Document:

INVESTMENT AGREEMENT

THIS INVESTMENT AGREEMENT between AO BONANZA LAS VEGAS, INC., a Nevada
corporation ("Borrower") and EUROWEB RE CORP., a Nevada corporation ("Lender")
includes three parts and incorporates the following agreements:

      1.    A Line of Credit construction loan agreement according to the terms
            and conditions presented below and according to the attached Line of
            Credit Promissory Note.
      2.    Option Agreement commencing on page 25.
      3.    Line of Credit Promissory Note (secured by a Deed of Trust) ---
            Attached as Exhibit "B".

BORROWER'S BOARD OF DIRECTORS: To secure any and all of Lender's interests and
rights as set forth in this Investment Agreement and all related agreements and
documents, Borrower, its officer(s), shareholder(s), and director(s) agree to
appoint Yossi Attia or other representative as Lender chooses, as a board member
in Borrower's board of directors. Yossi Attia's scope of decisions as a board of
directors shall be limited solely to matters that are directly or indirectly
related to this Investment Agreement and to the Bonanza development project. It
is understood that as of the date of this agreement Darrren Dunckel is the sole
shareholder and sole director of Borrower. Yossi Attia shall have the voting
power of not less than fifty percent (50%) of the total voting power of
Borrower's board of directors. In case Borrower, through its shareholders, board
of directors, or otherwise, appoints additional directors other than Darren
Dunckel and Yossi Attia, Borrower shall appoint additional Lender's
representative(s) as board members as instructed by Lender for the purpose of
maintaining Lender's minimum 50% board voting power. Borrower, its
shareholder(s), officer(s), and director(s) agree to not take any measures to
directly or indirectly dilute Lender's board voting power. Is such dilution
occurs; it shall constitute a breach of this agreement by Borrower.

Upon Lender's written authorization to Borrower that Borrower has paid back all
principal and interest amounts as set forth under this Investment Agreement
and/or that all conditions and performance under this Investment Agreement are
satisfied, Borrower shall have the right to remove any and all representative(s)
of Lender.

Board of Directors. Borrower agrees to deliver at Closing shareholders and board
resolutions appointing the above-mentioned Lender's representative. On the
closing, the Board of Directors shall consist of two members, as follows: Yossi
Attia and Darren Dunckel.

Protective Provisions. The consent of Lender shall be required for any action by
Borrower if such action would materially and adversely change the rights of
Lender under this Investment Agreement, including but not limited to acts that
(i) amend or repeal any provision of Borrower's Articles of Incorporation if
such action would materially and adversely change the rights, preferences, or
privileges of Lender under this Investment Agreement (ii) authorize or issue
shares of any class of stock having any preference or priority as to dividends
or assets superior to or on a parity with Lender's rights under this Investment
Agreement (iii) pay or declare any dividend on any junior securities, or (iv)
authorize a merger, sale of substantially all the assets of the Borrower,
recapitalization or reorganization of Borrower.

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I. CONSTRUCTION LOAN AGREEMENT (Line of Credit)

DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. All references
to dollar amounts shall mean amounts in lawful money of the United States of
America.

      AGREEMENT. The word "Agreement" means this Investment Agreement, as this
Investment Agreement may be amended or modified from time to time, together with
all exhibits and schedules attached to this Investment Agreement from time to
time.

      NOTE. The word "Note" means the promissory note or credit agreement
executed with this investment agreement, in the original principal amount of up
to $10,000,000.00 from Borrower to Lender, together with all renewals of,
extensions of, modifications of, refinancings of, consolidations of, and
substitutions for the promissory note or agreement.

      ARCHITECTURE CONTRACT. The words "Architecture Contract" mean the
architect's contract relating to the Project, if any.

      BORROWER. The word "Borrower" means each and every person or entity
signing the Note, including without limitation AO BONANZA LAS VEGAS, INC.

      COLLATERAL. The word "Collateral" means and includes without limitation
all property and assets granted as collateral security for a Loan, whether real
or personal property, whether granted directly or indirectly, whether granted
now or in the future, and whether granted in the form of a security interest,
mortgage, deed of trust, assignment, pledge, chattel mortgage, chattel trust,
factor's lien, equipment trust, conditional sale, trust receipt lien, charge,
lien or title retention contract, lease or consignment intended as a security
device, or any other security or lien interest whatsoever, whether created by
law, contract, or otherwise.

      EVENT OF DEFAULT. The words "Event of Default" mean and include without
limitation any of the Events of Default set forth below in the section titled
"EVENTS OF DEFAULT."

      GRANTOR. The word "Grantor" means and includes without limitation each and
all of the persons or entities granting a Security Interest in and Collateral
for the Indebtedness, including without limitation all Borrowers granting such a
Security Interest.

      GUARANTOR. The word "Guarantor" means and includes without limitation all
guarantors, sureties, and accommodation parties, including without limitation
all guarantors under the Completion Guaranty.

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      IMPROVEMENTS. The word "Improvements" means and includes without
limitation all existing and future buildings, structures, facilities, fixtures,
additions, and similar construction on the Property.

      INDEBTEDNESS. The word "Indebtedness" means and includes without
limitation all Loans, together with all other obligations, debts and liabilities
of Borrower to Lender, or any one or more of them, as well as all claims by
Lender against Borrower, or any one or more of them; whether now or hereafter
existing, voluntary or involuntary, due or not due, absolute or contingent,
liquidated or unliquidated; whether Borrower may be liable individually or
jointly with others; whether Borrower may be obligated as a guarantor, surety,
or otherwise; whether recovery upon such Indebtedness may be or hereafter may
become barred by any statute of limitations; and whether such indebtedness may
be or hereafter may become otherwise unenforceable.

      LENDER. The word "Lender" means EUROWEB RE CORP., its successors and
assigns.

      LOAN. The word "Loan" means the loan made to Borrower under this Agreement
and the related Documents as described below.

      LOAN FUND. The words "Loan Fund" mean the undisbursed proceeds of the Loan
under this Agreement together with any equity funds or other deposits required
from Borrower under this Agreement.

      PLANS AND SPECIFICATIONS. The words "Plans and Specifications" mean the
plans and specifications for the Project which have been submitted to and
initiated by Lender, together with such changes and additions as may be approved
by Lender in writing.

      PROJECT. The word "Project" means the construction and completion of all
improvements contemplated by this Agreement, including without limitation the
erection of the building or structure, installation of equipment and fixtures,
landscaping, and all other work necessary to make the Property usable and
complete for the intended purposes. The Project includes the following work:

Bonanza Condominiums
NE Corner Bonanza Rd. & Main Street
Las Vegas, Nevada
296 Condominium units with 34,700 sq. ft. retail over (3) levels of parking
The project consists of three parts: parking structure, residential
(including more than 20,000 sq.ft of recreation area), and commercial.

The Architect is:

Dennis E. Rusk Architect, Limited Liability Company
3960 E. Patrick Lane, #203
Las Vegas, Nevada 89102

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The Construction Manager is:

To be decided, and as interim period:

Bob Buente from Trafford Associates, LLC
3452 E. Foothill Blvd
Suite 840
Pasadena, CA  91107

      PROJECT DOCUMENTS. The words "Project Documents" mean the Plans and
Specifications, all studies, data and drawings relating to the Project, whether
prepared by or for Borrower, the Construction Contract, the Architecture
Contract, and all other contracts and agreements relating to the Project or the
construction of the improvements.

      PROPERTY. The word "Property" means the Real Property together with all
improvements, all equipment, fixtures, and other articles of personal property
now or subsequently attached or affixed to the real property, together with all
accessions, parts, and additions to, all replacements of, and all substitutions
for any of such property, and all proceeds (including insurance proceeds and
refunds of premiums) from any sale or other disposition of such property.

      REAL PROPERTY. The words "Real Property" mean the real property located in
      Clark County, State of Nevada, and legally described as:

            SEE ATTACHED EXHIBIT "A"

      RELATED DOCUMENTS. The words "Related Documents" mean and include without
      limitation all promissory notes, credit agreements, loan agreements,
      environmental agreements, guaranties, security agreements, mortgages,
      deeds of trust, and all other instruments, agreements and documents,
      whether now or hereafter existing, executed in connection with the
      indebtedness.

      SECURITY AGREEMENT. The words "Security Agreement" mean and include
      without limitation any agreements, promises, covenants, arrangements,
      understandings or other agreements, whether created by law, contract, or
      otherwise, evidencing, governing, representing, or creating a Security
      Interest.

      SECURITY INTEREST. The words "Security Interest" mean and include without
      limitation any type of collateral security, whether in the form of a lien,
      charge, mortgage, deed of trust, assignment, pledge, chattel mortgage,
      chattel trust, factor's lien, equipment trust, conditional sale, trust
      receipt, lien or title retention contract, lease or consignment intended
      as a security device, or any other security or lien interest whatsoever,
      whether created by law, contract, or otherwise.

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      Value. The word "Value" means such amount or worth as defined and
      determined by Lender in its sole discretion unless agreed to the contrary
      by Lender in writing.

LOAN. The Loan shall be in an amount not to exceed the principal sum of U.S.
$10,000.000.00 and shall bear interest on so much of the principal sum as shall
be advanced pursuant to the terms of this Agreement and the Related Documents.
The Loan shall bear interest on each Advance from the date of the Advance in
accordance with the terms of the Note. Borrower shall use the Loan Funds solely
for the payment of (a) the costs of constructing the improvements and equipping
the Project in accordance with the Construction Contract; (b) other costs and
expenses incurred or to be incurred in connection with the construction of the
improvements as Lender in its sole discretion shall approve; and (c) if
permitted by Lender, interest due under the Note, including all expenses and all
loan and commitment fees described in this Agreement. The Loan amount shall be
subject at all times to all maximum limits and conditions set forth in this
Agreement or in any of the Related Documents, including without limitation, any
limits relating to loan to value ratios and acquisition and Project costs.

FEES AND EXPENSES. Whether or not the Project shall be consummated, Borrower
shall assume and pay upon demand all out-of-pocket expenses incurred by Lender
in connection with the preparation of loan documents and the making of the Loan,
including without limitation the following: (a) all closing costs, fees, and
disbursements; (b) all expenses of Lender's legal counsel; and (c) all title
examination fees, title insurance premiums, appraisal fees, survey costs,
required fees, and filing and recording fees.

NO CONSTRUCTION PRIOR TO RECORDING OF SECURITY DOCUMENT. Borrower will not
permit any work or materials to be furnished in connection with the Project
until (a) Borrower has signed the Related Documents; (b) Lender's mortgage or
deed of trust and other Security interests in the Property have been duly
recorded and perfected; and (c) Lender has been provided evidence, satisfactory
to Lender, that Borrower has obtained all insurance required under this
Agreement or any Related Agreement and that Lender's liens on the Property and
improvements are valid perfected first liens, subject only to such exceptions,
if any, acceptable to Lender.

REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of Loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any indebtedness exists:

      Organization. Borrower is a corporation which is duly organized, validly
      existing, and in good standing under the laws of the State of Nevada and
      is validly existing and in good standing in all states in which Borrower
      is dong business. Borrower has the full power and authority to own its
      properties and to transact the business in which it is presently engaged
      or presently proposes to engage. Borrower also is duly qualified as a
      foreign corporation and is in good standing in all states in which the
      failure to so qualify would have a material adverse effect on its business
      or financial condition.

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      Authorization. The execution delivery, and performance of this Agreement
      by Borrower, to the extent to be executed, delivered or performed by
      Borrower, have been duly authorized by all necessary action by Borrower;
      do not require the consent or approval of any other person, regulatory
      authority or governmental body; and do not conflict with, result in a
      violation of, or constitute a default under (a) any provision of its
      articles of organization, operating agreement, or any other agreement or
      other instrument binding upon Borrower or (b) any law, governmental
      regulation, court decree, or order applicable to Borrower.

      Financial Information. Each financial statement of Borrower supplied to
      Lender truly and completely disclosed Borrower's financial condition as of
      the date of the statement, and there has been no material adverse change
      in Borrower's financial condition subsequent to the date of the most
      recent financial statement supplied to Lender. Borrower has no material
      contingent obligations except as disclosed in such financial statements.

      Litigation and Claims. No litigation, claim, investigation, administrative
      proceeding or similar action (including those for unpaid taxes) against
      Borrower is pending or threatened, and no other event has occurred which
      may materially adversely affect Borrower's financial condition or
      properties, other than litigation, claims, or other events, if any, that
      have been disclosed to and acknowledge by Lender in writing.

      Title to Property. Borrower has, or on the date of first disbursement of
      Loan proceeds will have, good and marketable title to the Property fee and
      clear of all defects, liens, and encumbrances, excepting only liens for
      taxes, assessments, or governmental charges or levels not yet delinquent
      or payable without penalty or interest, and such liens and encumbrances as
      may be approved in writing by the Lender.

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      Hazardous Substances. The terms "hazardous waste," "hazardous substance,"
      "disposal," "release," and "threatened release," as used in this
      Agreement, shall have the same meanings as set forth in the Comprehensive
      Environmental Response, Compensation, and Liability Act of 1980, as
      amended, 42 U.S.C. Section 9601 et seq, ("CERCLA"), the Superfund
      Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"),
      the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et
      seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901,
      et seq., or other applicable state or Federal laws, rules, or regulations
      adopted pursuant to any of the foregoing. Except as disclosed to and
      acknowledged by Lender in writing, Borrower represents and warrants that:
      (a) During the period of Borrower's ownership of the properties, there has
      been no use, generation, manufacture, storage, treatment, disposal,
      release or threatened release of any hazardous waste or substance by any
      person on, under, about or from any of the properties. (b) Borrower has no
      knowledge of, or reason to believe that there has been (i) any use,
      generation, manufacture, storage, treatment, disposal, release, or
      threatened release of any hazardous waste or substance on, under, about or
      from the properties by any prior owners or occupants of any of the
      properties, or (ii) any actual or threatened litigation or claims of any
      kind by any person relating to such matters. (C) Neither Borrower nor any
      tenant, contractor, agent or other authorized user of any of the
      properties; and any such activity shall be conducted in compliance with
      all applicable federal, state, and local laws, regulations, and
      ordinances, including without limitation those laws, regulations and
      ordinances described above. Borrower authorizes Lender and its agents to
      enter upon the properties to make such inspections and tests as Lender may
      deem appropriate to determine compliance of the properties with this
      section of the Agreement. Any inspections or tests made by Lender shall be
      at Borrower's expense and for Lender's purposes only and shall not be
      construed to create any responsibility or liability on the part of Lender
      to Borrower or to any other person. The representations and warranties
      contained herein are based on Borrower's due diligence in investigating
      the properties for hazardous waste and hazardous substances. Borrower
      hereby (a) releases and waives any future claims against Lender for
      indemnity or contribution in the event Borrower becomes liable for cleanup
      or other costs under any such laws, and (b) agrees to indemnify and hold
      harmless Lender against any and all claims, losses, liabilities, damages,
      penalties, and expenses which Lender may directly or indirectly sustain or
      suffer resulting from a breach of this section of the Agreement or as a
      consequence of any use, generation, manufacture, storage, disposal,
      release or threatened release of a hazardous waste or substance on the
      properties. The provisions of this section of the Agreement, including the
      obligation to indemnify, shall survive the payment of the indebtedness and
      the satisfaction of this Agreement and shall not be affect by Lender's
      acquisition of any interest in any of the properties, whether by
      foreclosure or otherwise.

      Project Costs. The Project costs are true and accurate estimates of the
      costs necessary to complete the Improvements in a good and workmanlike
      manner according to the Plans and Specifications presented by Borrower to
      Lender, and Borrower shall take all steps necessary to prevent the actual
      cost of the improvements from exceeding the Project costs.

      Utility Services. All utility services appropriate to the use of the
      Project after completion of construction are available at the boundaries
      of the Property. Access. The Property is contiguous to publicly dedicated
      streets, roads, or highways providing access to the Property.

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      Assessment of Property. The Property is and will continue to be assessed
      and taxed as an independent parcel by all governmental authorities.

      Compliance with Governing Authorities. Borrower has examined and is
      familiar with all the assessments, covenants, conditions, restrictions,
      reservations, building laws, regulations, zoning ordinances, and federal,
      state, and local requirements affecting the Project. The Project will at
      all times and in all respects conform to and comply with the requirements
      of such easements, covenants, conditions, restrictions, reservations,
      building laws, regulations, zoning ordinances, and federal, state and
      local requirements.

      Legal Effect. This Agreement constitutes, and any instrument or agreement
      required hereunder to be given by Borrower when delivered will constitute,
      legal, valid and binding obligations of Borrower enforceable against
      Borrower in accordance with their respective terms.

      Binding Effect. This Agreement, the Note and all Security Agreements
      directly or indirectly securing repayment of Borrower's Loan and Note are
      binding upon Borrower as well as upon Borrower's successors,
      representatives and assigns, and are legally enforceable in accordance
      with their respective terms.

      Survival of Representation and Warranties. Borrower understands and agrees
      that Lender is relying upon the above representations and warranties in
      extending Loan Advances to Borrower. Borrower further agrees that the
      foregoing representations and warranties shall be continuing in nature and
      shall remain in full force and effect until such time as Borrower's Loan
      and Note shall be paid in full, or until this Agreement shall be
      terminated in the manner provided above, whichever is the last to occur.

CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Advance and each subsequent Advance under this Agreement shall be subject to the
fulfillment to Lender's satisfaction of all of the conditions set forth in this
Agreement.

      Approval of Contractors, Subcontractors, and Materialmen. Lender shall
      have approved a list of all contractors employed in connection with the
      construction of the improvements, showing the name, address, and telephone
      number of each contractor, a general description of the nature of the work
      to be done, that labor and materials to be supplied, the names of
      materialmen, if known, and the appropriate dollar value of the labor,
      work, or materials with respect to each contractor or materialmen. Lender
      shall have the right to communicate with any person to verify the facts
      disclosed by the list or by any application for any Advance, or for any
      other purpose.

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      PLANS, SPECIFICATIONS, AND PERMITS. Lender shall have received and
      accepted a complete set of Plans and Specifications setting forth
      improvements for the Project, and Borrower shall have furnished to Lender
      copies of all permits and requisite approvals of any governmental bond
      necessary for the construction and use of the Project.

      ARCHITECTURE AND CONSTRUCTION CONTRACTS. Borrower shall have furnished in
form and substance satisfactory to Lender an executed copy of the Architecture
Contract and an executed copy of the Construction Contract.

      SUPPORT DOCUMENTS. Borrower shall provide to Lender in form satisfactory
      to Lender the following support documents for the Loan: Completion
      Guaranty.

      BUDGET AND SCHEDULE OF ESTIMATED ADVANCES. Lender shall have approved
      detailed budget and cash flow projections of total Project costs and a
      schedule of the estimated amount and time of disbursements of each
      Advance.

      BORROWER'S AUTHORIZATION. Borrower shall have provided in form and
      substance satisfactory to Lender properly certified resolutions, duly
      authorizing the execution and delivery of the Loan documents, and the
      consummation of the Project, and such other authorizations and other
      documents as Lender in its sole discretion may require.

      BOND. If requested by Lender, Borrower shall have furnished a performance
      and payment bond in an amount equal to 100% of the amount of the
      Construction Contract, as well as a materialmen's and mechanics' payment
      bond, with such riders and supplements as Lender may require, each in form
      and substance satisfactory to Lender, naming the General Contractor as
      principal and Lender as an additional obligee.

      APPRAISAL. If required by Lender, an appraisal shall be prepared for the
      Property, at Borrower's expense, which in form and substance shall
      satisfactory to Lender, in its sole discretion, including applicable
      regulatory requirements.

      PLANS AND SPECIFICATIONS. If requested by Lender, Borrower shall have
      assigned to Lender on Lender's forms the Plans and Specifications for the
      Project.

      ENVIRONMENT REPORT. If requested by Lender, Borrower shall have furnished
      to Lender, at Borrower's expense, an environmental report and certificate
      on the Property in form and substance satisfactory to Lender, prepared by
      an engineer or other expert satisfactory to Lender stating that the
      Property complies with all applicable provisions and requirements of the
      "Hazardous Substances" paragraph set forth below.

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      SOIL REPORT. If requested by Lender, Borrower shall have furnished to
      Lender, at Borrower's expenses, a soil report for the Property in form and
      substance satisfactory to Lender, prepared by a registered engineer
      satisfactory to Lender stating that the Property is free from soil or
      other geological conditions that would preclude its use or development as
      contemplated without extra expense for precautionary, corrective or
      remedial measures.

      SURVEY. If requested by Lender, Borrower shall have furnished to Lender a
      survey of recent date, prepared and certified by a qualified surveyor and
      providing that the improvements, if constructed in accordance with the
      Plans and Specifications, shall lie wholly within the boundaries of the
      Property without encroachment or violation of any zoning ordinances,
      building codes or regulations, or setback requirements, together with such
      other information as Lender in its sole discretion may require.

      ZONING. Borrower shall have furnished evidence satisfactory to Lender that
      the Property is duly and validly zoned for the construction maintenance,
      and operation of the Project.

      TITLE INSURANCE. Borrower shall have provided to Lender an ALTA Lender's
      extended coverage policy of title insurance with such endorsements as
      Lender may require, issued by a title insurance company acceptable to
      Lender and in a form, amount, and content satisfactory to Lender insuring
      or agreeing to insure that Lender's Mortgage or Deed of Trust on the
      Property is or will be upon recordation a valid lien on the Property free
      and clear of all defects, liens, encumbrances, and exceptions except those
      as specifically accepted by Lender in writing. If requested by Lender,
      Borrower shall provide to Lender, at Borrower's expense, a foundation
      endorsement to he title policy upon the completion of each foundation for
      the improvements, showing no encroachments, and upon completion an
      endorsement which insures the lien-free completion of the improvements.

      INSURANCE. Unless waived by Lender in writing, Borrower shall have
      delivered to Lender the following insurance policies or evidence thereof:
      an all risks course of construction insurance policy (builder's risk),
      with extended coverage covering the improvements issued in an amount and
      by a company acceptable to Lender, containing a loss payable or other
      endorsement satisfactory to Lender insuring Lender as mortgagee together
      with such other endorsements as may be required by Lender including
      stipulations that coverage will not be cancelled or diminished without at
      least ten (10) days, prior written notice to lender; (b) owners and
      General Contractor general liability insurance, public liability and
      workmen's compensation insurance; (c) flood insurance if required by
      Lender or applicable law; and (d) all other insurance required by this
      Agreement or by the Related Documents.

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      WORKERS' COMPENSATION COVERAGE. Provide to Lender proof of the General
      Contractor's compliance with all applicable workers' compensation laws and
      regulations with regard to all work performed on the Project.

      PAYMENT OF FEES AND EXPENSES. Borrower shall have paid to Lender all
      expenses specified in this Agreement as are then due and payable.

      SATISFACTORY CONSTRUCTION. All work usually done at the stage of
      construction for which disbursement is requested shall have been done in a
      good and workmanlike manner and all materials and fixtures usually
      furnished and installed at that stage of construction shall have been
      furnished and installed, all in compliance with the Plans and
      Specifications. Borrower shall also have furnished to Lender such proofs
      as Lender may require to establish the progress of the work, compliance
      with applicable laws, freedom of the Property from liens, and the basis
      for the requested disbursement.

      CERTIFICATION. Borrower shall have furnished to Lender a certification by
      an engineer, architect, or other qualified inspector acceptable to Lender
      that the construction of the improvements has complied and will continue
      with all applicable statutes, ordinances, codes, regulations, and similar
      requirements.

      LIEN WAIVERS. Borrower shall have obtained and attached to each
      application for an Advance, including the Advance to cover final payment
      to the General Contractor, executed acknowledgments of payments of all
      sums due and releases of mechanic's and materialmen's liens, satisfactory
      to Lender, from any party having lien rights, which acknowledgments of
      payment and releases of liens shall cover all work, labor, equipment,
      materials done, supplied, performed, or furnished prior to such
      application for an Advance.

      LACK OF DEFAULT. There shall not exist at the time of any Advance a
      condition which would constitute an Event of Default under this Agreement.

DISBURSEMENT OF LOAN PROCEEDS. The following provisions relate to the
disbursement of funds from the Loan Fund.

      APPLICATION FOR ADVANCES. Each application shall be stated on a standard
      AIA payment request form or other form approved by Lender, executed by
      Borrower, and supported by such evidence as Lender shall reasonably
      require. Borrower shall apply only for disbursement with respect to work
      actually done by the General Contractor and for materials and equipment
      actually incorporated into the Project. Each application for an Advance
      shall be deemed a certification of Borrower that as of the date of such
      application, all representations and warranties contained in the Agreement
      are true and correct, and that Borrower is in compliance with all of the
      provisions of this Agreement.

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      PAYMENTS. At the sole option of Lender, Advances may be paid in the joint
      names of Borrower and the General Contractor, subcontractor(s), or
      supplier(s) in payment of sums due under the Construction Contract. At its
      sole option, Lender may directly pay the General Contractor and any
      subcontractors or other parties the sums due under the Construction
      Contract. Borrower appoints Lender as its attorney-in-fact to make such
      payments. This power shall be deemed to be coupled with an Interest, shall
      be irrevocable, and shall survive an Event of Default under this
      Agreement.

      PROJECTED COST OVERRUNS. If Lender at any time determines in its sole
      discretion that the amount in the Loan Fund is insufficient, or will be
      insufficient, to complete fully and to pay for the Project, then within
      ten (10) days after receipt of a written request from Lender, Borrower
      shall deposit in the Loan Fund an amount equal to the deficiency as
      determined by Lender. The judgment and determination of Lender under this
      section shall be final and conclusive. Any such amounts deposited by
      Borrower shall be disbursed prior to any Loan proceeds.

      FINAL PAYMENT TO GENERAL CONTRACTOR. Upon completion of the Project and
      fulfillment of the Construction Contract to the satisfaction of Lender and
      provided sufficient Loan Funds are available, Lender shall make an Advance
      to cover the final payment due to the General Contractor upon delivery to
      Lender of endorsements to the ALTA title insurance policy following the
      posting of the completion notice, as provided under applicable law.
      Construction shall not be deemed complete for purposes of final
      disbursement unless and until Lender shall have received all of the
      following:

            (a) Evidence satisfactory to Lender that all work under the
            Construction Contract requiring inspection by any governmental
            authority with jurisdiction has been duly inspected and approved by
            such authority that a certificate of occupancy has been issued, and
            that all parties performing work have been paid, or will be paid,
            for such work;

            (b) A certification by an engineer, architect, or other qualified
            inspector acceptable to Lender that the improvements have been
            completed substantially in accordance with the Plans and
            Specifications and the Construction Contract, that direct connection
            has been made to all utilities set forth in the Plans and
            Specifications, and that the Project is ready for occupancy; and

                                       12
<PAGE>

            (c) Acceptance of the completed improvements by Lender and Borrower.

      Construction Default. If Borrower fails in any respect to comply with the
      provisions of this Agreement or if construction ceases before completion
      regardless of the reason, Lender, at its option, may refuse to make
      further Advances, may accelerate the indebtedness under the terms of the
      Note, and without thereby impairing any of its rights, powers, or
      privileges, may enter into possession of the construction site and perform
      or cause to be performed any and all work and labor necessary to complete
      the improvements, substantially in accordance with the Plans and
      Specifications.

      Damage or Destruction. If any of the Property or Improvements is damaged
      or destroyed by casualty of any nature, within sixty (60) days thereafter
      Borrower shall restore the Property and improvements to the condition in
      which they were before such damage or destruction with funds other than
      those in the Loan Fund. Lender shall not be obligated to make
      disbursements under this Agreement until such restoration has been
      accomplished.

      Right to Advance Funds. When any event occurs that Lender determines may
      endanger completion of the Project or the fulfillment of any condition or
      covenant in this Agreement, Lender may require Borrower to furnish, within
      ten (10) days after delivery of a written request, adequate security to
      eliminate, reduce, or indemnity Lender against, such danger. In addition,
      upon such occurrence, Lender in its sole discretion may advance funds or
      agree to undertake to advance funds to any party to eliminate, reduce, or
      indemnify Lender against such danger or to complete the Project. All sums
      paid by Lender pursuant to such agreements or undertakings shall be for
      Borrower's account and shall be without prejudice to Borrower's rights, if
      any, to receive such funds from the party to whom paid. All sums expended
      by Lender in the exercise of its option to complete the Project or protect
      Lender's interests shall be payable to Lender on demand together with
      interest from the date of the Advance at the rate applicable to the Loan.
      In addition, any Advance of funds under this Agreement, including without
      limitation direct disbursements to the General Contractor or other parties
      in payment of sums due under the Construction Contract, shall be deemed to
      have been expended by or on behalf of Borrower and to have been secured by
      Lender's Mortgage or Deed of Trust, if any, on the Property.

                                       13
<PAGE>

LIMITATION OF RESPONSIBILITY. The making of any Advance by Lender shall not
constitute or be interpreted as either (a) an approval or acceptance by Lender
of the work done through the date of the Advance, or (b) a representation or
indemnity by Lender to any party against any deficiency or defect in the work or
against any breach of any contract. Inspections and approvals of the Plans and
Specifications, the Improvements, the workmanship and materials used in the
Improvements, and the exercise of any other right of inspection, approval, or
inquiry granted to Lender in this Agreement are acknowledged to be solely for
the protection of Lender's interests, and under no circumstances shall they be
construed to impose any responsibility or liability of any nature whatsoever on
Lender to any party. Neither Borrower nor any contractor, subcontractor,
materialmen, laborer, or any other person shall rely, or have any right to rely,
upon Lender's determination of the appropriateness of any Advance. No
disbursement or approval by Lender shall constitute a representation by Lender
as to the nature of the Project, its construction, or its intended use for
Borrower or for any other person, nor shall it constitute an indemnity by Lender
to Borrower or to any other person against any deficiency or defects in the
Project or against any breach of any contract.

AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:

      Litigation. Promptly inform Lender in writing of (a) all material adverse
      changes in Borrower's financial condition, and (b) all existing and all
      threatened litigation, claims, investigations, administrative proceedings
      or similar actions affecting Borrower or any Guarantor which could
      materially affect the financial condition of Borrower or the financial
      condition of any Guarantor.

      Financial Records. Maintain its books and records in accordance with
      generally accepted accounting principles, applied on a consistent basis,
      and permit Lender to examine and audit Borrower's books and records at all
      reasonable times.

      Additional Information. Furnish such additional information and
      statements, lists of assets and liabilities, list of receivables and
      payables, inventory schedules, budgets, forecasts, tax returns, and other
      reports with respect to Borrower's financial condition and business
      operations as Lender may request from time to time.

      Compliance with Governmental Requirements. Comply with all laws,
      ordinances, and regulations, now or hereafter in effect, of all
      governmental authorities applicable to the use or occupancy of the
      Property, including without limitation, the Americans With Disabilities
      Act. Borrower may contest in good faith any such law, ordinance, or
      regulation and withhold compliance during any proceeding, including
      appropriate appeals, so long as Borrower has notified Lender in writing
      prior to doing so and so long as, in Lender's sole opinion, Lender's
      interests in the Property are not jeopardized. Lender may require Borrower
      to post adequate security or a surety bond, reasonably satisfactory to
      Lender, to protect Lender's interest.

                                       14
<PAGE>

      Construction of the Project. Commence construction of the Project no later
      than end of 2006, and cause the Improvements to be constructed and
      equipped in a diligent and orderly manner and in strict accordance with
      the Plans and Specifications approved by Lender, the Construction
      Contract, and all applicable laws, ordinances, codes, regulations, and
      rights of adjoining or concurrent property owners. Borrower agrees to
      complete the Project for purposes of final payment to the General
      Contractor on or before end of , 2008, regardless of the reason for any
      delay.

      Loan Proceeds. Use the Loan Funds solely for payment of bills and expenses
      directly related to the Project.

      Defects. Upon demand of Lender, promptly correct any defect in the
      Improvements or any departure from the Plans and Specifications not
      approved by Lender before further work shall be done upon the portion of
      the Improvements affected.

      Project Claims and Litigation. Promptly inform Lender of (a) all material
      adverse changes in the financial condition of the General Contractor; (b)
      any litigation and claims, actual or threatened, affecting the Project or
      the General Contractor, which could materially affect the successful
      completion of the Project or the ability of the General Contractor to
      complete the Project as agreed; and (c) any condition or event which
      constitutes a breach or default under any of the Related Documents or any
      contract related to the Project.

      Payment of Claims and Removal of Liens. (a) Cause all claims for labor
      done and materials and services furnished in connection with the
      Improvements to be fully paid and discharged in a timely manner, (b)
      diligently file or procure the filing of a valid notice of completion of
      the Improvements, or such comparable document as may be permitted under
      applicable lien laws, (c) diligently file or procure the filing of a
      notice of cessation, or such comparable document as may be permitted under
      applicable lien laws, upon the happening of cessation of labor on the
      Improvements for a continuous period of thirty (30) days or more, and (d)
      take all reasonable steps necessary to remove all claims of liens against
      the Property, the Improvements or any part of the Property or
      Improvements, or any rights or interests appurtenant to the Property or
      Improvements. Upon Lender's request, Borrower shall make such demands or
      claims upon or against laborers, materialmen, subcontractors, or other
      persons who have furnished or claim to have furnished labor, services, or
      materials in connection with the Improvements, which demands or claims
      shall under the laws of the State of Nevada require diligent assertions of
      lien claims upon penalty of loss or waiver thereof, Borrower shall, within
      ten (10) days after the filing of any claim of lien that is disputed or
      contested by Borrower, provide Lender with surety bond issued by a surety
      acceptable to Lender sufficient to release the claim of lien or deposit
      with Lender an amount satisfactory to Lender for the possibility that the
      contest will be unsuccessful. If Borrower fails to remove any lien on the
      Property or Improvements or provide a bond or deposit pursuant to this
      provision, Lender may pay such lien, or may contest the validity of the
      lien, and Borrower shall pay all costs and expenses of such contest,
      including Lender's reasonable attorneys' fees.

                                       15
<PAGE>

      Taxes and Claims. Pay and discharge when due all of Borrower's
      Indebtedness, obligations, and claims that, if unpaid, might become a lien
      or charge upon the Property or Improvements; provided, however, that
      Borrower shall not be required to pay and discharge any such indebtedness,
      obligation, or claim so long as (a) its legality shall be contested in
      good faith by appropriate proceedings, (b) the Indebtedness, obligation,
      or claim does not become a lien or charge upon the Property or
      Improvements, and (c) Borrower shall have established on its books
      adequate reserves with respect to the amount contested in accordance with
      generally accepted accounting practices. If the indebtedness, obligation,
      or claim does become a lien or charge upon the Property or Improvements,
      Borrower shall remove the lien or charge as provided in the preceding
      paragraph.

      Performance. Perform and comply with all terms, conditions, and
      provisions, set forth in this Agreement and in all other instruments and
      agreements between Borrower and Lender, and in all other loan agreements
      now or hereafter existing between Borrower and any other party. Borrower
      shall notify Lender immediately in writing of any default in connection
      with any agreement.

      Additional Assurances. Make, execute, and deliver to Lender such Security
      Agreements, instruments, documents, and other agreements reasonably
      necessary to document and secure the Loan and to perfect Lender's Security
      interests in the Property and Improvements.

NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:

      Indebtedness and Liens. (a) Except for trade debt incurred in the normal
      course of business and indebtedness to Lender contemplated by this
      Agreement, create, incur or assume indebtedness for borrowed money,
      including capital leases, (b) sell, transfer, mortgage, assign, pledge,
      lease, grant a security interest in, or encumber any of Borrower's assets,
      or (c) sell with recourse any of Borrower's accounts, except to Lender.

                                       16
<PAGE>

      Continuity of Operations. (a) Engage in any business activities
      substantially different than those in which Borrower is presently engaged,
      (b) cease operations, liquidate, merge, transfer, acquire or consolidate
      with any other entity, change ownership, change its name, dissolve or
      transfer or sell Collateral out of the ordinary course of business, or (c)
      make any distribution with respect to any capital account, whether by
      reduction of capital or otherwise.

LOANS, ACQUISITIONS AND GUARANTIES. (a) Loan, invest in or advance money or
assets, (b) purchase, create or acquire any interest in any other enterprise or
entity, or (c) incur any obligation as surely or guarantor other than in the
ordinary course of business.

      MODIFICATION OF CONTRACT. Make or permit to be made any modification of
      the Construction Contract.

      LIENS. Create or allow to be created any lien or charge upon the Property
      or the improvements.

GENERAL PROJECT PROVISIONS. The following provisions relate to the construction
and completion of the Project.

      CHANGE ORDERS. All requests for changes in the Plans and Specifications,
      other than minor changes involving no extra cost, must be in writing
      signed by Borrower and the architect, and delivered to Lender for it's
      approval. Borrower will not permit the performance of any work pursuant to
      any change order or modification of the Construction Contract or any
      subcontract without the written approval of Lender. Borrower will obtain
      any required permits or authorizations from governmental authorities
      having jurisdiction before approving or requesting a new change order.

      PURCHASE OF MATERIALS; CONDITIONAL SALES CONTRACTS. No materials,
equipment, fixtures, or articles of personal property placed in or incorporated
into the Project shall be purchased or installed under any Security Agreement or
other agreement whereby the seller reserves or purports to reserve title or the
right of removal or repossession, or the right to consider such items as
personal property after their incorporation into the Project, unless otherwise
authorized by Lender in writing.

      LENDER'S RIGHT OF ENTRY AND INSPECTION. Lender and its agents shall have
at all times the right of entry and free access to the Property and the right to
inspect all work done, labor performed, and materials furnished with respect to
the Project. Lender shall have unrestricted access to and the right to copy all
records, accounting books, contracts, subcontracts, bills, statements, vouchers,
and supporting documents of Borrower relating in any way during the Project.

                                       17
<PAGE>

      LENDER'S RIGHT TO STOP WORK. If Lender in good faith determines that any
      work or materials do not conform to the approved Plans and Specifications
      or sound building practices, or otherwise depart from any of the
      requirements of this Agreement, Lender may require the work to be stopped
      and withhold disbursements until the matter is corrected. In such event,
      Borrower will promptly correct the work to Lender's satisfaction. No such
      action by Lender will affect Borrower's obligation to complete the
      Improvements on or before the Completion Date. Lender is under no duty to
      supervise or inspect the construction or examine any books and records.
      Any inspection or examination by Lender is for the sole purpose of
      protecting Lender's security and preserving Lender's rights under this
      Agreement. No default of Borrower will be waived by any inspection by
      Lender. In no event will any inspection by Lender be a representation that
      there has been or will be compliance with the Plans and Specifications or
      that the construction is free from defective materials or workmanship.

      INDEMNITY. Borrower shall indemnify and hold Lender harmless from any and
      all claims asserted against Lender or the Property by any person, entity,
      or governmental body, or arising out of or in connection with the
      Property, Improvements, or Project. Lender shall be entitled to appear in
      any action or proceeding to defend itself against such claims, and all
      costs incurred by Lender in connection with such defense, including
      attorney's fees, shall be paid by Borrower to Lender. Lender shall, in its
      sole discretion be entitled to settle or compromise any asserted claims
      against it, and such settlement shall be binding upon Borrower for
      purposes of this indemnification. All amounts paid by Lender under this
      paragraph shall be secured by Lender's Mortgage or Deed of Trust, if any,
      on the Property, shall be deemed an additional principal Advance under the
      Loan, payable upon demand, and shall bear interest at the rate applicable
      to the Loan.

      PUBLICITY. Lender may display a sign at the construction site informing
      the public that Lender is the construction lender of the Project. Lender
      may obtain other publicity in connection with the Project through press
      releases and participation in ground-breaking and opening ceremonies and
      similar events.

      ACTIONS. Lender shall also have the right to commence, appear in, or
      defend any action or proceeding purporting to affect the rights, duties,
      or liabilities of the parties to this Agreement, or the disbursement of
      funds from the Loan Fund. In connection with the right, Lender may incur
      and pay reasonable costs and expenses, including, but not limited to,
      attorney's fees, for both trial and appellate proceedings. Borrower
      covenants to pay to Lender on demand all such expenses, together with
      interest from the date Lender incurs the expense at the rate specified in
      the Note, and Lender is authorized to disburse funds from the Loan Fund
      for such purposes.

                                       18
<PAGE>

      RELATIONSHIP TO THIS AGREEMENT. The terms and provisions of this
      Agreement, the Note and the Related Documents supersede any inconsistent
      terms and conditions of Lender's loan commitment letter to Borrower,
      provided that all obligations of Borrower under the commitment to pay any
      fees to Lender or any costs and expenses relating to the Loan or the
      commitment shall survive the execution and delivery of this Agreement, the
      Note and the Related Documents. Any failure of Borrower to perform any
      such obligation shall constitute a default under this Agreement.

RIGHT OF SETOFF. Borrower grants to Lender a contractual security interest in,
and hereby assigns, conveys, delivers, pledges, and transfers to Lender all
Borrower's right, title and interest in and to, Borrower's accounts with Lender
(whether checking, savings, or some other account), including without limitation
all accounts held jointly with someone else and all accounts Borrower may open
in the future, excluding however all IRA and Keogh accounts, and all trust
accounts for which the grant of a security interest would be prohibited by law.
Borrower authorizes Lender, to the extent permitted by applicable law, to charge
or setoff all sums owing on the indebtedness against any and all such accounts.

EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this agreement:

      DEFAULT ON INDEBTEDNESS. Failure of Borrower to make any payment when due
      on the Loans.

      OTHER DEFAULTS. Failure of Borrower or any Grantor to comply with or to
      perform when due any other term, obligation, covenant or condition
      contained in this Agreement or in any of the Related Documents, or failure
      of Borrower to comply with or to perform any other term, obligation,
      covenant or condition continued in any other agreement between Lender and
      Borrower.

      ENVIRONMENTAL DEFAULT. Failure of any party to comply with or perform when
      due any term, obligation, covenant or condition contained in any
      environmental agreement executed in connection with any Loan.

      FALSE STATEMENTS. Any warranty, representation or statement made or
      furnished to Lender by or on behalf of Borrower or any Grantor under this
      Agreement or the Related Documents is false or misleading in any material
      respect at the time made or furnished, or becomes false or misleading at
      any time thereafter.

      DEFECTIVE COLLATERALIZATION. This agreement or any of the Related
      Documents ceases to be in full force and effect (including failure of any
      collateral document to create a valid and perfected security interest or
      lien) at any time and for any reason.

                                       19
<PAGE>

      DEATH OR INSOLVENCY. The dissolution (regardless of whether election to
      continue is made), any member withdraws from Borrower, or any other
      termination of Borrower's existence as a going business or the death of
      any member, the Insolvency of Borrower, the appointment of a receiver for
      any part of Borrower's property, any assignment for the benefit of
      creditors, any type of creditor workout, or the commencement of any
      proceeding under any bankruptcy or insolvency laws by or against Borrower.

      CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
      forfeiture proceedings, whether by judicial proceeding, self-help,
      repossession or any other method, by any creditor or Borrower, any
      creditor of any Grantor against any collateral securing the indebtedness,
      or by any governmental agency. This includes a garnishment, attachment, or
      levy on or of any of Borrower's deposit accounts with Lender. However,
      this event of Default shall not apply if there is a good faith dispute by
      Borrower or Grantor, as the case may be, as to the validity or
      reasonableness of the claim which is the basis of the creditor or
      forfeiture proceeding, and if Borrower or Grantor gives Lender written
      notice of the creditor or forfeiture proceeding and furnishes reserves or
      a surety bond for the creditor or forfeiture proceeding satisfactory to
      Lender.

      ADVERSE CHANGE. A material adverse change occurs in Borrower's financial
      condition, or Lender believes the prospect of payment or performance of
      the Indebtedness is impaired.

      RIGHT TO CURE. If any default, other than a Default on Indebtedness, is
      curable and if Borrower or Grantor, as the case may be, has not been given
      a notice of a similar default within the preceding twelve (12) months, it
      may be cured (and no Event of Default will have occurred) if Borrower or
      Grantor, as the case may be, after receiving written notice from Lender
      demanding cure of such default: (a) cures the default within thirty (30)
      days; or (b) if the cure requires more than thirty (30) days, immediately
      initiates steps which Lender deems in Lender's sole discretion to be
      sufficient to cure the default and thereafter continues and completes all
      reasonable and necessary steps sufficient to produce compliance as soon as
      reasonably practical.

      BREACH OF CONSTRUCTION CONTRACT. The improvements are not constructed in
      accordance with the Plans and Specifications or in accordance with the
      terms of the Construction Contract.

                                       20
<PAGE>

      CESSATION OF CONSTRUCTION. Prior to the completion of construction of the
      improvements and equipping of the Project, the construction of the
      improvements or the equipping of the Project is abandoned or work thereon
      ceases for a period of more than ten (10) days for any reason, or the
      improvements are not completed for purposes of final payment to the
      General Contractor regardless of the reason for the delay.

      Transfer of Property. Sale, transfer, hypothecation, assignment, or
      conveyance of the Property or the improvements or any portion thereof or
      interest therein by Borrower or any Grantor without Lender's prior written
      consent.

      Condemnation. All or any material portion of the Property is condemned,
      seized, or appropriated without compensation, and Borrower does not within
      thirty (30) days after such condemnation, seizure, or appropriation,
      initiate and diligently prosecute appropriate action to contest in good
      faith the validity of such condemnation, seizure, or appropriation.

EFFECT OF AN EVENT OF DEFAULT; REMEDIES. Upon the occurrence of any Event of
Default and at any time thereafter, Lender may, at its option, but without any
obligation to do so, and in addition to any other right Lender may have ,do any
one or more of the following without notice to Borrower:(a) Cancel this
Agreement; (b) Institute appropriate proceedings to enforce the performance of
this Agreement; (c) Withhold further disbursement of Loan Funds; (d) Expend
funds necessary to remedy the default; (e) Take possession of the Property and
continue construction of the Project; (f) Accelerate maturity of the Note and/or
indebtedness and demand payment of all sums due under the Note and/or
indebtedness; (g) Bring an action on the Note and/or indebtedness; (h) Foreclose
Lender's Mortgage or Deed of Trust, if any, on the Property in any manner
available under law; and (i) Exercise any other right or remedy which it has
under the Note of Related Documents, or which is otherwise available at law or
in equity or by statute.

COMPLETION OF IMPROVEMENT BY LENDER. If Lender takes possession of the property,
it may take any and all actions necessary in its judgment to complete
construction of the Improvements, including but not limited to making changes in
the Plans and Specifications, work, or materials and entering into, modifying or
terminating any contractual arrangements, subject to Lender's right at any time
to discontinue any work without liability. If Lender elects to complete the
Improvements, it will not assume any liability to Borrower or to any other
person for completing the improvements or for the manner or quality of
construction of the improvements, and Borrower expressly waives any such
liability. Borrower irrevocably appoints Lender as its attorney-in-fact, with
full power of substitution, to complete its improvements, at Lender's option,
either in Borrower's name or in its own name. In any event, all sums expended by
Lender in completing its construction of the improvements will be considered to
have been disbursed to Borrower and will be secured by the collateral for the
Loan. Any such sums that cause the principal amount of the Loan to exceed the
face amount of the Note will be considered to be an additional Loan to Borrower,
bearing interest at the Note rate and being secured by the collateral. For these
purposes, Borrower assigns to Lender all of its right, title and interest in and
to the Project Documents; however Lender will not have any obligation under the
Project Documents unless Lender expressly hereafter agrees to assume such
obligations in writing. Lender will have the to exercise any rights of Borrower
under the Project Documents upon the occurrence of an Event of Default. All
rights, powers, and remedies of Lender under this Agreement are cumulative and
alternative, and are in addition to all rights which Lender may have under
applicable law.

                                       21
<PAGE>

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:

      Agency. Nothing in this Agreement shall be construed to constitute the
      creation of a partnership or joint venture between Lender and Borrower or
      any contractor. Lender is not an agent or representative of Borrower. This
      Agreement does not create a contractual relationship with and shall not be
      construed to benefit or bind Lender in any way with or create any
      contractual duties by Lender to any contractor, subcontractor,
      materialman, laborer, or any other person.

      Amendments. This Agreement, together with any Related Documents,
      constitutes the entire understanding and agreement of the parties as to
      the matters set forth in this Agreement. No alteration of or amendment to
      this Agreement shall be effective unless given in writing and signed by
      the party or parties sought to be charged or bound by the alteration or
      amendment.

      Applicable Law. This agreement has been delivered to Lender and accepted
      by Lender in the State of California. If there is a lawsuit, Borrower
      agrees upon Lender's request to submit to the jurisdiction of the courts
      of CLARK County, the State of Nevada

This Agreement shall be governed by and construed accordance with the laws of
the State of Nevada.

      Authority to File Notices. Borrower appoints and designates Lender as its
      attorney-in-fact to file for record any notice that Lender deems necessary
      to protect its interest under this Agreement. This power shall be deemed
      coupled with an interest and shall be irrevocable while any sum or
      performance remains due and owing under any of the Related Documents.

                                       22
<PAGE>

      Caption Headings. Caption heading is this Agreement are for convenience
      purposes only and are not to be used to interpret or define the provisions
      of this Agreement.

      Consent to Loan Participation. Borrower agrees and consents to Lender's
      sale or transfer, whether now or later, of one or more participation
      interests in the Loans to one or more purchasers, whether related or
      unrelated to Lender. Lender may provide, without any limitation
      whatsoever, to any one or more purchasers, or potential purchasers, any
      information or knowledge Lender may have about Borrower or about any other
      matter relating to the Loan, and Borrower hereby waives any rights to
      privacy it may have with respect to such matters. Borrower additionally
      waives any and all notices of sale of participation interests, as well as
      all notices of any repurchase of such participation interests. Borrower
      also agrees that the purchasers of any such participation interests will
      be considered as the absolute owners of such interests in the Loans and
      will have all the rights granted under the participation agreement or
      agreements governing the sale of such participation interest. Borrower
      further waives all rights of offset or countercism that it may have now or
      later against Lender or against any purchaser of such a participation
      interest and unconditionally agrees that either Lender or such purchaser
      may enforce Borrower's obligation under the Loans irrespective of the
      failure or insolvency of any holder of any interest in the Loans. Borrower
      further agrees that the purchaser of any such participation interests may
      enforce its interests irrespective of any personal claims or defenses that
      Borrower may have against Lender.

      Costs and Expenses. Borrower agrees to pay upon demand all of Lender's
      expenses, including without limitation attorneys' fees, incurred in
      connection with the preparation, execution, enforcement, modification and
      collection of this Agreement or in connection with the Loans made pursuant
      to this Agreement. Lender may pay someone else to help collect the Loans
      and to enforce this Agreement, and Borrower will pay that amount. This
      includes, subject to any limits under applicable law, Lender's attorneys'
      fees and Lender's legal expenses, whether or not there is a lawsuit,
      including attorneys' fees for bankruptcy proceedings (including efforts to
      modify or vacate any automatic stay or injunction), appeals, and any
      anticipated post-judgment collection services. Borrower also will pay any
      court costs, in addition to all other sums provided by law.

      Entire Agreement. This Agreement and the Related Documents constitute all
      of the agreements between the parties relating to the Project and
      supersede all other prior or concurrent oral or written agreements or
      understandings relating to the Project.

                                       23
<PAGE>

      Notices. All notices required to be given under this Agreement shall be
      given in writing, may be sent by telefacsimile (unless otherwise required
      by law), and shall be effective when actually delivered or when deposited
      with a nationally recognized overnight courier or deposited in the United
      States mail, first class, postage prepaid, addressed to the party to whom
      the notice is to be given at the address shown above. Any party may change
      its address for notices under this Agreement by giving formal written
      notice to the other parties, specifying that the purpose of the notice is
      to change the party's address. To the extent permitted by applicable law,
      if there is more than one Borrower, notice to any Borrower will constitute
      notice to all Borrowers. For notice purposes, Borrower will keep Lender
      informed at all times of Borrower's current address(es).

      Successors and Assigns. All covenants and agreements contained by or on
      behalf of Borrower shall bind its successors and assigns and shall inure
      to the benefit of Lender, its successors and assigns. Borrower shall not,
      however, have the right to assign its rights under its Agreement or any
      interest therein, without the prior written consent of Lender.

      Severability. If a court of competent jurisdiction finds any provision of
      this Agreement to be invalid or unenforceable as to any person or
      circumstance, such finding shall not render that provision invalid or
      unenforceable as to any other persons or circumstances. If feasible, any
      such offending provision shall be deemed to be modified to be within the
      limits of enforceability or validity; however, if the offending provision
      cannot be so modified, it shall be stricken and all other provisions of
      this Agreement in all other respects shall remain valid and enforceable.

      Survival. All warranties, representations, and covenants made by Borrower
      in this Agreement or in any certificate or other instrument delivered by
      Borrower to Lender under this Agreement shall be considered to have been
      relied upon by Lender and will survive the making of the Loan and delivery
      to Lender of the Related Documents, regardless of any investigation made
      by Lender or on Lender's behalf.

      Time is of the Essence. Time is of the essence in the performance of this
      Agreement.

      Waiver. Lender shall not be deemed to have waived any rights under this
      Agreement unless such waiver is given in willing and signed by Lender. No
      delay or omission on the part of Lender in exercising any right shall
      operate as a waiver of such right or any other right. A waiver by Lender
      of a provision of this Agreement shall not prejudice or constitute a
      waiver of Lender's right otherwise to demand strict compliance with that
      provision or any other provision of this Agreement. No prior waiver by
      Lender, nor any course of dealing between Lender and Borrower, or between
      Lender and any Grantor, shall constitute a waiver of any of Lender's
      rights or of any obligations of Borrower or of any Grantor as to any
      future transactions. Whenever the consent of Lender is required under this
      Agreement, the granting of such consent by Lender in any instance shall
      not constitute continuing consent in subsequent instances where such
      consent is required, and in all cases such consent may be granted or
      withheld in the sole discretion of Lender.

                                       24
<PAGE>

II.   OPTION AGREEMENT

As set forth in the Line of Credit Promissory Note, the unpaid principal of this
line of credit shall bear simple interest at the rate of twelve percent (12%)
per annum. In the alternative, the amount of the total interest or return shall
be equal to 33% of all gross profits from the real estate development project
located at 634 N. Main St., Las Vegas, Nevada, whichever is higher.

In addition to the above-mentioned terms and as part of this Investment
Agreement, Borrower ("Optionor") grants to Lender ("Optionee") the option to
purchase the real property described in Exhibit A, attached, including all
improvements and the Project ("Property"). This option is on the terms and
conditions set forth below:

Optionor grants Optionee an option to purchase the full Property and Project for
twenty million dollars ($15,000,000.00), which shall be paid in the following
manner:

o     The loan amount lent by Lender/Optionee to Borrower/Optionor in the amount
      of ten million dollars ($10,000,000.00) shall be considered as cash paid
      for the exercise of the option.

o     The remaining five million dollars ($5,000,000.00) (the "Share Purchase
      Price") shall be paid in shares of common stock of Euroweb International
      Corp. (the "Shares") The amount of Shares to be issued shall be determined
      by dividing $5,000,000 by the higher value of (i) the per share book value
      according to Euroweb International Corp's (the "Company")most recent
      balance sheet as filed with the Securities and Exchange Commission , or
      (ii) 90 day weighted average price of Euroweb International Corp.'s shares
      prior to the notice multiplied by 110%. The issuance of such Shares shall
      be subject to the completion and filing of a Notification Form: Listing of
      Additional Shares with the Nasdaq Stock Market.

      Optionor acknowledges that the Shares to be received by such Optionor
hereunder will be acquired for such Optionor's own account, not as nominee or
agent, and not with a view to the resale or distribution of any part thereof in
violation of the Securities Act of 1933, as amended (the "1933 Act"), such
Optionor does not have any agreement or understanding, directly or indirectly,
with any person to distribute the Shares and such Optionor has no present
intention of selling, granting any participation in, or otherwise distributing
the same in violation of the 1933 Act.

                                       25
<PAGE>

      Optionor acknowledges that it can bear the economic risk and complete loss
of its investment in the Shares and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment contemplated hereby.

      Optionor has had an opportunity to receive all information related to
Euroweb International Corp. requested by it and to ask questions of and receive
answers from the Euroweb International Corp. regarding Euroweb International
Corp., its business and the terms and conditions of the offering of the Shares.

      Optionor understands that the Shares are characterized as "restricted
securities" under the U.S. federal securities laws inasmuch as they are being
acquired in a transaction not involving a public offering and that under such
laws and applicable regulations such securities may be resold without
registration under the 1933 Act only in certain limited circumstances.

      It is understood that, except as provided below, certificates evidencing
the Shares may bear the following or any similar legend:

            "The securities represented hereby may not be transferred unless (i)
            such securities have been registered for sale pursuant to the
            Securities Act of 1933, as amended, (ii) such securities may be sold
            pursuant to Rule 144(k), or (iii) the Company has received an
            opinion of counsel reasonably satisfactory to it that such transfer
            may lawfully be made without registration under the Securities Act
            of 1933 or qualification under applicable state securities laws."

      Optionor is an "accredited investor" as defined in Rule 501(a) of
Regulation D, as amended, under the 1933 Act.

      Unless permitted by the applicable rules and regulations of the principal
securities market on which the Shares are then listed or traded, in no event
shall the Company issue upon exercise of the Option more than the maximum number
of shares of Common Stock that the Borrower can issue pursuant to any rule of
the principal United States securities market on which the Shares is then traded
(the "Maximum Share Amount"), which shall be 19.99% of the total shares
outstanding. Once the Maximum Share Amount has been issued (the date of which is
hereinafter referred to as the "Maximum Conversion Date"), if the Company fails
to eliminate any prohibitions under applicable law or the rules or regulations
of any stock exchange, interdealer quotation system or other self-regulatory
organization with jurisdiction over the Company or any of its securities on the
Company's ability to issue shares of common stock in excess of the Maximum Share
Amount, the Company shall pay the remaining portion of the Share Purchase Price
in cash. The Company will use its best efforts to seek and obtain Shareholder
Approval (or obtain such other relief as will allow issuance of the Shares
hereunder in excess of the Maximum Share Amount) as soon as practicable and
before the Maximum Conversion Date. As used herein, "Shareholder Approval" means
approval by the stockholders of the Company to authorize the issuance of the
full number of shares of common stock which would be issuable upon exercise of
the Option but for the Maximum Share Amount.

                                       26
<PAGE>

The term of the option shall begin on the date of signing of this agreement and
shall terminate on January 01, 2015.

The option shall be exercised by delivering written notice from Optionee to
Optionor before the expiration of the term of this option and in accordance with
the notice provisions of the "Exercise Notice" provision below. The Exercise
Notice shall affirmatively state that the Optionee exercises the option without
condition or qualification. Within three business days after exercise of the
option, the parties shall execute and deliver a grant deed and deposit the funds
and documents in escrow that are required to be deposited in order to fully
transfer title of the Property and Project to Lender/Optionee.

Optionor covenants, warrants, and represents to Optionee that all the covenants,
warranties, and representations set forth in this Investment Agreement are true
and correct.

Within 10 days after execution of this Option Agreement, Optionor shall deliver
to Optionee a current preliminary report on the Property prepared by a reputable
title company, together with copies of all documents identified as exceptions in
the report ("Preliminary Report"). Optionee shall have the sole discretion to
approve or disapprove any or all of the exceptions shown in the Preliminary
Report.

If Optionee disapproves any exception to title, as provided above, Optionor
shall notify Optionee within 10 days after receipt of such notice of disapproval
if Optionor is unwilling to clear the disapproved exceptions. Optionor covenants
that, if the option is exercised, Optionor shall, on or before closing, which
shall occur 30 days after Optionee exercises its option, cause all disapproved
exceptions to be removed as encumbrances against title to the Property except
any exceptions that Optionor has notified Optionee that Optionor will not
remove, in accordance with the notice provisions of this section.

At any time and from time to time during the term of the option, Optionee may
enter the Property for purposes of inspection, survey, tests, design of
improvements, and other actions reasonably related to the investigation by
Optionee of the suitability of the Property for the Optionee's purposes.

Optionee may make minor changes in the Property in the course of any
investigation permitted under this Option Agreement (e.g., soils borings),
provided that the change or damage is only temporary, that it is reasonably
necessary to the investigation of the physical characteristics of the Property,
and that Optionee repairs such damage and restores the Property to its original
condition promptly on completion of the investigation.

On execution of this Option Agreement, Optionor and Optionee shall execute and
record in the official records of the county in which the Property is located a
memorandum of option in the form of Exhibit C, attached. Optionee shall pay the
recording cost. Optionee covenants to execute and deliver to Optionor
immediately on the expiration or earlier termination of the term of this Option
Agreement a quitclaim deed in recordable form releasing and reconveying to
Optionor all right, title, and interest of Optionee in the Property.

                                       27
<PAGE>

All notices and other communications authorized or required under this Option
Agreement shall be in writing and shall be given by (1) personal delivery, (2)
mailing by certified mail or registered mail, return receipt requested, postage
prepaid, or United States express mail, or (3) delivery by commercially
recognized courier service. Any such notice or other communication shall be
deemed to have been given on the date of delivery or refusal to accept delivery
if addressed to the Optionor's or Optionee's place of business:

Optionee may assign this option and the rights under it.

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS INVESTMENT
AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF June
19th , 2006.

                                  Exhibits List
                                  -------------

Exhibit A:      Property Legal Description

Exhibit B:      Line of Credit Promissory Note

Exhibit C:      Memorandum of Option

                                       28
<PAGE>

BORROWER/OPTIONOR:

AO BONANZA LAS VEGAS, INC.,

By: /s/ Darren C. Dunckel
    -----------------------------------
    Darren C. Dunckel, its President

LENDER/OPTIONEE:

EUROWEB RE CORP.

By: /s/Yossi Attia
    ------------------------------------
    Yossi Attia,  its president

                                       29EXHIBIT
      4.6

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    THE
      REGISTERED HOLDER OF THIS UNIT PURCHASE OPTION BY ITS ACCEPTANCE HEREOF, AGREES
      THAT IT WILL NOT SELL, TRANSFER OR ASSIGN THIS UNIT PURCHASE OPTION EXCEPT
      AS
      HEREIN PROVIDED AND THE REGISTERED HOLDER OF THIS UNIT PURCHASE OPTION AGREES
      THAT IT WILL NOT SELL, TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE THIS UNIT
      PURCHASE OPTION FOR A PERIOD OF ONE HUNDRED EIGHTY (180) DAYS FOLLOWING THE
      EFFECTIVE DATE (DEFINED BELOW) TO ANYONE OTHER THAN (I) HOLDER OR AN
      UNDERWRITER OR A SELECTED DEALER IN CONNECTION WITH THE OFFERING, OR (II) A
      BONA FIDE OFFICER OR PARTNER OF HOLDER OR OF ANY SUCH UNDERWRITER OR SELECTED
      DEALER. 

     

     

    THIS
      UNIT
      PURCHASE OPTION IS VOID AFTER 5:00 P.M. EASTERN
      TIME,                        ,
      2011. 

     

     

    UNIT
      PURCHASE OPTION

     

    FOR
      THE
      PURCHASE OF

     

    [_]
      UNITS

     

    OF

     

    ADCARE
      HEALTH SYSTEMS, INC.

     

     

    1.     Unit
      Purchase Option.

     

             THIS
      CERTIFIES THAT, in consideration of $100 duly paid by or on behalf of
      ___________ (each, a “Holder”), as registered owner of this Unit Purchase
      Option, to AdCare Health Systems, Inc. (the “Company”), Holder is entitled, at
      any time or from time to time
      commencing                        ,
      2007 (the “Commencement Date”), and at or before 5:00 p.m., Eastern
      Time,                        ,
      2011 (the “Expiration Date”), but not thereafter, to subscribe for, purchase and
      receive, in whole or in part, up to [_] units (the “Units”) of the Company, each
      Unit consisting of two shares of Company common stock, par value $0.001 per
      share (the “Common Stock”), and two warrants (the “Warrant(s)”) expiring five
      years from the effective date (the “Effective Date”) of the registration
      statement (the “Registration Statement”) pursuant to which Units are offered for
      sale to the public (the “Offering”). Each Warrant is the same as the warrants
      included in the Units being registered for sale to the public (the “Public
      Warrants”) under the Securities Act of 1933, as amended (the “Act”) except that
      the exercise price of the Warrants shall be $[____] per share [or 125% of the
      exercise price of the Public Warrants]. If the Expiration Date is a day on
      which
      banking institutions are authorized by law to close, then this Unit Purchase
      Option may be exercised on the next succeeding day which is not such a day
      in
      accordance with the terms herein. During the period ending on the Expiration
      Date, the Company agrees not to take any action that would terminate the Unit
      Purchase Option. This Unit Purchase Option is initially exercisable at $[___]
      per Unit so purchased [or 125% of the exercise price of the Units in the
      Offering]; provided, however, that upon the occurrence of any of the events
      specified in Section 6 hereof, the rights granted by this Unit Purchase
      Option, including the exercise price per Unit and the number of Units (and
      Common Stock and Warrants underlying such Units) to be received upon such
      exercise, shall be adjusted as therein specified. The term “Exercise Price”
shall mean the initial exercise price or the adjusted exercise price, depending
      on the context. 

     

    2.     Exercise.

     

    (a)   Exercise
      Procedure.
      In
      order to exercise this Unit Purchase Option, the exercise form attached hereto
      must be duly executed and completed and delivered to the Company, together
      with
      this Unit Purchase Option and payment of the Exercise Price for the Units being
      purchased payable in cash or by certified check or official bank check. If
      the
      subscription rights represented hereby shall not be exercised at or before
      5:00 p.m., Eastern time, on the Expiration Date this Unit Purchase Option
      shall become and be void without further force or effect, and all rights
      represented hereby shall cease and expire.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (b)   Legend.
      Each
      certificate for the securities purchased under this Unit Purchase Option shall
      bear a legend as follows unless such securities have been registered under
      the
      Securities Act of 1933, as amended (the “Act”): 

     

    “The
      securities represented by this certificate have not been registered under the
      Securities Act of 1933, as amended (the “Act”) or applicable state law. The
      securities may not be offered for sale, sold or otherwise transferred except
      pursuant to an effective registration statement under the Act, or pursuant
      to an
      exemption from registration under the Act and applicable state law.”

     

    (c)   Cashless
      Exercise.
      (i) In lieu of the payment of the Exercise Price multiplied by the number
      of Units for which this Unit Purchase Option is exercisable (and in lieu of
      being entitled to receive Common Stock and Warrants) in the manner required
      by
      Section 2(a), the Holder shall have the right (but not the obligation) to
      convert any exercisable but unexercised portion of this Unit Purchase Option
      into Units (the “Conversion Right”) as follows: upon exercise of the Conversion
      Right, the Company shall deliver to the Holder (without payment by the Holder
      of
      any of the Exercise Price in cash) that number of Common Stock and Warrants
      comprising that number of Units equal to the quotient obtained by dividing
      (x) the “Value” (as defined below) of the portion of the Unit Purchase
      Option being converted by (y) the Current Market Value (as defined below).
      The “Value” of the portion of the Unit Purchase Option being converted shall
      equal the remainder derived from subtracting (a) (i) the Exercise Price
      multiplied by (ii) the number of Units underlying the portion of this Unit
      Purchase Option being converted from (b) the Current Market Value of a Unit
      multiplied by the number of Units underlying the portion of the Unit Purchase
      Option being converted. As used herein, the term “Current Market Value” per Unit
      at any date means the remainder derived from subtracting (x) the exercise
      price of the Warrants multiplied by the number of shares of Common Stock
      issuable upon exercise of the Warrants underlying one Unit from (y) the
      Current Market Price of the Common Stock multiplied by the number of shares
      of
      Common Stock underlying the Warrants and the Common Stock issuable upon exercise
      of one Unit. The “Current Market Price” of an Common Stock shall mean
      (i) if the Common Stock are listed on a national securities exchange or
      quoted on the Nasdaq National Market, Nasdaq SmallCap Market or NASD OTC
      Bulletin Board (or successor such as the Bulletin Board Exchange), the last
      sale
      price of the Common Stock in the principal trading market for the Common Stock
      as reported by the exchange, Nasdaq or the NASD, as the case may be;
      (ii) if the Common Stock are not listed on a national securities exchange
      or quoted on the Nasdaq National Market, Nasdaq SmallCap Market or the NASD
      OTC
      Bulletin Board (or successor such as the Bulletin Board Exchange), but is traded
      in the residual over-the-counter market, the closing bid price for the Common
      Stock on the last trading day preceding the date in question for which such
      quotations are reported by the Pink Sheets, LLC or similar publisher of such
      quotations; and (iii) if the fair market value of the Common Stock cannot
      be determined pursuant
      to clause (i) or (ii) above, such price as the Board of Directors of
      the Company shall determine, in good faith. 

     

    (ii)   The
      Cashless Exercise Right may be exercised by the Holder on any business day
      on or
      after the Commencement Date and not later than the Expiration Date by delivering
      the Unit Purchase Option with the duly executed exercise form attached hereto
      with the cashless exercise section completed to the Company, exercising the
      Cashless Exercise Right and specifying the total number of Units the Holder
      will
      purchase pursuant to such Cashless Exercise Right. 

     

    3.     Transfer.

     

    (a)   Restrictions—General.
      The
      registered Holder of this Unit Purchase Option, by its acceptance hereof, agrees
      that it will not sell, transfer, assign, pledge or hypothecate this Unit
      Purchase Option for a period of one hundred eighty (180) days following the
      Effective Date to anyone other than (i) an underwriter or a selected dealer
      in connection with the Offering, or (ii) a bona fide officer or partner of
      any of the foregoing. On and after the first anniversary of the Effective Date,
      transfers to others may be made subject to compliance with or exemptions from
      applicable securities laws. In order to make any permitted assignment, the
      Holder must deliver to the Company the assignment form attached hereto duly
      executed and completed, together with the Unit Purchase Option. The Company
      shall within three business days transfer this Unit Purchase Option on the
      books
      of the Company and shall execute and deliver a new Unit Purchase Option or
      Unit
      Purchase Options of like tenor to the appropriate assignee(s) expressly
      evidencing the right to purchase the aggregate number of Units purchasable
      hereunder or such portion of such number as shall be contemplated by any such
      assignment. 

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    (b)   Restrictions—Securities.
      The
      securities evidenced by this Unit Purchase Option shall not be transferred
      unless and until (i) the Company has received the opinion of counsel that
      the securities may be transferred pursuant to an exemption from registration
      under the Act and applicable state securities laws, the availability of which
      is
      established to the reasonable satisfaction of the Company, or (ii) a
      registration statement or a post-effective amendment to the Registration
      Statement relating to such securities has been filed by the Company and declared
      effective by the Securities and Exchange Commission (the “Commission”) and
      compliance with applicable state securities law has been established.

     

    4.     New
      Purchase Options to be Issued.

     

    (a)   Partial
      Exercise.
      Subject
      to the restrictions in Section 3 hereof, this Unit Purchase Option may be
      exercised or assigned in whole or in part. In the event of the exercise or
      assignment hereof in part only, upon surrender of this Unit Purchase Option
      for
      cancellation, together with the duly executed exercise or assignment form and
      funds sufficient to pay any Exercise Price and/or transfer tax, the Company
      shall cause to be delivered to the Holder without charge a new Unit Purchase
      Option of like tenor to this Unit Purchase Option in the name of the Holder
      evidencing the right of the Holder to purchase the number of Units purchasable
      hereunder as to which this Unit Purchase Option has not been exercised or
      assigned. 

     

    (b)   Loss,
      Theft, Destruction.
      Upon
      receipt by the Company of evidence satisfactory to it of the loss, theft,
      destruction or mutilation of this Unit Purchase Option and of reasonably
      satisfactory indemnification or the posting of a bond, the Company shall execute
      and deliver a new Unit Purchase Option of like tenor and date. Any such new
      Unit
      Purchase Option executed and delivered
      as a result of such loss, theft, mutilation or destruction shall constitute
      a
      substitute contractual obligation on the part of the Company. 

     

    5.     Registration
      Rights.

     

    (a)   Demand
      Registration.
      

     

    (i)    The
      Company, upon written demand (the “Initial Demand Notice”) of the Holder(s) of
      not less than 50% of the Unit Purchase Options and/or the underlying Units
      and/or the underlying securities (the “Majority Holders”), agrees to register on
      one occasion, all or any portion of the Unit Purchase Options requested by
      the
      Majority Holders in the Initial Demand Notice and all of the securities
      underlying such Unit Purchase Options, including the Units, Common Stock, the
      Warrants, the Common Stock underlying the Warrants (collectively, the
“Registrable Securities”). On such occasion, the Company will file a
      registration statement or a post-effective amendment to the Registration
      Statement covering the Registrable Securities within sixty days after receipt
      of
      the Initial Demand Notice and use its best efforts to have such registration
      statement or post-effective amendment declared effective as soon as possible
      thereafter. The demand for registration may be made at any time during a period
      of three years beginning on the Effective Date. The Company covenants and agrees
      to give written notice of its receipt of any Initial Demand Notice by any
      Holder(s) to all other registered Holders of the Unit Purchase Options and/or
      the Registrable Securities within ten days from the date of the receipt of
      any
      such Initial Demand Notice. 

     

    (ii)   The
      Company shall bear all fees and expenses attendant to registering the
      Registrable Securities, including the expenses of any legal counsel selected
      by
      the Holders to represent them in connection with the sale of the Registrable
      Securities, but the Holders shall pay any and all underwriting commissions.
      The
      Company agrees to use its reasonable best efforts to qualify or register the
      Registrable Securities in such states as are reasonably requested by the
      Majority Holder(s); provided, however, that in no event shall the Company be
      required to register the Registrable Securities in a state in which such
      registration would cause (i) the Company to be obligated to qualify to do
      business in such state, or would subject the Company to taxation as a foreign
      corporation doing business in such jurisdiction or (ii) the principal
      stockholders of the Company to be obligated to escrow their shares of capital
      stock of the Company. The Company shall cause any registration statement or
      post-effective amendment filed pursuant to the demand rights granted under
      Section 5(a)(i) to remain effective for a period of nine consecutive months
      from the effective date of such registration statement or post-effective
      amendment. 

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    (b)   ”Piggy-Back”
      Registration.

     

    (i)    In
      addition to the demand right of registration, the Holders of the Unit Purchase
      Options shall have the right for a period of seven years commencing on the
      Effective Date, to include the Registrable Securities as part of any other
      registration of securities filed by the Company (other than in connection with
      a
      transaction contemplated by Rule 145(a) promulgated under the Act or
      pursuant to Form S-8); provided, however, that if, in the written opinion
      of the Company's managing underwriter or underwriters, if any, for such
      offering, the inclusion of the Registrable Securities, when added to the
      securities being registered by the Company or the selling stockholder(s), will
      exceed the maximum amount of the Company's securities which can be marketed
      (i) at a price reasonably related to their then current market value, and
      (ii) without materially and adversely affecting the entire offering, then
      the Company will still be required to include the Registrable Securities, but
      may require the Holders to agree, in writing, to delay the sale of all or any
      portion of the Registrable Securities for a period of 90 days from the
      effective date of the offering, provided, further, that if the sale of any
      Registrable Securities is so delayed, then the number of securities to be
sold
      by
      all stockholders in such public offering during such 90 day period shall be
      apportioned pro rata among all such selling stockholders, including all holders
      of the Registrable Securities, according to the total amount of securities
      of
      the Company owned by said selling stockholders, including all holders of the
      Registrable Securities. 

     

    (ii)   The
      Company shall bear all fees and expenses attendant to registering the
      Registrable Securities, including the expenses of any legal counsel selected
      by
      the Holders to represent them in connection with the sale of the Registrable
      Securities but the Holders shall pay any and all underwriting commissions
      related to the Registrable Securities. In the event of such a proposed
      registration, the Company shall furnish the then Holders of outstanding
      Registrable Securities with not less than fifteen days written notice prior
      to
      the proposed date of filing of such registration statement. Such notice to
      the
      Holders shall continue to be given for each applicable registration statement
      filed (during the period in which the Unit Purchase Option is exercisable)
      by
      the Company until such time as all of the Registrable Securities have been
      registered and sold. The holders of the Registrable Securities shall exercise
      the “piggy-back” rights provided for herein by giving written notice, within ten
      days of the receipt of the Company's notice of its intention to file a
      registration statement. The Company shall cause any registration statement
      filed
      pursuant to the above “piggyback” rights to remain effective for at least nine
      months from the date that the Holders of the Registrable Securities are first
      given the opportunity to sell all of such securities. 

     

    (c)   Damages.
      Should
      the registration or the effectiveness thereof required by Sections 5(a) and
      5(b)
      hereof be delayed by the Company or the Company otherwise fails to comply with
      such provisions, the Company shall, in addition to any other equitable or other
      relief available to the Holder(s), be liable for any and all incidental, special
      and consequential damages sustained by the Holder(s), including, but not limited
      to, the loss of any profits that might have been received by the Holder upon
      the
      sale of Common Stock or Warrants (and Common Stock underlying the Warrants)
      underlying this Unit Purchase Option. 

     

             (d)   Indemnification.
      

     

    (i)    The
      Company shall indemnify the Holder(s) of the Registrable Securities to be sold
      pursuant to any registration statement hereunder and each person, if any, who
      controls such Holders within the meaning of Section 15 of the Act or
      Section 20(a) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), against all loss, claim, damage, expense or liability
      (including all reasonable attorneys' fees and other expenses reasonably incurred
      in investigating, preparing or defending against litigation, commenced or
      threatened, or any claim whatsoever whether arising out of any action between
      the Underwriter and the Company or between the Underwriter and any third party
      or otherwise) to which any of them may become subject under the Act, the
      Exchange Act or otherwise, arising from such registration statement but only
      to
      the same extent and with the same effect as the provisions pursuant to which
      the
      Company has agreed to indemnify the Underwriters contained in Section 5 of
      the Underwriting Agreement between the Company, Holder and the other
      Underwriters named therein dated the Effective Date. The Holder(s) of the
      Registrable Securities to be sold pursuant to such registration statement,
      and
      their successors and assigns, shall severally, and not jointly, indemnify the
      Company, its officers and directors and each person, if any, who controls the
      Company within the meaning of Section 15 of the Act or Section 20(a)
      of the Exchange Act, against all loss, claim, damage, expense or liability
      (including all reasonable attorneys' fees and other expenses reasonably incurred
      in investigating, preparing or defending against any claim whatsoever) to which
      they may become subject under the Act, the Exchange Act or otherwise, arising
      from information furnished by or on behalf of such Holders, or their successors
      or assigns, in writing, for specific inclusion in such registration statement
      to
      the same extent and with the same effect as the provisions contained
      in Section 5 of the Underwriting Agreement pursuant to which the
      Underwriters have agreed to indemnify the Company. 

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    (ii)   Nothing
      contained in this Unit Purchase Option shall be construed as requiring the
      Holder(s) to exercise their Unit Purchase Options or Warrants underlying such
      Unit Purchase Options prior to or after the initial filing of any registration
      statement or the effectiveness thereof. 

     

    (iii)  The
      Company shall furnish Newbridge
      Securities Corporation,
      as
      representative of the Holders participating in any of the foregoing offerings,
      a
      signed counterpart, addressed to the participating Holders, of (i) an
      opinion of counsel to the Company, dated the effective date of such registration
      statement (and, if such registration includes an underwritten public offering,
      an opinion dated the date of the closing under any underwriting agreement
      related thereto), and (ii) a “cold comfort” letter dated the effective date
      of such registration statement (and, if such registration includes an
      underwritten public offering, a letter dated the date of the closing under
      the
      underwriting agreement) signed by the independent public accountants who have
      issued a report on the Company's financial statements included in such
      registration statement, in each case covering substantially the same matters
      with respect to such registration statement (and the prospectus included
      therein) and, in the case of such accountants' letter, with respect to events
      subsequent to the date of such financial statements, as are customarily covered
      in opinions of issuer's counsel and in accountants' letters delivered to
      underwriters in underwritten public offerings of securities. The Company shall
      also deliver promptly to Newbridge
      Securities Corporation,
      as
      representative of the Holders participating in the offering, the correspondence
      and memoranda described below and copies of all correspondence between the
      Commission and the Company, its counsel or auditors and all memoranda relating
      to discussions with the Commission or its staff with respect to the registration
      statement and permit Newbridge
      Securities Corporation,
      as
      representative of the Holders, to do such investigation, upon reasonable advance
      notice, with respect to information contained in or omitted from the
      registration statement as it deems reasonably necessary to comply with
      applicable securities laws or rules of the National Association of Securities
      Dealers, Inc. (the “NASD”). Such investigation shall include access to
      books, records and properties and opportunities to discuss the business of
      the
      Company with its officers and independent auditors, all to such reasonable
      extent and at such reasonable times and as often as Newbridge
      Securities Corporation,
      as
      representative of the Holders, shall reasonably request. The Company shall
      not
      be required to disclose any confidential information or other records to
Newbridge
      Securities Corporation,
      as
      representative of the Holders, or to any other person, until and unless such
      persons shall have entered into reasonable confidentiality agreements (in form
      and substance reasonably satisfactory to the Company), with the Company with
      respect thereto. 

     

    (iv)  The
      Company shall enter into an underwriting agreement with the managing
      underwriter(s), if any, selected by any Holders whose Registrable Securities
      are
      being registered pursuant to this Section 5, which managing underwriter
      shall be reasonably acceptable to the Company. Such agreement shall be
      reasonably satisfactory in form and substance to the Company, each Holder and
      such managing underwriters, and shall contain such representations, warranties
      and covenants by the Company and such other terms as are customarily contained
      in agreements of that type used by the managing underwriter. The Holders shall
      be parties to any underwriting agreement relating to an underwritten sale of
      their Registrable Securities and may, at their option, require that any or
      all
      the representations, warranties and covenants of the Company to or for the
      benefit of such underwriters shall also be made to and for the benefit of such
      Holders. Such Holders shall not be required to make any representations or
      warranties to or agreements with the Company or the underwriters except as
      they
      may relate to such Holders and their intended methods of distribution.
      Such Holders, however, shall agree to such covenants and indemnification and
      contribution obligations for selling stockholders as are customarily contained
      in agreements of that type used by the managing underwriter. Further, such
      Holders shall execute appropriate custody agreements and otherwise cooperate
      fully in the preparation of the registration statement and other documents
      relating to any offering in which they include securities pursuant to this
      Section 5. Each Holder shall also furnish to the Company such information
      regarding itself, the Registrable Securities held by it, and the intended method
      of disposition of such securities as shall be reasonably required to effect
      the
      registration of the Registrable Securities. 

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    (v)   Notwithstanding
      anything contained in this Section 5 to the contrary, the Company shall
      have no obligation pursuant to Sections 5(a) or 5(b) for the registration of
      Registrable Securities held by any Holder (i) where such Holder would then
      be entitled to sell under Rule 144 within any three-month period (or such
      other period prescribed under Rule 144 as may be provided by amendment
      thereof) all of the Registrable Securities then held by such Holder, and
      (ii) where the number of Registrable Securities held by such Holder is
      within the volume limitations under paragraph (e) of Rule 144
      (calculated as if such Holder were an affiliate within the meaning of
      Rule 144). 

     

    (vi)  Each
      Holder agrees, that upon receipt of any written notice from the Company of
      the
      happening of any event as a result of which the prospectus included in the
      Registration Statement, as then in effect, includes an untrue statement of
      a
      material fact or omits to state a material fact required to be stated therein
      or
      necessary to make the statements therein not misleading in light of the
      circumstances then existing, such Holder will immediately discontinue
      disposition of Registrable Securities pursuant to the Registration Statement
      covering such Registrable Securities until such Holder's receipt of the copies
      of a supplemental or amended prospectus, and, if so desired by the Company,
      such
      Holder shall deliver to the Company (at the expense of the Company) or destroy
      (and deliver to the Company a certificate of such destruction) all copies,
      other
      than permanent file copies then in such Holder's possession, of the prospectus
      covering such Registrable Securities current at the time of receipt of such
      notice. 

     

             6.     Adjustments.

     

    (a)   Exercise
      Price and Number of Securities.
      The
      Exercise Price and the number of Units underlying the Unit Purchase Option
      shall
      be subject to adjustment from time to time as hereinafter set forth:

     

    (i)    If
      after the date hereof, and subject to the provisions of Section 6(c) below,
      the number of outstanding Common Stock is increased by a stock dividend payable
      in Common Stock or by a split-up of Common Stock or other similar event, then,
      on the effective date thereof, the number of Common Stock underlying each of
      the
      Units purchasable hereunder shall be increased in proportion to such increase
      in
      outstanding shares. In such case, the number of Common Stock, and the exercise
      price applicable thereto, underlying the Warrants underlying each of the Units
      purchasable hereunder shall be adjusted in accordance with the terms of the
      Warrants. For example, if the Company declares a two-for-one stock dividend
      and
      at the time of such dividend this Unit Purchase Option is for the purchase
      of
      one Unit at $10.00 per whole Unit (each Warrant underlying the Units is
      exercisable for $7.50 per share), upon effectiveness of the dividend, this
      Unit
      Purchase Option will be adjusted to allow for the purchase of one Unit at $10.00
      per Unit, each Unit entitling the holder to receive four shares of Common Stock
      and four Warrants (each Warrant exercisable for $3.75 per share). 

     

    (ii)   If
      after the date hereof, and subject to the provisions of Section 6(c), the
      number of outstanding Common Stock is decreased by a consolidation, combination
      or reclassification of the Common Stock or other similar event, then, on the
      effective date thereof, the number of Common Stock underlying each of the Units
      purchasable hereunder shall be decreased in proportion to such decrease in
      outstanding shares. In such case, the number of Common Stock, and the exercise
      price applicable thereto, issuable upon exercise of the Warrants included in
      each of the Units purchasable hereunder shall be adjusted in accordance with
      the
      terms of the Warrants. 

     

    (iii)  In
      case of any reclassification or reorganization of the outstanding Common Stock
      other than a change covered by Section 6(a)(i) or 6(a)(ii) hereof
      or that solely affects the par value of such Common Stock, or in the case of
      any
      merger or consolidation of the Company with or into another corporation (other
      than a consolidation or merger in which the Company is the continuing
      corporation and that does not result in any reclassification or reorganization
      of the outstanding Common Stock), or in the case of any sale or conveyance
      to
      another corporation or entity of the property of the Company as an entirety
      or
      substantially as an entirety in connection with which the Company is dissolved,
      the Holder of this Unit Purchase Option shall have the right thereafter (until
      the expiration of the right of exercise of this Unit Purchase Option) to receive
      upon the exercise hereof, for the same aggregate Exercise Price payable
      hereunder immediately prior to such event, the kind and amount of shares of
      stock or other securities or property (including cash) receivable upon such
      reclassification, reorganization, merger or consolidation, or upon a dissolution
      following any such sale or transfer, by a Holder of the number of Common Stock
      of the Company obtainable upon exercise of this Unit Purchase Option and the
      underlying Warrants immediately prior to such event; and if any reclassification
      also results in a change in Common Stock covered by Section 6(a)(i) or
      6(a)(ii), then such adjustment shall be made pursuant to Sections 6(a)(i),
      6(a)(ii) and this Section 6(a)(iii). The provisions of this
      Section 6(a)(iii) shall similarly apply to successive
      reclassifications, reorganizations, mergers or consolidations, sales or other
      transfers. 

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    (iv)  This
      form of Unit Purchase Option need not be changed because of any change pursuant
      to this Section, and Unit Purchase Options issued after such change may state
      the same Exercise Price and the same number of Units as are stated in the Unit
      Purchase Options initially issued pursuant to this Agreement. The acceptance
      by
      any Holder of the issuance of new Unit Purchase Options reflecting a required
      or
      permissive change shall not be deemed to waive any rights to an adjustment
      occurring after the Commencement Date or the computation thereof. 

     

    (b)   Substitute
      Unit Purchase Option.
      In case
      of any consolidation of the Company with, or merger of the Company with, or
      merger of the Company into, another corporation (other than a consolidation
      or
      merger which does not result in any reclassification or change of the
      outstanding Common Stock), the corporation formed by such consolidation or
      merger shall execute and deliver to the Holder a supplemental Unit Purchase
      Option providing that the holder of each Unit Purchase Option then outstanding
      or to be outstanding shall have the right thereafter (until the stated
      expiration of such Unit Purchase Option) to receive, upon exercise of such
      Unit
      Purchase Option, the kind and amount of shares of stock and other securities
      and
      property receivable upon such consolidation or merger, by a holder of the number
      of Common Stock of the Company (including such number of Common Stock underlying
      the Warrants) for which such Unit Purchase Option might have been exercised
      immediately prior to such consolidation, merger, sale or transfer. Such
      supplemental Unit Purchase Option shall provide for adjustments which shall
      be
      identical to the adjustments provided in Section 6. The above provision of
      this Section shall similarly apply to successive consolidations or mergers.
      

     

    (c)   Fractional
      Interests.
      The
      Company shall not be required to issue certificates representing fractions
      of
      Common Stock or Warrants upon the exercise of the Unit Purchase Option, nor
      shall it be required to issue scrip or pay cash in lieu of any fractional
      interests, it being the intent of the parties that all fractional interests
      shall be eliminated by rounding any fraction up to the nearest whole number
      of
      Warrants, Common Stock or other securities, properties or rights.

     

    7.     Reservation
      and Listing.
      The
      Company shall at all times reserve and keep available out of its authorized
      Common Stock, solely for the purpose of issuance upon exercise of the Unit
      Purchase Options or the Warrants underlying the Unit Purchase Option, such
      number of Common Stock or other securities, properties or rights as shall be
      issuable upon the exercise thereof. The Company covenants and agrees that,
      upon
      exercise of the Unit Purchase Options and payment of the Exercise Price
      therefor, all Common Stock and other securities issuable upon such exercise
      shall be duly and validly issued, fully paid and non-assessable and not subject
      to preemptive rights of any stockholder. The Company further covenants and
      agrees that upon exercise of the Warrants underlying the Unit Purchase Options
      and payment of the respective Warrant exercise price therefor, all Common Stock
      and other securities issuable upon such exercise shall be duly and validly
      issued, fully paid and non-assessable and not subject to preemptive rights
      of
      any stockholder. As long as the Unit Purchase Options shall be outstanding,
      the
      Company shall use its best efforts to cause all (i) Units and Common Stock
      issuable upon exercise of the Unit Purchase Options, (iii) Warrants
      issuable upon exercise of the Unit Purchase Options and (iv) Common Stock
      issuable upon exercise of the Warrants included in the Units issuable upon
      exercise of the Unit Purchase Option to be listed (subject to official notice
      of
      issuance) on all securities exchanges (or, if applicable on the Nasdaq National
      Market, SmallCap Market, OTC Bulletin Board or any successor trading market)
      on
      which the Units, the Common Stock or the Public Warrants issued to the public
      in
      connection herewith may then be listed and/or quoted. 

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    8.     Certain
      Notice Requirements.

     

    (a)   Right
      to Notice.
      Nothing
      herein shall be construed as conferring upon the Holders the right to vote
      or
      consent as a stockholder for the election of directors or any other matter,
      or
      as having any rights whatsoever as a stockholder of the Company. If, however,
      at
      any time prior to the expiration of the Unit Purchase Options and their
      exercise, any of the events described in Section 8(b) shall occur, then, in
      one or more of said events, the Company shall give written notice of such event
      at least fifteen days prior to the date fixed as a record date or the date
      of
      closing the transfer books for the determination of the stockholders entitled
      to
      such dividend, distribution, conversion or exchange of securities or
      subscription rights, or entitled to vote on such proposed dissolution,
      liquidation, winding up or sale. Such notice shall specify such record date
      or
      the date of the closing of the transfer books, as the case may be.
      Notwithstanding the foregoing, the Company shall deliver to each Holder a copy
      of each notice given to the other stockholders of the Company at the same time
      and in the same manner that such notice is given to the stockholders.

     

    (b)   Enumerated
      Events.
      The
      Company shall be required to give the notice described in this Section 8
      upon one or more of the following events: (i) if the Company shall take a
      record of the holders of its Common Stock for the purpose of entitling them
      to
      receive a dividend or distribution payable otherwise than in cash, or a cash
      dividend or distribution payable otherwise than out of retained earnings, as
      indicated by the accounting treatment of such dividend or distribution on the
      books of the Company, or (ii) the Company shall offer to all the holders of
      its Common Stock any additional shares of capital stock of the Company or
      securities convertible into or exchangeable for shares of capital stock of
      the
      Company, or any option, right or warrant to subscribe therefor, or (iii) a
      dissolution, liquidation or winding up of the Company (other than in connection
      with a consolidation or merger) or a sale of all or substantially all of its
      property, assets and business shall be proposed. 

     

    (c)   Change
      in Exercise Price.
      The
      Company shall, promptly after an event requiring a change in the Exercise Price
      pursuant to Section 6 hereof, send notice to the Holders of such event and
      change (the “Price Notice”). The Price Notice shall describe the event causing
      the change and the method of calculating same and shall be certified as being
      true and accurate by the Company's President and Chief Financial Officer.

     

    (d)   Notice
      Delivery.
      All
      notices, requests, consents and other communications under this Unit Purchase
      Option shall be in writing and shall be deemed to have been duly made when
      hand
      delivered, or mailed by express mail or private courier service: (i) If to
      the registered Holder of the Unit Purchase Option, to the address of such Holder
      as shown on the books of the Company, or (ii) If to the Company, to the
      following address or to such other address as the Company may designate by
      notice to the Holders: 

     

    AdCare
      Health Systems, Inc.

    5057
      Troy
      Road

    Springfield,
      Ohio 45502-9032

    Attn:
      David A. Tenwick, Chairman

     

    9.     Miscellaneous.

     

    (a)   Amendments.
      The
      Company and Newbridge
      Securities Corporation
      may from
      time to time supplement or amend this Unit Purchase Option without the approval
      of any of the Holders in order to cure any ambiguity, to correct or supplement
      any provision contained herein that may be defective or inconsistent with any
      other provisions herein, or to make any other provisions in regard to matters
      or
      questions arising hereunder that the Company and Newbridge
      Securities Corporation
      may deem
      necessary or desirable and that the Company and Newbridge
      Securities Corporation
      deem
      shall not adversely affect the interest of the Holders. All other modifications
      or amendments shall require the written consent of and be signed by the party
      against whom enforcement of the modification or amendment is sought.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    (b)   Headings.
      The
      headings contained herein are for the sole purpose of convenience of reference,
      and shall not in any way limit or affect the meaning or interpretation of any
      of
      the terms or provisions of this Unit Purchase Option. 

     

    (c)   Entire
      Agreement.
      This
      Unit Purchase Option (together with the other agreements and documents being
      delivered pursuant to or in connection with this Unit Purchase Option)
      constitutes the entire agreement of the parties hereto with respect to the
      subject matter hereof, and supersedes all prior agreements and understandings
      of
      the parties, oral and written, with respect to the subject matter hereof.

     

    (d)   Binding
      Effect.
      This
      Unit Purchase Option shall inure solely to the benefit of, and shall be binding
      upon, the Holder and the Company and their permitted assignees, respective
      successors, legal representative and assigns, and no other person shall have
      or
      be construed to have any legal or equitable right, remedy or claim under or
      in
      respect of or by virtue of this Unit Purchase Option or any provisions herein
      contained. 

     

    (e)
      Governing
      Law.
      This
      Unit Purchase Option shall be governed by and construed and enforced in
      accordance with the laws of the State of New York, without giving effect to
      conflict of laws. The Company hereby agrees that any action, proceeding or
      claim
      against it arising out of, or relating in any way to this Unit Purchase Option
      shall be brought and enforced in the courts of the State of New York or of
      the
      United States of America for the Southern District of New York, and irrevocably
      submits to such jurisdiction, which jurisdiction shall be exclusive. The Company
      hereby waives any objection to such exclusive jurisdiction and that such courts
      represent an inconvenient forum. Any process or summons to be served upon the
      Company may be served by transmitting a copy thereof by registered or certified
      mail, return receipt requested, postage prepaid, addressed to it
      at the
      address set forth in Section 8 hereof. Such mailing shall be deemed
      personal service and shall be legal and binding upon the Company in any action,
      proceeding or claim. The Company and the Holder agree that the prevailing
      party(ies) in any such action shall be entitled to recover from the other
      party(ies) all of its reasonable attorneys' fees and expenses relating to such
      action or proceeding and/or incurred in connection with the preparation
      therefor. 

     

    (f)   Waivers.
      The
      failure of the Company or the Holder to at any time enforce any of the
      provisions of this Unit Purchase Option shall not be deemed or construed to
      be a
      waiver of any such provision, nor to in any way affect the validity of this
      Unit
      Purchase Option or any provision hereof or the right of the Company or any
      Holder to thereafter enforce each and every provision of this Unit Purchase
      Option. No waiver of any breach, non-compliance or non-fulfillment of any of
      the
      provisions of this Unit Purchase Option shall be effective unless set forth
      in a
      written instrument executed by the party or parties against whom or which
      enforcement of such waiver is sought; and no waiver of any such breach,
      non-compliance or non-fulfillment shall be construed or deemed to be a waiver
      of
      any other or subsequent breach, non-compliance or non-fulfillment. 

     

    (g)
       Counterparts.
      This
      Unit Purchase Option may be executed in one or more counterparts, and by the
      different parties hereto in separate counterparts, each of which shall be deemed
      to be an original, but all of which taken together shall constitute one and
      the
      same agreement, and shall become effective when one or more counterparts has
      been signed by each of the parties hereto and delivered to each of the other
      parties hereto. 

     

    (h)   Exchange
      Agreement.
      As a
      condition of the Holder's receipt and acceptance of this Unit Purchase Option,
      Holder agrees that, at any time prior to the complete exercise of this Unit
      Purchase Option by Holder, if the Company and Newbridge
      Securities Corporation
      enter
      into an agreement (the “Exchange Agreement”) pursuant to which they agree that
      all outstanding Unit Purchase Options will be exchanged for securities or cash
      or a combination of both, then Holder shall agree to such exchange and become
      a
      party to the Exchange Agreement. 

     

     

    [Balance
      of page intentionally left blank]

     

     

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    IN
      WITNESS WHEREOF, the Company has caused this Unit Purchase Option to be signed
      by its duly authorized officer as of the    day
      of            ,
      2006.

     

     

    ADCARE
      HEALTH SYSTEMS, INC.

     

    

    By: _____________________________

    Name: David
      A.
      Tenwick

    Title: Chairman

     

     

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    Form
      To Be Used To Exercise Unit Purchase Option 

     

    AdCare
      Health Systems, Inc.

    5057
      Troy
      Road

    Springfield,
      Ohio 45502-9032

    Attn:
      David A. Tenwick, Chairman

    

    Date:                        ,
      200  

     

    The
      undersigned hereby elects irrevocably to exercise all or a portion of the within
      Unit Purchase Option and to
      purchase            Units
      of AdCare Health Systems, Inc. and hereby makes payment of
      $                        (at
      the rate of
      $                        per
      Unit) in payment of the Exercise Price pursuant thereto. Please issue the Common
      Stock and Warrants as to which this Unit Purchase Option is exercised in
      accordance with the instructions given below. 

     

    or
      

     

    The
      undersigned hereby elects irrevocably to convert its right to
      purchase                        Units
      purchasable under the within Unit Purchase Option by surrender of the
      unexercised portion of the attached Unit Purchase Option (with a "Value" based
      of
      $            based
      on a "Market Price" of
      $            ).
      Please issue the securities comprising the Units as to which this Unit Purchase
      Option is exercised in accordance with the instructions given below.

     

           

    ____________________________________

    Signature

    

      

      

    ____________________________________

    Signature
      Guaranteed

     

    INSTRUCTIONS
      FOR REGISTRATION OF SECURITIES 

     

    Name: ____________________________________________________________________      

    (Print
      in
      Block Letters)

    

    Address:
      ____________________________________________________________________      

     

    NOTICE:
      THE SIGNATURE TO THIS FORM MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE
      FACE OF THE WITHIN UNIT PURCHASE OPTION IN EVERY PARTICULAR WITHOUT ALTERATION
      OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A BANK,
      OTHER
      THAN A SAVINGS BANK, OR BY A TRUST COMPANY OR BY A FIRM HAVING MEMBERSHIP ON
      A
      REGISTERED NATIONAL SECURITIES EXCHANGE. 

     

     

    
 

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    Form
      To Be Used To Assign Unit Purchase Option 

     

    ASSIGNMENT
      

     

    (To
      be
      executed by the registered Holder to effect a transfer of the within Unit
      Purchase Option)

     

             FOR
      VALUE
      RECEIVED,                        does
      hereby sell, assign and transfer
      unto                        the
      right to
      purchase                        Units
      of AdCare Health Systems, Inc. (the "Company") evidenced by the within Unit
      Purchase Option and does hereby authorize the Company to transfer such right
      on
      the books of the Company. 

     

     

    Dated:            ,
      200            

    

    ____________________________________

    Signature

    

      

      

              ___________________________________

    Signature
      Guaranteed

     

     

    NOTICE:
      THE SIGNATURE TO THIS FORM MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE
      FACE OF THE WITHIN UNIT PURCHASE OPTION IN EVERY PARTICULAR WITHOUT ALTERATION
      OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A BANK,
      OTHER
      THAN A SAVINGS BANK, OR BY A TRUST COMPANY OR BY A FIRM HAVING MEMBERSHIP ON
      A
      REGISTERED NATIONAL SECURITIES EXCHANGE. 

     

    

    
      
         

      

      
        13

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