May 14, 2010 (FinancialWire) — Lakes Entertainment, Inc. (NASDAQ: LACO) said that it has entered into a termination agreement with the Iowa Tribe of Oklahoma terminating all agreements with the tribe, including a note under which around $5 million was advanced to the Tribe, after the tribe backed out of a deal to build a casino.

According to Lakes, the tribe had decided not to pursue the proposed Ioway Casino with a subsidiary of Lakes Entertainment.

The termination agreement provides for the Iowa Tribe to pay to Lakes a total of $4.5 million, with $1 million to be paid within two days of execution of the agreement, and the sum of $3.5 million to be paid in 15 equal monthly installments beginning on June 15 and on the 15th day of each of the next 14 months.

Lakes said that the Iowa Tribe is permitted to make prepayments on the outstanding amount at a 6% discount during the first twelve months after the execution of the termination agreement.

The company was operating under a gaming development consulting agreement with the tribe to provide development consulting services related to the proposed Ioway Casino development.

Lakes said it was not receiving any compensation for its consulting services under the consulting agreement.

The company was also managing the Cimarron Casino for the tribe under a management agreement approved by the National Indian Gaming Commission. Lakes was receiving an annual management fee for its services in an amount equal to 30% of the net total revenues of the Cimarron Casino in excess of $4 million.

Minnesota-based Lakes Entertainment currently has development and management or financing agreements with three separate tribes for casino operations in Michigan and California, for a total of three separate casino sites.

The company is currently managing the Four Winds Casino Resort for the Pokagon Band of Potawatomi Indians and the Red Hawk Casino for the Shingle Springs.

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