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Exhibit 10.1




EMPLOYMENT AGREEMENT




     This Employment Agreement is made and entered into on April 16, 2004 (the
“Effective Date”), by and between Spectre Gaming, Inc., a Minnesota corporation
located at 800 Nicollet Mall, Minneapolis, Minnesota, 55402 (the “Company”),
and Russell Mix, with a mailing address of 3100 West Burbank Blvd., Burbank,
California 91505 (the “Executive”).



BACKGROUND




     A. The Company desires to employ Executive as the Company’s Chief
Executive Officer and President in accordance with the terms and conditions of
this Agreement, and wishes to obtain reasonable protection against unfair
competition from Executive following termination of employment and to protect
itself against unfair competition and the use of its confidential business and
technical information.



     B. Executive wishes to provide services to the Company in exchange for
compensation and is willing to grant the Company the benefits of the various
covenants contained herein.



AGREEMENT




     Now, Therefore, in consideration of the foregoing facts, the mutual
covenants set forth herein and for other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:



     1. Employment. The Company hereby employs Executive as the Company’s Chief
Executive Officer and President, and Executive hereby accepts such employment
and agrees to serve the Company to the best of his ability, promoting the
Company’s interests and business and devoting his full business time, energy
and skill to such employment; provided, however, that Executive shall be
entitled to devote a minimal amount of time to Prolific Publishing, Inc. such
that there is no impact on Executive’s duties owed to the Company hereunder.



     2. Duties and Powers. While Executive is employed hereunder, and
excluding any periods of vacation, sick, disability or other leave to which
Executive is entitled, Executive agrees to devote substantially all of
Executive’s attention and time during normal business hours to the business and
affairs of the Company and, to the extent necessary to discharge the
responsibilities assigned to Executive pursuant hereto and under the Company’s
bylaws as amended from time to time, to use Executive’s reasonable best efforts
to perform faithfully and efficiently such responsibilities. In addition,
Executive shall perform such other duties in the nature of a chief executive
officer as the Company’s Board of Directors (the “Board”) or an executive
committee thereof shall reasonably determine from time to time. Executive
shall



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comply with the Company’s policies and procedures; provided, however, that
to the extent such policies and procedures are inconsistent with this
Agreement, the provisions of this Agreement shall control.



     3. Term. This Agreement shall commence on the Effective Date and continue
for a three-year (3-year) period thereafter unless earlier terminated pursuant
to Section 9.



     4. Salary. During the term of this Agreement, the Company shall pay to
Executive a salary of Fourteen Thousand One Hundred Sixty-Six and No/Dollars
($14,166) per month, the equivalent of One Hundred Seventy Thousand and
No/Dollars ($170,000) per year, which shall be paid in installments of Seven
Thousand Eighty-Three and No/Dollars ($7,083) twice per month. On or prior to
the one-year anniversary date of this Agreement, the Board will review and
evaluate the performance of Executive, and may increase Executive’s salary
hereunder. Notwithstanding the foregoing, in the event the Company attains
operating profitability for two consecutive fiscal quarters during the term
hereof, Executive’s annual salary shall thereupon automatically adjust to Two
Hundred Thousand and No/Dollars ($200,000) per year, beginning as of the next
fiscal quarter immediately following such profitable fiscal quarters.




5.      Annual Bonus.(a) Executive and the Board will work together to create
a mutually acceptable bonus plan detailing agreed-upon goals and
objectives for the Company for each fiscal year (or portion thereof)
within ninety (90) days of the Effective Date. The bonus plan shall
provide that if Executive attains certain goals and objectives identified
therein, he shall be entitled to receive a cash bonus equal to at least
one hundred percent (100%) of the salary paid to Executive during such
fiscal year. In addition, the bonus plan may provide, or the Board may
in its discretion determine to grant, additional cash bonus compensation
to Executive for meeting certain other criteria (including exceeding all
goals and objectives by certain amounts or percentages) in a maximum
amount of up to two hundred percent (200%) of the salary paid to
Executive during such fiscal year (or portion thereof).




(b)      At the election of Executive and with reasonable notice to the Board,
all or any portion of any cash bonus payments under paragraph (a) above
shall be satisfied by the issuance of options to purchase common stock of
the Company in lieu of cash, with exercise prices equal to the fair
market value of such common stock on any such date of election. Upon any
such election, Executive shall receive options whose aggregate value,
determined by using the Black-Scholes method of option valuation, are
equal to the cash bonus payments to which Executive is entitled.



     6. Stock Option Grant. Executive shall receive a non-qualified option to
purchase up to Six Hundred Thousand (600,000) shares of the Company’s common
stock (the “Option”) at an exercise price of One Dollar and Fifty Cents ($1.50)
per share. 60,000 shares of the Option shall vest immediately as of the
Effective Date. The remaining Option shares shall vest as follows:




     (a) 60,000 shares shall vest on the one-year anniversary of the
Effective Date;



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     (b) 60,000 shares shall vest on the two-year anniversary of the
Effective Date;




     (c) 60,000 shares shall vest on the three-year anniversary of the
Effective Date;




     (d) 60,000 shares shall vest on the four-year anniversary of the
Effective Date; and




     (e) The remaining 300,000 shares shall vest on the ten-year
anniversary of the Effective Date or as set forth below, if earlier:




     (i) 60,000 shares shall vest upon the trading of the Company’s
common stock at a per-share price of $3.00 or higher for a period
of twenty (20) consecutive days;




     (ii) 60,000 shares shall vest upon the trading of the
Company’s common stock at a per-share price of $5.00 or higher for
a period of twenty (20) consecutive days;




     (iii) 60,000 shares shall vest upon the trading of the
Company’s common stock at a per-share price of $7.00 or higher for
a period of twenty (20) consecutive days;




     (iv) 60,000 shares shall vest upon the trading of the
Company’s common stock at a per-share price of $9.00 or higher for
a period of twenty (20) consecutive days; and




     (v) 60,000 shares shall vest upon the trading of the Company’s
common stock at a per-share price of $10.00 or higher for a period
of twenty (20) consecutive days.



     The Option shall be governed by the terms of a Stock Option Agreement, in
the form attached hereto as Exhibit A, to be executed and delivered by the
parties hereto contemporaneously with this Agreement or as soon as reasonably
practicable thereafter (the “Stock Option Agreement”).



     7. Other Benefits. Executive shall be entitled to participate in or
receive benefits under any employee-benefit plan made available by the Company
in the future to its executives and key management employees, subject to and on
a basis consistent with the terms, conditions and overall administration of
such plans. Nonetheless, in its sole discretion the Company may amend or
terminate any such employee-benefit plan providing benefits generally to its
employees or its executive officers. Executive shall be entitled to an
aggregate of three (3) weeks of paid vacation in each calendar year.





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     8. Reimbursement of Business Expenses.
Upon presentation of appropriate receipts and/or vouchers, the Company shall
reimburse Executive for the reasonable and necessary expenses he incurs in connection
with the performance of his duties, in
accordance with any and all Company’s policies and procedures governing such
expenses.



     9. Termination.
Notwithstanding the term set forth in Section 3
hereof, this Agreement may be earlier terminated as set forth below:(a)
by the Company without Cause upon 30 days written notice to Executive;




     (b) by Executive with Good Reason upon 30 days written notice to the
Company, where “Good Reason” means: (i) a Change in Control of the
Company (as defined in the Stock Option Agreement); (ii) a material
breach of this Agreement by the Company; or (iii) any material and
adverse diminishment of Executive’s responsibilities and authority under
this Agreement;




     (c) by Executive voluntarily upon at least 30 days written notice to
the Company, specifying an effective date for such termination;




     (d) by the Company, immediately upon written notice to Executive for
the following events, each of which would constitute “Cause”: (i)
Executive is convicted of a felony; (ii) Executive has materially
breached this Agreement; (iii) Executive’s material violation of a
Company policy that has a materially adverse effect on the Company; (iv)
Executive’s failure to perform his duties as the Company’s Chief
Executive Officer as required by this Agreement, which failure has not
been cured by Executive after ten days written notice thereof to
Executive by the Company; or (v) Executive’s consistent failure to meet
the Company’s goals and objectives as identified by the Board;




     (e) upon the death or disability of Executive. For the purposes of
this Agreement, Executive’s “disability” shall occur if Executive shall
become incapacitated by accident or illness and, in the sole
determination of the Board, shall be unable to perform the duties of the
positions he then occupies with reasonable accommodation for a period of
time of not less than 90 consecutive days, and the Company provides 30
days written notice to the Executive at any time after such period of
disability.




     In the event of any termination occurring by virtue of paragraphs
(a) through (e) above, Executive shall be entitled to compensation and
benefits accrued through the effective date of termination; provided,
however, that if there are any damages to the Company arising by virtue
of a termination undertaken by the Company pursuant to paragraph (d)
above, the Company shall be entitled to offset any amounts owed to
Executive against any such damages. Furthermore, if Executive’s
employment is terminated pursuant to paragraphs (a) or (b) above, he
shall continue to receive the salary payments specified in Section 4 for
the one-year period immediately following the effectiveness of any such
termination (the “Severance Payments”).



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     10. Confidential Information.




     (a) Executive will hold all Confidential Information (as defined
below) in the strictest confidence and never use, disclose or publish any
Confidential Information without the prior express written permission of
the Company and its Board. Executive agrees to maintain control over any
Confidential Information obtained, and restrict access thereto to the
Company’s employees, agents or other associated parties who have a need
to use such Confidential Information for its intended purpose. Executive
agrees to advise and inform any party to whom he has provided access to
the Confidential Information of its confidential nature, and further
agrees to ensure that such parties be bound by the terms and obligations
of this Agreement that relate to confidentiality.(b) Upon the Company’s
request, all records and any compositions, articles, devices and other
items which disclose or embody Confidential Information, including all
copies or specimens thereof in Executive’s possession, whether prepared
or made by Executive or others, will be delivered to the Company.




     (c) All documents and tangible items provided to Executive by the
Company or created by Executive for use in connection with his employment
by the Company are the sole and exclusive property of the Company and
shall be promptly returned to the Company upon termination of employment
with the Company, together with all copies, recordings, notes or
reproductions of any kind made from or about the documents and tangible
items or the information they contain.




     (d) For purposes of this Agreement and subject to the following
paragraph, the term “Confidential Information” shall mean all information
developed by Executive as a result of his work with, for, on behalf of or
in conjunction with the Company and any information relating to the
Company’s processes and products, including information relating to
research, development, manufacturing, know-how, formulae, product ideas,
inventions, trade secrets, patents, patent applications, systems,
products, programs and techniques and any secret, proprietary or
confidential information, knowledge or data of the Company. All
information disclosed to Executive or to which Executive obtains access,
whether originated by Executive or by others, which is treated by the
Company as “Confidential Information,” or which Executive has a
reasonable basis to believe is “Confidential Information,” will be
presumed to be “Confidential Information.”




     Notwithstanding the foregoing definition, the term “Confidential
Information” will not apply to information which (i) Executive can
establish by documentation was known to Executive prior to its receipt by
Executive from the Company, (ii) is lawfully disclosed to Executive by a
third party not deriving such information from the Company, or (iii) is
presently in the public domain or becomes a part of the public domain
through no fault of Executive.





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     (e) The Company shall in turn keep all
personal nonpublic information about Executive that the Company may now have or
hereafter
acquire in strict confidence and shall not disclose any such personal nonpublic
information except as
required by law or ordered by a court of competent jurisdiction, or with
the consent, express or implied, of Executive himself.



     11. Inventions. Executive and Company agree that the following
covenants shall bind the parties:




     (a) Executive agrees that any “Invention” (as defined below) shall be the
sole and exclusive property
of the Company, and further agrees to: (i) promptly and fully inform the
Company in writing of such Inventions; (ii) assign to the Company all of
Executive’s rights to such Inventions, and to applications for patents
and/or copyright registrations and to patents and/or copyright
registrations granted upon such Inventions in the United States or in any
foreign country; 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) Executive and the Company understand that the provisions of this
Agreement requiring assignment of Inventions to the Company will not
apply to any particular Invention that: (i) Executive develops entirely
on his own time; and (ii) Executive develops without using Company
equipment, supplies, facilities or trade-secret information; and (iii)
does not result from any work performed by Executive for the Company; and
(iv) does not, at the time of conception or reduction to practice,
directly relate to the Company’s business or to its actual or
demonstrably anticipated research or development. Any such Invention
will be owned entirely by Executive, even if developed by Executive
during the term of this Agreement or otherwise during the time period of
his employment with the Company. Finally, Executive agrees and covenants
that he will not individually file any patent applications relating to
Inventions without first obtaining an express release from a duly
authorized Company representative.




     (c) For purposes of this Agreement, the term “Inventions” means all
discoveries, improvements, inventions, ideas and works of authorship,
whether patentable or copyrightable, conceived or made by Executive
either solely or jointly with others, and relating to any consultation,
work or services performed by Executive with, for on behalf of or in
conjunction with the Company or based on or derived from Confidential
Information.



     12. Restrictive Covenants. Executive agrees that during the period
Executive is employed by the Company (commencing on the date of this
Agreement), including any period thereafter during which Executive is
receiving Severance Payments, Executive will not, without the prior
express written consent of the Company, directly or indirectly, engage in
any of the following actions:




     (a) render services, advice or assistance to
any corporation, person, organization or other entity which engages in
the marketing, selling, production, design or
development of any product, good, service or procedure which is or
may be used as an alternative, or which is or may be sold in competition
with any product, good, service or procedure marketed, sold, produced,
designed or developed by the Company (including products, goods, services
or procedures being researched or under development by the Company
currently or during Executive’s



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employment with the
Company), or engage in any such activities in any capacity whatsoever, including without
limitation as an employee, independent contractor, officer, director,
manager, beneficial owner, partner, member or shareholder; provided,
however, that Executive may be a shareholder of a corporation required to
file periodic reports with the Securities and Exchange Commission under
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended,
where his total holdings are less than one percent (1%) of the issuing
corporation’s issued and outstanding publicly traded securities; or




     (b) 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




     (c) 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 business
information or trade secrets of the Company to any third person or
entity, or to in any way interfere adversely with the relationship
between any such employee and the Company.



     13. Conflicts of Interest. Executive agrees that he will not, directly or
indirectly, transact business with the Company for his own benefit, or as
agent, owner, partner or shareholder of any other entity; provided, however,
that any such transaction may be entered into if approved by all of the
disinterested members of the Board, of which Executive is a member director as
of the date hereof, after full disclosure.



     14. Further Assurances. Each party shall, without further consideration,
execute such additional documents as may be reasonably required in order to
carry out the purpose and intent of this Agreement.



     15. Arbitration.




     (a) The parties will, to the greatest extent possible, endeavor to
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 five years of
corporate or commercial law experience and have at least an AV
rating by Martindale Hubbell. If the parties cannot agree on an
arbitrator, either party may request the AAA to appoint an arbitrator
which appointment will be final.



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     (b) The arbitration will be held in that particular State and
municipal location in which the Company’s headquarters, at the time of
any such arbitration’s institution, is located. 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. Once
commenced, the hearing on the disputed matters will be held four days a
week until concluded, with each hearing date to begin at 9:00 a.m. and to
conclude at 5:00 p.m. 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 the time limits of this Section 15 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 shall 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 the particular
State and municipal location in which the Company’s headquarters is then
located.



     16. General Provisions.




     (a) This Agreement shall be interpreted and enforced in accordance
with the laws of the State of Minnesota without regard to its
conflicts-of-law provisions. The venue for any action hereunder shall be
in that particular State in which the Company’s headquarters shall, at
the time of any such action’s institution, be located.




     (b) 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 so as not to be illegal, invalid or unenforceable, and such
illegality, invalidity or unenforceability shall have no effect upon and
shall not impair the enforceability of any other provision of this
Agreement.




     (c) This Agreement contains the entire understanding of the parties
with regard to all matters contained herein, except for the terms and
conditions of the Stock Option Agreement referenced in Section 6. There
are no other agreements, conditions or representations, oral or written,
expressed or implied, with regard to the matters contained in this
Agreement other than those referenced in this paragraph. This Agreement
supersedes all prior agreements relating to the matters contained herein.




     (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 Executive may not assign this
Agreement because the services to be rendered hereunder are unique and
personal in nature.



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     (e) This Agreement may be amended only in writing, signed by both
parties. Any waiver by either party of compliance with any provision of
this Agreement by the other party shall not operate or be construed as a
waiver of any other provision of this Agreement, or of any subsequent
breach by such party of a provision of this Agreement.




     (f) Any notice to be given under this Agreement by either Executive
or the Company shall be in writing and shall be effective upon personal
delivery or delivery by mail, registered or certified, postage prepaid
with return receipt requested. Mailed notices shall be addressed to the
party at the address set forth at the beginning of this Agreement, but
each party may change its or his address by written notice in accordance
with this paragraph. Notice delivered personally shall be deemed given
as of actual receipt and mailed notices shall be deemed given as of three
business days after mailing.




     (g) The parties hereby mutually represent and warrant that they are
authorized to execute and deliver this Agreement, that this Agreement
will be valid and enforceable against each party upon their execution and
delivery of the same, and that there are no restrictive agreements
binding them which may affect their ability to perform their respective
obligations hereunder.




     (h) If any party is made or shall become a party to any litigation
(including arbitration) commenced by or against the other party involving
the enforcement of any of the rights or remedies of such party, or
arising on account of a default of the other party in its performance of
any of the other party’s obligations hereunder, then the parties shall
bear their own expenses and attorneys’ fees.




     (i) This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which shall
constitute one and the same agreement. Signatures delivered by facsimile
and other means of electronic communication shall be valid and binding to
the same extent as original signatures.



Signature Page Follows




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     IN WITNESS WHEREOF, the parties have executed this Employment Agreement to
be effective as of the Effective Date.



	 	 	 
	

	 	COMPANY:
	 
	 	 
	

	 	SPECTRE GAMING, INC.
	

	 	a Minnesota corporation
	 
	 	 
	

	 	/s/ Ronald E. Eibensteiner
	

	 	
 
	

	 	RONALD E. EIBENSTEINER, Chairman
	 
	 	 
	

	 	EXECUTIVE:
	 
	 	 
	

	 	/s/ Russell Mix
	

	 	
 
	

	 	Russell Mix







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