Standby Equity Distribution Agreement Term Sheet among Iron Star Development Inc., Cornell Capital Partners, LP, and CallKey Group Ltd.

Summary

Iron Star Development Inc. and CallKey Group Ltd. have agreed to a term sheet with Cornell Capital Partners, LP, under which Cornell will commit to purchase up to $10 million of Iron Star's common stock over 24 months, following SEC registration. Iron Star may request advances of up to $1 million at a time, selling shares at 97% of the market price. Cornell receives warrants and fees as part of the deal. The agreement requires Iron Star to register the shares for resale and maintain registration for two years. The arrangement is confidential and subject to formal agreements.

EX-10.3 4 v027968_ex10-3.txt CORNELL CAPITAL PARTNERS, LP 101 HUDSON STREET, SUITE 3700 JERSEY CITY, NEW JERSEY 07302 October 5, 2005 PERSONAL AND CONFIDENTIAL Board of Directors CallKey Group Ltd. Attention Nile Helmboldt 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/ Mark Angelo ------------------------------------ Name: Mark Angelo Title: Portfolio Manager AGREED TO AND ACCEPTED: IRON STAR DEVELOPMENT, INC. By: /s/ Wallace Boyack ------------------------------------ Name: Wallace Boyack Title: President CALLKEY GROUP LTD. By: /s/ Niles Hemlboldt ------------------------------------ Name: Niles Hemlboldt Title: Chief Financial Officer