BOARD MEMBER AGREEMENT
Exhibit
10.20
This
Agreement is being made and entered into this 31 day of January 2005, by and
between Pokertek, Inc., a North Carolina corporation with principal offices
at
0000 Xxxxx Xxxx, Xxxxx X, Xxxxxxxx, XX 00000 (the “Company”), and Xxxx Xxxxxx an
individual with address at Xxx Xxxxxx Xxxxxx Xx., Xxxxx 000, Xxx Xxxxx, XX,
00000 (the “Director”).
WITNESSETH
WHEREAS,
the Company is engaged in the business of software sales and software research
and development (the “Business”);
WHEREAS,
the Company desires to establish 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;
WHEREAS,
the Company desires to engage the Director as the Chairman of its 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;
Termination. 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
and Reimbursement.
2.1. |
On
the date of this Agreement, for serving on the Board of Directors,
Company
shall grant the Director, pursuant to the Company’s 2004 Stock Incentive
Plan, an option (the “Option”) to purchase 200,000 shares (equal to 2.66%
of the fully diluted shares of the Company) 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, in the form
attached as Exhibit A, which shall be provided to Director on the
date of
the grant. 50,000 shares (equal to .66% of the fully diluted shares
of the
Company) 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”) in the form
attached as Exhibit A, to be entered into at the time of the grant
of the
Option 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, or in the event of a Constructive Termination (as defined
below)
of Director’s service 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, not subject to further appeal) of, or pleading
guilty to, a felony or a 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 3.3). For purposes of this Agreement,
“Constructive Termination” means Director’s resignation from the Board of
Directors following the Company’s failure to (i) obtain director and
officer liability insurance acceptable to Director within thirty
(90) days
after the date of this Agreement, or (ii) maintain such insurance
coverage
at all times thereafter.
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2.2. |
The
Company will reimburse Director for all expenses incurred by him
in the
course of the performance of his duties as a Director hereunder and
approved, in advance, by the
Company.
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3. Non-Disclosure,
Ownership of Intellectual Property
3.1. |
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.
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3.2. |
[Omitted.]
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3.3. |
Director
agrees and undertakes that, so long as this Agreement is in effect
and for
a period of one year thereafter (the “Covenant Period”), 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 3.3 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.
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4. |
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.
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IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.
POKERTEK, INC. | ||
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By: | /s/ Xxxxxx X. Xxxxx | |
Xxxxxx X. Xxxxx |
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Chief Executive Officer |
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Date: January 31, 2005 | By: | /s/ Xxxx Xxxxxx |
Xxxx Xxxxxx |
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