Exhibit 10.3
 
CONSULTING AGREEMENT

This Consulting Agreement (the “Agreement”) is entered into as of September 13,
2006, by and between Russell C. Mix (“Consultant”), whose principal address is
______________________, and Spectre Gaming, Inc., a Minnesota corporation
(the “Company”), with its principal place of business located at 14200 23rd
Avenue N., Minneapolis, Minnesota 55447. The parties are entering into this
Agreement in connection with that certain Separation and Release Agreement by
and between the parties and of even date herewith (the “Separation Agreement”).

1.  Consulting Services; Consulting Fee. The Company hereby retains the services
of Consultant in connection with strategic legal and regulatory compliance
matters, strategic general business consulting services, and assisting the
Company with the identification, hire (by the Company) and training of one or
more persons (within the first two months of the term of this Agreement) who
will focus on providing the Company with long-term legal and regulatory
compliance services (collectively referred to herein as the “Services”).
Consultant will provide the Services on a part-time and as-needed basis.
Consultant will be paid an annual consulting fee of Ninety-Nine Thousand One
Hundred Sixty-Two and No/100 Dollars ($99,162.00), payable in arrears on a once
monthly basis in installments as follows (the “Consulting Fee”): (a) for the
first two months after the date hereof, $14,166 per month; and for the remainder
of the term of this Agreement, $7,083 per month.

2.  Independent Contractor. Consultant is an independent contractor, and
Consultant’s employees, affiliates, assistants, contractors, agents and
representatives (if any) are not, and will not be deemed to be, employees of
Company. Consultant will have the right to control and direct the means, manner
and method by which the Services required by this Agreement will be performed.
Nevertheless, the Services of Consultant will conform to all specifications of
the Company. Consultant will have the right to perform the Services required by
this Agreement at any place or location, and at such times, as Consultant may
determine except in those cases where Company requires the Services to be
performed at a specific location and/or during normal work hours; provided,
however, that if the Company so requires Services to be performed at a specific
location, the Company will reimburse Consultant’s reasonable travel expenses.
Consultant will furnish all equipment and materials required to provide the
Services required under this Agreement, except to the extent that Consultant’s
work must be performed on or with Company’s equipment and/or materials.

3.  Term. This Agreement shall commence on the date of its execution and
continue for a one-year period thereafter (the “Term”), subject to early
termination pursuant to the following paragraphs:

(a)  This Agreement shall terminate immediately upon Consultant’s death; and

(b)  The Company may terminate this Agreement for Cause. For purposes of this
Agreement, “Cause” shall mean: (i) any acts or omissions by Consultant which
demonstrate a failure by Consultant to substantially perform the Services
required under this Agreement, or which may otherwise constitute a breach of
this Agreement, and which failure is not cured by Consultant or are not capable
of being cured by Consultant within ten days after the Company delivers written
notice of such failure to Consultant; (ii) Consultant’s conviction of a felony
(whether or not such conviction is pending appeal); (iii) any act of fraud or
misappropriation by the Consultant against the Company or otherwise; (iv)
Consultant’s violation of any terms or conditions of the Separation Agreement,
specifically including but not limited to the provisions of Section 7 of the
Separation Agreement.

 
 

--------------------------------------------------------------------------------

 

4.  Confidentiality.

(a)  For purposes of this Agreement, the term “Confidential Information” shall
include any and all confidential or proprietary information or material
disclosed to or known by Consultant as a consequence of or in any way connected
with this Agreement or the relationship contemplated hereby (in either case, the
“Consulting Relationship”) and which relates to the Company’s business,
financial projections and/or information, trade secrets, know-how, technical
data, software development, licenses, products, marketing and marketing ideas,
accounting, merchandising, sales, relationships, concepts, procedures or
processes and any other proprietary information relating the Company’s business
as it is conducted now or hereafter proposed to be conducted. All information
having been or later disclosed to Consultant, to which Consultant presently has
or later obtains access or of which Consultant is or becomes knowledgeable or
familiar in connection with the Consulting Relationship (whether originated by
the Company, Consultant or by others), whether or not reduced to writing, and
whether or not in human readable or machine readable form, will be presumed to
be Confidential Information hereunder. Confidential Information also includes
any and all information which the Company obtains from a third party and treats
or designates as confidential information, whether or not owned or developed by
Company. Notwithstanding the foregoing, the term “Confidential Information” will
not apply to information which (i) Consultant can establish by documentation was
known to Consultant prior to the date hereof and not otherwise in violation of
Consultant’s confidentiality obligations under the Separation Agreement; (ii) is
lawfully disclosed to Consultant by a third party not deriving such information
from the Company; (iii) is presently in the public domain or becomes a part of
the public domain through no fault of Consultant; or (iv) is independently
developed by the Consultant without the use of Confidential Information, as can
be demonstrated by contemporaneous written evidence.

(b)  Consultant acknowledges that, in the course of the Consulting Relationship,
Consultant will acquire or have access to Company’s Confidential Information,
which is a valuable asset of Company, is proprietary to Company, and properly
the subject of protection. From the date of this Agreement, Consultant will hold
all Confidential Information in the strictest confidence and never directly or
indirectly disseminate, disclose or otherwise make available to any third party,
or use for Consultant’s or any third party’s benefit (other than as expressly
provided in writing), any Confidential Information without the prior express
written consent of the Company. Consultant will at all times maintain control
over any Confidential Information obtained from the Company, and will establish
and maintain safeguards against the destruction, loss, alteration of or
unauthorized access to Confidential Information in Consultant’s possession. Upon
Company’s written authorization permitting Consultant to provide or disclose any
Confidential Information to a third party, Consultant agrees to advise and
inform any third party to whom he, she or it has provided access to the
Confidential Information of its confidential nature, and further agrees to
ensure that any such third party independently agree in writing to be bound by
the terms of this Agreement relating to confidentiality.

(c)  All Confidential Information will at all times remain the sole property of
Company. All documents and tangible items provided to or obtained by Consultant
in connection with the Consulting Relationship which disclose or embody
Confidential Information, and all documents and tangible items created by
Consultant for use in memorializing, recording or analyzing any Confidential
Information (including all copies, recordings, notes or reproductions of any
kind), are the sole and exclusive property of the Company and shall be promptly
returned to the Company or destroyed upon termination of the Consulting
Relationship or the Company’s request.

 
2

--------------------------------------------------------------------------------

 
5.  Inventions.

(a)  Consultant agrees that all “Inventions” (as defined below) shall be the
sole and exclusive property of the Company. More specifically, Consultant hereby
acknowledges and agrees that, to the fullest extent permitted by applicable law,
all Inventions shall be “works made for hire” as defined in 17 U.S.C. § 101, as
amended (and as such concept is similarly defined under any applicable foreign
laws), and as such will constitute the sole and exclusive property of the
Company without any further action required on the part of either party hereto.
To the extent that any Invention does not qualify as works made for hire,
Consultant hereby assigns to the Company any and all rights to all Inventions.
If the foregoing assignment is invalid or ineffective for any reason, then
Consultant hereby grants the Company a perpetual, royalty-free, non-exclusive,
worldwide license to fully exploit any intellectual property or propriety rights
in the Invention, and any patents, copyrights and/or trademarks (or other
intellectual property or propriety registrations or applications) resulting
therefrom. Furthermore, Consultant hereby forever waives and agrees never to
assert any moral rights it may have in all or any part of an Invention, even
after the termination of the Consulting Relationship. To perfect and effectuate
the covenants contained in this Section, Consultant hereby further agrees to:
(i) promptly and fully inform the Company in writing of all Inventions; (ii)
promptly execute and deliver assignment or conveyance documentation to the
Company evidencing that all of Consultant’s rights to all Inventions are the
sole and exclusive property of the Company; and (iii) promptly acknowledge and
deliver to the Company, without charge to the Company but at the Company’s
expense, such written instruments and do such other acts as may be necessary, in
the reasonable opinion of the Company, to obtain and maintain patents and/or
copyright registrations and to vest the entire rights, interest in and title
thereto in the Company.

(b)  Consultant and the Company understand that the provisions of this Agreement
requiring assignment of Inventions to the Company will not apply to any
Invention that meets all four of the following criteria: (i) Consultant develops
such Invention entirely on his, her or its own time; (ii) Consultant develops
such Invention without using Company equipment, supplies, facilities or
Confidential Information; and (iii) does not result from any work performed by
Consultant for the Company; and (iv) does not, at the time of conception or
reduction to practice, directly relate to the Company’s business as conducted
prior to or during the Consulting Relationship or known by Consultant to be
anticipated to be conducted in the future. Any such Invention will be owned
entirely by Consultant, even if developed by Consultant during the term of this
Agreement or otherwise during the Consulting Relationship. Finally, Consultant
agrees and covenants that Consultant will not individually file any patent
applications relating to Inventions without first obtaining an express release
from a duly authorized Company representative.

(c)  For all purposes of this Agreement, the term “Inventions” means all
discoveries, improvements, inventions, ideas and works of authorship, whether
patentable or copyrightable or able to be trademarked, including all associated
rights thereto under any copyright, trademark and/or patent applications,
registrations, continuations in part, extensions, and granted applications
extending patent, copyright or trademark protections, regardless of whether
conceived or made by Consultant solely or jointly with others, and relating to
any consultation, work or services performed by Consultant with, for on behalf
of or in conjunction with the Company or based on or derived from Confidential
Information.

 
3

--------------------------------------------------------------------------------

 

6.  Non-Solicitation.

(a)  During the Restricted Period (as defined below), Consultant agrees that he
will not, without the prior written consent of the Company, directly or
indirectly (a) induce, solicit, endeavor to entice or attempt to induce any
customer, supplier, licensee, licensor or other business relation of the Company
to cease doing business with the Company, or in any way interfere with the
relationship between any such customer, vendor, licensee, licensor or other
business relation and the Company, or (b) induce, solicit or endeavor to entice
or attempt to induce any employee of the Company to leave the employ of the
Company, or to work for, render services or provide advice to or supply
Confidential Information to any third person or entity, or to in any way
interfere adversely with the relationship between any such employee and the
Company.

(b)  For all purposes of this Agreement, the term “Restricted Period” means the
term of this Agreement and a one-year period after the expiration or termination
of this Agreement, and shall include an extension to such restricted period
equal to the length of time during which any covenant under this Section is
violated.

7.  Representations and Warranties. Company and Consultant hereby represent and
warrant to each other that their respective execution, delivery and performance
of this Agreement will not (a) violate or breach Company’s or Consultant’s
articles of incorporation or corporate bylaws, as applicable, (b) result in a
breach of any of the terms or conditions of, or constitute a default under, any
mortgage, note, bond, indenture, agreement, license or other instrument or
obligation to which Company or Consultant is now a party or by which any of them
or any of their respective properties or assets may be bound or affected, or
(c) violate any order, writ, injunction or decree of any court, administrative
agency or governmental body in any respect, the violation or breach of which
would prevent the Company or Consultant from consummating the transactions
contemplated herein. Moreover, the parties hereby represent and warrant that no
consents of any third parties or governmental authorities are required for
Company and Consultant to enter into this Agreement.

8.  Arbitration.

(a) The parties will resolve any disputes relating to the Agreement through
amicable negotiations. Failing an amicable settlement, any controversy, claim or
dispute arising under or relating to this Agreement, including the existence,
validity, interpretation, performance, termination or breach of this Agreement,
will finally be settled by binding arbitration before a single arbitrator (the
“Arbitration Tribunal”) which will be jointly appointed by the parties. The
Arbitration Tribunal shall self-administer the arbitration proceedings utilizing
the Commercial Rules of the American Arbitration Association (“AAA”); provided,
however, the AAA shall not be involved in administration of the arbitration. The
arbitrator must be a retired judge of a state or federal court of the United
States or a licensed lawyer with at least ten years of corporate or commercial
law experience.

(b) The arbitration will be held in Denver, Colorado. Each party will have
discovery rights as provided by the Federal Rules of Civil Procedure within the
limits imposed by the arbitrator; provided, however, that all such discovery
will be commenced and concluded within 60 days of the selection of the
arbitrator. It is the intent of the parties that any arbitration will be
concluded as quickly as reasonably practicable. The arbitrator will use all
reasonable efforts to issue the final written report containing award or awards
within a period of five business days after closure of the proceedings. Failure
of the arbitrator to meet such time limits will not be a basis for challenging
the award. The Arbitration Tribunal will not have the authority to award
punitive damages to either party. Each party will bear its own expenses, but the
parties will share equally the expenses of the Arbitration Tribunal. The
Arbitration Tribunal may award attorneys’ fees and other related costs payable
by the losing party to the successful party as it deems equitable. This
Agreement will be enforceable, and any arbitration award will be final and
non-appealable, and judgment thereon may be entered in any court of competent
jurisdiction. Notwithstanding the foregoing, claims for injunctive relief may be
brought in a state or federal court in Minneapolis, Minnesota.

 
4

--------------------------------------------------------------------------------

 
9.  Indemnification. Each party agrees to indemnify and hold harmless the other
party from and against all claims, demands, suits, losses, damages, costs, and
expenses (including without limitation attorney’s fees) arising out of or
relating to any breach (intentional or otherwise) by such party of any
representations, warranties, agreements, covenants, obligations or other terms
or conditions of this Agreement.

10.  Injunctive Relief. The Consultant acknowledges and agrees that it would be
difficult to fully compensate the Company for damages resulting from the breach
or threatened breach of the covenants contained in Sections 4 through 6 of this
Agreement, and that any such breach would cause the Company irreparable harm.
Accordingly, the Company will be entitled to seek injunctive relief, including
but not limited to temporary restraining orders, preliminary injunctions and
permanent injunctions, to enforce the terms hereof, without the need to
demonstrate irreparable harm. This right to injunctive relief will not, however,
diminish any of the Company’s other legal rights hereunder or at law.

11.  General Provisions.

(a)  This Agreement contains the entire understanding of the parties with regard
to all matters contained herein, and supersedes all prior agreements relating to
the matters contained herein. This Agreement may be amended only in a writing
signed by both parties.

(b)  This Agreement shall be construed in accordance with the laws of the State
of Minnesota applicable to contracts made and to be performed within Minnesota,
without regard to its conflicts-of-law principles.

(c)  Any termination of this Agreement will not release either party from any
obligations or liabilities that remain to be performed, or by their nature would
be intended to be applicable following any such termination, including but not
limited to the covenants contained in Sections 4 though 6 hereof.

(d)  This Agreement is and shall be binding upon the heirs, personal
representatives, legal representatives, successors and assigns of the parties
hereto; provided, however, that Consultant may not assign its obligations or
delegate its duties under this Agreement.

(e)  If any provision of this Agreement shall be held by any court of competent
jurisdiction to be illegal, invalid or unenforceable, such provision shall be
construed and enforced as if it had been more narrowly drawn (or limited in
scope, including geographic and/or temporal scope) so as not to be illegal,
invalid or unenforceable, and such illegality, invalidity or unenforceability
shall in no event have any effect upon or impair the enforceability of any other
provision of this Agreement.

(f)  Any notice to be given under this Agreement shall be in writing and shall
be effective (i.e., deemed given) upon personal delivery, upon the day after
sending by next-day courier to the address set forth in the introductory
paragraph of this Agreement, or upon the third day after mailing by registered
or certified mail, postage prepaid with return-receipt requested, addressed to
the recipient party at the address set forth in the introductory paragraph of
this Agreement. Each party may change its or his address by written notice in
accordance with the previous sentence.

 
5

--------------------------------------------------------------------------------

 
(g)  This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which shall constitute one and the same
agreement. Signatures to this Agreement may be delivered by facsimile or other
means of electronic transmission, and signatures so delivered shall be fully
valid and binding expressions of intent to be bound to the same extent as the
delivery of original signatures.

(h)  Other than as expressly set forth herein, this Agreement is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder, and no third party shall be entitled to rely on the provisions
hereof.

(i)  The parties agree that this Agreement has been jointly drafted and
negotiated by the parties and their respective attorneys and advisors and that
no party may assert an ambiguity in the construction of this Agreement against
another party because the other party allegedly drafted the allegedly ambiguous
provision.

(j)  The headings of Sections hereunder are for convenience and reference only,
and shall not be deemed a part of this Agreement or otherwise affect the
interpretation hereof.

(k)  No consent under and no waiver of any provision of this Agreement on any
one occasion shall constitute a consent under or waiver of any other provision
on such occasion or on any other occasion, nor shall it constitute a consent
under or waiver of the consented-to or waived provision on any other occasion.
No consent or waiver shall be enforceable unless it is in writing and signed by
the party against whom such consent or waiver is sought to be enforced.

*  *  *  *  *

 
 
6

--------------------------------------------------------------------------------

 
 
In Witness Whereof, the undersigned have caused this Agreement to be executed as
of the date first above written.

SPECTRE GAMING, INC.:
CONSULTANT:
                       
By:
/s/ D. Bradly Olah                                
By:
/s/ Russell C. Mix                                 
 
D. Bradly Olah, President
Russell C. Mix

 
 
 
 
 
 
 
 
 
 
7

--------------------------------------------------------------------------------