Board Member Agreement
Exhibit
10.3
|
0000 Xxxxx Xxxx, Xxxxx
X
Xxxxxxxx, XX
00000
(704)
849-0860
Referred
to as “the Company”
|
Xxxx X
Xxxxxx
Xxx Xxxxxx Xxxxxx
#000
Xxx Xxxxx, XX
00000
(952)
449-7001
Referred
to as “the Director”
|
This
Board Member Agreement (the “Agreement”) is effective as of the 1st day of July,
2009, by and between PokerTek, Inc., a North Carolina corporation (the
“Company”), and Xxxx X Xxxxxx, an individual resident of the State of Nevada
(the “Director”). This Agreement replaces any previous Board Member Agreement
executed by the parties.
WHEREAS,
the Company engaged in the development, manufacture and marketing of electronic
products for use in the gaming and amusement markets (the
“Business”).
WHEREAS,
the Company has established a Board of Directors to assist the Company in its
endeavors to manage the Business so as to maximize returns for the Company’s
shareholders; and
WHEREAS,
the Company desires to engage the Director as the Chairman of the Board of
Directors and the Director represents that he has the requisite skill and
knowledge to serve as such; and
NOW
THEREFORE, in consideration of the mutual promises contained herein, and
intending to be legally bound, the parties hereto hereby declare and agree as
follows:
|
|
1.
|
Term. The term of this
Agreement shall commence on the date hereof (the “Effective Date”), and
shall continue until the Director no longer serves on the Company’s Board
of Directors (the “Term”), it being understood that the Director shall
remain on the Company’s Board of Directors at the discretion of the
Company’s shareholders.
|
|
|
2.
|
Compensation.
|
|
|
a.
|
Director's Fees. In
consideration of the services to be rendered under this Agreement as a
member of the Board of Directors and for serving on various committees of
the Board of Directors, Director shall receive annual compensation of
$48,000, payable in quarterly installments of $12,000 per quarter. At the
Director’s election, such fees shall be payable either in cash or in
shares of Company stock. After an election is made by the Director, the
Director can change his election upon 30 days prior written notice to the
Chief Financial Officer of the Company, or in his absence, to another
appropriate officer of the Company, and the new payment election shall be
effective for the next payment date after the notice was given. In the
event that such fees are paid in the form of common stock, the number of
shares issued will be determined by dividing $12,000 by the average
closing price on the NASDAQ Capital Market of PokerTek common stock for
the 10 business days preceding the end of the quarterly period; provided,
however, that if such average price per share calculation is less than the
closing bid price on the effective date of this agreement, such closing
bid price on the date of this agreement shall be
used.
|
Page 1 of
5
|
|
b.
|
Stock and Stock
Options.
|
|
|
i.
|
Company
acknowledges that Director is an owner of Common Stock and may hold
options to purchase stock in Company, and that the rights attributable to
these securities (the "Securities") shall not be affected by the execution
of this Agreement.
|
|
|
ii.
|
On
January 31, 2005, for serving on the Board of Directors, Company granted
Director, pursuant to the Company’s 2004 Stock Incentive Plan, an option
(the “Option”) to purchase 200,000 shares of common stock of the Company
(the “Option Shares”), at a purchase price equal to $2.67, under the terms
and conditions set forth in the Stock Option Agreement, dated January 31,
2005. Fifty thousand (50,000) shares shall vest in a series of four (4)
successive equal quarterly installments over the one year period measured
from the date hereof upon the Director’s completion of each additional
quarter over such one (1) year period. The remaining option shares shall
vest in a series of twelve (12) successive equal quarterly installments
upon the Director’s completion of each additional quarter serving as a
member of the Board over the three (3) year period beginning one (1) year
from the date hereof. The Stock Option Agreement (the “Option Agreement”)
dated January 31, 2005, shall provide that all Option Shares subject to
the Option Agreement at the time of a Change of Control (as defined in the
2004 Stock Incentive Plan) not otherwise vested shall automatically vest
in full immediately prior to the effective date of the Change of Control
so that the Option may be exercised for any or all of the Option Shares.
In addition, if Optionee is terminated without Cause (as defined below) as
a member of the Board of Directors by the Company without Director’s
written consent, or if the shareholders of the Company do not re-elect
Director as a member of the Board of Directors at any time during the term
of the Option, the Option shall become exercisable in full and may be
exercised for any or all of the Option Shares. For purposes of this
Agreement, “Cause” means (i) Director’s conviction (by a court of
competent jurisdiction, no subject to further appeal) of, or pleading
guilty to, a felony or crime involving fraud or dishonesty against the
Company; or (ii) Director’s willful and continued failure to substantially
perform Director’s duties for the Company which failure continues for
thirty (30) days following Director’s receipt of written notice of such
failure to perform; or (iii) Director’s death, or any illness, disability
or other incapacity in such a manner that Director is physically rendered
unable regularly to perform his duties hereunder for a period in excess of
one hundred twenty (120) consecutive days; or (iv) Director having
ownership interest (other than ownership, for strictly investment
purposes, of less than five percent (5%) of the capital stock of a
company) in any entity including Lakes Entertainment, Inc., WPT
Enterprises, Inc., or Sklansky Games, LLC which engages in Competing
Activities (as defined in Section
4.b.).
|
Page 2 of
5
|
|
c.
|
Expenses. The Company
shall reimburse Director for all reasonable business expenses incurred in
the performance of his duties hereunder in accordance with Company's
expense reimbursement guidelines.
|
|
|
d.
|
Indemnification. Company
will indemnify and defend Director and hold Director harmless against any
liability incurred in the performance of Director’s service on the Board
of Directors pursuant to this Agreement (the “Services”) to the fullest
extent authorized in Company's Certificate of Incorporation, as amended,
bylaws, as amended, applicable law and as provided in any individual
indemnification agreements the Company many enter into with the Director.
Company has purchased Director's and Officer's liability insurance, and
Director shall be entitled to the protection of any insurance policies the
Company maintains for the benefit of its Directors and Officers against
all costs, charges and expenses in connection with any action, suit or
proceeding to which he may be made a party by reason of his affiliation
with Company, its subsidiaries, or affiliates or Director’s Services
hereunder.
|
|
|
3.
|
Termination.
|
|
|
a.
|
Right to Terminate. At
any time, Director may be removed as Director as provided in Company's
Certificate of Incorporation, as amended, bylaws, as amended, and
applicable law. Director may resign as Director as provided in Company's
Certificate of Incorporation, as amended, bylaws, as amended, and
applicable law. Notwithstanding anything to the contrary contained in or
arising from this Agreement or any statements, policies, or practices of
Company, neither Director nor Company shall be required to provide any
advance notice or any reason or cause for termination of Director's
status, except as provided in Company's Certificate of Incorporation, as
amended, Company's bylaws, as amended, and applicable
law.
|
|
|
b.
|
Effect of Termination as
Director. Upon a termination of Director's status as a Director,
this Agreement will terminate; Company shall pay to Director all
compensation to which Director is entitled up through the date of
termination. Thereafter, all of Company's obligations under this Agreement
shall cease.
|
Page 3 of
5
|
|
4.
|
Non−Disclosure, Ownership of
Intellectual Property
|
|
|
a.
|
Director
covenants and undertakes that, during the term of this Agreement and
thereafter, absent the Company’s prior written consent, all information,
written or oral, relating to the Company, its parents, subsidiaries or
affiliates, the Company’s Business or condition (actual or planned),
disclosed to him by the Company, or which otherwise became known to him in
connection with the performance of the Services (the “Information”), shall
be maintained by him in full and absolute confidence, and he shall not use
such Information, directly or indirectly, in whole or in part, for his own
benefit or any purpose whatsoever except as specifically and explicitly
provided hereunder. Director’s undertaking hereunder shall not apply to
Information which is in, or becomes part of, the public domain, or which
was known by Director before the time of
disclosure.
|
|
|
b.
|
Director
agrees and undertakes that, so long as this Agreement is in effect and for
a period of one year thereafter, neither he, nor any entity in which he
holds a majority of the equity interest or voting control (either directly
or through other entities in which he holds a majority of the equity
interest or voting control) (each a “Controlled Entity”), shall engage in
the marketing and distribution of poker tables featuring automated live
poker games through the use of a simulated dealer and an electronic
facsimile of chips and playing cards (such activities, the “Competing
Activities”). The Company acknowledges that Director has ownership
interests in or other relationships with entities that are not Controlled
Entities (each a “Non−Controlled Entity”), and the restriction in the
preceding sentence does not apply to activities of Non−Controlled
Entities. However, Director agrees to inform the Company at such time as
the Non−Controlled Entity commences Competing Activities, provided that he
is aware of the Competing Activities and the disclosure would not violate
a non−disclosure agreement with the Non−Controlled Entity. The parties
acknowledge that the covenants contained in this paragraph 4.b. are made
by Director personally and not by any third party. The Company
acknowledges that Lakes Entertainment, Inc., WPT Enterprises, Inc., and
Sklansky Games, LLC are Non-Controlled
Entities.
|
|
|
5.
|
Miscellaneous. This
Agreement constitutes the entire agreement between the parties with
respect to the matters referred to herein, and no other arrangement,
understanding or agreement, verbal or otherwise, shall be binding upon the
parties hereto. This Agreement may not be assigned by any of the parties
hereto, and may not be amended or modified, except by the written consent
of both parties hereto. No failure or delay on the part of any party
hereto in exercising any right, power or remedy hereunder shall operate as
a waiver thereof. Headings to Sections herein are for the convenience of
the parties only, and are not intended to be or to affect the meaning or
interpretation of this Agreement. The Company shall have the right to
enforce this Agreement and any of its provisions by injunction, specific
performance or other equitable relief, without bond and without prejudice
to any other rights and remedies that the Company may have for the breach
of this Agreement. In the event that any covenant, condition or other
provision contained in this Agreement is held to be invalid, void or
illegal by any court of competent jurisdiction, the same shall be deemed
severable from the remainder thereof, and shall in no way affect, impair
or invalidate any other covenant, condition or other provision therein
contained. If such condition, covenant or other provisions shall be deemed
invalid due to its scope or breadth, such covenant, condition or other
provision shall be deemed valid to the extent permitted by law. All
notices required to be delivered under this Agreement shall be effective
only if in writing and shall be deemed given when received by the party to
whom notice is required to be given and shall be delivered personally, or
by registered mail to the addresses set forth above. The parties agree
that any suit, action or proceeding between Director (and his attorneys,
successors, and assigns) and the Company (and its affiliates,
shareholders, directors, officers employees, members, agents, successors,
attorneys, and assigns) relating to the Services or the termination of
those Services shall be brought in either the United States District Court
for the Western District of North Carolina or in a North Carolina state
court in the county of Mecklenburg and that the parties shall submit to
the jurisdiction of such court. The parties irrevocably waive, to the
fullest extent permitted by law, any objection the party may have to the
laying of venue for any such suit, action or proceeding brought in such
court. If any one or more provisions of this section shall for any reason
be held invalid or unenforceable, it is the specific intent of the parties
that such provisions shall be modified to the minimum extent necessary to
make it or its application valid and enforceable. This Agreement shall be
construed and interpreted in accordance with the laws of the State of
North Carolina.
|
Page 4 of
5
Executed
as of this 15th day of July, 2009.
|
POKERTEK:
|
DIRECTOR:
|
|||
|
By:
|
/s/
Xxxx X Xxxxxxxx
|
By:
|
/s/
Xxxx X Xxxxxx
|
|
|
Print
Name:
|
Xxxx
X Xxxxxxxx
|
Print
Name:
|
Xxxx
X Xxxxxx
|
|
|
Title:
|
Acting
CEO & CFO
|
Title:
|
Chairman
|
|
|
Date:
|
7/15/09
|
Date:
|
7/15/09
|
|
Page 5 of
5
