Document:

SECURITY AGREEMENT

SECURITY AGREEMENT

THIS SECURITY AGREEMENT is entered into as of this      day of 

, 2016, by and among GLOBAL HEALTHCARE REIT, INC. ("Debtor"), and ALL OF THE HOLDERS OF THE GLOBAL HEALTHCARE REIT, INC. SERIES 2016 10% SENIOR SECURED PROMISSORY NOTES ("Secured Party").

Recitals

A.

Debtor has agreed to borrow from a syndicate of Lenders (“Lenders”), and the Lenders have agreed to lend to Debtor the sum of up to $1.0 million (the "Loan");

B.

As of the date hereof, Debtor has executed and delivered to each of the Lenders a senior secured promissory note in the principal amount of their investments, which in the aggregate total up to $1.0 million, (the "Notes"); and

C.

As a condition to the agreement of the Lenders to loan such amount to Debtor, Debtor is required to enter into this Security Agreement and to grant to the Lenders a security interest in the Collateral (as hereinafter defined).

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, the parties hereto agree as follows:

Agreement

1.

SECURITY

1.1

Grant of Security Interest.  As security for all of the Obligations (as defined in Section 1.2), Debtor hereby grants to the Secured Party, a continuing security interest (as that term is defined in the Uniform Commercial Code as in effect in Colorado on the date hereof (the "Uniform Commercial Code")), in, and assigns and pledges to the Secured Party all of the Debtor's right, title and interest in and to the following, whether now owned or hereafter acquired (by operation of law or otherwise), and whether now or hereafter existing, owned by Debtor or in which Debtor otherwise has any rights (collectively, the "Collateral"):

(a)

All of Debtor's tangible personal property, including without limitation all present and future inventory, equipment (including items of equipment that are or become fixtures), now owned or hereafter acquired;

(b)

All patents and patent applications and the inventions and improvements described and claimed therein, including without limitation, all patents and patent applications described on Schedule 1.1 hereto, together with (i) all reissues, divisionals, continuations, renewals, substitutions, extensions and continuations-in-part thereof, (ii) all income, royalties, damages and payments now or hereafter due or payable under and with respect thereto, including without limitation, damages and payments for past, present and future infringements thereof, (iii) the right to sue for past, present and future infringements thereof, and (iv) all rights corresponding, incident or relating thereto (collectively, the "Patents");

(c)

All licenses and similar agreements and covenants not to sue with respect to all Patents or any of them (other than any existing license agreements or covenants not to sue which by their terms prohibit assignment, transfer or the grant of a security interest by Debtor or give the other party thereto the right to terminate the same upon an assignment, transfer or grant of a security interest therein, which licenses or covenants not to sue do not in the aggregate have a material adverse effect on the value or utility of the Patents or other assets of Debtor individually or as a whole), together with (i) all renewals, extensions, supplements and continuations thereof and supplements thereto, (ii) income, royalties, damages and payments now or hereafter due or payable with respect thereto, including without limitation, damages and payments for past, present and future breaches thereof, (iii) the right to sue for past, present and future breaches thereof, and (iv) all rights corresponding, incident or relating thereto (collectively, the "Licenses");

(d)

To the extent that such rights are assignable, all of Debtor's other intangible personal property other than the property covered by subsection (e) below, including, without limitation, all present and future accounts, contract rights, permits, licenses, general intangibles, chattel paper, documents, and instruments, now owned or hereafter acquired;

(e)

All of Debtor's present and future Government Accounts and rights under Government Contracts, now owned or hereafter acquired; provided, however, that Secured Party shall not have a security interest in any rights under any Government Contract of Debtor or in the related Government Account where the taking of such Security Interest would be a violation of an express prohibition contained in the Government Contract (for purposes of this limitation, the fact that a Government Contract is subject to, or otherwise refers to, Title 31, § 3727 or Title 41, § 15 of the United States Code shall not be deemed an express prohibition against assignment thereof); and

(f)

Any and all additions to any of the foregoing, and any and all replacements, products and proceeds (including insurance proceeds) of any of the foregoing.

For purposes of this Agreement, the terms "accounts," "chattel paper," "documents," "general intangibles," "instruments," "inventory," "fixtures", "contract rights" and "equipment" shall have the meanings ascribed to them in Article 9 of the Uniform Commercial Code, "Government Account" shall mean all accounts arising out of any Government Contract and "Government Contract" shall mean all contracts with the United States Government or with any agency thereof, and all amendments thereto.

1.2

Obligations.  The security interest created hereby in the Collateral constitutes a continuing security interest for all of the following obligations, indebtedness and liabilities, whether now existing or hereafter incurred or arising (collectively, the "Obligations"):

(a)

The payment and performance by Debtor, as and when due and payable, of all amounts from time to time owing by it under or with respect to, whether for principal, interest, fees, expenses or otherwise, and the performance of all other obligations of Debtor under, the Notes, this Agreement, an Agreement Among Lenders, or any other document or instrument now or hereafter delivered in connection with or as security for the Notes (collectively, the "Loan Documents");

(b)

All loans and future advances made by Secured Party to Debtor evidenced by, and all other debts, obligations and liabilities of every kind and character of Debtor arising from, the Notes, or hereafter arising in favor of Secured Party, whether such debts, 

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obligations or liabilities be direct or indirect, primary or secondary, joint or several, fixed or contingent, and whether originally payable to Secured Party or to a third party and subsequently acquired by Secured Party and whether such debts, obligations or liabilities are evidenced by notes, open account, overdraft, endorsement, security agreement, guaranty, or otherwise (it being contemplated that Debtor may hereafter become indebted to one or more Secured Party in further sum or sums, but Secured Party shall have no obligation to extend further indebtedness by reason of this Agreement);

(c) 

All expenditures made or incurred by Secured Party to protect and maintain the Collateral and to enforce the rights of Secured Party under this Agreement;

(d)

The due performance and observance by Debtor of all of its other obligations and undertakings from time to time existing under or with respect to the Loan Documents or any other document or instrument now or hereafter delivered in connection with or as security for any of the Loan Documents; and

(e)

All renewals, extensions, amendments, modifications, supplements or restatements of or substitutions for any of the foregoing.

Notwithstanding anything to the contrary contained in this Agreement, the Obligations are not intended to include, and the Collateral is not intended to secure, amounts owing from the Debtor to Secured Party under any promissory note (other than the Notes, which is intended to be secured hereby) made by the Debtor in favor of Secured Party before the date of this Agreement.

1.3

Certain Rights of Secured Party.  The Secured Party shall have the right, but not the obligation, to pay any taxes or levies on the Collateral or any costs to repair or to preserve the Collateral, which payment shall be made for the account of Debtor and shall constitute a part of the obligations owed to the Secured Party and secured pursuant to this Agreement.

1.4

Financing Statements.  At the request of the Secured Party, Debtor will execute such financing statements, continuation statements, and other documents with respect to the Collateral pursuant to the Uniform Commercial Code and otherwise as Secured Party may request, in form satisfactory to the Secured Party, and Debtor will pay the cost of filing the same in all public offices where filing is reasonably necessary (including, without limitation, the cost of filing in the office of the California Secretary of State and the United States Patent and Trademark Office).

1.5

No Release.  No injury to, or loss or destruction of, any item of the Collateral shall relieve Debtor of any obligation under this Agreement or under any of the other Loan Documents.

2.

REPRESENTATIONS AND WARRANTIES OF DEBTOR

In order to induce Secured Party to enter into this Agreement and to make the Loan, Debtor hereby makes the following representations and warranties to Secured Party:

2.1

Organization; Due Authorization; Enforceability.  Debtor is a corporation duly organized, validly existing and in good standing under the laws of the State of Utah.  The execution, delivery and performance by Debtor of this Agreement and all transactions contemplated 

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herein are within Debtor's corporate powers and have been duly authorized by all necessary action on the part of Debtor, corporate and otherwise.  This Agreement has been duly executed and delivered by Debtor and constitutes the valid and binding obligation of Debtor, enforceable against Debtor in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, or similar laws affecting the enforcement of creditors' rights generally and by general principles of equity.

2.2

No Conflicts or Consents.  Neither the ownership nor the intended use of the Collateral by Debtor, nor the grant of the security interest by Debtor to Secured Party herein, nor the exercise by Secured Party of any rights and remedies hereunder, does or will (i) conflict with or violate any provision of the Articles of Organization, Operating Agreement or other governing documents of Debtor, (ii) conflict with or violate any applicable domestic or foreign law, statute, rule or regulation applicable to or binding upon Debtor, (iii) conflict with or violate any agreement, judgment, license, order or permit applicable to or binding upon Debtor, or (iv) result in or require the creation of any lien, charge or Encumbrance (as defined below) upon any assets or properties of Debtor except as expressly contemplated by this Agreement.  Except for filings of financing statements to be made in favor of Secured Party and filing a copy of this Agreement with the United States Patent and Trademark Office, no consent, approval, authorization or order of, and no notice to or filing with, any court, governmental authority or third party is required in connection with the grant by Debtor of the security interest herein or the exercise by Secured Party of any rights and remedies hereunder.

2.3

Security Interest.  Debtor has and will have at all times full right, power and authority to grant a security interest in the Collateral to Secured Party in the manner provided herein, free and clear of any lien, security interest, adverse claims or other charges or encumbrances. This Agreement creates a valid and binding security interest in favor of Secured Party in the Collateral securing the Obligations.  The filing of the financing statements and other instruments of registration delivered concurrently herewith by Debtor to Secured Party will perfect, and establish the first priority of, Secured Party's security interests hereunder in the Collateral securing the Obligations.  No further or subsequent filing, recording, registration, other public notice or other action is necessary or desirable to perfect or otherwise continue, preserve or protect such security interest, except for continuation statements or filings.

2.4

Title to Assets.  As of the date hereof, Debtor has good, valid, and marketable title to all of its properties and assets (whether real or personal), and there exists no mortgage, lien, security interest, reservation, covenant, restriction or other encumbrance (each of the foregoing hereinafter referred to as an "Encumbrance") of any nature upon, or with respect to, Debtor or any of its properties or assets, including, without limitation, the Collateral, except for liens of record and the security interests created by this Agreement.  

2.5

Taxes.  Debtor has filed all tax returns and reports required by any governmental authority to be filed by Debtor, and such returns and reports are true and correct.  Debtor has paid all taxes, assessments, and other government charges imposed upon it or its income, profits or properties, or upon any part thereof, other than those presently payable without penalty or interest.

2.6

No Default.  No Event of Default (as defined in Section 6.1 hereof), and no event which with notice, lapse of time, or both would constitute an Event of Default, has occurred and is continuing as of the date hereof.

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3.

AFFIRMATIVE COVENANTS OF DEBTOR

Until all of the Obligations of Debtor are paid and performed in full, Debtor hereby covenants and agrees that it shall, unless the Secured Party otherwise consents in advance in writing:

3.1

Payment of Notes.  Punctually pay the principal of and interest on the Notes and all other amounts that may be due thereunder at the times and places and in the manner specified therein, except to the extent of any principal or interest that is converted into common stock of the Debtor according to the terms of the Notes.

3.2

Corporate Existence.  Preserve, maintain, and keep in full force and effect its corporate existence in the jurisdiction of its incorporation.

3.3

Taxes, Charges, and Obligations.  Pay and discharge all taxes, assessments, and governmental charges or levies imposed upon it or upon its income, profits, properties or any part thereof, prior to the date on which penalties or interest attach thereto, as well as all claims which, if unpaid, might become an Encumbrance upon any properties of Debtor, and pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all of the indebtedness and other obligations of whatever nature of Debtor; provided, however, that Debtor shall not be required to pay any such tax, assessment, charge, levy, claim, indebtedness or obligation so long as (a) the validity thereof is being diligently contested by Debtor in good faith and by proper proceedings, (b) Debtor sets aside on its books adequate reserves therefor in accordance with generally accepted accounting principles, (c) during the period of such contest the enforcement of any contested item is effectively stayed, and (d) in the case where any such tax, assessment, charge, claim or levy might become an Encumbrance upon any item of the Collateral or any part thereof, Debtor makes arrangements acceptable to the Secured Party to secure the payment thereof.

3.4

Maintenance of Property.  Keep all property used or useful in its business, including, without limitation, the Collateral, in good repair, working order, and condition, and from time to time make all necessary or desirable repairs, renewals, and replacements thereof.

3.5

Preservation of Patents.  Prosecute diligently any patent application pertaining to the Patents, now or hereafter pending, file and prosecute opposition, cancellation, reissue, reexamination, protest, public use, concurrent use and similar proceedings relating to the Patents, and preserve and maintain all rights in all Patents.  Any expenses incurred in connection with the foregoing shall be borne by Debtor.

3.6

Notice and Defense of Actions.  Provide Secured Party with immediate notice of any opposition, cancellation, reissue, reexamination, protest, public use, concurrent use or similar proceeding relating to the Patents or any part thereof, and shall diligently defend its rights in any such action or proceeding.

3.7

Collateral.  Execute, deliver, and file, or cause the execution, delivery, and filing of, any and all documents (including, without limitation, financing statements and continuation statements) that Secured Party deem necessary or desirable to create, perfect, preserve, validate, or otherwise protect a first priority lien and security interest in the Collateral; immediately upon learning thereof, report to the Secured Party any reclamation, return or repossession of any goods forming a part of the Collateral, any claim or dispute asserted by any debtor or other obligor owing an obligation to Debtor, and any other matters affecting the value or enforceability or collectability of 

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any of the Collateral; defend the Collateral against all claims and demands of all persons at any time claiming the same or any interest therein adverse to the Secured Party, and pay all costs and expenses (including attorneys' fees and expenses) incurred in connection with such defense; indemnify and protect the Secured Party against any liability, loss or expense arising from any such claims, demands, or disputes or out of any such reclamation, return or repossession of goods forming a part of the Collateral; provided, however, that if the Secured Party shall so elect, the Secured Party shall have the right at all times to settle, compromise, adjust or litigate all claims and disputes directly with the debtor or other obligor owing an obligation to Debtor upon such terms and conditions as the Secured Party deems advisable, and all costs and expenses thereof (including attorneys' fees and expenses) shall be made for the account of Debtor and shall constitute a part of the Obligations owed to the Secured Party and secured pursuant to this Agreement.

3.8

Notice of Default and Loss.  Give immediate notice to the Secured Party upon the occurrence of any Event of Default or event which with notice or lapse of time or otherwise would constitute an Event of Default and of any loss or damage to any of the Collateral.

3.9

Information.  Furnish Secured Party any information that any Secured Party may from time to time reasonably request concerning any covenant, provision or representation contained in this Agreement or any other matter in connection with the Collateral or Loan Documents.

4.

NEGATIVE COVENANTS OF DEBTOR

Until all of the Obligations of Debtor are paid and performed in full, Debtor hereby covenants and agrees that it shall not, unless the Secured Party otherwise consents in advance in writing:  

4.1

Fundamental Changes.  Amend its Certificate of Incorporation or bylaws by any amendment which would adversely affect Debtor's ability to perform or comply with any of the terms, conditions or agreements to be performed or complied with by Debtor hereunder or under any of the Loan Documents or to perform any of the transactions contemplated hereby or thereby, change its name, consolidate or merge with any other corporation or other entity, or purchase, lease or otherwise acquire all or substantially all of the assets of any other entity, including shares of stock of other corporations, except that Debtor may own notes and other receivables acquired in the ordinary course of business.  Debtor shall not take any action described in this Section 4.1 unless and until Debtor has taken all action requested by Secured Party to further perfect or protect Secured Party's security interests in the Collateral.

4.2

Transfer of Assets.  Sell, lease, assign (by operation of law or otherwise), pledge or otherwise dispose of any of its properties or assets (including, without limitation, the Collateral), whether now owned or hereafter acquired, except for sales of properties and assets other than the Patents and Licenses in the ordinary course of business and for fair market value.  Debtor shall not enter into any agreement relating to any Patent or License other than licensing agreements in the ordinary course of business, which are not inconsistent with the terms hereof and which do not have a material adverse effect on Debtor.

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5.

POWERS AND AUTHORIZATIONS

5.1

New or Additional Patents.  If, before the Obligations shall have been satisfied in full, Debtor shall obtain rights to any new or additional patents or applications therefor, Debtor shall give to Secured Party prompt notice thereof in writing.  Any such new patents and applications therefor shall, without any further action on behalf of Debtor, automatically become subject to the terms of this Agreement and shall be deemed to be Patents for the purposes of this Agreement.  Debtor will amend Schedule 1.1 to include any new or additional patents and applications therefor, but such new or additional patents and applications therefor shall constitute Collateral hereunder whether or not Debtor so amends Schedule 1.1; and Debtor agrees to execute such additional security agreements, financing statements, instruments of registration and related documents as may be reasonably requested by Secured Party to perfect Secured Party’s security interest in such patents and applications therefor. 

5.2.

Power of Attorney.  Debtor hereby irrevocably appoints Secured Party as Debtor's attorney-in-fact and proxy, with full authority in the place and stead of Debtor and in the name of Debtor or otherwise, in such Secured Party's discretion, at any time upon the occurrence and during the continuance of an Event of Default, to take any action and to execute any instrument which such Secured Party may deem necessary or advisable to accomplish the purposes of this Agreement, including without limitation (i) to obtain and adjust insurance required to be paid to any Secured Party under the Loan Documents, (ii) to ask, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral, (iii) to receive, endorse and collect any drafts or other instruments, documents and chattel paper in connection with clause (i) or clause (ii) above, (iv) to file any claims or take any action or institute any proceedings that such Secured Party may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of Secured Party with respect to any of the Collateral, and (v) to execute and file one or more financing or continuation statements, and amendments thereto, relating to the Collateral.  Secured Party shall be under no duty to exercise or withhold the exercise of any of the rights, powers, privileges, and options expressly or implicitly granted to Secured Party in this Agreement, and shall not be responsible for any failure to do so or any delay in doing so.  Secured Party shall not be liable for any act or omission or for any error of judgment or any mistake of fact or law in their individual capacity or in their capacity as attorney-in-fact except acts or omissions resulting from such Secured Party's willful misconduct or gross negligence.  This power of attorney is conferred on Secured Party solely to protect, preserve and realize upon the security interests in the Collateral.  Secured Party shall not be responsible for any decline in the value of the Collateral and shall not be required to take any steps to preserve rights against prior parties or to protect, preserve or maintain any security interest or lien given to secure the Collateral.  The powers granted herein are coupled with an interest and shall be irrevocable from the date hereof and so long as any part of the Obligations is outstanding.

5.3

Performance by Secured Party.  If Debtor fails to perform any agreement or obligation contained herein, Secured Party may itself, at its option and in its sole discretion, perform, or cause performance of, such agreement or obligation, and the expenses of such Secured Party incurred in connection therewith shall be payable by Debtor on demand; provided, however, that nothing herein shall impose any obligation of any kind whatsoever on Secured Party to perform any obligation or agreement of Debtor.

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6.

EVENTS OF DEFAULT AND REMEDIES

6.1

Events of Default.  The occurrence of any one or more of the following events shall constitute an "Event of Default" hereunder:

(a)

any action or event that is an "Event of Default" under the Notes; (b) Debtor shall fail to pay or perform the Obligations when due; (c) any representation or warranty made by or on behalf of Debtor herein or in any other Loan Document shall prove to have been incorrect in any material respect on or as of any date as of which made; (d) Debtor shall at any time fail to observe, satisfy or perform any of the covenants or agreements contained in Sections 3.1, 3.2, 4.1, or 4.5 of this Agreement; (e) Debtor shall at any time fail to observe, satisfy or perform any of the covenants or agreements contained in Sections 3 or 4 (other than in Sections 3.1, 3.2, 4.1 or 4.5) of this Agreement, except that no failure to observe any of such covenants or agreements hereof shall constitute an Event of Default hereunder unless such default shall continue unremedied for a period of twenty (20) business days after written notice of the existence of such default shall have been received by Debtor from Secured Party; or (f) Debtor shall default in the payment of principal of or interest on any Indebtedness (other than the Notes) of Debtor or any such Indebtedness shall be accelerated or otherwise become due and payable prior to its stated maturity.

6.2

Rights and Remedies of the Secured Party.  Upon the occurrence of any Event of Default, or at any time thereafter, in addition to all other rights, powers and remedies herein conferred, conferred in the other Loan Documents or conferred by operation of law, Secured Party may declare the Obligations due, payable and performable or to become due, payable and performable to such Secured Party immediately, including all principal and interest remaining unpaid on the Notes payable to Secured Party and all other amounts with respect to Secured Party secured hereby or thereby, all without demand, presentment or notice, all of which are hereby expressly waived; and from time to time in its discretion, without limitation and without notice except as expressly provided below, Secured Party may:

(a)

Exercise with respect to the Collateral all the rights and remedies of a secured party on default under the Uniform Commercial Code (whether or not the Uniform Commercial Code applies to the affected Collateral);

(b)

Require Debtor to, and Debtor hereby agrees that it shall at its expense and upon request of Secured Party forthwith, assemble all or part of the Collateral and the documentation relating to the Collateral as directed by such Secured Party and make it available to such Secured Party at a place to be designated by such Secured Party which is reasonably convenient to both parties;

(c)

Reduce its claim to judgment or foreclose or otherwise enforce, in whole or in part, the security interest created hereby by any available judicial procedure;

(d)

Dispose of, at its office, on the premises of Debtor or elsewhere, all or any part of the Collateral, as a unit or in parcels, by public or private proceedings, and by way of one or more contracts (it being agreed that the sale of any part of the Collateral shall not exhaust Secured Party's power of sale, but sales may be made from time to time, and at any time, until all of the Collateral has been sold or until the Obligations have been paid and performed in full), and at any such sale it shall not be necessary to exhibit any of the Collateral;

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(e)

Buy the Collateral, or any portion thereof, at any public sale;

(f)

Buy the Collateral, or any portion thereof, at any private sale if the Collateral is of a type customarily sold in a recognized market or is of a type that is the subject of widely distributed standard price quotations;

(g)

Apply by appropriate judicial proceedings for appointment of a receiver for the Collateral, or any part thereof, and Debtor hereby consents to any such appointment; and

(h)

At its discretion, retain the Collateral in satisfaction of the Obligations whenever the circumstances are such that Secured Party is entitled to do so under the Uniform Commercial Code or otherwise.

Debtor agrees that, to the extent notice of sale shall be required by law, five (5) calendar days' notice to Debtor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification.  Secured Party shall not be obligated to make any sale of Collateral regardless of notice of sale having been given.  Secured Party may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.

6.3

Application of Proceeds.  Upon the occurrence of any Event of Default, or at any time thereafter, Secured Party may in its discretion apply any cash held by Secured Party as Collateral, and any cash proceeds received by any Secured Party with respect to any sale of, collection from, or other realization upon all or any part of the Collateral, to any or all of the following in such order as Secured Party may elect:

(a)

To the repayment of the reasonable out-of-pocket costs and expenses, including attorneys' fees and legal expenses, incurred by Secured Party in connection with (i) the administration of this Agreement, (ii) the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, any Collateral, (iii) the exercise or enforcement of any of the rights of Secured Party hereunder; or (iv) the failure of Debtor to perform or observe any of the provisions hereof;

(b)

To the payment or other satisfaction of any liens and other encumbrances upon any of the Collateral;

(c)

To the reimbursement of Secured Party for the amount of any obligations of Debtor paid or discharged by Secured Party pursuant to the provisions of this Agreement or the other Loan Documents, and of any expenses of Secured Party payable by Debtor hereunder or under the other Loan Documents;

(d)

To the satisfaction of any other Obligations; 

(e)

By holding the same as Collateral;

(f)

To the payment of any other amounts required by applicable law; and

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(g)

By delivery to Debtor or to whomsoever shall be lawfully entitled to receive the same or as a court of competent jurisdiction shall direct.

Unless the Secured Party otherwise agrees, all proceeds received by Secured Party from the sale of, collection from, or other realization upon any Collateral (net of the actual unreimbursed out-of-pocket costs incurred by Secured Party in connection with such sale, collection or other realization) and all payments to Secured Party to reimburse it for certain expenses as provided herein if Debtor can not pay 100% of the demanded expense amounts shall be distributed to Secured Party.  

6.4

Deficiency.  In the event that the proceeds of any sale, collection or realization of or upon the Collateral by Secured Party are insufficient to pay all amounts to which Secured Party is legally entitled, Debtor shall be liable for the deficiency, together with interest thereon as provided in the governing Loan Documents or (if no interest is so provided) at such other rate as shall be fixed by applicable law, together with the costs of collection and the fees and expenses of any attorneys employed by Secured Party to collect such deficiency.

6.5

Non-Judicial Remedies.  In granting to Secured Party the power to enforce its rights hereunder without prior judicial process or judicial hearing, Debtor expressly waives, renounces and knowingly relinquishes any legal right which might otherwise require Secured Party to enforce its rights by judicial process.  In so providing for non-judicial remedies, Debtor recognizes and concedes that such remedies are consistent with the usage of trade, are responsive to commercial necessity, and are the result of a bargain at arm's length.  Nothing herein is intended to prevent Secured Party or Debtor from resorting to judicial process at any party's option.

6.6

Remedies Not Exclusive.  All rights, powers and remedies herein conferred are cumulative, and not exclusive, of (i) any and all other rights and remedies herein conferred or provided for, (ii) any and all other rights, powers and remedies conferred or provided for in the Loan Documents, and (iii) any and all rights, powers and remedies conferred, provided for or existing at law or in equity, and Secured Party shall, in addition to the rights, powers and remedies herein conferred or provided for, be entitled to avail itself of all such other rights, powers and remedies as may now or hereafter exist at law or in equity for the collection of and enforcement of the Obligations and the enforcement of the warranties, representations, covenants, indemnities and other agreements contained the Loan Documents.  Each and every such right, power and remedy may be exercised from time to time and as often and in such order as may be deemed expedient by Secured Party and the exercise of any such right, power or remedy shall not be deemed a waiver of the right to exercise, at the same time or thereafter, any other right, power or remedy.  No delay or omission by Secured Party or other person or entity in the exercise of any right, power or remedy will impair any such right, power or remedy or operate as a waiver thereof or of any other right, power or remedy then or thereafter existing.

7.

MISCELLANEOUS PROVISIONS

7.1

Additional Actions and Documents.  Debtor shall take or cause to be taken such further actions, shall execute, deliver, and file or cause to be executed, delivered, and filed such further documents and instruments, and shall obtain such consents as may be necessary or as the Secured Party may reasonably request in order fully to effectuate the purposes, terms, and conditions of this Agreement and the other Loan Documents, whether before, at or after the closing of transactions contemplated hereby and thereby or the occurrence of an Event of Default hereunder.

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7.2

Notification. All notices, requests, instructions or other communications to be given in writing hereunder shall be addressed as follows:

If to Debtor:

Name:

Global Healthcare REIT, Inc.

Address:

8480 E. Orchard Rd., Ste. 3600

Greenwood Village, CO  80111

Fax:

Attention:

Lance Baller, Interim President and CEO

with a copy, which shall not constitute notice, to:

Address:

Clifford L. Neuman, P.C.

6800 N. 79th St., Ste. 200

Niwot, CO  80503

Fax:

303-449-1045

Attention:

Clifford L. Neuman, Esq.

If to the Secured Party:

Address:

Fax:

Written communications shall be deemed given, when addressed to the other party as set forth above, three days after sent by registered or certified mail, one day after sent by overnight courier of national repute or on the same day when delivered in person or when sent by facsimile to the facsimile number as set forth above, provided that the sending party can provide written evidence of the communication's successful transmission to such facsimile number.  The notification information of any party may be changed by notifying the other parties of such change in accordance with this Section 7.2.  Notice by e-mail shall not be effective for any purpose under this Agreement.

If Secured Party receives from a third party any notice or other written communication relating to the Collateral or any other right or obligation of the Secured Party under this Agreement, it shall forward promptly a copy of such notice or written communication to the Borrower, unless it is clear from the face of the notice or written communication that the Borrower has received or will receive the same notice or written communication from that third party.

7.3

Expenses.  Debtor shall (a) reimburse the Secured Party and save the Secured Party harmless against liability for the payment of all out-of-pocket expenses arising in connection with enforcement of, or the preservation or exercise of any rights (including the right to collect and dispose of the Collateral) under, this Agreement or any of the other Loan Documents, including, without limitation, the fees and expenses of counsel to the Secured Party arising in such connection; and (b) pay, and hold the Secured Party and subsequent holders of the Notes harmless from and 

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against, any and all present and future stamp taxes or similar document taxes or recording taxes and any and all charges with respect to or resulting from any delay in paying, or failure to pay, such taxes.

7.4

Severability.  If fulfillment of any provision of the Loan Documents or performance of any transaction related thereto, at the time such fulfillment or performance shall be due, shall involve transcending the limit of validity prescribed by law, then the obligation to be fulfilled or performed shall be reduced to the limit of such validity; and if any clause or provision contained in any Loan Document operates or would operate prospectively to invalidate any Loan Document, in whole or in part, then such clause or provision only shall be held ineffective, as though not herein or therein contained, and the remainder of the Loan Documents shall remain operative and in full force and effect.

7.5

Waivers.  No waiver by the Secured Party of, or consent by the Secured Party to, a variation from the requirements of any provision of the Loan Documents shall be effective unless made in a written instrument duly executed on behalf of Secured Party, and any such waiver shall be limited solely to those rights or conditions expressly waived.

7.6

Rights Cumulative.  The rights and remedies of the Secured Party described in any of the Loan Documents are cumulative and not exclusive of any other rights or remedies which the Secured Party or the then holder of the Notes otherwise would have at law or in equity or otherwise.  Except as otherwise provided herein, notice to or demand on Debtor in any case shall not entitle Debtor to any other notice or demand in similar or other circumstances.

7.7

Entire Agreement; Modification; Benefit.  This Agreement, the exhibits hereto, and the other Loan Documents constitute the entire agreement of the parties hereto with respect to the matters contemplated herein, supersede all prior oral and written agreements with respect to the matters contemplated herein, and may not be modified, deleted or amended except by written instrument executed by the parties.  All terms of this Agreement and of the other Loan Documents shall be binding upon, and shall inure to the benefit of and be enforceable by, the parties hereto and their respective successors and permitted assigns; provided, however, that no Secured Party may assign or transfer any of its rights or obligations hereunder except in connection with the transfer or assignment of a Notes, which is permitted by the terms thereof.  Debtor shall not have the right to assign or transfer any of its rights or obligations hereunder without the prior written consent of each Secured Party.

7.8

Termination.  This Agreement shall terminate upon the payment and performance in full of all Obligations under the Notes. 

7.9

Construction.  This Agreement and the other Loan Documents, the rights and obligations of the parties hereto, and any claims or disputes relating thereto shall be governed by and construed in accordance with the laws of the State of Colorado (excluding the choice of law rules thereof).  Each party hereto hereby acknowledges that all parties hereto participated equally in the negotiation and drafting of this Agreement and that, accordingly, no court construing this Agreement shall construe it more stringently against one party than against the other.

7.10

Pronouns.  All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the person or entity may require.

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7.11

Headings.  Section and subsection headings contained in this Agreement are inserted for convenience of reference only, shall not be deemed to be a part of this Agreement for any purpose, and shall not in any way define or affect the meaning, construction or scope of any of the provisions hereof.

7.12

Payments.  If any payment or performance of the Notes or of any of the other obligations under this Agreement or any of the other Loan Documents becomes due on a day other than a Business Day, the due date shall be extended to the next succeeding Business Day, and interest thereon (if applicable) shall be payable at the then applicable rate during such extension.  For the purposes of this Agreement, "Business Day" means a day other than a Saturday, Sunday or other day on which commercial banks in Colorado are authorized by law to close.

7.13

Execution.  To facilitate execution, this Agreement and any of the other Loan Documents may be executed in as many counterparts as may be required; and it shall not be necessary that the signatures of, or on behalf of, each party, or the signatures of all persons required to bind any party, appear on each counterpart; but it shall be sufficient that the signature of, or on behalf of, each party, or the signatures of the persons required to bind any party, appear on one or more of the counterparts.  All counterparts shall collectively constitute a single agreement.  It shall not be necessary in making proof of this Agreement or any other Loan Document to produce or account for any particular number of counterparts; but rather any number of counterparts shall be sufficient so long as those counterparts contain the respective signatures of, or on behalf of, all of the parties hereto.

IN WITNESS WHEREOF, the undersigned have duly executed this Agreement, or have caused this Agreement to be duly executed on their behalf, as of the day and year first hereinabove set forth.

LENDERS:

By execution of each Subscription Agreement

DEBTOR

Global Healthcare REIT, Inc.

By:________________________________

       Lance Baller, CEO

13AGREEMENT AMONG LENDERS

AGREEMENT BY AND AMONG LENDERS 

This Agreement is made and entered into as of the __ day of ___________, 2016, by and between Global Healthcare REIT, Inc., a Utah corporation (the “Company”) and those parties who purchased and hold Series 2016 10% Senior Secured Promissory Notes (the “Notes”) issued by the Company (collectively referred to herein as “Lenders”).

RECITALS

A.

The Company has sold Notes to Lenders in the aggregate principal amount of up to One Million and 00/100 Dollars ($1,000,000). 

B.

The Notes are secured by a senior security interest in all of the tangible and intangible assets of the Company (the “Collateral” and “Security Interest”, respectively) under the terms of a Security Agreement of even date.

C.

Lenders desire to act in concert with respect to the Notes and Security Interest.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the receipt and sufficiency whereof are hereby acknowledged, the parties agree as follows:

1.

Security Documents.  Attached as Exhibit B hereto is a copy of a Security Agreement (the Security Agreement and other documents that may be used to register Lenders’ security interest in the Collateral, and any certificates representing securities to be delivered to perfect a pledge is referred to herein as the “Security Documents”).  The Security Documents run in favor of each Lender to the extent of each Lender’s interest therein.  The Lenders hereby appoint Lance Baller (“Custodian”) as their custodian, only for the purpose of holding the original Security Documents.  Custodian will provide copies to the Lenders upon request.

2.

Risks of Collectibility.  Each Lender will bear the risks of collectibility of the Note held by it, of the Borrower’s financial condition, of fraud or forgery, of the enforceability of the Security Documents, of the adequacy of the security for Loan, and any other matters relating to the Loan.  Each Lender agrees that it has been solely responsible for making an independent appraisal and investigation into the financial condition, creditworthiness, nature, and status of the Borrower.  Each Lender confirms to the other Lenders that it has not, in connection with his decision to enter into the Loan transaction, relied on any other Lender (i) to inquire on his behalf into the accuracy or completeness of any information provided in connection with the Loan (whether or not such information is distributed to the Lenders), (ii) to assess or keep under review on his behalf the financial condition, creditworthiness, nature or status of the Borrower, or (iii) to advise such Lender as to the results of any appraisal or investigation performed by any other Lender.

3.

Appointment of Agent.  (a)  Upon the occurrence of one or more of the events of Default set forth in the Lender Notes or Security Agreement, or in the event a Majority of the Lenders so determine, Lenders shall appoint an agent (“Agent”) to perform certain ministerial functions on their behalf, including those specified in the Lender Notes and Security Documents. Lenders holding a majority of the total outstanding principal balance of 

the Notes (“Majority” or “Majority in Interest”) shall control all decisions regarding the exercise of rights of the Lenders under the Lender Notes and Security Documents.  Lenders constituting a Majority shall appoint the Agent in the manner set forth in paragraph 4(c).  

(b)

Agent will enforce the Lender Notes and the Security Documents, as described in the other provisions of

this Agreement.

(c)

The Agent shall be appointed by vote of a Majority.  The vote may be taken (i) in a meeting held for such purpose upon five (5) days written notice to the Lenders; or (ii) by written agreement of a Majority without a meeting.  Attendance at the meeting may be in person, by proxy, or by telephone.  Agent will signify his acceptance of such appointment, and his agreement with terms of this agreement that pertain to him as Agent, by executing a copy of this Agreement.  The terms of this agreement pertaining to such Agent’s rights, duties, and responsibilities hereunder shall be effective upon the Agent’s signature.

4.

Expenses.  If an Agent is appointed under paragraph 4 of this Agreement, Lenders shall pay him/her/it for their services in an amount that is customary and reasonable for such services.  The following out-of-pocket expenses incurred by Agent, to the extent not paid by the Company, shall be paid by the Lenders pro rata in proportion to the amount of the Lender Notes held by them:

(a)

Expenses incurred in the enforcement of the Lender Notes;

(b)

Expenses incurred following any Event of Default under any of the Lender Notes or Security Documents and any expenses incurred prior to but in connection with or in preparation for any such Event of Default; and

(c)

Expenses otherwise incurred and approved in advance in writing by a Majority in Interest of the Lenders.

Each Lender shall pay its share of all such expenses within fifteen (15) calendar days after receipt of a written statement from Agent itemizing the expenses that have been incurred and are due and payable or have been paid by Agent.  In the event that any Lender fails or refuses to pay its share of any expenses under this Section, Agent shall have a priority claim, to the extent of such unpaid expenses, on such Lender’s share of all payments of principal, interest, fees, and other charges with respect to the Notes and of all proceeds from realization upon the security for the Notes.  Each Lender hereby grants to Agent a security interest in its share of such payments and proceeds to secure the payment of expenses that it is obligated to pay hereunder.

5.

Records.  Agent shall at all times keep books of account and records at his current address reflecting all transactions in connection with the Loan and the Lenders’ interests therein.  Each Lender shall have access to Agent’s records maintained in connection with the Loan for inspection and/or copying at such Lender’s expense at all reasonable times during business hours.  Upon request, Agent shall furnish to any Lender copies of title reports, financial information, inspection reports, and other documents relating to the Loan, the Security Documents, or the Company that have been furnished to or prepared by Agent in connection with the Loan.

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6.

Liability of Agent.  Neither Agent nor any of his/her/its agents shall be liable for any action taken or not taken in good faith in connection with the Loan, in the absence of his own gross negligence or willful misconduct.  Agent shall in no event be liable to any Lender for any action taken or not taken by Agent with the consent or at the request of such Lender, unless such action is performed in a grossly negligent manner or in a manner constituting willful misconduct (which manner of performance was not requested or consented to by such Lender).

Agent may consult with legal counsel, independent public accountants and other experts selected by him and shall not be liable for any action taken or not taken in good faith reliance upon the advice of such experts.  Unless specifically requested to do so by any Lender, Agent shall have no duty to inquire into or verify (i) any statement, warranty, or representation made by the Company in connection with the Loan; (ii) the truthfulness or genuineness of any information or document supplied by the Company in connection with the Loan; or (iii) the genuineness of the signatures of any party (other than Agent).  Agent shall not incur any liability by acting in reliance upon any notice, consent, or other writing (including telexes, telecopies, or similar instruments) believed by Agent to be genuine or to be signed by the proper party or parties.

7.

Indemnification.  Each Lender shall, pro rata, in proportion to the amount of the Note held by him, indemnify Agent against any cost, expense, claim, demand, action, loss, or liability, including reasonable attorney’s fees incurred in contesting the same, that Agent may suffer or incur in connection with the Loan in his capacity as Agent, or any action taken or omitted by Agent in good faith under this Agreement, except to the extent the same arises from Agent’s gross negligence or willful misconduct, or from actions taken by Agent that are outside the scope of his authority under this Agreement.

8.

Litigation.  Subject to the provisions of Section 12 hereof, Agent shall have the exclusive right to initiate, direct, and otherwise control any litigation involving all of the Lenders in their capacity as such under the Loan, whether as plaintiffs, defendants, or otherwise.  All costs and expenses incurred by Agent in connection with such litigation, including reasonable attorney’s fees, shall be paid in accordance with Section 4 hereof.

9.

Notifications.  Each Lender shall endeavor (but shall not incur any liability for failure to do so) to notify each other of any events or occurrences that come to their attention that may have material adverse effect on the security for the Loan or the ability of the Company to perform any of their respective obligations under the Lender Notes.

10.

Defaults of the Company.  Agent shall send to each Lender a copy of each notice he sends to the Company pursuant to the Lender Notes notifying the Company of any claimed defaults thereunder.  The failure of the Company to cure any such default within the time periods, if any, specified in the Lender Notes or Security Documents shall constitute an Event of Default thereunder unless such Event of Default is waived (either during or after the applicable cure period) by all of the Lenders (for any Event of Default resulting from the failure to make required payments of principal and interest on the Loan) or by a Majority (for any other Event of Default).

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Agent shall advise the Lenders from time to time as to his recommendations with respect to any Event of Default and the possible waiver thereof.

11.

Enforcement.  Upon the occurrence of any Event of Default under the Lender Notes or Security Documents that is not waived in accordance with the terms of this Agreement, Agent shall (unless otherwise required by this Section 11) take all reasonable steps for the enforcement of the Loan that Agent would normally take in the event of such a default that is not waived under a similar loan for his own account.  Agent shall be entitled to exercise his reasonable discretion to determine when and in what manner the Loan shall be enforced, and shall control and direct all actions taken or not taken in connection with such enforcement; provided, however, that a majority in interest of the Lenders must approve, or may require, the exercise of any affirmative remedy provided to Agent under the terms of any of the Lender Notes or Security Documents, including but not limited to, acceleration of the Lender Notes. Unless otherwise instructed in writing by a majority in interest of the Lenders, however, Agent shall have no obligation to withhold disbursements or exercise any right or remedy available to Lenders if in Agent’s reasonable judgment the exercise of such rights is not in the best interests of the Lenders.

12.

Permitted Actions.  Any actions that require the consent or approval of a specified number of Lenders pursuant to the terms of this Agreement may be initiated by any group of Lenders comprising the number whose consent or approval is required.  Any actions, consents, or approvals required or permitted of the Lenders under the Lender Notes or Security Documents, for which the consent or approval of a specified number of Lenders is not required in this Agreement, may be taken or given by Agent, and if so taken or given by Agent shall not be binding upon all of the Lenders.  Agent may, however, at his sole option at any time upon notice to the Lenders, request the Lenders’ approval or authorization of any action, consent, or approval that may be taken or given by Agent under the preceding sentence, which approval or authorization shall require the written consent of a majority in interest of the Lenders.

Any action taken or decision made by Agent or by any group of Lenders to whom the authority to take such action or make such decision has been given pursuant to the terms of this Agreement, shall be binding upon all of the Lenders, and each Lender agrees to execute all documents and instruments and take all other actions that are deemed necessary or desirable by Agent or the Lenders making such decisions to carry out the terms thereof.

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13.

Pari Passu Status in Lender Notes.

a.

Each of the Lenders hereby acknowledges and agrees that none of the Lenders, individually or collectively, shall have priority with respect to any payments of principal or interest in respect of the Lenders’ Lender Notes. Rather, each of the Lenders hereby acknowledges and agrees that its and their respective rights and priority are pari passu with the rights and priority of each and all of the Lenders. In addition, and without limitation of the generality of the foregoing, each Lender hereby confirms, agrees and stipulates that regardless of the relative times at which indebtedness of the Company was incurred to the holders of Lender Notes, and regardless of anything to the contrary contained in any documents executed in connection with the Lender Notes, shall in all respects be held by them on a pari passu basis.  

b.

In the event of (i) an Event of Default, (ii) any insolvency, bankruptcy, receivership, liquidation, reorganization, assignment for the benefit of creditors or other similar proceeding relating to the Company, whether voluntary or involuntary, (iii) any proceeding for the voluntary liquidation, dissolution or other winding-up of the Company, whether involving insolvency or bankruptcy proceedings or not, then, and in any such event, any payment or other distribution of any character, whether in cash, securities or other property out of or in respect of the assets of the Company, shall be shared by the Lenders on a pari passu basis with the amount thereto to which Lenders are entitled to be determined based on the proportion which the then outstanding Lenders’ indebtedness bears to the aggregate indebtedness represented by the Lender Notes; provided, however, that the Lenders, individually or collectively, shall not take any action without prior written notice having been furnished to all Lenders.

c.

If the Lenders, individually or collectively, shall at any time have received any payment, distribution or additional security from any of the assets of the Company, whether arising out of or as a result of any event described in Section 13(b) above or otherwise, the receiving party thereof shall promptly provide the Company or any court-appointed trustee or Agent with a detailed accounting thereof, and shall promptly take all action necessary to implement the pro-rata sharing contemplated by Section 13(b) above.  Any such payment, distribution or security so received shall be deemed to be held in trust by the receiving party thereof for the benefit of all the Lenders until such sharing has been implemented and completed as contemplated by Section 13(b) above. 

d.

Each of the Lenders agree to use reasonable efforts to cooperate with one another in the realization upon and/or liquidation of the assets of Company following an Event of Default, and to promptly advise any designated or appointed agent with respect to the Company’s assets and all other Lenders of any actions taken with respect thereto, provided, however, that no Lender shall, enter into any modification or amendment of any agreements that would (i) extend the term of the Lenders’ Indebtedness, (ii) increase the applicable rate of interest payable by the Company thereunder, or (iii) increase the amount of the Company's indebtedness thereunder, 

5

without the prior written approval of a two-thirds (2/3rds) majority in interest of all of the Lenders. 

14.

Power of Attorney.

a.

To effectuate the terms and provisions hereof, the Lenders hereby appoint the Agent as their attorney-in-fact (and the Agent hereby accepts such appointment) for the purpose of carrying out the provisions of this Agreement including, without limitation, taking any action on behalf of, or at the instruction of, the Majority in Interest at the written direction of the Majority in Interest and executing any consent authorized pursuant to this Agreement and taking any action and executing any instrument that the Agent may deem necessary or advisable (and lawful) to accomplish the purposes hereof.

b.

All acts done under the foregoing authorization are hereby ratified and approved and neither the Agent nor any designee nor agent thereof shall be liable for any acts of commission or omission, for any error of judgment, for any mistake of fact or law except for acts of gross negligence or willful misconduct.

c.

This power of attorney, being coupled with an interest, is irrevocable while this Agreement remains in effect.

15.

Further Assurances.  Each Lender, and Agent after his appointment, agree to use their best efforts to cooperate in the administration of the Loan under this Agreement and, except as specified in Section 9 hereof, to use their best efforts to keep each other reasonably well informed with respect to any material event relating to the Company and/or the Loan.  Without limiting the generality of the foregoing, the parties hereby agree to execute such documents and perform such acts as may be desirable to carry out the purposes of this Agreement, including without limitation, the execution of such documents as Agent may request in connection with any actions or decisions of Agent or any specified number of Lenders authorized under this Agreement regarding the administration or enforcement of the Loan, ownership, management, operation, sale, or leasing of the collateral, whether or not any Lender agrees with such decision or action.  The obligations of the parties contained herein may be specifically enforced by an action brought in a court of competent jurisdiction.

16.

Successors and Assigns; Resignation of Agent.  Any Lender shall have the right to assign its interest in this Agreement to any one to whom it has assigned its Note.  Agent’s obligations hereunder shall not be assigned or delegated without the prior written consent of a Majority.  Agent may resign as agent at any time for any reason upon providing the Lenders 10 days prior written notice.  Upon the resignation of Agent, a Majority shall designate a successor agent in accordance with the provisions of paragraph 4(c).

17.

No Joint Venture.  Nothing contained in this Agreement shall be construed as creating a joint venture or partnership among the parties hereto, and no party shall be obligated for the acts or omissions of any other party except as expressly provided herein.

18.

Notices.  Except where verbal notice is specifically authorized in this Agreement, all notices hereunder shall be in writing and shall be deemed effectively given or served for all purposes when presented personally, upon receipt if sent by first class mail or 

6

over-night express, or on the date of transmission if sent by telegram, telex, or telecopy to any party hereto at the address set forth on the signature page hereof, or at such other address as any party shall subsequently designate by notice.

19.

Approvals.  Any document, information, or action that is required to be approved by any party under this Agreement shall be approved or disapproved by written notice given no later than fifteen (15) calendar days after receipt of such document, information, or written request for approval of such action.  If any party fails to give its written approval or disapproval of any matter within the foregoing fifteen-day period, such party will be deemed to have approved such matter for all purposes.

20.

No Oral Change.  This Agreement may not be changed, discharged, or terminated orally, but only by an instrument in writing signed by the party against whom enforcement of the change, discharge, or termination is sought.

21.

Arbitration.  If at any time during the term of this Agreement any dispute, difference, or disagreement shall arise upon or in respect of the Agreement, and the meaning and construction hereof, every such dispute, difference, and disagreement shall be referred to a single arbiter agreed upon by the parties, or if no single arbiter can be agreed upon, an arbiter or arbiters shall be selected in accordance with the rules of the American Arbitration Association and such dispute, difference, or disagreement shall be settled by arbitration in accordance with the then prevailing commercial rules of the American Arbitration Association, and judgment upon the award rendered by the arbiter may be entered in any court having jurisdiction thereof.

22.

Litigation Costs.  In the event of any controversy, claim, arbitration, or legal action among the parties hereto arising out of this Agreement or relating to the Loan, the prevailing party will be entitled to recover from the other party or parties (jointly or severally) all costs, damages, and expenses, including reasonable attorney’s fees, incurred by the prevailing party in connection with such controversy, claim, arbitration, or legal action.

23.

Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado, excluding its laws of conflict of laws.

24.

Severability.  The provisions of this Agreement are severable and a declaration by a court of competent jurisdiction that any of those provisions is invalid or unenforceable shall not affect the validity or enforceability of any other provision.

25.

Headings.  The headings used herein are for purposes of convenience only and should not be used in construing the provisions hereof.

26.

Counterparts.  This agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed the same document. 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized agents as of the day and year first above written.

GLOBAL HEALTHCARE REIT, INC.

By:

      Lance Baller, Interim President and CEO

LENDER:

Name:

Address:

Amount of Note:

Signature:

By execution of Subscription Agreement

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