This Agreement is made this 7th day of August, 2000, by and between MRD Gaming, LLC, a Nevada limited liability company, 600 Whitney Ranch Drive, C-15, Henderson, NV 89014 ("MRD"); and Lakes Gaming and Resorts, LLC, 130 Cheshire Lane, Minnetonka, MN 55305, a Minnesota limited liability company ("Lakes").

PRELIMINARY STATEMENT AND CERTAIN DEFINITIONS

A. MRD'S BUSINESS, THE TRIBES AND THE PROJECTS. MRD is in the business of financing, developing, equipping, constructing and starting-up casino projects for Indian tribes in the State of California (MRD's "Business"). MRD and its affiliates have secured written agreements (the Project Contracts") with the Paskenta Band of Nomlaki Indians, Corning, California; and the Clover dale Rancheria of Pom o Indians, Clover dale, California (the "Tribes"); for the development of casino projects on Indian lands for each of the Tribes (each a "Project", or collectively, the "Projects") following the passage of Proposition 1 A in California permitting Class III Indian Gaming (as defined in the National Indian Gaming Regulatory Act, or "IGRA"). The Project being developed with the Paskenta Band is hereinafter called the "Paskenta Project" and the Project being developed with the Clover dale Rancheria is hereinafter called the "Clover dale Project." MRD has filed a certificate of conversion with the California Secretary of State, to convert to a California limited liability company, but the conversion is not complete.

B. THE BUSINESS OF LAKES. Lakes is engaged, in part, in the business of developing and managing casino projects for Indian tribes.

C. EXISTING PROJECT COMPANIES AND ASSETS. United Gaming Holding Co., LLC is a Maryland limited liability company ("United"), which is owned by SCG Gaming Enterprises, LLC, which is controlled by Franklin Capital Group and its affiliated investors (collectively, except for United, "Franklin"). United has formed and now owns two Maryland limited liability companies, Pacific Coast Gaming- Santa Rosa, LLC and Pacific Coast Gaming-Corning, LLC, which hold the Project Contracts for the Clover dale Project and the Paskenta Project, respectively (each a "Project Company and, collectively, the Project Companies"), and are managed by MRD. Pursuant to the Project Contracts, the Project Companies hold the development rights granted by the Tribes with respect to each of the Projects (the "Development Rights"), some of which were acquired on July 6, 2000, from Ruth Michels and her affiliated entities ("Michels"). Prior to the date of this Agreement, Franklin, United and Michels have provided funds, in the amount of $1,121,811, to MRD and to the Tribes for development of the Projects pursuant to the Project Contracts (the "Advanced Funds").

D. PURPOSES AND CERTAIN CONDITIONS OF AGREEMENT. Lakes and MRD have negotiated certain terms and conditions under which Lakes is willing to provide limited financing for the Projects in the form of loans to MRD and each of the Project Companies after they are acquired by MRD and Lakes. Except for temporary lending to be provided by Lakes to MRD under Section 17, certain specific conditions of Lakes' participation as the new provider of funding for the Projects are that MRD:

(1) acquire all right, title and interest to the equity interests in the Project Companies;

(2) the assets of the Project Companies must include at least all right, title and interest to the Development Rights, the Project Contracts and any other assets of the Project Companies (the "Other Assets"), including the Development Rights and Other Assets acquired by Franklin and/or United from Pacific Coast Gaming, LLC, a Wisconsin limited liability company owned by Michels;

(3) assign to Lakes an interest in each of the Project Companies in accordance with the provisions of Section 7, and

(4) contribute to the appropriate Project Company all of MRD's interests (if any) in such Development Rights, Project Contracts, Other Assets, and other rights MRD may have in the Projects in accordance with the provisions of Section 7. All of the Development Rights, Project Contracts and Other Assets held by the Project Companies, including without limitation those acquired or held by MRD and contributed to the Project Companies hereunder, and any other rights of MRD and its subsidiaries and affiliates with respect to the Projects are hereinafter collectively referred to as the "Project Assets." The purpose of this Agreement is to set forth the specific terms and conditions of that business relationship between the parties.

AGREEMENT

Now, therefore, in consideration of the facts and intentions recited above (which are a part of this Agreement) and the mutual agreements hereinafter set forth, the adequacy and sufficiency of which, as adequate legally binding consideration, are acknowledged by Lakes and MRD, the parties agree as follows:

1. ACQUISITION OF PROJECT COMPANIES, DEVELOPMENT RIGHTS, PROJECT CONTRACTS ANDOTHER ASSETS.

As an express condition of any lending under this Agreement, except for temporary funding to be provided by Lakes under Section 17, Lakes requires MRD to purchase from Franklin and United 100% of the equity interests in the Project Companies (the "Franklin Buy-out"), subject to the condition that the Project Companies which shall then hold all of the Project Assets not already held by MRD or its subsidiaries (including without limitation those acquired from Michels), pursuant to a detailed written agreement (a true and complete copy of which shall be delivered to Lakes when it is fully executed), which shall contain the material terms and conditions set forth in the brief letter agreement between MRD and Franklin attached hereto as Exhibit A and hereby made a part hereof (the "Buy-out Terms"), the terms and conditions set forth in the following paragraph and such other terms and conditions as Franklin and MRD shall mutually agree (with the approval of Lakes, which shall not be unreasonably withheld or conditioned, or unduly delayed), and subject to the terms of this Agreement. The Buy-out Terms include reimbursement to Franklin of the actual amount of funds Franklin and Michels have advanced to MRD and the Tribes for the Projects to the date of this Agreement (the "Advanced Funds"), and a premium amount due Franklin for having taken the initial investment risk in the Projects (the "Premium").

When MRD purchases the equity interests in the Project Companies in the Franklin Buy-out, and when a portion of such interests are thereafter assigned by MRD to Lakes (or its subsidiaries) hereunder, such interests shall be free and clear of all liens and encumbrances; and the Project Companies shall not have any debts or other liabilities or obligations, except for any loans and funding commitments owed to the Tribes under the Project Contracts. This condition shall be supported by warranties, representations, and covenants of indemnification, to the extent customary inequity purchases, either given by Franklin to MRD and its assigns or, to the extent it is not appropriate for Franklin to do so (because MRD has had the entire control or knowledge of the matter), by MRD to Lakes in a supplement to this Agreement. MRD represents and warrants to Lakes that Exhibit B attached hereto contains a complete listing of all written (and a written summary of any oral) Project Contracts and no others exist except as described therein.

On and after the closing of the Franklin Buy-out in accordance with the Buy-out Terms, Lakes shall loan to MRD funds sufficient to fund a part of the cost of the Franklin Buy-out, subject to the limitations set forth below. Lakes will make two loans to MRD for this purpose. The first loan shall be called the "Clover dale Premium Loan," the proceeds of which shall be used exclusively by MRD to pay Franklin the agreed upon......

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