Unassociated Document


    Exhibit
10.5

    
      	
               

              

            	
               

              Board
      Member Agreement

               

            


    

    


    
      	
              PokerTek, Inc.
      

              1150 Crews
      Road,
      Suite F

              Matthews, NC
      28105

              (704)
      849-0860

                Referred
      to as “the Company”

            	
              Joseph J
      Lahti

              2975 Somerset
      Lane

              Long Lake, MN
      55356

              (612)
      723-1081

              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 Joseph J Lahti, an individual resident of the State of Minnesota
(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 its Audit
Committee 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.

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              b.

            	
              Executive Leadership Committee
      Fees. In addition to the Director Fees outlined in item 2.a., the
      Director shall also receive annual compensation of $60,000, payable in
      quarterly installments of $15,000 per quarter, for the services to be
      provided as Chair of the Executive Leadership Committee. Such fees shall
      be payable in shares of Company stock, and the number of shares issued
      will be determined by dividing $15,000 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.

            


    

     

    
      	
               
      

            	
              c.

            	
              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
      March 31, 2006, the Company granted the Director, pursuant to the
      Company’s 2005 Stock Incentive Plan, an option (the “Option”) to purchase
      50,000 shares of common stock of the Company (the “Option Shares”), at a
      purchase price equal to the closing stock price on March 31, 2006, under
      the terms and conditions set forth in the Stock Option Agreement, dated
      March 2, 2006. Ten thousand (10,000) 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 sixteen (16) successive equal quarterly
      installments upon the Director’s completion of each additional quarter
      serving as a member of the Board over the four (4) year period beginning
      one (1) year from the date hereof. The Stock Option Agreement (the “Option
      Agreement”) shall provide that all Option Shares subject to the Option
      Agreement at the time of a Change of Control (as defined in the 2005 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, only the vested Options shall become exercisable. 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
..

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              d.

            	
              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.

            


    

     

    
      	
               
      

            	
              e.

            	
              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.

            


    

     

    
      	
               
      

            	
              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.

            


    

     

    
      	
               
      

            	
              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.

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Executed
as of this 15th day of July, 2009.

    


    
      	
              POKERTEK:

            	 
      	
              DIRECTOR:

            
	 	 	 
	
              By:

            	
              /s/
      Mark D Roberson

            	 
      	
              By:

            	
              /s/
      Joseph J Lahti

            
	
              Print
      Name:

            	
              Mark
      D Roberson

            	 
      	
              Print
      Name:

            	
              Joseph
      J Lahti

            
	
              Title:

            	
              Acting
      CEO & CFO

            	 
      	
              Title:

            	
              Director

            
	
              Date:

            	
              7/15/09

            	 
      	
              Date:

            	
              7/15/09