THIS
      SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
      OR
      THE SECURITIES COMMISSION OF ANY STATE, IN RELIANCE UPON AN EXEMPTION FROM
      REGISTRATION UNDER THE SECURITIES ACT OF 1933, AND, ACCORDINGLY, MAY NOT BE
      OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
      THE
      SECURITIES ACT OF 1933 OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
      TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF SUCH ACT AND IN
      ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, ALL AS EVIDENCED BY A LEGAL
      OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH
      SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

    


    


    UNSECURED
      TERM PROMISSORY NOTE

    


    
      	
              $______________

            	
              Dated:
                February ____, 2007

            


    

    


    For
      Value
      Received,
      Spectre
      Gaming, Inc., a Minnesota corporation (the “Maker”),
      with
      its primary offices located at 14200 23rd Avenue N., Minneapolis, Minnesota
      55447, promises to pay to the order of _____________________________ or its
      registered assigns (the “Payee”),
      upon
      the terms set forth below, the principal sum of _____________________ AND NO/100
      DOLLARS ($________________), plus interest on the unpaid principal sum
      outstanding at the per
      annum
      rate
      equal to fifty-five percent (55%). This Note is not secured by any security
      interest in any of the Company’s assets and the Company has and shall have no
      obligation to provide Payee with any collateral to secure repayment of the
      loan
      evidenced by this Note.

    


    
      	1.	
              Payments.

            


    

    


    
      	
              (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.

            


    

    


    
      	
              (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.

            


    

    


    
      	
              (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.

            


    

    


    
      	
              (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.

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    
      	2.	
              Events
                of Default.

            


    

    


    
      	
              (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):

            


    

    


    
      	 	
              (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;

            


    

    


    
      	 	
              (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;

            


    

    


    
      	 	
              (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

            


    

    


    
      	 	
              (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.

            


    

    


    
      	
              (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.

            


    

    


    
      	
              3.
                

            	
              Adjustments
                to Conversion Price.
                The Conversion Price is subject to adjustment as provided in this
                Section
                3.

            


    

    


    
      	
              (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.

            


    

    


    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

       

    

    
      	
              (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.

            


    

    


    
      	
              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.

            


    

    


    
      	
              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.

            


    

    


    
      	
              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.

            


    

    


    
      	
              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.

            


    

    


    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

       

    

    
      	
              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.

            


    

    


    
      	
              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.

            


    

    


    
      	
              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.

            


    

    


    
      	
              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.

            


    

    


    
      	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.

            


    

    


    
      	
              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:

            


    

    


    
      	
              (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.

            


    

    


    
      	
              (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.

            


    

    


    
      	
              (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).

            


    

    


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

       

    

    
      	
              (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.

            


    

    


    
      	
              (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.

            


    

    


    
      	
              (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.

            


    

    


    
      	
              (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.

            


    

    


    
      	
              (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.

            


    

    


    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

       

    

    
      	
              (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.

            


    

    


    
      	
              (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.

            


    

    


    In
      Witness Whereof,
      the
      undersigned signs this Note as and on behalf of the “Maker” and not as a surety
      or guarantor or in any other capacity.

     

     

    
      	 	
              SPECTRE
                GAMING, INC.:


               

               

               
 

                

              

              Kevin
                M. Greer

              Chief
                Financial Officer

            


    

     

    
      
        
        

      

      
        6