**UNSECURED      TERM PROMISSORY NOTE**

| $______________ | Dated:                February ____, 2007 |
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*per      annum*

| 1. | Payments. |
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| (a) | Subject                to Section 14 below, the full amount of principal and accrued interest                under this Note, net of interest paid in advance pursuant to paragraph                (d)                below, shall be due on the one-year anniversary of the date of this                Note,                as first set forth above (the “Maturity                Date”),                unless due earlier in accordance with the terms of this                Note. |
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| (b) | Maker                may prepay the principal sum and interest under this Note in whole                or in                part until the Maturity Date or such earlier time as the principal                sum and                interest become due in accordance with the terms of this Note. In                the                event of any prepayment, the Maker will not be entitled to recover                any                advance payments of interest made pursuant to paragraph (d)                below. |
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| (c) | Any                payments of principal under and pursuant to this Note shall be made                in                cash, by either check or wire transfer of immediately available funds                to                the Payee pursuant to written instructions from the                Payee. |
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| (d) | Payments                of interest on this Note shall be made in shares of the Maker’s common                stock, $0.01 par value per share, at the valuation rate of $1.10                per share                (the “Conversion                Price”),                subject to adjustment as set forth in Section 3 below. Payment of                one year                of interest on this Note shall be made in advance by issuance of                an                appropriate number of shares of common stock to the Payee on or prior                to                February 15, 2007. In the event of a downward adjustment to the Conversion                Price subsequent to the issuance of shares of common stock as advance                interest payments hereunder, additional shares of common stock will                be due                and payable at the Maturity Date. |
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| 2. | Events                of Default. |
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| (a) | “Event                of Default,”                wherever used herein, means any one of the following events (whatever                the                reason and whether it shall be voluntary or involuntary or effected                by                operation of law or pursuant to any judgment, decree or order of                any                court, or any order, rule or regulation of any administrative or                governmental body): |
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|   | (i) | any                default in the payment of the principal of, or the interest on, this                Note,                as and when the same shall become due and                payable; |
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|   | (ii) | Maker                shall fail to observe or perform any obligation or shall breach any                material term or provision of this Note and such failure or breach                shall                not have been remedied within ten days after the date on which notice                of                such failure or breach shall have been                delivered; |
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|   | (iii) | Maker                shall fail to observe or perform any of its obligations owed to Payee                or                any other material covenant, agreement, representation or warranty                contained in, or otherwise commit any material breach under that                certain                Purchase Agreement by and between the Maker and Payee, dated as of                ____,                2007 (the “Purchase                Agreement”);                or |
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|   | (iv) | Maker                shall commence, or there shall be commenced against Maker a case                under any                applicable bankruptcy or insolvency laws as now or hereafter in effect                or                any successor thereto, or Maker commences any other proceeding under                any                reorganization, arrangement, adjustment of debt, relief of debtors,                dissolution, insolvency or liquidation or similar law of any jurisdiction                whether now or hereafter in effect relating to Maker, or there is                commenced against Maker any such bankruptcy, insolvency or other                proceeding which remains undismissed for a period of 60 days; or                Maker is                adjudicated insolvent or bankrupt; or any order of relief or other                order                approving any such case or proceeding is entered; or Maker suffers                any                appointment of any custodian or the like for it or any substantial                part of                its property which continues undischarged or unstayed for a period                of 60                days; or Maker makes a general assignment for the benefit of creditors;                or                Maker shall fail to pay, or shall state in writing that it is unable                to                pay its debts generally as they become                due. |
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| (b) | If                any Event of Default occurs, then, subject to Section 14 below, the                full                principal amount of this Note, together with all accrued interest                thereon,                shall at the Payee’s election become immediately due and payable in the                manner described in Section 1 above. The Payee need not provide and                Maker                hereby waives any presentment, demand, protest or other notice of                any                kind, and the Payee may immediately and without expiration of any                grace                period enforce any and all of its rights and remedies hereunder and                all                other remedies available to it under applicable law. Such declaration                may                be rescinded and annulled by Payee at any time prior to payment hereunder.                No such rescission or annulment shall affect any subsequent Event                of                Default or impair any right consequent                thereon. |
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| 3. | Adjustments                to Conversion Price.                The Conversion Price is subject to adjustment as provided in this                Section                3. |
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| (a) | The                Conversion Price shall be adjusted from time to time such that in                case the                Company shall hereafter (i) subdivide its then-outstanding shares                of                common stock into a greater number of shares, or (ii) combine outstanding                shares of common stock, by reclassification or otherwise. In any                such                event, the Conversion Price in effect immediately prior to such event                shall (until adjusted again pursuant hereto) be adjusted immediately                after                such event to a price (calculated to the nearest full cent) determined                by                dividing (A) the number of shares of common stock outstanding immediately                prior to such event, multiplied by the then-existing Conversion Price,                by                (B) the total number of shares of common stock outstanding immediately                after such event, and the resulting quotient shall be the adjusted                Conversion Price per share. An adjustment made pursuant to this paragraph                shall become effective immediately after the effective date of any                subdivision, combination or reclassification. If, as a result of                an                adjustment made pursuant to this paragraph, the Payee shall become                entitled to receive shares of two or more classes of capital stock                or                shares of common stock and other capital stock of the Company, the                Board                of Directors (whose determination shall be conclusive) shall determine                the                allocation of the adjusted Conversion Price between or among shares                of                such classes of capital stock or shares of common stock and other                capital                stock. All calculations under this paragraph shall be made to the                nearest                cent. In the event that at any time as a result of an adjustment                made                pursuant to this paragraph, the Payee shall become entitled to receive                any                shares of the Company other than shares of common stock, thereafter                the                Conversion Price of such other shares so receivable upon payment                of                interest hereunder shall be subject to adjustment from time to time                in a                manner and on terms as nearly equivalent as practicable to the provisions                with respect to common stock contained in this                paragraph. |
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| (b) | Upon                any adjustment of the Conversion Price pursuant to Section 3(a) above,                the                Company shall within ten days after the date when the circumstances                giving                rise to the adjustment occurred give written notice thereof, by                first-class mail, postage prepaid, addressed to the Payee, which                notice                shall state the Conversion Price resulting from such adjustment and                the                increase or decrease, setting forth in reasonable detail the method                of                calculation and the facts upon which such calculation is                based. |
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| 4. | No                Waiver of Payee’s Rights.                All payments of principal and interest shall be made without setoff,                deduction or counterclaim. No delay or failure on the part of the                Payee in                exercising any of its options, powers or rights, nor any partial                or single                exercise of its options, powers or rights shall constitute a waiver                thereof or of any other option, power or right, and no waiver on                the part                of the Payee of any of its options, powers or rights shall constitute                a                waiver of any other option, power or right. Maker hereby waives                presentment of payment, protest, and all notices or demands in connection                with the delivery, acceptance, performance, default or endorsement                of this                Note. Acceptance by the Payee of less than the full amount due and                payable                hereunder shall in no way limit the right of the Payee to require                full                payment of all sums due and payable hereunder in accordance with                the terms                hereof. |
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| 5. | Modifications.                No term or provision contained herein may be modified, amended or                waived                except by written agreement or consent signed by the party to be                bound                thereby. |
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| 6. | Cumulative                Rights and Remedies.                The rights and remedies of Payee expressed herein are cumulative                and not                exclusive of any rights and remedies otherwise available under this                Note,                or applicable law (including at equity). The election of Payee to                avail                itself of any one or more remedies shall not be a bar to any other                available remedies, which Maker agrees Payee may take from time to                time. |
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| 7. | Collection                Expenses.                If Payee shall commence an action or proceeding to enforce this Note,                then                Maker shall reimburse Payee for its costs of collection and reasonable                attorneys’ fees incurred with the investigation, preparation and                prosecution of such action or                proceeding. |
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| 8. | Severability.                If any provision of this Note is declared by a court of competent                jurisdiction to be in any way invalid, illegal or unenforceable,                the                balance of this Note shall remain in effect, and if any provision                is                inapplicable to any person or circumstance, it shall nevertheless                remain                applicable to all other persons and                circumstances. |
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| 9. | Successors                and Assigns.                This Note shall be binding upon Maker and its successors and shall                inure                to the benefit of the Payee and its successors and assigns. The term                “Payee” as used herein, shall also include any endorsee, assignee or other                holder of this Note. |
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| 10. | Lost                or Stolen Note.                If this Note is lost, stolen, mutilated or otherwise destroyed, Maker                shall execute and deliver to the Payee a new promissory note containing                the same terms, and in the same form, as this Note. In such event,                Maker                may require the Payee to deliver to Maker an affidavit of lost instrument                and customary indemnity in respect thereof as a condition to the                delivery                of any such new promissory note. |
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| 11. | Governing                Law; Dispute Resolution.                This Note shall be governed by the laws of the State of Minnesota                without                regard to its conflicts-of-law principles. Any judicial action to                enforce                any right of any party under this Note may be brought and maintained,                subject to Section 5.8 of the Purchase Agreement (which is incorporated                herein by this reference), in Minnesota state or federal courts.                Accordingly, the parties hereby submit to the process, jurisdiction                and                venue of any such court. Each party hereby waives, and agrees not                to                assert, any claim that it is not personally subject to the jurisdiction                of                the foregoing courts in the State of Minnesota or that any action                or other                proceeding brought in compliance with this Section is brought in                an                inconvenient forum. |
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| 13. | Notice. Any                and all notices or other communications or deliveries to be provided                by                the Payee hereunder shall be in writing and delivered in accordance                with                the provisions of Section 5.6 of the Purchase                Agreement. |
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| 14. | Subordination.                **By                accepting this Note, the Payee agrees to the subordination of this                Note                and the Company’s obligations hereunder, pursuant to the following                paragraphs:** |
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| (a) | THE                INDEBTEDNESS EVIDENCED BY THIS NOTE IS JUNIOR AND SUBORDINATE TO                ANY                “SENIOR INDEBTEDNESS” (AS DEFINED BELOW) OF THE COMPANY OF EVERY TYPE AND                DESCRIPTION WHICH THE COMPANY MAY NOW OR AT ANY TIME HEREAFTER OWE                (EXPRESSLY INCLUDING COSTS OF COLLECTION AND ATTORNEYS’ FEES), WHETHER                SUCH INDEBTEDNESS NOW EXISTS OR IS HEREAFTER CREATED OR INCURRED,                AND                WHETHER SUCH INDEBTEDNESS IS FIXED OR CONTINGENT, LIQUIDATED OR                UNLIQUIDATED. |
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| (b) | For                all purposes of this Note, the term “Senior                Indebtedness”                means indebtedness of the Company under those certain Variable Rate                Convertible Debentures dated as of August 18, 2006, in aggregate                principal                amount of $8,242,548.70. The term “Senior                Lenders”                means the holders of Senior                Indebtedness. |
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| (c) | Without                the prior written consent of the Senior Lenders, which consent the                Senior                Lenders may withhold for any reason or no reason, the Payee will                not                demand, receive or accept any principal payment from the Company                in                respect of this Note if, as a result of such payment, any default                either                then exists or with the giving of notice or the passage of time would                exist under the Senior Indebtedness (other than any default created                solely                by the issuance of this Note or the Interest Shares, as defined in                the                Purchase Agreement). |
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| (d) | In                the event that the Payee shall receive any payment on this Note which                the                Payee is not entitled to receive under the provisions of the foregoing                subparagraph (c), the Payee will hold the amount so received in trust                for                Senior Lenders and will forthwith turn over such payment to the Senior                Lenders in the form received (except for the endorsement of the Payee,                where necessary) for application against the then-existing Senior                Indebtedness (whether due or not due), *pro                rata*                among the Senior Lenders. In the event of the failure of the Payee                to make                any endorsement required under this Section 14, any and all Senior                Lenders, or any of its officers or employees on behalf of such Senior                Lender(s), are hereby irrevocably appointed as attorney(s)-in-fact                for the                Payee to make the same in the Payee’s                name. |
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| (e) | The                Payee will not commence any action or proceeding against the Company                to                recover all or any part of the unpaid principal amount of this Note,                or                join with any creditor (unless all Senior Lenders shall so join)                in                bringing any proceedings against the Company under any bankruptcy,                reorganization, readjustment of debt, arrangement of debt, receivership,                liquidation or insolvency law or statute of the federal or any state                government, unless and until the then-existing Senior Indebtedness                has                been paid in full. |
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| (f) | In                the event of any receivership, insolvency, bankruptcy, assignment                for the                benefit of creditors, reorganization or arrangement with creditors,                whether or not pursuant to bankruptcy laws, the sale of all or                substantially all of the assets, dissolution, liquidation or any                other                marshalling of the assets or liabilities of the Company, the Payee                will                file all claims, proofs of claim or other instruments of similar                character                necessary to enforce the obligations of the Company in respect of                this                Note and will hold in trust for the Senior Lenders and promptly pay                over                to such Senior Lenders in the form received (except for the endorsement                of                the Payee, where necessary) for application against the then-existing                Senior Indebtedness (whether due or not due), held *pro                rata*                by                the Senior Lenders, any and all monies, dividends or other assets                received                in any such proceedings on account of this Note, unless and until                the                then-existing Senior Indebtedness has been paid in full. In the event                that                the Payee shall fail to take any such action, any Senior Lender,                as                attorney-in-fact for the Payee, may take such action on behalf of                the                Payee. Accordingly, the Payee hereby irrevocably appoints any and                all                Senior Lenders, or any of its officers or employees on behalf of                such                Senior Lender(s), as attorney(s)-in-fact for the Payee with the right                (but                not the duty) to demand, sue for, collect and receive any and all                such                monies, dividends or other assets and give acquittance therefor and                to                file any claim, proof of claim or other instrument of similar character,                and to take such other proceedings in the Senior Lenders’ own name or in                the name of the Payee as such Senior Lenders may deem necessary or                advisable for the enforcement of the agreements contained herein;                and the                Payee will execute and deliver to any and all Senior Lenders such                other                and further powers of attorney or instruments as such Senior Lenders                may                request in order to accomplish the                foregoing. |
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| (g) | This                Section 14 shall constitute a continuing agreement of subordination,                and                the Senior Lenders may continue, without notice to or consent by                the                Payee, to extend or renew any such Senior Indebtedness, and as to                all such                Senior Indebtedness and extensions or renewals thereof, this Section                14                shall continue effective until the same have been fully paid together                with                interest thereon. |
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| (h) | The                Senior Lenders collectively, and any particular Senior Lender, may,                at any                time and from time to time, without the consent of or notice to the                Payee,                without incurring responsibility to the Payee, and without impairing                or                releasing any of its rights or any of the obligations of the Payee                hereunder: (i) change the interest rate or change the amount of payment                or                extend the time of payment or renew or otherwise alter the terms                of any                Senior Indebtedness or any instrument evidencing the same in any                manner;                (ii) release anyone liable in any matter for the payment or collection                of                the Senior Indebtedness or any part thereof; (iii) exercise or refrain                from exercising any right against the Company or others (including                the                Payee); and (iv) apply any sums received by such Senior Lender(s),                by                whomsoever paid and however realized, to Senior Indebtedness in such                manner as the Senior Lender(s) shall deem                appropriate. |
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| (i) | No                waiver shall be deemed to be made by any Senior Lender of any of                its                rights hereunder unless the same shall be in writing and signed on                behalf                of such Senior Lender; and each such waiver, if any, shall be a waiver                only with respect to the specific matter or matters to which the                waiver                expressly relates, and shall in no way impair the rights of that                Senior                Lender or the obligations of the Payee to such Senior Lender in any                other                respect at any other time. |
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| (j) | This                Section 14 and every part hereof shall be binding upon the Payee                and upon                the heirs, legal representatives, successors and assigns of the Payee.                Each Senior Lender is a third-party beneficiary to the provisions                of this                Section 14, and this Section 14 is enforceable against the Payee                by each                Senior Lender and each of its participants, successors and assigns.                Notice                of acceptance by the Senior Lenders of the terms set forth in this                Section                14, and of any reliance by such Senior Lenders upon the subordination                herein contained, is hereby waived by the                Payee. |
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|   | **SPECTRE                GAMING, INC.:**                    Kevin                M. Greer*Chief                Financial Officer* |
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