CORNELL CAPITAL PARTNERS, LP
000 XXXXXX XXXXXX, XXXXX 0000
XXXXXX XXXX, XXX XXXXXX 00000
October 5, 2005
PERSONAL AND CONFIDENTIAL
Board of Directors
CallKey Group Ltd.
Attention Xxxx Xxxxxxxxx
Unit 3b Isle of Man Freeport
Ballasalla
Isle of Man
IM9 2AP
British Isles
Gentlemen:
On the terms and subject to the conditions set forth below, Cornell
Capital Partners, LP (the "Investor") will commit to purchase up to ten
($10,000,000) million dollars of the common stock of Iron Star Development
Incorporated, (the "Issuer") on the principal terms set forth below. This letter
is subject to the parties negotiating and entering into formal agreements
setting forth their respective rights and obligations. Such agreements will
contain customary representations, warranties and indemnifications. The material
terms of the offering are set forth below:
Issuer Iron Star Development (ISDV)
Investor Cornell Capital Partners, LP
Securities Common Stock
Commitment Amount The Investor shall commit to purchase up to ten
($10,000,000) million of Common Stock of the Issuer over
the course of twenty-four (24) months after an effective
registration of the Common Stock. The Issuer shall have
the right, but not the obligation, to sell Common Stock
to the Investor. Each right to sell Common Stock is
called an "Advance." Each Advance may be up to one
million ($1,000,000) dollars. Standby Equity
Distribution Agreement proceeds may be used by CallKey
for purposes such as paying off existing capital debt.
Iron Star Development Incorporated
October 4, 2005
Page 2
Advance Notice In order to request an Advance, the Issuer will submit a
written notice (an "Advance Notice") to the Investor.
The Advance Notice will specify the amount of the
Advance. Advance Notices may be delivered to the
Investor every seven (7) trading days after the Common
Stock is registered with the Securities and Exchange
Commission. The date the Advance Notice is delivered to
the Investor is called an "Advance Notice Date."
Purchase Price The Issuer will sell to the Investor the Common Stock at
a purchase price equal to ninety-seven percent (97%) of
the Market Price. The "Market Price" is the lowest
closing bid price of the Common Stock during the five
(5) consecutive trading days after the Advance Notice
Date (the "Pricing Period").
Advance Date The Advance Date is the date on which the sale of the
Common Stock and the payment of the Purchase Price are
completed. Each Advance Date will be on the first (1st)
trading day after the end of the relevant Pricing
Period. On each Advance Date, the Issuer will cause the
delivery of whole shares of Common Stock to the Investor
or its designees via DWAC, against payment therefore to
the Issuer's designated account by wire transfer of
immediately available funds (provided that the shares of
stock are received by the Investor no later than 1:00 pm
EST) or next day available funds if the shares are
received thereafter.
No Short Sales The Investor will not, nor cause, nor permit any of its
affiliates to, engage in any short sales with respect to
the Common Stock.
Iron Star Development Incorporated
October 4, 2005
Page 3
Registration Rights The Issuer shall file a registration statement with the
Securities and Exchange Commission to register the
resale of shares of Common Stock to be issued to the
Investor. The Issuer shall use its best effort to get
the registration statement effective. The Issuer shall
continuously maintain the effectiveness of the
registration statement for a period of twenty-four (24)
months after the effective date. The Issuer shall pay
all offering expenses in connection with the
registration (the "Registration Statement").
Warrants The Investor shall be granted 50,000 Warrants for each
one million ($1,000,000) draw down of the Standby Equity
Distribution of which each 50,000 tranche shall be
exercisable at 102% of the average "Market Price on a
cash basis. Warrants shall be valid for a period of five
years from each traunches vesting at time of full draw
down.
Structuring Fee The Issuer will pay to the Investor a structuring fee of
$20,000.
Except for the Structuring Fee, each party will be
responsible for all its own fees and expenses in this
transaction.
Commitment Fees Upon closing, the Issuer shall issue to the Investor
restricted shares to the Issuer's common stock in an
amount equal to five percent (5%) of the Commitment
Amount based on the closing bid of the Issuer's Common
Stock on the closing date. These shares shall have
"piggy-back" and demand registration rights and will be
included in the Registration Statement.
Upon each Advance, the Investor shall receive directly
from escrow cash compensation equal to five percent (5%)
of the gross proceeds of such Advance.
Iron Star Development Incorporated
October 4, 2005
Page 4
Confidentiality The existence of this term sheet and the individual
terms and conditions are of a confidential nature and
shall not be disclosed to anyone, except the Issuer, the
Issuer's management, Board of Directors, legal counsel
and accounting advisors.
[SIGNATURE PAGE TO IMMEDIATELY FOLLOW]
Iron Star Development Incorporated
October 4, 2005
Page 5
If the terms and conditions contained herein are satisfactory, please sign
as indicated below. We appreciate this opportunity to work with you. We look
forward to an expeditious and successful closing of this transaction.
Sincerely,
CORNELLCAPITAL PARTNERS, LP
By: Yorkville Advisors, LLC
Its: General Partner
By: /s/ Xxxx Xxxxxx
------------------------------------
Name: Xxxx Xxxxxx
Title: Portfolio Manager
AGREED TO AND ACCEPTED:
IRON STAR DEVELOPMENT, INC.
By: /s/ Xxxxxxx Xxxxxx
------------------------------------
Name: Xxxxxxx Xxxxxx
Title: President
CALLKEY GROUP LTD.
By: /s/ Xxxxx Xxxxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Chief Financial Officer
