GLOBAL CASINOS INC (Form: 8-K, Received: 12/03/2009 13:40:20)

LOAN DOCUMENT

PURCHASE AND ASSIGNMENT AGREEMENT

THIS LOAN DOCUMENT PURCHASE AND ASSIGNMENT AGREEMENT (the “Agreement”), is effective this 30 ^th day of November, 2009 (the “Effective Date”), by and between ASTRAEA INVESTMENT MANAGEMENT, LP as trustee (“Assignor” or “Seller”), and GLOBAL CASINOS, INC. (“Assignee” or “Buyer”),

RECITALS

Assignor is a party to certain loan documents which evidence a loan by Assignor to Casinos, USA, Inc. (“Casinos” or “Borrower”), and more particularly described on Exhibit A attached hereto and incorporated herein by this reference and collectively referred to herein as the “Loan Documents.”

Assignee desires to purchase all of Assignor’s rights, title, and interest in and to the Loan Documents, and Assignor is willing to do so on the terms and conditions set forth in this Agreement.

Further, Assignor is willing to transfer to Assignee all of Assignor’s rights, title, and interest in and to the Loan Documents on the terms and conditions set forth herein.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing Recitals, the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Purchase of Loan Documents . At the Closing (defined below), Assignor shall sell, and Assignee shall buy, the Loan Documents; in consideration, Assignee shall pay to Assignor the sum of Seven Hundred Twenty-One Thousand Twenty Dollars and 51/100 Dollars ($721,020.51) plus accrued interest of $474.10 per day from November 18, 2009 to the closing date (the “Purchase Price”).

Payment of Purchase Price . Buyer shall remit the Purchase Price to Seller at Closing by delivering to Seller a cashier's check therefor or, at the Seller's option, by wire transfer thereof in immediately available funds to an account designated by Seller.

(a)

Any interest and/or principal payments under the Note received by Seller prior to the Closing shall be for the account of Seller.

(b)

Any interest and/or principal payments under the Note received by Buyer or Seller after the Closing shall be for the account of Buyer.

(c)

In the event Seller receives any principal on the Loan Documents between the date hereof and the Closing Date, such payments shall be for the account of the Seller and the Purchase Price will be reduced by the amount of such principal reduction.

Closing . Closing of the transactions contemplated hereunder (“Closing”) shall occur at a time and place mutually agreed upon by the parties hereto, but in no event later than 1:00 p.m., November 30, 2009. Assignee will be responsible for its legal costs and for the administrative closing costs of the transaction (filing fees, title insurance, etc.), and at Closing, will pay $4,000 to Assignor to cover Assignor’s legal costs.

Assignment of Loan Documents . At Closing, Assignor shall assign to Assignee the Loan Documents free and clear of any liens, encumbrances, pledges or claims of third parties, without recourse and without representation or warranty except as set forth in this Agreement. The form of the executed Assignments to be delivered at Closing by Assignor are attached hereto as Exhibit B, and incorporated herein by reference.

No Merger. The parties acknowledge and agree that it is their intention that all of the Loan Documents will remain in full force and effect after the transactions contemplated by this Agreement have been consummated. To the extent allowed by law, the parties further acknowledge and agree that the interests of Borrower in the Property will not merge with the interests of Assignee in the Property created by the Loan Documents. It is the express intention of each of the parties (and all of the conveyances provided for herein will so recite) that such interests of Borrower and Assignee in the Property will not merge, but be and remain at all times separate and distinct, notwithstanding any union of said interests at any time by purchase, termination or otherwise and that the liens held by Assignee against the Property created by certain of the Loan Documents will remain at all times valid and continuous liens against the Property. Assignee specifically reserve the right to assert all claims held by Assignee against the collateral described in the Loan Documents from time to time after the Closing Date subject, however, to the terms of this Agreement.

Assignor’s Representations . Assignor represents, warrants, and covenants to Assignee the following:

(a)

Assignor has not further assigned, pledged, hypothecated or otherwise transferred any of its rights or interests under the Loan Documents, or any one of the Loan Documents, to any other party or parties and is the owner of such rights and interests; the Loan Documents (except the Deed of Trust listed in Exhibit A, which is also for the benefit of other noteholders referenced therein) are not subject to any other mortgage, security interest, pledge, lien, charge, encumbrance or title retention or other security agreement or arrangement of any nature whatsoever;

(b)

Seller’s assignment of the Loan Documents, and each of them, to Buyer shall be free and clear of any and all mortgage, security interest, pledge, lien, charge, encumbrance or title retention or other security agreement or arrangement of any nature whatsoever of any third party, except any rights of other noteholders referenced in the Deed of Trust;

(c)

To the best of the knowledge of Assignor and except for the Loan Documents listed on Exhibit A hereto, there exist no other agreements, documents, instruments or commitments to which Seller is a party that effects, modifies, impairs or

limits in any manner whatsoever the rights of the holder of the Loan Documents which would be binding upon Buyer or limit, modify or impair the rights of Buyer under the Loan Documents;

(d)

As of Closing, the outstanding and unpaid principal balance of the Note is $721,010.51;

(e)

To the best of the knowledge of Assignor, Exhibit A sets forth a true and complete list of all the agreements, documents, and instruments evidencing or securing the transactions contemplated by the Loan Documents;

(f)

As of Closing, Assignor has no claims or causes of action against Assignee or Borrower, except claims or causes of action arising under the Loan Documents; and

(g)

Assignor is duly authorized by all appropriate corporate action to undertake and perform this Agreement.

Assignee’s Representations and Other Agreements . Assignee represents, warrants and covenants to Assignor the following:

(a)

Assignee has conducted its own investigation and analysis of the Borrower, the Loan Documents, the real property owned by Borrower located in Black Hawk, Colorado and any other collateral securing the Loan Documents (collectively the “Property”) and is not relying on any representations or warranties of Assignor, or any documentation including any underwriting materials, third party reports, including environmental reports, pertaining to the Property or the Borrower, whenever provided to Assignee by Assignor, except for those representations and warranties specifically made by Assignor in this Agreement. Assignee acknowledges that the Borrower is in default under the Loan Documents.

(b)

Assignee is duly authorized by all appropriate corporate action to undertake and perform this Agreement.

(c)

As between Assignor and Assignee, Assignor shall have no liability for and shall have no obligation to indemnify Assignee from any debt, claim, obligation or liability for hazardous waste or other environmental contamination on or in the Property, if any.

(d)

As of the date hereof, Assignee or Borrower have no claims or causes of action against Assignor pertaining to the Property or the Loan Documents or Assignee’s loan secured by the Property.

(e)

Assignee possesses reasonable sophistication in financial matters and has elected to purchase the Loan Documents based on their own investigation, including environmental diligence, and is not relying on any documents, diligence materials,

whenever obtained, or any statements whatsoever by Assignor, other than the Assignor Representations in Section 6.

Further Assurances . Assignee shall, at its own cost and expense, execute, acknowledge, file, and record such further documents and instruments and shall take such other actions as may be reasonably required or appropriate to carry out the intent and purposes of this Agreement including, without limitation, the preparation, execution, and filing of a Form UCC-3. After Closing, Assignor will provide such other and further information or documentation regarding the Loan as Assignee may request, provided such requests are reasonable.

Attorneys’ Fees . In the event of dispute under this Agreement, the prevailing party shall be obligated to pay the non-prevailing party’s (whether or not suit is filed) reasonable attorney’s fees and costs incurred in connection with such dispute, including without limitation any and all costs and fees incurred in any insolvency, bankruptcy or similar proceedings, state or federal, whether voluntarily or involuntarily commenced.

10.

Binding on Heirs and Successors . This Agreement shall be binding on and shall inure to the benefit of the successors and assigns of the parties hereto.

11.

Entire Agreement, Modification, Waiver . This Agreement, together with documents and instruments delivered in connection herewith, contain the entire agreement of the parties relating to the subject matter hereof. Any oral representations, supplements or modifications concerning this Agreement shall be of no force or effect unless contained in a subsequent written modification signed by the party to be charged. No waiver of any of the provisions of this Agreement shall be deemed, or shall constitute, a waiver of any other provision, whether or not similar, nor shall any waiver constitute a continuing waiver. No waiver shall be binding unless executed in writing by the party making the waiver.

12.

Governing Law and Arbitration . This Agreement is executed and intended to be performed in the State of Colorado, and the laws of that State shall govern its interpretation and effect. Any dispute or claim in law or equity between the parties arising out of this Agreement or any resulting transaction which is not settled though mediation within thirty (30) days shall be decided by neutral, binding arbitration in Boulder County, Colorado, and not by court action, except as provided by Colorado law for judicial review of arbitration proceeding. The arbitration shall be conducted in accordance with the rules of either the American Arbitration Association (AAA) or Judicial Arbitration and Mediation Services, Inc. (JAMS). The claimant first filing for the arbitration shall make the selection between AAA and JAMS rules. The parties to arbitration may agree in writing to use different rules and/or arbitrator(s). In all other respects, the arbitration shall be conducted in accordance with the Federal Rules of Civil Procedure. In any arbitration, the prevailing party shall be entitled to recover its costs and attorney’s fees incurred in both the mediation and arbitration. Judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. The parties shall have the right to discovery in accordance with the Federal Rules of Civil Procedure. The filing of a judicial action to enable the recording of a notice of pending action, for order of attachment, receivership, injunction, or other provisional remedies, shall not constitute a waiver of the right to arbitrate under this provision.

13.

Captions . The captions and section headings used herein are for convenience and for ease of reference only and constitute no part of this Agreement or understanding between the parties hereto, and no reference shall be made thereto for the purpose of construing or interpreting any of the provisions hereof.

14.

Survival of Warranties . The warranties and representations, and covenants of the parties hereunder shall survive the transactions contemplated herein

15.

Counterparts . This Agreement may be executed simultaneously in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

16.

Parties in Interest . Nothing in this Agreement, whether express or implied, is intended to confer any rights or remedies under or by reason of this Agreement on any persons other than the parties to it and their respective successors and assigns, nor is anything in this Agreement intended to relieve or discharge the obligation or liability of any third persons to any party to this Agreement, nor shall any provision give any third persons any right of subrogation or action over or against any party to this Agreement.

17.

Singular, Plural, etc. Whenever the singular number is used herein and when required by the context, the same shall include the plural, and the masculine gender shall include the feminine and neuter genders, and the word “person” shall include corporation, firm, partnership, joint venture, trust, estate, or other association.

18.

Invalidity . In the event that any condition, covenant, promise, or other provision herein contained is held to be invalid or void by any court of competent jurisdiction, the same shall be deemed severable from the remainder of this Agreement and shall in no way affect any other covenant, promise, condition, or other provision herein contained. If such condition, covenant, promise, or other provision shall be deemed invalid due to its scope or breadth, such provision shall be deemed valid to the extent of the scope or breadth permitted by law.

19.

Exhibits and Schedules . All Exhibits and Schedules referred to herein are hereby attached hereto and incorporated herein by this reference with the same force and effect as if fully set forth herein

20.

Execution . This Agreement shall be executed in duplicate original. Transmittal of fully-executed signature pages to the other party by facsimile shall be deemed to constitute execution, provided original signature pages are simultaneously transmitted to that party by overnight mail.

21.

Default. Notwithstanding anything herein to the contrary, if either party fails to make the required deliveries at the Closing or otherwise defaults under this Agreement, then the non-defaulting party shall have the right to terminate this Agreement and thereupon this Agreement shall be null and void and of no legal effect whatsoever. If so terminated, each party hereto shall suffer their own losses, costs, expenses or damages arising out of, under or related to this Agreement.

22.

Assignee’s Indemnity. Assignee shall indemnify, defend and hold the Assignor harmless from and against any and all losses, liabilities, damages, costs and obligations, or actions or claims in respect thereof, including reasonable counsel fees, which the Assignor may suffer or incur arising out of or based upon:

(a)

the breach of any representation, warranty, covenant or agreement of Assignee contained in this Agreement; and

(b)

the Assignee's use of any of the Loan Documents after the Closing.

23.

Conditions Precedent to Closing. The obligation of performance by the Assignor and Assignee of their respective obligations under this Agreement is subject to the condition that on the Closing Date no suit, action or other proceeding shall be pending before any court or governmental or regulatory authority which seeks to restrain or prohibit or to obtain damages or other relief in connection with this Agreement or the consummation of the transactions contemplated by this Agreement. The performance of Assignor of its obligations under this Agreement is further subject to the condition that the Assignor has not, on or before the Closing Date, received a tender of funds from or on behalf of the parties obligated under the Loan Documents sufficient to satisfy all obligations thereunder.

24.

Assignor’s Indemnity. Assignor shall indemnify, defend and hold the Assignee harmless from and against any and all losses, liabilities, damages, costs and obligations, or actions or claims in respect thereof, including reasonable counsel fees, which the Assignee may suffer or incur arising out of or based upon the breach of any representation of Assignor contained in Section 6 this Agreement.

25.

Release . In consideration of the covenants contained herein, the receipt and sufficiency whereof are hereby acknowledged, Assignor and Assignee, together with their respective subsidiaries, officers, directors, employees, attorneys, agents, shareholders, successors and affiliates, both past and present, on the other, each hereby irrevocably and unconditionally releases, acquits and forever discharges the other party, together with its affiliates, agents, employees, officers, directors, representatives and successors, of and from any and all charges, complaints, grievances, claims, actions, causes of action, suits, liabilities, obligations, promises, agreements, demands, controversies, rights, damages, costs, debts, losses, expenses (including attorneys' fees and costs actually incurred or to be incurred), from any rights claimed or asserted by any reason and any other rights, whether statutory, contractual, or tortious, known or unknown, foreseen or unforeseen, at law or in equity, including damages and consequences known or foreseen resulting from or which may result from any matter, transaction, fact, occurrence or conduct which has occurred or does or shall otherwise exist, at or prior to the date hereof, including, but not limited to, any and all liability for claims, damages, or causes of action of whatsoever kind, known or unknown. This Release shall become effective at Closing and shall survive the transaction set forth herein.

IN WITNESS WHEREOF, the parties have executed this Agreement as set forth below.

ASSIGNOR:

ASTRAEA INVESTMENT MANAGEMENT, LP

By:

/s/ Bruce Leadbetter__________

Name:

Bruce Leadbetter

Title: Managing Partner

ASSIGNEE:

GLOBAL CASINOS, INC.

By: __ /s/ Clifford L. Neuman __

Name: Clifford L. Neuman

Title: President

EXHIBIT A

LOAN DOCUMENTS

Promissory Note and Loan Agreement dated January 17, 1997, in the original principal amount of $783,103.56, executed by Casinos USA, Inc.

Agreement and Amendment to Promissory Note dated as of August 31, 2002.

Second Amendment to Promissory Note dated March 18, 2008.

Agreement dated March 18, 2008

Deed of Trust executed by Casinos USA, Inc. for the benefit of Astraea Investment Management, LP, dated January 17, 1997, and recorded April 1, 1997, in the real property records of the Clerk & Recorder for Gilpin County, Colorado, (“Records”) at Book 617, Page 464;

Security Agreement dated August 31, 2002 executed by Casinos USA, Inc.

EXHIBIT B-1

ASSIGNMENT OF DEED OF TRUST

THIS ASSIGNMENT is entered into effective this 30 ^th day of November, 2009 by and between Astraea Investment Management, LP , ("Assignor") and Global Casinos, Inc., a Utah corporation ("Assignee").

WITNESSETH

WHEREAS , Assignee is a Beneficiary of that certain Deed of Trust executed by Casinos USA, Inc. dated January 17, 1997 and filed for record in the Clerk and Recorder’s Office of Gilpin County, Colorado on April 1, 1997 in the real property records of the Clerk & Recorder for Gilpin County, Colorado (“Records”) at Book 617, Page 464; (“Deed of Trust”) securing repayment of a promissory note in the original principal amount of $783,103.56 (“the Note”) and encumbering the real property described on Exhibit “A” attached hereto and incorporated herein by reference; and

WHEREAS , Assignor agrees to assign all of its right, title and interest in and to the Deed of Trust to Assignee and is simultaneously assigning the Note to Assignor.

NOW THEREFORE , in consideration of the mutual promises made herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

Assignment . Effective November 30, 2009 (the "Assignment Date"), Assignor hereby assigns, transfers and conveys to Assignee any and all of Assignor's right, title and interest in and to the Deed of Trust, and the right to exercise any and all rights and remedies of the Assignor, thereunder with respect to the Collateral described therein. Assignor represents and warrants that (i) Assignor has the right, power and authority to execute this Assignment; (ii) that to the best of Assignor’s knowledge the Deed of Trust is a good, valid and binding agreement of the parties thereto, and their assignees, and is in full force and effect in accordance with its terms which have not been amended or modified; and (iii) that no act or omission on the part of Assignor has occurred which would constitute a default under the Deed of Trust. Assignor disclaims any further interest in the Deed of Trust.

Binding Effect . This Agreement shall be binding upon the parties hereto, their successors and assigns.

IN WITNESS WHEREOF , the parties have executed this Assignment as of the date first above written.

ASSIGNOR:

ASTRAEA INVESTMENT MANAGEMENT, LP

By:

/s/ Bruce Leadbetter

Its: Managing Partner

ASSIGNEE:

GLOBAL CASINOS, INC.

By:

/s/ Clifford L. Neuman

Clifford L. Neuman, its President

STATE OF TEXAS

)

) ss

COUNTY OF DALLAS

)

The foregoing instrument was acknowledged before me this 30 ^th day of November, 2009, by Bruce Leadbetter as Managing Partner of Astraea Investment Management, LP.

Witness my hand and official seal.

My commission expires: March 5, 2012

/s/ Jessica Turpen

Notary Public

14185 Dallas Pkwy # 1020

Dallas, TX 75254

STATE OF COLORADO

)

) ss

COUNTY OF BOULDER

)

The foregoing instrument was acknowledged before me this 30 ^th day of November 2009, by Clifford L. Neuman, President of Global Casinos, Inc., a Utah corporation.

Witness my hand and official seal.

My commission expires: April 6, 2013

/s/ Melissa A. Perry

Notary Public

1507 Pine Street

Boulder, CO 80302

EXHIBIT A

Lot 5 and the Easterly 30 feet of Lot 4 laying perpendicular to Lot 5, Block 40, City of Black Hawk in the County of Gilpin, State of Colorado

EXHIBIT A-2

ASSIGNMENT OF NOTE

THIS ASSIGNMENT is entered into effective this 30 ^th day of November, 2009 by and between ASTRAEA INVESTMENT MANAGEMENT, LP ("Assignor") and GLOBAL CASINOS, INC., a Utah corporation ("Assignee").

WITNESSETH

WHEREAS , Assignor is the Holder of that certain Promissory Note from Casinos USA, Inc. in the original principal amount of $783,103.56 ("Note"); and

WHEREAS , Assignor desires to assign all of its right, title and interest in and to the Note to Assignee.

Assignment . Effective November 30, 2009 (the "Assignment Date"), Assignor hereby assigns, transfers and conveys to Assignee any and all of Assignor's right, title and interest in and to the Note and the right to collect all sums due thereunder. Assignor represents and warrants that (i) Assignor has the right, power and authority to execute this Assignment; (ii) that the Note is the good, valid and binding agreement of the parties thereto and their assignees and is in full force and effect in accordance with its terms which were amended pursuant to the “Agreement and Amendment to Promissory Note” effective September 17, 2002 and the “Agreement” effective March 18, 2008. Assignor disclaims any further interest in the Note and any further right to collect sums due thereunder.

Acceptance and Indemnification . Assignee hereby accepts the foregoing assignment and transfer and promises to observe and perform all services and obligations required under the Note accruing on or after the Assignment Date or otherwise attributable to the period commencing on said date and continuing thereafter for so long as the Note remains in full force and effect. Assignee shall indemnify, defend and hold harmless Assignor, its affiliates, agents and assigns, from any and all claims, demands, actions, causes of action, suits, proceedings, damages, liabilities, costs and expenses of every nature whatsoever, including attorneys' fees, which arise from or relate to the Note on or after the Assignment Date.

Binding Effect . This Agreement shall be binding upon the parties hereto, their successors and assigns.

IN WITNESS WHEREOF , the parties have executed this Assignment as of the date first above written.

ASSIGNOR:

ASTRAEA INVESTMENT MANAGEMENT, LP

By: /s/ Bruce Leadbetter

Its: Managing Partner

ASSIGNEE:

GLOBAL CASINOS, INC.

A Utah corporation

By: /s/ Clifford L. Neuman

Clifford L. Neuman, its President

ALLONGE AND LOAN PARTICIPATION AGREEMENT

THIS ALLONGE and LOAN PARTICIPATION AGREEMENT is made and entered into effective the 30 ^th day of November, 2009, by and among Global Casinos, Inc. (“Global”), and William P. Martindale, (“Martindale”) (hereinafter individually and collectively referred to as “Participant” or “Participants”), and Casinos USA, Inc, (“Casinos”).

Recitals

The Participants are desirous of jointly owning and participating, as tenants in common, in the loan by Astraea Investment Management, LP (“Astraea”) to Casinos, USA, Inc. (“Casinos” or “Borrower”) evidenced by a Promissory Note in the original principal amount of Seven Hundred Eighty Three Thousand One Hundred Three 56/100ths Dollars ($783,103.56) dated as of January 17, 1997 (the “Note”), and including all security documents, including but not limited to the: Senior Deed of Trust; Security Agreement with respective UCC and Fixture Filings; Stock Pledge Agreement and any other security instrument executed as security for the loan, (collectively “the Loan”). Exhibit A hereto sets forth all of the documents and agreements comprising the Loan and security documents (collectively the “Loan Documents”).

The Loan is and shall continue to be secured by a first priority deed of trust secured by that certain real property located in the City of Black Hawk, County of Gilpin, State of Colorado commonly known as 110 Main Street, Black Hawk, Colorado, and recorded in the records of the Gilpin County Clerk and Recorder on April 1, 1997 at Book 617, Page 464. The Loan is and shall also continue to be secured by a security interest in all personal property, fixtures and improvements (tangible and intangible) owned by or under assignment to the Borrower.

The Participants are desirous of appointing Global as the Loan Servicing Agent to perform and handle all of the necessary financing, accounting and other matters as more particularly described below which relate to the loan.

Agreement

In consideration of the mutual covenants and undertakings hereinafter set forth, including the reciprocal waiver and/or release of any pre-existing duties of a prior Loan Agreement that conflict with this Loan Agreement, the parties agree as follows:

Participation.

For and in consideration of the payment to Global in the amount of $250,000, Global hereby transfers and assigns to Martindale an undivided interest in the Note set forth herein. Each Participant shall own and participate in the Loan as follows: (i) Global shall own an undivided 65.3% interest in the Note (the “Global Interest”), and (ii) Martindale shall own an undivided 34.7% interest in the Note

(the “Martindale Interest”). The Global Interest and Martindale Interest shall be of equal rank.


	Amount	%
Global Interest	$471,020.51	65.3
Martindale Interest	$250,000	34.7
Legal Balance of Note	$721,020.51	100.000%

Allonge and Note Modification. Effective as of the date of this Agreement, the parties agree that the terms of the Note shall be modified as follows:

Maturity Date: Subject to and contingent upon Lisa Montrose agreeing to a three year extension of her loan to Borrower upon terms and conditions acceptable to Global and Martindale (the “Montrose Note”), the maturity date of the Note shall be extended to December 31, 2012 (the “Maturity Date”), upon which date all outstanding principal, accrued interest and any unpaid fees and costs shall be immediately due and payable. If the Montrose Note is not extended and remains in default, then the Note shall continue to be fully matured and in default.

Interest:

The outstanding principal balance due under the Note shall accrue interest at the rate of 12% per annum.

Payments:

Monthly payments of principal and interest in the amount of $12,712.95 shall be due and payable on or before the first day of each month until the Maturity Date. Payments are based upon a seven (7) year amortization.

Collateral. Borrower hereby acknowledges and agrees that the Property and all Collateral pledged to Participants as security for the Loan shall continue to secure the Loan in the same priority position and is not changed or altered in any way by this Modification.

Collections and Distributions.

The Participants hereby appoint Global to serve as the Loan Servicing Agent to collect payments from Borrower.

Notwithstanding the fact that the Global Interest and Martindale Interest are of equal rank, Global agrees that for so long as the Martindale Interest is outstanding, Borrower shall only make payment against the proportionate share of the Martindale Interest in the Note.

All principal payments by Borrower against the Martindale Interest shall be deemed a purchase by Global and a sale and assignment by Martindale of that principal interest in the Note. Notwithstanding the provisions of this Section 3(c), the Martindale Interest shall not be reduced until such time as Martindale has been paid 100% of the principal amount and all accrued interest attributable to the Martindale Interest,

whereupon Global shall be deemed to have purchased and acquired the Martindale Interest in its entirety.

Representations and Covenants .

The respective parties severally agree as follows:

Participants acknowledge Borrower’s present default under the Loan or the Loan Documents.

Participants have made, or have had the opportunity to make, their own independent evaluations and investigations, including inspections and review of the Borrower’s books and records prior to owning and participating in the Loan.

Global represents and warrants that the Note and Loan Documents are valid agreements of the Borrower and are in full force and effect, fully enforceable except to the extent enforceability may be affected by the laws of bankruptcy or insolvency or principles of equity and that Global has the authority and capacity to sell a participation in its Note.

Major Actions.

Global may:

Purchase Martindale’s participation at any time for the full amount outstanding under the Martindale Interest.

Commence any action or exercise any right, including the right of foreclosure, under the Note or the Loan Documents.

ii.

Neither party shall have the authority to (a) modify or amend any term or condition of the Loan or Loan Documents without consent of the other party, (b.) waive or release the Borrower or any other obligor, including guarantors, under the Loan Agreement or any of the Collateral, or (c.) discharge the Borrower or any other obligor, including the guarantors, except as required by the Loan Agreement or the Collateral... Furthermore, any release or substitution of collateral must be approved by both parties.

iii.

Should either party elect to sell its position in the Note, such party

shall have the obligation to notify the other party of its intention to sell its position (“Notification Date”). Within 10 days from the Notification Date, non-selling party shall have the exclusive right to notify selling party of its desire to take out selling party by payment in full of selling party’s participation (the “Takeout”) within 45 days of the Notification Date.

Loan Participation Fee. In consideration of Martindale’s agreement to purchase the Interest provided for herein, Global agrees to pay Martindale a Loan Participation Fee as follows:

a. Global agrees to pay Martindale an additional interest payment on the outstanding principal balance of the Martindale Interest equal to 1% per annum in year one, 2% per annum in year two and 3% per annum in year three. The additional interest payment shall be payable in equal monthly installments together with other payments under the Note.

b. Global shall issue to Martindale 50,000 shares of common stock upon execution of this Agreement; an additional 50,000 shares of stock on the first anniversary of the date of this Agreement; and an additional 50,000 shares on the second anniversary of the date of this Agreement, provided that on each issue date there remains outstanding and unpaid any amount due and owing under the Martindale Interest.

Administration in the Ordinary Course .

The Loan and the Loan Documents shall be administered by the Loan Servicing Agent as follows:

The Loan and the Loan Documents shall be dealt with and enforced by the Loan Servicing Agent in its sole discretion on the Participants’ behalf. The Loan Servicing Agent will service and manage the Loan and Loan Documents using the same degree of care it would use if it owned the entire Loan, and in conformity with the Loan in the ordinary course of business.

The Loan Servicing Agent shall bear its own internal and usual expenses of servicing the Loan.

All collection or other expenses reasonably incurred by the Loan Servicing Agent in connection with a default of the Loan, including protection of the Loan Documents and Collateral, and all advances made or required to be made by either party to preserve the Collateral, and all recoveries thereof, shall be shared pro rata by each Participant. Each Participant shall be required to contribute its proportionate share of such expenses and/or advances or reimburse the Participant paying such expense or advance its proportionate share.

The Loan Servicing Agent shall provide each Participant prompt written notice of any notice of default of the Borrower under the Loan or the Loan Documents.

The Loan Servicing Agent and its employees and agents shall not be liable to any Participant for any action take or omitted or for error in judgment, except for actions or omissions or errors taken or made in bad faith. The Loan Servicing Agent and its employees and agents do not assume or warrant and shall not have any responsibility or liability, express or implied, for the collectability, enforceability, genuineness, sufficiency or validity of the Loan or the Loan

Documents, or the financial condition or the legal status of the Borrower, or any credit or other information furnished by it to any Participant, except for the information furnished by the Loan Servicing Agent to the Participant as to the Loan Servicing Agent’s capacity to enter into and perform this Loan Participation Agreement.

Replacement of Loan Servicing Agent.

Furthermore, replacement of the Loan Servicing Agent shall occur upon (i) the resignation of the Loan Servicing Agent, (ii) the filing by or against the Loan Servicing Agent of any petition for relief under the bankruptcy laws of the United States, now or hereafter in effect, or any insolvency, readjustment of debt, dissolution or liquidation law or statute now or hereafter in effect, whether any such action or proceeding shall be at law, in equity or under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, receivership, liquidation or dissolution law or statute, (iii) the dissolution of the Loan Servicing Agent, or (iv) the cessation of business by the Loan Servicing Agent, the Participants shall select a new loan servicing agent. In the event the Participants cannot unanimously agree on the selection of a new loan servicing agent, the vote of the majority in interest of the Participants shall be binding as to the selection of the new loan servicing agent.

Other Extensions of Credit to Borrower.

Each party acknowledges and agrees that they, or any of their affiliates, may extend credit other than the Loan, to the Borrower or any of its affiliates. To the extent that any party may have (a.) the right to setoff against, (b.) a lien upon, or (c.) a security interest in, any existing or hereafter acquired property of the Borrower or any of its affiliates, which property is not included within the Collateral, each party shall be under no obligation to exercise any right it may have against such property, or in the event of such exercise to apply the proceeds therefrom on account of the Loan. When used herein, the term “affiliates” shall be interpreted broadly.

10.

Nature of Relationship . The Parties shall each hold their respective Interests as tenants-in-common. The parties do not intend by this Agreement to create a partnership, joint venture or other separate entity for federal or state law purposes, but merely to set forth the terms and conditions upon which each of them shall hold their respective ownership interests in the Note and Loan Documents. Each party hereby agrees to elect to be excluded from the provisions of Subchapter K of Chapter 1 of the Internal Revenue Code of 1986, as amended, (the “Code”), with respect to their undivided ownership interest in the Note and Loan Documents. Each party hereby covenants and agrees that each owner shall report in such owner’s respective federal and state income tax returns such owner’s respective portion of items of income, deduction, loss and credit which result from holding the Note in a manner consistent with the treatment of the co-tenancy as a co-ownership of a negotiable instrument (and not as a partnership) for federal and applicable state tax purposes. Each party hereby agrees to indemnify, protect, defend and hold the other free and harmless from all costs, liabilities, tax consequences and expenses, including, without limitation, attorneys’ fees, which may result from any party notifying the IRS in violation of this Agreement or otherwise taking a contrary position with respect to the IRS. No party shall hold itself out as or represent to a third party that it is a partner with respect to the other. Except as expressly

provided herein, no party is authorized to act as agent for, to act on behalf of, or to do any act that will bind any other or to incur any obligations with respect to the subject matter hereof.

11.

Indemnity . Each party hereby agrees to indemnify, protect, defend and hold the other free and harmless from all costs, liabilities, tax consequences and expenses including, without limitation, attorneys’ fees and costs, which may arise from breach of representations or result from any party so notifying the Commissioner in violation of this Agreement or otherwise taking a contrary position on any tax return, report or other document.

12.

Notice.

All Notices provided for hereunder shall be in writing and shall be deemed given and received when personally delivered or when deposited in the United States mail, postage prepaid, registered or certified mail, return receipt requested, addressed to the applicable party as follows, or at such other address as shall be designated by such party by written notice to the other parties:

Global Casinos, Inc.

1507 Pine Street

Boulder, Colorado 80302

Fax: 303-449-1045

Email: clneuman@neuman.com

William Martindale

5646 Milton Street # 731

Dallas, TX 75206-3935

Fax: (214) 956-7713

Email: snuffcityranch@sbcglobal.net

13.

Counterparts .

This Agreement may be executed in counterparts, each of which shall be deemed to be an original instrument, and all of which together shall constitute one and the same instrument.

14.

Miscellaneous.

This Agreement shall be governed by the laws of the State of Colorado, and may not be amended or modified, except by written instrument signed by each party. This Agreement shall be binding upon each party, their heirs, successors, and assigns.

WITNESS the execution hereof by the parties hereto.

Global Casinos, Inc.

By:_ /s/ Clifford L. Neuman ___

Clifford L. Neuman

William P. Martindale

:__ /s/ William P. Martindale _

Casinos USA, Inc.

By:___ /s/ Douglas James

Douglas James, Authorized Agent