Form 8-K
8-K — Accel Entertainment, Inc.
Accession: 0001698991-26-000053
Filed: 2026-07-14
Period: 2026-07-14
CIK: 0001698991
SIC: 7900 (SERVICES-AMUSEMENT & RECREATION SERVICES)
Item: Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers
Item: Regulation FD Disclosure
Item: Financial Statements and Exhibits
Documents
8-K — acel-20260714.htm (Primary)
EX-10.1 (leadershiptransitionagreem.htm)
EX-10.2 (toucanoriginalapa.htm)
EX-10.3 (toucanapa-firstamendment.htm)
EX-10.4 (arlimitedliabilitycompanya.htm)
EX-10.5 (executiveemploymentagreeme.htm)
EX-99.1 (q22026leadershiptransition.htm)
GRAPHIC (accel_logographicxglossya.jpg)
XML — IDEA: XBRL DOCUMENT (R1.htm)
8-K
8-K (Primary)
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acel-20260714
0001698991false00016989912026-07-142026-07-14
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 14, 2026
ACCEL ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)
Delaware 001-38136 98-1350261
(State or other jurisdiction
of incorporation) (Commission
File Number) (IRS Employer
Identification No.)
140 Tower Drive
Burr Ridge,
Illinois 60527
(Address of principal executive offices) (Zip Code)
(630) 972-2235
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading symbol(s) Name of each exchange on which registered
Class A-1 common stock, par value $0.0001 per share ACEL New York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(b)
On July 14, 2026, Derek Harmer notified Accel Entertainment, Inc. (the “Company”) that he will be resigning from his position as Chief Compliance Officer of the Company, effective as of March 31, 2027, to pursue other career opportunities. Mr. Harmer’s resignation is not the result of any dispute or disagreement with the Company, the Company’s management or the Board of Directors of the Company (the “Board”) on any matter relating to the Company’s operations, policies or practices.
On July 14, 2026, the Company entered into a Transition Agreement with Mr. Harmer (the “Transition Agreement”), which amends the Executive Employment Agreement by and between the Company and Mr. Harmer dated July 16, 2020, as amended as of July 15, 2023. The Transition Agreement provides for certain post-separation arrangements in connection with Mr. Harmer’s departure as Chief Compliance Officer and subsequent service on the Company’s Compliance Committee. Pursuant to the terms of the Transition Agreement, Mr. Harmer’s employment with the Company will end on March 31, 2027 (the “Transition Date”), at which time he will have no further employment relationship with the Company and will no longer serve as an officer of the Company. Effective on the day immediately following the Transition Date, subject to specified conditions, the Company will appoint Mr. Harmer to serve as a member of the Company’s Compliance Committee (the “Compliance Committee”). While Mr. Harmer serves on the Compliance Committee, Mr. Harmer will be an independent contractor to the Company and will be entitled to compensation under the related Compliance Committee Appointment Agreement, which is attached as Exhibit A to the Transition Agreement. The Compliance Committee Appointment Agreement provides for an initial one-year term and compensation of $10,000 for each calendar quarter, billed in arrears.
Under the Transition Agreement, Mr. Harmer is entitled to a 2026 grant of 42,085 restricted stock units (“RSUs”), which were granted on June 5, 2026 with a vesting commencement date of February 25, 2026, and which vest over a two-year service-based vesting period in two equal installments on the first and second anniversaries of February 25, 2026. For purposes of vesting of Mr. Harmer’s time-based RSUs, including the 2026 RSUs, Mr. Harmer’s service as a member of the Compliance Committee will be deemed to constitute continuous service to the Company or its affiliates for purposes of continued vesting of his time-based RSUs, subject to his timely execution and non-revocation of a general release following the Transition Date. Mr. Harmer’s performance-based RSUs will vest in accordance with the applicable award agreements as if a covered termination occurred on the Transition Date, and his outstanding stock options will be treated as if his employment or other service terminated on the Transition Date, with unvested options forfeited and vested options expiring if not exercised within 90 days following the Transition Date, unless otherwise provided in the applicable option award agreement. Mr. Harmer will remain eligible to receive an annual bonus for 2026, with his individual performance target percentage deemed to be no less than 75% of target and his financial performance target percentage determined based on the Company’s achievement of applicable financial targets. If the Company removes Mr. Harmer from the Compliance Committee other than for Cause (as defined in the Transition Agreement) prior to the full vesting of his time-based RSUs, those unvested time-based RSUs will vest in full as of the date of such removal.
The foregoing description of the Transition Agreement, including the Compliance Committee Appointment Agreement attached thereto, is qualified in its entirety by reference to the full text of the Transition Agreement, a copy of which is filed as Exhibit 10.1 attached hereto, and the terms of which are incorporated by reference herein.
(c)
On July 14, 2026, the Company announced that Stan Guidroz, age 59, was appointed by the Board as the Company’s Chief Operating Officer, effective July 14, 2026.
Mr. Guidroz has served as the Founder and Chief Executive Officer of Toucan Gaming, LLC (“Toucan Gaming”) since 2022, which the Company acquired as its Louisiana gaming operations subsidiary in November 2024. Mr. Guidroz previously served as the Vice President of Southern Operations of Jacobs Entertainment, Inc., the owner and operator of gaming and entertainment facilities,
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from 2002 to 2022. Mr. Guidroz received his bachelor’s degree in business administration and management and his Master of Business Administration from the University of Louisiana at Lafayette.
There is no arrangement or understanding between Mr. Guidroz and any other persons pursuant to which Mr. Guidroz was selected as the Company’s Chief Operating Officer. There are no family relationships between Mr. Guidroz and any director or other executive officer of the Company. Except as described below, Mr. Guidroz has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
Mr. Guidroz has certain continuing economic interests in Toucan Gaming. The Company owns 85% of the outstanding membership interests of Toucan Gaming, LLC, and Toucan Management, LLC (“Toucan Management”) owns 15% of the outstanding membership interests of Toucan Gaming, LLC.
Mr. Guidroz owns Toucan Management, which was a party to the Asset Purchase Agreement, dated April 11, 2023, as amended by the First Amendment to Asset Purchase Agreement, dated November 1, 2024 (collectively, the “Purchase Agreement”), by and among the Company, Accel Entertainment, LLC, a wholly owned subsidiary of the Company (“Accel Entertainment”), Toucan Gaming and Toucan Management, pursuant to which the Company acquired substantially all of the assets of Toucan Device Owner, LLC, formerly known as Toucan Gaming, LLC (the “Toucan Acquisition”). Pursuant to the Purchase Agreement, Accel Entertainment is required to make annual installment payments to Toucan Gaming of $500,000 on each of the first ten anniversaries of the closing of the Toucan Acquisition. Nine annual installment payments remain outstanding as of the date of this Current Report on Form 8-K. The installment payments are not affected by Mr. Guidroz’s employment with the Company and continue to be governed by the Purchase Agreement. The Purchase Agreement also provides that remaining unpaid installment payments may accelerate upon specified events, including certain sale transactions involving the Company or Toucan Gaming.
In addition, the Toucan Gaming Amended and Restated Limited Liability Company Agreement, dated as of November 1, 2024 (the “Toucan LLCA”), provides for certain put and call rights with respect to the 15% membership interest held by Toucan Management. The Company has a call right to purchase all such membership interests after the tenth anniversary of November 1, 2024, or earlier upon specified events, including termination of Mr. Guidroz’s employment for cause or a sale of the Company. Toucan Management and related parties have a put right to require the Company to repurchase all, but not less than all, of their membership interests after the seventh anniversary of November 1, 2024, following termination of Mr. Guidroz’s employment without cause or following certain other events described in the Toucan LLCA. The applicable purchase price for the put or call is based on the amount the Toucan Management members would receive if Total Equity Value (as defined in the Toucan LLCA) were distributed to such members.
The foregoing descriptions of the Purchase Agreement and the Toucan LLCA are qualified in their entirety by reference to the full text of such agreements, copies of which are filed as Exhibit 10.2 and 10.3, respectively, attached hereto, and the terms of which are incorporated by reference herein.
In addition, on July 14, 2026, the Company entered into an amended and restated employment agreement with Mr. Guidroz, effective as of July 14 2026 (the “A&R Guidroz Employment Agreement”). Pursuant to the terms of the A&R Guidroz Employment Agreement, Mr. Guidroz’s base salary will be at an initial annual rate of $500,000. Mr. Guidroz will be eligible to receive an annual performance bonus with a target amount equal to 65% of his annual base salary, with his annual bonus for 2026 prorated to reflect the increase in his target bonus amount to 65% from 50% under his prior employment agreement. Mr. Guidroz will also be eligible to receive a one-time promotion grant consisting of 20,000 RSUs, which will vest ratably over three years from the grant date or such other date approved by the Board or the Compensation Committee. Commencing in calendar year 2027, Mr. Guidroz will be eligible to receive annual equity-based incentive compensation awards with a target grant date value equal to 115% of his annual base salary. Upon a covered termination of employment, which includes the Company’s termination of Mr. Guidroz’s employment without cause, Mr. Guidroz’s resignation for good reason or the Company’s non-renewal of the A&R Guidroz Employment Agreement without cause at the end of the applicable term, Mr. Guidroz is entitled to severance equal to his annual base salary as of the termination date, any annual bonus for the prior completed fiscal year to the extent earned but unpaid and his target annual bonus for the calendar year in which the termination occurs, payable in installments over a 12-month period, and up to 12 months of continued COBRA coverage, subject to his execution and non-revocation of a release of claims. If such covered termination occurs within one year following a
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change in control, he is also entitled to a pro rata bonus for the year of termination and accelerated vesting of outstanding equity awards. Under the A&R Guidroz Employment Agreement, Mr. Guidroz is subject to non-competition and non-solicitation restrictions during his employment and for a period of two years thereafter.
The foregoing description of the A&R Guidroz Employment Agreement is qualified in its entirety by reference to the full text of the A&R Guidroz Employment Agreement, a copy of which is filed as Exhibit 10.4 attached hereto, and the terms of which are incorporated by reference herein.
Item 7.01 Regulation FD Disclosure.
On July 14, 2026, the Company issued a press release relating to the management changes discussed in this Current Report on Form 8-K. A copy of the press release is furnished herewith as Exhibit 99.1. Exhibit 99.1 shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that Section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit
Number Description
10.1
Transition Agreement, dated July 14, 2026, by and between Accel Entertainment, Inc., and Derek Harmer
10.2
Asset Purchase Agreement, dated April 11, 2023, by and among, Accel Entertainment, LLC, Accel Entertainment, Inc., Toucan Gaming, LLC, Toucan Management, LLC and Stan Guidroz
10.3
First Amendment to Asset Purchase Agreement, dated November 1, 2024, by and among, Accel Entertainment, LLC, Accel Entertainment, Inc., Toucan Gaming, LLC, Toucan Management, LLC and Stan Guidroz
10.4
Toucan Gaming, LLC Amended and Restated Limited Liability Company Agreement, dated November 1, 2024
10.5
Amended and Restated Employment Agreement, dated July 14 2026, by and between Accel Entertainment, Inc., and Stan Guidroz
99.1
Press Release by Accel Entertainment, Inc., dated July 14, 2026
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
ACCEL ENTERTAINMENT, INC.
Date: July 14, 2026 By:
/s/ Scott Levin
Scott Levin
Chief Legal Officer & Corporate Secretary
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EX-10.1
EX-10.1
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Document
Exhibit 10.1
TRANSITION AGREEMENT
This TRANSITION AGREEMENT (“Agreement”), is entered into as of July 14, 2026 (the “Effective Date”), by Accel Entertainment, Inc., a Delaware corporation (the “Company”), and Derek Harmer (“Harmer”), and amends that certain Executive Employment Agreement by and between the Company and Harmer dated July 16, 2020, and amended as of July 15, 2023 (the “Employment Agreement”).
WHEREAS, the Employment Agreement and Harmer’s employment with the Company shall terminate as set forth herein;
WHEREAS, reference is made to those certain grant notices issued to Harmer by the Company and associated award agreements between Harmer and the Company, in each case, pursuant to the Accel Entertainment, Inc. Long Term Incentive Plan, as amended from time to time (the “LTIP”), whereby the Company granted Harmer certain Restricted Stock Units (as such term is defined in the LTIP) (“RSUs”). Such grant notices and award agreements are set forth on Schedule 1 hereto and are collectively referred to herein as the “RSU Agreements” and each a “RSU Agreement” (which such defined term as used herein, for the avoidance of doubt, includes both (i) RSUs subject to vesting conditions based on both continued service requirements and the achievement of performance goals and (ii) RSUs subject to vesting conditions based solely on continued service requirements); and
WHEREAS, in order to facilitate an orderly transition associated with Harmer’s departure as Chief Compliance Officer (“CCO”) of the Company, the parties hereto desire to amend the Employment Agreement and agree to certain post-separation terms (including with respect to the RSU Agreements and the Option Agreements (defined below)) as set forth herein.
NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1.Definitions. Capitalized terms used and not defined in this Agreement shall have the respective meanings assigned to them in the Employment Agreement.
2.Expiration of Employment Agreement. The term of the Employment Agreement (as amended hereby), and Harmer’s employment with the Company thereunder, shall end on March 31, 2027 (the “Transition Date”); provided that such term may earlier terminate upon a termination of Harmer’s employment as set forth in Section 4.1 of the Employment Agreement. As of the Transition Date, Harmer shall have no further employment relationship with the Company or any of its Affiliates, and Harmer agrees that such separation from employment shall effectuate Employee’s automatic resignation as an officer of the Company and as an officer of any of the Company’s Affiliates (as applicable), in each case effective as of the Transition Date. Harmer agrees to execute any reasonable documents required to effectuate such resignations. The Company and Harmer acknowledge and agree that Harmer’s employment termination as of the Transition Date shall not constitute a Covered Termination and Harmer shall not be entitled to any of the payments set forth in Section 5.2(a) of the Employment Agreement. For
the avoidance of doubt, Harmer shall be entitled to receive the Accrued Benefits as set forth in Section 5.1 of the Employment Agreement.
3.Base Salary; Continued Healthcare. As As of January 1, 2027, Harmer’s annual base salary shall be $300,000 per annum. Following the Transition Date, and subject to the requirements of Section 7 of this Agreement, Harmer will be entitled to receive continued healthcare coverage pursuant to the provisions of COBRA in accordance with the terms and conditions of Section 5.2(b) of the Employment Agreement (the “Continued Healthcare Benefits”).
4.Long-Term Incentive Compensation.
(a)2026 LTIP Grant. The Company shall grant Harmer equity-based incentive compensation in 2026 pursuant to the terms of Section 3.3 of the Employment Agreement; provided that such grant shall be for 42,085 Restricted Stock Units and shall be subject to vesting conditions based solely on continued service requirements (the “2026 RSUs”). The 2026 RSUs are subject to the terms of the LTIP and an award agreement governing the 2026 RSUs, and (i) shall be subject to a two-year service-based vesting period, which such definition of service shall include Harmer’s service as a member of the Compliance Committee (as hereinafter defined) and (ii) shall vest in two equal installments on the first and second anniversaries of the vesting commencement date for the 2026 RSUs. The grant notice and corresponding award agreement with respect to the 2026 RSUs is referred to herein as the “2026 RSU Agreement.” The parties acknowledge that the 2026 RSUs were granted on June 5, 2026, with a vesting commencement date of February 25, 2026. Harmer shall not be entitled to receive any other equity-based incentive compensation pursuant to the terms of the Employment Agreement.
(b)Existing RSU Agreements and Option Agreements. With respect to any RSU Agreement identified in the “Award Type” column as a “RSU” on Schedule 1 hereto, as well as the 2026 RSU Agreement (collectively, the “Time-Based RSUs”), for purposes of any vesting that requires Harmer’s continuous employment with or service to the Company or its Affiliate, notwithstanding anything in any plan or award to the contrary, Harmer’s service as a member of the Compliance Committee shall be deemed to be continuous employment with or service to the Company or its Affiliate (the “Service Definition Benefit”). With respect to (i) any RSU Agreement identified in the “Award Type” column as a “PSU” on Schedule 1 hereto (the “Performance-Based RSUs”), vesting pursuant to such Performance-Based RSUs shall be in accordance with the terms of the applicable award agreement as if a “Qualifying Termination” (as defined in such award agreement) occurred on the Transition Date and (ii) each outstanding stock option agreement in respect of shares of Company common stock granted to Harmer listed on Schedule 1 (collectively, the “Option Agreements”), for purposes of exercisability of any Company stock options pursuant to such Option Agreements Harmer shall be deemed to have terminated employment or other service with the Company as of the Transition Date, with unvested options automatically forfeited on the Transition Date and vested options expiring if not exercised within 90 days of the Transition Date (unless otherwise provided in the applicable Option Agreement).
5.Annual Bonus. The Company shall pay Harmer an Annual Bonus in respect of calendar year 2026 pursuant to the terms of Section 3.2 of the Employment Agreement; provided that (i) with respect to the individual performance target percentage, the percentage applied shall not be less than 75% of such target, and (ii) with respect to the financial performance target percentage, the percentage applied
shall be determined in accordance with the Company’s achievement of applicable financial targets. Harmer shall not be entitled to receive an Annual Bonus in respect of calendar year 2027.
6.Compliance Committee Membership.
(a)Effective on the day immediately following the Transition Date, the Company will appoint Harmer to serve (such services referred to herein as the “Compliance Services”) as a member of the Company’s Compliance Committee (the “Compliance Committee”) on the terms set forth in the Compliance Committee Appointment Agreement substantially in the form attached hereto as Exhibit A (the “Appointment Agreement”), subject to Harmer satisfying the regulatory suitability requirements set forth therein and provided that there has not been a termination of Harmer’s employment as set forth in Section 4.1 of the Employment Agreement prior to the Transition Date. The term that Harmer serves as a member of the Compliance Committee is referred to as the “Committee Term.” For the avoidance of doubt, Compliance Services shall be in addition to, and not in lieu of, Harmer’s obligations pursuant to the Cooperation provision in Section 6.6 of the Employment Agreement.
(b)During the Committee Term, Harmer shall be an independent contractor to the Company, and, as such, Harmer shall be free to provide services to other entities during the Committee Term as long as (i) Harmer does not violate any of the terms of this Agreement, the terms of the Employment Agreement that survive its termination (including the covenants in Sections 6.2 - 6.4 of the Employment Agreement), the terms of the Appointment Agreement, the terms of any RSU Agreement, or other obligations Harmer owes to the Company or its Affiliates and (ii) such services do not interfere or conflict with the Company’s or its Affiliate’s gaming licenses, as determined in the sole discretion of the Board. Harmer agrees to attend meetings (whether in-person or virtually) of the Compliance Committee. To the extent the Company requires Harmer to travel to serve in performance of the Compliance Services, the Company shall reimburse Harmer for such reasonable travel expenses in accordance with the terms of any travel reimbursement policies of the Company in effect at the time. The method of performance, time of performance, place of performance, hours utilized in such performance, and other details of the manner of performance of Harmer’s Compliance Services shall be within the sole control of Harmer. In the performance of the Compliance Services, Harmer shall comply with all applicable laws and shall be an independent contractor and not be deemed to be an employee or agent of the Company or any of its Affiliates or have any power to bind or commit the Company or any of its Affiliates. Harmer acknowledges and agrees that, in respect of his performance of Compliance Services, as a non-employee, Harmer shall not be eligible for, and hereby waives any rights to, any benefits or benefit plans sponsored by the Company or any of its Affiliates for the benefit of its or their employees (other than receipt of vested benefits accrued as of the Transition Date and any right to continued participation in the Company’s health insurance policies pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985).
(c)Harmer acknowledges and agrees that the compensation set forth in the Appointment Agreement shall be Harmer’s sole compensation for the Compliance Services, and Harmer shall not be entitled to any other payment or benefits with respect to the Compliance Services. Notwithstanding anything herein or in any other agreement between the Company and Harmer to the contrary, following the Transition Date, Harmer may retain and use the Company computer issued to Harmer during his period of employment (subject to the Company having a reasonable opportunity to “scrub” the foregoing for confidential information of the Company or its Affiliates).
(d)During the Committee Term, Harmer shall be bound by, and agrees to comply with, the Confidential and Proprietary Information and Work Product provisions set forth in Section 6.4 and Section 6.5 of the Employment Agreement, and any references in such to Harmer’s employment in such Sections shall be deemed to apply to Harmer’s service as a member of the Compliance Committee. Notwithstanding the foregoing, nothing in this Agreement (or in the Employment Agreement) shall prohibit or restrict Harmer from: (i) initiating communications directly with, cooperating with, providing information to, causing information to be provided to, or otherwise assisting in an investigation by, any governmental agency (including the Department of Justice, Department of Labor, Securities and Exchange Commission, any Inspector General and any other governmental agency, commission, or regulatory authority) regarding a possible violation of any law; (ii) responding to any inquiry or legal process directed to Harmer from any governmental agency or responding to a subpoena or court order; (iii) testifying, participating or otherwise assisting in any action or proceeding by any governmental agency relating to a possible violation of law; (iv) making any other disclosures that are protected under the whistleblower provisions of any applicable law; or (v) disclosing information if reasonably appropriate in connection with any legal process between Harmer or the Company or any of its affiliates. Nothing in this Agreement requires Harmer to obtain prior authorization before engaging in any conduct described in the preceding sentence, or to notify the Company that Harmer has engaged in any such conduct. Additionally, pursuant to the federal Defend Trade Secrets Act of 2016, an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (A) is made (1) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney and (2) solely for the purpose of reporting or investigating a suspected violation of law; (B) is made to the individual’s attorney in relation to a lawsuit for retaliation against the individual for reporting a suspected violation of law; or (C) is made in a complaint or other document filed in a lawsuit or proceeding, if such filing is made under seal.
(e)In the event that prior to the full vesting of the Time-Based RSUs the Company removes Harmer from the Compliance Committee other than for Cause (as defined below), such unvested Time-Based RSUs shall vest in full as of the date of such removal without Cause. For purposes of this Agreement “Cause” shall mean Harmer’s: (i) material breach of this Agreement, the Appointment Agreement, or any other material written agreement between Harmer and the Company or any of its Affiliates or material breach of any policy or code of conduct established by the Company, any of its Affiliates or the Company’s Board of Directors (the “Board”) and applicable to and previously made available to Harmer; (ii) commission of an act of gross negligence, willful misconduct, breach of fiduciary duty, fraud, theft or embezzlement; (iii) commission of, or conviction or indictment of, or plea of nolo contendere to, any felony (or state law equivalent) or any crime involving moral turpitude; or (iv) commission of any action that could cause Harmer or the Company to be in violation of the Illinois Video Gaming Act or rules established by the Illinois Gaming Board or the laws or regulations in any other State in which the Company operates or plans to operate, or that could cause the revocation or loss of any other material gaming license in any State in which the Company operates or plans to operate; provided, however, that if Harmer’s actions or omissions as set forth in clause (i) are of such a nature that the Board determines they are curable by Harmer, such actions or omissions must remain uncured 30 days after the Board has provided Harmer written notice of the obligation to cure such actions or omissions.
7.General Release Agreement. Harmer will not be eligible for the Continued Healthcare Benefits set forth in Section 3 or the Service Definition Benefit set forth in Section 4 and Section 6(e) shall not be applicable unless, on or after the Transition Date, Harmer timely executes and delivers to the Company a general release of all claims that Harmer may have against the Company and its Affiliates or Persons affiliated with the Company and its Affiliates, in the form set forth in Exhibit B hereto (the “Release”), and such Release becomes effective on or before the 60th day following the Transition Date. In the event that Harmer does not timely execute and deliver such Release, or such Release does not become effective and irrevocable within such period, the Continued Healthcare Benefits shall not be available and neither the Service Definition Benefit nor Section 6(e) shall be applicable.
8.Termination Prior to Transition Date. Notwithstanding anything to the contrary in this Agreement, in the event Harmer’s employment with the Company terminates prior to the Transition Date for any reason, this Agreement shall become null and void as of such actual employment termination date and Harmer shall have no right to any benefits set forth hereunder (and the terms and conditions of the Employment Agreement shall apply instead).
9.Limited Effect. Except as expressly provided in this Agreement (including the confirmation that Harmer’s separation from employment as of the Transition Date is not a Covered Termination), all of the terms and provisions of the Employment Agreement are and will remain in full force and effect and are hereby ratified and confirmed by the parties hereto. Without limiting the generality of the foregoing, the agreements contained herein will not be construed as an agreement to or waiver of any other provision of the Employment Agreement or as a waiver of or consent to any further or future action on the part of either party hereto that would require the waiver or consent of the other party hereto. On and after the Effective Date, each reference in the Employment Agreement to “this Agreement,” “the Agreement,” “hereunder,” “hereof,” “herein,” or words of like import will mean and be a reference to the Employment Agreement as amended by this Agreement.
10.Notices. All notices, requests, demands, claims and other communications permitted or required to be given hereunder must be in writing and shall be deemed duly given and received (a) if personally delivered, when so delivered, (b) if mailed, three business days following the date deposited in the U.S. mail, certified or registered mail, return receipt requested, (c) if sent by e-mail or other form of electronic communication, once transmitted and the confirmation is received, or (d) if sent through an overnight delivery service in circumstances to which such service guarantees next day delivery, the day following being so sent:
If to Harmer, addressed to his last known address on file with the Company;
If to the Company, addressed to:
Accel Entertainment, Inc.
140 Tower Drive
Burr Ridge, IL 60527
Attn: Chief Legal Officer
Email: scott.levin@accelentertainment.com
11.Miscellaneous.
(a)This Agreement is governed by and construed in accordance with the laws of the State of Illinois, without regard to the conflict of laws provisions of such State.
(b)This Agreement shall inure to the benefit of and be binding upon each of the parties hereto and each of their respective permitted successors and permitted assigns.
(c)The headings in this Agreement are for reference only and do not affect the interpretation of this Agreement.
(d)This Agreement may be executed in counterparts, each of which is deemed an original, but all of which constitute one and the same agreement. Delivery of an executed counterpart of this Agreement electronically or by facsimile shall be effective as delivery of an original executed counterpart of this Agreement.
(e)This Agreement, the Employment Agreement (as amended by this Agreement), the RSU Agreements, the Option Agreements and the Appointment Agreement constitute the sole and entire agreement between the parties hereto with respect to the subject matter contained herein, and supersede all prior and contemporaneous understandings, agreements, representations, and warranties, both written and oral, with respect to such subject matter. For the avoidance of doubt, Sections 5.4, 6.2-6.6, 7.1, and 7.2 of the Employment Agreement shall continue to apply and survive the Transition Date. Further for the avoidance of doubt, with respect to the post-termination non-competition and non-solicitation restrictions in Sections 6.2 and 6.3, such post-termination restrictions shall commence as of the Transition Date.
(f)Unless otherwise prohibited by law or specified below, all disputes, claims and causes of action, in law or equity, arising from or relating to this Agreement or its enforcement, performance, breach, or interpretation will be resolved solely and exclusively by final and binding arbitration in Cook County, Illinois through Judicial Arbitration and Mediation Services/Endispute (“JAMS”) before a single neutral arbitrator, in accordance with the JAMS employment arbitration rules then in effect. THE PARTIES HEREBY WAIVE ANY RIGHTS THEY MAY HAVE TO TRIAL BY JURY IN REGARD TO ARBITRABLE CLAIMS. The JAMS rules may be found and reviewed at https://www.jamsadr.com/rules-employment-arbitration. The arbitrator will issue a written decision that contains the essential findings and conclusions on which the decision is based.
(g)The Company makes no representations or warranties to Harmer with respect to any tax, economic or legal consequences of this Agreement or any payments or other benefits provided hereunder, including without limitation under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the Treasury Regulations promulgated thereunder (“Section 409A of the Code”), and no provision of the Agreement shall be interpreted or construed to transfer any liability for failure to comply with Section 409A of the Code from Harmer or any other individual to Company or any of its affiliates. Harmer, by executing this Agreement, shall be deemed to have waived any claim against the Company and its affiliates with respect to any such tax, economic or legal consequences. However, the parties intend that this Agreement and the payments and other
benefits provided hereunder be exempt from the requirements of Section 409A of the Code to the maximum extent possible, whether pursuant to the short-term deferral exception described in Treasury Regulation Section 1.409A-1(b)(4) or otherwise. To the extent Section 409A of the Code is applicable to this Agreement (and such payments and benefits), the parties intend that this Agreement (and such payments and benefits) comply with the deferral, payout and other limitations and restrictions imposed under Section 409A of the Code. Notwithstanding any provision of this Agreement to the contrary, this Agreement shall be interpreted, operated and administered in a manner consistent with such intentions. Without limiting the generality of the foregoing, and notwithstanding any provision of this Agreement to the contrary, with respect to any payments and benefits under this Agreement to which Section 409A of the Code applies, all references in this Agreement to the end of Harmer’s employment are intended to mean Harmer’s “separation from service,” within the meaning of Code Section 409A(a)(2)(A)(i). In addition, if Harmer is a “specified employee,” within the meaning of Code Section 409A(a)(2)(B)(i), at the time of Harmer’s “separation from service,” within the meaning of Code Section 409A(a)(2)(A)(i), then to the extent necessary to avoid subjecting Harmer to the imposition of any additional tax under Section 409A of the Code, amounts that would otherwise be payable under this Agreement during the six-month period immediately following Harmer’s “separation from service,” shall not be paid to Harmer during such period, but shall instead be accumulated and paid to Harmer (or, in the event of Harmer’s death, Harmer’s estate) in a lump sum on the first business day following the date that is six months after Harmer’s separation from service. Moreover, the parties intend that this Agreement be deemed to be amended to the extent necessary to comply with the requirements of Section 409A of the Code and to avoid or mitigate the imposition of additional taxes under Section 409A of the Code, while preserving to the maximum extent possible the essential economics of Harmer’s rights under the Agreement.
Signature Page Follows
IN WITNESS WHEREOF, the Parties have executed this Amendment as of the date first written above.
ACCEL ENTERTAINMENT, INC.
By: /s/ Scott Levin
Name: Scott Levin
Title: Chief Legal Officer and Corporate Secretary
ACCEPTED AND AGREED:
/s/ Derek Harmer
Derek Harmer
[Signature Page to Transition Agreement]
Exhibit A
COMPLIANCE COMMITTEE APPOINTMENT AGREEMENT
April 1, 2027
Derek Harmer
derekh@accelentertainment.com
Re: Accel Entertainment, Inc. Compliance Committee
Dear Derek:
Accel Entertainment, Inc. (“Accel Entertainment” or “Company”) has had discussions with you about serving as a Member of the Company’s Compliance Committee (the “Committee”). This Letter Agreement (“Agreement”) will set forth the terms under which you will serve as a Member of the Committee.
You and Accel acknowledge and agree to the following terms:
•You agree to serve as a Member of the Committee for an initial term of one year.
•In exchange for your service, Accel Entertainment shall pay you $10,000 for each calendar quarter which shall be billed in arrears.
•As part of Accel Entertainment’s compliance plan, Accel Entertainment conducts criminal background checks (“Contractor Background Check”) by a third party utilizing open-source materials to determine if the individual and/or business is a suitable business partner for Accel Entertainment. This Agreement is expressly contingent upon your Contractor Background Check returning such results as would allow Accel Entertainment to conclude that you are and will be a suitable business partner for Accel Entertainment.
While you are a Member of the Committee, you (“Recipient”) may be given access to the Confidential Information of the Company. Recipient agrees to: (i) protect Company's Confidential Information in a reasonable and appropriate manner to the same extent Recipient protects the confidentiality of its own proprietary and confidential information of like kind, but in no event less than a reasonable manner; and (ii) use and reproduce Company's Confidential Information only to perform Recipient’s obligations and exercise its rights pursuant to the Agreement. The obligations set forth in this paragraph shall not apply to information which is: (a) publicly known; (b) already known to the Recipient without obligations of confidentiality; (c) disclosed to Recipient by a third party who is not, to Recipient’s knowledge, under a confidentiality restriction with respect to such Confidential Information; or (d) independently developed by the Recipient without use of Company’s Confidential Information. Disclosure of Confidential Information pursuant to applicable law, a subpoena or other validly issued administrative or judicial process shall not be a breach of Recipient's obligations, provided that Recipient shall provide prior notice to Company of such disclosure if permitted by law. In the event of any actual known breach in relation to any actual known unauthorized access, disclosure or use of Company’s Confidential Information in connection with the Services (a “Security Breach”), to the extent caused by Recipient, Recipient shall be responsible for containing such Security Breach, mitigating potential risks to affected individuals and notifying affected individuals and regulatory authorities of the Security Breach where required by law. Recipient shall be solely responsible for all costs or expenses associated with any remedial actions or notifications to the extent such Security Breach is caused by Recipient. “Confidential Information” shall mean any and all information that should reasonably be deemed to be confidential given the nature or circumstances of the information or disclosure relating to Company or the business, products, markets, condition (financial or other), operations, assets, liabilities, results of operations, cash flows or prospects of Company, including without limitation any notes, analyses, compilations, studies, forecast,
interpretations, or other documents prepared by the Recipient that derive from, contain, reflect or are based upon, in whole or in part, the information furnished by Company.
The parties will indemnify and hold harmless each other from all claims, actions, disputes, suit, proceeding, loss, damage, or expense (including, without limitation, reasonable attorneys’ fees and court costs), arising out of, or relating to any breach of this Agreement by the parties or any of the representations or warranties provided by the parties herein.
The Agreement shall terminate immediately, without any further liability to the other party, if either party: (i) receives a directive from any regulatory body to terminate this Agreement; (ii) receives information from any regulatory body that a continued relationship under this Agreement may negatively impact the party’s good standing with the regulatory body or any of its respective gaming licenses; (iii) is ordered to disassociate from the other party pursuant to Illinois Gaming Board Rule 1800.330, or any similar rule in any other jurisdiction; and/or (iv) has its gaming license revoked or denied, has its renewal denied, or surrenders its license. Additionally, neither party is required to return any consideration exchanged pursuant to the terms of the Agreement.
Notwithstanding the above, either party may terminate the Agreement at any time upon thirty (30) days’ notice with or without cause.
This Agreement shall be governed by the laws of the State of Illinois. In the event that any court of law and/or regulatory body requests changes to the terms of this Agreement to comply with applicable law, rules, and regulations, the parties agree to amend the terms of the Agreement accordingly.
Neither party will assign and/or transfer this Agreement and its rights and/or obligations hereunder without the prior written consent of the other party.
The parties represent and warrant that they have the full power and authority to enter into this Agreement. Neither party has signed any other agreement that would interfere with the validity of this Agreement.
Please countersign and date this Agreement in the space provided below and return a countersigned copy of this Agreement to Accel to confirm your agreement to the foregoing arrangement.
Sincerely:
ACCEL ENTERTAINMENT GAMING, LLC
By: __________________________________
Printed Name:
Its:
Acknowledged and Agreed by Derek Harmer
as of the 1st day of April 2027.
By: ________________________________________
Printed Name: Derek Harmer
Exhibit B
GENERAL RELEASE AGREEMENT
This General Release Agreement (this “Release”) is entered into between Derek Harmer (“Executive”) and Accel Entertainment, Inc. (the “Company”) (collectively, the “parties”).
WHEREAS, Executive and the Company are parties to that certain Executive Employment Agreement dated as of July 16, 2020, as amended as of July 15, 2023 (the “Original Employment Agreement”), and the Transition Agreement dated as of July 14, 2026 (the “TA” and, together with the Original Employment agreement, the “Employment Agreement”)and Leadership Transition and Advisory Services Agreement dated as of February 2, 2026 (the “Employment Agreement”);
WHEREAS, capitalized terms used and not defined in this Release shall have the respective meanings assigned to them in the Employment Agreement;
WHEREAS, Executive’s employment with the Company terminated as of the Separation Date (defined below);
WHEREAS, as of the Separation Date, Executive shall serve as a member of the Company’s Compliance Committee pursuant to the terms of that certain Compliance Committee Appointment Agreement entered into between the parties as of the date hereof; and;
WHEREAS, the Company has agreed to provide Executive the benefits set forth in the TA, subject to Executive’s timely entry into and return (and non-revocation) of this Release and Executive’s compliance with the terms hereof.
NOW THEREFORE, in consideration for the mutual promises and undertakings of the parties as set forth below, Executive and the Company hereby enter into this Release.
1.Employment Separation. The parties acknowledge and agree that Executive’s employment with the Company terminated on March 31, 2027 (the “Separation Date”), pursuant to Section 2 of the TA. As of the Separation Date, Executive (i) has been appointed to serve as a member of the Company’s Compliance Committee pursuant to the terms of that certain Compliance Committee Appointment Agreement entered into between the parties as of the Separation Date (the “Appointment Agreement”) and (ii) has no further employment relationship with the Company or any other Released Party, and, except for his position as a member of the Company’s Compliance Committee, has resigned from and no longer holds any offices, director positions or other positions with the Company or any other Released Party.
2.Acknowledgment of Payment of Wages. By Executive’s signature below, Executive acknowledges that the Company has paid to Executive all wages, salary, compensation, benefits, accrued vacation (if applicable), reimbursable expenses previously submitted by Executive in accordance with applicable Company policy, and any similar payments due Executive from the Company as of the Separation Date. By signing below, Executive acknowledges that the Company does not owe Executive any other amounts arising out of or otherwise in connection with his employment with the Company or any Released Party (excluding, for the avoidance of doubt, the release consideration described in Section 3
below). Executive agrees to promptly (and by no later than 30 days following the Separation Date) submit for reimbursement, and otherwise in accordance with the Company’s reimbursement policies, all final outstanding expenses, if any.
3.Release Consideration. In exchange for Executive’s timely execution (and non-revocation) of this Release and Executive’s other promises herein, the Company agrees to provide Executive with the benefits as set forth in Sections 3 and 4 of the TA, including the Continued Healthcare Benefits and the Service Definition Benefit. By signing below, Executive acknowledges that Executive is receiving the release consideration described in this Section 3 in exchange for waiving Executive’s rights to claims referred to in this Release and Executive would not otherwise be entitled to the consideration.
4.Return of Company Property. Executive hereby warrants to the Company that Executive has returned (without retaining copies thereof) to the Company all property or data of the Company or any Released Party of any type whatsoever that has been in Executive’s possession, custody or control (other than de minimis items not containing the confidential information of the Company of its Affiliates), with the exception of any property or data Executive is authorized to retain in connection with his being a member of the Company’s Compliance Committee. Notwithstanding anything to the contrary set forth herein or the Employment Agreement or TA, the Company hereby acknowledges and agrees that Executive may retain and use his Company-issued computer as his own (subject to the Company having a reasonable opportunity to “scrub” the foregoing for confidential information belonging to the Company or its Affiliates), and Executive may retain, as his own property, copies of any personnel documents, personal to him, previously provided to him by the Company, such as payroll and tax records, as well as his personal rolodex and address book.
5.Surviving Obligations. Executive hereby acknowledges that he continues to be bound by (i) those provisions of the Employment Agreement that survive the termination of Executive’s employment, including Sections 6.2 (Non-Competition), 6.3 (Non-Solicitation), 6.4 (Confidential and Proprietary Information), 6.5 (Work Product), and 6.6 (Cooperation) of the Employment Agreement in accordance with their terms which survive, (ii) Section 6 of the TA, and (iii) the terms and provisions of the Appointment Agreement (collectively the “Surviving Obligations”). For the avoidance of doubt, Sections 5.4, 6.2-6.6, 7.1, and 7.2 of the Employment Agreement shall continue to apply. The parties hereby acknowledge that (x) the TA, (y) the RSU Agreements (as amended by the TA and this Release, as applicable), and (z) the Appointment Agreement remain in full force and effect.
6. General Release and Waiver of Claims.
a.The benefits and promises set forth in this Release are in full satisfaction of all accrued compensation and benefits to which Executive may be entitled by virtue of Executive’s employment with the Company or Executive’s separation from the Company, including pursuant to the Employment Agreement (including those set forth in Article V of the Employment Agreement prior to its amendment by the TA). To the fullest extent permitted by law, Executive, individually and on behalf of his heirs, agents, assigns and representatives, intending to make a full, complete, and general release, unconditionally and irrevocably releases and forever discharges the following persons and entities (collectively, the “Released Parties”): (i) the Company; (ii) the Company’s present and former officers, directors, shareholders, members, managers, employees, agents, representatives, attorneys, and assigns, in each case, in their official capacities with respect
to the Company; (iii) the Company’s present and former parent companies, subsidiaries, successors, affiliated and related entities (collectively, the “Affiliates”); and (iv) all of the Affiliates’ respective present and former officers, directors, shareholders, members, managers, employees, agents, representatives, attorneys, and assigns, in each case, in their official capacities with respect to the Affiliates, from any liability for any and all claims, causes of action, demands, debts, damages, costs, attorneys’ fees, or liabilities of any nature whatsoever, in law or in equity, whether now known or hereafter discovered (collectively, “Released Claims”), that have arisen, or may arise, out of events that have occurred from the beginning of time through the date Executive signs this Release, including, but not limited to, Released Claims relating to or arising from Executive’s employment with the Company and the Affiliates and all contracts or agreements that Executive may have entered into with the Company and the Affiliates, including, but not limited to, the Employment Agreement.
b.The Released Claims include all claims arising out of Executive’s employment with the Company and the Affiliates, including, but not limited to, claims under Title VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991, Sections 1981 through 1988 of Title 42 of the United States Code, the Employee Retirement Income Security Act of 1974 (“ERISA”), the Americans with Disabilities Act, the Americans with Disabilities Act Amendments Act of 2008, the Age Discrimination in Employment Act of 1967, as amended (including as amended by the Older Workers Benefit Protection Act), the Rehabilitation Act of 1973, the Family and Medical Leave Act of 1993, as amended, the Occupational Safety and Health Act, the Sarbanes-Oxley Act of 2002 and the Dodd Frank Wall Street Reform and Consumer Protection Act of 2010, the Fair Labor Standards Act, the Illinois Minimum Wage Law, the Illinois Wage Payment and Collection Act, the Illinois Human Rights Law and all other wage, labor, and civil rights laws of the State of Illinois (each, to the extent permitted by law), and all other federal, state, and local constitutions, statutes, ordinances, and regulations, and including, but not limited to, claims for wrongful or retaliatory discharge (whether arising by statute or common law), retaliation, breach of contract (including under the Employment Agreement), breach of covenant of good faith and fair dealing, interference with contract or economic advantage, defamation, negligence, and any other contract or tort claims, and any claims for compensation, benefits, or damages of any kind not expressly set forth in this Release that could be filed with any court or governmental administrative body or tribunal having jurisdiction over such matters, and this Release resolves and subsumes any and all Released Claims based upon any conduct by the Released Parties. THIS RELEASE INCLUDES MATTERS ATTRIBUTABLE TO THE SOLE OR PARTIAL NEGLIGENCE (WHETHER GROSS OR SIMPLE) OR OTHER FAULT, INCLUDING STRICT LIABILITY, OF ANY OF THE RELEASED PARTIES. Executive represents and warrants that as of the date Executive signs this Release, he knows of no right to which he is entitled under the Fair Labor Standards Act, the Illinois Minimum Wage Law, or Illinois Wage Payment and Collection Act.
c.Executive hereby acknowledges that Executive is aware of the principle that a general release does not extend to claims that the releasor does not know or suspect to exist in his or her favor at the time of executing the release, which, if known by him or her, must have materially affected his or her settlement with the releasee. With knowledge of this principle, Executive hereby agrees to expressly waive any rights he may have to that effect.
d.In no event shall the Released Claims include: (i) any claim to vested benefits under an employee benefit plan that is subject to ERISA and that cannot be released pursuant to ERISA; (ii) any claim based on facts that first occur after the date that Executive executes this Release; (iii) any right to indemnification under Section 7.1 of the Employment Agreement, the TA, that certain Indemnity Agreement dated as of November 20, 2019 between the Company and Executive (the “Indemnity Agreement”), or the Company’s directors & officers insurance policy applicable to Executive; (iv) any right under or any claim to enforce Executive’s rights under this Release (including rights to the benefits set forth in Sections 3 and 5 of the TA); or (vi) any Released Claims that cannot be waived as a matter of law, including claims for unemployment compensation benefits or workers’ compensation insurance benefits; provided, however, Executive acknowledges that the Company and any other Released Party may provide truthful information in response to any application for such benefits.
e.To the fullest extent permitted by law, any dispute regarding the scope of this general release (as well as any other dispute under this Release) will be determined by an arbitrator under the procedures set forth in Section 7.8 (Dispute Resolution; Arbitration) of the Employment Agreement. THE PARTIES ARE KNOWINGLY AND VOLUNTARILY WAIVING THEIR RIGHTS TO TRIAL BY JURY IN ANY CLAIM ARISING OUT OF OR RELATING OT THIS RELEASE.
7.Protected Rights. Executive understands that nothing in this Release limits Executive’s ability to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local government agency or commission (“Government Agencies”); however, Executive understands and agrees that, to the extent permitted by law, Executive is waiving any and all rights to recover any monetary or personal relief from any of the Released Parties as a result of any Government Agency proceeding or subsequent legal actions. Nothing herein waives Executive’s right to receive an award for information provided to a Government Agency (including, for the avoidance of doubt, any monetary award or bounty from any governmental agency or regulatory or law enforcement authority in connection with any protected “whistleblower” activity) and nothing herein or in any other agreement between Executive and any Released Party shall prohibit or restrict Executive from: (i) initiating communications directly with, cooperating with, providing information or making statements to, causing information to be provided to, or otherwise assisting in an investigation by, any Government Agency; (ii) responding to any inquiry or legal process directed to Executive from any Government Agency; (iii) testifying, participating or otherwise assisting in any action or proceeding by any Government Agency; or (iv) making any disclosures that are protected under the whistleblower provisions of any applicable law. Nothing in this Release requires Executive to obtain prior authorization before engaging in any conduct described in this Section 7 or to notify any Released Party that Executive has engaged in any such conduct.
8.Non-disparagement. Executive agrees that Executive will not, directly or indirectly, make any defamatory or disparaging remarks regarding the Company or any Released Party or any of their products or services, whether verbally or in writing, including, but not limited to, on any media outlet (including social media), website or blog; provided, however, nothing in this Section 8 shall restrict or impede Executive from making any of the statements or disclosures, or engaging in any of the activities, permitted under Section 7 above or from providing truthful information in response to a subpoena or other
legal process. The Company agrees that, within five (5) days of the Effective Date, it shall instruct those individuals who are officers or directors of the Company, in each case, as of the Separation Date, to not make any defamatory or disparaging remarks regarding Executive, whether verbally or in writing, including, but not limited to, on any media outlet (including social media), website or blog; provided, however, the instruction may provide that it does not restrict or impede such individuals from making statements or disclosures that are required by subpoena or other legal process or from making truthful statements as reasonably required in the ordinary course of business.
9.Acknowledgements; Advice to Consult with Lawyer or Representation. This is an important legal document. The Company hereby advises Executive to consult with a lawyer or representative of Executive’s choice before signing this Release. By executing and delivering this Release, Executive acknowledges and agrees that:
a.Executive has carefully read this Release;
b.The confidentiality obligations set forth in this Agreement are Executive’s documented preference, are knowing and voluntary, are mutually beneficial to Executive and the Company, and are supported by valid, bargained-for consideration, including consideration to which Executive is not otherwise entitled;
c.Executive has had sufficient time (and at least twenty-one (21) calendar days) to consider this Release before the execution and delivery hereof to the Company. To accept this Release, Executive must deliver his executed Release to the Company care of Scott Levin at scott.levin@accelentertainment.com not later than the twenty-second (22nd) day after the Company provided an executed version of this Release to Executive;
d.Executive has been advised by the Company in writing to discuss this Release with an attorney or representative of Executive’s choice before signing this Release, and Executive has had adequate opportunity to do so prior to executing and delivering this Release;
e.Executive has seven (7) calendar days after signing this Release to revoke it (such seven-day period is referred to as the “Release Revocation Period”). This Release will not become effective or enforceable until the Release Revocation Period has expired without Executive exercising Executive’s revocation right. Any notice of revocation of the Release is effective only if such revocation is in writing and received by the Company care of Scott Levin at scott.levin@accelentertainment.com, on or before the expiration of the Release Revocation Period. Executive understands that if Executive revokes his acceptance of this Release pursuant to this Section 9(d), this Release will be of no force or effect, and Executive will not be entitled to receive the benefits set forth in Section 3 above; provided, however, that the termination of Executive’s employment shall still be effective as of the Separation Date;
f.Executive fully understands the final and binding effect of this Release; the only promises made to Executive to sign this Release are those stated within the four corners of this Release and in entering this Release, Executive has not relied on any representation or statement, written or oral, of any Released Party or Released Party’s agent that is not set forth in this Release; Executive is signing this Release knowingly, voluntarily, and of Executive’s own free will;
Executive relies on Executive’s own judgment in entering into this Release; and Executive understands and agrees to each of the terms and conditions of this Release; and
g.No Released Party has provided any tax or legal advice regarding this Release and Executive has had an adequate opportunity to receive sufficient tax and legal advice from advisors of Executive’s own choosing such that Executive enters into this Release with full understanding of the tax and legal implications thereof
10.Effective Date. This Release is effective on the eighth (8th) day after Executive signs it, provided Executive has not revoked it as of that time (the “Effective Date”).
11.No Waiver. No failure by any party at any time to give notice of any breach by another party of, or to require compliance with, any condition or provision of this Release shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.
12.Third Party Beneficiaries. This Release shall inure to the benefit of the Company, its Affiliates, and their permitted successors and assigns, and each Released Party that is not a signatory hereto is a third-party beneficiary of Executive’s release of claims, covenants, and representations hereunder and shall be entitled to rely on and enforce such release, covenants and representations as if a party hereto.
13.Severability and Modification. To the extent permitted by applicable law, the parties agree that any term or provision of this Release (or part thereof) that renders such term or provision (or part thereof) or any other term or provision (or part thereof) of this Release invalid or unenforceable in any respect shall be severable and shall be modified or severed to the extent necessary to avoid rendering such term or provision (or part thereof) invalid or unenforceable, and such severance or modification shall be accomplished in the manner that most nearly preserves the benefit of the parties’ bargain hereunder.
14.Headings; Interpretation. Titles and headings to Sections hereof are for the purpose of reference only and shall in no way limit, define or otherwise affect the provisions hereof. The word “or” as used herein is not exclusive and is deemed to have the meaning “and/or.” The use herein of the word “including” following any general statement, term or matter shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as “without limitation”, “but not limited to”, or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that could reasonably fall within the broadest possible scope of such general statement, term or matter. All references to Executive’s “employment” with the Company shall be construed as meaning “employed by or providing services to one or more Released Parties, including in Executive’s capacity as an executive of the Company.” Neither this Release nor any uncertainty or ambiguity herein shall be construed or resolved against any party, whether under any rule of construction or otherwise. On the contrary, this Release has been reviewed by each of the parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of the parties.
15.Entire Agreement; Amendment. The parties acknowledge and agree that (i) this Release, (ii) the TA, and (iii) with respect to: (x) the Surviving Obligations, the Employment Agreement, the
Appointment Agreement, (y) the LTIP, the RSU Agreements, and the Option Agreements and any other award documents or agreements applicable to the foregoing, and (z) indemnity, the Indemnity Agreement, and the Company’s directors & officers insurance policy applicable to Executive, constitute the entire agreement between the parties with respect to the matters herein; provided, however, this Release shall complement and be in addition to (and not supersede or replace) any and all obligations Executive has to the Released Parties with respect to non-disclosure, confidentiality, and return of property, and Executive shall not be in breach of any such obligations as a result of any conduct expressly permitted herein. Subject to Section 13, this Release may not be changed orally but only by an agreement in writing agreed to and signed by the parties.
16.Counterparts. This Release may be executed in one or more counterparts (including portable document format (.pdf) and facsimile counterparts), each of which shall be deemed to be an original, but all of which together will constitute one and the same agreement.
17.Governing Law. This Release is governed by and construed in accordance with the laws of the State of Illinois, without regard to the conflict of laws provisions of such State.
18.Section 409A. The intent of the parties is that this Release and the payments and benefits under this Release are either exempt from or comply with the requirements of Section 409A of the Internal Revenue Code of 1986 and the United States Treasury regulations and interpretive guidance issued thereunder (collectively, “Section 409A”), and this Release shall be construed and administered in accordance with such intent. In the event the parties in good faith determine that this Agreement or any payments referenced herein are not in compliance with Section 409A, the parties shall in good faith modify this Agreement (or any other agreements) to comply with Section 409A while endeavoring to maintain to the maximum extent possible the intended economic benefits. Notwithstanding the foregoing, the Company makes no representations that the payments or benefits provided under this Release comply with or are exempt from the requirements of Section 409A and in no event shall the Company or any other Released Party be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by Executive on account of non-compliance with Section 409A.
(Signature Page Follows)
In Witness Whereof, the parties have executed this Release as of the date written below.
Dated:
Accel Entertainment, Inc.
Name:
Title:
Dated:
Derek Harmer
Schedule 1
RSU Agreements
Award Type*
Date of Grant
Total Number of Units Granted
PSU
3/10/2025
21,414
RSU
3/10/2025
21,414
PSU
3/15/2024
23,184
RSU
3/15/2024
23,184
RSU
7/15/2023
40,000
* “PSU” refers to a Restricted Stock Unit that is subject to both time-based and performance-based vesting requirements. “RSU” refers to a Restricted Stock Unit that is subject only to time-based vesting requirements.
Option Agreements
Award Type
Date of Grant
Total Number of Options Granted
Total Number of Options Outstanding as of Effective Date
Incentive Stock Option
3/14/2022
1,846
1,846
Non-Qualified Stock Option
3/14/2022
27,697
27,697
Non-Qualified Stock Option
3/16/2021
32,335
32,335
Non-Qualified Stock Option
7/13/2020
12,176
12,176
Incentive Stock Option
7/13/2020
3,824
3,824
Incentive Stock Option
2/27/2020
21,548
21,548
Non-Qualified Stock Option
2/27/2020
41,452
41,452
[Schedule 1 to Transition Agreement]
EX-10.2
EX-10.2
Filename: toucanoriginalapa.htm · Sequence: 3
Document
Exhibit 10.2
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (as amended, modified or supplemented in accordance with the terms hereof, this “Agreement”), dated as of April 11, 2023, is by and among, Accel Entertainment, LLC, a Delaware limited liability company (such entity or its permitted designee, “Buyer”), Accel Entertainment, Inc. (“Parent,” and collectively with Buyer, the “Buyer Parties”), Toucan Gaming, LLC, a Louisiana limited liability company (“Seller”), Toucan Management, LLC, a Louisiana limited liability company (“Owner”), and Stan Guidroz (“Guidroz”). Seller, Owner and Guidroz are collectively referred to herein as the “Seller Parties.” Certain capitalized terms used but not otherwise defined herein shall have the meanings ascribed thereto in Section 1.1 of this Agreement.
RECITALS
(a)Seller is engaged in the business of owning, operating, placing, servicing and maintaining Video Draw Poker Devices (as defined in the Louisiana Video Draw Poker Devices Control Law) at fuel, retail and restaurant locations (the “Business”).
(b)Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, all of the Assets (as defined below), on the terms and conditions set forth herein.
(c)In order to comply with the regulations promulgated by the Louisiana Gaming Control Board and otherwise set forth the terms and conditions of the other transactions contemplated among the Parties, Buyer, Parent, Seller and Owner are also entering into two additional purchase agreements on the date hereof whereby Buyer will purchase (i) five percent (5%) of the outstanding membership interests of Seller upon the terms, and subject to the conditions, set forth in the Membership Interest Purchase Agreement of event date herewith (the "MIPA"); and (ii) Seller's option (the "LSM Option") to acquire 90% of the membership interests of L.S.M Gaming, Inc. ("LSM") pursuant to the terms, and subject to the conditions, set forth in the LSM Option Purchase Agreement of even date herewith (the "LSM Option Purchase Agreement").
(d)Guidroz owns all of the membership interest of Owner, and Owner owns all of the membership interests of Seller.
(e)Owner and Guidroz, as the direct and indirect holders of the outstanding membership interests of Seller, will derive substantial benefit from the consummation of the transactions contemplated by this Agreement, the MIPA and the LSM Option Purchase Agreement.
AGREEMENT
In consideration of the mutual promises and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 General Definitions. For the purposes of this Agreement, the following terms have the meaning set forth below:
“Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by or is under common control with such Person. As used herein, the term “control” means: (i) the power to vote at least ten percent (10%) of the voting power of a Person, or (ii) the possession, directly or indirectly, of any other power to direct or cause the direction of the management and policies of such a Person, whether through ownership of voting securities, by contract or otherwise.
“Affiliated Group” means an affiliated group as defined in Section 1504 of the Code (or analogous combined, consolidated or unitary group defined under state, local or foreign income Tax Law).
“Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks located in Lafayette, Louisiana are authorized or required by Law to close.
"CARES Act" means the Coronavirus Aid, Relief, and Economic Security Act, and all regulations and guidance issued by any Governmental Authority with respect thereto, as in effect from time to time.
“Code” means the Internal Revenue Code of 1986, as amended.
“Contracts” means all contracts, agreements, licenses, commitments, obligations and understandings, in any case whether written or oral, to which Seller is party other than the LSM Option Purchase Agreement.
"Directly or Indirectly" means as an individual, partner, shareholder, member, creditor, director, officer, principal, agent, employee, trustee, consultant, advisor or in any other relationship or capacity.
"Employee Benefit Plan" means any "employee benefit plan" (as defined under Section 3(3) of ERISA) or any other bonus, deferred compensation, pension, profit-sharing, retirement, stock purchase, stock option, stock appreciation, other forms of incentive compensation, excess benefit, supplemental pension insurance, disability, medical, supplemental unemployment, vacation benefits, payroll practice, fringe benefit, scholarship, sickness, accident, severance, or post-retirement compensation or benefit, welfare or any other employee benefit plan, policy, arrangement or practice, whether written or oral.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated there under.
"ERISA Affiliate" means any entity that would be deemed a "single employer" with the Company or any Subsidiary under Section 414(b), (c), (m) or (0) of the Code or Section 4001 of ERISA.
"Financial Statements" means (i) the unaudited balance sheet as of January 1, 2023 and the related statements of income and operations of Seller for the one (1) months then ended, and the unaudited balance sheets as of December 31, 2022 and December 31, 2021, and the related statements of income and operations of Seller for the fiscal year then ended, attached hereto as Schedule 4.16.
“GAAP” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board.
“Governmental Authority” means any court, tribunal, arbitrator, authority, agency, commission, official or other instrumentality of the United States, any foreign country, or any domestic or foreign state, province, county, city, other political subdivision or any other similar body or organization exercising governmental or quasi-governmental power or authority.
"Gray Gaming Purchase Agreement" means the Purchase Agreement, dated January 13, 2023, between Seller and Gray Gaming LLC to acquire certain assets of Gray Gaming LLC.
“Indebtedness” means, with respect to any Person without duplication, (i) all obligations of such Person for borrowed money, whether current or funded, secured or unsecured, (ii) all obligations of such Person for the deferred purchase price of any property or services (other than trade accounts payable and accrued expenses, to the extent specifically included in the Assumed Liabilities), (iii) all obligations of such Person created or arising under any conditional sale or other title retention agreement, (iv) all obligations of such Person secured by a purchase money mortgage or other Lien, (v) all obligations under leases which shall have been or should be, in accordance with GAAP, recorded as capital leases, (vi) all obligations secured by Liens on property acquired by such Person, whether or not such obligations were assumed by such Person at the time of acquisition of such property, (vii) all obligations of such Person with respect to unfunded employee benefit plans, (viii) all obligations in respect of deferred rent, (ix) any obligations (including all Taxes) deferred pursuant to the CARES Act or similar program (including any unforgiven obligations under any Paycheck Protection Program loan), (x) all obligations of a type referred to in clauses (i) through (ix) above which are directly or indirectly guaranteed by such Person or which such Person has agreed (contingently or otherwise) to purchase or otherwise acquire or in respect of which it has otherwise assured a credit against loss, (xi) interest, principal, prepayment penalty, fees, or expenses, to the extent due or owing in respect of those items listed in clauses (i) through (x) above, whether resulting from their payment or discharge or otherwise, (xii) any refinancings of any of the foregoing obligations, and (xiii) any obligations with respect to deferred revenue or customer deposits.
“Intellectual Property” means, collectively, in the United States and all countries or jurisdictions foreign thereto, (i) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, (ii) all trademarks, all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith, (iii) all moral rights and copyrights in any work of authorship (including but not limited to catalogues and related copy, databases, software, and mask works) and all applications, registrations, and renewals in connection therewith, (iv) all trade secrets and confidential business information, (v) all websites and software, (vi) all other proprietary and intellectual property rights, (vii) all copies and tangible embodiments of any of the foregoing (in whatever form or medium), (viii) the exclusive right to display, reproduce, and create derivative works based on any of the foregoing and (ix) all income, royalties, damages and payments related to any of the foregoing, and the right to sue and recover for past, present or future infringements, misappropriations or other conflict with any intellectual property.
“Law” means the common law of any state or other jurisdiction, or any provision of any foreign, federal, state or local law, statute, code, rule, regulation, order, certification standard, accreditation standard, Permit, judgment, injunction, decree or other decision of any court or other tribunal or Governmental Authority.
“Liabilities” means any indebtedness, liabilities or obligations of any nature whatsoever, whether accrued or unaccrued, absolute or contingent, direct or indirect, asserted or unasserted, fixed or unfixed, known or unknown, choate or inchoate, perfected or unperfected, liquidated or unliquidated, secured or unsecured, or otherwise, and whether due or to become due.
"Material Adverse Effect" means any material adverse effect on the Business, prospects, earnings, operations, Assets, liabilities, business condition (financial or otherwise), results of operations, net worth or contracts of the Business or Seller other than as (a) disclosed on the Disclosure Schedules hereto; (b) consented to in writing by Buyer; (c) attributable to economic or business conditions generally (other than conditions affecting the Business specifically); (d) acts of war or terrorism; (e) changes in conditions in the United States or global economy or capital or financial markets generally, including changes in interest or exchange rates; (f) changes in general legal, tax, regulatory, political or business conditions (other than conditions affecting the Business specifically); (g) changes in generally accepted accounting principles; (h) the execution, announcement or performance of this Agreement or the consummation of the transactions contemplated by this Agreement; or (i) earthquakes hurricanes or other natural disasters.
“Party” means any party to this Agreement.
“Permits” means permits, licenses, registrations, qualifications, approvals and authorizations by or of Governmental Authorities.
"Permitted Lien" means (i) Liens for Taxes not yet due and payable, (ii) inchoate mechanics' and materialmen's liens for construction in progress, and (iii) to the extent such Liens would not reasonably be expected to have a Material Adverse Effect, (A) workmen's, repairmen's, warehousemen's and carriers' liens arising in the ordinary course of business of Seller consistent with past practice, (B) all Liens and other imperfections of title that are typical for the applicable property type and locality, and (C) all Liens expressly disclosed to Buyer as such on the Disclosure Schedules.
“Person” means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, unincorporated association, corporation or other entity or any Governmental Authority.
"Plan" means any Employee Benefit Plan maintained, sponsored, or contributed to by Seller or any ERISA Affiliate on behalf of any employee, member, director or shareholder of Seller (whether current, former or retired) or their beneficiaries, or with respect to which Seller or any Affiliate has any obligation on behalf of such Persons.
"Proceeding" any suit, action, complaint, proceeding, investigation, arbitration, mediation, audit, claim or order.
"Real Property" means any real property presently owned, used, leased, occupied, managed or operated by Seller.
“Seller’s Taxes” means any Taxes (i) imposed on any Seller Party for any taxable period, (ii) imposed with respect to the Business or the Assets for any taxable period (or portion of any taxable period) ending on or before the Closing Date, (iii) imposed in connection with the transactions
contemplated by this Agreement (including any Transfer Taxes), or (iv) imposed on Buyer as a transferee or successor of any Seller Party.
“Seller Transaction Expenses” means (i) all of the fees and expenses incurred or reimbursed by any Seller Party in connection with the negotiation, documentation and consummation of the transactions contemplated by this Agreement, including all fees, expenses, disbursements and other similar amounts paid to attorneys, investment bankers, brokers, financial advisors or accountants, (ii) all payments required to obtain third party consents in connection with the consummation of the transactions contemplated by this Agreement and (iii) all change of control, severance, bonus, stock appreciation, phantom stock or similar payments due by Seller to any Person and other accelerations or increases in rights or benefits of Seller employees under any plan, agreement or arrangement of Seller, which obligation has not been paid as of Closing and, in each case, either (x) arises at or prior to the Closing or (y) is payable or becomes due in whole or in part as a result of the consummation of the transactions contemplated by this Agreement, including all Taxes that are payable by Seller in connection with or as a result of the payment of such liability.
“Subsidiary” or “Subsidiaries” means, with respect to any Person, any corporation, partnership, limited liability company, joint venture or other legal entity of any kind of which such Person (either alone or through or together with one or more of its other Subsidiaries) owns, directly or indirectly, more than 50% of the capital stock or other equity interests the holders of which are (a) generally entitled to vote for the election of the board of directors or other governing body of such legal entity or (b) generally entitled to share in the profits or capital of such legal entity.
"Suitability Determination" means the process of submitting for approval to the Louisiana Gaming Control Board and the Video Gaming Division of the Louisiana State Police information concerning each individual who owns, has or controls, directly or indirectly, more than a five percent (5%) ownership, income or profit interest in a licensee of the Louisiana Gaming Control Board or the Video Gaming Division of the Louisiana State Police; any person who receives more than a five percent (5%) revenue interest in any form in any licensee of the Louisiana Gaming Control Board or the Video Gaming Division of the Louisiana State Police including, but not limited to, a consulting fee, commission, finder’s fee, loan repayment, or any other business expense related to the gaming operation of the licensee; any person who receives or may receive more than five percent (5%) of the gaming revenue from a licensee of the Louisiana Gaming Control Board or the Video Gaming Division of the Louisiana State Police and the spouses of the foregoing persons; any officer, director, partner, member, manager, or managing member of a licensee of the Louisiana Gaming Control Board or the Video Gaming Division of the Louisiana State Police; any trustee, settlor or beneficiary of a trust that owns, has or controls, directly or indirectly, more than a five percent (5%) interest in a licensee of the Louisiana Gaming Control Board or the Video Gaming Division of the Louisiana State Police; and, any person who has the ability to exercise significant influence over a licensee of the Louisiana Gaming Control Board or the Video Gaming Division of the Louisiana State Police. For purposes of this Agreement, a Suitability Determination means confirmation that the Louisiana Gaming Control Board has approved the application or transfer of interests in question.
“Tax” means (i) any multi-national, U.S. federal, state, local or foreign income, gross receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer, registration, value added, escheat or unclaimed property (whether or not considered a Tax under applicable Law), excise, natural resources, entertainment, amusement, severance, stamp, occupation, healthcare (whether or not considered a tax under applicable law), premium, windfall profit, environmental, customs, duties, real property, personal property, ad valorem, capital stock, social security, unemployment, disability, payroll, license,
employee or other withholding, or other tax, of any kind whatsoever, including any interest, penalties or additions to Tax or additional amounts in respect of the foregoing, (ii) any transferee, secondary, contractual, or other liability for a “Tax” as described in clause (i) hereof of another Person, (iii) and any liability for a “Tax” as described in clause (i) hereof of another Person assumed by agreement or arising as a result of being (or ceasing to be) a member of any Affiliated Group (or being included (or required to be included) in any Tax Return relating thereto).
“Tax Returns” means returns, declarations, reports, claims for refund, information returns or other documents (including any related or supporting schedules, statements or information, Treasury Form TD F 90-22.1 and FinCEN Form 114) filed or required to be filed, or maintained or required to be maintained, in connection with the determination, assessment or collection of any Tax of any Party or the administration of any laws, regulations or administrative requirements relating to any Tax.
“Transaction Document” means any agreement, document, certificate or instrument delivered pursuant to or in connection with this Agreement, the MIPA, the LSM Option Purchase Agreement or the transactions contemplated hereby.
ARTICLE II
PURCHASE AND SALE OF THE ASSETS
Section 2.1 Assets. On the terms and subject to the conditions set forth in this Agreement, at the Closing, Seller agrees to sell, transfer, assign and deliver to Buyer or its designee, free and clear of all liens, mortgages, charges, security interests, pledges or other encumbrances or adverse claims or interests of any nature (“Liens”), and Buyer agrees to purchase and assume from Seller, all of Seller’s right, title and interest in and to, all of its assets (which include all assets used in the Business) (other than the Excluded Assets) (collectively, the “Assets”), whether or not such Assets are held by any Seller Party or any of its or his Affiliates, including (a) all leasehold improvements, supplies, furniture and equipment (including all computers) and other tangible personal property, (b) all cash on hand, accounts receivable, and the right to bill and receive payment for products or services provided or performed but unbilled or unpaid as of the Closing and prepaid assets and prepaid expenses of Seller, (c) all books and records of Seller and all customer and vendor information and lists, (d) all Intellectual Property and all goodwill associated therewith, and the exclusive right to display, prepare, reproduce, create derivative works based on, and operate (as applicable) the same, (e) all telephone, electronic mail addresses and facsimile numbers utilized by Seller, (f) rights under the customer and other Contracts, including those set forth on Schedule 2.1(f) (the “Assumed Contracts”), (g) all rights under Permits, including those set forth on Schedule 2.1(g), but excluding Seller’s license under the Louisiana Video Draw Poker Devices Control Law, (h) all cash and cash equivalents held by Seller and (i) all goodwill and other intangible assets associated therewith, in each case owned by a Seller Party or otherwise used in connection with the Business.
Section 2.2 Excluded Assets. Notwithstanding anything to the contrary herein, Seller shall not contribute, convey, assign or transfer to Buyer, and Buyer shall not acquire, the Excluded Assets and the “Assets” shall not include any Excluded Assets. “Excluded Assets” shall mean and be limited to the following assets of Seller: (a) all of Seller’s rights under this Agreement, the MIPA or the LSM Option Purchase Agreement, including the consideration paid to Seller pursuant to this Agreement or such other agreements; (b) all minute books of Seller, including the organizational documents of Seller; (c) any Tax assets of Seller; (d) all employee benefit plans; (e) all rights, obligations and liabilities under Contracts
that are not Assumed Contracts; (f) all bank and other accounts; and (g) all assets of Seller listed on Schedule 2.2.
Section 2.3 Assumed Liabilities. Notwithstanding anything to the contrary contained in this Agreement or any Transaction Document, and regardless of whether such Liability is disclosed in this Agreement, in any of the Transaction Documents, on any Schedule hereto or thereto or otherwise, and regardless of Buyer’s or any of its directors’, officers’, employees’, agents’ or representatives’ knowledge or awareness of any Liability, whether learned in connection with Buyer’s due diligence investigation of the Business or otherwise, Buyer will not assume, agree to pay, perform or discharge or in any way be responsible for any Liabilities of the Business or Seller (the “Excluded Liabilities”), except that Buyer will assume at the Closing only the following Liabilities (the “Assumed Liabilities”): (a) obligations arising under the Assumed Contracts arising with respect to the operation of the Business after the Closing; (b) Seller’s current trade accounts payable and current accrued expenses (including payroll obligations with respect to salary and wages owed to employees of the Business); and (c) all liabilities incurred by the Business in the ordinary course of business (but, excluding, in any event, obligations or Liabilities with respect to Indebtedness, Seller Taxes, Seller Transaction Expenses and any third party claim related to any operations or liabilities of Seller); provided, however, that in no event shall the Assumed Liabilities include any Liability relating to or arising from any (x) breach, or event, circumstance or condition that with notice, lapse of time or both would constitute or result in a breach, by Seller, on or before the Closing Date, of any of its obligations under Contracts or (y) tort, infringement or violation of Law.
Section 2.4 Closing. Subject to the terms and conditions of this Agreement, the closing of the transactions contemplated hereby (the "Closing") shall take place at 10:00 a.m., central time, no later than two (2) Business Days after the last of the conditions to Closing set forth in Sections 8.1 through 8.3 have been satisfied or waived by the Party entitled to the benefit thereof (other than conditions which, by their nature, are to be satisfied at the Closing), remotely by exchange of documents and signatures (or their electronic counterparts), or at such other time, date or place as the parties may mutually agree (the date of the Closing, the "Closing Date"), which will occur (subject to the foregoing regarding conditions to Closing), immediately after the closing of the LSM Option Purchase Agreement and the exercise of the LSM Option.
Section 2.5 Seller Closing Deliveries. At the Closing, the Seller Parties shall have delivered or caused to have been delivered to Buyer:
(a)bills of sale, assignments, endorsements and other documents of title and other good and sufficient instruments of conveyance and transfer, as are effective to vest Buyer with full, complete and marketable right, title and interest in and to the Assets, free and clear of all Liens;
(b)a certificate executed and delivered by the Secretary of Seller certifying: (i) the organizational documents of Seller (as also certified as of a recent date by the Secretary of State of Louisiana) and (ii) copies of resolutions of the board of directors (or equivalent governing body) and the Owner adopting and authorizing the transactions contemplated by this Agreement and the Transaction Documents to which Seller is a party;
(c)certificate of good standing of Seller issued not earlier than ten (10) days prior to the Closing Date by the Secretary of State of Louisiana and each other jurisdiction where Seller is qualified to do business;
(d)documentation evidencing the release of all of Liens upon the Assets;
(e)Required Consents;
(f)a counterpart signature page to the Amended and Restated Operating Agreement of LSM (as Buyer's designee) in substantially the form attached as Exhibit A hereto (the "Buyer Operating Agreement"), duly executed by Guidroz;
(g)a counterpart signature page to the Employment Agreement between Buyer and Guidroz in substantially the form attached as Exhibit B hereto (the "Employment Agreement"), duly executed by Guidroz;
(h)a non-foreign person affidavit dated as of the Closing Date from Seller, sworn under penalty of perjury and in form and substance required under the Treasury Regulations issued pursuant to Section 1445 of the Code stating that Seller is not a “foreign person” as defined in Section 1445 of the Code; and
(i)such other documents and instruments as Buyer may reasonably require in order to effectuate the transactions that are the subject of this Agreement.
Section 2.6 Buyer Closing Deliveries. At the Closing, Buyer shall have delivered or caused to be delivered to the Seller:
(a)the Closing Payment and evidence of the delivery of the Buyer Equity in accordance with Section 3.2;
(b)counterpart signature pages to the Buyer Operating Agreement, duly executed by LSM and Buyer;
(c)a counterpart signature page to the Employment Agreement, duly executed by Buyer;
(d)an agreement pursuant to which Buyer assumes the Assumed Liabilities; and
(e)such other documents and instruments as Seller may reasonably require in order to effectuate the transactions that are the subject of this Agreement.
ARTICLE III
CONSIDERATION AND MANNER OF PAYMENT
Section 3.1 Purchase Price. The aggregate consideration for the Assets and the rights and benefits conferred herein, including the covenants of the Seller Parties set forth in Section 6.7 (the “Purchase Price”), shall be (i) the Base Purchase Price, plus (ii) the Installment Payments (as defined below), plus (iii) the Bonus (as defined below), plus (iv) the Buyer Equity issue to Guidroz, plus (v) the assumption of the Assumed Liabilities, plus (vi) the Purchase Price Adjustment, if any. For purposes hereof: (a) the "Base Purchase Price" shall be an amount equal to $8,900,000; and (b) the “Buyer Equity” means five percent (5%) of the total outstanding membership interests in LSM, such that Guidroz shall own fifteen percent (15%) of LSM in the aggregate following the Closing.
Section 3.2 Payment of Purchase Price.
(a)Deposit. Upon the execution of this Agreement, Buyer shall pay to Seller by wire transfer of immediately available funds an amount equal to Three Million Five Hundred Thousand Dollars ($3,500,000.00) (the "Initial Deposit"), which shall be fully refundable if the Closing does not occur or in the manner provided pursuant to Section 3.4; provided, however, that notwithstanding the foregoing, $500,000 of the Initial Deposit (the "Suitability Deposit Amount") shall become non-refundable on July 6, 2023 unless Buyer has exercised its right to terminate the MIPA pursuant to Section 10.1(e) thereof prior to such date. In addition, and for the avoidance of doubt, the Parties agree that the Suitability Deposit is being made in satisfaction of Buyer's obligation under Section 2.3 of the MIPA and shall be treated accordingly under Sections 2.2 and 2.3 thereof. The Initial Deposit plus any increase in the Initial Deposit pursuant to the remainder of this Section 3.2(a) shall be referred to herein as the "Deposit". If, prior to the Closing (i) Seller desires to consummate any of the transactions set forth on Exhibit C hereto by way of (A) a merger, consolidation, liquidation, recapitalization or other business combination transaction involving such Person; (B) the issuance or acquisition of membership interests of such Person; (C) the sale, lease, exchange or other disposition of any significant portion of the such Person's properties or assets or (D) a financing or leasing arrangement (a "Third Party Transaction") and (ii) Buyer consents to such Third Party Transaction, the Deposit shall be increased by the applicable amount set forth on Exhibit C with respect to the corresponding Third Party Transaction (the aggregate amount by which the Deposit is so increased with respect to all Third Party Transactions shall be referred to herein as the "Purchase Price Adjustment"). Each such increase to the Deposit shall be paid to Seller by Buyer not less than three (3) Business Days prior to the scheduled consummation of such Third Party Transaction.
(b)Payment on the Closing Date. At the Closing: (i) Buyer shall pay, on behalf of Seller and for its account, to the applicable obligees thereof the amount of all Indebtedness and Seller Transaction Expenses outstanding as of the Closing, and in each such case as identified on Schedule 3.2(b) to be delivered by Seller to Buyer (but subject to Buyer's approval); (ii) the total amount of the Deposit and Divestiture Payments, if any, shall be applied by the Parties as a payment against the Purchase Price, (iii) Buyer shall pay to Seller an amount (the “Closing Payment”) equal to (A) the Base Purchase Price, plus (B) the Purchase Price Adjustment, if any, minus (C) the amount of the Deposit and the Divestiture Payments, if any, minus (D) the amount of all Indebtedness and Seller Transaction Expenses to be paid by Buyer pursuant to Section 3.2(b)(i) above, minus (E) Two Hundred Fifty Thousand Dollars ($250,000.00) (the “Holdback Amount”). The Closing Payment shall be made in cash by wire transfer of immediately available funds to the account or accounts designated by Seller. In addition, Buyer shall deliver to Seller evidence of the issuance of the Buyer Equity.
(c)Installment Payments. On each of the first ten (10) anniversaries of the closing of the MIPA (the "MIPA Closing"), Buyer shall pay to Seller an amount equal to Five Hundred Thousand Dollars ($500,000.00) (each such payment, an "Installment Payment") by wire transfer of immediately available funds, provided that Buyer shall not be required to make any Installment Payment to Seller until after the later of (i) the Closing or (ii) twelve (12) months after the Buyer files a complete suitability application if there has not been a Regulatory Disapproval, provided that if Buyer receives a Suitability Determination at any time after the Closing, Buyer shall be required to begin making Installment Payments under this Section upon such receipt; provided,
further, that upon the occurrence of an Installment Payment Acceleration Event, any then remaining unpaid Installment Payments shall accelerate and become due and payable in full upon the occurrence of such Installment Payment Acceleration Event. If the Closing occurs any time after the first anniversary of the MIPA Closing, Buyer shall pay to Seller upon Closing each Installment Payment that was not paid as of result of the Closing occurring after the first anniversary of the MIPA Closing. Buyer shall, at its sole election and at any time, be entitled to prepay any then remaining unpaid amounts of the Installment Payments prior to their applicable due dates. For purposes hereof, an "Installment Payment Acceleration Event" shall mean the occurrence of any of the following: (x) the consummation of the "Call Option" pursuant to Section 6.05 of the Buyer Operating Agreement as a result of a Sale of Accel Parent (as defined in the Buyer Operating Agreement), (y) the consummation of a Sale of Accel Parent and either (i) Andrew Rubenstein no longer being the CEO of Parent or (ii) the change in 50% or more of Parent's "Named Executive Officers" , in each case of the foregoing clauses (i) or (ii), on our prior to the date that is twenty-four (24) months following the consummation of such Sale of Accel Parent or (z) a Sale of the Company (as defined in the Buyer Operating Agreement) is consummated with respect to Buyer.
(d) Bonus. If (i) the Closing occurs on or before the nine (9) month anniversary of Buyer filing a complete Suitability application or (ii) the Closing occurs after the nine (9) month anniversary of Buyer filing a complete Suitability application and the aggregate revenue of Seller is greater than or equal to Five Hundred Thousand Dollars ($500,000.00) for the ninety (90) day period immediately preceding the Closing, then Buyer shall pay to Seller within five (5) business days following the Closing an amount equal to the following (the "Bonus"): (1) Twenty Thousand Dollars ($20,000.00) multiplied by the number of full months calendar months between Buyer filing a complete Suitability application and the Closing plus (2) Twenty Thousand Dollars ($20,000.00) multiplied by a fraction, the numerator of which equals the number of days between the last monthly anniversary of Buyer filing a complete Suitability application and the date of the Closing and the denominator of which equals the number of days in the calendar month of the date the Closing occurs.
(e) Divestiture Payments. In the event that (x) Buyer's Affiliates have not (i) discontinued manufacturing slot machines and other video gaming devices for distribution in the State of Louisiana and (ii) surrendered all regulatory licenses they have with the Louisiana Gaming Control Board and the Video Gaming Division of the Louisiana State Police, in each case, as of or prior to the date that is one hundred eighty (180) days following the date of this Agreement (the "Trigger Date"), (y) Buyer has not elected to terminate this Agreement pursuant to Section 8.4(f) and (z) substantial progress has been made by Buyer and its Affiliates in satisfying the conditions in the foregoing clause (x) as of the Trigger Date, then at Buyer's election Buyer shall be entitled to extend the date after which Seller is entitled to terminate this Agreement pursuant to Section 8.4(e) by ninety (90) days by making three (3) monthly payments in an amount equal to $100,000 (the "Divestiture Payments") on each thirty (30) day anniversary of the Trigger Date, which shall be non-refundable if the transactions contemplated hereby are not consummated (other than as a result of a breach of this Agreement by the Seller Parties).
Section 3.3 Purchase Price Allocation. Buyer and each Seller Party agree to allocate the Purchase Price (along with all other items of consideration for income Tax purposes and including any adjustment thereto) among the Assets and the covenants set forth in Section 6.7 using the principles set forth on Schedule 3.3 hereto. Buyer shall prepare such allocation of the Purchase Price (along with all other items
of consideration for income Tax purposes), which allocation shall be binding upon Buyer and each Seller Party for all federal, state and local income Tax purposes, no later than (i) in the case of the original allocation, ninety (90) days following the Closing Date and (ii) in the case of any adjustment to the Purchase Price (or any other item of consideration) requiring an amendment to the previous allocation, thirty (30) days following the date of such adjustment. Buyer and each Seller Party shall timely and properly report for all federal (including on IRS Form 8594), state and local income Tax purposes (and shall defend in any Tax audit or contest) the sale of the Assets in a manner consistent with the allocation set forth on Schedule 3.3.
Section 3.4 Repayment of Deposit.
(a)If Seller does not consummate the transactions contemplated by the Gray Gaming Purchase Agreement within thirty (30) days of the date of this Agreement, then Seller shall promptly repay the amount of the Initial Deposit (excluding the Suitability Deposit Amount) in full to Buyer and the Base Purchase Price shall be automatically reduced from Eight Million Nine Hundred Thousand Dollars ($8,900,000) to Five Million Nine Hundred Thousand Dollars ($5,900,000).
(b)If Seller consummates the transactions contemplated by the Gray Gaming Purchase Agreement and either (i) Buyer receives a Regulatory Disapproval or (ii) Seller, Owner or Guidroz loses its or his license under the Louisiana Video Draw Poker Devices Control Law prior to the Closing, Seller shall repay the full amount of the Deposit (less the Suitability Deposit Amount to the extent it has become non-refundable as of such date) to Buyer in equal monthly installments at an interest rate equal to the Applicable Federal Rate for mid-term notes over a period of four (4) years pursuant to the form of promissory note attached hereto as Exhibit D hereto; provided, however, that the total monthly payments for a given calendar year will be capped at 75% of the free operating cash flow of Seller for such calendar year. In the event that any principal amount is not paid because of the cap provided in the previous sentence, all such unpaid amounts will be due at the maturity date of the note.
(c)Notwithstanding the foregoing or Section 3.2(a), if Buyer terminates this Agreement pursuant to Section 8.4(b), then Seller shall repay the full amount of the Deposit (less the Suitability Deposit Amount to the extent it has become non-refundable as of the applicable date and so long as the termination is not pursuant to Section 8.4(b)(i)) to Buyer in equal monthly installments at an interest rate equal to the Applicable Federal Rate for mid-term notes over a period of four (4) years pursuant to the form of promissory note attached hereto as Exhibit D hereto; provided, however, that the total monthly payments for a given calendar year will be capped at 75% of the free operating cash flow of Seller for such calendar year. In the event that any principal amount is not paid because of the cap provided in the previous sentence, all such unpaid amounts will be due at the maturity date of the note; provided, further that in the event Buyer terminates this Agreement pursuant to Section 8.4(b)(i) as a result of a breach of this Agreement by Seller, Owner or Guidroz, the applicable interest rate for the promissory note will equal to SOFR plus 250 basis points.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES
The Seller Parties hereby jointly and severally represent and warrant to Buyer as of the date hereof and as of the Closing Date as follows. All such representations and warranties are qualified by the Disclosure Schedules. The Disclosure Schedules have been arranged for purposes hereof in separate sections corresponding to the sections of this Article IV, and information disclosed in one section of the Disclosure Schedules shall not be deemed to be an exception to another section of the Disclosure Schedules unless the relevance of such information to such other section is apparent on its face.
Section 4.1 Organization and Qualification. Seller is and at all times has been a limited liability company duly organized, validly existing and in good standing in the State of Louisiana, with full power and authority to own, lease and operate the Assets and carry on the Business as conducted at all times prior to the Closing. Owner is and at all times has been a limited liability company duly organized, validly existing and in good standing in the State of Louisiana, with full power and authority to own, lease and operate its properties and carry on its as conducted as of the Closing and proposed to be conducted following the Closing. Seller and Owner are, and as of the Closing, will be, licensed or qualified to transact business and are in good standing as foreign entities in each jurisdiction in which it would be required to be so licensed or qualified, except where the failure to be so licensed or qualified or in good standing would not individually or in the aggregate have a Material Adverse Effect. Each such jurisdiction in which the Seller and Owner are qualified is set forth in Schedule 4.1. The name of each owner, director, manager and officer of Seller and Owner, and the position held by each such individual, is set forth on Schedule 4.1 hereto.
Section 4.2 Authority; No Breach.
(a)Each of Seller Parties has all requisite power and authority to execute and deliver this Agreement and the Transaction Documents, to which it or he is a party, and to perform, carry out and consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement and the Transaction Documents to which it or he is a party have been duly authorized by all necessary action on the part of each of Seller Parties. This Agreement has been duly executed and delivered by each of Seller Parties and constitutes the legal, valid and binding obligation of such Seller Party, enforceable against such Seller Party in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar laws relating to or affecting the rights of creditors generally, or by general equitable principles.
(b)Except as set forth in Schedule 4.2(b), neither the execution, delivery or performance of this Agreement or any Transaction Document by any of Seller Parties, nor the consummation of any of the transactions contemplated herein or therein, does or will: (i) violate any Law, or conflict with any judicial or administrative order or decree relating to Seller Parties; (ii) constitute a breach or default under any Contract or any other agreement or instrument by which Seller Parties are bound; (iii) create any Lien on any assets of Seller; or (iv) other than the consents required under any Contract which have been obtained prior to the Closing Date, require any consent, notice to or filing with any Government Authority or any Person on behalf of Seller (the "Required Consents").
Section 4.3 Capitalization. Schedule 4.3 sets forth the entire capitalization of Seller, including the record owners of all outstanding equity securities. There are no voting agreements, voting trusts or other agreements, commitments or understandings with respect to the voting or transfer of equity securities or other securities of Seller. Seller does not own or otherwise hold, directly or indirectly, any stock, membership interest, partnership interest, joint venture interest or other equity or participation interest in any Person.
Section 4.4 Financial Statements. Seller has delivered to Buyer true and complete copies of the Financial Statements. The Financial Statements have been prepared in accordance with Seller's historical accounting principles and practices, consistently applied throughout the period involved ("Accounting Principles") from the books and records of Seller, and present fairly (i) the financial position of Seller at the dates thereof and (ii) the results of operations of Seller for the periods then ended, subject to normal recurring year-end adjustments and the absence of notes (none of which is expected to be material or outside the ordinary course of business considered under prior year end adjustments). The books and records of Seller have been maintained in accordance with the Accounting Principles and are based on Seller's records maintained in the ordinary course of business. The Financial Statements properly reflect all material transactions to which Seller has been a party. Seller has no knowledge of any material liabilities or contingent liabilities that relate to any asset, service, action or commitment by the Business or any Seller Party. Seller maintains a standard system of accounting established and administered in accordance with Accounting Principles. Seller has no Liabilities other than those which are adequately reflected or reserved against in the Financial Statements or which have been incurred in the ordinary course of business consistent with past practice since the date of the most recent Financial Statement and which (x) are not, individually or in the aggregate, material in amount and (y) in any case, do not result from, arise out of, relate to, are in the nature of, or were caused by any breach of contract, breach of warranty, tort, infringement or violation of law.
Section 4.5 Interests of Related Persons. Except as set forth on Schedule 4.5, neither Seller Parties nor any member, shareholder, officer, director, partner, relative, or Affiliate of any Seller Party (collectively, the "Related Persons"): (a) owns any interest in any Person which is a competitor, supplier or customer of Seller or the Business or serves as an officer, partner, member, shareholder, director, employee or consultant for any such Person; (b) owns, in whole or in part, any Asset or right of material significance, used in connection with the Business; (c) has an interest in any material contract or agreement pertaining to the Business; or (d) has any material contractual arrangements with the Business or Seller.
Section 4.6 Absence of Certain Changes or Events. Except as set forth on Schedule 4.6, since December 31, 2022, and other than in the ordinary course of business consistent with past practice, to the Seller's knowledge, there has not been any change, event, condition, or development that is, or could reasonably be expected to be, individually or in the aggregate, materially adverse to (a) Seller Parties' ability to operate the Business or service the customers of the Business or Seller Parties' relationship with the customers of the Business or (b) the value of the Assets or the Business.
Section 4.7 Taxes. All Taxes due and payable by Seller have been timely and properly paid in full. Seller has timely and properly filed (taking into account any properly obtained extensions) all U.S. federal, state, county, local and foreign Tax Returns that it is required to have filed, and such Tax Returns are complete and correct in all respects. Any deficiencies proposed as a result of any audits of Seller by any Governmental Authority have been fully paid or finally settled, and there are no present disputes as to Taxes payable by Seller. There are no unexpired waivers or extensions of any statute of limitations with
respect to any Taxes of Seller and Seller is not a party to any Proceedings by any Governmental Authority for the collection or assessment of Taxes against it. No claim has ever been made by an authority in a jurisdiction where Seller does not file Tax Returns that Seller may be subject to taxation by that jurisdiction. Schedule 4.7 sets forth each jurisdiction in which Seller is required to file Tax Returns or pay Taxes. There are no Liens on any of the Assets that arose in connection with any failure (or alleged failure) to pay any Tax. Seller has timely and properly withheld and paid all Taxes required to have been withheld and paid in connection with any amounts paid or owing to any employee, independent contractor, stockholder, or other third party, and all Forms W-2 and 1099 required with respect thereto have been properly completed and timely filed by Seller. Seller does not have any liability for Taxes of another Person under Treasury Regulation Section 1.1502-6, as a transferee or successor, by contract, or otherwise. Seller is not party to any agreement, contract, arrangement, or plan that has resulted or could result, separately, or in the aggregate, in the payment of any “excess parachute payment” within the meaning of Section 280G of the Code. Seller is not and has not ever been a “United States real property holding corporation” within the meaning of Section 897(c)(2) of the Code. Seller has never participated in any “reportable transaction” within the meaning of Section 6707A(c)(1) of the Code or Treasury Regulation Section 1.6011-4(b). Seller has not requested or received a ruling from any Governmental Authority or signed any binding agreement with any Governmental Authority that might impact the amount of Tax due from Buyer or its Affiliates on or after the Closing Date. None of the Assets are “section 197(f)(9) intangibles” (as defined in Treasury Regulation Section 1.197-2(h)(1)(i) and assuming for this purpose that the transition period ends on August 10, 1993). Seller has properly and timely collected and maintained all resale certificates and other documentation required to qualify for any exemption from the collection of sales taxes.
Section 4.8 Assets.
(a)Seller has good and freely transferable title to all of the Assets, free and clear of all Liens, except for (i) Permitted Liens and (ii) Liens set forth in Schedule 4.8(a). Each Asset is structurally sound, is in good operating condition and repair, and is adequate for the uses to which it is being put, and no Asset is in need of maintenance or repairs except for ordinary, routine maintenance and repairs that are not material in nature or cost. The Assets are sufficient for the continued conduct of the Business after the Closing in substantially the same manner as conducted prior to the Closing and constitute all of the rights, property, and assets necessary to conduct the Business as currently conducted.
(b) Schedule 4.8(b) contains a complete and correct list of all Real Property leased by Seller or the Business. Neither Seller nor the Business owns or has ever owned any Real Property. Seller Parties have previously delivered to Buyer true, complete and correct copies of all lease documents relating to such property. All lease documents are unmodified, in full force and effect and valid, binding and enforceable in accordance with their terms. No event has occurred which constitutes, or, with the passing of time or giving of notice, or both, would constitute, a default by Seller or to the knowledge of Seller, by any landlord under any such lease document. To the knowledge of Seller, all improvements and buildings on Real Property of Seller are structurally sound with no defects and in good operating condition and repair (ordinary wear and tear excepted) and are adequate for the uses to which they are being put.
Section 4.9 Intellectual Property.
(a)Seller has good title or the right to use all Intellectual Property necessary for or used in the operation of the Business as presently conducted and as presently proposed to be conducted, free and clear of any Liens (the “Business Intellectual Property"). Except for Company Intellectual Property licensed from others, no third Person has asserted ownership rights in any of the Business Intellectual Property, and Seller has not licensed or sublicensed to any third Person the right to use the Business Intellectual Property. The use of the Business Intellectual Property by Seller on or prior to the Closing Date does not infringe any right of any third Person. To Seller's knowledge, no third Person is infringing any of the Business Intellectual Property. Seller has taken reasonable steps in accordance with normal industry practice to maintain the confidentiality of the Business Intellectual Property. The execution, delivery and performance of this Agreement by Seller and the Owner, and the consummation of the transactions contemplated hereby, will not impair any right under, or cause Seller to be in violation or default under, any policy, agreement, Law or regulation applicable to any private or personal information acquired by Seller or used by Seller in the conduct of the Business as presently conducted.
(b)Seller owns, leases or licenses all software, hardware, databases, computer equipment and other information technology (collectively, "Computer Systems") that are necessary for the operations of the Business. The data storage and transmittal capability, functionality and performance of the Computer Systems and the Computer Systems as a whole are adequate for the Businesses as currently conducted and proposed to be conducted. Since January 1, 2020, the Computer Systems have not failed to any material extent and the data which they process has not been corrupted. Seller has taken all reasonable steps in accordance with the industry standards to preserve the availability, security and integrity of the Computer Systems and the data and information stored on the Computer Systems.
Section 4.10 Contracts and Commitments. Seller Parties have made available to Buyer true and complete copies of all Contracts, including all amendments or modifications thereto, to which Seller is a party or any other Seller Parties are parties related to the Business. Each such Contract is in full force and effect and, except to the extent that enforcement may be limited by bankruptcy, reorganization, insolvency and other similar laws, is enforceable in accordance with its terms. No Seller Party is in material breach or material default, and, to the knowledge of Seller, there is no basis for any valid claim of breach or default, under any Contract, to which Seller or the Business is a party or by which Seller or the Business are bound, and, to the knowledge of Seller, there exists no event or condition which (whether with or without notice, lapse of time or both) would constitute a default thereunder; and, to the knowledge of Seller, no other party to any such Contract.
Section 4.11 Employees. Set forth on Schedule 4.11 is a list of the employees and independent contractors of the Business, setting forth the name, title, employment (or such independent contractor, as the case may be) commencement date, whether such individual is exempt or non-exempt from overtime requirements, current annual rate of base salary of each such Person and total compensation (including bonuses) for such Person for the year ended December 31, 2022, annual vacation entitlement, amount of accrued and unused vacation (as of the Closing Date in the ordinary course of business consistent with past practice (and the dollar value of such vacation), and the amount of sick leave credited to such individual as of the date hereof in the ordinary course of business consistent with past practice (and the dollar value of such sick leave). With respect to employees of Seller: (i) there is no pending or, to Seller's knowledge, threatened unfair labor practice charges, employment discrimination charges or employee
grievance charges; (ii) there is no request for union representation, labor strike, dispute, slowdown or stoppage pending or, to Seller's knowledge, threatened against or directly affecting Seller or the Business; (iii) no grievance or arbitration proceeding arising out of or under collective bargaining agreements is pending and no claims therefor exist; and (iv) the employment of Seller's employees is terminable at will without cost to Seller except for payment of accrued salaries or wages and vacation pay. As of the date hereof and the Closing Date, Seller has paid all salaries, wages, bonus, sales commission, vacation and sick pay, profit sharing obligations and other compensation amounts due and owing to its employees. Seller has appropriately classified each service provider to Seller as an employee or independent contractor for all applicable Laws.
Section 4.12 Employee Benefit Plans. Schedule 4.12 (i) sets forth a complete and accurate list of each Plan. Each Plan that is a "nonqualified deferred compensation plan" (within the meaning of Section 409A(d)(1) of the Code) complies in all respects with Section 409A of the Code. Neither Seller, its ERISA Affiliates, nor any of their respective predecessors, has sponsored, maintained or contributed to, or been required to sponsor, maintain contribute to, at any time during the last six (6) years, any employee pension benefit plan (within the meaning of Section 3(2) of ERISA) that is subject to Section 412 of the Code, Section 302 of ERISA or Title IV of ERISA, including any multiemployer plan (within the meaning of Section 4001(a)(3) of ERISA). With respect to each Plan: (a) all contributions, premiums and other payments due or required to be paid to (or with respect to) the Plan have been paid, or, if not yet due, have been accrued as a liability on the Financial Statements; (b) no actions, suits or claims (other than routine claims for benefits, appeals of such claims, and qualified domestic relations orders) are pending or, to the knowledge of Seller, threatened with respect to (or against the assets of) the Plan; and (c) the Plans have been maintained and operated all material respects in accordance with its terms and applicable law.
Section 4.13 Insurance. Schedule 4.13 sets forth a true and complete list of all current insurance policies maintained by Seller in connection with the Business. Except as set forth on Schedule 4.13, there are no pending insurance claims under any insurance policy or the knowledge of Seller, a basis to make a claim under any insurance policy. Neither the Seller Parties nor Seller has received any written notice of cancellation of, premium increase with respect to, or alteration of coverage under, any Seller insurance policies. All premiums due on Seller insurance policies have either been paid or, if not yet due, accrued. To Seller's knowledge, all Seller insurance policies (a) are in full force and effect and enforceable in accordance with their terms and (b) have not been subject to any lapse in coverage. To Seller's knowledge, Seller is not in default under, and has not otherwise failed to comply with, in any material respect, any provisions contained in any insurance policy. The insurance policies comply with all applicable laws and contracts to which Seller is a party or to which it is bound.
Section 4.14 Litigation. Except as set forth in Schedule 4.14, there are currently no Proceedings of any kind or nature whatsoever by or before any court or Governmental Authority or other regulatory or administrative agency or commission or tribunal or otherwise pending or, to the knowledge of Seller, threatened against or involving or potentially involving Seller, the Business, the Assets, or Seller's direct or indirect members, shareholders, officers or directors, or which question or challenge the validity of this Agreement or any action taken or to be taken by Seller Parties or Seller pursuant to this Agreement or in connection with the transactions contemplated hereby. Neither Seller nor the Business is subject to any judgment, order, decree or legal requirement which involves more than $15,000 other than reimbursement claims in the ordinary course of business. Seller Parties have delivered to Buyer accurate and complete copies of all documentation relating to any of the foregoing.
Section 4.15 Compliance with Law; Necessary Authorizations.
(a)Neither Seller nor any other Seller Party is a party to, or bound by, any order, writ, injunction, judgment or decree of any court or Governmental Authority or of any arbitration award with respect to the Assets or personnel or business activities. None of Seller or any other Seller Party is, or has been, in any material respect in violation of, or delinquent in respect to, any Law of, Permit from or order or judgment with, any federal, state or local Governmental Authority (or to which the Assets or personnel or business activities are subject or to which it is subject). No notice, citation, inquiry or complaint has been received by Seller or any other Seller Party in the past five (5) years of any alleged violation of, or liability or obligation (or potential liability or obligation) under, any federal, state or local Governmental Authority, and, to Seller's knowledge, there are no facts or circumstances which could be the basis for such notice, citation, inquiry or complaint. To Seller's knowledge, none of Seller's employees has been or is currently in violation of any federal, state or local Governmental Authority, including any laws, rules or regulations promulgated by the Louisiana Gaming Control Board.
(b)All Permits required for Seller to conduct the Business have been obtained by it and are valid and in full force and effect. All fees and charges with respect to such Permits as of the date hereof have been paid in full. Schedule 4.15(b) lists all current Permits issued to Seller, including the names of the Permits and their respective dates of issuance and expiration. No event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to result in the revocation, suspension, lapse or limitation of any Permit set forth on Schedule 4.15(b).
Section 4.16 Brokers or Finders. Schedule 4.16 lists any brokers, advisers or finders that have been engaged by any Seller Party in connection with the sale of the Business and any amounts due to any such Person in connection with such engagement. Except as set forth on Schedule 4.16, no Seller Party or any Affiliate of any Seller Party has retained any broker or finder, or made any statement or representation to any Person that would entitle such Person to, or agreed to pay, any broker’s, finder’s or similar fees or commissions in connection with the transactions contemplated by this Agreement.
Section 4.17 Solvency. (a) Seller is not insolvent as defined in Section 101 of Title 11 of the United States Code, (b) Seller does not have unreasonably small capital, (c) Seller has not incurred debts beyond its ability to pay such debts as they mature and (d) the capital of Seller has not been impaired.
Section 4.18 Investment Representations.
(a)The Buyer Equity to be acquired by Seller pursuant to this Agreement shall be acquired for Seller's own account and not with a view to, or intention of, distribution thereof in violation of the Securities Act of 1933 (the "Securities Act") or any applicable state securities Laws.
(b)Seller is an "accredited investor" as such term is defined in Rule 501(a) promulgated under the Securities Act, is sophisticated in financial matters and is able to evaluate the risks and benefits of the investment in the Buyer Equity.
(c)Seller is able to bear the risk of its investment in the Buyer Equity for an indefinite period of time and is aware that transfer of the Buyer Equity may not be possible because (i) such transfer is subject to contractual restrictions on transfer set forth in the Buyer Operating Agreement, and
(ii) the Buyer Equity has not been registered under the Securities Act or any applicable state securities Laws and, therefore, cannot be sold unless subsequently registered under the Securities Act and such applicable state securities laws or an exemption from such registration is available.
(d)The Buyer Equity was not offered to Seller by any means of general solicitation or general advertising.
(e)Seller specifically acknowledges its understanding that there are significant risks associated with the Buyer Equity including that (i) although equity investments in companies such as Buyer offer the opportunity for significant capital appreciation, such investments involve the highest degree of risks and can result in the loss of Seller's entire investment, (ii) other general business risks, including the effects of a recession, may have a more pronounced effect on companies such as Buyer, (iii) Buyer or its subsidiaries may incur substantial debt from time to time, and (iv) the other equity holders of Buyer control Buyer's board of managers, and will therefore be able to control the direction and future operations of Buyer.
(f)Seller acknowledges and agrees that, except as expressly set forth in ARTICLE V, Buyer has not made and is not making any express or implied representation or warranty of any kind whatsoever, including any representation or warranty as to (i) the value of Buyer and its direct and indirect subsidiaries or their future profitability or future earnings performance or (ii) the accuracy or completeness of any information regarding Buyer or any of its direct and indirect subsidiaries furnished or made available to Seller or its representatives. Seller understands, acknowledges and agrees that the representations and warranties of Buyer expressly set forth in ARTICLE V constitute the sole and exclusive representations and warranties to Seller in connection with the transactions contemplated hereby, and all other representations and warranties of any kind or nature, express or implied (including any relating to the future or historical financial condition, results of operations, assets or liabilities of Buyer or any of its direct and indirect subsidiaries) are specifically disclaimed by Buyer, notwithstanding the delivery or disclosure to Seller, the Owner, their Affiliates and their respective officers, directors, employees and representatives, if any, of any documentation or other information.
(g)Seller acknowledges that: (i) it has had an opportunity to ask questions and receive answers concerning the terms and conditions of the offering of the Buyer Equity and has had access to such other information concerning Buyer as Seller has requested, (ii) it has made its own inquiry and investigation into, and based thereon, has formed an independent judgment concerning, Buyer and its assets and properties; and (iii) it has not relied on Buyer or any of its Affiliates, officers, employees or representatives in connection with his investigation of Buyer and its business, with respect to making any investment decision.
Section 4.19 Full Disclosure. No representation or warranty by Seller Parties in this Agreement and no statement contained in the Disclosure Schedules to this Agreement or any certificate or other document furnished or to be furnished to Buyer pursuant to this Agreement contains any untrue statement of a material fact or omits to state a material fact necessary to make the statement contained therein, in light of the circumstances in which they are made, not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer Parties, jointly and severally, hereby represent and warrant to the Seller Parties that:
Section 5.1 Organization. Each of the Buyer Parties is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware and has all requisite power and authority to own, lease and operate its assets, properties and business and to carry on its business as now being conducted.
Section 5.2 Authorization. Each of the Buyer Parties has full right, power, capacity and authority to execute and deliver this Agreement and each of the Transaction Documents to be executed and delivered thereby, to consummate the transactions contemplated hereby and thereby and to comply with the terms, conditions and provisions hereof and thereof. The execution, delivery and performance by each Buyer Party of this Agreement and each of the Transaction Documents to which each Buyer Party is a party have been duly and properly authorized by all company action in accordance with applicable Law and with the organizational documents of such Buyer Party. This Agreement and each of the Transaction Documents to which each Buyer Party is a party have been duly executed and delivered by each Buyer Party and constitute the legal, valid and binding obligation of each Buyer Party, enforceable against such Buyer Party in accordance with their terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting the enforcement of creditors rights generally, and general principles of equity (regardless of whether such enforceability is considered in a Proceeding in law or equity).
Section 5.3 Consents and Approvals. No consent, approval, order or authorization of, or registration, declaration or filing with, or notice to, any Governmental Authority or other Person that has not been made or obtained by Buyer is required to be made or obtained in connection with the authorization, execution, delivery and performance by Buyer of this Agreement and the Transaction Documents, or the consummation of the transactions contemplated hereby and thereby.
Section 5.4 No Violation. The execution, delivery and performance by Buyer of this Agreement and the Transaction Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby will not: (a) result in the breach of any of the terms or conditions of, or constitute (with or without notice or lapse of time or both) a default under or an event which would give rise to any right of notice, modification, acceleration, payment, cancellation or termination under, or in any manner release any party thereto from any obligation under, or otherwise affect any rights of Buyer under, any mortgage, note, bond, indenture, contract, agreement, license or other instrument or obligation of any kind or nature, in any case whether written or oral, by which Buyer or their assets may be bound or affected; (b) violate or conflict with any Law; (c) violate any writ, judgment, decree or injunction to which Buyer may be subject; or (d) violate any provision of the organizational documents of Buyer.
Section 5.5 No Brokers or Finders. None of Buyer or any Affiliate thereof has retained any broker or finder, made any statement or representation to any Person that would entitle such Person to, or agreed to pay, any broker’s, finder’s or similar fees or commissions in connection with the transactions contemplated by this Agreement.
Section 5.6 Capitalization of LSM and Related Matters. As of the Closing and after giving effect to the transactions contemplated by this Agreement and the Buyer Operating Agreement (including the issuance of the Buyer Equity), Buyer shall own eighty-five percent (85%) of the membership interests of LSM, and Guidroz or his designee shall own fifteen percent (15%) of the membership interests of LSM, in each case, subject to the terms and conditions set forth in the Buyer Operating Agreement. As of the Closing, LSM shall not have outstanding any securities convertible or exchangeable for any of its equity securities, nor shall LSM have outstanding any rights or options to subscribe for or to purchase any equity securities or any securities convertible into or exchangeable for its equity securities or any equity appreciation rights or phantom equity plans. As of the Closing, all of LSM's outstanding equity securities shall be validly issued and fully paid.
ARTICLE VI
COVENANTS AND OTHER AGREEMENTS
Section 6.1 Conduct of Business Prior to Closing. From the date hereof until the Closing, except as otherwise provided in this Agreement or consented to in writing by Buyer, which consent will not be unreasonably withheld, conditioned or delayed, Seller Parties shall, and shall cause Seller to, (x) conduct the Business in the ordinary course of business consistent with past practice; (y) use reasonable best efforts to maintain and preserve intact the Assets, current organization and business of Seller and to preserve the rights, franchises, goodwill and relationships of its employees, suppliers, regulators and others having business relationships with Seller and (z) not engage in any material transactions or materially change the operations of Seller. Without limiting the foregoing, from the date hereof until the Closing Date, Seller Parties shall cause Seller to:
(a)preserve and maintain all of its Permits;
(b)pay its Indebtedness, Taxes and other obligations when due;
(c)maintain the properties and assets owned, operated or used by Seller in the same condition as they were on the date of this Agreement, subject to reasonable wear and tear;
(d)continue in full force and effect without modification all Insurance Policies, except as required by applicable Law;
(e)defend and protect its properties and assets from infringement or usurpation;
(f)perform all of its obligations under all Contracts relating to or affecting its properties, assets or business;
(g)maintain its books and records in accordance with past practice;
(h)comply in all material respects with all applicable Laws;
(i)allocate a maximum of fifty percent (50%) of Seller's revenue to payroll, with the balance being used for operations and capital expenditures (subject to the restrictions set forth in Section 6.1(j) below);
(j)not take or permit any action that would cause any of the changes, events, or conditions described in Section 4.6 to occur or take or permit any of the following actions:
(i)make any capital expenditures or purchase equipment in excess of $250,000.00 annually; provided, however, that any consent required by Buyer with respect to a Third Party Transaction listed on Exhibit C shall not be unreasonably withheld, conditioned or delayed;
(ii)materially increase the salary of any executive or employee of the Business;
(iii)Dispose of or encumber any Assets except immaterial assets in the ordinary course of business or as otherwise agreed by Buyer;
(iv)Distribute any Seller funds in the form of dividends or distributions;
(v)Except with Buyer approval, enter into any Contract with respect to a Third Party Transaction other than (A) the Gray Gaming Purchase Agreement, and (B) entering into negotiations to acquire all or substantially all of the assets of Fred's truck stops ("Fred's Acquisition") (except that no definitive agreement with respect thereto may be entered into without the input and prior written consent of Buyer, which will not be unreasonably delayed, conditioned or withheld, and condition that any financing in connection therewith may be prepaid without penalty);
(vi)incur any Indebtedness; or
(vii)make loans to, or investments in, any other Person, except as otherwise provided in this Agreement or as agreed by Buyer.
Section 6.2 Access to Information. From the date hereof until the Closing, Seller Parties shall, and shall cause Seller to, (a) afford Buyer reasonable access to and the right to inspect the Assets, premises, books and records, Contracts and other documents and data related to Seller; (b) furnish Buyer with such financial, operating and other data and information related to Seller as Buyer may reasonably request; and (c) instruct the representatives of Seller to cooperate with Buyer in its investigation of Seller and the Business at such time and as Guidroz may determine in his reasonable discretion. Any investigation pursuant to this Section 6.2 shall be conducted in such manner as not to interfere unreasonably with the conduct of the Business.
Section 6.3 No Solicitation of Other Bids. From the date hereof until the earlier of Closing or Termination, the Seller Parties shall not, and shall not authorize or permit any of their Affiliates or any of their or their respective representatives to, directly or indirectly, (i) encourage, solicit, initiate, facilitate or continue inquiries regarding an Acquisition Proposal; (ii) enter into discussions or negotiations with, or provide any information to, any Person concerning a possible Acquisition Proposal; or (iii) enter into any agreements or other instruments (whether or not binding) regarding an Acquisition Proposal. The Seller Parties shall immediately cease and cause to be terminated, and shall cause their respective Affiliates and all of their and their respective representatives to immediately cease and cause to be terminated, all existing discussions or negotiations with any Persons conducted heretofore with respect to, or that could lead to, an Acquisition Proposal. For purposes hereof, "Acquisition Proposal" shall mean any inquiry, proposal or offer from any Person (other than Buyer or any of its Affiliates) concerning (A) a merger, consolidation, liquidation, recapitalization or other business combination transaction involving Seller or
the Business; (B) the issuance or acquisition of membership interests in Seller or any other financing involving Seller; or (C) the sale, lease, exchange or other disposition of any significant portion of Seller's properties or assets. Seller shall promptly advise Buyer orally and in writing of any Acquisition Proposal, any request for information with respect to any Acquisition Proposal, or any inquiry with respect to or which could reasonably be expected to result in an Acquisition Proposal, the material terms and conditions of such request, Acquisition Proposal or inquiry, and the identity of the Person making the same. The rights and remedies for noncompliance with this Section 6.3 shall include having such provision specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed that any such breach or threatened breach may cause irreparable injury to Buyer and that money damages may not provide an adequate remedy to Buyer.
Section 6.4 Notice of Certain Events.
(a)From the date hereof until the Closing, Seller shall promptly notify Buyer in writing of:
(i)any fact, circumstance, event or action the existence, occurrence or taking of which (A) has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (B) has resulted in, or could reasonably be expected to result in, any representation or warranty made by the Seller Parties hereunder not being true and correct or (C) has resulted in, or could reasonably be expected to result in, the failure of any of the conditions set forth in Section 8.2 to be satisfied;
(ii)any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement;
(iii)any notice or other communication from any Governmental Authority in connection with the transactions contemplated by this Agreement; and
(iv)any Proceedings commenced or, to Seller Parties' knowledge, threatened against, relating to or involving or otherwise affecting Seller or the Business that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to Section 4.14 or that relates to the consummation of the transactions contemplated by this Agreement.
(b)Buyer's receipt of information pursuant to this Section 6.4 shall not operate as a waiver or otherwise affect any representation, warranty or agreement given or made by Seller in this Agreement (including for purposes of Section 7.2 and Section 8.2) and shall not be deemed to amend or supplement the Disclosure Schedules.
Section 6.5 Filings and Authorizations. The Seller Parties, Buyer Parties and their Board of Directors (or equivalent governing body), as promptly as practicable, (i) but in no event later than promptly following the closing of the transactions under the MIPA, shall make, or cause to be made, all such filings and submissions under laws, rules and regulations applicable to him or it, or its Affiliates, as may be required to consummate the transactions contemplated herein and apply for a Suitability Determination, in accordance with the terms of this Agreement, including without limitation filings with the Louisiana Gaming Control Board, (ii) shall use all commercially reasonable efforts to obtain, or cause to be obtained, all authorizations, approvals, consents and waivers from all Persons necessary to be
obtained by him or it, or its Affiliates, in order to consummate the transactions contemplated herein, and (iii) shall use all commercially reasonable efforts to promptly take, or cause to be taken, all other actions necessary, proper or advisable in order for him or it, to fulfill his, her or its obligations hereunder. The Seller Parties and Buyer Parties shall coordinate and cooperate with one another in exchanging such information and supplying such reasonable assistance as may be reasonably requested by each in connection with the foregoing.
Section 6.6 Closing Conditions. From the date hereof until the Closing, each Party shall use reasonable best efforts to take such actions as are necessary to expeditiously satisfy the closing conditions set forth in Article VIII hereof.
Section 6.7 Non-Competition; Confidentiality.
(a)Non-Competition. As consideration for Buyer to enter into this Agreement, and to accord to Buyer the full value of its purchase of the Assets and the Business, each Seller Party agrees that for the period commencing on the Closing Date and expiring on the fifth (5th) anniversary of the Closing Date, or two (2) years after the termination of Guidroz's employment with Buyer or any Affiliates, whichever is longer, such Seller Party will not, and will not allow any of its or his Affiliates, without the prior written consent of Buyer, Directly or Indirectly, through a managed service company or otherwise, or by action in concert with others, own, manage, operate, join, control, finance or participate in, or participate in the ownership, management, operation, control or financing of, or be connected as a principal, agent, representative, consultant, employee, investor, owner, partner, manager, joint venturer or otherwise with, or permit their respective names to be used by or in connection with a business or entity in the Business or in a business that is competitive with the Business or any portion thereof or any other related or ancillary businesses that Seller or its Affiliates participate in or are actively contemplating participating in as of the date of the termination; provided, however, that this Agreement shall not prevent the beneficial ownership for investment purposes of, five percent (5%) or less of any class of equity securities of any such Person which are registered under Section 12 of the Exchange Act.
(b)Non-Solicitation of Employees. Each Seller Party agrees that for the period commencing on the Closing Date and expiring on the fifth (5th) anniversary of the Closing Date, or two (2) years after the termination of Guidroz's employment with Buyer or any Affiliates, whichever is longer, such Seller Party will not, nor will any of its or his Affiliates or Relatives, without the written consent of Buyer, Directly or Indirectly, for each of their own account or on behalf of any other Person, induce or attempt to induce any officer or key employee to leave his or her employment with Buyer or any of its Affiliates or hire any such officer or key employee.
(c)Solicitation or Interference with Customers. Each Seller Party agrees that for the period commencing on the Closing Date and expiring on the fifth (5th) anniversary of the Closing Date, or two (2) years after the termination of Guidroz's employment with Buyer or any of its Affiliates, whichever is longer, such Seller Party will not, Directly or Indirectly, nor shall any of its or his Affiliates or Relatives, without the written consent of Buyer, directly for their own account or on behalf of any other Person, solicit, divert, take away or attempt to take away any customers of the Business, Buyer or any of its Affiliates or the business or patronage of any such other customer or in any way interfere with, disrupt or attempt to disrupt any relationships between Buyer or any of its Affiliates and any of its customers.
(d)Confidential Information. Neither any Seller Party nor any of its or his Affiliates or Relatives shall at any time use or disclose to or for the benefit of any Person other than Buyer and its Affiliates, any trade secret or confidential information, knowledge or data relating to the Business (including, without limitation, information relating to accounts, financial dealings, transactions, intangibles, processes, services, service offerings, products and proposals), whether or not marked or otherwise identified as confidential or secret, unless (i) such information is already known to such third party or to others not bound by a duty of confidentiality or such information becomes publicly available through no fault of such party, (ii) the use of such information is necessary or appropriate in making any filing or obtaining any consent or approval required for the consummation of the transactions contemplated by this Agreement, or (iii) the furnishing or use of such information is required by or necessary or appropriate in connection with legal proceedings.
(e)Acknowledgments. The Parties acknowledge that, in view of the nature of the Business and the business objectives of Buyer and Seller Parties in entering into this Agreement and the transactions contemplated hereby, the restrictions contained in this Section 6.7 are reasonably necessary to protect the legitimate business interests of the Parties and that any violation of such restrictions may result in irreparable injury to the non-violating Parties for which damages will not be an adequate remedy. The Parties therefore acknowledge that, if any such restrictions are violated, the non-violating Parties and any of their Affiliates shall be entitled to seek preliminary and injunctive relief against the violating Party as well as to an equitable accounting of earnings, profits and other benefits arising from such violation. In addition, in the event of a breach of this Section 6.7, Seller’s rights to payment of the Bonus shall terminate. Each Seller Party shall be liable for any breach by its, his or her respective Affiliates of this Section 6.7.
Section 6.8 Accounts Receivable. All payments and reimbursements made by any third party in the name of or to Seller that arise out of the conduct of the Business following the Closing or in respect of accounts receivable included in the Assets shall be held by Seller in trust for the benefit of Buyer and, promptly, and in any event within three (3) business days, after receipt by Seller of any such payment or reimbursement, Seller shall pay over to Buyer the amount of such payment or reimbursement without right of set off, together with all corresponding notes, documentation and information received in connection therewith.
Section 6.9 Agreements Regarding Tax Matters. For all purposes under this Agreement involving the determination of Taxes (including the determination of Seller’s Taxes), in the case of Taxes that are payable with respect to any taxable period that includes but does not end on the Closing Date, the portion of any such Tax that is allocable to the portion of the taxable period ending at the end of the Closing Date shall be (i) in the case of Taxes that are (x) based upon or related to income or receipts, (y) imposed in connection with the sale or other transfer or assignment of property (real or personal, tangible or intangible), or (z) employment, social security or other similar Taxes, deemed equal to the amount which would be payable if the taxable year ended on the close of the Closing Date; and (ii) in the case of Taxes imposed on a periodic basis with respect to any assets or otherwise measured by the level of any item, deemed to be the amount of such Taxes for the entire period (or, in the case of such Taxes determined on an arrears basis, the amount of such Taxes for the immediately preceding period) multiplied by a fraction the numerator of which is the number of calendar days in the taxable period ending on the close of the Closing Date and the denominator of which is the number of calendar days in the entire taxable period.
Section 6.10 Payment of Excluded Liabilities. Each Seller Party jointly and severally agrees to pay in full and discharge all of the Excluded Liabilities in accordance with their stated terms, as applicable, and in a manner that is not detrimental to any relationships of Buyer or the Business with lessors, employees, clients, customers, suppliers or others.
Section 6.11 Further Assurances. Each of the Parties agrees that subsequent to the Closing Date, upon the reasonable request of any other Party from time to time, it, he or she shall execute and deliver, or cause to be executed and delivered, such further instruments and take such other actions as may be necessary or desirable to carry out the transactions contemplated by this Agreement and the Transaction Documents or to vest, perfect or confirm ownership of the Assets in Buyer.
Section 6.12 Nonassignable Contracts. To the extent that the assignment hereunder by Seller to Buyer of any Assumed Contract is not permitted or is not permitted without the consent of any other party to the Assumed Contract, which consent has not been received, this Agreement shall not be deemed to constitute an assignment of any such Assumed Contract if such consent is not given or if such assignment otherwise would constitute a breach of, or cause a loss of contractual benefits under, any such Assumed Contract, and Buyer shall not assume any Liabilities thereunder. With respect to any such Assumed Contract, Sellers shall continue to use commercially reasonable efforts to obtain such consents and shall cooperate with Buyer in any arrangement designed to provide Buyer with the rights and benefits (subject to the obligations) under any such Assumed Contracts. Upon the receipt of any such consent, Seller shall assign such Assumed Contract to Buyer.
Section 6.13 Employment of Certain Employees of Seller. Immediately before the Closing, Seller shall encourage its employees listed on Exhibit E hereto (the "Transferred Employees") to accept employment with Buyer for corresponding salaries listed thereon, and subject to such acceptance, Buyer shall hire the Transferred Employees and pay the applicable salaries. Subject to the terms and conditions of Buyer's benefit plans, Buyer shall cause the Transferred Employees to be eligible to participate in its available employee benefit plans under the same eligibility requirements and waiting periods as similarly situated employees of Buyer. For purposes of eligibility and vesting under such plans, the Transferred Employees who accept employment with Buyer on or about the Closing Date shall be given credit for their years of service for their most recent hire date with Seller, all benefit plan waiting periods shall be waived for such employees, and Buyer’s group medical plan shall give credit to such employees for amounts paid toward deductibles and co-payments, if any, under Seller’s medical plan for the current plan. For the avoidance of doubt, nothing in this Agreement shall be deemed to limit the right of Buyer to change or modify the terms and conditions of employment for any Transferred Employee or construed as altering the at-will nature of any Transferred Employee's employment. Nothing in this Agreement shall be deemed to limit the right of Buyer to (A) change or modify the terms and conditions of employment for any Transferred Employee or (B) change, modify, or terminate any employee benefit plan or arrangement in accordance with its terms.
Section 6.14 Repurchase of Assets. If, within one hundred eighty (180) days following the Closing, a Regulatory Disapproval occurs (a "Repurchase Event"), Buyer shall sell, and Seller shall be obligated to repurchase, all of the Assets and assume the Assumed Liabilities for a cash purchase price equal to the Base Purchase Price, plus the amount of the Purchase Price Adjustment, if any, by Seller paying to Buyer such amount in equal monthly installments at an interest rate equal to the Applicable Federal Rate for mid-term notes over a period of four (4) years pursuant to the form of promissory note attached hereto as Exhibit D (provided, however, that the total monthly payments for a given calendar
year will be capped at 75% of the free operating cash flow of Seller for such calendar year and in the event that any principal amount is not paid because of the cap provided in the previous clause, all such unpaid amounts will be due at the maturity date of the note) and all other obligations and restrictive covenants of Seller Parties will be terminated. In addition, upon the occurrence of a Repurchase Event within one hundred eighty (180) days following Closing, Buyer's obligation to make any further Installment Payments shall immediately terminate without any further action of the parties hereto. If a Regulatory Disapproval occurs after the date that is one hundred eighty (180) days following the Closing, Buyer shall provide Seller with a right of first offer to purchase the Assets and assume the Assumed Liabilities on terms mutually agreeable between the parties hereto, including any financing by Buyer, prior to selling the Assets to a third party.
Section 6.15 Buyer's Divestiture of Other Louisiana Business. Buyer Parties shall use commercially reasonable efforts to, as promptly as practicable but in no event more than one hundred eighty (180) days after the date of the signing of this Agreement, cause Buyer's affiliate, Grand Vision Gaming LLC, to (a) discontinue manufacturing slot machines and other video gaming devices for distribution in the State of Louisiana and (b) surrender all regulatory licenses it has with the Louisiana Gaming Control Board and the Video Gaming Division of the Louisiana State Police.
ARTICLE VII
INDEMNIFICATION
Section 7.1 Survival of Representations and Warranties. All representations and warranties contained in Articles IV and V shall survive the Closing and shall remain in full force and effect for a period of eighteen (18) months after the Closing Date with the exception of the representations and warranties in Sections 4.1, 4.2, 4.3, 4.5, 4.7, 4.8(a) and 4.16 (collectively, the "Fundamental Representations") which shall, in each case, survive for the shorter of (a) six (6) years or (b) sixty (60) days following the expiration of the applicable statute of limitations, and any claim for fraud or willful misconduct regarding the transactions contemplated herein, which shall, in each case, survive indefinitely. All covenants and agreements of the Parties contained herein shall survive the Closing for the shorter of the applicable statute of limitations or the period explicitly specified therein. The termination of any survival period of the representations and warranties provided herein shall not affect the rights of Buyer Claimants in respect of any claim made by such Buyer Claimant in a Claims notice prior to the expiration of the applicable survival period provided in this Section 7.1.
Section 7.2 Indemnification by Seller Parties.
(a)Seller Parties, jointly and severally ("Seller Indemnitors"), shall indemnify and hold Buyer and its Affiliates, and their respective directors, managers, officers, employees, members, partners, agents, successors and assigns (other than Guidroz, Owner and Seller) (collectively, "Buyer Claimants" and individually, a "Buyer Claimant") harmless from and defend each of them from and against any and all demands, claims, actions, Liabilities, losses, costs, damages or expenses whatsoever (including, without limitation, reasonable attorneys' fees and expenses) (collectively, "Claims") asserted against, imposed upon or incurred by Buyer Claimants resulting from or arising out of (i) any breach of or inaccuracy of any representation or warranty of Seller Parties contained herein; (ii) any breach of covenant or obligation of any of Seller Parties contained herein; (iii) any Excluded Liabilities, including any third party claim related to any operations or liabilities of Seller, any Indebtedness of Seller, any Seller Transaction Expenses and Seller Taxes; and (iv) specifically with respect to any demands, claims, actions, liabilities, losses,
costs, damages or expenses whatsoever including actual attorneys' fees and expenses related to all undisclosed claims under Sections 4.7, 4.12, 4.13 and 4.14.
(b)The Seller Indemnitors shall not be required to indemnify a Buyer Claimant with regard to claims under Sections 7.2(a)(i) or 7(a)(iii) (other than in respect of Fundamental Representations) unless the aggregate cumulative sum of all amounts for which indemnity would otherwise be due under Sections 7.2(a)(i) or 7(a)(iii) exceed One Hundred Twenty-Five Thousand dollars ($125,000) (the "Deductible"), in which case, the Seller Indemnitors shall be liable for all amounts in excess of the Deductible.
(c)Seller Indemnitor's liability to indemnify Buyer Claimants, for claims under Section 7.2(a) (other than with respect to Excluded Liabilities or breaches of Section 6.7) that are for fraud, intentional misrepresentation or willful malfeasance, shall be limited to the Purchase Price (the "Fraud Cap"). Buyer Claimants' right to indemnification shall not be limited or affected in any way by any pre-Closing investigation by Buyer.
(d)Seller Indemnitor's liability to indemnify Buyer Claimants, for breaches of Section 7.2(a)(i) (other than in respect of breaches of Fundamental Representations) shall be limited to $1,250,000 (the "RW Cap") in the aggregate.
Section 7.3 Indemnification by Buyer Parties. From and after the Closing, Buyer Parties shall jointly and severally indemnify and hold Guidroz, Owner and Seller, and their directors, managers, officers, employees, members, partners, agents, successors and assigns (collectively, "Seller Claimants" and individually "Seller Claimant") harmless from and defend each of them from and against any and all Claims asserted against, imposed upon or incurred by Seller Claimants resulting from or arising out of (i) any inaccuracy or breach of any representation or warranty of Buyer Parties contained herein; (ii) any breach of any covenant or obligation of Buyer Parties contained herein; and (iii) any third party claim related to any operations or liabilities, following the Closing including, without limitation, for any post-closing Indebtedness of the Company. Buyer Parties shall not be required to indemnify a Seller Claimant under clause Section 7.3(a)(i) and 7.3(a)(iii) (other than in respect of Fundamental Representations) unless the aggregate cumulative sum of all amounts for which indemnity would otherwise be due under Section 7.3(a)(i) and 7.3(a)(iii) exceeds the Deductible, in which case, Buyer Parties shall be liable for all such amounts in excess of the Deductible.
Section 7.4 Terms and Conditions of Indemnification. The respective obligations and liabilities of Seller Indemnitors and Buyer to indemnify pursuant to this Article VII shall be subject to the following terms and conditions:
(a)The Party seeking indemnification ("Claimant" or "Indemnified Party") shall notify the other Party or Parties ("Indemnifying Party") of the claim in writing (such written notice, an "Indemnification Notice") promptly after receiving notice of any action, lawsuit, proceeding, investigation, demand or other claim against the Indemnified Party. Each such Indemnification Notice shall describe, in reasonable detail to the extent practicable, the Claim, including the facts giving rise to such claim for indemnification hereunder, the amount or method of computation of the amount of such claim (if known) and such other information with respect thereto as the Indemnifying Party may reasonably request; provided, that, the failure to so notify an Indemnifying Party shall not relieve the Indemnifying Party of its obligations hereunder except to the extent that (and only to the extent that) the Indemnifying Party is materially prejudiced by such
failure. The Indemnifying Party shall have thirty (30) days after its receipt of such notice to respond in writing to such Claim. During such thirty (30) day period, the Claimant shall allow the Indemnifying Party and its professional advisors to investigate the matter or circumstance alleged to give rise to the Claim, and whether and to what extent any amount is payable in respect of the Claim and the Claimant shall assist the Indemnifying Party's investigation by giving such information and assistance (including access to the Business' premises and personnel and the right to examine and copy any accounts, documents or records) as the Indemnifying Party or any of its professional advisors may reasonably request. If the Indemnifying Party does not so respond within such thirty (30) day period, the Indemnifying Party shall be deemed to have rejected such claim, in which case the Claimant shall be free to pursue such remedies as may be available to the Claimant on the terms and subject to the provisions of this Agreement.
(b) In all cases, the Claimant shall provide its reasonable cooperation to the Indemnifying Party in defense of claims or litigation relating to Claims, including by making employees, information and documentation reasonably available.
Section 7.5 Tax Treatment of Indemnification Payments. All indemnification payments made under this Agreement shall be treated by the parties as an adjustment to the Purchase Price for Tax purposes, unless otherwise required by Law.
Section 7.6 Insurance. Any indemnification payment under this Article VII shall be net of any insurance and tax benefit actually received by the Claimant with respect to the Claim (net of any out of pocket costs and expenses incurred to recover any such insurance).
Section 7.7 Right of Offset. If (a) at the time Buyer is required to pay a Purchase Price Adjustment or (b) Guidroz (or any of his Affiliates) owns any ownership interest of Buyer (including LSM) and Buyer has asserted a claim for indemnification pursuant to this Article VII and the Holdback Amount has been exhausted, Buyer shall be entitled to deposit into escrow the payment of any Purchase Price Adjustment, Installment Payment or Bonus in an amount equal to, the Buyer's good faith estimate of the aggregate unpaid amount of such Claim, such escrow amount to be applied against the full amount of Buyer's Claim once finally adjudicated. The right to deposit into escrow is cumulative to any other rights or remedies Buyer may have. Once the claim for indemnification for which the withheld payment relates has been resolved by the parties, Buyer shall promptly pay to Seller any Purchase Price Adjustment, Installment Payment or Bonus withheld in excess of such resolved claim, and pay to itself the excess held in escrow. Under no circumstances may Buyer offset against payment of any Installment Payment. Buyer further stipulates that, notwithstanding anything to the contrary set forth is this Agreement or elsewhere, if the Closing occurs, each Installment Payment becomes due and payable in full on its due date in accordance with the terms hereof, subject to no defenses, offsets are otherwise. Buyer agrees not to assert any defense to the payment of an Installment Payment or make any claim that would prevent or delay the payment of any Installment Payment once the Closing occurs.
Section 7.8 Materiality Qualifiers. Notwithstanding anything to the contrary contained herein, for purposes of determining the amount of losses arising from such a breach for which the Buyer Indemnitees or the Seller Indemnitees are entitled to indemnification under this Agreement, each such representation and warranty shall be read without giving effect to any qualification that is based on materiality, including the words "material," "Material Adverse Effect," "in any material respect" and other uses of the word "material" or words of similar meaning (and shall be treated as if such words were deleted from such representation or warranty).
Section 7.9 Order of Payments; Holdback Amount. Any losses payable to a Buyer Indemnitee pursuant to this Article VII shall be satisfied: (i) from the Holdback Amount; and (ii) to the extent the amount of losses exceeds the Holdback Amount, from the Seller Parties. Within three (3) Business Days after the eighteen (18) month anniversary of the Closing Date (the "Holdback Payment Date"), Buyer shall release to Seller an amount equal to the Holdback Amount minus the Indemnification Holdback Amount. The term "Indemnification Holdback Amount" shall mean, as of the Holdback Payment Date, the aggregate amount of all losses relating to claims for indemnification in accordance with Section 7.2 of this Agreement that have not been resolved or satisfied as mutually agreed between the Parties. Promptly (within 3 days) upon the resolution of any claim relating to any of the Indemnification Holdback Amount, the portion of the Indemnification Holdback Amount for such indemnification claim not otherwise distributable to Buyer as agreed between the Parties shall be released to Seller. Any portion of the Holdback Amount released by Buyer pursuant to this Section 7.9 shall be made by wire transfer of immediately available funds to an account that has been designated by Seller.
Section 7.10 Exclusive Remedies. The Parties acknowledge and agree that, from and after the Closing, their sole and exclusive remedy with respect to any and all claims for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement shall be pursuant to the indemnification provisions set forth in this Article VII. In furtherance of the foregoing, each Party hereby waives, to the fullest extent permitted under Law, any and all rights, claims and causes of action for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement it may have against the other Parties hereto and their Affiliates and each of their respective representatives, arising under or based upon any Law, except pursuant to the indemnification provisions set forth in this Article VII. Nothing in this Section 7.10 or otherwise in this Agreement shall limit any Person's (x) right to seek and obtain any equitable relief to which such Person shall be entitled or (y) remedies in the case of fraud committed by the other party hereto.
Section 7.11 Application as it Relates to MIPA. Upon the Closing, the provisions of this Article VII shall amend, replace and supersede the provisions of Article VIII of the MIPA. The provisions of this Article VII shall apply mutatis mutandis to the MIPA as if they had been fully set forth therein.
ARTICLE VIII
CLOSING CONDITIONS; TERMINATION
Section 8.1 Conditions to Obligations of All Parties. The obligations of each Party to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions:
(a)No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any order which is in effect and has the effect of making the transactions contemplated by this Agreement illegal, otherwise restraining or prohibiting consummation of such transactions or causing any of the transactions contemplated hereunder to be rescinded following completion thereof.
Section 8.2 Conditions to Obligations of Buyer. The obligations of Buyer to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or Buyer's waiver, at or prior to the Closing, of each of the following conditions:
(a)Other than the Fundamental Representations, the representations and warranties of the Seller Parties contained in this Agreement or any Transaction Document delivered pursuant hereto shall be true and correct in all respects (in the case of any representation or warranty qualified by materiality or Material Adverse Effect) or in all material respects (in the case of any representation or warranty not qualified by materiality or Material Adverse Effect) on and as of the date hereof and on and as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects). The Fundamental Representations shall be true and correct in all respects on and as of the date hereof and on and as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects).
(b)The Seller Parties shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement and each of the Transaction Documents to be performed or complied with by it prior to or on the Closing Date.
(c)No Proceedings shall have been commenced against Buyer, Seller or any other Seller Party, which would prevent the Closing. No injunction or restraining order shall have been issued by any Governmental Authority, and be in effect, which restrains or prohibits any transaction contemplated hereby.
(d)The closing of the transactions contemplated by the MIPA shall have occurred.
(e)From the date of this Agreement, there shall not have occurred any Material Adverse Effect, nor shall any event or events have occurred that, individually or in the aggregate, with or without the lapse of time, could reasonably be expected to result in a Material Adverse Effect.
(f)Buyer shall have received a certificate, dated the Closing Date and signed by a duly authorized officer of Seller, that each of the conditions set forth in Section 8.2(a) and Section 8.2(b) have been satisfied.
(g)Buyer shall have exercised the LSM Option and consummated the acquisition of 90% of the membership interests of LSM.
Section 8.3 Conditions to Obligations of Seller. The obligations of Seller to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or Seller's waiver, at or prior to the Closing, of each of the following conditions:
(a)Other than the representations and warranties of Buyer contained in Section 5.1, Section 5.2 and Section 5.5, the representations and warranties of Buyer contained in this Agreement, the Transaction Documents and any certificate or other writing delivered pursuant hereto shall be true and correct in all respects (in the case of any representation or warranty qualified by materiality or material adverse effect) or in all material respects (in the case of any representation or warranty not qualified by materiality or material adverse effect) on and as of the date hereof and on and as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of
which shall be determined as of that specified date in all respects). The representations and warranties of Buyer contained in Section 5.1, Section 5.2 and Section 5.5 shall be true and correct in all respects on and as of the date hereof and on and as of the Closing Date with the same effect as though made at and as of such date.
(b)Buyer shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement and each of the Transaction Documents to be performed or complied with by it prior to or on the Closing Date.
(c)No injunction or restraining order shall have been issued by any Governmental Authority, and be in effect, which restrains or prohibits any material transaction contemplated hereby.
(d)Seller shall have received a certificate, dated the Closing Date and signed by a duly authorized officer of Buyer, that each of the conditions set forth in Section 8.3(a) and Section 8.3(b) have been satisfied.
(e)Buyer shall have delivered to Seller such other documents or instruments as Seller reasonably requests and are reasonably necessary to consummate the transactions contemplated by this Agreement, including, without limitation, the resolutions of the Buyer Parties which authorize the execution, delivery, and performance of this Agreement and the other agreements, instruments, and documents required to be delivered in connection with this Agreement or at the Closing and the consummation of the transactions contemplated hereby and thereby, and the names and signatures of the officers of the Buyer and Parent authorized to sign this Agreement and the other Transaction Documents.
(f)Buyer's affiliate, Grand Vision Gaming LLC, shall have discontinued manufacturing slot machines and other video gaming devices for distribution in the State of Louisiana.
(g)Buyer shall have exercised the LSM Option and consummated the acquisition of 90% of the membership interests of LSM.
Section 8.4 Termination.
(a)by the mutual written consent of Buyer, on the one hand, and Seller, on the other hand;
(b)by Buyer by written notice to Seller if: (i) Buyer is not then in material breach of any provision of this Agreement and there has been a breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made bey a Seller Party pursuant to this Agreement that would give rise to the failure of any of the conditions specified in Sections 8.1 through 8.3 and such breach, inaccuracy or failure has not been cured by Seller within ten (10) days of Seller's receipt of written notice of such breach from Buyer or such extended period (but in no event more than thirty (30) days) required to cure if Seller commences a cure within such ten (10) day period and diligently proceeds to completion a cure; or (ii) any of the conditions set forth in Section 8.1 or Section 8.2 shall not have been, or if it becomes apparent that any of such conditions will not be, fulfilled by the first anniversary hereof, unless such failure shall be due to the failure of Buyer to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing;
(c)by Seller by written notice to Buyer if: (i) no Seller Party is then in material breach of any provision of this Agreement and there has been a breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by Buyer pursuant to this Agreement that would give rise to the failure of any of the conditions specified in Sections 8.1 through 8.3 and such breach, inaccuracy or failure has not been cured by Buyer within ten (10) days of Buyer's receipt of written notice of such breach from Seller; or (ii) any of the conditions set forth in Section 8.1 or Section 8.3 shall not have been, or if it becomes apparent that any of such conditions will not be, fulfilled by first anniversary hereof, unless such failure shall be due to the failure of any Seller Party to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by each of them prior to the Closing;
(d)by either Buyer or Seller if a Law is enacted that makes consummation of the transactions contemplated hereby illegal or otherwise prohibited or if the consummation of the transactions contemplated hereby would violate any nonappealable final order of any Governmental Authority having competent jurisdiction;
(e)by Seller on or after the date that is the later of (x) Trigger Date and (y) ninety (90) days following the Trigger Date if Buyer has elected to make the Divestiture Payments pursuant to Section 3.2(e), by written notice to Buyer if Buyer's affiliate, Grand Vision Gaming LLC, shall not have as of such date (i) discontinued manufacturing slot machines and other video gaming devices for distribution in the State of Louisiana and (ii) surrendered all regulatory licenses it has with the Louisiana Gaming Control Board and the Video Gaming Division of the Louisiana State Police; or
(f)by Buyer on or after the date that is the later of (x) Trigger Date and (y) ninety (90) days following the Trigger Date if Buyer has elected to make the Divestiture Payments pursuant to Section 3.2(e), by written notice to Seller if Buyer's affiliate, Grand Vision Gaming LLC, shall not have as of such date of termination (i) discontinued manufacturing slot machines and other video gaming devices for distribution in the State of Louisiana and (ii) surrendered all regulatory licenses it has with the Louisiana Gaming Control Board and the Video Gaming Division of the Louisiana State Police.
Section 8.5 Effect of Termination. In the event of termination of this Agreement as provided in Section 8.4, this Agreement shall immediately terminate and have no further force and effect and there shall be no liability on the part of any Party to any other Party under this Agreement, except that (a) the covenants and agreements set forth in this Section 8.5, Section 8.6 and Article IX (Miscellaneous) shall survive such termination indefinitely and (b) nothing in this Section 8.5 shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement. Notwithstanding anything to the contrary herein, Seller's sole remedy in the event that Buyer's Affiliates have not (i) discontinued manufacturing slot machines and other video gaming devices for distribution in the State of Louisiana and (ii) surrendered all regulatory licenses it has with the Louisiana Gaming Control Board and the Video Gaming Division of the Louisiana State Police, in each case, as of or prior to Trigger Date shall be to elect to terminate this Agreement pursuant to Section 8.4(e) or receive the Divestiture Payments in accordance with Section 3.2(e).
Section 8.6 Termination Fee. In addition, if (x) this Agreement is validly terminated by either Buyer pursuant to Section 8.4(b)(i) or Seller pursuant to Section 8.4(c)(i) (such terminating party, as applicable, the "Terminating Party") and (y) the breach underlying the applicable termination by the Terminating Party is either an intentional failure by the non-Terminating Party to consummate the Closing
when obligated to do so pursuant to Section 2.4 or a breach (whether through action or inaction) of this Agreement by the non-Terminating Party for the purpose of causing the failure of any condition set forth in Section 8.1 through 8.3, then the Seller Parties (jointly and severally), in the case where the Terminating Party is the Buyer, and Buyer Parties (jointly and severally), in the case where Terminating Party is Seller, shall be obligated to pay the applicable Terminating Party within ten (10) Business Days after such termination a fee in an amount equal to $1,000,000 (the "Termination Fee") in cash by wire transfer of immediately available funds to an account or accounts designated by the Terminating Party; provided, however, that notwithstanding the foregoing if (i) Buyer is the Terminating Party and (ii) the applicable termination by Buyer is not the result of a breach of Section 6.3 hereof, Seller shall be obligated to pay Buyer only such portion of the Termination Fee that is equal to 50% of Seller's then available cash liquidity (as reasonably demonstrated to Buyer by delivery of then current financial statements and other applicable financial records, including bank statements) in cash within such ten (10) Business Day period and the balance shall be paid in accordance with the Contingent Non-Negotiable Senior Secured Promissory Note issued by Seller in favor of Buyer on the date hereof.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Regulatory Condition. This Agreement shall be subject to a regulatory condition, which shall be either (a) the express written disapproval of this Agreement by any of the regulatory agencies which require said approval, including but not limited to the Louisiana Gaming Control Board and the Video Gaming Division of the Louisiana State Police, or (b) a finding of unsuitability of Buyer or any of its officers or directors (who cannot reasonably be replaced) required to submit to a Suitability Determination, by any of the regulatory agencies which require said approval, including but not limited to the Louisiana Gaming Control Board and the Video Gaming Division of the Louisiana State Police. Furthermore, in the event that any such regulatory agency should disapprove of any of the terms and/or conditions of this Agreement, or a find Buyer or any of its officers or directors (who cannot reasonably be replaced) unsuitable, then this Agreement or any such term or condition hereof that is not approved shall be null and void retroactive to the date of the signing of this Agreement, and shall have no binding effect on the parties hereto (such event, a "Regulatory Disapproval"). In the event of an occurrence of a Regulatory Disapproval, this Agreement or any such term or condition hereof shall be null and void retroactive to the date of the signing of this Agreement, and shall have no binding effect on the parties hereto, other than Seller’s right to retain the Suitability Deposit Amount.
Section 9.2 Expenses. Except as provided herein, Seller Parties and Buyer Parties shall each pay their own legal, accounting, due diligence and finders expenses incurred in connection with this Agreement and the transactions contemplated hereby.
Section 9.3 Amendment. This Agreement may not be modified, amended, altered or supplemented except by a written agreement executed by Buyer and Seller.
Section 9.4 Entire Agreement. This Agreement, together with the Exhibits and Schedules hereto and the instruments and other documents delivered pursuant to this Agreement, contains the entire agreement of the Parties relating to the subject matter hereof, and supersedes all prior agreements, understandings, representations, warranties and covenants of any kind between the parties, including the letter of intent, dated February 18, 2023, between Accel Entertainment, Inc., Seller and Guidroz. All other agreements are specifically waived.
Section 9.5 Waivers. Waiver by any party of any breach of or failure to comply with any provision of this Agreement by the other party shall not be construed as, or constitute, a continuing waiver of such provision, or a waiver of any other breach of, or failure to comply with, any other provision of this Agreement. No waiver of any such breach or failure of any term or condition of this Agreement shall be effective unless in a written notice signed by the waiving party and delivered, in the manner required for notices generally, to each affected party.
Section 9.6 Notices. All notices and other communications hereunder shall be validly given or made if in writing, (i) when delivered personally (by courier service or otherwise), (ii) when sent by telecopy or email as indicated by proof of transmittal, or (iii) when actually received if mailed by first-class certified or registered United States mail or recognized overnight courier service, postage-prepaid and return receipt requested, and all legal process with regard hereto shall be validly served when served in accordance with applicable law, in each case to the address of the party to receive such notice or other communication set forth below, or at such other address as any party hereto may from time to time advise the other parties:
If to the Seller Parties:
Toucan Management, LLC
Attention: Stan Guidroz
165 Industrial Parkway
Lafayette, Louisiana 70508
email: Stan@toucanla.com
with a copy (which shall not constitute notice) to:
Perret Doise LLC
721 Cambridge Drive
Lafayette, Louisiana 70503
(337) 593-4910 (Telecopy)
email:hperret@perretlaw.com
If to Buyer:
Accel Entertainment, LLC
140 Tower Drive
Burr Ridge, Illinois 60527
Attention: General Counsel
(630) 863-7279 (Telecopy)
email: derekh@accelentertainment.com
with a copy (which shall not constitute notice) to:
Goldberg Kohn Ltd.
55 East Monroe, Suite 3300
Chicago, IL 60603
Attention: Ross Friedman
Email: Ross.Friedman@goldbergkohn.com
(312) 863-7840 (Telecopy)
Section 9.7 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same document.
Section 9.8 Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware applicable to agreements made and to be performed entirely within such State, without regard to the conflicts of law principles of such State. Each of the
parties hereto hereby irrevocably waives personal service of process and consents to service of process by certified or registered mail, return receipt requested addressed to such party at its address set forth in Section 9.6. Subject to applicable law, process in any such proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Nothing herein shall affect the right of any party to serve legal process in any other manner permitted by law or at equity or to enforce in any lawful manner a judgment obtained in one jurisdiction in any other jurisdiction. Seller Parties and Buyer Parties agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Sole and exclusive venue and jurisdiction for any action under this Agreement shall be in any state or federal court of the State of Texas.
Section 9.9 Binding Effect; Third Party Beneficiaries; Assignment. This Agreement shall be binding upon, inure to the benefit of and be enforceable by the parties hereto and their respective legal representatives, successors and permitted assigns. Except as expressly set forth herein, nothing expressed or referred to in this Agreement is intended or shall by construed to give any Person other than the parties to this Agreement, or their respective legal representatives, successors and permitted assigns, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein. None of the parties hereto may assign this Agreement nor any of its rights hereunder; provided, however, that nothing in this Agreement shall or is intended to limit the ability of Buyer or Parent to assign its rights or delegate its responsibilities, liabilities and obligations under this Agreement, in whole or in part, without the consent of any Seller Party to (a) any Affiliate of Buyer or Parent (including, after the exercise of the LSM Option, LSM), (b) any direct or indirect third party arm’s-length purchaser of all or substantially all of the assets of Buyer or (c) any lender to Buyer, Parent or any of their Affiliates as security for borrowings; provided, however, that an assignment pursuant to subsection (a) or (c) shall not release Buyer or Parent from any of its responsibilities, liabilities or obligations under this Agreement.
Section 9.10 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall not invalidate the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction, and any such provision, to the extent invalid or unenforceable, shall be replaced by a valid and enforceable provision which comes closest to the intention of the parties underlying such invalid or unenforceable provision.
Section 9.11 Headings. The headings contained in this Agreement are for reference purposes only and shall not modify, define, limit, expand or otherwise affect in any way the meaning or interpretation of this Agreement.
Section 9.12 No Agency. No party hereto shall be deemed hereunder to be an agent of, or partner or joint venturer with, any other party hereto.
Section 9.13 Public and Private Announcements. Prior to the Closing, neither Buyer nor any Seller Party will issue or cause the publication of any press release or otherwise make any public or private statement with respect to the transactions contemplated hereby without the prior written consent of the parties hereto; provided, however, that any party hereto may make a public or private announcement to the extent required by law, judicial process or the rules, regulations or interpretations of applicable laws.
Section 9.14 Accounting Terms. Any accounting terms used in this Agreement shall, unless otherwise defined in this Agreement, have the meaning ascribed thereto by the Code.
Section 9.15 Knowledge. The term Seller's "knowledge" and words of similar import means the actual current knowledge of Guidroz. For purposes of determining "knowledge," the Seller Parties shall be deemed to know the daily operations, financial matters and all material requirements of all laws applicable to the Business, including without limitation, any rules and regulations established by the Louisiana Gaming Control Board.
Section 9.16 Interpretation. In this Agreement, unless a contrary intention appears, (1) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision, and to any certificates delivered pursuant hereto; and (ii) reference to any Article or Section means such Article or Section hereof. All Exhibits are incorporated herein by their specific reference and made a part hereof. The parties hereto agree that they have been represented by counsel during the negotiation, preparation and execution of this Agreement and, therefore, waive the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.
Section 9.17 Waiver of Bulk Sales Laws. Buyer and the Seller Parties hereby waive compliance in connection with the transactions contemplated by this Agreement or the Transaction Documents with the provisions of any applicable bulk sales laws in effect as of the date of the Closing; provided, however, that the Seller Parties shall fully indemnify, reimburse and hold harmless Buyer and its Affiliates against all losses which Buyer may suffer due to such non-compliance.
[Signature Page Follows]
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the date first above written.
SELLER:
TOUCAN GAMING, LLC
By: /s/ Stan Guidroz
Name: Stan Guidroz
Its: Owner-Manager
OWNER:
TOUCAN MANAGEMENT, LLC
By: /s/ Stan Guidroz
Name: Stan Guidroz
Its: Owner-Manager
GUIDROZ:
By: /s/ Stan Guidroz
Name: Stan Guidroz
BUYER:
ACCEL ENTERTAINMENT, LLC
By: /s/ Andrew H. Rubenstein
Name: Andrew H. Rubenstein
Its: Manager
PARENT:
ACCEL ENTERTAINMENT, LLC
By: /s/ Andrew H. Rubenstein
Name: Andrew H. Rubenstein
Its: President
EX-10.3
EX-10.3
Filename: toucanapa-firstamendment.htm · Sequence: 4
Document
Exhibit 10.3
FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
THE FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT (this "Amendment") is made and entered into as of November 1, 2024 (the “First Amendment Effective Date”), by and among Accel Entertainment LLC, a Delaware limited liability company (such entity or its permitted designee, “Buyer”), Accel Entertainment, Inc. (“Parent,” and collectively with Buyer, the “Buyer Parties”), Toucan Device Owner, LLC, a Louisiana limited liability company (f/k/a Toucan Gaming, LLC) (“Seller”), Toucan Management, LLC, a Louisiana limited liability company (“Owner”), and Stan Guidroz (“Guidroz”).
RECITALS
WHEREAS, the Buyer Parties, Seller, Owner and Guidroz are parties to that certain Asset Purchase Agreement, dated as of April 11, 2023 (the "Purchase Agreement"); and
WHEREAS, pursuant to Section 9.3 of the Purchase Agreement, the Buyer and the Seller desire to amend the terms of the Purchase Agreement as set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1.Amendments to the Purchase Agreement.
(a)Recital (c) is hereby deleted in its entirety.
(b)Each reference in the Purchase Agreement to the "Buyer Equity" is hereby deleted in its entirety.
(c)Each reference in the Purchase Agreement to the "MIPA" is hereby deleted in its entirety.
(d)Each reference in the Purchase Agreement to the "LSM Option Purchase Agreement" and the "LSM Option" is hereby deleted in its entirety.
(e)Each reference in the Purchase Agreement to the "MIPA Closing" is hereby replaced with the "Closing".
(f)Section 2.4(c) of the Purchase Agreement is hereby amended and restated in its entirety as follows:
(g)Closing. The closing of the transactions contemplated hereby (the “Closing”) means 10:00 a.m. central time on November 1, 2024.
(h)In Section 2.6(b) of the Purchase Agreement, "LSM" is hereby replaced with "Toucan Gaming, LLC".
(i)The second sentence in Section 3.1 is hereby amended and restated in its entirety as follows:
"For purposes hereof, the "Base Purchase Price" shall be an amount equal to $9,500,000."
(j)The first sentence of Section 3.2(c) of the Purchase Agreement is hereby amended and restated in its entirety as follows:
"(c) Installment Payments. On each of the first ten (10) anniversaries of the Closing, Buyer shall pay to Seller an amount equal to Five Hundred Thousand Dollars ($500,000.00) (each such payment, an "Installment Payment") by wire transfer of immediately available funds, provided that Buyer shall not be required to make any Installment Payment to Seller until after the Closing; provided, further, that upon the occurrence of an Installment Payment Acceleration Event, any then remaining unpaid Installment Payments shall accelerate and become due and payable in full upon the occurrence of such Installment Payment Acceleration Event.”
(k)Section 3.4(b) of the Purchase Agreement is hereby deleted in its entirety.
(l)Section 4.18 of the Purchase Agreement is hereby deleted in its entirety.
(m)Section 6.14 of the Purchase Agreement is hereby deleted in its entirety.
(n)Section 7.2(b) of the Purchase Agreement is hereby amended and restated in its entirety as follows:
"(b) The Seller Indemnitors shall not be required to indemnify a Buyer Claimant with regard to claims under Sections 7.2(a)(i) or 7(a)(iii) (other than in respect of Fundamental Representations) unless the aggregate cumulative sum of all amounts for which indemnity would otherwise be due under Sections 7.2(a)(i) or 7(a)(iii) exceed One Hundred Thirty-Five Thousand dollars ($135,000) (the "Deductible"), in which case, the Seller Indemnitors shall be liable for all amounts in excess of the Deductible."
(o)Section 7.2(d) of the Purchase Agreement is hereby amended and restated in its entirety as follows:
"(d) Seller Indemnitor's liability to indemnify Buyer Claimants, for breaches of Section 7.2(a)(i) (other than in respect of breaches of Fundamental Representations) shall be limited to $1,350,000 (the "RW Cap") in the aggregate."
(p)Section 7.11 of the Purchase Agreement is hereby deleted in its entirety.
(q)Section 8.2(d) of the Purchase Agreement is hereby deleted in its entirety.
(r)Section 8.2(g) of the Purchase Agreement is hereby amended and restated in its entirety as follows:
"(g) Buyer shall have consummated the acquisition of 90% of the membership interests of Toucan Gaming, LLC."
(s)Section 8.3(g) of the Purchase Agreement is hereby amended and restated in its entirety as follows:
"(g) Buyer, as Stan Guidroz’s designee, shall have consummated the acquisition of 90% of the membership interests of Toucan Gaming, LLC."
(t)Section 9.1 of the Purchase Agreement is hereby deleted in its entirety.
(u)In Exhibit A of the Purchase Agreement, all references to “Toucan Entertainment, LLC” are hereby amended to “Toucan Gaming, LLC” and all references to its state of organization are changed from “Louisiana” to “Delaware.”
(v)In Exhibit B of the Purchase Agreement all references to “Toucan Entertainment, LLC” are hereby amended to “Toucan Gaming, LLC” and all references to its state of organization are changed from “Louisiana” to “Delaware.”
2.Termination of the LSM Option Purchase Agreement and MIPA. The Buyer Parties, Seller, Owner and Guidroz are parties to (a) that certain Membership Interest Purchase Agreement, dated as of April 11, 2023 (the "MIPA") and (b) that certain LSM Option Purchase Agreement, dated as of April 11, 2023 (the "LSM Option Purchase Agreement"). For and in consideration of an increase in the Base Purchase Price of $600,000.00, each of the Buyer Parties, Seller, Owner and Guidroz agree that the MIPA and the LSM Option Purchase Agreement are hereby terminated without any further action required to be taken on the part of any Person and of no further force and effect, and none of the Buyer Parties, Seller, Owner or Guidroz has or shall have any rights or obligations to each other thereunder or any liability of any kind, continuing or otherwise, to any party thereto.
3.Miscellaneous. This Amendment shall constitute an amendment pursuant to and in accordance with Section 9.3 of the Purchase Agreement. Except as specifically modified by this Amendment, the terms of the Purchase Agreement shall remain in full force and effect. After the date hereof, any reference to the Purchase Agreement shall mean the Purchase Agreement, as amended and modified hereby. All capitalized terms not specifically defined herein shall have the meanings assigned to them in the Purchase Agreement. The provisions of Article IX of the Purchase Agreement shall apply to this Amendment mutatis mutandis.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the date first above written.
SELLER:
TOUCAN DEVICE OWNER, LLC
By: /s/ Stan Guidroz
Name: Stan Guidroz
Its: Managing Member
OWNER:
TOUCAN MANAGEMENT, LLC
By: /s/ Stan Guidroz
Name: Stan Guidroz
Its: Managing Member
GUIDROZ:
By: /s/ Stan Guidroz
Name: Stan Guidroz
BUYER:
ACCEL ENTERTAINMENT LLC
By: /s/ Andrew Rubenstein
Name: Andrew Rubenstein
Its: President
PARENT:
ACCEL ENTERTAINMENT, INC.
By: /s/ Andrew Rubenstein
Name: Andrew Rubenstein
Its: President and Chief Executive Officer
EX-10.4
EX-10.4
Filename: arlimitedliabilitycompanya.htm · Sequence: 5
Document
Exhibit 10.4
TOUCAN GAMING, LLC
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
Dated as of November 1, 2024
THE MEMBERSHIP INTERESTS REPRESENTED BY THIS LIMITED LIABILITY COMPANY AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER APPLICABLE SECURITIES LAWS. SUCH UNITS MAY NOT BE SOLD, ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF AT ANY TIME WITHOUT EFFECTIVE REGISTRATION UNDER SUCH ACT AND LAWS OR AN EXEMPTION THEREFROM, AND COMPLIANCE WITH THE OTHER RESTRICTIONS ON TRANSFERABILITY SET FORTH HEREIN.
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT OF
TOUCAN GAMING, LLC
This Amended and Restated Limited Liability Company Agreement (this "Agreement") of Toucan Gaming, LLC, a Delaware limited liability company (the "Company"), is entered into as of November 1, 2024 (the "Effective Date") by and among the Company, Toucan Management, LLC ("Toucan Management") and Accel Entertainment LLC ("Accel") and any other Person who, after the date hereof, becomes a Member in accordance with the terms of this Agreement (collectively, the "Members"). Unless otherwise noted or defined elsewhere in this Agreement, capitalized terms used in this Agreement have the meanings ascribed herein, as more fully set forth in ARTICLE X.
WHEREAS, the Company was initially formed as a corporation on October 20, 1993, by the filing of Articles of Incorporation with the Secretary of State of the State of Louisiana, and converted from a corporation to a limited liability company on October 31, 2024, by the filing of a Louisiana Articles of Charter Surrender with the Secretary of State of the State of Louisiana and a Certificate of Conversion with the Department of State of the State of Delaware;
WHEREAS, on November 1, 2024, pursuant to that certain Unit Purchase Agreement (the "Toucan Gaming UPA") by and among L.S.M. Holdco, Inc., Accel and the Company, Accel became the owner of 90% of the issued and outstanding membership interests of the Company;
WHEREAS, immediately thereafter, L.S.M. Holdco, Inc. transferred 10% of the issued and outstanding membership interests of the Company to Stan Guidroz ("Guidroz"), resulting in Accel owning 90% of the issued and outstanding membership interests of the Company and Guidroz owning 10% of the issued and outstanding membership interests of the Company;
WHEREAS, promptly following the consummation of the Toucan Gaming UPA and pursuant to the Asset Purchase Agreement, by and among Accel, Toucan Device Owner, LLC (f/k/a Toucan Gaming, LLC) ("Toucan Device Owner"), Toucan Management and Guidroz, the Company (as the permitted assignee of Accel) acquired substantially all of the assets of Toucan Device Owner other than the Toucan Device Owner device license on the terms (the "Toucan Device Owner Assets"), and subject to the conditions, set forth therein and, as part of the consideration therefor;
WHEREAS, Accel contributed all of the Toucan Device Owner Assets to the Company;
WHEREAS, Toucan Management contributed all of the membership interests of Toucan Device Owner to the Company in exchange for 5% of the outstanding membership interests of the Company;
WHEREAS, Guidroz contributed 10% of the outstanding membership interests of the Company to Toucan Management, resulting in Accel owning 85% of the issued and outstanding membership interests of the Company and Toucan Management owning 15% of the issued and outstanding membership interests of the Company; and
WHEREAS, the Company and the Members desire to execute and deliver this Agreement to set forth the rights, powers and interests of the Members with respect to the Company and their membership interest therein and to provide for the management of the business and operations of the Company.
NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Members, intending to be legally bound, hereby agree as follows:
ARTICLE I
Organizational Matters
Section 1.01 Name. The name of the Company is Toucan Gaming, LLC.
Section 1.02 Principal Office. The principal office of the Company is located at 165 Industrial Parkway, Lafayette, LA 70508, or such other location as may from time to time be determined by the Manager. The Manager shall give prompt notice of any such change to each of the Members.
Section 1.03 Registered Office; Registered Agent. The registered office of the Company and the registered agent for service of process on the Company in the State of Delaware shall be that office and Person named in the Certificate of Formation or such other office (which need not be a place of business of the Company) or such other Person or Persons as the Manager may designate from time to time in the manner provided by the Delaware Act and Applicable Law.
Section 1.04 Purpose; Powers.
(a)The purposes of the Company are to engage in any lawful act or activity for which limited liability companies may be formed under the Delaware Act and to engage in any and all activities necessary or incidental thereto.
(b)The Company shall have all the powers necessary or convenient to carry out the purposes for which it is formed, including the powers granted by the Delaware Act.
Section 1.05 Term. The term of the Company commenced on the date and time the Certificate of Formation were filed with the Department of State of the State of Delaware and shall continue in existence in perpetually or until any earlier date when the Company is terminated in accordance with the provisions of this Agreement or as provided by law.
ARTICLE II
Members
Section 2.01 Members. The names, mailing addresses, and Membership Interests of the Members are set out in Schedule I attached hereto (the "Members Schedule"). The Manager shall maintain and update the Members Schedule upon the issuance or Transfer of any Membership Interests to any new or existing Member in accordance with this Agreement.
Section 2.02 Capital Contributions; Capital Accounts; No Withdrawals.
(a)The Members have contributed to the Company the amounts, in the form of cash, property, services, or a promissory note or other obligation (as such amounts may be amended herein from time to time, the "Capital Contributions") set out in the Members Schedule. No Member is required to make additional Capital Contributions to the Company.
(b)The Company shall establish and maintain for each Member a separate capital account (a "Capital Account") on its books and records in accordance with the provisions of Section 704(b) of the Code and Treasury Regulations Section 1.704-1(b)(2)(iv). Each Capital Account shall be (i) credited by such Member's Capital Contributions to the Company and any profits allocated to such Member in accordance with Section 4.01 and (ii) debited by any distributions to such Member pursuant to Section 5.01(a) and any losses allocated to such Member in accordance with Section 4.01. For purposes of maintaining the Members' Capital Accounts, profits and losses shall be determined in accordance with Treasury Regulation Section 1.704-1(b). The Capital Accounts shall be adjusted by the Manager upon the occurrence of an event described in Treasury Regulations Section 1.704-1(b)(2)(iv)(f)(5) in the manner described in Treasury Regulations Section 1.704-1(b)(2)(iv)(f)(5) and (g) if the Manager determines that such adjustments are necessary or appropriate to reflect the relative economic interests of the Members. In the event of a Transfer of any Membership Interest in accordance with the terms of this Agreement, the Transferee shall succeed to the Capital Account of the Transferor to the extent it relates to the transferred Membership Interest.
(c)No Member shall be entitled to withdraw any part of its Capital Account or to receive any distribution from the Company, except as otherwise provided in this Agreement.
(d)Loans by any Member to the Company shall not be considered Capital Contributions and shall not affect the maintenance of such Member’s Capital Account. The amount of any such loans shall be a debt of the Company to such Member and shall be payable or collectible in accordance with the terms and conditions upon which such loans are made. Any loans made by Accel to the Company shall accrue interest at a rate equal to 200 basis points above Accel’s borrowing rate in effect during the term of any such loan and secured by the assets of the Company.
Section 2.03 Admission of Additional Members.
(a)Additional Members may be admitted from time to time in connection with (i) the issuance of Membership Interests by the Company, subject to compliance with the provisions of Section 3.02(b), or (ii) a Transfer of Membership Interests, subject to compliance with the provisions of ARTICLE VI, and in either case, following compliance with the provisions of Section 2.03(b) and with the unanimous consent of all existing Members.
(b)In order for any Person not already a Member of the Company to be admitted as a Member, whether pursuant to an issuance or a Transfer (including a Permitted Transfer)
of Membership Interests, such Person shall have executed and delivered to the Company a written undertaking in the form of a joinder agreement on terms agreeable to the Manager. Upon the amendment of the Members Schedule by the Manager and the satisfaction of any other applicable conditions, including, if a condition, the receipt by the Company of payment for the issuance of the applicable Membership Interests, such Person shall be admitted as a Member, shall be a party hereto, shall be deemed listed as such on the books and records of the Company, and thereupon shall be issued his, her, or its Membership Interests. The Manager shall also adjust the Capital Accounts of the Members as necessary in accordance with Section 2.02.
Section 2.04 No Withdrawal; Death of Member.
(a)So long as a Member continues to hold any Membership Interest, such Member shall not have the ability to withdraw as a Member prior to the dissolution and winding up of the Company and any such withdrawal or attempted withdrawal by a Member prior to the dissolution and winding up of the Company shall be null and void. As soon as any Member ceases to hold any Membership Interests, such Person shall no longer be a Member. A Member shall cease to be a Member as a result of the bankruptcy of such Member or as a result of any other events specified in Section 18-304 of the Delaware Act.
(b)The death of any Member shall not cause the dissolution of the Company. In such event, the Company and its business shall be continued by the remaining Member or Members and the Membership Interests owned by the deceased Member shall be automatically Transferred to such Member's executors, administrators, testamentary trustees, legatees, distributees or beneficiaries, as applicable, as Permitted Transferees; provided, that any such Permitted Transferee shall be admitted as a Member only upon compliance with the provisions of Section 2.03(b).
Section 2.05 Certification of Membership Interests.
(a)The Company may, but shall not be required to, issue certificates evidencing Membership Interests in the Company.
(b)If the Manager shall issue certificates representing Membership Interests in accordance with Section 2.05(a), then in addition to any other legend required by Applicable Law, all certificates representing issued and outstanding Membership Interests shall bear a legend substantially in the following form:
THE MEMBERSHIP INTERESTS REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A LIMITED LIABILITY COMPANY AGREEMENT AMONG THE COMPANY AND ITS MEMBERS, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY. NO TRANSFER, SALE, ASSIGNMENT, GIFT, PLEDGE, ENCUMBRANCE, HYPOTHECATION, OR OTHER DISPOSITION OF THE MEMBERSHIP INTERESTS REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH LIMITED LIABILITY COMPANY AGREEMENT.
THE MEMBERSHIP INTERESTS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER APPLICABLE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, OR OTHERWISE DISPOSED EXCEPT PURSUANT TO (A) A REGISTRATION STATEMENT EFFECTIVE UNDER SUCH ACT AND LAWS, OR (B) AN EXEMPTION FROM REGISTRATION THEREUNDER.
Section 2.06 Meetings.
(a)Meetings of the Members may be called by (i) the Manager or (ii) a Member or group of Members holding more than 50% of the Membership Interests.
(b)Written notice stating the place, date, and time of the meeting and, in the case of a meeting of the Members not regularly scheduled, describing the purposes for which the meeting is called, shall be delivered not fewer than 2 days and not more than 30 days before the date of the meeting to each Member, by or at the direction of the Manager or the Member(s) calling the meeting, as the case may be. The Members may hold meetings at the Company's principal office or at such other place, as the Manager or the Member(s) calling the meeting may designate in the notice for such meeting.
(c)Any Member may participate in a meeting of the Members by means of conference telephone or other communications equipment by means of which all Persons participating in the meeting hear each other, and participation in a meeting by such means shall constitute presence in person at such meeting.
(d)On any matter that is to be voted on by the Members, a Member may vote in person or by proxy, and such proxy may be granted in writing, by means of Electronic Transmission, or as otherwise permitted by Applicable Law. Every proxy shall be revocable in the discretion of the Member executing it unless otherwise provided in such proxy; provided, that such right to revocation shall not invalidate or otherwise affect actions taken under such proxy prior to such revocation.
(e)The business to be conducted at such meeting need not be limited to the purpose described in the notice and can include other business to be conducted by the Members; provided, that the Members shall have been notified of the meeting in accordance with Section 2.06(b). Attendance of a Member at any meeting shall constitute a waiver of notice of such meeting, except where a Member attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.
(f)A quorum of any meeting of the Members shall require the presence, whether in person or by proxy, of the Members holding a majority of the Membership Interests. Subject to Section 2.07, no action may be taken by the Members unless the appropriate quorum is present at a meeting.
(g)Subject to Section 2.07, Section 3.02 and Section 11.09, and any other provision of this Agreement or non-waivable provisions of the Delaware Act requiring the vote, consent, or approval of a different percentage of the Membership Interests, no action may
be taken by the Members at any meeting at which a quorum is present without the affirmative vote of the Members holding a majority of the Membership Interests.
Section 2.07 Action Without Meeting. Notwithstanding the provisions of Section 2.06, any matter that is to be voted on, consented to, or approved by Members may be taken without a meeting, without prior notice, and without a vote if consented to, in writing or by Electronic Transmission, by a Member or Members holding not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which each Member entitled to vote on the action is present and votes in favor of the matter. A record shall be maintained by the Manager of each such action taken by written consent of a Member or Members.
Section 2.08 Gaming Related Matters.
(a)In the event that a Member (or a Gaming Related Person of such Member) experiences a Gaming Problem, the applicable Member shall promptly notify the other Members and the Manager of the relevant details and take all actions necessary or advisable to eliminate, terminate, discontinue or otherwise cure the Gaming Problem, including (i) terminating the relationship with any Person giving rise to the Gaming Problem, (ii) effecting the Transfer of its Membership Interests as permitted hereunder, and (iii) taking all other actions as may be necessary or appropriate to remedy the Gaming Problem. Notwithstanding anything contained herein to the contrary, all Transfers or redemptions of Membership Interests shall be subject to compliance with all applicable requirements of all Gaming Laws, including any right of prior approval, review and/or filing thereunder. If any Governmental Authority requires the implementation of another mechanism or terms for any Transfers or redemptions of Membership Interests that are inconsistent with Article VI of this Agreement, the terms required by such Governmental Authority will control and the applicable provisions of this Agreement will be deemed modified by the Manager (without the consent of any Member) in a manner consistent with such requirements, and the Manager shall have authority to implement such modifications (without the consent of any Member) at its discretion.
(b)In the event that the Manager determines that a Gaming Problem exists with respect to a Toucan Management Member (or a Gaming Related Person of such Toucan Management Member), and such Toucan Management Member has not eliminated, terminated, discontinued or otherwise cured such Gaming Problem by the earlier of (i) any deadline imposed by the relevant Governmental Authority and/or the Manager or (ii) sixty (60) days after such Toucan Management Member received notice of such Gaming Problem, then such Toucan Management Member's Membership Interests shall be subject to repurchase pursuant to Section 6.05 hereof.
ARTICLE III
Management
Section 3.01 Management of the Company. Subject to the provisions of Section 3.02 and except as otherwise provided by non-waivable provisions the Delaware Act, the business, property and affairs of the Company shall be managed solely and exclusively by the Manager. The actions of the Manager taken in accordance with the provisions of this Agreement shall bind the Company. No other Member of the Company shall have any authority or right to act on
behalf of or bind the Company, unless otherwise provided herein or unless specifically authorized by the Manager pursuant to a duly adopted resolution expressly authorizing such action.
Section 3.02Actions Requiring Approval of Members. Without the unanimous written approval of all Members, the Company shall not, and shall not enter into any commitment to:
(a)enter into, or to amend, restate or waive any provision of, any contract, agreement or transaction with Accel or any Affiliate of Accel, unless such agreement, contract or transaction is on terms and conditions not materially less favorable in the aggregate to the Company, as the case may be, than those that could have been obtained in a comparable transaction on an arm’s length basis from an unrelated Person; provided, however, that the foregoing provisions of this Section 3.02(a) shall not apply to the Company (a) reimbursing Accel or any of its Affiliates for expenses incurred on behalf of the Company, (b) engaging in any transaction or paying any consideration, indemnification, reimbursement or advancement of expenses expressly permitted by this Agreement, (c) paying any indemnification, reimbursement and advancement of expenses to directors or officers of any subsidiary of the Company to the extent permitted by law and the applicable entity organizational documents, or (d) making loans to the Company, subject to compliance with Section 2.02(d); or
(b)Issue additional Membership Interests, Equity Securities, or other securities.
Section 3.03 Officers. The Manager may appoint one or more individuals as officers of the Company (the "Officers") as the Manager deems necessary or desirable to carry on the business of the Company and may delegate to such Officers such power and authority as the Manager deems advisable. An Officer is not required to be a Member of the Company. Any individual may hold two or more offices of the Company. Each Officer shall hold office until his or her successor is designated by the Manager or until his or her earlier death, resignation, or removal. Any Officer may resign at any time upon written notice to the Manager. Any Officer may be removed by the Manager at any time, with or without cause. A vacancy in any office occurring because of death, resignation, removal, or otherwise may, but need not, be filled by the Manager.
Section 3.04 Replacement and Resignation of Manager. The Manager may be removed at any time, with or without cause, by the Members holding a majority of the Membership Interests. The Manager may resign at any time by delivering a written resignation to the Company, which resignation shall be effective upon receipt thereof unless it is specified to be effective at some other time or upon the occurrence of a particular event. Following the Manager's removal or resignation, a successor Manager shall be elected by the affirmative vote of the Members holding a majority of the Membership Interests. The removal of the Manager shall not affect the Manager's rights as a Member and shall not constitute a withdrawal of such Member from the Company.
ARTICLE IV
Allocations
Section 4.01 Allocation of Profits and Losses.
(a)The Company's profits and losses for each Fiscal Year will be allocated among the Members pro rata in accordance with their Membership Interests.
(b)Notwithstanding any other provision of this Agreement, (i) "partner nonrecourse deductions" (as defined in Treasury Regulations Section 1.704-2(i)), if any, of the Company shall be allocated for each Fiscal Year to the Member that bears the economic risk of loss within the meaning of Treasury Regulations Section 1.704-2(i) and "nonrecourse deductions" (as defined in Treasury Regulations Section 1.704-2(b)) and "excess nonrecourse liabilities" (as defined in Treasury Regulations Section 1.752-3(a)), if any, shall be allocated to and among the Members in accordance with their Membership Interests.
(c)This Agreement shall be deemed to include "qualified income offset," "minimum gain chargeback," and "partner nonrecourse debt minimum gain chargeback" provisions within the meaning of Treasury Regulations under Section 704(b) of the Code.
(d)All items of income, gain, loss, deduction, and credit of the Company shall be allocated among the Members for federal, state, and local income tax purposes consistent with the manner that the corresponding items are allocated among the Members pursuant to this section, except as may otherwise be provided herein or under the Code.
ARTICLE V
Distributions
Section 5.01 Distributions.
(a)Distributions of available cash shall be made to the Members at the times and in the aggregate amounts determined by the Manager. Such distributions shall be paid to the Members pro rata in accordance with their respective Membership Interests.
(b)Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not make any distribution to Members if such distribution would violate the Delaware Act or other Applicable Law.
(c)In the event that the Company consummates a divestiture of material assets or a material line of business that results in material taxable income to the Members in a taxable year (all as determined by the Manager in its good faith discretion), the Manager shall subject to any applicable covenants and restrictions contained in the Company’s loan agreements, and taking into account the Company's liquidity, cause the Company to distribute to the Members (ratably amongst the Members based upon each Member’s share of the taxable income taken into account pursuant to clause (i) below) with respect to such taxable year (other than any taxable year, or portion thereof, starting on or following the date on which there is a Sale of the Company) an amount of cash that, in
the good faith judgment of the Manager equals (i) the amount of taxable income, if any, allocable to the Members in respect of such taxable year as a result of the applicable divestiture (net of taxable losses and tax credits allocated to the Members in respect of prior taxable years and not previously taken into account under this clause), multiplied by (ii) the highest combined marginal federal and applicable state income tax rate for married individuals filing jointly in the State of Louisiana.
ARTICLE VI
Transfers
Section 6.01 General Restrictions on Transfer.
(a)Except as permitted pursuant to Section 6.02 or as contemplated by Sections 6.03 through 6.06, no Member shall Transfer all or any portion of its Membership Interest in the Company, except with the written consent of the Manager. No Transfer of Membership Interests to a Person not already a Member of the Company shall be deemed completed until the prospective Transferee is admitted as a Member of the Company in accordance with Section 2.03 hereof.
(b)Notwithstanding any other provision of this Agreement (including Section 6.02, but excluding Sections 6.03 through Section 6.06)), each Member agrees that it will not Transfer all or any portion of its Membership Interest in the Company, and the Company agrees that it shall not issue any Membership Interests:
(i)except as permitted under the Securities Act and other applicable federal or state securities or blue sky laws, and then, with respect to a Transfer of Membership Interests, only upon delivery to the Company of an opinion of counsel in form and substance satisfactory to the Company to the effect that such Transfer may be effected without registration under the Securities Act;
(ii)if such Transfer or issuance would cause the Company to be considered a "publicly traded partnership" under Section 7704(b) of the Code within the meaning of Treasury Regulation Section 1.7704-1(h)(1)(ii), including the look-through rule in Treasury Regulation Section 1.7704-1(h)(3);
(iii)if such Transfer or issuance would affect the Company's existence or qualification as a limited liability company under the Delaware Act;
(iv)if such Transfer or issuance would cause the Company to lose its status as a partnership for federal income tax purposes;
(v)if such Transfer or issuance would cause the Company to be required to register as an investment company under the Investment Company Act of 1940, as amended; or
(vi)if such Transfer or issuance would cause the assets of the Company to be deemed "Plan Assets" as defined under the Employee Retirement Income Security
Act of 1974 or its accompanying regulations or result in any "prohibited transaction" thereunder involving the Company.
(c)Any Transfer or attempted Transfer of any Membership Interest in violation of this Agreement shall be null and void, no such Transfer shall be recorded on the Company's books, and the purported Transferee in any such Transfer shall not be treated (and the purported Transferor shall continue be treated) as the owner of such Membership Interest for all purposes of this Agreement.
(d)Except as provided in Section 2.04(b), no Transfer (including a Permitted Transfer) of Membership Interests to a Person not already a Member of the Company shall be deemed completed until the prospective Transferee (including a Permitted Transferee) is admitted as a Member of the Company in accordance with Section 2.03(b) hereof.
(e)For the avoidance of doubt, any Transfer of a Membership Interest permitted by this Agreement shall be deemed a sale, transfer, assignment, or other disposal of such Membership Interest in its entirety as intended by the parties to such Transfer, and shall not be deemed a sale, transfer, assignment, or other disposal of any less than all of the rights and benefits described in the definition of the term "Membership Interest," unless otherwise explicitly agreed to by the parties to such Transfer.
Section 6.02 Permitted Transfers. The provisions of Section 6.01(a) shall not apply to any Transfer by any Member of all or any portion of its Membership Interest to any of the following (each, a "Permitted Transferee" and, any such Transfer to a Permitted Transferee, a "Permitted Transfer"):
(a)Any Affiliate of such Member; or
(b)With respect to any Member that is a natural Person, (i) such Member's Spouse, parent, siblings, descendants (including adoptive relationships and stepchildren), and the Spouses of each such natural persons (collectively, "Family Members"); (ii) a trust under which the distribution of Membership Interests may be made only to such Member and/or any Family Member of such Member; (iii) a charitable remainder trust, the income from which will be paid to such Member during his life; (iv) a corporation, partnership, or limited liability company, the stockholders, partners, or members of which are only such Member and/or Family Members of such Member; or (v) by will or by the laws of intestate succession, to such Member's executors, administrators, testamentary trustees, legatees, distributees, or beneficiaries.
Section 6.03 Drag-Along.
(a)If Accel approves a Sale of the Company and elects in writing to have such transaction governed by this Section 6.03 (as so approved, an "Approved Sale"), then each Member shall vote for, consent to and raise no objections against such Approved Sale. If the Approved Sale is structured (x) as a merger or consolidation, each Member shall waive any dissenters rights, appraisal rights or similar rights in connection with such merger or consolidation or (y) to include the sale of Membership Interests, each Member (other than Accel) shall agree to sell all of his, her or its Membership Interests and other
Equity Securities of the Company on the terms and conditions approved by Accel, subject to the terms and conditions of this Section 6.03. Each Member (other than Accel) shall take all actions in connection with the consummation of the Approved Sale as may be requested by Accel to the same extent as Accel (other than, with respect to Members who are also members of the management team of the Company, matters that customarily apply to members of management), including, but not limited to, becoming party to a purchase and sale agreement, merger and/or other agreements related to the Approved Sale which may provide for any of the following (among other things): (i) indemnification obligations, earn-outs and working capital, cash, debt and similar adjustments to purchase price and escrows, holdbacks and similar arrangements to support indemnification obligations and adjustments to purchase price, in each case, on a pro rata basis (based on the allocation of consideration in accordance herewith) other than any such obligations that relate specifically to a particular Member, such as indemnification with respect to representations and warranties given by a Member regarding such Member's title to Membership Interests or such Member's authority, which shall be the sole responsibility of such Member; (ii) representations and warranties; (iii) non-compete, non-solicitation, non-disparagement and confidentiality obligations; (iv) general release of claims against the Company and its subsidiaries (subject to reasonable and customary exceptions such as rights to compensation, indemnification and professional liability insurance coverage); and (v) the appointment of Accel or its designee as a seller representative, with customary authority to act on behalf of all Members, including (A) disputing or refraining from disputing, on behalf of each of the Members any amounts to be received by the Members, or any claim made by the counterparty to such transaction agreement, (B) negotiating and compromising, on behalf of each of the Members, any dispute that may arise under, and exercise or refrain from exercising any remedies available under, such transaction agreement, (C) executing, on behalf of each of the Members, any settlement agreement, release or other document with respect to such dispute or remedy (so long as any such settlement or release by any of the Members includes a release of such Member), and (D) determining the amount of, and holding, such reserves (to satisfy known or potential post-closing purchase price adjustments, indemnification claims, defense costs or any fees, costs and expenses incurred in connection with the Approved Sale or by the seller representative in performing its obligations under the transaction agreement) as Accel or such designee reasonably and in good faith deems appropriate. Each Member transferring Membership Interests pursuant to this Section 6.03 shall pay its pro rata share (based on the allocation of consideration in accordance herewith) of the reasonable expenses incurred by the Company and Accel in connection with such Transfer.
(b)The obligations of the Members under this Section 6.03 with respect to an Approved Sale are subject to the satisfaction of the condition that the consideration paid with respect to each Membership Interest shall be the same. Each Member shall take all actions in connection with an Approved Sale as may be requested by Accel to effect such allocation of consideration.
(c)Accel is hereby granted the sole right to approve or consent to a merger or consolidation of the Company without any approval or consent of any other Members. In no manner shall this Section 6.03 be construed to grant to any Member any dissenters rights or appraisal rights or give any other Member any right to vote in any transaction structured as a merger or consolidation.
(d)Accel may amend the terms of, or terminate, any Approved Sale at any time prior to its consummation at the sole discretion of Accel, and Accel shall have no obligation or liability to any Member in connection with any such amendment or termination. Accel shall have no obligation or liability to any Member for any breaches by the proposed acquirer of any of its obligations in connection with an Approved Sale, any termination of the Approved Sale or any failure of the Approved Sale to be consummated.
Section 6.04 Tag-Along Rights.
(a)With the exception of transfers to Permitted Transferees or in accordance with Section 6.03, at least fifteen (15) days prior to any Transfer of Membership Interests by Accel, Accel (the "Transferring Party") shall deliver a written notice (the "Transfer Notice") to the Company and each of the other Members, specifying in reasonable detail the identity of the prospective Transferee(s), the number of Membership Interests to be Transferred and, to the extent known, the terms and conditions of the Transfer. The Members may elect to participate in the contemplated Transfer by delivering written notice to the Transferring Party within ten (10) days after delivery of the Transfer Notice (such period, the "Election Period", and the Members so electing, the "Electing Members"). The Electing Members shall be entitled to sell in the contemplated Transfer (or to the Transferring Party in lieu thereof pursuant to Section 6.04(b)), at the applicable price (taking into account any distribution priorities set forth in Section 5.01) and on the same terms (including becoming party to a purchase and sale agreement related to the Transfer with such terms and conditions as the Transferring Party shall approve), a number of Membership Interests, equal to the product of (i) the quotient determined by dividing (A) the number of Membership Interests owned by such Person by (B) the aggregate number of Membership Interests owned by the Transferring Party and all Electing Members and (ii) the number of Membership Interests to be Transferred by the Transferring Party as set forth in the Transfer Notice. Any Electing Member may elect to sell in any Transfer contemplated under this Section 6.04 a lesser number of Membership Interests than such Electing Member is entitled to sell hereunder, in which case the Transferring Party shall have the right to sell an additional number of Membership Interests in such Transfer equal to the number that such Electing Member has elected not to sell. Each Member Transferring Membership Interests pursuant to this Section 6.04 shall pay its pro rata share (determined based on his, her or its share of the final dollar amount of the proceeds allocated in such Transfer) of the expenses incurred by the Transferring Party in connection with such Transfer.
(b)With respect to any Transfer subject to Section 6.04(a), the Transferring Party shall not Transfer any of its Membership Interests to any prospective Transferee if such prospective Transferee declines to allow the participation of the Electing Members to the extent required by this Section 6.04, unless, in lieu of such participation, the Transferring Party or its Affiliates purchase the number of Membership Interests from each Electing Member which such Electing Member would have been entitled to sell under Section 6.04(a) for the price and on the terms such Electing Member would have been entitled to under Section 6.04(a).
(c)The Transferring Party may Transfer the Membership Interests specified in the Transfer Notice (less the number of Membership Interests which Electing Members have
elected to sell in accordance with the terms hereof) to any Person at a price and on terms not more favorable, in the aggregate, to the Transferee(s) thereof than specified in the Transfer Notice during the 180-day period immediately following the Election Period. Any Transferring Party's Membership Interests not Transferred within such 180-day period shall be subject to the provisions of this Section 6.04 and any subsequent Transfer will require a new Transfer Notice.
Section 6.05 Call Option.
(a)At any time after the tenth anniversary of the Effective Date or, if prior to such date, upon either (w) the termination of Guidroz's employment with the Company for "Cause" (as defined in the Employment Agreement dated as of the Effective Date), (x) Guidroz has engaged or is engaging in any conduct in violation of any confidentiality, non-competition, non-solicitation or other similar restrictive covenant contained in any agreement with the Company or any of its Affiliates, (y) the occurrence of the conditions set forth in Section 2.08(b) in the event of a Gaming Problem as to any Toucan Management Member or (z) the consummation of a Sale of Accel Parent, the Company or its designee shall have the right, but not the obligation, to purchase (the "Call Option") all of the Membership Interests (the "Call Option Membership Interests") then held by Toucan Management, Guidroz, its or their Affiliates, Family Members or their respective Permitted Transferees (the "Toucan Management Members") at a price equal to the applicable Option Price by delivering a written notice of such election within ninety (90) days of the event in (x), (y), or (z), after which the Call Option shall terminate and expire to the Toucan Management Members (the date of such written notice, the "Call Option Exercise Notice Date"), which notice shall specify the Company's calculation of the Option Price.
(b)If the Company (or its designee) timely elects to purchase any Call Option Membership Interests pursuant to this Section 6.05, the Option Price shall be paid by the Company or its designee by check or wire transfer of immediately available funds; provided, however, that notwithstanding the foregoing, if the Call Option is being exercised pursuant to the clauses (w), (x) or (y) of Section 6.05(a), then the Option Price may be paid by the Company (or its designee) by delivery of one or more Purchaser Notes (as defined below).
(c)The Company (or its designee) will designate in writing to the Toucan Management Members, the time, date and place of any purchase under this Section 6.05. The closing of the purchase shall take place within ninety (90) days of the Call Option Exercise Notice Date or the Call Option will terminate. At the closing of a purchase pursuant to this Section 6.05, each Toucan Management Member shall transfer ownership of such Call Option Membership Interests and execute and deliver a representation and warranty that each such Toucan Management Member is conveying to the Company (or its designee) all of the Call Option Membership Interests free and clear of all liens, claims and encumbrances, except for those liens, claims and encumbrances set forth in this Agreement. If the Call Option Price for a Membership Interest is $0, such Membership Interest shall be deemed forfeited on the Call Option Notice Date without any further action by the Company or the applicable Toucan Management Member.
Section 6.06 Put Option.
(a)At any time (x) after the seventh anniversary of the Effective Date, (y) following the termination of Guidroz's employment with the Company without Cause (as defined in the Employment Agreement dated as of the Effective Date) or (z) following an Accel Parent Put Event, the Toucan Management Members may require (by delivery of written notice to the Company (the date of such written notice, the "Put Option Exercise Notice Date")) that the Company repurchase all (but not less than all) of the Membership Interests owned by the Toucan Management Members (the "Put Option Membership Interests") at a repurchase price equal to the applicable Option Price. The Company shall be entitled to designate Accel or one of its Affiliates as the purchaser of the Put Option Membership Interests hereunder, and all obligations of the Company, Accel, and their designees will be guaranteed by the Accel Parent.
(b)If the Toucan Management Members elect to exercise the option to require the Company to purchase the Put Option Membership Interests pursuant to this Section 6.06, the Option Price shall be paid by the Company or its designee by check or wire transfer of immediately available funds; provided, however, that notwithstanding the foregoing, if (x) the Company does not have sufficient liquidity to pay the Option Price in full in cash or (y) the terms of any debt financing arrangements of the Company or its Affiliates prohibit the Company from paying the Option Price in full in cash, then in either such case the applicable portion of the Option Price that is subject to such constraints may be paid by the Company by delivery of one or more Purchaser Notes . "Purchaser Note" shall mean an unsecured subordinated promissory note issued by the Company and guaranteed by the Accel Parent with a four-year maturity and bearing interest at a fixed rate equal to the "prime rate" as published in The Wall Street Journal on the Call Option Exercise Notice Date.
(c)The Company (or its designee) will designate in writing to the Toucan Management Members, the time, date and place of any purchase under this Section 6.06. The date will be within ninety (90) days of the Put Option Exercise Notice Date. At the closing of a purchase pursuant to this Section 6.06, each Toucan Management Member shall make a representation and warranty that each such Toucan Management Member is conveying to the Company (or its designee) all of the Put Option Membership Interests free and clear of all liens, claims and encumbrances, except for those liens, claims and encumbrances set forth in this Agreement.
ARTICLE VII
No Personal Liability and Indemnification
Section 7.01 No Personal Liability: Members; Manager.
(a)Except as otherwise provided in the Delaware Act, by Applicable Law, or expressly in this Agreement, no Member will be obligated personally for any debt, obligation, or liability of the Company or other Members, whether arising in contract, tort, or otherwise, solely by reason of being a Member.
(b)Except as otherwise provided in the Delaware Act, by Applicable Law, or expressly in this Agreement, no Manager will be obligated personally for any debt,
obligation, or liability of the Company, whether arising in contract, tort, or otherwise, solely by reason of being a Manager.
Section 7.02 Indemnification.
(a)To the fullest extent permitted under the Delaware Act, any Covered Person (as defined in section (c) below) shall be entitled to indemnification and reimbursement of reasonable expenses from the Company for and against any loss, damage, claim, or expense (including reasonable attorneys' fees) (collectively, "Losses") whatsoever incurred by the Covered Person relating to or arising out of any act or omission or alleged acts or omissions (whether or not constituting negligence) performed or omitted by any Covered Person on behalf of the Company; provided, however, that (i) any indemnity under this Section 7.02 shall be provided out of and to the extent of the Company assets only, and neither any Member or any other Person shall have any personal liability to contribute to such indemnity by the Company; (ii) such Covered Person acted in good faith and in a manner believed by such Covered Person to be in, or not opposed to, the best interests of the Company and, with respect to any criminal proceeding, had no reasonable cause to believe his conduct was unlawful; and (iii) such Covered Person's conduct did not constitute fraud or willful misconduct, in either case as determined by a final, nonappealable order of a court of competent jurisdiction.
(b)Upon receipt by the Company of a written undertaking by or on behalf of the Covered Person to repay such amounts if it is finally judicially determined that the Covered Person is not entitled to indemnification under this Section 7.02, the Company shall advance, to the extent reasonably required, each Covered Person for reasonable legal or other expenses (as incurred) of such Covered Person in connection with investigating, preparing to defend, or defending any claim, lawsuit, or other proceeding relating to any Losses for which such Covered Person may be indemnified pursuant to this Section 7.02.
(c)For purposes of this Section 7.02, "Covered Person" means (i) each Member; (ii) each Manager and Officer of the Company; and (iii) each officer, director, shareholder, partner, manager, member, Affiliate, employee, agent, or representative of each Member and of each Manager.
Section 7.03 No Duties. To the extent that, at law or in equity, a Member, Manager or Officer, in each case, in their capacity as such, has any duty (including any fiduciary duty) to the Company, a Member or any other Person that is party to or otherwise bound by this Agreement, all such duties are hereby eliminated, and each of the Company, Members and such other Persons hereby waives such duties (including any fiduciary duties), to the fullest extent permitted by the Delaware Act and all other applicable law.
ARTICLE VIII
Accounting and Tax Matters
Section 8.01 Inspection Rights. Upon reasonable notice from a Member, the Company shall afford the Member access during normal business hours to the corporate, financial, and similar records, reports, and documents of the Company, and shall permit the Member to examine such documents and make copies thereof.
Section 8.02 Income Tax Status. It is the intent of this Company and the Members that this Company shall be treated as a partnership for US, federal, state, and local income tax purposes. Neither the Manager nor any Member shall make an election for the Company to be classified as other than a partnership pursuant to Treasury Regulations Section 301.7701-3.
Section 8.03 Tax Matters Representative.
(a)Appointment; Resignation. The Members hereby appoint the Manager as the "partnership representative" as provided in Section 6223(a) of the Code (the "Tax Matters Representative"). The Tax Matters Representative can be removed at any time by a vote of Members holding a majority of the Membership Interests of the Company, and shall resign if it is no longer a Member. In the event of the resignation or removal of the Tax Matters Representative, the holders of a majority of the Membership Interests of the Company shall appoint a new Tax Matters Representative.
(b)Tax Examinations and Audits. The Tax Matters Representative is authorized and required to represent the Company (at the Company's expense) in connection with all examinations of the Company's affairs by any federal, state, local, or foreign taxing authority, including resulting administrative and judicial proceedings, and to expend Company funds for professional services and costs associated therewith.
The Tax Matters Representative shall promptly notify the Members in writing of the commencement of any tax audit, upon receipt of a tax assessment or upon the receipt of a notice of final partnership adjustment, and shall keep the Members reasonably informed of the status of any tax audit and resulting administrative and judicial proceedings. Without the consent of Members holding a majority of the Membership Interests of the Company, the Tax Matters Representative shall not extend the statute of limitations, file a request for administrative adjustment, file suit relating to any Company tax refund or deficiency, or enter into any settlement agreement relating to items of income, gain, loss, or deduction of the Company with any federal, state, local, or foreign taxing authority.
(c)US Federal Tax Proceedings. To the extent permitted by applicable law and regulations, the Tax Matters Representative will cause the Company to annually elect out of the partnership audit procedures set forth in Subchapter C of Chapter 63 of the Code as amended by the Bipartisan Budget Act of 2015 (the "Revised Partnership Audit Rules") pursuant to Section 6221(b) of the Code. For any year in which applicable law and regulations do not permit the Company to elect out of the Revised Partnership Audit Rules, then within forty-five (45) days of any notice of final partnership adjustment, the Tax Matters Representative will cause the Company to elect the alternative procedure under Section 6226 of the Code, and furnish to the Internal Revenue Service and each Member (including former Members) during the year or years to which the notice of final partnership adjustment relates a statement of the Member's share of any adjustment set forth in the notice of final partnership adjustment.
(d)Section 754 Election. The Tax Matters Representative will make an election under Section 754 of the Code, if requested in writing by Members holding a majority of the outstanding Membership Interests.
(e)Indemnification. The Company shall defend, indemnify, and hold harmless the Tax Matters Representative against any and all liabilities sustained as a result of any act or decision concerning Company tax matters and within the scope of such Member's responsibilities as Tax Matters Representative, so long as such act or decision was done or made in good faith and does not constitute gross negligence or willful misconduct.
Section 8.04 Tax Returns.
(a)At the expense of the Company, the Manager will cause the preparation and timely filing (including extensions) of all tax returns required to be filed by the Company pursuant to the Code as well as all other required tax returns in each jurisdiction in which the Company owns property or does business. As soon as reasonably possible after the end of each Fiscal Year (but in any event by March 31st of the year following such Fiscal Year), the Manager will deliver to each Member, Company information necessary for the preparation of such Member's federal, state, and local income tax returns for such Fiscal Year and information estimating the Company’s taxable income for the year following the Fiscal Year to enable each Member to estimate their income for the subsequent Fiscal Year.
(b)Each Member agrees that such Member shall not treat any Company item on such Member's federal, state, foreign, or other income tax return inconsistently with the treatment of the item on the Company's return.
ARTICLE IX
Dissolution and Liquidation
Section 9.01 Events of Dissolution. The Company shall be dissolved and its affairs wound up only upon the occurrence of any of the following events:
(a)An election to dissolve the Company made by holders of a majority of the Membership Interests;
(b)The sale, exchange, involuntary conversion, or other disposition or Transfer of all or substantially all the assets of the Company; or
(c)The entry of a decree of judicial dissolution under § 18-802 of the Delaware Act.
Section 9.02 Effectiveness of Dissolution. Dissolution of the Company shall be effective on the day on which the event described in Section 9.01 occurs, but the Company shall not terminate until the winding up of the Company has been completed, the assets of the Company have been distributed as provided in Section 9.03, and the Articles of Organization shall have been cancelled as provided in Section 9.04.
Section 9.03 Liquidation. If the Company is dissolved pursuant to Section 9.01, the Company shall be liquidated and its business and affairs wound up in accordance with the Delaware Act and the following provisions:
(a)The Manager, or another Person selected by the Manager, shall act as liquidator to wind up the Company (the "Liquidator"). The Liquidator shall have full power and authority to sell, assign, and encumber any or all of the Company's assets and to wind up and liquidate the affairs of the Company in an orderly and business-like manner.
(b)As promptly as possible after dissolution and again after final liquidation, the Liquidator shall cause a proper accounting to be made by a recognized firm of certified public accountants of the Company's assets, liabilities, and operations through the last day of the calendar month in which the dissolution occurs or the final liquidation is completed, as applicable.
(c)The Liquidator shall liquidate the assets of the Company and distribute the proceeds of such liquidation in the following order of priority, unless otherwise required by mandatory provisions of Applicable Law:
(i)First, to the payment of the Company's debts and liabilities to its creditors (including Members, if applicable) and the expenses of liquidation (including sales commissions incident to any sales of assets of the Company);
(ii)Second, to the establishment of and additions to reserves that are determined by the Manager to be reasonably necessary for any contingent unforeseen liabilities or obligations of the Company; and
(iii)Third, to the Members, on a pro rata basis, in accordance with each Member's Membership Interests.
Section 9.04 Required Filings. Upon completion of the winding up of the Company, the Liquidator shall make all necessary filings required by the Delaware Act.
ARTICLE X
Definitions
Section 10.01 Definitions. Capitalized terms used herein and not otherwise defined shall have the meanings set forth in this Section 10.01:
(a)"Accel" means Accel Entertainment LLC.
(b)"Accel Parent" means Accel Entertainment, Inc.
(c)"Accel Parent Put Event" means (x) the consummation of a Sale of Accel Parent and (y) either (i) Andrew Rubenstein no longer being the CEO of Accel Parent or (ii) the change in 50% or more of Accel Parent's "Named Executive Officers", in each case of the foregoing clauses (i) or (ii), on our prior to the date that is twenty-four (24) months following the consummation of such Sale of Accel Parent.
(d)"Affiliate" means, with respect to any Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such Person. For purposes of this definition, "control" when used with respect to any specified Person, shall mean the power, direct or indirect, to direct or cause the direction of the
management and policies of such Person, whether through ownership of voting securities or partnership or other ownership interests, by contract, or otherwise; and the terms "controlling" and "controlled" shall have correlative meanings.
(e)"Applicable Law" means all applicable provisions of (i) constitutions, treaties, statutes, laws (including the common law), rules, regulations, decrees, ordinances, codes, proclamations, declarations, or orders of any Governmental Authority; (ii) any consents or approvals of any Governmental Authority; and (iii) any orders, decisions, advisory, or interpretative opinions, injunctions, judgments, awards, decrees of, or agreements with, any Governmental Authority.
(f)"Articles of Organization" means the Certificate of Formation filed with the Department of State of the State of Delaware on October 31, 2024.
(g)"Code" means the Internal Revenue Code of 1986, as amended.
(h)"Delaware Act" means the Delaware Limited Liability Company Act and any successor statute, as it may be amended from time to time.
(i)"Electronic Transmission" means any form of communication not directly involving the physical transmission of paper, including the use of, or participation in, one or more electronic networks or databases (including one or more distributed electronic networks or databases), that creates a record that may be retained, retrieved and reviewed by a recipient thereof and that may be directly reproduced in paper form by such a recipient through an automated process.
(j)"Equity Securities" means any and all Membership Interests of the Company and any securities of the Company convertible into, exchangeable for, or exercisable for, such Membership Interests, including, without limitation, any warrants or other rights to acquire such Membership Interests.
(k)"Fiscal Year" means the calendar year, unless the Company is required or elects to have a taxable year other than the calendar year, in which case Fiscal Year shall be the period that conforms to its taxable year.
(l)"Gaming Laws" means those Applicable Laws promulgated by any Governmental Authority under such Applicable Laws pursuant to which any Governmental Authority possesses regulatory or licensing authority over gaming within any jurisdiction.
(m)"Gaming License" means all licenses, permits, approvals, authorizations, registrations, findings of suitability, qualifications, franchises and entitlements issued by any Governmental Authority necessary for the lawful conduct of activities under the Gaming Laws.
(n)"Gaming Problem" means, a determination by the Manager and/or the Company's Gaming Compliance Committee, that a "Gaming Problem" exists following the occurrence of any of the following: (i) a communication from a Governmental Authority that the Company or any Gaming Related Person does not satisfy any
suitability, eligibility or other qualification criteria pursuant to any applicable Gaming Laws with respect to a Gaming License, including any character or suitability criteria thereunder, (ii) a communication from a Governmental Authority that a Gaming Related Person must divest itself of any interest in, or disassociate from, the Company or its Affiliates (including Accel), or (iii) a circumstances such that any Gaming Related Person is deemed likely, in the reasonable discretion of the Manager and/or the Company's Gaming Compliance Committee based on verifiable information received from any Governmental Authority or otherwise, to preclude or materially delay, impede or impair the ability of the Company, any Member and/or its Affiliates or any Gaming Related Person of the foregoing to obtain, maintain or renew any Gaming License held any such Person, or such as may result in the imposition of materially burdensome terms and conditions on, or the revocation or suspension of, such a Gaming License.
(o)"Gaming Related Person" means any Member or, with respect to any Member, any other Person whose relationship with such Member may result in Governmental Authorities determining that there is or may be a Gaming Problem.
(p)"Governmental Authority" means any federal, state, local, or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations, or orders of such organization or authority have the force of law), or any arbitrator, court, or tribunal of competent jurisdiction.
(q)"Lien" means any mortgage, pledge, security interest, option, right of first offer, encumbrance, or other restriction or limitation of any nature whatsoever.
(r)"Manager" means, initially, Andrew Rubenstein, or such other Person as may be designated or become the Manager pursuant to the terms of this Agreement.
(s)"Marital Relationship" means a civil union, domestic partnership, marriage, or any other similar relationship that is legally recognized in any jurisdiction.
(t)"Membership Interest" means an interest in the Company owned by a Member, including such Member's rights to (i) receive a distributive share of Company assets and items of Company income, gain, loss, and deduction; (ii) vote, consent, or participate in any Member decisions provided in this Agreement and the Delaware Act; and (iii) receive any and all other benefits due to a Member under this Agreement and the Delaware Act. The Membership Interest of each Member will be stated as a percentage interest in the same proportion as the total Capital Contributions of such Member bears to the total Capital Contributions of all Members.
(u)"Option Enterprise Value" means an amount equal to (x) seven (7), multiplied by (y) EBITDA of the Company for the twelve (12) month period ending as of the last day of the calendar month ending immediately preceding the month in which the Call Option Exercise Notice Date or Put Option Exercise Notice Date, as applicable, occurs.
(v)"Option Price" means the amount that the Toucan Management Members would receive in respect of their Membership Interests if the Total Equity Value was distributed to the Members in accordance with Section 5.01(a).
(w)"Person" means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association, or other entity.
(x)"Sale of Accel Parent" means either (i) the sale, lease, transfer, conveyance or other disposition, in one transaction or a series of related transactions, of all or substantially all of the assets of the Accel Parent and its subsidiaries, taken as a whole, to a Person who is not an Affiliate of Accel Parent or (ii) a transaction or series of related transactions (including by way of merger, consolidation, recapitalization, reorganization or sale of securities) the result of which is that the stockholders of Accel Parent immediately prior to such transaction, together with such stockholders' Affiliates, are after giving effect to such transaction no longer, in the aggregate, the "beneficial owners" (as such term is defined in Rule 13d-3 and Rule 13d-5 promulgated under the Securities Exchange Act), directly or indirectly through one or more intermediaries, of more than 50% of the voting power of the outstanding voting securities of Accel Parent.
(y)"Sale of the Company" means either (i) the sale, lease, transfer, conveyance or other disposition, in one transaction or a series of related transactions, of all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, to a Person who is not an Affiliate of Accel or (ii) a transaction or series of related transactions (including by way of merger, consolidation, recapitalization, reorganization or sale of securities) the result of which is that the Members immediately prior to such transaction, together with such Members’ Affiliates, are after giving effect to such transaction no longer, in the aggregate, the "beneficial owners" (as such term is defined in Rule 13d-3 and Rule 13d-5 promulgated under the Securities Exchange Act), directly or indirectly through one or more intermediaries, of more than 50% of the voting power of the outstanding voting securities of the Company.
(z)"Securities Act" means the Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations thereunder, which shall be in effect at the time.
(aa)"Spouse" means a spouse, a party to a civil union, a domestic partner, a same-sex spouse or partner, or any individual in a Marital Relationship with a Member.
(bb)"Total Equity Value" means the aggregate proceeds which would be received by the Members if: (i) the assets of the Company as a going concern were sold at a price equal to the Option Enterprise Value; (ii) the Company satisfied and paid in full all of its obligations and liabilities (including all loans made by Accel or its Affiliates to the Company); and (iii) such net sale proceeds were then distributed in accordance with Section 5.01(a), all as determined in good faith by the Manager.
(cc)"Transfer" means to sell, transfer, assign, gift, pledge, encumber, hypothecate, or similarly dispose of, directly or indirectly, voluntarily or involuntarily, by operation of law or otherwise, or to enter into any contract, option, or other arrangement
or understanding with respect to the sale, transfer, assignment, gift, pledge, encumbrance, hypothecation, or similar disposition of, any Membership Interests or any interest (including a beneficial interest) therein. "Transfer" when used as a noun shall have a correlative meaning.
(dd)"Transferor" and "Transferee" mean a Person who makes or receives a Transfer, respectively.
ARTICLE XI
Miscellaneous
Section 11.01 Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any jurisdiction).
Section 11.02 Submission to Jurisdiction. The parties hereby agree that any suit, action, or proceeding based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby, shall be brought in the federal courts of the United States of America or the courts of the State of Louisiana, in each case located in the City of Lafayette and Parish of Lafayette. Each of the parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action, or proceeding.
Section 11.03 Waiver of Jury Trial. EACH PARTY HERETO HEREBY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 11.04 Waiver. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No failure to exercise, or delay in exercising, any right, remedy, power, or privilege arising from this Agreement shall operate or be construed as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power, or privilege. Nothing contained in this Section 11.04 shall diminish the waiver described in Section 11.03.
Section 11.05 Notices. All notices, requests, consents, claims, demands, waivers, and other communications hereunder shall be in writing and shall be deemed to have been given:
(a)when delivered by hand;
(b)when received by the addressee if sent by a nationally recognized overnight courier;
(c)on the date sent by facsimile or email of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next business day if sent after normal business hours of the recipient; or
(d)on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid.
Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 11.05):
If to the Company:
165 Industrial Parkway
Lafayette, LA 70508
Email: andy@accelentertainment.com
Attention: Andrew Rubenstein
with a copy to:
Accel Entertainment
140 Tower Drive
Burr Ridge, Illinois 60527
Email: John.Lee@accelentertainment.com
Attention: John Lee, Deputy General Counsel
If to the Manager:
Andrew Rubenstein
140 Tower Drive
Burr Ridge, Illinois 60527
Email: andy@accelentertainment.com
with a copy to:
Accel Entertainment 140 Tower Drive
Burr Ridge, Illinois 60527
Email: John.Lee@accelentertainment.com
Attention: John Lee, Deputy General Counsel
If to a Member:
To the Member's respective mailing address as set forth on the Members Schedule.
Section 11.06 Remedies. In the event of any actual or prospective breach or default by any party, the other parties shall be entitled to equitable relief, including remedies in the nature of injunction and specific performance, awarded by a court of competent jurisdiction (without being required to post a bond or other security or to establish any actual damages). In this regard, the parties acknowledge and agree that they will be irreparably damaged in the event this Agreement is not specifically enforced, since (among other things) the Membership Interests are not readily marketable. All remedies hereunder are cumulative and not exclusive, may be exercised concurrently, and nothing herein shall be deemed to prohibit or limit any party from pursuing any other remedy or relief available at law or in equity for any actual or prospective breach or default, including recovery of damages. In addition, the parties hereby waive and renounce any defense to such equitable relief that an adequate remedy at law may exist.
Section 11.07 Severability. If any term or provision of this Agreement is held to be invalid, illegal, or unenforceable under Applicable Law in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction.
Section 11.08 Successors and Assigns. Subject to the restrictions on Transfers set forth herein, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors, and assigns.
Section 11.09 Amendment. No provision of this Agreement may be amended or modified except by an instrument in writing executed by Members holding a majority of the Membership Interests, except that no amendment to this Agreement shall be effective if such amendment would (w) alter or change the powers, preferences, or special rights of one class of Membership Interests so as to materially adversely affect them and not similarly alter or change the powers, preferences or special rights of any other class of Membership Interests, without the approval of the holders of a majority of the Membership Interests of such class, (x) amend any provision of this Agreement that requires the unanimous consent or any of Sections 6.05 or 6.06 or this Section 11.09, in each case, without the approval of Toucan Management, (y) change a right expressly granted to Toucan Management herein, without the consent of Toucan Management or (z) impose any new obligation on Toucan Management or Guidroz, restrict Toucan Management or Guidroz from making Permitted Transfers pursuant to Section 6.02, or remove Toucan Management's or Guidroz's right to participate in Transfers pursuant to Section 6.04, without the approval of Toucan Management. Any such written amendment or modification will be binding upon the Company and each Member.
Section 11.10 Headings. The headings in this Agreement are inserted for convenience or reference only and are in no way intended to describe, interpret, define, or limit the scope, extent, or intent of this Agreement or any provision of this Agreement.
Section 11.11 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement.
Section 11.12 Entire Agreement. This Agreement, together with the Certificate of Formation and all related Exhibits and Schedules, constitutes the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein and therein, and supersedes all prior and contemporaneous understandings, agreements, representations, and warranties, both written and oral, with respect to such subject matter.
Section 11.13 No Third-Party Beneficiaries. Except as provided in ARTICLE VII, this Agreement is for the sole benefit of the parties hereto (and their respective heirs, executors, administrators, legal representatives, successors, and permitted assigns) and nothing herein, express or implied, is intended to or shall confer upon any other Person, including any creditor of the Company, any legal or equitable right, benefit, or remedy of any nature whatsoever under or by reason of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.
The Company:
Toucan Gaming, LLC, a Delaware limited liability company
By: /s/ Andrew Rubenstein
Name: Andrew Rubenstein
Its: Manager
The Member:
Toucan Management, LLC, a Delaware limited liability company
By: /s/ Stan Guidroz
Stan Guidroz
Accel Entertainment, LLC, a Delaware limited liability company
By: /s/ Andrew Rubenstein
Name: Andrew Rubenstein
Its: President
Schedule I
MEMBERS SCHEDULE
Member Name, Address, Email, and Fax
Capital Contribution
Membership Interest
Toucan Management, LLC
407 Whitcomb Road
Lafayette, LA 70503
Stan@toucanla.com
In Kind
15%
Accel Entertainment LLC
140 Tower Drive
Burr Ridge, IL 60527
derekh@accelentertainment.com
630.863.7279
In Kind
85%
Schedule I
EX-10.5
EX-10.5
Filename: executiveemploymentagreeme.htm · Sequence: 6
Document
Exhibit 10.5
AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”) is entered into and effective as of July 14, 2026 (the “Effective Date”), by Accel Entertainment, Inc., a Delaware corporation (the “Company”), Stan Guidroz (“Executive”), and with respect to Section 7.9(a), Toucan Gaming, LLC, a Delaware limited liability company (“Toucan”), and amends and restates that certain Executive Employment Agreement entered into as of November 1, 2024, by and between Toucan and Executive (the “Prior Agreement”).
WHEREAS, Pursuant to that certain Asset Purchase Agreement, dated as of April 11, 2023 (the “APA”), the Company acquired substantially all of the assets of Toucan Device Owner, LLC (f/k/a Toucan Gaming, LLC), a Louisiana limited liability company. All capitalized terms used in this Agreement without definition have the meanings given to them in the APA;
WHEREAS, Executive’s employment under the Prior Agreement commenced as of November 1, 2024 (the “Prior Agreement Effective Date”), and Executive has served as Chief Executive Officer of Toucan and in related leadership capacities for the Company and its Affiliates.
WHEREAS, as of the Effective Date, Executive will transition from Executive’s current role as Chief Executive Officer of Toucan and will no longer serve in that capacity, and the Company desires to employ Executive as the Company’s Chief Operating Officer, and Executive desires to be employed by the Company in such new role, on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 “Affiliate” means any corporation, partnership, limited liability company, limited liability partnership, association, trust or other organization that, directly or indirectly, controls, is controlled by, or is under common control with, the Company. For purposes of the preceding sentence, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any entity or organization, shall mean the possession, directly or indirectly, of the power (i) to vote more than 50% of the securities having ordinary voting power for the election of directors of the controlled entity or organization or (ii) to direct or cause the direction of the management and policies of the controlled entity or organization, whether through the ownership of voting securities, by contract, or otherwise.
1.2 “Board” means the Board of Directors of the Company.
1.3 “Cause” means: (a) Executive’s material breach of this Agreement or any other written agreement between Executive and the Company or an Affiliate or Executive’s breach of any policy or code of conduct established by the Company or an Affiliate and applicable to Executive; (b) commission of an act of gross negligence, willful misconduct, breach of fiduciary duty, fraud, theft or embezzlement on the part of Executive; (c) commission by Executive of, or conviction or indictment of Executive for, or plea of guilty or nolo contendere by Executive to, any felony (or state law equivalent) or any crime involving moral turpitude; (d) commission of any action that could cause Executive, the Company or any of its Affiliates to be in violation of the Illinois Video Gaming Act, any gaming statute, regulation or rule under which the Company or any of its Affiliates operates, or rules established by the Illinois Gaming Board or any other applicable governmental or
gaming regulatory authority, or that could cause the revocation or loss of any other material gaming license in any State in which the Company or any of its Affiliates operates or plans to operate; or (e) Executive’s willful failure or refusal, other than due to Disability, to perform Executive’s obligations pursuant to this Agreement or any other written agreement with the Company or an Affiliate, as applicable, or to follow any lawful directive from the Company or any Affiliate, as determined by the Company; provided, however, that if Executive’s actions or omissions as set forth in clause (e) are of such a nature that the Company reasonably determines they are curable by Executive, such actions or omissions must remain uncured 30 days after the Company has provided Executive written notice of the obligation to cure such actions or omissions.
1.4 “Change in Control” means a “Change in Control” as such term is defined in the Company’s Long Term Incentive Plan, as may be amended from time to time (the “LTIP”); provided that the transaction (including any series of transactions) also qualifies as a change in control under U.S. Treasury Regulation 1.409A-3(i)(5).
1.5 “Change in Control Covered Termination” means a Covered Termination that occurs within the Change in Control Period.
1.6 “Change in Control Period” means the period (a) commencing on the date of the consummation of a Change in Control (the “Closing”) and (b) ending on the one-year anniversary of such Closing.
1.7 “COBRA” means the Consolidated Omnibus Reconciliation Act of 1985, as amended.
1.8 “Code” means the Internal Revenue Code of 1986, as amended.
1.9 “Covered Termination” means (a) the termination of Executive’s employment by the Company without Cause, or (b) Executive’s termination of employment with the Company for Good Reason. A Covered Termination will not include a termination of Executive’s employment by reason of Executive’s death or Disability, the termination of Executive’s employment for Cause or Executive’s termination of his employment without Good Reason. A termination of Executive’s employment upon the expiration of the term of this Agreement following the Company providing advance written notice to not renew the term of this Agreement in accordance with Section 2.3 shall be deemed to be a Covered Termination; provided that there does not exist grounds to terminate Executive’s employment for Cause at the time of such employment termination.
1.10 “Disability” means a physical or mental sickness or any injury which renders Executive incapable of performing the services required of him as an Executive of the Company and which has continued or is expected to continue for more than six months during any 12-month period. In the event Executive shall be able to perform his usual and customary duties on behalf of the Company following a period of disability, and does so perform such duties or such other duties as are prescribed by the Board for a period of three continuous months, any subsequent period of disability shall be regarded as a new period of disability for purposes of this Agreement. The Company and Executive shall determine the existence of a Disability and the date upon which it occurred. In the event of a dispute regarding whether or when a Disability occurred, the matter shall be referred to a medical doctor selected by the Company and Executive. In the event of their failure to agree upon such a medical doctor, the Company and Executive shall each select a medical doctor who together shall select a third medical doctor who shall make the determination. Such determination shall be conclusive and binding upon the parties hereto.
1.11 “Good Reason” means Executive’s resignation within 90 days after any of the following events, unless Executive consents in writing to the applicable event: (a) a material decrease in Executive’s base salary, other than a reduction in annual base salary of less than 10% that is implemented in connection with a contemporaneous reduction in annual base salaries affecting other senior executives of the Company; (b) a material decrease in (i) Executive’s then-current title or position, or (ii) authority or areas of responsibility as are commensurate with Executive’s then-current title or position; (c) a relocation of Executive’s principal work location to a location more than 50 miles from Executive’s then-current principal location of employment; or
(d) a material breach by the Company or any Affiliate of this Agreement or any material agreement between Executive and the Company or any Affiliate. Notwithstanding the foregoing, any assertion by Executive of a termination for Good Reason will not be effective unless and until Executive has: (A) provided the Company or any Affiliate, within 60 days of Executive’s knowledge of the occurrence of the facts and circumstances underlying the Good Reason event, written notice stating with specificity the applicable facts and circumstances underlying such Good Reason event; and (B) provided the Company or any Affiliate with an opportunity to cure the same within 30 days after the receipt of such notice.
1.12 “Person” shall mean any individual, natural person, corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any company limited by shares, limited liability company or joint stock company), incorporated or unincorporated association, governmental authority, firm, society or other enterprise, organization or other entity of any nature.
ARTICLE II
EMPLOYMENT BY THE COMPANY
2.1 Position and Duties. Subject Subject to the terms set forth herein, as of the Effective Date, Executive will be employed as the Company’s Chief Operating Officer and will report to the Company’s Chief Executive Officer. Executive’s principal work location will be the Company’s Burr Ridge, Illinois office. The parties hereto acknowledge that Executive’s role as Chief Operating Officer is an enterprise-wide leadership role that requires regular in-person engagement with the Company’s executive leadership team, operational leaders, and market teams. Accordingly, Executive will maintain a regular business presence at the Burr Ridge, Illinois office and will travel to the Company’s markets as the Company deems necessary to perform Executive’s duties, support the Company’s operations, and satisfy the business expectations established from time to time by the Company’s Chief Executive Officer, in each case consistent with applicable Company policies. Executive will perform such services as are consistent with such position and such other duties as reasonably are assigned to Executive by the Company’s Chief Executive Officer, including, without limitation, oversight of the Company’s operations across all markets, support of market strategy and execution, and such other operational, strategic and leadership responsibilities as are consistent with Executive’s position. During the term of Executive’s employment with the Company, Executive will devote Executive’s best efforts and substantially all of Executive’s business time and attention to the business of the Company.
2.2 Employment Policies. Executive’s employment relationship with the Company will also be governed by the general employment policies and practices of the Company and its Affiliates, including those relating to protection of confidential information and assignment of inventions, except that when the terms of this Agreement differ from or are in conflict with the Company’s general employment policies or practices, this Agreement will control.
2.3 Term. The term of Executive’s employment hereunder shall end on the fourth anniversary of the Prior Agreement Effective Date; provided that (i) such term shall automatically renew for successive one-year periods on the fourth anniversary of the Prior Agreement Effective Date and on the last day of each successive one-year period unless either party provides advance written notice of non-renewal to the other party no less than 90 days prior to the commencement of a succeeding one-year period, in which case such term shall terminate on the day immediately prior to the commencement of such successive one-year period, and (ii) such term shall earlier terminate upon a termination of Executive’s employment as set forth in Section 4.1. Executive acknowledges and agrees that there is no assurance that this Agreement will be renewed or extended as described in the immediately preceding sentence, and neither Executive nor the Company has any obligation to renew or extend this Agreement or any right to require any such renewal or extension, and, subject to Section 1.9, a failure to renew or extend this Agreement shall not entitle Executive or the Company to any additional compensation, and shall not be deemed a basis for a Covered Termination.
2.4 Licensing and Conditions. Executive’s continued employment in the position described herein is subject to verification of a background investigation and credit check to the extent required by the Company, execution of the Company’s standard employment policies, and satisfactory completion and maintenance of all licensing requirements as defined and regulated by the Illinois Gaming Board and other applicable government agencies.
ARTICLE III
COMPENSATION
3.1 Base Salary. Executive will receive for services to be rendered hereunder an annual base salary of $500,000 effective as of the Effective Date, payable in accordance with the Company’s standard payroll practices. Executive’s base salary will be subject to review from time to time in the sole discretion of the Board or the compensation committee thereof (the “Compensation Committee”).
3.2 Annual Bonus. Executive will be eligible to receive an annual performance bonus with a target amount of 65% of the Executive’s base salary (the “Annual Bonus”). The Annual Bonus for calendar year 2026 will be prorated to reflect the increase to Executive’s target amount to 65% from 50% under the Prior Agreement effective as of the Effective Date. Annual Bonus payments will be determined at the discretion of the Board or the Compensation Committee and will be subject to the achievement of any applicable Company and individual performance milestones or other terms and conditions determined by the Board or the Compensation Committee. The Annual Bonus, if any, will be payable as soon as practicable following, and no later than March 15 following, the end of the calendar year to which the bonus relates, subject to Executive’s continued employment through the payment date.
3.3 Long-Term Incentive Compensation. Subject to approval by the Board or the Compensation Committee, Executive will be eligible to receive a one-time promotion grant of 20,000 restricted stock units (“RSUs”) in connection with Executive’s promotion to Chief Operating Officer (the “Promotion RSU Grant”). The Promotion RSU Grant will vest ratably over three years from the grant date or such other date approved by the Board or the Compensation Committee, subject to Executive’s continued service with the Company on each applicable vesting date and the terms and conditions of the Company’s LTIP and the applicable RSU agreement governing such awards.
In addition, Executive will be eligible to receive grants of equity-based incentive compensation awards on an annual basis commencing in calendar year 2027, with a target grant date value of 115% of Executive’s annual base salary (the “Annual Grant”). The Annual Grant will be made on the Company’s typical cycle for senior executives and on the same basis as grants made to other senior executives. The Company expects that these grants will be a mix of time-based RSUs and performance-based RSUs (“PSUs”) that vest over three years, with the PSUs subject to the Company achieving its Board-approved financial targets and Executive’s continuous employment with the Company after satisfying the applicable conditions. The value of the RSUs and PSUs will be based on the closing price of the Company’s stock on the date they are approved and granted by the Compensation Committee. Such grants, if any, will be made in the sole discretion of the Board or the Compensation Committee and may be subject to revised time- and/or performance-based vesting criteria, in their sole discretion, and shall be subject to the terms and conditions of the LTIP and the applicable grant and award agreements.
3.4 Company Benefits.
(a) General Eligibility. Executive will be eligible to continue to participate in the employee benefit plans offered by the Company to its employees, such as, to the extent such plans are maintained by the Company: participation in the Company 401(k) program, Company contributions to group health insurance, Company-paid life insurance, Company-paid short-term disability insurance, and the Employee Assistance Program (EAP), as well as voluntary contributions to Company-sponsored dental, vision, supplemental life
insurance, accident, critical care insurance plans, and other arrangements established by the Company (“Employee Benefit Plans”), including a Company phone and, to the extent provided under the Prior Agreement or otherwise approved by the Company, the continued use of an automobile provided by the Company, each in accordance with the terms and conditions of such plans and arrangements as in effect from time to time.
(b) Transition. For purposes of Executive’s transition from Chief Executive Officer of Toucan to Chief Operating Officer of the Company, Executive’s employment will be treated as continuous service with the Company and its Affiliates, and Executive will retain and carry over any existing, accrued, earned, or vested benefits from Executive’s current position with Toucan, including any earned and unused PTO, except to the extent prohibited by the applicable Employee Benefit Plan, insurance contract, plan administrator, or applicable law.
(c) PTO Accrual. Following the Effective Date, Executive will be eligible to accrue up to twenty-five (25) days of PTO per calendar year, at a rate of 0.9615 days per pay period, less any earned and unused PTO carried over from Executive’s prior position to the extent necessary to administer the Company’s PTO policy. PTO may be used no more than one week at a time unless otherwise approved by the Company’s Chief Executive Officer, and no more than sixty (60) hours of PTO may roll over from any calendar year to the next. Notwithstanding the foregoing, the Company shall have the right to amend or terminate any Employee Benefit Plan at any time in its sole discretion, subject to the terms of such Employee Benefit Plan and applicable law.
3.5 Expenses.
(a) Expense Reimbursement. The Company will reimburse Executive for all reasonable and necessary expenses incurred by Executive in connection with the Company’s business, including travel to the Company’s Burr Ridge, Illinois office (subject to the cap and limitations set forth in Section 3.5(b)) and its other markets, provided that the expenses are properly documented and accounted for in accordance with the Company’s policies as may be in effect from time to time. Frequent travel to all Company markets will be required. For the avoidance of doubt, Executive will not be reimbursed for costs associated with Executive’s personal aircraft except with respect to fuel and out-of-pocket operating costs associated therewith actually incurred as a result of business-related travel and otherwise approved in accordance with Company policy.
(b) Temporary Business Lodging Reimbursement Cap. For up to twelve (12) months following the Effective Date, provided Executive’s principal place of business and tax home remain outside the greater-Chicago metropolitan area, the Company will reimburse Executive under the Company’s accountable-plan procedures and applicable expense reimbursement policies for actual, reasonable, and properly substantiated temporary lodging or housing expenses incurred for business travel to the Company’s Burr Ridge, Illinois headquarters, including all business-related meals and local business travel within the greater-Chicago metropolitan area, up to $4,500 per month. This benefit is not a stipend, allowance, relocation benefit, or additional compensation. Executive must timely submit all required documentation, including receipts and the date, amount, and location, as required by Company policy. The Company may modify, suspend, discontinue, or treat any reimbursement as taxable wages if the Company determines that the expense does not qualify under Company policy, accountable-plan rules, or applicable law, or if Executive’s principal place of business or tax home changes. After the twelve-month period, Executive will be responsible for such expenses except to the extent separately approved under the Company’s generally applicable business expense reimbursement policy.
ARTICLE IV
TERMINATION
4.1 Termination of Employment. Executive’s employment with the Company hereunder may be terminated by the Company or Executive, as applicable, without any breach of this Agreement under the
following circumstances: (a) the Company may terminate Executive’s employment with or without Cause at any time; (b) Executive may resign for Good Reason or without Good Reason at any time; (c) Executive’s employment shall terminate automatically upon Executive’s death or, subject to a determination by the Board, upon Executive’s Disability; and (d) in the event either the Company or Executive provides timely notice of non-renewal pursuant to Section 2.3, Executive’s employment shall terminate as of the expiration of the then-current term. Any termination of Executive’s employment by the Company or by Executive under this Article IV (other than in the case of Executive’s death) shall be communicated by a written notice to the other party hereto and shall be effective on the date on which such notice is given unless otherwise indicated (and subject to the notice and cure periods required in the event of a termination for Cause or a resignation for Good Reason).
4.2 Deemed Resignation. Upon termination of Executive’s employment for any reason including Executive’s resignation for any reason, Executive shall be deemed to have resigned from all offices and directorships, if any, then held with the Company or any of its Affiliates. Notwithstanding the foregoing, in the event that, following Executive’s termination of employment, Executive continues to provide services to the Company as a consultant or member of the Board, Executive may continue to serve in such offices and directorships as then mutually agreed upon between Executive and the Company.
4.2 Installment Payments and Put Options. In the event that this Agreement is terminated for any reason, the Installment Payments and Put Option (as defined in the APA) shall remain unaffected and shall continue to be governed by the provisions set forth in the APA or the operating agreement of Toucan as applicable, except as otherwise set forth in the last sentence of Section 5.2 (c).
ARTICLE V
SEVERANCE PAYMENTS AND BENEFITS
5.1 General. Upon a termination of Executive’s employment for any reason, Executive (or Executive’s estate) shall be entitled to receive Executive’s accrued but unpaid base salary, accrued vacation pay, unreimbursed business expenses for which proper documentation is provided, in accordance with Company policy, and other vested amounts and benefits earned by (but not yet paid to) or owed to Executive under any applicable Employee Benefit Plan of the Company through and including the date of termination of Executive’s employment (the “Accrued Benefits”). For the avoidance of doubt, Executive’s accrued but unpaid base salary shall include only any base salary earned, but not yet paid through the date of termination, and not the base salary that would have otherwise been earned through the end of the then-current term had it not earlier terminated.
5.2 Covered Termination. In the event Executive experiences a Covered Termination, Executive will be entitled to receive Executive’s Accrued Benefits and, subject to the requirements of Section 5.3, will be entitled to receive the following payments and benefits:
(a)Cash Severance. Executive will be entitled to receive an amount equal to the sum of (i) one (1) times Executive’s base salary at the annual rate in effect for Executive at the time of termination, (ii) any Annual Bonus for the prior completed fiscal year, to the extent earned but not yet paid at the time of such termination, and (iii) one (1) times Executive’s target Annual Bonus for the calendar year in which the Covered Termination occurs. The amounts payable pursuant to this Section 5.2(a) shall be paid over a 12-month period in substantially equal installments in accordance with the Company’s normal payroll policies, less applicable withholdings, with such installments to commence in the first payroll period immediately following the 60th day after the date of such Covered Termination, provided that the Release (as defined below) has become effective and non-revocable, inclusive of a catch-up payment covering the amount that would have otherwise been paid during the period between Executive’s separation date and the first payment date but for the application of this provision.
(b)Continued Healthcare. If Executive elects to receive continued healthcare coverage pursuant to the provisions of COBRA, the Company will, at its election, either directly pay or reimburse Executive for, the premium for Executive and Executive’s covered dependents through the earliest to occur of (i) the 12-month anniversary of the Covered Termination and (ii) the first date on which Executive and Executive’s covered dependents become eligible for substantially comparable healthcare coverage under another employer’s plans; provided that as soon as administratively practicable following the 60th day after the date of such Covered Termination, provided that the Release has become effective and non-revocable, the Company will pay to Executive a cash lump-sum payment equal to the monthly premiums that would have been paid on behalf of Executive had such payments commenced on the date of the Covered Termination. Notwithstanding the foregoing, the Company may elect at any time that, in lieu of directly paying or reimbursing such premiums, the Company will instead provide Executive with a monthly or lump sum cash payment equal to the amount the Company would have otherwise paid pursuant to this Section 5.2(b), less applicable tax withholdings.
(c)Cash Severance in a Change in Control Covered Termination. For the avoidance of doubt, the payments described in Section 5.2(a) shall also become payable in a Change in Control Covered Termination or at any time following the Change in Control Period, subject to the release requirements of Section 5.3, provided further that in no event will the payments described in this Section 5.2(c) result in duplicate payments or benefits to Executive under this Section 5.2. In addition to the payments described in Section 5.2(a), Executive will also be eligible to receive Executive’s Annual Bonus then in effect, pro-rated for the number of days in the calendar year in which the Change in Control Covered Termination occurs during which Executive was employed by the Company. Any amount payable pursuant to this Section 5.2(c) shall be payable in a lump-sum, less applicable withholdings, in the first payroll period immediately following the date the requirements of Section 5.3 are satisfied (such that the Release is effective and non-revocable in a timely manner). In the event that a Change in Control occurs and Executive is terminated without Cause within two years from the effective date thereof, any remaining Installment Payments shall be accelerated and payable within 30 days of the date of termination, and the Put Option shall become fully exercisable as of the date of termination, in each case to the extent provided under and subject to the terms of the APA and applicable governing documents.
(d)Equity Awards. If such Covered Termination is a Change in Control Covered Termination and subject to the release requirements of Section 5.3, each outstanding and unvested equity award held by Executive, including without limitation, each outstanding stock option, restricted stock unit and share of restricted stock, will automatically become vested, and if applicable, exercisable and any forfeiture restrictions or rights of repurchase thereon will lapse, in each case with respect to 100% of the shares underlying such outstanding equity awards as of the date of such Covered Termination; provided that any performance-based vesting criteria will be treated in accordance with the applicable award agreement or other applicable equity incentive plan governing the terms of such equity award. For the avoidance of doubt, any Installment Payments and Put Option rights described in the Prior Agreement shall remain governed by the APA or the operating agreement of Toucan, as applicable, and shall survive any termination of this Agreement to the extent provided therein.
(e)Qualifying Termination. Effective as of the Effect Date, any provision of any outstanding RSU, PSU, stock option or other equity award granted to Executive by the Company that references a Qualifying Termination (as such term is defined in the applicable award agreement or other applicable equity incentive plan governing the terms of such equity award) shall be deemed automatically amended and modified, without the necessity of any further action or documentation by the Company or Executive, to include a termination of Executive’s employment upon the expiration of the term of any employment agreement with the Company following the Company providing advance written notice to not renew the term of such employment agreement in accordance with the terms thereof (regardless of any time limit otherwise stated therein); provided that there does not exist grounds to terminate Executive’s employment for Cause at the time of such employment termination. For the
avoidance of doubt, all such outstanding RSUs, PSUs, stock options and other equity awards shall be interpreted and administered in a manner consistent with this Agreement.
5.3 Release. Executive will not be eligible for the severance payment and benefits described in Section 5.2 unless (i) Executive has executed and delivered to the Company a general release of all claims that Executive may have against the Company (or its successor) or Persons affiliated with the Company (or its successor) in a form acceptable to the Company (the “Release”), and such Release becomes effective on or before the 60th day following the date of the Covered Termination and (ii) Executive has not revoked or breached the provisions of such Release or breached the provisions of Article VI. In the event that Executive does not execute and deliver such Release, such Release does not become effective and irrevocable within such period or Executive revokes or breaches the provisions of such Release or breaches the provisions of Article VI, Executive (A) will be deemed to have voluntarily resigned Executive’s employment hereunder without Good Reason and (B) will not be entitled to the payments or benefits described in Section 5.2, and may be required to repay such payment or benefits to the extent already provided by the Company to Executive. It is acknowledged and agreed that the Release will not include any post-employment non-competition or non-solicitation covenants that are more restrictive than those to which Executive was bound immediately prior to the Covered Termination, and that the Release will not include the waiver of any vested equity or ownership rights, it being understood that all equity and ownership rights (including any arising from the RSUs), Installment Payments and Put Option rights will be governed by the terms of the applicable governing documents.
5.4 Section 280G; Limitation on Payments. Notwithstanding anything in this Agreement to the contrary, if any payment or distribution to Executive pursuant to this Agreement or otherwise (“Payment”) would (a) constitute a “parachute payment” within the meaning of Section 280G of the Code and (b) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment will either be delivered in full or delivered as to such lesser extent as would result in no portion of such Payment being subject to the Excise Tax, whichever of the foregoing amounts, after taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by Executive on an after-tax basis of the largest payment, notwithstanding that all or some portion of the Payment may be taxable under Section 4999 of the Code. The accounting firm engaged by the Company for general audit purposes as of the date prior to the effective date of the applicable change in control, or such other Person as determined in good faith by the Company, will perform the foregoing calculations, and the Company will bear all expenses with respect to the determinations by such accounting firm required to be made hereunder. Any good faith determinations of the accounting firm made pursuant to this Section 5.4 will be final, binding and conclusive upon all parties. Any reduction in payments and/or benefits pursuant to the foregoing will occur in the following order: (i) reduction of cash payments; (ii) cancellation of accelerated vesting of equity awards, if any; (iii) cancellation of accelerated vesting of other equity awards; and (iv) reduction of other benefits payable to Executive.
ARTICLE VI
COVENANTS
6.1 Outside Activities; Conflict of Interest. During Executive’s term of employment, Executive will not engage in any other employment, occupation or business enterprise without the prior written consent of the Board; provided that it is understood that Executive may serve as a member of the board of directors or managers of one for-profit company, with the prior written consent of the Board. Notwithstanding the foregoing, Executive may engage in civil and not-for-profit activities and/or maintain passive investments, in each case so long as such activities do not materially interfere with or conflict with the performance of Executive’s duties or the Company’s gaming licenses, as determined in the sole discretion of the Board. During the term of Executive’s employment hereunder, Executive shall submit to the Board all business, commercial and investment opportunities or offers presented to Executive or of which Executive becomes aware that involve the Company’s business or any competitive activity of the Company’s business, and, unless approved
by the Board, Executive shall not accept or pursue, directly or indirectly, any such opportunities on Executive’s own behalf.
6.2 Non-Competition. During the term of Executive’s employment hereunder and for a period of two years following Executive’s termination of service for any reason (“Restricted Period”), Executive will not engage in any line of business engaged in or planned to be engaged in by the Company or any of its Affiliates (“Business”), or in a business that is competitive with the Business or any portion thereof of any other related or ancillary businesses that the Company or its Affiliates participate in (or plan to participate in), within the Territory; provided, however, that Executive may own, as a passive investor, securities of any competitor corporation, so long as Executive’s direct holdings in any such corporation do not in the aggregate constitute more than 1% of the voting stock of such corporation. For purposes of this Section, “engage in” as applied to Executive shall include: (a) performing or participating in any activities which are the same as, or substantially similar to, activities which Executive performed or in which Executive participated, in whole or in part, for or on behalf of the Company or any of its Affiliates; (b) performing activities or services about which Executive obtained Proprietary Information, as defined below, as a result of Executive’s association with the Company or any of its Affiliates; and/or (c) interfering with or negatively impacting the business relationship between the Company and a Customer, Prospective Customer, or any other third party about whom Executive obtained Proprietary Information as a result of Executive’s association with the Company or any of its Affiliates.
(a) Territory (in the state of Louisiana). For purposes of this Agreement, “Territory” means within each of the following discrete, severable, geographic areas within Louisiana:
the parishes of Acadia, Allen, Ascension, Assumption, Avoyelles, Beauregard, Bienville, Bossier, Caddo, Calcasieu, Caldwell, Cameron, Catahoula, Claiborne, Concordia, De Soto, East Baton Rouge, East Carroll, East Feliciana, Evangeline, Franklin, Grant, Iberia, Iberville, Jackson, Jefferson, Jefferson Davis, La Salle, Lafayette, Lafourche, Lincoln, Livingston, Madison, Morehouse, Natchitoches, Orleans, Ouachita, Plaquemines, Pointe Coupee, Rapides, Red River, Richland, Sabine, St. Bernard, St. Charles, St. Helena, St. James, St. John the Baptist, St. Landry, St. Martin, St. Mary, St. Tammany, Tangipahoa, Tensas, Terrebonne, Union, Vermilion, Vernon, Washington, Webster, West Baton Rouge, West Carroll, West Feliciana, Winn.
(b) Territory (outside the state of Louisiana). Beyond the geographic areas of Louisiana, “Territory” also means Nebraska, Nevada, Illinois, Georgia, Montana, Wyoming, Iowa, North Carolina, Pennsylvania, Missouri, and any other State in the United States in which the Company or any of its Affiliates operate or plan to operate, in any line of business engaged in or planned to be engaged in by the Company or any of its Affiliates.
(c) Good Faith Estimate. Because the Company will provide Executive with access to the Company’s Proprietary Information (as such term is defined below in Section 6.5) and valuable information concerning employees, Customers (as such term is defined below in Section 6.3(a)), and Prospective Customers (as such term is defined below in Section 6.3(b)) of the Company, and because the Company considers promotions and transfers, and contemplates expansion to new geographic areas, the parties hereto acknowledge and agree that the Territory described above: (i) represents a good faith estimate of the geographic areas that may be applicable at the time of termination of Executive’s employment; (ii) shall be construed ultimately to cover only so much of such estimate as relates to the geographic areas actually involved within a reasonable period of time prior to Executive’s termination; and (iii) is drafted in such a way that a court may modify the definition and grant only the relief reasonably necessary to protect such legitimate business interests.
6.3 Non-Solicitation.
(a) Customers. During the Term and for the duration of the Restricted Period, Executive shall not, directly or indirectly, solicit any Customer of the Company or any of its Affiliates within the Territory for the purpose of selling or providing any products or services competitive with the Business. The restrictions set forth in this Section shall apply only to those Customers within the Territory (i) with whom or which Executive dealt on behalf of the Company or any of its Affiliates, (ii) whose dealings with the Company or any of its Affiliates were coordinated or supervised by Executive, (iii) about whom Executive obtained Proprietary Information in the ordinary course of business as a result of Executive’s association with the Company or any of its Affiliates, or (iv) who received products or services authorized by the Company or any of its Affiliates, the sale or provision of which results or resulted in compensation, commissions, or earnings for Executive within the Restricted Period. For purposes of this Agreement, “Customer” means any person or entity to which the Company or any of its Affiliates has sold its products or services.
(b) Prospective Customers. During the Term and for the duration of the Restricted Period, Executive shall not, directly or indirectly, solicit any potential or prospective Customer (“Prospective Customer”) of the Company or any of its Affiliates within the Territory for the purpose of selling or providing any products or services competitive with the Business. The restrictions set forth in this Section shall apply only to those Prospective Customers within the Territory (i) with whom or which Executive dealt on behalf of the Company or any of its Affiliates, (ii) whose dealings with the Company or any of its Affiliates were coordinated or supervised by Executive, or (iii) about whom Executive obtained Proprietary Information in the ordinary course of business as a result of Executive’s association with the Company or any of its Affiliates.
(c) Employees. During the Term and for the duration of the Restricted Period, Executive shall not, directly or indirectly, solicit, recruit, or induce any employee to (i) terminate his or her employment relationship with the Company or any of its Affiliates, or (ii) work for any other person or entity engaged in the Business. For the avoidance of doubt, the foregoing restriction shall also include prohibiting Executive from disclosing to any third party the names, background information, or qualifications of any employee, or otherwise identifying any employee as a potential candidate for employment. The restrictions set forth in this Section shall apply only to employees (x) with whom Executive had Material Interaction (as such term is defined below), or (y) Executive, directly or indirectly, supervised; provided, however, that a general advertisement to which an employee of the Company responds shall not on its own result in a breach of this Section 6.3. For purposes of this Section, “Material Interaction” means any interaction with an employee that relates directly or indirectly to the performance of Executive’s duties or the employee’s duties for the Company or any of its Affiliates.
(d) Acquisition Targets. During the Term and for the duration of the Restricted Period, unless approved by the Company, Executive shall not, (i) directly or indirectly acquire or attempt to acquire any business which the Company or its Affiliates have identified as a potential acquisition target or (ii) take any action to induce or attempt to induce any business which the Company has identified as a potential acquisition target to consummate any acquisition, investment or other similar transaction with any Person other than the Company or its Affiliates.
6.4 Reformation. If, at the time of enforcement of this Article VI, a court holds that the restrictions stated in this Article VI are unreasonable under circumstances then existing, the parties hereto agree that the court may reduce such restrictions to the maximum period, scope, or geographical area reasonable under such circumstances.
6.5 Confidential and Proprietary Information. Except as Executive reasonably and in good faith determines to be required in the faithful performance of Executive’s duties hereunder, Executive shall, during the term of Executive’s employment and following Executive’s termination of service for any reason, maintain in confidence and shall not directly or indirectly, use, disseminate, disclose or publish, for Executive’s benefit or the benefit of any other Person, any confidential or proprietary information or trade secrets of or relating to
the Company or any of its Affiliates, including, without limitation, information with respect to the Company’s operations, processes, protocols, products, inventions, business practices, finances, principals, vendors, suppliers, customers, potential customers, marketing methods, costs, prices, contractual relationships, regulatory status, compensation paid to employees or other terms of employment (“Proprietary Information”), or deliver to any Person, any document, record, notebook, computer program or similar repository of or containing any such Proprietary Information. Executive’s obligation to maintain and not use, disseminate, disclose or publish, for Executive’s benefit or the benefit of any other Person, any Proprietary Information after Executive’s termination of service will continue so long as such Proprietary Information is not, or has not by legitimate means become, generally known and in the public domain (other than by means of Executive’s direct or indirect disclosure of such Proprietary Information) and continues to be maintained as Proprietary Information by the Company. Notwithstanding the foregoing, nothing in this Agreement shall prohibit or restrict Executive from: (i) initiating communications directly with, cooperating with, providing information to, causing information to be provided to, or otherwise assisting in an investigation by, any governmental agency or regulatory authority, including the Securities and Exchange Commission, Department of Justice, Department of Labor, Equal Employment Opportunity Commission, Congress, any inspector general, and any other governmental agency or commission or regulatory authority (collectively, “Governmental Agencies”) regarding a possible violation of any law; (ii) responding to any inquiry or legal process directed to Executive from any Governmental Agency; (iii) testifying, participating or otherwise assisting in any action or proceeding by any Governmental Agency relating to a possible violation of law; (iv) reporting any good faith allegations of unlawful employment practices or criminal conduct to any Government Agency; (v) making any truthful statements or disclosures required by law, regulation or legal process; (vi) requesting or receiving confidential legal advice; or (vii) making any other disclosures that are protected under the whistleblower provisions of any applicable law. Nothing in this Agreement requires Executive to obtain prior authorization before engaging in any conduct described in the previous sentence, or to notify the Company that Executive has engaged in any such conduct. Additionally, pursuant to the federal Defend Trade Secrets Act of 2016, an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (A) is made (1) in confidence to a federal, state or local government a official, either directly or indirectly, or to an attorney and (2) solely for the purpose of reporting or investigating a suspected violation of law; (B) is made to the individual’s attorney in relation to a lawsuit for retaliation against the individual for reporting a suspected violation of law; or (C) is made in a complaint or other document filed in a lawsuit or proceeding, if such filing is made under seal.
6.6 Work Product. Executive acknowledges and agrees that any copyrightable works prepared by Executive within the scope of Executive’s employment will be “works made for hire” under the Copyright Act and that the Company will be considered the author and owner of such copyrightable works. Executive further agrees that all inventions, improvements, designs, original works of authorship, formulas, processes, compositions of matter, computer software programs, databases, mask works, confidential information and trade secrets (“inventions”) made, created, conceived or first reduced to practice during the period of Executive’s employment, whether or not in the course of Executive’s employment, and whether or not patentable, copyrightable or protectable as trade secrets, and that (a) are developed using equipment, supplies, facilities or trade secrets of the Company; (b) result from work performed by Executive for the Company; or (c) relate to the Company’s business or actual or demonstrably anticipated research or development, will be the sole and exclusive property of the Company, and Executive hereby agrees to assign and hereby assigns to the Company all such inventions. Executive shall execute any and all documents and shall provide such assistance necessary either to evidence or register the assignment of these rights. This Agreement shall not include assignment of an invention that fully qualifies as Executive’s invention under the provisions of the Illinois Compiled Statutes Chapter 765, § 1060/2, the text of which is attached to this Agreement as Exhibit A.
6.7 Cooperation. Executive agrees to reasonably cooperate with the Company during the term of Executive’s employment hereunder and thereafter, at the Company’s sole expense relating to any travel or other out-of-pocket expenses incurred, in connection with any governmental, regulatory, commercial, private or other investigations, arbitrations, litigations or similar matters that may arise during the term of Executive’s
employment hereunder, or in any way relate to events that occurred during term of Executive’s employment hereunder, until such investigations, arbitrations, litigations or similar matters are completely resolved.
6.8 Remedies. In the event of the breach or threatened breach by Executive of any of the provisions of this Article VI, the Company may suffer irreparable harm for which monetary damages may be an inadequate remedy. Accordingly, in addition and supplementary to any other rights and remedies available to the Company, the Company shall be entitled to seek specific performance and/or temporary, preliminary, and permanent injunctive or other equitable relief from a court of competent jurisdiction to enforce or prevent any violations of the provisions of this Article VI, without the necessity of posting a bond or other security, to the fullest extent permitted by applicable law. For the avoidance of doubt, the arbitration provision set forth in Section 7.8 shall not apply to any request, claim, or action by the Company for specific performance, injunctive relief, or other equitable relief under this Section 6.8, and the Company may pursue such relief in a court of competent jurisdiction.
6.9 Illinois Freedom to Work Act; Adequate Consideration. Executive acknowledges and agrees that the covenants set forth in this Article VI are ancillary to this Agreement and Executive’s employment relationship with the Company, and are reasonably necessary to protect the Company’s and its Affiliates’ legitimate business interests, including without limitation its Proprietary Information, trade secrets, customer and supplier relationships, goodwill, confidential business strategies, pricing information, acquisition opportunities, employee relationships and investments in Executive’s role and responsibilities. Executive further acknowledges and agrees that Executive’s actual or expected annualized earnings exceed the applicable earnings thresholds under the Illinois Freedom to Work Act for the covenants set forth in this Article VI. Executive acknowledges and agrees that the compensation, benefits, rights and opportunities provided to Executive under Article III, Section 4.3 of Article IV, and Article V of this Agreement, including without limitation Executive’s base salary, annual bonus opportunity, equity or equity-based compensation opportunity, employee benefits, expense reimbursement rights, severance rights and other financial and professional benefits provided under this Agreement, constitute adequate consideration for the covenants set forth in this Article VI within the meaning of the Illinois Freedom to Work Act. Executive further acknowledges and agrees that such consideration is separate from, and in addition to, Executive’s employment or continued employment with the Company, and is adequate by itself, or together with Executive’s employment or continued employment, to support Executive’s obligations under this Article VI.
6.10 Review Period. The Company hereby advises Executive to consult with an attorney of Executive’s choice before entering into this Agreement. In signing below, Executive agrees and acknowledges that Executive has been advised by the Company to consult with an attorney of Executive’s choice before entering into this Agreement, and that Executive had at least fourteen (14) days to review this Agreement prior to being required to sign it and agree to its terms, including the terms of the non-competition and non-solicitation covenants set forth in Sections 6.2 and 6.3.
ARTICLE VII
GENERAL PROVISIONS
7.1 Indemnification. The Company shall indemnify and hold harmless Executive, to the maximum extent permitted by applicable law, against all costs, charges, expenses, claims and judgments incurred or sustained by Executive in connection with any action, suit or proceeding to which Executive may be made a party by reason of being, or agreeing to be, an officer, director or employee of the Company or any subsidiary or affiliate of the Company. The Company shall provide directors and officers insurance for Executive in reasonable amounts. The Board shall determine, in its sole discretion, the availability of insurance upon reasonable terms and the amount of such insurance coverage.
7.2 Tax Matters.
(a)Section 409A. It is intended that any right to receive installment payments pursuant to this Agreement will be treated as a right to receive a series of separate and distinct payments for purposes of
Section 409A of the Code. It is further intended that all payments and benefits hereunder satisfy, to the greatest extent possible, the exemption from the application of Section 409A of the Code (and any state law of similar effect) provided under Treasury Regulation Section 1.409A-1(b)(4) (as a “short-term deferral”) and are otherwise exempt from or comply with Section 409A of the Code. Accordingly, to the maximum extent permitted, this Agreement will be interpreted in accordance with such intent. To the extent necessary to comply with Section 409A of the Code, if the designated payment period for any payment under this Agreement begins in one taxable year and ends in the next taxable year, the payment will commence or otherwise be made in the later taxable year. For purposes of Section 409A of the Code, if the Company determines that Executive is a “specified employee” under Section 409A(a)(2)(B)(i) of the Code at the time of Executive’s separation from service, then to the extent delayed commencement of any portion of the payments or benefits to which Executive is entitled pursuant to this Agreement is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such portion will not be provided until the earlier (i) the expiration of the six-month period measured from Executive’s separation from service or (ii) the date of Executive’s death. As soon as administratively practicable following the expiration of the applicable Section 409A(2)(B)(i) period, all payments deferred pursuant to the preceding sentence will be paid in a lump-sum to Executive and any remaining payments due pursuant to this Agreement will be paid as otherwise provided herein.
(b)Expense Reimbursement. To the extent that any reimbursements payable to Executive pursuant to this Agreement are subject to the provisions of Section 409A of the Code, such reimbursement will be paid to Executive no later than December 31st of the year following the year in which such expense was incurred. The amount of expenses reimbursed in one year will not affect the amount eligible for reimbursement in any subsequent year and Executive’s right to reimbursement under this Agreement will not be subject to liquidation or exchange for another benefit.
(c)Withholding. All amounts and benefits payable under this Agreement are subject to deduction and withholding to the extent required by applicable law.
7.3 At-Will Employment. Executive’s employment relationship with the Company is at-will. Either Executive or the Company may terminate Executive’s employment or service at any time for any or no reason, with or without cause.
7.4 Compensation Recoupment. All incentive and equity awards and amounts payable to Executive pursuant to this Agreement shall be subject to recoupment pursuant to any compensation recoupment policy that is applicable generally to executive officers of the Company and in effect from time to time, and all applicable laws, rules and regulations of the stock exchanges and public market on which the securities of the Company are traded.
7.5 Notice. Any notices provided hereunder must be in writing and shall be deemed effective upon the earlier of personal delivery (including personal delivery by facsimile) or the third day after mailing by first-class mail, to the Company at its primary office location and to Executive at Executive’s address as listed on the Company payroll.
7.6 Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid or unenforceable provisions had never been contained herein. With respect to Sections 6.2 and 6.3 above, in the event any court of competent jurisdiction shall determine that the scope, time or territorial restrictions set forth therein are unreasonable, then it is the intention of the parties that such restrictions be enforced to the fullest extent that such court deems reasonable, and Sections 6.2 and 6.3 shall thereby be reformed.
7.7 Choice of Law. All questions concerning the construction, validity, and interpretation of this Agreement will be governed by the law of the State of Illinois without regard to the conflicts of law provisions.
7.8 Dispute Resolution; Arbitration.
(a) General. Except for any request, claim, or action by the Company for specific performance, injunctive relief, or other equitable relief pursuant to Section 6.8, and unless otherwise prohibited by law or specified below, all disputes, claims and causes of action, in law or equity, arising from or relating to this Agreement or its enforcement, performance, breach, or interpretation will be resolved solely and exclusively by final and binding arbitration in Cook County, Illinois through Judicial Arbitration and Mediation Services/Endispute (“JAMS”), before a single neutral arbitrator, in accordance with the JAMS Employment Arbitration Rules & Procedures then in effect. This applies equally to the Company and Executive and reflects the parties’ mutual, actual, knowing, and bargained-for consideration, including the Company’s agreement to arbitrate claims, Executive’s agreement to arbitrate claims, and the compensation, benefits, rights, and other consideration provided to Executive under this Agreement.
(b) Truthful Statements. Nothing in this Section is intended to prevent Executive from making truthful statements or disclosures about alleged unlawful employment practices, reporting good-faith allegations of unlawful employment practices or criminal conduct to any appropriate federal, state, or local governmental agency or official, participating in or cooperating with any governmental investigation or proceeding, making truthful statements or disclosures required by law, regulation, subpoena, or other legal process, or requesting or receiving confidential legal advice.
(c) No Waiver. Nothing in this Section waives, limits, or diminishes any substantive right, statutory right, remedy, defense, burden of proof, or right to recover attorneys’ fees, costs, or damages that would otherwise be available to either Party in a court of competent jurisdiction.
(d) Arbitrator’s Decision. The arbitrator shall have authority to award all relief that would be available in a court of competent jurisdiction. The arbitrator will issue a written decision that contains the essential findings and conclusions on which the decision is based. The arbitrator’s decision may be enforced in any court of competent jurisdiction.
(e) Unlawful Arbitration. Nothing in this Section shall require arbitration of any claim to the extent such arbitration is prohibited by the Illinois Workplace Transparency Act or other applicable law.
(f) Waiver of Jury Trial. THE PARTIES HERETO HEREBY WAIVE ANY RIGHTS THEY MAY HAVE TO TRIAL BY JURY IN REGARD TO ARBITRABLE CLAIMS. The JAMS rules may be found and reviewed at http://www.jamsadr.com/rules-employment-arbitration.
7.9 Entire Agreement.
(a) As Applicable to Toucan. Toucan joins in this Agreement solely for the limited purpose of acknowledging and agreeing that, as between Toucan and Executive, this Agreement supersedes and replaces the Prior Agreement in its entirety as of the Effective Date. Toucan further acknowledges and agrees that, from and after the Effective Date, the Prior Agreement shall be of no further force or effect, and neither Toucan nor Executive shall have any further rights, duties, claims, or obligations under the Prior Agreement.
(b) Supersession of Prior Agreement; The Company. This Agreement (and, as referenced herein, the LTIP and any applicable RSU and PSU grant and award, and except for rights relating to Installment Payments and Put Option rights under the APA and applicable governing documents of Toucan, which shall remain governed by the applicable agreements) constitutes the entire agreement between Executive and the Company with respect to the subject matter hereof, and supersedes all prior or contemporaneous offers, negotiations and agreements, whether written or oral, relating to such subject matter, including the Prior Agreement; provided, however, that in the event that Executive is
subject to any other restrictive covenants with respect to the Company or its Affiliates (including with respect to confidentiality or non-disclosure, non-competition, non-solicitation, or intellectual property), the restrictive covenants contained in this Agreement shall complement and be in addition to, and not supersede or be in lieu of, such other restrictive covenants (which shall remain in full force and effect in accordance with the terms thereof). This Agreement is entered into without reliance on any promise or representation other than those expressly contained herein or therein and, subject to Section 7.6, may not be modified or amended except in a writing signed by an officer of the Company and Executive.
7.10 Survival. The rights and obligations of the parties hereto under Sections 6.5, 6.7, 6.8, 7.4, 7.7, 7.8, and any other provision of this Agreement that by its terms or nature is intended to survive, shall survive the expiration or termination of this Agreement and the termination of Executive’s employment, regardless of the reason for such expiration or termination. Such surviving provisions shall remain in full force and effect in accordance with their respective terms.
7.11 Title and Headings; Construction. Titles and headings to Sections hereof are for the purpose of reference only and shall in no way limit, define or otherwise affect the provisions hereof. Any and all Exhibits referred to in this Agreement are, by such reference, incorporated herein and made a part hereof for all purposes. Unless the context requires otherwise, all references to laws, regulations, contracts, documents, agreements and instruments refer to such laws, regulations, contracts, documents, agreements and instruments as they may be amended, restated or otherwise modified from time to time, and references to particular provisions of laws or regulations include a reference to the corresponding provisions of any succeeding law or regulation. All references to “dollars” or “$” in this Agreement refer to United States dollars. The words “herein”, “hereof”, “hereunder” and other compounds of the word “here” shall refer to the entire Agreement, including all Exhibits attached hereto, and not to any particular provision hereof. Unless the context requires otherwise, the word “or” is not exclusive. Wherever the context so requires, the masculine gender includes the feminine or neuter, and the singular number includes the plural and conversely. All references to “including” shall be construed as meaning “including without limitation.” Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against any party hereto, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by each of the parties hereto and shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of the parties hereto.
(Signature Page Follows)
In Witness Whereof, the parties have executed this Agreement as of the date first written above.
ACCEL ENTERTAINMENT, INC.
By: /s/ Scott Levin
Name: Scott Levin
Title: Chief Legal Officer and Corporate Secretary
ACCEPTED AND AGREED:
By:/s/ Stan Guidroz
Stan Guidroz
ACKNOWLEDGED AND AGREED SOLELY FOR PURPOSES OF SECTION 7.9(a):
TOUCAN GAMING, LLC
By: /s/ Andrew H. Rubenstein
Name: Andrew H. Rubenstein
Title: Manager
EXHIBIT A
ILLINOIS COMPILED STATUTES CHAPTER 765 SECTION 1060/2
INVENTION ON OWN TIME - EXEMPTION FROM AGREEMENT
“(1) A provision in an employment agreement which provides that an employee shall assign or offer to assign any of the employee’s rights in an invention to the employer does not apply to an invention for which no equipment, supplies, facilities, or trade secret information of the employer was used and which was developed entirely on the employee’s own time, unless (a) the invention relates (i) to the business of the employer, or (ii) to the employer’s actual or demonstrably anticipated research or development, or (b) the invention results from any work performed by the employee for the employer. Any provision which purports to apply to such an invention is to that extent against the public policy of this State and is to that extent void and unenforceable. The employee shall bear the burden of proof in establishing that his invention qualifies under this subsection.
(2) An employer shall not require a provision made void and unenforceable by subsection (1) of this Section as a condition of employment or continuing employment. This Act shall not preempt existing common law applicable to any shop rights of employers with respect to employees who have not signed an employment agreement.
(3) If an employment agreement entered into after January 1, 1984, contains a provision requiring the employee to assign any of the employee’s rights in any invention to the employer, the employer must also, at the time the agreement is made, provide a written notification to the employee that the agreement does not apply to an invention for which no equipment, supplies, facility, or trade secret information of the employer was used and which was developed entirely on the employee’s own time, unless (a) the invention relates (i) to the business of the employer, or (ii) to the employer’s actual or demonstrably anticipated research or development, or (b) the invention results from any work performed by the employee for the employer.”
EX-99.1
EX-99.1
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Exhibit 99.1
Accel Entertainment Names Stan Guidroz Chief Operating Officer
Proven Leader of Accel’s Growing Louisiana Subsidiary Brings Years of Experience
and Deep Industry Relationships to New Role
Chicago, IL – July 14, 2026 -- Accel Entertainment, Inc. (NYSE: ACEL) ("Accel" or the "Company"), a leading locals-focused gaming operator partnering with small businesses, local communities, and state governments to provide entertaining, convenient, and safe gaming experiences nationwide, announced today that Stan Guidroz, currently Chief Executive Officer of the Company's Toucan Gaming, LLC ("Toucan") subsidiary, has been promoted to Chief Operating Officer of Accel. The appointment is effective July 14, 2026 and in connection with Mr. Guidroz's appointment, Mark Phelan, who serves as President and Chief Operating Officer, will relinquish the Chief Operating Officer title. As previously announced, Mr. Phelan will continue to serve as President and will become Chief Executive Officer of Accel in August 2026.
"Stan is a proven leader who has made significant contributions to Accel's growth, and this promotion reflects his track record and the depth of talent across our organization," said Andy Rubenstein, Chairman and Chief Executive Officer of Accel Entertainment. "Stan has built Toucan into a premier operator and a model for the disciplined, accretive growth we are pursuing across our markets. He will continue to draw on his deep Louisiana and industry-wide relationships as he takes on broader operational leadership across the Company.”
"As I transition to Chief Executive Officer, I look forward to working closely with Stan," said Mark Phelan, President of Accel Entertainment. “His operating discipline and extensive industry experience will allow us to continue to successfully execute our strategic roadmap for growth and deliver long-term shareholder value."
Mr. Guidroz has served as Chief Executive Officer of Toucan, Accel's Louisiana operating subsidiary, since 2021, where he has built a growing Louisiana route and overseen a series of disciplined, accretive acquisitions, including the recent acquisition of Rice Palace Truck Stop Casino. He brings more than two decades of Louisiana gaming experience, including his tenure at Jacobs Entertainment, Inc., where he led the company's Louisiana operations as Vice President and President of its Cash Magic truck stop casinos – growing the business to 27 locations – and served as Chief Operating Officer of Colonial Downs Racetrack. Earlier in his career, he founded a convenience store company that he grew to 19 stores before its sale to Conco, Inc. Mr. Guidroz founded the Louisiana Video Gaming Association in 2015 and served as its President through 2025, during which he helped advance significant legislation for the state's local gaming market. As Chief Operating Officer, Mr. Guidroz will oversee the Company's day-to-day operations across its markets.
"I'm honored to take on this role and to build on the strong operating foundation this team has established," said Mr. Guidroz. "I look forward to working with Andy, Mark, and the entire team to drive operational excellence across Accel's markets. The relationships and trust we've built in Louisiana are exactly what makes disciplined growth possible, and that's the partnership-first approach I intend to bring to every market Accel serves."
Separately, the Company announced that Derek Harmer, Chief Compliance Officer, will transition from his role to pursue other opportunities effective March 31, 2027, and will be joining the Company's gaming Compliance Committee effective April 1, 2027.
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"We thank Derek for his many contributions to Accel and are pleased that the Company will continue to benefit from his expertise through his service on the gaming Compliance Committee," said Mr. Rubenstein.
About Accel
Accel Entertainment, Inc. (NYSE: ACEL) is a growing provider of locals-focused gaming and one of the largest terminal operators in the United States, supporting more than 28,000 electronic gaming terminals in over 4,500 third-party local and regional establishments and 20 self-operated gaming locations across ten states. Through exclusive long-term contracts, Accel serves licensed non-casino locations including bars, restaurants, convenience stores, truck stops, gaming cafes, and fraternal and veteran establishments. Accel provides its local partners with a turnkey, full-service, capital-efficient gaming solution that encompasses manufacturing, content, payments, loyalty, 24/7 customer service, data analysis and reporting, and cash logistics. The Company’s racino, Fairmount Park - Casino & Racing, features live racing, electronic gaming machines, live table games, food and beverage amenities, and pari-mutuel betting.
Contact:
Joseph Jaffoni, Norberto Aja
JCIR
212-835-8500
acel@jcir.com
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