Document:

Private Placement Memorandum dated October 25, 2010.

							
		  				  	EXHIBIT 10.8
			
		  				  	 Copy No.
                            

			
		  				  	 Presented to:

			
		  				  	 __________________

			
		  				  	 Date: __________________

			
		  				  	

 PRIVATE PLACEMENT MEMORANDUM 

DIAMONDHEAD CASINO 
 CORPORATION 
  

 
 Up To $750,000
of Units Consisting of 
 Unsecured Convertible Promissory Notes and Warrants 

 
  

OCTOBER 25, 2010 
 This confidential private placement memorandum may not be shown or given to any person other than the person whose name appears above and may not be printed or reproduced in any manner whatsoever.
Failure to comply with this directive can result in a violation of the Securities Act of 1933, as amended, and/or the Securities Exchange Act of 1934, as amended, including Regulation FD. Any further distribution or reproduction of these materials,
in whole or in part, or the divulgence of any of the contents by an offeree is unauthorized. 

 DIAMONDHEAD CASINO CORPORATION 

 
  

PRIVATE PLACEMENT MEMORANDUM 
 Up To $750,000 of Units Consisting of 
 Unsecured Convertible Promissory
Notes and Warrants 
  
  

Diamondhead Casino Corporation, a Delaware corporation, is offering to a limited number of accredited investors, Units, each consisting
of: (a) a 9% Interest-bearing, unsecured, convertible Promissory Note in the principal amount of $25,000 convertible into 50,000 shares of our common stock, par value $.001 per share (the “Notes”), and (b) a five-year warrant to
purchase up to 50,000 shares of our common stock, par value $.001 per share, at an exercise price of $1.00 per share (the “Warrants”). 
 The offering is being conducted contingent on a minimum sale of 4 Units or $100,000 (the “Minimum Offering”). The Company may sell up to a maximum of an additional 26 Units, for a maximum
offering of 30 Units or $750,000 (the “Maximum Offering”). The Company intends to offer the securities to accredited or institutional investors through its officers and directors in those jurisdictions where sales by such persons are
permitted by law. No commission or other remuneration will be paid to any officer or director of the Company in connection with any sale of these securities. 
 The offering of Units will terminate upon the earlier of: (a) the sale of 30 Units, or (b) April 30, 2011, unless extended without notice by us for up to two additional 30-day periods (the
“Termination Date”). The minimum subscription is one Unit or $25,000, although we reserve the right to accept a limited number of subscriptions for a fraction of a Unit. We also reserve the right to accept or reject any subscription, in
whole or in part, and any subscription that is not accepted will be returned without interest. You may not revoke a subscription tendered to purchase any Units, except as provided herein. The proceeds from this offering will be placed in an escrow
account established by us at Wachovia Bank. Upon completion of the Minimum Offering prior to the Termination Date, we will be permitted to access these escrowed funds. Thereafter, we will be able to access all net proceeds invested in this offering
after such funds are deposited into the escrow account. If the Minimum Offering is not completed prior to the Termination Date, any subscriptions accepted by us will be returned without interest. 

The securities offered under this Confidential Private Placement Memorandum have not been registered under the Securities Act of 1933,
as amended (the “Securities Act”). This offer is being made pursuant to the exemption provided by Section 4(2) of the Securities Act and certain rules and regulations promulgated under that section. Accordingly, you may not transfer
the offered securities in the absence of an effective registration statement under the Securities Act or evidence acceptable to us and our counsel, which includes an opinion of counsel, that registration is not required. 

The Units are speculative and an investment in them involves a high degree of risk. You must be prepared to bear the economic risk of
this investment for an indefinite period of time and be able to withstand a total loss of your investment. See “Risk Factors” and “Terms of the Offering.” 

  
 2 

 By accepting the information contained in this Confidential Private Placement
Memorandum, the recipient acknowledges its express agreement with us to maintain such information in confidence. We have caused these materials to be delivered to you in reliance upon your agreement to maintain the confidentiality of this
information and upon Regulation FD promulgated by the Securities and Exchange Commission (“SEC”). 
 THESE
SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS MEMORANDUM. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL. 
 THIS MEMORANDUM DOES NOT CONSTITUTE AN OFFER IN ANY JURISDICTION IN WHICH
AN OFFER IS NOT AUTHORIZED. 
  

													
	 	  	Offering Price	 	  	Sales Commissions	 	 	Proceeds to Company	 
	 Minimum Offering
	  	$	100,000	  	  	 	Not Applicable 	(1) 	 	$	100,000	(1) 
	 Maximum Offering
	  	$	750,000	  	  	$	65,000 	(2) 	 	$	680,000	(2)(3) 

  

	(1)	 The Company expects the minimum offering to be placed by its officers and directors. No commission or other remuneration will be paid to any officer
or director of the Company in connection with any sale of these securities. 

	(2)	 The Company may incur sales commissions in the maximum amount of $65,000 if units are placed as a result of the efforts of unrelated, third-party
agents. 

	(3)	 The Company may incur offering-related expenses of approximately $5,000 in connection the maximum offering. 

OCTOBER 25, 2010 

  
 3 

 IMPORTANT NOTICE 

The Units are being offered without registration under the Securities Act of 1933, as amended (“Securities Act”), in
reliance upon the exemption from registration afforded by Section 4(2) of the Securities Act and Regulation D promulgated thereunder. 
 Investment in this offering involves a high degree of risk, and investors should not invest any funds in this offering unless they can afford to lose their entire investment. In making an investment
decision, investors must rely on their own examination of the terms of the offering, including the merits and risks involved. See “Risk Factors.” 
 This confidential memorandum does not constitute an offer to sell, or solicitation of an offer to buy, nor shall any securities be offered or sold to any person in any jurisdiction in which such offer,
solicitation, purchase or sale would be unlawful, prior to registration or qualification under the securities laws of such jurisdiction. 
 The securities offered hereby are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under the Securities Act and applicable state laws
pursuant to registration or exemption therefrom. Prospective investors must acquire the securities for investment, solely for their own account, and without any view towards resale or distribution. Investors should be aware that they will be
required to bear the financial risks of this investment for an indefinite period of time. 
 Only information or
representations contained herein may be relied upon as having been authorized. No person has been authorized to give any information or to make any representations other than those contained in this memorandum in connection with the offer being made
hereby, and if given or made, such information or representations must not be relied upon as having been authorized by the Company. Investors are cautioned not to rely upon any information not expressly set forth in this memorandum. The information
presented is as of the date set forth on the cover page hereof unless another date is specified, and neither the delivery of this memorandum nor any sale hereunder shall create any implication that there have been no changes in the information
presented subsequent to such date(s). 
 Prospective investors are not to construe the contents of this memorandum as
legal, investment, or tax advice. Prospective investors should consult their advisors as to legal, investment, tax, and related matters concerning an investment by such prospective investors in the Company. 

The statements contained herein are based on information believed to be reliable. No warranty can be made as to the accuracy of such
information or that circumstances have not changed since the date such information was supplied. This memorandum contains summaries of certain provisions of documents relating to the business of the Company and the purchase of common stock in the
Company, and such summaries do not purport to be complete and are qualified in their entirety by reference to the texts of the original documents. 

  
 4 

 STATE NOTICES 

NASAA UNIFORM LEGEND. In making an investment decision, investors must rely on their own examination of the person or entity
creating the securities and the terms of the offering, including the merits and risks involved. These securities have not been recommended by federal or state securities commissions or regulatory authorities. Furthermore, the foregoing authorities
have not confirmed the accuracy or determined the adequacy of the offering documents. Any representation to the contrary is a criminal offense. These securities are subject to restrictions on transferability and resale and may not be transferred or
resold except as permitted under the Securities Act, and the applicable state securities laws pursuant to registration or exemption therefrom. Investors should be made aware that they will be required to bear the financial risks of this investment
for an indefinite period of time. 
 For Residents of All States. The presence of a legend for any given state
reflects only that a legend may be required by that state and should not be construed to mean an offer or sale may be made in any particular state. The offering documents may be supplemented by additional state legends. If you are uncertain as to
whether or not offers or sales may be lawfully made in any given state, you are advised to contact the Company for a current list of states in which offers or sales may be lawfully made. An investment in this offering is speculative and involves a
high degree of financial risk. Accordingly, prospective investors should consider all of the risk factors described herein. 

NOTICE TO FLORIDA RESIDENTS: THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE FLORIDA
SECURITIES AND INVESTOR PROTECTION ACT AND THEY, THEREFORE, HAVE THE STATUS OF SECURITIES ACQUIRED IN AN EXEMPT TRANSACTIOIN UNDER FLA. STAT. §517.061 OF THE FLORIDA SECURITIES AND INVESTOR PROTECTION ACT. EACH OFFEREE WHO IS A FLORIDA RESIDENT
SHOULD BE AWARE THAT SECTION 517.061(11)(a)(5) OF THE FLORIDA SECURITIES ACT PROVIDES, IN RELEVANT PART, AS FOLLOWS: “WHEN SALES ARE MADE TO FIVE OR MORE PERSONS [IN FLORIDA], ANY SALE [IN FLORIDA] MADE PURSUANT TO [SECTION 517.061(11)] IS
VOIDABLE BY THE PURCHASER IN SUCH SALE EITHER WITHIN 3 DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY SUCH PUCHASER TO THE ISSUER, AN AGENT OF THE ISSUER, OR AN ESCROW AGENT OR WITHIN 3 DAYS AFTER THE AVAILABILITY OF THAT PRIVILEGE IS
COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER.” 
 THE AVAILABILITY OF THE PRIVILEGE TO VOID SALES PURSUANT
TO SECTION 517.061(12) IS HEREBY COMMUNICATED TO EACH FLORIDA OFFEREE. EACH PERSON ENTITLED TO EXERCISE THE PRIVILEGE TO VOID SALES GRANTED BY SECTION 517.061(11)(a)(5) AND WHO WISHES TO EXERCISE SUCH RIGHT MUST, WITHIN THREE DAYS AFTER THE TENDER
OF THE PURCHASE PRICE OF THE UNITS TO THE COMPANY OR TO ANY AGENT OF THE COMPANY (INCLUDING ANY DEALER ACTING ON BEHALF OF THE COMPANY OR ANY BROKER OF SUCH DEALER) OR AN ESCROW AGENT, CAUSE A WRITTEN NOTICE OR TELEGRAM TO BE SENT TO THE COMPANY AT
THE ADDRESS PROVIDED IN THE MEMORANDUM. SUCH LETTER OR TELEGRAM MUST BE SENT AND, IF POSTMARKED, POSTMARKED ON OR PRIOR TO THE END OF THE AFOREMENTIONED THIRD DAY. IF A PERSON IS SENDING A LETTER, IT IS PRUDENT TO SEND SUCH LETTER BY CERTIFIED MAIL,
RETURN-RECEIPT-REQUESTED, TO ASSURE THAT IT IS RECEIVED AND ALSO TO EVIDENCE THE TIME IT WAS MAILED. SHOULD A PERSON MAKE THIS REQUEST ORALLY, HE MUST ASK FOR WRITTEN CONFIRMATION THAT HIS REQUEST HAS BEEN RECEIVED. 

  
 5 

 NOTICE TO GEORGIA RESIDENTS: THESE SECURITIES HAVE BEEN ISSUED OR
SOLD IN RELIANCE ON PARAGRAPH 13 OF CODE SECTION 10-5-9 OF THE GEORGIA SECURITIES ACT OF 1973, AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT OR PURSUANT TO AN EFFECTIVE REGISTRATION UNDER SUCH ACT.

 NOTICE TO MARYLAND RESIDENTS: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE MARYLAND SECURITIES ACT BY
REASON OF AN EXEMPTION RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE SECURITIES MAY NOT BE TRANSFERRED OR SOLD EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER THE MARYLAND SECURITIES ACT OR PURSUANT TO AN EFFECTIVE REGISTRATION.

 NOTICE TO NEW JERSEY RESIDENTS: THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE BUREAU OF
SECURITIES OF THE STATE OF NEW JERSEY NOR HAS THE BUREAU PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. THE FILING OF THE WITHIN OFFERING DOES NOT CONSTITUTE APPROVAL OF THE ISSUE OR THE SALE THEREOF BY THE BUREAU OF SECURITIES. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL. 
 THESE ARE SPECULATIVE SECURITIES AND INVOLVE A HIGH DEGREE OF RISK. THESE
SECURITIES ARE OFFERED ONLY TO BONA FIDE ADULT RESIDENTS OF THE STATE OF NEW JERSEY. 
 NOTICE TO NORTH CAROLINA RESIDENTS

 THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF THIS MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING MERITS AND RISKS INVOLVED. THE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE
NOT CONFIRMED THE ACCURACY OR ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR SOLD EXCEPT AS PERMITTED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE
PERIOD OF TIME. ALL PURCHASERS MUST BE PURCHASING FOR INVESTMENT. 

  
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 NOTICE TO TEXAS RESIDENTS 

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE TEXAS SECURITIES ACT, BY REASON OF
SEPCIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE SECURITIES CANNOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY REGISTERED OR AN EXEMPTION FROM
REGISTRATION IS AVAILABLE. THE INVESTMENT IS SUITABLE IF IT DOES NOT EXCEED 10% OF THE INVESTOR’S NET WORTH. 

NOTICE TO VIRGINIA RESIDENTS: THE STATE CORPORATION COMMISSION OF VIRGINIA DOES NOT PASS UPON THE ADEQUACY OR
ACCURACY OF THIS DISCLOSURE DOCUMENT NOR UPON THE MERITS OF THIS OFFERING, AND THE COMMISSION EXPRESSES NO OPINION AS TO THE QUALITY OF THE SECURITIES OFFERED. 

  
 7 

 TABLE OF CONTENTS 

 

					
	 	  	Page	 
	 Forward-looking Statements
	  	 	9	  
		
	 The Company
	  	 	9	  
		
	 Terms of the Offering
	  	 	9	  
		
	 Incorporation of Documents by Reference
	  	 	12	  
		
	 Risk Factors
	  	 	12	  
		
	 Use of Proceeds
	  	 	13	  
		
	 Description of Units
	  	 	14	  
		
	 Description of Capital Stock
	  	 	15	  
		
	 Investor Suitability Standards
	  	 	16	  
		
	 Additional Information
	  	 	17	  

  

			
	 	  	 Appendices

	 Subscription Agreement
	  	Appendix A
		
	 Accredited Investor Questionnaire
	  	Appendix B
		
	 Form of Unsecured Promissory Note
	  	Appendix C
		
	 Form of Warrant
	  	Appendix D
		
	 	  	 Exhibits

		
	 Annual Report on Form 10-K for the year ended December 31, 2009
	  	Exhibit A
		
	 Quarterly Report on Form 10-Q for the period ended March 31, 2010
	  	Exhibit B
		
	 Quarterly Report on Form 10-Q for the period ended June 30, 2010
	  	Exhibit C
		
	 Amendment No. 1 to Form 10-K/A for the year ended December 31, 2009
	  	Exhibit D

  
 8 

 FORWARD-LOOKING STATEMENTS 

This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding events, conditions, and financial trends that may effect the Company’s future plans of operation, business strategy, operating results, and financial
position. Diamondhead Casino Corporation is referred to herein as “the Company,” “we,” or “our.” Except for historical information contained herein, the matters discussed in this document, in particular, statements that
use forward-looking terminology such as “believes,” “intends,” “anticipates,” “may,” “will,” “should,” or “expects,” or the negative or other variation of these or similar words,
are intended to identify forward-looking statements that are subject to risks and uncertainties including, but not limited to, increased competition, financing, governmental action, environmental opposition, legal actions, and other unforeseen
factors. The development of the Diamondhead, Mississippi project, in particular, is subject to additional risks and uncertainties, including but not limited to, risks relating to permitting, financing, the availability of capital resources,
licensing, construction and development, litigation, the activities of environmental groups, delays, and the actions of federal, state, or local governments and agencies. Although the Company believes the expectations reflected in such
forward-looking statements are reasonable, there can be no assurance that such expectations are reasonable or that they will be correct. Moreover, the financial results reported herein are not necessarily an indication of future prospects of the
Company. Future results may differ materially. 
 All subsequent written or oral forward-looking statements attributable to the
Company are expressly qualified in their entirety by the cautionary statements included in this document. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information,
future events, or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this document might not occur. 
 THE COMPANY 
 Diamondhead Casino Corporation (stock symbol
“DHCC”) is a publicly-traded company, which owns, through its wholly-owned subsidiary, Mississippi Gaming Corporation, an approximate 404 acre tract of land in Diamondhead, Mississippi. The property fronts Interstate 10 for approximately
two miles and fronts the Bay of St. Louis for approximately two miles. There are no liens and there is no debt on the property. The property is located in Hancock County, Mississippi and is zoned by the county for a casino resort. The property was
last appraised in 2003 at approximately $109 million. The Company intends, in conjunction with one or more partners, to develop the Diamondhead property in phases beginning with a casino resort. 

TERMS OF THE OFFERING 
  

			
	 Issuer of Units
	  	 Diamondhead Casino Corporation

		
	 Unit Composition
	  	 Each Unit is comprised of: (a) a 9% interest-bearing, unsecured, convertible promissory note in the principal amount of $25,000 convertible into 50,000 shares
of our common stock, par value $ .001 per share (the “Notes”); and (b) a five-year warrant to purchase 50,000 shares of our common stock, par value $.001 per share at an exercise price of $1.00 per share (the “Warrants”). The
Note is convertible at the option of the Holder at any time and, at the option of the Borrower, after 180 days or, alternatively, after the price of the Common Stock of the Borrower is at or above One Dollar ($1.00) per share for ten (10)
consecutive business days prior to the date of written notice to the Holder.

  
 9 

			
	 Unit Price
	  	 $25,000 per Unit

		
	 Offering Period
	  	 The offering of Units will terminate upon the earlier of: (a) the sale of 30 Units, or (b) April 30, 2011 unless extended, without notice by us for up to two
additional 30-day periods (the “Termination Date”).

		
	 Size of Offering
	  	 The offering is being conducted contingent on the sale of a minimum of 4 Units, or $100,000 (the “Minimum Offering”) and up to a maximum of 30
Units, for a maximum offering of $750,000 (the “Maximum Offering”).

		
	 Minimum Subscription
	  	 The minimum subscription is one Unit (or $25,000), although we reserve the right to accept a limited number of subscriptions for a fraction of a Unit. We also
reserve the right to accept or reject any subscription, in whole or in part, and any subscription that is not accepted will be returned without interest. You may not revoke a subscription tendered to purchase any Units.

		
	 Redemption
	  	 We may redeem the Warrants issuable as part of the Units:

 

•      at a price of $.001 per share of common stock underlying the
Warrants,
  

•      upon a minimum of 30 days’ prior written notice of redemption,
and
  

•      if, and only if: (a) the last sale price of the common stock equals or
exceeds $2.50 per share for 10 consecutive trading days ending on the third business day prior to the notice of redemption to the Warrant holder, and (b) during each day of the foregoing 10 trading day period and through the date we exercise our
redemption right we must have an effective registration statement with a current prospectus on file with the SEC pursuant to which the underlying common stock may be sold.

 
 We established the last criterion to provide you with a premium to
the initial warrant exercise price, as well as a degree of liquidity to cushion the market reaction, if any, to our redemption call. If the foregoing conditions are satisfied and we call the warrants for redemption, you will then be entitled to
exercise the Warrants prior to the date scheduled for redemption. However, there can be no assurance that the price of the common stock will equal or exceed $2.50 or the warrant exercise price after the redemption call is made.

		
	 Escrow
	  	 The subscription amounts will be placed in an escrow account established by us at Wachovia Bank. Upon completion of the Minimum Offering and prior to the
Termination Date, we will be permitted to access these escrowed funds. If the Minimum Offering is not completed prior to the Termination Date, any subscriptions accepted by us will be returned without
interest.

  
 10 

			
	 Maturity Date
	  	 The Notes will mature on the same date, being two years from the Issue date unless accelerated due to the occurrence of an Event of
Default.

		
	 Interest
	  	 Interest on the Notes is payable semi-annually at a rate of nine percent (9%) per annum. The determination as to whether interest shall be paid in cash or
Common Stock shall be at the sole option of the Borrower.

		
	 Default
	  	 The following will be “Events of Default” under the Notes (after the expiration of any applicable cure period as set forth in the Notes): (a) we
default in the payment of any unpaid principal or accrued interest when due; (b) we default in the observance or performance of any covenants set forth in the Notes; or (c) we incur a bankruptcy event (as further defined in the
Note).

		
	 Use of Proceeds
	  	 We intend to use the proceeds from this offering, depending upon the amount raised, to pay certain current liabilities, to pay partial accrued, but unpaid
salaries, for general corporate purposes and working capital, and to sustain the Company while it seeks additional financing. See “Use of Proceeds.”

		
	 Trading
	  	 Our common stock is traded on the OTC Bulletin Board under the symbol “DHCC.” The Units, the Notes, and the Warrants are not currently listed on any
national securities exchange or other market. It is not anticipated that the Units, the Notes, or the Warrants will ever be listed on any market.

		
	 Restrictions on Transfer
	  	 The securities offered will be restricted as to transferability under state and federal laws regulating securities.
The issuance of the securities has not been registered under the Securities Act, or any other similar state statutes, in reliance upon exemptions from the registration requirements contained therein. Accordingly, the securities will be
“restricted securities” as defined in Rule 144 of the Securities Act. As “restricted securities,” an investor must hold them indefinitely and may not dispose or otherwise sell them without registration under the Securities Act
and any applicable state securities laws unless exemptions from registrations are available. Moreover, in the event an investor desires to sell or otherwise dispose of any of the securities, the investor will be required to furnish us with an
opinion of counsel acceptable to us that the transfer would not violate the registration requirements of the Securities Act or applicable state securities laws.

 
 Any certificate or other document evidencing the
securities will be imprinted with a conspicuous legend stating that the securities have not been registered under the Securities Act and state securities laws and referring to the restrictions on transferability and sale of the securities. In
addition, our records concerning the securities will include “stop transfer notations” with respect to such securities.

		
	 Risk Factors
	  	 See “Risk Factors” and the other information in this memorandum and documents incorporated by reference for factors that you should carefully
consider before deciding to invest in the Units.

  
 11 

 INCORPORATION OF DOCUMENTS BY REFERENCE 

We are incorporating by reference into this memorandum the following documents which we have filed with the Securities and Exchange
Commission (hereafter “SEC”), which means that we are disclosing important information to you by referring you to those documents. We have attached these documents as exhibits to this memorandum and they are incorporated by reference and
made a part of this memorandum to the extent not updated herein. 
  

	 	•	 	 Our Annual Report on Form 10-K for the year ended December 31, 2009 

 

	 	•	 	 Our Quarterly Report on Form 10-Q for the period ended March 31, 2010 

 

	 	•	 	 Our Quarterly Report on Form 10-Q for the period ended June 30, 2010 

 

	 	•	 	 Amendment No. 1 to Form 10-K/A for the year ended December 31, 2009 

RISK FACTORS 
 The Units being offered hereby are speculative, involve a high degree of risk, and should only be purchased by those who can afford to lose their entire investment. Therefore, prospective investors should
carefully consider the following risk factors related to this offering as well as other risks before making an investment decision. Any of the following risks could adversely and materially affect our business or financial condition and as a result,
the value of the Units may decline substantially. 
 In addition, as indicated above under “Incorporation of Documents by
Reference,” we have incorporated documents by reference, including our Annual Report on Form 10-K and Amendment No. 1 thereto for the fiscal year ended December 31, 2009, our Form 10-Q for the period ended March 31, 2010 and our
Form 10-Q for the period ended June 30, 2010. Item 1A of these reports discloses and discusses various risk factors that investors should consider in addition to the risks set forth herein. 

Investors should consult with their own financial, legal and tax advisors prior to subscribing for Units. 

Risks Related to this Offering 
 The Notes are our unsecured obligations and no sinking fund has been created to repay the Notes. 
 The Notes are our unsecured obligations. Additionally, we do not intend to create a sinking fund for the Notes. As such, the Notes will be repaid by us from available cash at the maturity date. There can
be no assurance that we will have such cash available. 
 There is a limited market for our common stock and there are substantial
restrictions on the transferability of the securities offered herein. 
 There is no market for the Units, Notes, or
Warrants, and the market for our common stock is limited, volatile, and sporadic. Accordingly, purchasers of our securities offered hereby will be required to bear the economic consequences of holding such securities for an indefinite period of
time. Since the securities have not yet been registered under applicable federal and state securities laws, all such securities sold in connection with this offering will be “restricted securities.” Therefore, such securities offered
hereby cannot be sold or otherwise disposed of except in transactions that are subsequently registered under applicable federal and state securities laws, or in transactions exempt from such registration. While there are no blanket exemptions for
the resale of unregistered securities, the SEC has promulgated a uniform resale rule (“Rule 144”) that is generally applicable to the holders of restricted securities of companies whose securities are traded on a public market. Because the
securities have not been registered, persons acquiring the securities in connection with this offering will be required to represent in writing that they are purchasing the same for investment only and not with a view to, or for sale in connection
with, any subsequent distribution thereof. All certificates which evidence the securities offered hereby will be inscribed with a printed legend which clearly describes the applicable restrictions on transfer or resale by the owner thereof.

  
 12 

 If the Company does not continue to raise adequate capital in the future, it will be
unable to continue as a going concern and the Company may be required to issue future financial statements on a liquidation basis. 
 The Company has expended all of the funds raised in its previous private placement of securities which was reported in the Company’s last financial filing made on its Form 10-Q for the period ended
June 30, 2010. Therefore, if the Company does not raise sufficient capital in this Offering and in the future to pay its current and future obligations, it will not be able to continue as a going concern and may need to issue future financial
statements on a liquidation basis, including appropriate disclosures regarding such a presentation. 
 USE OF PROCEEDS

 If we complete the Minimum Offering, we will raise net proceeds of approximately $100,000, inasmuch as no commissions or
expenses are expected to be incurred in connection with the Minimum offering. If we complete the Maximum Offering, we will raise net proceeds of approximately $680,000, after deducting commissions and expenses expected to be incurred by us in
connection with the Maximum offering. 
 If the minimum offering amount is obtained, which would net the Company approximately
$100,000, these proceeds will be used to pay certain current liabilities of the Company, but will be insufficient to pay all current liabilities. These proceeds will be used to pay Friedman LLP, the Company’s independent registered public
accounting firm, approximately $7,500 for services required in connection with review services of the financial statements and Form10-Q for the period ended September 30, 2010; to pay approximately $14,000 for the annual Directors and Officers
liability insurance premium; to pay approximately $35,000 for partial, deferred compensation owed to the President of the Company and to pay approximately $ 30,000 to retain the Company’s CFO through December 31, 2010. The remainder, if
any, will be used for general corporate purposes and working capital and to sustain the Company while it seeks further capital. 

If additional capital is raised in this offering in excess of the minimum offering amount raised, assuming the additional amount raised
is sufficient to do so, the additional proceeds will be used to pay partial, deferred compensation owed to the President (in addition to the amount paid above if the minimum offering amount is obtained) and the Vice-President of the Company. The
remainder will be used for general corporate purposes and working capital and to sustain the Company while it seeks further capital. Even assuming the Company raised the maximum proceeds available under this offering, inasmuch as the Company has no
revenue, the Company would still be required to seek further funding in the future. 

  
 13 

 DESCRIPTION OF UNITS 
 Overview 
 Because this section is a summary, it does not describe every
aspect of the Promissory Notes or Warrants. Therefore, this summary is qualified by reference to these documents, as set forth in Appendix C and Appendix D. 
 Notes 
 The Notes are unsecured obligations of the Company. The Notes will
be issued in the minimum aggregate principal amount of $100,000 and in the maximum aggregate principal amount of $750,000. The Notes will mature two years from the Issue date of the Note (the “Maturity Date”). To the extent not previously
paid, the principal due under the Notes shall be payable in full on the Maturity Date, unless previously converted into the Borrower’s Common Stock or accelerated due to the occurrence of an Event of Default. 

Interest on the outstanding principal balance of the Note shall accrue, beginning from the Issue Date, at a rate of nine percent
(9%) per annum payable in cash or Common Stock of the Company. The determination as to whether interest shall be paid in cash or Common Stock of the Company shall be at the sole option of the Company. Interest shall be payable semi-annually
and, if paid in Common Stock, computed based upon the average closing price of the Common Stock for the thirty consecutive business days prior to June 30 and December 31 of each year. Interest on the outstanding principal balance of the
Note shall be computed on the basis of the actual number of days elapsed and a 365 day year. 
 Upon written notice to the
Holder, the Borrower may, at its sole option, after a minimum of one hundred and eighty (180) calendar days from the Issue Date or, alternatively, after the price of the Common Stock of the Borrower is at or above One Dollar ($1.00) per share
for ten (10) consecutive business days prior to the date of written notice to the Holder, convert the outstanding principal due under each $25,000 Note into 50,000 shares of fully-paid and nonassessable shares of Common Stock of the Borrower.
Any unpaid interest due on the Note shall, at the option of the Borrower, be payable in cash or in Common Stock of the Borrower. If paid in Common Stock, the number of shares of Common Stock payable in interest shall be computed by dividing the
unpaid interest due by the average closing price of the Common Stock for the thirty (30) consecutive business days prior to the Conversion Date. 
 No “sinking fund” is provided for the Notes, which means that the Notes do not require the Company to redeem or retire the Notes. 
 Events of Default 
 The occurrence of any of the following events of default
(“Event of Default”) shall, at the option of the Holder, make all sums of principal and interest then remaining unpaid and all other amounts payable under the Note immediately due and payable: 

 

	 	•	 	 The Company shall default in the payment of the principal or accrued interest when due. 

 

	 	•	 	 The Company shall default in the observance or performance of any covenants set forth in the Notes or other term or condition of the offering.

  
 14 

	 	•	 	 The Company shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for
a substantial part of its property or business; or such a receiver or trustee shall otherwise be appointed. 

  

	 	•	 	 A money judgment, writ or similar final process shall be entered or filed against the Company or any of its property or other assets for more than
$1,500,000, and shall remain unvacated, unbonded or unstayed for a period of ninety (90) business days. 

  

	 	•	 	 Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings or relief under any bankruptcy law or any law, or the
issuance of any notice in relation to such event for the relief of debtors shall be instituted by or against the Borrower and if instituted against Borrower are not dismissed within ninety (90) business days of initiation.

 Warrants 
 Each Unit includes a Warrant to purchase 50,000 shares of common stock at an exercise price of $1.00 per share. The Warrant expires in five years and can be redeemed, under certain conditions, by the
Company. 
 Governing Law 
 The Notes and Warrants are governed by and construed in accordance with the laws of the State of Delaware. 
 DESCRIPTION OF CAPITAL STOCK 
 Common Stock 

Our authorized capital stock consists of 50,000,000 shares of common stock and 5,000,000 shares of preferred stock. As of
June 30, 2010, there were 36,961,404 shares of common stock issued and 34,161,736 shares of common stock outstanding. In addition, as of June 30, 2010, there were a total of 4,775,000 potentially dilutive securities, which consist of
convertible notes, private placement warrants, options to purchase common stock and convertible preferred stock. 
 Subject to
preferences that may be applicable to any preferred stock outstanding at the time, the holders of common stock are entitled to receive dividends out of legally available assets at such times and in such amounts as our Board of Directors may from
time to time determine. Each stockholder is entitled to one vote for each share of common stock held on all matters submitted to a vote of stockholders. Cumulative voting for the election of directors is not authorized. 

Our common stock is not subject to conversion or redemption and holders of common stock are not entitled to preemptive rights. Upon the
liquidation, dissolution or winding up of the Company, the remaining assets legally available for distribution to stockholders, after payment of claims or creditors and payment of liquidation preferences on outstanding preferred stock, are
distributable ratably among the holders of common stock and any participating preferred stock outstanding at that time. Liquidation preferences on outstanding preferred stock totaled $2,519,080 at June 30, 2010. Each outstanding share of common
stock is fully paid and nonassessable. 

  
 15 

 Preferred Stock 
 Our Board of Directors has the authority, without action by stockholders, to designate and issue preferred stock in one or more series. The Board of Directors may also designate the rights, preferences
and privileges of each series of preferred stock, any or all of which may be greater than the rights of our common stock. It is not possible to state the actual effect of the issuance of any shares of preferred stock on the rights of holders of the
common stock until the Board of Directors determines the specific rights of the holders of the preferred stock. However, these effects might include: (a) restricting dividends on the common stock; (b) diluting the voting power of the
common stock; (c) impairing the liquidation rights of the common stock; and (d) delaying or preventing a change in control of the Company without further action by stockholders. 

INVESTOR SUITABILITY STANDARDS 
 Investment in our securities involves significant risks and is not a suitable investment for all potential investors. See “Risk Factors.” 

INVESTOR QUALIFICATIONS; SUBSCRIPTION 
 The Securities Act and the rules and regulations promulgated thereunder by the SEC impose limitations on the persons who may participate in the offering and from whom subscriptions may be accepted.
Accordingly, this offering and the sale of shares hereunder is limited to “accredited investors” as that term is defined in Rule 501 of Regulation D promulgated under the Securities Act. Subject to the foregoing, an investor may subscribe
for the shares only by executing the subscription agreement and delivering such documents to the company along with the subscription payment for the shares purchased. See Subscription Agreement (Appendix A) and Accredited Investor Questionnaire
(Appendix B). 
 PLEASE NOTE THAT BEING QUALIFIED TO PARTICIPATE IN THIS OFFERING DOES NOT MAKE THE OFFERING A SUITABLE INVESTMENT.

 ACCREDITED INVESTORS 
 An accredited investor means any person who comes within any of the following categories, or whom we reasonably believes comes within any of the following categories, at the time of the sale of the
securities to that person: 
 (a) Any bank as defined in section 3(a)(2) of the Act or savings and loan association or other
institution as defined in Section 3(a)(5)(A) of the Act whether acting in an individual or fiduciary capacity; brokers and dealers registered under Section 15 of the Securities Exchange Act of 1934; an insurance company as defined in
section 2(13) of the act; an investment company registered under the Investment Company Act of 1940 or a business development company as defined in section 2(a)(48) of that act; a Small Business Investment Company licensed by the U. S. Small
Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958; an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974, if the investment decision is made
by a plan fiduciary, as defined in section 3(21) of such act, which is either a bank, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000; 

(b) Any private business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940; 

  
 16 

 (c) Any organization described in Section 501(c)(3) of the Internal Revenue Code,
corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets of more than $5,000,000; 

(d) Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive
officer, or general partner of a general partner of that issuer; 
 (e) Any natural person whose individual net worth or joint
net worth with that person’s spouse, at the time of his purchase exceeds $1,000,000; 
 (f) Any natural person who had an
individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching that same level in the current
year; 
 (g) Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the
securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D; and 
 (h) Any entity in which all of the equity owners are accredited investors. 
 IF YOU ARE NOT AN
ACCREDITED INVESTOR, RETURN THIS MEMORANDUM TO THE COMPANY IMMEDIATELY. IN THE EVENT YOU DO NOT MEET SUCH REQUIREMENTS, THIS MEMORANDUM SHALL NOT CONSTITUTE AN OFFER TO SELL SECURITIES TO YOU. 

If you decide to invest in the Units, we will be relying on your representation that you are an accredited investor, as described above,
in order to properly satisfy federal and state securities laws. 
 ADDITIONAL INFORMATION 

We will make available to any investor, or the investor’s representative, the opportunity to ask questions and receive answers
concerning the terms and conditions of the offering and to obtain information which we possess or can acquire without unreasonable effort or expense that is necessary to verify the accuracy of the information contained in this memorandum. Copies of
all agreements and documents referred to in the memorandum are available upon request. Any requests or questions to the Company should be directed to its President, Deborah Vitale, President, Diamondhead Casino Corporation, 1301 Seminole Boulevard,
Suite 142, Largo, Florida 33770. 

  
 17Appendix (C) to Private Placement Memorandum dated October 25, 2010

 EXHIBIT 10.8.1 

THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OR EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OR EXERCISE HEREOF MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT HERETO OR THERETO UNDER SAID
ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO DIAMONDHEAD CASINO CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED. 
 DIAMONDHEAD CASINO CORPORATION 
 PROMISSORY NOTE 

 

			
	Principle Amount $            	  	Issue Date:                     ,
2010

 FOR VALUE RECEIVED, Diamondhead Casino Corporation, a Delaware corporation, located at
1301 Seminole Boulevard, Suite 142, Largo, Florida 33770 (hereinafter called “the Company” or “the Borrower”), hereby promises to pay to
                            , (the “Holder”) located at
                            , without demand, the principal amount of
                     Dollars ($            ), plus all accrued and unpaid
interest thereon, on the Maturity Date,” as defined below, to the extent the principal has not previously been paid or converted into Common Stock of the Company as set forth below. 

This Note is one of a duly authorized issue of nine percent (9%) unsecured, convertible Promissory Notes of the
Borrower, in aggregate maximum principal amount of up to Seven Hundred and Fifty Thousand Dollars ($750,000) (the “Promissory Notes”) issued pursuant to a Subscription Agreement (the “Subscription Agreement”). The Promissory
Notes rank equally and ratably without priority over one another. No payment, including any prepayment, shall be made hereunder unless payment, including any prepayment, is offered with respect to the other Promissory Notes, in an amount which bears
the same ratio to the then unpaid principal amount of such Promissory Notes as the payment made hereon bears to the then unpaid principal amount under this Note. Unless otherwise separately defined herein, all capitalized terms used in this Note
shall have the same meaning as is set forth in the Subscription Agreement. The following terms shall apply to this Note. 

  
 1 

 ARTICLE I 
 GENERAL PROVISIONS 
  

	1.1	 Interest Rate. 

 Interest on the outstanding principal balance of this unsecured, convertible Promissory Note (hereafter “this Note”) shall accrue, beginning from the Issue Date stated above, at a rate of nine
percent (9%) per annum. Interest on this Note shall be paid in cash or Common Stock of the Company at the sole option of the Borrower. Interest shall be payable semi-annually and, if paid in Common Stock, computed based upon the average closing
price of the Common Stock for the thirty consecutive business days prior to June 30 and December 31 of each year. Interest on the outstanding principal balance of the Note shall be computed on the basis of the actual number of days elapsed
and a 365 day year. 
  

	1.2	 Maturity Date. 

 The maturity date (“Maturity Date”) of this Note shall be two years from the above-stated Issue Date of this Note. 

 

	1.3	 Prepayment in Cash. 

 This Note shall not be subject to any prepayment in cash by the Borrower without the consent of the Holder. 
 ARTICLE II 
 CONVERSION RIGHTS 

 

	2.1.	 Conversion into the Borrower’s Common Stock.  

 Holder’s Right to Convert 
 The Holder shall have the right to convert
the unpaid principal due under this Note into Common Stock of the Borrower at any time. 
 The Holder shall exercise its right
of conversion by forwarding the original of the Note, together with a Notice of Conversion, signed by the Holder, notifying the Borrower that the Holder is exercising its right to convert the unpaid principal due under the Note to Common Shares of
the Borrower. For each Unit purchased for $25,000, the Note shall be convertible into a maximum of 50,000 shares of Common Stock of the Borrower. As soon as is practicable after receipt of the Notice of Conversion and subject to the receipt of the
original Note (or if the original Note has been lost or destroyed, an affidavit of Holder certifying to such loss or destruction), the Company shall issue and deliver, or cause to be issued and delivered to the Holder, a certificate or certificates
for the number of shares due the Holder. Any unpaid interest due on the Note shall, at the option of the Borrower, be payable in cash or in Common Stock of the Borrower. If paid in Common Stock, the number of shares of Common Stock payable in
interest shall be computed by dividing the unpaid interest due by the average closing price of the Common Stock for the thirty (30) consecutive business days prior to the date of the Notice of Conversion. 

In the event, the Borrower has made payment of a portion of the principal due under this Note, the number of shares due the Holder upon
exercise of the right to convert shall be proportionally adjusted to an amount computed by multiplying the original number of shares available for conversion pursuant to this Note by a fraction, where the numerator is the remaining unpaid principal
balance of the note and the denominator is $25,000 multiplied by the number of units purchased. 

  
 2 

 Borrower’s Right to Convert 

The Borrower shall have the right to convert the principal and any interest due under this Note into Common Stock of the Borrower as set
forth below. 
 Upon written notice to the Holder, the Borrower may, after a minimum of one hundred and eighty
(180) calendar days from the Issue Date or, alternatively, after the price of the Common Stock of the Borrower is at or above One Dollar ($1.00) per share for thirty (30) consecutive business days prior to the date of written notice to the
Holder, convert the outstanding principal due under this Note into shares of fully-paid and nonassessable shares of Common Stock of the Borrower. For each Unit purchased for $25,000, the Note shall be convertible into a maximum of 50,000 shares of
Common Stock of the Borrower. Any unpaid interest due on the Note shall, at the option of the Borrower, be payable in cash or in Common Stock of the Borrower. If paid in Common Stock, the number of shares of Common Stock payable in interest shall be
computed by dividing the unpaid interest due by the average closing price of the Common Stock for the thirty (30) consecutive business days prior to the Conversion Date. The Holder agrees that it has no right to prevent the Borrower from
effecting such conversion without the Holder’s consent. 
 In the event, the Borrower has made payment of a portion of the
principal due under this Note, the number of shares due the Holder upon exercise of the right to convert shall be proportionally adjusted to an amount computed by multiplying the original number of shares available for conversion pursuant to this
Note by a fraction, where the numerator is the remaining unpaid principal balance of the note and the denominator is $25,000 multiplied by the number of units purchased. 

 

	2.2	 Notice of Conversion. 

 The Borrower shall exercise its right of conversion by forwarding a Notice of Conversion, signed by the President of the Borrower, to the Holder, a) notifying the Holder that the Borrower is exercising
its right to convert the Note to Common Shares of the Borrower and the effective date of conversion (“the Conversion Date”), which date shall be at least ten (10) calendar days from the date of the Notice of Conversion, but no later
than thirty (30) calendar days from the date of the Notice of Conversion; and b) notifying the Holder of the amount of interest to be paid and whether the interest will be paid in cash or in Common Stock of the Borrower. The Holder agrees to
surrender the original Note not later than seven (7) business days following receipt of the Notice of Conversion (or if the original Note has been lost or destroyed, to provide an affidavit certifying to such loss or destruction). As soon as is
practicable after the Conversion Date and subject to the receipt of the original Note (or if the original Note has been lost or destroyed, an affidavit of Holder certifying to such loss or destruction), the Company shall issue and deliver, or cause
to be issued and delivered to the Holder, a certificate or certificates for the number of shares due the Holder with interest computed as of the Conversion Date. 
  

	2.3	 Fractional Shares. 

 No fractional shares shall be issued. The number of shares due the Holder will be rounded up or down to the nearest share. 

  
 3 

 ARTICLE III 
 EVENT OF DEFAULT 
  

	3.1	 Event of Default. 

 The occurrence of any of the following events of default (“Event of Default”) shall, at the option of the Holder hereof, make all sums of principal and interest then remaining unpaid hereon and
all other amounts payable hereunder immediately due and payable, upon demand, without presentment, or grace period, all of which hereby are expressly waived, except as set forth below: 

(a) Failure to Pay Principal or Interest. The Borrower fails to pay principal, interest or other sum due under this Note when due
and such failure continues for a period of sixty (60) business days after the due date. 
 (b) Breach of Covenant.
The Borrower breaches any material covenant or other term or condition of the Subscription Agreement or this Note in any material respect and such breach, if capable of cure, continues for a period of sixty (60) business days after written
notice to the Borrower from the Holder. 
 (c) Breach of Representations and Warranties. Any material representation or
warranty of the Borrower made herein, in the Subscription Agreement, or in any agreement, statement or certificate given in writing pursuant hereto or in connection herewith shall be false or misleading in any material respect as of the date made
and the Closing Date, and would otherwise have a material adverse effect on the Borrower. 
 (d) Receiver or Trustee. The
Borrower shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business; or such a receiver or trustee shall otherwise be
appointed. 
 (e) Judgments. Any money judgment, writ or similar final process shall be entered or filed against Borrower
or any of its property or other assets for more than $1,500,000, and shall remain unvacated, unbonded or unstayed for a period of ninety (90) business days. 
 (f) Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings or relief under any bankruptcy law or any law, or the issuance of any notice in relation to
such event, for the relief of debtors shall be instituted by or against the Borrower and if instituted against Borrower are not dismissed within ninety (90) business days of initiation. 

 

	3.2	 Remedies Upon An Event of Default. 

 If an Event of Default shall have occurred and shall be continuing, the Holder of this Note may at any time at its option, (a) declare the entire unpaid principal balance of this Note, together with
all interest accrued hereon, due and payable, and thereupon, the same shall be accelerated and so due and payable; provided, however, that upon the occurrence of an Event of Default described in (i) Sections 3.1(f), without presentment, demand,
protest, or notice, all of which are hereby expressly unconditionally and irrevocably waived by the Borrower, the outstanding principal balance and accrued interest hereunder shall be automatically due and payable, and (ii) Sections 3.1(a)
through (e), the Holder may exercise or otherwise enforce any one or more of the Holder’s rights, powers, privileges, remedies and interests under this Note or applicable law. No course of delay on the part of the Holder shall operate as a
waiver thereof or otherwise prejudice the right of the Holder. No remedy conferred hereby shall be exclusive of any other remedy referred to herein or now or hereafter available at law, in equity, by statute or otherwise. 

  
 4 

 ARTICLE IV 
 MISCELLANEOUS 
  

	4.1	 Failure or Indulgence Not Waiver. 

 No failure or delay on the part of Holder hereof in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege preclude other or further exercise thereof or of any other right, power or privilege. All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available. 

 

	4.2	 Notices. 

 All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally
served, (ii) deposited in the mail by registered or certified mail, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery or facsimile.
Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address
or number designated (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where
such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The
addresses for such communication shall be the addresses set forth in the Subscription Agreement or such other address as such party shall have specified most recently by written notice. 

 

	4.3	 Assignability. 

 This Note shall be binding upon the Borrower and its successors and assigns and shall inure to the benefit of the Holder and its successors in interest. This Note may not be assigned by the Holder without
the prior written consent of the Company, except to an Affiliate of Holder that is an “accredited investor” as such term is defined in Regulation D under the Securities Act of 1933. 

 

	4.4	 Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. 

The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note, at law or in
equity (including, without limitation, a decree of specific performance and/or other injunctive relief). No remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy and nothing herein shall limit
a Holder’s right to pursue actual damages for any failure by the Borrower to comply with the terms of this Note. Amounts set forth or provided for herein with respect to payments and the like (and the computation thereof) shall be the amounts
to be received by the Holder. The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable and material harm to the Holder and that the remedy at law for any such breach may be inadequate. Therefore the Borrower
agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available rights and remedies, at law or in equity, to such equitable relief, including but not limited to an injunction
restraining any such breach or threatened breach, without the necessity of showing economic loss and without any bond or other security being required. 

  
 5 

	4.5	 WAIVER OF TRIAL BY JURY. 

 THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS NOTE OR ANY OTHER DOCUMENT OR INSTRUMENT EXECUTED AND DELIEVERED IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THE PAYEE OR THE COMPANY. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PAYEE’S PURCHASING THIS NOTE. 
  

	4.6	 Payment Not Subject to Set-Off. 

 The Borrower acknowledges that it has not and will not be permitted to assert any right of set-off or counterclaim with respect to its obligation to pay the principal and interest as of the Maturity Date
as set forth herein and hereby waives any and all defenses it may have in the future with respect to such payment, except to the extent that (a) this Note has been converted into Common Stock in accordance with Article II prior to the Maturity
Date, (b) the Borrower’s defense is that Borrower has paid part or all of the principal and interest due hereon in accordance with the terms hereof or (c) the Holder has expressly waived its right to such payment in a writing signed
by Holder. 
  

	4.7	 Governing Law and Jurisdiction. 

 The parties expressly agree that all the terms and provisions hereof shall be construed in accordance with and governed by the laws of the State of Delaware. The parties hereby agree that any dispute
which may arise between them arising out of or in connection with this Agreement shall be adjudicated before a court of competent jurisdiction in the State of Delaware and they hereby submit to the exclusive jurisdiction of the courts of the State
of Delaware with respect to any action or legal proceeding commenced by any party and irrevocably waive any objection they now or hereafter may have respecting the venue of any such action or proceeding brought in such a court or respecting the fact
that such court is an inconvenient forum. 
  

	4.8	 Construction. 

 This Agreement shall not be construed against the party preparing it, but shall be construed as if all parties prepared it. 

 

	4.9	 Maximum Payments. 

 Nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that the rate of
interest required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the Borrower to the Holder and thus refunded to the Borrower.

  

	5.0	 Shareholder Status. 

 The Holder shall not have any rights as a shareholder of the Borrower with respect to shares underlying unconverted portions of this Note. However, the Holder will have all rights of a shareholder of the
Borrower with respect to Common Stock, if any, issued upon conversion of this Note and with respect to Common Stock, if any, issued in payment of interest due on this Note. 

  
 6 

	5.1	 Incorporation by Reference. 

 The Private Placement Memorandum of Diamondhead Casino Corporation dated October 25, 2010, the Accredited Investor Questionnaire, the Subscription Agreement, and the Warrant to Purchase Common Stock
of Diamondhead Casino Corporation are incorporated herein by reference, together with all exhibits and appendices thereto and documents incorporated by reference therein. 
 IN WITNESS WHEREOF, the Borrower has caused this Note to be signed in its name by an authorized officer as of the
                     day of
                    , 2010. 
  

	
	  
	DIAMONDHEAD CASINO CORPORATION
	By: Deborah A. Vitale
	Title: President

  
 7

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