EXHIBIT 10.16.1

 

LAKES ENTERTAINMENT, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT

 

 

THIS NON-QUALIFIED STOCK OPTION AGREEMENT ("Agreement") is entered into as of
the date set forth below by and between (Name) ("Participant") and Lakes
Entertainment, Inc., a Minnesota corporation, having a place of business at 130
Cheshire Lane, Minneapolis, Minnesota, 55305 (the "Company").

 

WITNESSETH:

 

WHEREAS, the Company has adopted the Lakes Entertainment, Inc. 2007 Stock Option
and Compensation Plan (the "Plan") and the Committee appointed pursuant to the
Plan or its delegate granted a Non-Qualified Stock Option to the Participant on
                       , subject to the execution of this Agreement. Capitalized
terms not defined in this Agreement have the meaning assigned to them in the
Plan.

 

NOW THEREFORE, it is agreed as follows:

 

1.     The terms and conditions of the Plan, a copy of which has been delivered
to the Participant, are hereby incorporated into and made a part of this
Agreement by reference as if set forth in full. In the event of any conflict or
inconsistency between the provisions of this Agreement and those of the Plan,
the provisions of the Plan shall govern and control.

 

2.     The number of Shares subject to the Option provided for by this Agreement
and the purchase price of each such Share are set forth at the end of this
Agreement after "Number of Shares:" and "Purchase Price:", respectively.

 

3.     No Option provided for by this Agreement is exercisable after the
expiration of ten (10) years from the date the Option was granted by the
Committee or its delegate.

 

4.     Except as provided in paragraph 5 and paragraph 6 of this Agreement, the
Option provided for by this Agreement is exercisable in cumulative installments
of ____________% of the total grant beginning on or after the first anniversary
of the date the Option was granted by the Committee or its delegate, with an
additional twenty-five ____________% of the total grant becoming exercisable on
or after each of the ____________ successive anniversaries of such date, so long
as the Participant remains an employee of the Company.

 

5.     In the event the employment of the Participant is terminated, for any
reason other than death, the Option provided by this Agreement shall be
exercisable by the Participant (to the extent the Participant is entitled to do
so at the termination of employment) at any time within six (6) months after
such termination of employment, but in no event later than the expiration date
of the Option. In the event of any termination of employment of the Participant
that is either (a) for "cause" (as defined below) or (b) voluntary on the part
of the Participant and without the written consent of the Company, the
Participant's right to exercise any part of the Option will terminate on the
date employment of the Participant terminated.

 

 
 

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For purposes of this Agreement, a termination for "cause" has the meaning set
forth in any employment agreement between the Company (or any of its
subsidiaries) and the Participant. If there is no employment agreement between
the Company (or any of its subsidiaries) and the Participant or there is no
definition of termination for "cause" in the Participant's employment agreement,
then a termination for "cause" means: (a) the Participant's conviction of a
felony that would materially damage the reputation of the Company; (b) material
misappropriation by the Participant of the Company's property or other material
acts of dishonesty by the Participant against the Company; or (c) the
Participant's gross negligence or willful misconduct in the performance of his
or her duties as an employee of them Company that has a material adverse effect
on the Company.

 

In the event that the Participant shall die while an employee of the Company, or
any of its subsidiaries, the Option may be exercised (to the extent that the
Participant shall have been entitled to do so at the date of his or her death)
by the person to whom the Option is transferred by will or the applicable laws
of descent and distribution at any time within one (1) year after the date of
death, but in no event later than the expiration date of the Option.

 

6.     Unless otherwise determined by the Board and a majority of the Continuing
Directors, the Option will become immediately exercisable in full if a Change in
Control occurs. In the even the Company is a party to a merger, exchange or
reorganization, the Option will be subject to the terms and conditions of the
agreement of merger, exchange or reorganization, which may include, without
limitation, accelerating the vesting or exercise date of the Option in exchange
for the immediate distribution of a cash payment equal to the difference between
the Fair Market Value on the date of the Change in Control and the exercise
price of the Option multiplied by the number of Shares subject to the Option.

 

7.     The Option may not be transferred, pledged or assigned (except, in the
event of the Participant's death, by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined in
the Internal Revenue Code of 1986, as amended, or Title I of the Employee
Retirement Income Security Act, or the rules thereunder). The Committee may
establish procedures as it deems appropriate for a Participant to designate a
Person or Persons, as beneficiary or beneficiaries, to exercise the
Participant's rights and receive any property distributable with respect to any
Option in the event of the Participant's death. The Committee, in its discretion
and subject to such additional terms and conditions as it determines, may permit
a Participant to transfer a Non-Qualified Stock Option to any "family member"
(as defined in the General Instructions to Form S-8 (or any successor to such
General Instructions and Form) under the Securities Act of 1933, as amended) at
any time the Participant holds the Non-Qualified Stock Option, provided that
such transfers may not be for value and the family member may not make
subsequent transfers other than by will or by the laws of descent and
distribution. The Option may be exercised during the Participant's lifetime only
by the Participant or, if permissible under applicable law, by the Participant's
guardian or legal representative. The Option may not be pledged, alienated,
attached or otherwise encumbered, and any purported pledge, alienation,
attachment or encumbrance of the Option will be void and unenforceable against
the Company or any Affiliate.

 

 
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8.     The Participant's employment, subject to the provisions of any contract
between the Company (or any of its subsidiaries) and the Participant, shall be
at the pleasure of the Board of Directors of the Company or other employing
corporation.

 

9.     Subject to the terms and conditions of this Agreement and the Plan, the
Option, may be exercised by giving written notice of exercise signed by the
Participant to the Secretary of the Company at its principal office and
specifying the number of Shares to be purchased and by paying in full the
purchase price of the number of Shares with respect to which the Option is
exercised, in cash and/or, with the consent of the Committee, shares of common
stock of the Company or other property. In addition, the Participant shall, upon
notification of the amount due and prior to or concurrently with the delivery to
the Participant of a certificate representing the Shares issued pursuant to the
Option exercised, pay promptly an amount sufficient to satisfy applicable
federal, state or local tax requirements. In the event the Option is exercised
by any person other than the Participant, such notice shall be accompanied by
appropriate proof of the right of such person to exercise the Option. The
Company has no obligation to deliver Shares or cash upon exercise of any Option
until qualified for delivery under such laws and regulations as may be deemed by
the Company applicable to such exercise.

 

10.     Nothing in this Agreement expressed or implied is intended or shall be
construed as conferring upon or giving to any person, firm or corporation, other
than the parties to this Agreement, any rights or benefits under or by reason of
this Agreement.

 

11.     Each party to this Agreement agrees to execute such further papers,
agreements, assignments or documents of title as may be necessary or desirable
to effect the purposes of this Agreement and carry out its provisions.

 

12.     This Agreement embodies the entire agreement made between the parties to
this Agreement with respect to the matters covered herein and shall not be
modified except by writing signed by the party to be charged.

 

13.     This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which shall constitute but one and
the same agreement.

 

14.     This Agreement, in its interpretation and effect, shall be governed by
the laws of the State of Minnesota applicable to contracts executed and to be
performed in the State of Minnesota.

 

 
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the effective
date.

 

 

 

NUMBER OF SHARES:

 

PARTICIPANT:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PURCHASE PRICE:

 

LAKES ENTERTAINMENT, INC.

 

 

 

 

 

 

 

 

By

 

 

 

 

 

Its: President, Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

 

EFFECTIVE DATE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

         

 

 

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