**Exhibit 10.2**

 

**INCENTIVESTOCK OPTION AGREEMENT**

THIS INCENTIVE STOCK OPTION AGREEMENT (the “Agreement”)is entered into and effective June 29, 2006 (the “Date of Grant”), by andbetween Southwest Casino Corporation (the “Company”) and Tracie Wilson (the “Optionee”).

A.                                   TheCompany has adopted its 2004 Stock Option Plan (the “Plan”) which authorizesthe Board of Directors of the Company, or a committee as provided for in thePlan (the Board or this committee are referred to as the “Committee” in thisAgreement), to grant incentive stock options to employees of the Company andits Subsidiaries (as defined in the Plan).

B.                                     TheCompany desires to give the Optionee an inducement to acquire a proprietaryinterest in the Company and an added incentive to advance the interests of theCompany by granting to the Optionee an option to purchase shares of commonstock of the Company under the Plan.

C.                                     Termsstated but not otherwise defined in this Agreement have the meanings assignedto 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 50,000 shares (the “OptionShares”) of the Company’s common stock, $.001 par value (the “Common Stock”),according to the terms and subject to the conditions stated in this Agreementand as stated in the Plan.  Subject tothe provisions of Section 10 of this Agreement, the Option is intended to be an“incentive stock option,” as that term is used in Section 422 of the InternalRevenue Code of 1986, as amended (the “Code”).

# **2.****                                      *Option Exercise Price.***

The per share price to be paid by Optionee uponexercise of this Option will be $0.75.

# **3.****                                      *Duration of Option and Time of Exercise.***

## 3.1                                 InitialPeriod of Exercisability.  Subject toSections 3.2 and 3.3 below, this Option will become exercisable with respect tothe Option Shares in 12 installments beginning on the last day of each fiscalquarter of the Company, as provided in the table below.  The table below states the initial dates ofexercisability of each installment and the number of Option Shares as to whichthis Option will become exercisable on those dates:

| Initial Date of  Exercisability               | ** ** | **Number of Option Shares  Available for Exercise** |
|-----------------------------------------------|------------|-----------------------------------------------------|
| June 30, Sept. 30 & Dec. 31, 2006         |       | 4,167                                               |
| March 31, June 30, Sept. 30 and Dec. 31, 2007 |       | 4,167                                               |
| March 31, June 30, Sept. 30 and Dec. 31, 2008 |       | 4,166                                               |
| March 31, 1 2009                              |       | 4,167                                               |

The right to exercisethis Option is cumulative with respect to the Option Shares becomingexercisable on the dates stated above; provided, however, that in no event willthis Option be

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exercisable after, and this Option will become voidand expire as to all unexercised Option Shares at, 5:00 p.m. (Minnesota time)on June 28, 2016 (the “Time of Termination”).

## 3.2                                 Terminationof Employment.

### (a)                                  TerminationDue to Death or Disability or Retirement. If Optionee’s employment with the Company and all Subsidiaries isterminated by reason of the Optionee’s death, Disability or Retirement, thisOption will become immediately exercisable in full as of the date of death,Disability or Retirement and remain exercisable for a period of 12 months aftersuch termination (but not after the Time of Termination).

### (b)                                 Terminationfor Reasons Other Than Death, Disability or Retirement.  Except as provided in Section 3.3, ifOptionee’s employment with the Company and all Subsidiaries is terminated forany reason other than death, Disability or Retirement, or Optionee is in theemploy of a Subsidiary and the Subsidiary ceases to be a Subsidiary of theCompany (unless the Optionee continues in the employ of the Company or anotherSubsidiary), all rights of the Optionee under the Plan and this Agreement willterminate immediately without notice of any kind and no portion of the Optionwill be exercisable; provided, however, that if Optionee’s termination is dueto any reason other than voluntary termination by the Optionee or terminationby the Company or any Subsidiary for “Cause” (or Optionee’s death, Disabilityor Retirement), this Option will remain exercisable to the extent exercisableon the date of Optionee’s termination for a period of 90 days.

## 3.3                                 Changein Control.

### (a)                                  Impactof Change in Control.  If a Change inControl of the Company occurs whereby the acquiring entity or successor to theCompany does not assume this Option or replace it with a substantiallyequivalent incentive award, then, as of the date of the Change of Control, thisOption will vest as to all shares and become immediately exercisable in fulland will remain exercisable until the Time of Termination, regardless ofwhether the Optionee remains in the employ of the Company or anySubsidiary.  In addition, if a change incontrol occurs, the Committee, in its sole discretion and without consent ofthe Optionee, may determine that the Optionee will receive, with respect tosome or all of the Option Shares, cash in the amount of the excess of the FairMarket Value (as defined in the Plan) of those Option Shares immediately beforethe effective date of the Change in Control over the per share exercise priceof this Option.

### (b)                                 Limitationon 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 asprovided above (which acceleration could be deemed a “payment” within themeaning of Section 280G(b)(2) of the Code), together with any otherpayments that the Optionee has the right to receive from the Company or anycorporation which is a member of an “affiliated group” (as defined inSection 1504(a) of the Code without regard to Section 1504(b) of theCode) 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 Optioneestated herein will be reduced to the largest amount that will result in noportion of the payments being subject to the excise tax imposed bySection 4999 of the Code; provided, however, that if the Optionee issubject to a separate agreement with the Company or a Subsidiary that expresslyaddresses the

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### potentialapplication of Sections 280G or 4999 of the Code (including, withoutlimitation, that “payments” under such agreement or otherwise will be reduced,that the Optionee will have the discretion to determine which “payments” willbe 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 notapply, and any payments to the Optionee under Section 3.3(a) of this Agreementwill be treated as payments arising under such separate agreement.

# **4.****                                      *Manner of Option Exercise.***

## 4.1                                 Notice.  Optionee may exercise this Option, in wholeor in part from time to time, subject to the conditions in the Plan and in thisAgreement, by delivery, in person, by facsimile or electronic transmission (ifconfirmed) or through the mail, to the Company at its principal executiveoffice (Attention: Chief Financial Officer), of a written notice of exercise.  This notice must (a) be in a formsubstantially similar to the form attached to this Agreement as Exhibit A,or such other form as is satisfactory to the Committee, (b) identify thisOption, (c) specify the number of Option Shares with respect to which thisOption is being exercised, and (d) be signed by the person or persons soexercising this Option.  The notice mustbe accompanied by payment in full of the total purchase price of the OptionShares purchased.  If this Option isbeing exercised as provided by the Plan and Section 3.2 above, by any person orpersons other than the Optionee, the notice must be accompanied by appropriateproof of right of that person or persons to exercise this Option.  As soon as practicable after the effectiveexercise of this Option, the Optionee will be recorded on the stock transferbooks of the Company as the owner of the Option Shares purchased, and theCompany will deliver to the Optionee one or more duly issued stock certificatesevidencing ownership.

## 4.2                                 Payment.  At the time of exercise of this Option, theOptionee must pay the total purchase price of the Option Shares to be purchasedentirely in cash (including a check, bank draft or money order, payable to theorder of the Company); provided, however, that the Committee, in its solediscretion, may allow such payment to be made, in whole or in part, by tenderof a promissory note (on terms acceptable to the Committee in its solediscretion) or a Broker Exercise Notice or Previously Acquired Shares, or by acombination of such methods.  If Optioneeis permitted to pay the total purchase price of this Option in whole or in partwith Previously Acquired Shares, the value of those shares will equal theirFair Market Value on the date of exercise, in whole or in part, of this Option.

# **5.****                                      *Rights of Optionee; Transferability.***

## 5.1                                 Employment.  Nothing in this Agreement will be construedto (a) limit in any way the right of the Company to terminate the employment orservice of the Optionee at any time, or (b) be evidence of any agreement or understanding,express or implied, that the Company will retain the Optionee in any particularposition, at any particular rate of compensation or for any particular periodof time.

## 5.2                                 Rightsas a Shareholder.  The Optionee hasno rights as a shareholder with respect to the Option Shares issuable uponexercise of this Option unless and until all conditions to the effectiveexercise of this Option (including, without limitation, the conditions statedin Sections 4 and 6 of this Agreement) have been satisfied and the Optionee hasbecome the holder of record of the Option Shares.  No adjustment will be made for dividends ordistributions for which the record Date precedes the date the Optionee becomesthe holder of record of the Option Shares,

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## except as may otherwise be provided in thePlan or determined by the Committee in its sole discretion.

## 5.3                                 Restrictionson Transfer.  Except undertestamentary will or the laws of descent and distribution or as otherwiseexpressly permitted by the Plan, no right or interest of the Optionee in thisOption before exercise may be assigned or transferred, or subjected to anylien, during the lifetime of the Optionee, either voluntarily or involuntarily,directly or indirectly, by operation of law or otherwise.  The Optionee will, however, be entitled todesignate a beneficiary to receive this Option upon Optionee’s death, and, inthe event of the Optionee’s death, exercise of this Option (to the extentpermitted under Section 3.2(a) of this Agreement) may be made by the Optionee’slegal representatives, heirs and legatees.

## 5.4                                 Breachof Confidentiality, Assignment of Inventions or Non-Compete Agreements.  Notwithstanding anything in this Agreement orthe Plan to the contrary, if Optionee materially breaches the terms of any writtenconfidentiality, assignment of inventions or non-compete agreement entered intowith the Company or any Subsidiary, whether such breach occurs before or aftertermination of the Optionee’s employment with the Company or any Subsidiary,the Committee may immediately terminate all rights of the Optionee under thePlan and this Agreement.

# **6.****                                      *Securities Law and Other Restrictions.***

## 6.1                                 SecuritiesLaw Restrictions.  Notwithstandingany 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 ineffect with respect to the Option Shares a registration statement under theSecurities Act and any applicable state or foreign securities laws or anexemption from such registration, and (b) there has been obtained any otherconsent, 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 transferby Optionee upon the receipt of any representations or agreements from theparties involved, and the placement of any legends on certificates representingOption Shares, as may be deemed necessary by the Company in order to complywith such securities law or other restrictions.

# **7.****                                      *Withholding Taxes.***

The Company is entitled to (a) withhold and deductfrom future wages of the Optionee (or from other amounts that may be due andowing to the Optionee from the Company), or make other arrangements for thecollection of, all legally required amounts necessary to satisfy any federal,state or local withholding and employment-related tax requirements attributableto this Option including, without limitation, the grant or exercise of thisOption or a disqualifying disposition of any Option Shares, or (b) require theOptionee promptly to remit the amount of such withholding to the Company beforeacting on the Optionee’s notice of exercise of this Option.  If the Company is unable to withhold suchamounts, for whatever reason, the Optionee agrees to pay to the Company anamount equal to the amount the Company would otherwise be required to withholdunder 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 structureor shares of

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the Company occurs, theCommittee (or, if the Company is not the surviving corporation in any suchtransaction, the board of directors of the surviving corporation), in order toprevent dilution or enlargement of the rights of the Optionee, must makeappropriate adjustment to the number and kind of securities or other property(including cash) subject to, and the exercise price of, this Option.

# **9.****                                      *Subject to Plan.***

This Option and the Option Shares granted and issuedunder this Agreement have been granted and issued under, and are subject to theterms of, the Plan.  The terms of thePlan are incorporated by reference in this Agreement in their entirety, and theOptionee, by execution of this Agreement, acknowledges having received a copyof the Plan.  The provisions of thisAgreement will be interpreted as to be consistent with the Plan, and anyambiguities in this Agreement will be interpreted by reference to thePlan.  If any provision of this Agreementis inconsistent with the terms of the Plan, and the Plan does not permit thatprovision to vary from the terms of the Plan, the terms of the Plan willprevail.

# **10.****                              *****Incentive Stock OptionLimitations.***

## 10.1                           Limitationon Amount.  To the extent that theaggregate Fair Market Value (determined as of the date of grant) of the sharesof Common Stock with respect to which one or more incentive stock options(within the meaning of Section 422 of the Code) are exercisable for the firsttime by the Optionee during any calendar year (under the Plan and any otherincentive stock option plans of the Company or any subsidiary or parentcorporation of the Company (within the meaning of the Code)) exceeds $100,000(or such other amount as may be prescribed by the Code from time to time),excess incentive stock options will be treated as non-statutory stock optionsin the manner stated in the Plan.

## 10.2                           Limitationon Exercisability; Disposition of Option Shares.  If and to the extent the Option remainsunexercised more than one year after Optionee’s termination of employment byreason of death or Disability, or more than 3 months after Optionee’stermination for any reason other than death or Disability, the Option shall bedeemed to be a non-statutory stock option. In addition, if a disposition (as defined in Section 424(c) of the Code)of shares of Common Stock acquired under the exercise of the Option occursbefore the expiration of 2 years after the Date of grant, or the expiration ofone year after Optionee’s exercise and acquisition of shares acquired underthis Option (a “disqualifying disposition”), the Option will, to the extent ofthe disqualifying disposition, be treated in a manner similar to anon-statutory stock option.

## 10.3                           NoRepresentation or Warranty.  Section422 of the Code and the rules and regulations under Section 422 are complex,and neither the Plan nor this Agreement purports to summarize or otherwisestated all of the conditions that need to be satisfied in order for this Optionto qualify as an incentive stock option. In addition, this Option may contain terms and conditions that allow forexercise of this Option beyond the periods permitted by Section 422 of theCode, including, without limitation, the periods described in Section 10.2 ofthis Agreement.  Accordingly, the Companymakes no representation or warranty regarding whether the exercise of thisOption will qualify as the exercise of an incentive stock option, and theCompany recommends that the Optionee consult with the Optionee’s own advisorsbefore making any determination regarding the exercise of this Option or thesale of the Option Shares.

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# **11.****                               *Miscellaneous.***

## 11.1                           BindingEffect.  This Agreement will bebinding upon the heirs, executors, administrators and successors of the partiesto this Agreement.

## 11.2                           GoverningLaw.  This Agreement and all rightsand obligations under this Agreement will be construed in accordance with thePlan and governed by the laws of the State of Minnesota, without regard toconflicts of laws provisions.  Any legalproceeding related to this Agreement will be brought in an appropriateMinnesota court and the parties to this Agreement consent to the exclusivejurisdiction of the court for this purpose.

## 11.3                           EntireAgreement.  This Agreement and thePlan state the entire agreement and understanding of the parties to thisAgreement with respect to the grant and exercise of this Option and theadministration of the Plan and supersede all prior agreements, arrangements,plans and understandings relating to the grant and exercise of this Option andthe administration of the Plan.

## 11.4                           Amendmentand Waiver.  Other than as provided inthe Plan, this Agreement may be amended, waived, modified or canceled only by awritten instrument executed by the parties to this Agreement or, in the case ofa waiver, by the party waiving compliance.

The parties to this Agreement have executed this Agreementeffective the day and year first above written.
|                                                                                                  | ** ** | **SOUTHWEST CASINO CORPORATION** |
|--------------------------------------------------------------------------------------------------|------------|----------------------------------|
|                                                                                             | ** ** | ** **                       |
|                                                                                             | ** ** | ** **                       |
|                                                                                             |       | By                               |   |
|                                                                                             |       | Its                              |   |
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| By execution of  this Agreement,  the Optionee acknowledges having  received a copy of the Plan. | ** ** | **OPTIONEE**                     |
|                                                                                             | ** ** | ** **                       |
|                                                                                             | ** ** | (Signature)                      |
|                                                                                             | ** ** |                             |
|                                                                                             |       | (Name and Address)               |
|                                                                                             |       |                             |
|                                                                                             |       |                             |

 

***To qualify for incentive stock option treatment, theOptionee must not dispose of the Option Shares purchased upon exercise of thisOption until at least two (2) years from the Date of Grant and at least one (1)year from the Date of Exercise.  If theseholding periods are not met, the sale or other disposition of the Option Shareswill be a disqualifying disposition under Section 422(a) of the United StatesTax Code.***

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