Exhibit 4.8


 


DIRECTOR
STOCK OPTION AGREEMENT


(NON-QUALIFIED
STOCK OPTION)


 


THIS DIRECTOR STOCK
OPTION AGREEMENT (the “Agreement”) is entered into and effective January 10,
2006 (the “Date of Grant”), by and between Southwest Casino Corporation (the “Company”)
and
                          
(the “Optionee”).


 


A.                 The Company has
adopted its 2004 Stock Incentive Plan (the “Plan”) which authorizes the Board
of Directors of the Company, or a committee as provided for in the Plan (the
Board or this committee are referred to as the “Committee” in this Agreement),
to grant incentive stock options to directors of the Company (as defined in the
Plan).


 


B.                   The Company
desires to give the Optionee an inducement to acquire a proprietary interest in
the Company and an added incentive to advance the interests of the Company by
granting to the Optionee an option to purchase shares of common stock of the
Company under the Plan.


 


C.                   Terms stated
but not otherwise defined in this Agreement have the meanings assigned to those
terms in the Plan.


 


Accordingly, the parties
agree as follows:


 


1.                                      Grant of Option.


 


The Company hereby
grants to the Optionee the right, privilege, and option (the “Option”) to
purchase 150,000 shares (the “Option Shares”) of the Company’s common stock,
$.001 par value (the “Common Stock”), according to the terms and subject to the
conditions stated in this Agreement and as stated in the Plan. This Option is not
intended to be an “incentive stock option,” as that term is used in Section 422
of the Internal Revenue Code of 1986, as amended (the “Code”).


 


2.                                      Option Exercise Price.


 


The per share price to be
paid by Optionee upon exercise of this Option will be $0.65.


 


3.                                      Duration of Option and
Time of Exercise.


 


3.1                                 Initial Period of Exercisability. Subject to Sections 3.2 and 3.3 below,
this Option will become exercisable with respect to the Option Shares in 12
quarterly installments beginning on December 31, 2005 and continuing on
the last day of each fiscal quarter of the Company, as provided in the table
below. The table below states the initial dates of exercisability of each
installment and the number of Option Shares as to which this Option will become
exercisable on those dates:


 


	
  Initial Date of

  Exercisability

  	
   

  	
  Number of Option Shares

  Available for

  Exercise at each Date

  
	
  Mar. 31, June 30, Sept. 30, Dec. 31,
  2006

  	
   

  	
  12,500

  
	
  Mar. 31, June 30, Sept. 30, Dec. 31,
  2007

  	
   

  	
  12,500

  
	
  Mar. 31, June 30, Sept. 30, Dec. 31,
  2008

  	
   

  	
  12,500

  



 


The right to exercise
this Option is cumulative with respect to the Option Shares becoming
exercisable on the dates stated above; provided, however, that in no event will
this Option be


 

















 


exercisable after, and
this Option will become void and expire as to all unexercised Option Shares at,
5:00 p.m. (Minnesota time) on January 9, 2016 (the “Time of
Termination”).


 


3.2                                 Termination of Service.


 


(a)                                  Termination Due to Mandatory Retirement. If Optionee’s service with the Board of
Directors of the Company is terminated by reason of the Optionee’s mandatory
retirement in accordance with the policies of the Company and its Board of
Directors, this Option will continue to become exercisable and remain
exercisable as if the Optionee continued to serve as a Director of the Company
(but not after the Time of Termination).


 


(b)                                 Termination Due to Death or Disability. If Optionee’s service with the Board of
Directors of the Company is terminated by reason of the Optionee’s death or
Disability, this Option will become immediately exercisable in full as of the
date of death or Disability and remain exercisable for a period of 12 months
after such termination (but not after the Time of Termination).


 


(c)                                  Termination for Reasons Other Than Death,
Disability or Retirement. Except as provided in Section 3.3, if Optionee’s service with
the Board of Directors is terminated for any reason other than death,
Disability or mandatory retirement, this Option will remain exercisable to the
extent exercisable on the date of termination of Optionee’s service on the
Board of Directors and remain exercisable for a period of 90 days after such
termination.


 


3.3                                 Change in Control.


 


(a)                                  Impact of Change in Control. If a Change in Control of the Company
occurs whereby the acquiring entity or successor to the Company does not assume
this Option or replace it with a substantially equivalent incentive award,
then, as of the date of the Change of Control, this Option will vest as to all
shares and become immediately exercisable in full and will remain exercisable
until the Time of Termination, regardless of whether the Optionee remains in
the service of the Company. In addition, if a change in control occurs, the
Committee, in its sole discretion and without consent of the Optionee, may determine
that the Optionee will receive, with respect to some or all of the Option
Shares, cash in the amount of the excess of the Fair Market Value (as defined
in the Plan) of those Option Shares immediately before the effective date of
the Change in Control over the per share exercise price of this Option.


 


(b)                                 Limitation on Change in Control Payments. Notwithstanding anything in this Section 3.3
to the contrary, if, with respect to the Optionee, the acceleration of the
vesting of this Option as provided above (which acceleration could be deemed a “payment”
within the meaning of Section 280G(b)(2) of the Code), together with
any other payments that the Optionee has the right to receive from the Company
or any corporation which is a member of an “affiliated group” (as defined in Section 1504(a) of
the Code without regard to Section 1504(b) of the Code) of which the
Company is a member, would constitute a “parachute payment” (as defined in Section 280G(b)(2) of
the Code), the payments to the Optionee stated herein will be reduced to the
largest amount that will result in no portion of the payments being subject to
the excise tax imposed by Section 4999 of the Code; provided, however,
that if the Optionee is subject to a separate agreement with the Company that
expressly addresses the potential


 


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application of Sections 280G or 4999 of the Code
(including, without limitation, that “payments” under such agreement or
otherwise will be reduced, that the Optionee will have the discretion to
determine which “payments” will be reduced, that such “payments” will not be
reduced or that such “payments” will be “grossed up” for tax purposes), then
this Section 3.3(b) will not apply, and any payments to the Optionee
under Section 3.3(a) of this Agreement will be treated as payments
arising under such separate agreement.


 


4.                                      Manner of Option Exercise.


 


4.1                                 Notice. Optionee may exercise this Option, in whole or
in part from time to time, subject to the conditions in the Plan and in
this Agreement, by delivery, in person, by facsimile or electronic transmission
(if confirmed) or through the mail, to the Company at its principal executive
office (Attention: Chief Financial Officer), of a written notice of exercise. This
notice must (a) be in a form substantially similar to the form attached
to this Agreement as Exhibit A, or such other form as is
satisfactory to the Committee, (b) identify this Option, (c) specify
the number of Option Shares with respect to which this Option is being
exercised, and (d) be signed by the person or persons so exercising this
Option. The notice must be accompanied by payment in full of the total purchase
price of the Option Shares purchased. If this Option is being exercised as
provided by the Plan and Section 3.2 above, by any person or persons other
than the Optionee, the notice must be accompanied by appropriate proof of right
of that person or persons to exercise this Option. As soon as practicable after
the effective exercise of this Option, the Optionee will be recorded on the
stock transfer books of the Company as the owner of the Option Shares
purchased, and the Company will deliver to the Optionee one or more duly issued
stock certificates evidencing ownership.


 


4.2                                 Payment. At the time of exercise of this Option, the
Optionee must pay the total purchase price of the Option Shares to be purchased
entirely in cash (including a check, bank draft or money order, payable to the
order of the Company); provided, however, that the Committee, in its sole
discretion, may allow such payment to be made, in whole or in part, by
tender of a promissory note (on terms acceptable to the Committee in its sole
discretion) or a Broker Exercise Notice or Previously Acquired Shares, or by a
combination of such methods. If Optionee is permitted to pay the total purchase
price of this Option in whole or in part with Previously Acquired Shares,
the value of those shares will equal their Fair Market Value on the date of
exercise, in whole or in part, of this Option.


 


5.                                      Rights of Optionee;
Transferability.


 


5.1                                 Rights as a Shareholder. The Optionee has no rights as a
shareholder with respect to the Option Shares issuable upon exercise of this
Option unless and until all conditions to the effective exercise of this Option
(including, without limitation, the conditions stated in Sections 4 and 6 of
this Agreement) have been satisfied and the Optionee has become the holder of
record of the Option Shares. No adjustment will be made for dividends or
distributions for which the record Date precedes the date the Optionee becomes
the holder of record of the Option Shares, except as may otherwise be
provided in the Plan or determined by the Committee in its sole discretion.


 


5.2                                 Restrictions on Transfer. Except under testamentary will or the
laws of descent and distribution or as otherwise expressly permitted by the
Plan, no right or interest of the Optionee in this Option before exercise may be
assigned or transferred, or subjected to any lien, during the lifetime of the
Optionee, either voluntarily or involuntarily, directly or indirectly, by


 


3

















 


operation of law or
otherwise. The Optionee will, however, be entitled to designate a beneficiary
to receive this Option upon Optionee’s death, and, in the event of the Optionee’s
death, exercise of this Option (to the extent permitted under Section 3.2(a) of
this Agreement) may be made by the Optionee’s legal representatives, heirs
and legatees.


 


5.3                                 Breach of Confidentiality, Assignment of
Inventions or Non-Compete Agreements. Notwithstanding anything in this Agreement or the
Plan to the contrary, if Optionee materially breaches the terms of any written
confidentiality, assignment of inventions or non-compete agreement entered into
with the Company or any Subsidiary, whether such breach occurs before or after
termination of the Optionee’s service to the Company, the Committee may immediately
terminate all rights of the Optionee under the Plan and this Agreement.


 


6.                                      Securities Law and Other
Restrictions.


 


Notwithstanding any other
provision of the Plan or this Agreement, the Optionee may not sell,
assign, transfer or otherwise dispose of, any Option Shares unless (a) there
is in effect with respect to the Option Shares a registration statement under
the Securities Act and any applicable state or foreign securities laws or an
exemption from such registration, and (b) there has been obtained any
other consent, approval or permit from any other regulatory body that the
Committee, in its sole discretion, deems necessary or advisable. The Company may condition
a sale or transfer by Optionee upon the receipt of any representations or
agreements from the parties involved, and the placement of any legends on
certificates representing Option Shares, as may be deemed necessary by the
Company in order to comply with such securities law or other restrictions.


 


7.                                      Withholding Taxes.


 


The Company is entitled
to (a) withhold and deduct from future amounts owed to Optionee, or make
other arrangements for the collection of, all legally required amounts
necessary to satisfy any federal, state or local withholding and
employment-related tax requirements attributable to this Option including,
without limitation, the grant or exercise of this Option or a disqualifying
disposition of any Option Shares, or (b) require the Optionee promptly to
remit the amount of such withholding to the Company before acting on the
Optionee’s notice of exercise of this Option. If the Company is unable to
withhold such amounts, for whatever reason, the Optionee agrees to pay to the
Company an amount equal to the amount the Company would otherwise be required
to withhold under federal, state or local law.


 


8.                                      Adjustments.


 


If any reorganization,
merger, consolidation, recapitalization, liquidation, reclassification, stock
dividend, stock split, combination of shares, rights offering, divestiture or
extraordinary dividend (including a spin-off), or any other similar change in
the corporate structure or shares of the Company occurs, the Committee (or, if
the Company is not the surviving corporation in any such transaction, the board
of directors of the surviving corporation), in order to prevent dilution or
enlargement of the rights of the Optionee, must make appropriate adjustment to
the number and kind of securities or other property (including cash) subject
to, and the exercise price of, this Option.


 


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9.                                      Subject to Plan.


 


This Option and the
Option Shares granted and issued under this Agreement have been granted and
issued under, and are subject to the terms of, the Plan. The terms of the Plan
are incorporated by reference in this Agreement in their entirety, and the
Optionee, by execution of this Agreement, acknowledges having received a copy
of the Plan. The provisions of this Agreement will be interpreted as to be
consistent with the Plan, and any ambiguities in this Agreement will be
interpreted by reference to the Plan. If any provision of this Agreement is
inconsistent with the terms of the Plan, and the Plan does not permit that
provision to vary from the terms of the Plan, the terms of the Plan will
prevail.


 


10.                               Miscellaneous.


 


10.1                           Binding Effect. This Agreement will be binding upon the
heirs, executors, administrators and successors of the parties to this
Agreement.


 


10.2                           Governing Law. This Agreement and all rights and
obligations under this Agreement will be construed in accordance with the Plan
and governed by the laws of the State of Minnesota, without regard to conflicts
of laws provisions. Any legal proceeding related to this Agreement will be
brought in an appropriate Minnesota court and the parties to this Agreement
consent to the exclusive jurisdiction of the court for this purpose.


 


10.3                           Entire Agreement. This Agreement and the Plan state the
entire agreement and understanding of the parties to this Agreement with
respect to the grant and exercise of this Option and the administration of the
Plan and supersede all prior agreements, arrangements, plans and understandings
relating to the grant and exercise of this Option and the administration of the
Plan.


 


10.4                           Amendment and Waiver. Other than as provided in the Plan,
this Agreement may be amended, waived, modified or canceled only by a
written instrument executed by the parties to this Agreement or, in the case of
a waiver, by the party waiving compliance.


 


The parties to this Agreement
have executed this Agreement effective the day and year first above written.


 


	
   

  	
  SOUTHWEST CASINO CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Thomas E. Fox, President

  
	
   

  	
   

  
	
   

  	
   

  
	
  By execution of this Agreement, 

  	
  OPTIONEE

  
	
  the Optionee acknowledges having

  	
   

  
	
  received a copy of the Plan.

  	
   

  
	
   

  	
  (Signature)

  
	
   

  	
   

  
	
   

  	
  (Name and Address)

  
	
   

  	
   

  
	
   

  	
   

  



 


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