Document:

Exhibit 10.53

 

INCENTIVE STOCK OPTION AGREEMENT

 

THIS INCENTIVE STOCK OPTION AGREEMENT (the “Agreement”) is entered into
and effective March 20, 2008 (the “Date of Grant”), by and between
Southwest Casino Corporation (the “Company”) and James B. Druck (the “Optionee”).

 

A.            The Company has adopted its 2004 Stock
Option 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 employees of the Company and its Subsidiaries (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 170,000 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.  Subject to the 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 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 $0.48.

 

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 installments beginning 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

  	
   

  
	
  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

  	
   

  

 

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 March 19, 2018 (the “Time of
Termination”).

 

3.2           Termination of Employment.

 

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

 

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

 

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 employ of the
Company or any Subsidiary.  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 or a
Subsidiary that expressly addresses the 

 

2

 

potential 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           Employment.  Nothing in
this Agreement will be construed to (a) limit in any way the right of the
Company to terminate the employment or service 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 particular position, at any particular
rate of compensation or for any particular period of time.

 

5.2           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, 

 

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

 

5.3           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 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.

 

5.4           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 employment with the
Company or any Subsidiary, the Committee may immediately terminate all rights
of the Optionee under the Plan and this Agreement.

 

6.             Securities Law and Other
Restrictions.

 

6.1           Securities Law 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
wages of the Optionee (or from other amounts that may be due and owing to the
Optionee from the Company), 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 

 

4

 

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.

 

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.          Incentive Stock Option
Limitations.

 

10.1         Limitation on Amount.  To the extent
that the aggregate Fair Market Value (determined as of the date of grant) of
the shares of 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 first time by the Optionee during any calendar year (under the Plan and
any other incentive stock option plans of the Company or any subsidiary or
parent 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 to
time), excess incentive stock options will be treated as non-statutory stock
options in the manner stated in the Plan.

 

10.2         Limitation on Exercisability; Disposition of Option
Shares.  If and to the extent the Option remains
unexercised more than one year after Optionee’s termination of employment by
reason of death or Disability, or more than 3 months after Optionee’s
termination for any reason other than death or Disability, the Option shall be
deemed 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
occurs before the expiration of 2 years after the Date of grant, or the
expiration of one year after Optionee’s exercise and acquisition of shares
acquired under this Option (a “disqualifying disposition”), the Option will, to
the extent of the disqualifying disposition, be treated in a manner similar to
a non-statutory stock option.

 

10.3         No Representation or Warranty.  Section 422
of the Code and the rules and regulations under Section 422 are
complex, and neither the Plan nor this Agreement purports to summarize or
otherwise stated all of the conditions that need to be satisfied in order for
this Option to qualify as an incentive stock option.  In addition, this Option may contain terms
and conditions that allow for exercise of this Option beyond the periods
permitted by Section 422 of the Code, including, without limitation, the
periods described in Section 10.2 of this Agreement.  Accordingly, the Company makes no
representation or warranty regarding whether the exercise of this Option will
qualify as the exercise of an incentive stock option, and the Company
recommends that the Optionee consult with the Optionee’s own advisors before
making any determination regarding the exercise of this Option or the sale of
the Option Shares.

 

5

 

11.          Miscellaneous.

 

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

 

11.2         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.

 

11.3         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.

 

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 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

  	
   

  
	
   

  	
  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, the
Optionee must not dispose of the Option Shares purchased upon exercise of this
Option until at least two (2) years from the Date of Grant and at least
one (1) year from the Date of Exercise. 
If these holding periods are not met, the sale or other disposition of
the Option Shares will be a disqualifying disposition under Section 422(a) of
the United States Tax Code.

 

6Exhibit 10.54

 

INCENTIVE STOCK OPTION AGREEMENT

 

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

 

A.            The Company has adopted its 2004 Stock
Option 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 employees of the Company and its Subsidiaries (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 170,000 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.  Subject to the 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 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 $0.48.

 

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 installments beginning 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

  	
   

  
	
  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

  	
   

  

 

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 March 19, 2018 (the “Time of
Termination”).

 

3.2           Termination of Employment.

 

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

 

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

 

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 employ of the
Company or any Subsidiary.  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 or a
Subsidiary that expressly addresses the 

 

2

 

potential 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           Employment.  Nothing in
this Agreement will be construed to (a) limit in any way the right of the
Company to terminate the employment or service 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 particular position, at any particular
rate of compensation or for any particular period of time.

 

5.2           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, 

 

3

 

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

 

5.3           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 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.

 

5.4           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 employment with the
Company or any Subsidiary, the Committee may immediately terminate all rights
of the Optionee under the Plan and this Agreement.

 

6.             Securities Law and Other
Restrictions.

 

6.1           Securities Law 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
wages of the Optionee (or from other amounts that may be due and owing to the
Optionee from the Company), 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 

 

4

 

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.

 

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.          Incentive Stock Option
Limitations.

 

10.1         Limitation on Amount.  To the extent
that the aggregate Fair Market Value (determined as of the date of grant) of
the shares of 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 first time by the Optionee during any calendar year (under the Plan and
any other incentive stock option plans of the Company or any subsidiary or
parent 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 to
time), excess incentive stock options will be treated as non-statutory stock
options in the manner stated in the Plan.

 

10.2         Limitation on Exercisability; Disposition of Option
Shares.  If and to the extent the Option remains
unexercised more than one year after Optionee’s termination of employment by
reason of death or Disability, or more than 3 months after Optionee’s
termination for any reason other than death or Disability, the Option shall be
deemed 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
occurs before the expiration of 2 years after the Date of grant, or the
expiration of one year after Optionee’s exercise and acquisition of shares
acquired under this Option (a “disqualifying disposition”), the Option will, to
the extent of the disqualifying disposition, be treated in a manner similar to
a non-statutory stock option.

 

10.3         No Representation or Warranty.  Section 422
of the Code and the rules and regulations under Section 422 are
complex, and neither the Plan nor this Agreement purports to summarize or
otherwise stated all of the conditions that need to be satisfied in order for
this Option to qualify as an incentive stock option.  In addition, this Option may contain terms
and conditions that allow for exercise of this Option beyond the periods
permitted by Section 422 of the Code, including, without limitation, the
periods described in Section 10.2 of this Agreement.  Accordingly, the Company makes no
representation or warranty regarding whether the exercise of this Option will
qualify as the exercise of an incentive stock option, and the Company
recommends that the Optionee consult with the Optionee’s own advisors before
making any determination regarding the exercise of this Option or the sale of
the Option Shares.

 

5

 

11.          Miscellaneous.

 

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

 

11.2         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.

 

11.3         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.

 

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 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

  	
   

  
	
   

  	
  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, the
Optionee must not dispose of the Option Shares purchased upon exercise of this
Option until at least two (2) years from the Date of Grant and at least
one (1) year from the Date of Exercise. 
If these holding periods are not met, the sale or other disposition of
the Option Shares will be a disqualifying disposition under Section 422(a) of
the United States Tax Code.

 

6

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