investors may obtain free copies of the definitive proxy statement, and other relevant materials and documents filed with the SEC by directing a written request to Investor Relations, Lakes Entertainment, Inc., 130 Cheshire Lane, Suite #101, Minnetonka, MN 55305, or by accessing Lakes’ website at www.lakesentertainment.com under the heading “Investors” and then “SEC Filings.”

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Participants in the Solicitation

Lakes, Golden Gaming and their respective directors, executive officers and certain other members of management and employees may be deemed to be “participants” in the solicitation of proxies from shareholders of Lakes in connection with the proposed transaction, including with respect to the issuance of shares of Lakes common stock under the Merger Agreement. Information about Lakes’ directors and executive officers is available in Lakes’ definitive proxy statement, dated July 23, 2014, for its 2014 annual meeting of shareholders. Additional information regarding participants in the proxy solicitation and a description of their interests in the proposed transaction will be contained in the proxy statement that Lakes will file with the SEC in connection with the proposed transaction and other relevant documents or materials to be filed with the SEC regarding the proposed transaction.

Financial Information and Non-GAAP Financial Measures

All years represented in this presentation are fiscal years unless otherwise indicated. Lakes’ fiscal year is the 52 or 53 weeks ending the Sunday closest to December 31 of the specified year. For example, references to the 2015 fiscal year refer to fiscal year ending on January 3, 2016. Golden Gaming’s fiscal year ends on December 31 of each year. This press release includes actual, projected and combined information with respect to Lakes and Golden Gaming. Information relating to Golden Gaming and combined information are presented for illustrative purposes only and do not purport to be indicative of what Lakes’ or Golden Gaming’s actual and combined business, financial condition or results of operations will be if the transaction is consummated.

This press release contains certain financial measures that are not in accordance with generally accepted accounting principles (“non-GAAP”). A “non-GAAP financial measure” is defined as a numerical measure of a company’s financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles (“GAAP”) in the statements of income, balance sheets or statements of cash flow of the company. These measures are presented as supplemental disclosures because they are widely used measures of performance and bases for valuation of companies in our industry. EBITDA is defined as net income before interest expense, provision for income taxes and depreciation and amortization. Adjusted EBITDA (adjusts EBITDA to remove the effects of one-time items including pre-opening expenses, impairments and other losses, gains and losses on non-operating assets and liabilities, discontinued operations and transition expenses related to acquired operations. Uses of cash flows that are not reflected in Adjusted EBITDA include capital expenditures, interest payments, income taxes, debt principal repayments, and certain regulatory gaming assessments which can be significant. Operating Free Cash Flow represents Adjusted EBITDA less maintenance capital expenditures, change in working capital and income taxes. Adjusted Net Income represents net income before gain or loss from non-core assets and a full year of the estimated benefit of refinancing Lakes and Golden Gaming indebtedness. The pro forma presentations of these non-GAAP measures reflect current estimates of the combined results of Lakes and Golden Gaming only. The disclosure of EBITDA, Adjusted EBITDA, Operating Free Cash Flow, Adjusted Net Income and other non-GAAP financial measures may not be comparable to similarly titled measures reported by other companies. EBITDA, Adjusted EBITDA, Operating Free Cash Flow and Adjusted Net Income should be considered in addition to, and not as a substitute, or superior to, net income, operating income, cash flows, revenue, or other measures of financial performance prepared in accordance with GAAP.

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5

EX-99

Exhibit 99.2

Memorandum

Date:	January 26, 2015	Cc:
To:	Rocky Gap
From:	Tim Cope, President
Subject:	Lakes and Golden Gaming Merger

I am very excited to personally share with you the news that Lakes Entertainment has entered into a Merger Agreement with Golden Gaming. Golden Gaming is a leading owner and operator of slot route operations, taverns and casinos, all of which are focused on the Nevada local gaming market. Lakes will remain publicly traded and be renamed Golden Entertainment.

The combination of Lakes strong balance sheet and Rocky Gap Casino Resort, with Golden Gaming’s casinos, distributed gaming platform, and tavern operations makes the combined company truly unique in the market place. Together the combined company will operate approximately 9,250 slot machines and video lottery terminals in Nevada and Maryland across four casino properties, 48 taverns and over 600 route locations.

I wanted to directly communicate to you, as a valued employee of Rocky Gap, that we plan to continue to operate Rocky Gap as we have in the past. Upon completion of the merger, the combined company, which will include Rocky Gap, will be well positioned to expand not only in Nevada but also in other jurisdictions, providing employees more opportunities with a leading company in the gaming industry.

Based on current September 30, 2015 financial estimates and assumptions, the legacy Golden Gaming shareholder would be issued approximately 7,858,145 shares of Lakes common stock upon closing of the merger transaction which would represent approximately 35.7% of the total post-merger shares plus options in the combined company. Lakes current shareholders and option holders would retain approximately 64.3% of the total post-merger shares in the combined company.

Blake Sartini, the founder and current Chief Executive Officer of Golden Gaming, will be named the Chairman and Chief Executive Officer of the combined company at closing. Lyle Berman will continue as a Board member and sign a three-year consulting agreement with the combined company. I will also continue as a Board member and consultant to the combined company. The combined company headquarters will be at the current Golden Gaming offices in Las Vegas.

The merger is anticipated to close by year end 2015 and is subject to customary regulatory and closing conditions being satisfied, including approval by Lakes’ shareholders.

This is an exciting opportunity for Lakes and for Rocky Gap and we look forward to working through obtaining the necessary approvals to finalize this merger transaction with Golden Gaming. Our focus remains on providing excellent guest service, a high quality food offering and a great gamble in a fun and exciting atmosphere. I want to thank each of you for contributing to a successful first full year of operations at Rocky Gap and I encourage you to keep our customers smiling.