Exhibit 10.1
SETTLEMENT AGREEMENT
PARTIES.The parties to this agreement are Cynthia Bridges, Secretary of the Department of Revenue, State of Louisiana (hereinafter, the “Plaintiff” or the “Department”), and LAKES ENTERTAINMENT, INC., formerly LAKES GAMING, INC. (hereinafter collectively referred to as “the Defendant” or “Lakes”).
RECITALS:
WHEREAS,Plaintiff, exercising her rights and privileges pursuant to La. R.S. 47:1561, caused her attorneys to file a petition, against the Defendant, for Louisiana corporation income and franchise tax along with interest and attorney’s fees for taxable periods ending January 3, 1999 through December 31, 2002 (the foregoing collectively referred to as the “taxable years at issue”), such suit being entitled “Cynthia Bridges, Secretary Department of Revenue State of Louisiana vs. Lakes Entertainment, Inc. formerly Lakes Gaming, Inc.,” 19th JDC No. 527,596, Div. “23” (“the Lawsuit”), and
WHEREAS,Defendant answered the Department’s petition, and the Parties have vigorously litigated the Lawsuit for the past six (6) years, and Lakes contends that it owes no tax, penalty or interest to Plaintiff for any of the taxable years at issue, and
WHEREAS,there exists a genuine legal dispute between the Department and the Defendant regarding the amount due if any for the taxable years at issue in the Lawsuit, and
WHEREAS,the Parties are cognizant of the complex legal and factual issues in connection with the above described Lawsuit as well as any lawsuits that could have been filed, and the hazards of litigating and contesting these issues, the parties recognize and agree that it is in their respective interests to reach an agreement disposing of all issues and differences pertaining to and included in the actual and potential Lawsuit, and in order to avoid the time, expense and uncertainty of contesting these issues and to fully resolve any and all disputes or claims of any kind or nature, known or unknown, asserted or unasserted, with respect to the actual or potential Lawsuit, the Department and the Defendant wish to enter into this Agreement in order to fully and completely resolve each and every aspect of any and all disputes, claims or defenses, asserted or unasserted, know or unknown, by the Department or the Defendant in connection with or on account of any taxes, interest, penalties and attorney’s fees claimed and/or asserted in connection with the actual or potential Lawsuit for the taxable years at issue; and
WHEREAS,the Department and the Defendant agree that neither this Agreement nor any of its terms, conditions, negotiations, nor proceedings in connection herewith shall constitute or be construed or deemed to be evidence of an admission on the part of the Department or the Defendant.
NOW, THEREFORE,for and in consideration of the premises and mutual releases, settlements, dismissals, covenants, and agreements by and between the Parties, and the mutual benefits accruing to the Parties from the execution of this Agreement, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, and with
no admission of liability on the part of any party, each balancing the hope of gaining against the danger of losing with respect to the claimed and/or asserted taxes, interest, penalties, attorney’s fees, and Lawsuit described hereinabove, and each preferring compromise and settlement to resolve their claims, disputes and defenses relating to the Lawsuit,
NOW, THEREFORE,the Parties hereby agree as follows:
| | 1.1 | | Releases by the Department. The Department does hereby forever release, acquit, waive and discharge the Defendant and each of its predecessors, successors, assigns, parent corporations, affiliated corporations, subsidiary corporations (doing business in their own names, and doing business under any other names), and its respective officers, directors, partners, employees, agents, and attorneys, past and present, (hereinafter referred to as the “Defendant Releasees”), from any and all taxes and other claims, without limitation, asserted or assessed, which could have been asserted or assessed, by the Department in the Lawsuit for the taxable years at issue therein. The Department releases the Defendant Releasees from any and all past, present or future Louisiana corporation income and franchise taxes, including interest or penalties associated therewith, for the taxable years at issue in the Lawsuit. The Department agrees to jointly dismiss with prejudice any and all claims asserted in the Lawsuit, subject to the terms and conditions of this Agreement. The Department releases the Defendant Releasees from any and all past, present or future taxes and claims for the taxable years at issue in the Lawsuit. |
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| | 1.2 | | Releases by Defendant. The Defendant does hereby forever release, acquit, waive and discharge the Department from any claims for overpayments, refund, offset or credit an all related claims, without limitation, arising from the taxable years at issue, asserted, or which could have been asserted, by the Defendant in the Lawsuit with the Department or before the Louisiana Board of Tax Appeals. The Defendant hereby forever releases and surrenders any and all rights to taxes, interest or penalties paid in connection with, or related to the taxable years at issue. |
| 2. | | PAYMENTS, ATTORNEY FEES AND DISMISSALS: |
| | 2.1 | | Payment of Negotiated Settlement Amount. By March 21, 2011, or as soon as possible thereafter, the Defendant agrees to pay to the Department the sum of EIGHT MILLION DOLLARS ($8,000,000.00). No part of this amount shall constitute penalties of any kind. |
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| | 2.2 | | Payment of Attorney Fees. On the same date that payment is made to the Department, the Defendant shall pay to Stutes & Lavergne, LLC (Tax I.D. No. 20-2265428), 600 Broad Street, Lake Charles, Louisiana, 70601, the Department’s counsel in the Lawsuit, (with the approval and direction of the Department) the sum of ONE MILLION DOLLARS ($1,000,000), which shall constitute full and complete payment of all attorney fees due Stutes & Lavergne, LLC, or Perry, Atkinson, Balhoff, Mengis & Burns, LLC, and any other attorneys engaged individually and/or collectively by the |
