Document:

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.

    

    
      
         

      

      
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    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.

    

    
      
         

      

      
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    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.

    

    
      
         

      

      
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    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.

    

    
      
         

      

      
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    (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

            

    

    
 

     

     

     

     

     

     

     

     

    
      
         

      

      
        7Exhibit
        10.4

    

     

    STOCK
      OPTION AGREEMENT

    

    

    This
      Stock Option Agreement
      (the
“Agreement”)
      is
      made and entered into as of September 12, 2006, by and between Spectre Gaming,
      Inc., a Minnesota corporation (the “Company”),
      and
      Russell C. Mix (“Mix”).
      The
      parties have previously entered into that certain Stock Option Agreement dated
      on or about March 22, 2004 (the “Prior
      Agreement”),
      pursuant to which the Company granted Mix options to purchase up to 600,000
      shares of the Company’s common stock at $1.50 per share. The Prior Agreement
      will be terminated pursuant to a Separation and Release Agreement in final
      form
      mutually acceptable to the parties.

    

    Now,
      Therefore,
      the
      parties hereby agree as follows:

    1. 
Grant
      of Option.
      The
      Company hereby grants Mix an option, hereinafter referred to as the
“Option,”
to
      purchase up to 450,000 shares of Company’s common stock (the “Option
      Shares”).
      The
      entire Option shall be vested as of the date on which the parties execute and
      deliver the above-referenced Separation and Release Agreement.

    

    2. 
Purchase
      Price.
      The
      purchase price of the Option Shares covered by the Option shall be One Dollar
      and No/100 ($1.00) per Option Share.

    

    3. 
Term
      of Option.
      The
      Option shall be exercisable for a period of two years from the date of this
      Agreement; provided,
      however,
      that
      the Option shall immediately terminate upon Mix’s violation of the provisions of
      Section 7 of the Separation Agreement. Upon the expiration or termination of
      the
      Option as set forth above, the Option shall become null and void.

    

    4. 
Method
      of Exercising Option.
      Subject
      to the terms and conditions of this Agreement, the Option may be exercised
      by
      written notice to the Company. Such notice shall state the election to exercise
      the Option and the number of Option Shares in respect of which the Option is
      being exercised, and shall be signed by the person or persons so exercising
      the
      Option. Such notice shall either: (a) be accompanied by payment of the full
      purchase price of such Option Shares, in which event the Company shall deliver
      one or more certificates representing such Option Shares as soon as practicable
      after the notice and payment therefor shall have been received; or (b) fix
      a
      date not less than five nor more than ten business days from the date such
      notice shall be received by the Company for the payment of the full purchase
      price of such Option Shares, at which time the Company shall make delivery
      of
      one or more certificates representing the purchased Option Shares. Payment
      of
      such purchase price may take the form of cash, shares of stock of the Company
      (the total market value of which equals the total purchase price), or any
      combination of cash and shares of the Company, the total market value of which
      equals the total purchase price. Any such notice shall be deemed given when
      received by the Company at its principal place of business. All Option Shares
      purchased upon the exercise of the Option as provided herein shall be fully
      paid
      and non-assessable shares of Company capital stock. Notwithstanding anything
      in
      this Agreement to the contrary, the Option may not be exercised at any time
      after the Company’s delivery to Mix of a written notice that he is in violation
      of the provisions of Section 7 of the Separation Agreement.

    

    5. 
Rights
      of Option Holder.
      Mix, as
      holder of the Option, shall not have any of the rights of a shareholder with
      respect to the Option Shares covered by the Option except to the extent that
      one
      or more certificates for such Option Shares shall be delivered to him upon
      the
      due exercise of all or any part of the Option.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    6. 
Limited
      Transferability.
      The
      Option shall not be transferable (except, in the event of the Mix’s death, by
      will or the laws of descent and distribution to the limited extent provided
      in
      this Agreement) or pursuant to a qualified domestic relations order as defined
      by the Internal Revenue Code of 1986, as amended, or Title I of the Employee
      Retirement Income Security Act, or the rules thereunder, and the Company shall
      not be required to recognize any attempted assignment of such rights by any
      participant. Notwithstanding the preceding sentence, the Option may be
      transferred by the holder thereof to family members, trusts or charities, or
      to
      an affiliate controlled by him. During Mix’s lifetime, the Option may be
      exercised only by him, by his guardian or legal representative or by the
      transferees permitted by the preceding sentence. Except as set forth above,
      the
      Option may not be assigned, transferred, pledged or hypothecated in any way,
      shall not be assignable by operation of law, and shall not be subject to
      execution, attachment or similar process. Any attempted assignment, transfer,
      pledge, hypothecation or other disposition of the Option contrary to the
      provisions hereof, and the levy of any execution, attachment or similar process
      upon the Option shall be null and void and without effect.

    

    7. 
General.
      The
      Option is a non-qualified stock option, and is subject to the terms and
      conditions of the Company’s 2004 Stock Option Plan. The Company shall at all
      times during the term of the Option reserve and keep available such number
      of
      Option Shares as will be sufficient to satisfy the requirements of this
      Agreement.

    

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

    

    

      
        	
              	SPECTRE
                GAMING, INC.:
	 	 	 
	 	 	 
	 	 	 
	
              	
                By

              	
                /s/
                  D. Bradly
                  Olah                                                
                  

              
	 	 	
                D.
                  BRADLY OLAH, President

              
	 	 	 
	 	 	 
	 	 	 
	 	 	
                /s/
                  Russell C.
                  Mix                                               
                  

              
	
              	 	
                RUSSELL
                  C. MIX

              

      

    

     

     

     

    
      
         

      

      
        2

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