**Exhibit 10.54**

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**INCENTIVE STOCK OPTION AGREEMENT**

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THIS INCENTIVE STOCK OPTION AGREEMENT (the “Agreement”) is entered intoand effective March 20, 2008 (the “Date of Grant”), by and betweenSouthwest Casino Corporation (the “Company”) and Thomas E. Fox (the “Optionee”).

 

A.            The Company has adopted its 2004 StockOption Plan (the “Plan”) which authorizes the Board of Directors of theCompany, or a committee as provided for in the Plan (the Board or thiscommittee are referred to as the “Committee” in this Agreement), to grantincentive stock options to employees of the Company and its Subsidiaries (asdefined in the Plan).

 

B.            The Company desires to give the Optionee aninducement to acquire a proprietary interest in the Company and an addedincentive to advance the interests of the Company by granting to the Optioneean option to purchase shares of common stock 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.***

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The Company hereby grants to the Optionee the right, privilege, andoption (the “Option”) to purchase 170,000 shares (the “Option Shares”) of theCompany’s common stock, $.001 par value (the “Common Stock”), according to theterms and subject to the conditions stated in this Agreement and as stated inthe Plan.  Subject to the provisions of Section 10of this Agreement, the Option is intended to be an “incentive stock option,” asthat term is used in Section 422 of the Internal Revenue Code of 1986, asamended (the “Code”).

 

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

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The per share price to be paid by Optionee upon exercise of this Optionwill be $0.48.

 

# **3.****            *****Duration of Option andTime of Exercise.***

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## 3.1           Initial Period of Exercisability. Subject to Sections 3.2 and 3.3 below, this Option will becomeexercisable with respect to the Option Shares in 12 installments beginning onthe last day of each fiscal quarter of the Company, as provided in the tablebelow.  The table below states theinitial dates of exercisability of each installment and the number of OptionShares as to which this Option will become exercisable on those dates:

 
| **Initial Date of  Exercisability**                         | ** ** | **Number of Option Shares  Available for Exercise** | ** ** |
|-----------------------------------------------------------------------|------------|------------------------------------------------------------------------------|------------|
| March 20,  2008                                                  |       | 42,500                                                                       |       |
| March 31,  June 30, Sept. 30 & Dec. 31, 2008  |       | 10,625                                                                       |       |
| March 31,  June 30, Sept. 30 & Dec. 31, 2009  |       | 10,625                                                                       |       |
| March 31,  June 30, Sept. 30, & Dec. 31, 2010 |       | 10,625                                                                       |       |

 

Theright to exercise this Option is cumulative with respect to the Option Sharesbecoming exercisable on the dates stated above; provided, however, that in noevent will this Option be 

 

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exercisableafter, and this Option will become void and expire as to all unexercised OptionShares at, 5:00 p.m. (Minnesota time) on March 19, 2018 (the “Time ofTermination”).

 

## 3.2           Termination of Employment.

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### (a)           Termination Due 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).

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### (b)           Termination for Reasons Other Than Death, Disabilityor 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.

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## 3.3           Change in Control.

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### (a)           Impact of Change in Control. If a Change in Control of the Company occurs whereby the acquiringentity or successor to the Company does not assume this Option or replace itwith a substantially equivalent incentive award, then, as of the date of theChange of Control, this Option will vest as to all shares and becomeimmediately exercisable in full and will remain exercisable until the Time ofTermination, regardless of whether the Optionee remains in the employ of theCompany or any Subsidiary.  In addition,if a change in control occurs, the Committee, in its sole discretion andwithout 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 theexcess of the Fair Market Value (as defined in the Plan) of those Option Sharesimmediately before the effective date of the Change in Control over the pershare exercise price of this Option.

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### (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 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 in Section 1504(a) ofthe Code without regard to Section 1504(b) of the Code) of which theCompany is a member, would constitute a “parachute payment” (as defined in Section 280G(b)(2) ofthe Code), the payments to the Optionee stated herein will be reduced to thelargest amount that will result in no portion of the payments being subject tothe excise tax imposed by Section 4999 of the Code; provided, however,that if the Optionee is subject to a separate agreement with the Company or aSubsidiary that expressly addresses the 

 

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

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

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

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## 4.2           Payment.  At the timeof exercise of this Option, the Optionee must pay the total purchase price ofthe Option Shares to be purchased entirely in cash (including a check, bankdraft 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 theCommittee in its sole discretion) or a Broker Exercise Notice or PreviouslyAcquired Shares, or by a combination of such methods.  If Optionee is permitted to pay the totalpurchase price of this Option in whole or in part with Previously AcquiredShares, the value of those shares will equal their Fair Market Value on thedate of exercise, in whole or in part, of this Option.

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

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## 5.1           Employment.  Nothing inthis Agreement will be construed to (a) limit in any way the right of theCompany to terminate the employment or service of the Optionee at any time, or (b) beevidence of any agreement or understanding, express or implied, that theCompany will retain the Optionee in any particular position, at any particularrate of compensation or for any particular period of time.

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## 5.2           Rights as a Shareholder. The Optionee has no rights as a shareholder with respect to the OptionShares issuable upon exercise of this Option unless and until all conditions tothe effective exercise of this Option (including, without limitation, theconditions stated in Sections 4 and 6 of this Agreement) have been satisfiedand the Optionee has become 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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## exceptas may otherwise be provided in the Plan or determined by the Committee in itssole discretion.

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## 5.3           Restrictions on Transfer. Except under testamentary will or the laws of descent and distributionor as otherwise expressly permitted by the Plan, no right or interest of theOptionee in this Option before exercise may be assigned or transferred, orsubjected to any lien, during the lifetime of the Optionee, either voluntarilyor involuntarily, directly or indirectly, by operation of law orotherwise.  The Optionee will, however,be entitled to designate a beneficiary to receive this Option upon Optionee’sdeath, and, in the event of the Optionee’s death, exercise of this Option (tothe extent permitted under Section 3.2(a) of this Agreement) may bemade by the Optionee’s legal representatives, heirs and legatees.

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## 5.4           Breach of Confidentiality, Assignment of Inventions orNon-Compete Agreements.  Notwithstanding anything inthis Agreement or the Plan to the contrary, if Optionee materially breaches theterms of any written confidentiality, assignment of inventions or non-competeagreement entered into with the Company or any Subsidiary, whether such breachoccurs before or after termination of the Optionee’s employment with theCompany or any Subsidiary, the Committee may immediately terminate all rightsof the Optionee under the Plan and this Agreement.

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# **6.****            *****Securities Law and OtherRestrictions.***

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## 6.1           Securities Law Restrictions. Notwithstanding any other provision of the Plan or this Agreement, theOptionee may not sell, assign, transfer or otherwise dispose of, any OptionShares unless (a) there is in effect with respect to the Option Shares aregistration statement under the Securities Act and any applicable state orforeign securities laws or an exemption from such registration, and (b) therehas been obtained any other consent, approval or permit from any otherregulatory body that the Committee, in its sole discretion, deems necessary oradvisable.  The Company may condition asale or transfer by Optionee upon the receipt of any representations oragreements from the parties involved, and the placement of any legends oncertificates representing Option Shares, as may be deemed necessary by theCompany in order to comply with such securities law or other restrictions.

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

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The Company is entitled to (a) withhold and deduct from futurewages of the Optionee (or from other amounts that may be due and owing to theOptionee from the Company), or make other arrangements for the collection of,all legally required amounts necessary to satisfy any federal, state or localwithholding and employment-related tax requirements attributable to this Optionincluding, without limitation, the grant or exercise of this Option or adisqualifying 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.***

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If any reorganization, merger, consolidation, recapitalization,liquidation, reclassification, stock dividend, stock split, combination ofshares, rights offering, divestiture or extraordinary dividend (including a spin-off),or any other similar change in the corporate structure or shares of 

 

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the Company occurs, the Committee (or, if the Company is not thesurviving corporation in any such transaction, the board of directors of thesurviving corporation), in order to prevent dilution or enlargement of therights of the Optionee, must make appropriate adjustment to the number and kindof securities or other property (including cash) subject to, and the exerciseprice of, this Option.

 

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

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This Option and the Option Shares granted and issued under thisAgreement have been granted and issued under, and are subject to the terms of,the Plan.  The terms of the Plan areincorporated 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.***

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## 10.1         Limitation on Amount.  To the extentthat the aggregate Fair Market Value (determined as of the date of grant) ofthe shares of Common Stock with respect to which one or more incentive stockoptions (within the meaning of Section 422 of the Code) are exercisablefor the first time by the Optionee during any calendar year (under the Plan andany other incentive stock option plans of the Company or any subsidiary orparent corporation 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 totime), excess incentive stock options will be treated as non-statutory stockoptions in the manner stated in the Plan.

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## 10.2         Limitation on Exercisability; Disposition of OptionShares.  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) ofthe Code) of shares of Common Stock acquired under the exercise of the Optionoccurs before the expiration of 2 years after the Date of grant, or theexpiration of one year after Optionee’s exercise and acquisition of sharesacquired under this Option (a “disqualifying disposition”), the Option will, tothe extent of the disqualifying disposition, be treated in a manner similar toa non-statutory stock option.

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## 10.3         No Representation or Warranty.  Section 422of the Code and the rules and regulations under Section 422 arecomplex, and neither the Plan nor this Agreement purports to summarize orotherwise stated all of the conditions that need to be satisfied in order forthis Option to qualify as an incentive stock option.  In addition, this Option may contain termsand conditions that allow for exercise of this Option beyond the periodspermitted by Section 422 of the Code, including, without limitation, theperiods described in Section 10.2 of this Agreement.  Accordingly, the Company makes norepresentation or warranty regarding whether the exercise of this Option willqualify as the exercise of an incentive stock option, and the Companyrecommends that the Optionee consult with the Optionee’s own advisors beforemaking any determination regarding the exercise of this Option or the sale ofthe Option Shares.

 

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

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## 11.1         Binding Effect. This Agreement will be binding upon the heirs, executors, administratorsand successors of the parties to this Agreement.

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

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

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## 11.4         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 theparties to this Agreement or, in the case of a waiver, by the party waivingcompliance.

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

 
| ** **                        | **SOUTHWEST  CASINO CORPORATION** |
|-----------------------------------|-----------------------------------|
| ** **                        | ** **                        |
| ** **                        | ** **                        |
|                              | By                                |   |
|                              | Its                               |   |
|                              |                              |
|                              |                              |
| By execution of this  Agreement,  | **OPTIONEE**                      |
| the Optionee  acknowledges having | ** **                        |
| received a copy of the  Plan.     | ** **                        |
|                              | ** **                        |
|                              | (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 leastone (1) year from the Date of Exercise. If these holding periods are not met, the sale or other disposition ofthe Option Shares will be a disqualifying disposition under Section 422(a) ofthe United States Tax Code.***

 

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