Horseshoe Gaming, L.L.C. - Unit Option Agreement

EXHIBIT 10.27


HORSESHOE GAMING, L.L.C.


UNIT OPTION AGREEMENT


THIS UNIT OPTION AGREEMENT (this "Agreement") is entered into as of February 1, 1997 by and between Horseshoe Gaming, L.L.C. (the "Company") and Urs Vogel ("Optionee") pursuant to the Company's 1997 Unit Option Plan (the "Plan"). All capitalized terms not otherwise defined herein shall have the meaning set forth in the Plan.


RECITALS


A. The Company considers it desirable to give Optionee an incentive to advance the Company's interest through the opportunity to acquire an equity interest and thus participate in the Company's growth, development and financial success.


B. The Company has determined to grant Optionee the right to purchase Units pursuant to the terms and conditions of this Agreement.


AGREEMENT


NOW, THEREFORE, in consideration of the covenants hereinafter set forth, the parties agree as follows:


1. Option; Number of Units. The Company hereby grants to Optionee the right (the "Option") to purchase up to 126,245 Units (the "Units") at a price of $3.47 per Unit (the "Purchase Price"). The Option and the right to purchase all or any portion of the Units are subject to the terms and conditions stated in this Agreement and in the Plan, including, without limitation, the provisions of Sections 4, 10, 13 (b), and 14 of the Plan and Sections 3 and 4 hereof. Upon exercise of the Option, Optionee shall become a member of the Company, with the rights and benefits, and subject to the terms and conditions, set forth in the Company's Limited Liability Company Agreement and the Company's Limited Liability Company Agreement shall (if necessary) be amended to so provide. The Optionee agrees to comply with, and be subject to, the provisions of the Company's Limited Liability Company Agreement and to do all acts required thereunder.


2. Vesting. The Option shall vest in three (3) equal annual installments of 33 1/3% of the Units covered by the Option on each of the first through third anniversaries of the date of Optionee's employment with the Company pursuant to the Employment Agreement between the Company and Optionee dated November 1, 1995. Notwithstanding the foregoing, in the event


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Jack B. Binion (including any entities through which Jack B. Binion holds his ownership interest in the Company), family members of Jack B. Binion and/or trusts established for the benefit of his heirs transfer controlling interest in the Company to a third party in a transaction other than a public offering, the Option shall immediately become fully vested.


3. Term of Option. Except for the rights conferred upon the Company pursuant to Section 7 below, the Option, and Optionee's right to exercise the Option, shall terminate when the first of the following occurs:


(a) termination pursuant to Section 13 (b) or Section 14 of
the Plan;


(b) the expiration of ten (10) years from the date hereof; or


(c) ninety (90) days after the date of termination of
Optionee's (i) employment or (ii) consulting relationship, as
applicable, with the Company and all of the Subsidiaries and
Related Entities, unless such termination results from
Optionee's death or disability (within the meaning of Section
105 (d) (4) of the Internal Revenue Code of 1986, as amended)
or Optionee dies within ninety (90) days after the date of
termination of Optionee's employment or consulting
relationship with the Company and all of the Subsidiaries and
Related Entities, in which case this Agreement and the Option
shall terminate 180 days after the date of termination of
Optionee's employment or consulting relationship with the
Company and all of the Subsidiaries and Related Entities.


4. Termination of Employment. The termination for any reason of Optionee's employment or consulting relationship with the Company and all of the Subsidiaries and Related Entities shall not accelerate the vesting of the Option or affect the number of Units with respect to which the Option may be exercised; provided, however, that the Option may only be exercised with respect to that number of Units which could have been purchased under the Option had the Option been exercised by Optionee on the date of such termination and shall in all events be subject to Section 3 hereof.


5. Death of Optionee; No Assignment. The rights of Optionee under this Agreement may not be assigned or transferred except by will, by the laws of descent or distribution or inter vivos to a trust for the benefit of Optionee or Optionee and Optionee's spouse and may be exercised during the lifetime of Optionee only by such Optionee; provided, however, that in the event of disability (within the meaning of Section 105 (d) (4) of the Internal Revenue Code of 1986, as amended) of Optionee, a designee of Optionee (or the Optionee's legal representative if Optionee has not designated anyone) may exercise the Option on behalf of Optionee (provided the Option would have been exercisable by Optionee) until the right to exercise the Option expires pursuant to Section 3 hereof. Any attempt to sell, pledge, assign, hypothecate, transfer or otherwise dispose of the Option in contravention of this Agreement or the Plan shall be void and shall have no effect. If Optionee should die while Optionee is engaged in an employment or consulting relationship with the Company and/or any Subsidiary or Related Entity, and provided Optionee's rights hereunder shall have vested, in whole or in part, pursuant to Section 2 hereof,


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Optionee's, designee, legal representative, or legatee, the successor trustee of Optionee's inter vivos trust or the person who acquired the right to exercise the Option by reason of the death of Optionee (individually, a "Successor") shall succeed to Optionee's rights under this Agreement. After the death of Optionee, only a Successor may exercise the Option.


6. Exercise of Option. On or after the vesting of all or any portion of the Option in accordance with Section 2 hereof and until termination of the Option in accordance with Section3 hereof, the Option may be exercised by Optionee (or such other person specified in Section 5 hereof) to the extend exercisable as determined under Section 2 hereof, upon delivery of the following to the Company at its principal executive offices:


(a) a written notice of exercise which identifies this
Agreement and states the number of Units to be purchased;


(b) a check, cash or an combination thereof in the amount of
the aggregate Purchase Price (or payment of the aggregate
Purchase Price in such other form of lawful consideration as
the Committee may approve from time to time under the
provisions of Section 7 of th ...