Document:

notes.htm

 

CERISTAR, INC. PROMISSORY NOTE

$175,000.00                                                                                       

Original Issue Date: November 25, 2003

 

FOR VALUE RECEIVED, the undersigned, CERISTAR, INC., a Delaware corporation with offices at 50 West Broadway, Suite 1100, Salt Lake City, UT, 84101 (the "Maker"), unconditionally promises to pay to the order of SOVCAP EQUITY PARTNERS, LTD., a Bahamas corporation, or its registered assigns (the "Holder"), at its office at c/o Lion Corporate
Securities Ltd., Cumberland House #27, Cumberland Street, P.O. Box N-10818, Nassau, New Providence, The Bahamas or at such other place as may be designated by the holder hereof in writing, the principal sum of ONE HUNDDRED, SEVENTY-FIVE THOUSAND DOLLARS ($175,000), without interest, except as specified herein.

 

1. Payments. The Maker agrees to pay the principal of this Note within ten (10) days following demand from the Holder requesting payment, which demand may be made at any
time after the 120th day following the issue date of this Note. The Maker shall have the right to prepay this Note in whole at any time or in part from time to time. Any payments, including prepayments, of principal of this Note, whether upon demand, at the option of the Company, upon default or otherwise shall include a repayment premium equal to the product of (a) the Repayment Percentage (as defined below) and (b) the number of thirty
(30) day periods (rounded up to the next whole number) (each 30-day period referred to as a "Monthly Period") that this Note has been outstanding (computed from the date of issuance of this Note to the date of payment) but in no event higher than the maximum amount permitted by law. For purposes of this Note, the Repayment Percentage shall mean one and one-half percent (1.5%) of the outstanding principal amount of this Note. All payments by the Maker on account of principal, premium, interest or fees hereunder
shall be made in money of the United States of America that at the time of payment is legal tender, by wire transfer of immediately available funds.

 

2. Interest. Without limiting any of the rights of the holder of this Note under Section 4 of this Note, if any payment of principal or premium thereon is not made when
the same shall become due and payable hereunder, interest shall accrue thereon at a rate per annum equal to twelve percent (12%) per annum. Notwithstanding anything to the contrary contained herein, no payments that are considered interest shall accrue or be payable at a rate in excess of the maximum amount permitted by law.

 

3. Use of Proceeds. The Company agrees use the proceeds from the sale and issuance of the Bridge Notes only for payment of following expenses:

 

a. Working Capital

b. Employee/Management Compensation

c. Equipment Lease/Purchase Payments

d. Consulting Fees

 

4. Conversion.

 

(a) At any time after the date that is 120 days following the issue date of this Note and from time to time, the Holder may convert all or any portion of this Note, together with the Repayment Percentage, and accrued and unpaid interest
and fees due on this Note (the "Conversion Amount") into shares of common stock of the Maker (the "Common Stock").

 

(b) If the Holder elects to convert less than the full principal amount of this Note, the Maker shall issue a Note in substantially the same form as this Note, except that the principal amount shall be reduced by the principal amount
so converted (exclusive of the redemption premium).

 

(c) The number of shares of Common Stock issuable upon conversion of this Note is equal to the quotient of the Conversion Amount of that portion of the Note being converted divided by the Conversion Price. Fractional shares will not be
issued. In lieu of any fraction of a share, the Maker shall deliver its check for the dollar amount of the less than full share remainder. For purposes of this Note, the "Conversion Price" shall mean the product of (a) .75 and (b) the average closing bid price of the Common Stock for the five trading days ending on the trading day immediately preceding the Conversion Date.

 

(d) To convert this Note into Common Stock, (the "Conversion Date"), the Holder hereof shall (A) deliver or transmit by facsimile, for receipt on or prior to 11:59 P.M., Eastern Time, on such date, a copy of a fully executed notice of
conversion in the form attached hereto as Exhibit A (the "Conversion Notice") to the Maker or its designated transfer agent for its Common Stock (the "Transfer Agent"), and (B) surrender to a common carrier for delivery to the Maker or the Transfer Agent as soon as practicable following such date, this Note (or an indemnification undertaking with respect to such shares in the case of the loss, theft, or destruction of this Note) and the originally executed Conversion Notice. The date the Maker receives the Conversion
Note and this Note is hereinafter the "Conversion Date."

 

(e) Upon receipt by the Maker of a facsimile copy of a Conversion Notice, the Maker shall immediately send, via facsimile, a confirmation of receipt of such Conversion Notice to Holder. Upon receipt by the Maker or the Transfer Agent
of the Note to be converted pursuant to a Conversion Notice, together with the originally executed Conversion Notice, the Maker or the Transfer Agent (as applicable) shall, within five (5) business days following the date of receipt, (A) issue and surrender to a common carrier for overnight delivery to the address as specified in the Conversion Notice, a certificate, registered in the name of Holder or its designee, for the number of shares of Common Stock to which Holder shall be entitled or (B) credit the aggregate
number of shares of Common Stock to which such Holder shall be entitled to the Holder's or its designee's balance account at The Depository Trust Company.

 

(f) The Person or persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the "Record Holder" or Holder of such shares of Common Stock on the Conversion Date.

 

(g) If the Maker shall fail to issue to Holder within five (5) business days following the date of receipt by the Maker or the Transfer Agent of this Note to be converted pursuant to a Conversion Notice, a certificate for the number of
shares of Common Stock to which each Holder' is entitled upon Holder's conversion of this Note, in addition to all other available remedies which such Holder may pursue hereunder, the Maker shall pay additional damages to Holder' on each day after the fifth (5th) business day following the date of receipt by the Maker or the Transfer Agent an amount equal to 1,0% of the product of (A) the number of shares of Common Stock not issued to Holder and to which Holder is entitled multiplied by (B) the Closing Bid Price
of the Common Stock on the business day following the date of receipt by the Maker or the Transfer Agent of the Conversion Notice. The foregoing notwithstanding, Holder at its option may withdraw a Conversion Notice, and remain a Holder of this Note, if Holder has otherwise complied with this Section 4.

 

(h) If any adjustment to the Conversion Price to be made pursuant to clause (j) of this Section 4 becomes effective immediately after a record date for an event as therein described, and conversion occurs prior to such event but after
the record date, the Maker may defer issuing, delivering, or paying to Holder any additional shares of Common Stock or check for any cash remainder required by reason of such adjustment until the occurrence of such event, provided that the Maker delivers to Holder a due bill or other appropriate instrument evidencing the Holders' right to receive such additional shares or check upon the occurrence of the event giving rise to the adjustment.

 

 

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(i)         Until such time as this Note has been fully redeemed, the Maker shall

 

reserve out of its authorized but unissued Common Stock enough shares of Common Stock to

 

permit the conversion of the entire Redemption Price and all accrued and unpaid interest due on

 

this Note at any time. All shares of Common Stock issued upon conversion of this Note shall be

 

fully paid and nonassessable. The Maker covenants that if any shares of Common Stock,

 

required to be reserved for purposes of conversion of this Note hereunder, require registration

 

with or approval of any governmental authority under any federal or state law or listing upon any

 

national securities exchange before such shares may be issued upon conversion, the Maker shall

 

in good faith, as expeditiously as possible, endeavor to cause such shares to be duly registered,

 

approved or listed, as the case may be.

 

(j)      The Conversion Price shall be subject to adjustment from time to time as

 

follows:

 

(i)      If the Maker at any time subdivides (by any stock split, stock dividend, recapitalization, or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced.
If the Maker at any time combines (by combination, reverse stock split, or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased.

(ii)     Prior to the consummation of any Organic Change (as defined below), the Maker will make appropriate provision (in form and substance satisfactory to the Holder to insure that Holder will thereafter have the right to acquire and receive in lieu of, or in addition to, (as the case may be) the shares of Common Stock immediately theretofore acquirable and receivable
upon the conversion of this Holder's Note, such shares of stock, securities, or assets as may be issued or payable with respect to, or in exchange for, the number of shares of Common Stock immediately theretofore acquirable and receivable upon the conversion of this Note had such Organic Change not taken place. In any such case, the Maker will make appropriate provision (in form and substance satisfactory to Holder with respect to such Holder's rights and interests to insure that the provisions of this clause
(j) will thereafter be applicable. The Maker will not effect any such consolidation, merger, or sale, unless prior to the consummation thereof the successor entity (if other than the Maker) resulting from consolidation or merger or the entity purchasing such assets assumes, by written instrument (in form and substance satisfactory to Holder), the obligation to deliver to Holder such shares of stock, securities, or assets as, in accordance with the foregoing provisions, that Holder may be entitled to acquire.
For purposes of this Agreement, "Organic Change" means any recapitalization, reorganization, reclassification, consolidation, merger, or sale of all or substantially all of the Maker's assets to another Person (as defined below), or other similar transaction which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities, or assets with respect to or in exchange for Common Stock; and "Person" means an individual, a limited
liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, and a government or any department or agency thereof.

 

(k)     The Holder shall be entitled to piggyback registration rights with respect to the shares of Common Stock issuable upon conversion of this Note by the Holder. The Company agrees to include such shares on the first available registration, including forms S-l, SB-2 or S-3, filed by the Company with Securities
and Exchange Commission.

 

 

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(1)      Unless the Note is under Default (as defined in Section 5 of the Note) or unless prior to an Organic Change (as defined in Section 4(j)(n) of the Note), in no event shall the Holder be entitled to convert the Notes in excess of that number, which upon giving effect to such conversion, would cause the
aggregate number of shares of Common Stock beneficially owned by the holder and its affiliates to exceed 9.99% of the outstanding shares of the Common Stock following the conversion. For purposes of the foregoing proviso, the aggregate number of shares of common stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon conversion or exercise of the Notes with respect to which the determination is being made, but shall exclude the number of shares
of Common Stock which would be issuable upon (i) conversion of the remaining unconverted Notes owned by the Holder or its affiliates, and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the holder and it affiliates. Except as set forth in the preceding sentence, for purposes of this Section 4(1), beneficial ownership shall be calculated
in accordance with Section 13(d) of the 1934 Act.

 

5. Events of Default. If any of the following conditions or events shall occur and be continuing: (a) the Maker shall default in the payment of principal of this Note when
the same becomes due and payable; (b) the Maker shall admit in writing its inability to pay its debts as such debts become due; (c) the Maker shall make a general assignment for the benefit of creditors; (d) the Maker shall commence a voluntary case under the Federal Bankruptcy Code (as now or hereafter in effect); (e) the Maker shall file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, or adjustment of debts; (f) there shall have been instituted against the Maker any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings for relief under the Federal Bankruptcy Code or any other law relating to bankruptcy, insolvency or adjustment of debts, which are not dismissed within sixty (60) days after such institution; or (g) the Maker shall take any action for the purposes of effecting any of the foregoing; then, and in any such event, the Holder may at any time (unless all defaults shall theretofore have been remedied) at its option,
declare this Note to be due and payable, whereupon this Note shall forthwith mature and become due and payable, together with interest accrued thereon, without presentment, demand, protest or notice, all of which are hereby waiver.

 

6. NEGATIVE COVENANTS. The provisions of this Section 6 shall remain in effect so long as any of the Bridge Notes shall remain outstanding

 

(a)     Restrictions on Debt. Hereafter, the Company will not create, assume, or incur or become or at any time be liable in respect of, any Debt, except: Bridge Notes issued pursuant to this Agreement; Debt outstanding on the date hereof to the extent reflected on the most recent balance sheet of the Company or incurred
in the ordinary course of business thereafter and debt incurred to accomplish duties and obligations of the Company under contracts to provide customer premises equipment, services, or other related obligations to existing or new customers of the Company as a result of business contracts; Purchase money security interests not to exceed $250,000 per year; and Secured debt in an aggregate principal amount up to $20 million.

(i)      Definition of Debt. For purposes of this Agreement, the capitalized term "Debt" of any Person shall mean: all indebtedness of such Person for borrowed money, including without limitation obligations evidenced by bonds, debentures, Bridge Notes, or other similar instrument; all indebtedness guaranteed
in any manner by such Person, or in effect guaranteed by such Person through an agreement to purchase, contingent or otherwise; all accounts payable which, to the knowledge of such Person, have remained unpaid for a period of 90 days after the same become due and payable in accordance with their respective terms taking into account any grace period relating to the due date expressly set forth in the applicable invoice with respect to the payment of such accounts payable; all indebtedness secured by any mortgage,
lien, pledge, charge, security interest or other encumbrance upon or in property owned by such Person, even though such Person has not assumed or become liable for the payment of such indebtedness; all indebtedness created or arising under any conditional sale agreement or lease in the nature thereof (including obligations as lessee under leases which shall have been or should be, in accordance with generally accepted accounting principles, recorded as capitalized leases) (but excluding operating leases) or other
title

 

retention agreement with respect to property acquired by such Person, even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession of such property all bankers' acceptances and letters of credit; and liabilities in respect of unfunded vested benefits under Plans covered
by Title IV of ERISA

 

(b) Restrictions on Equity Sales. The Company will not offer or enter into an agreement to sell equity securities of the Company, under private placement memorandum or other private offering document or letter, whether of equity securities,
convertible debt securities, or securities or instruments convertible into or exchangeable for debt or equity securities of the Company, except through an underwritten public offering or after receiving approval by the purchaser as described in 6(f) below.

 

(c) Restrictions on Transactions with Affiliates. The Company will not make any loans or advances to any of its officers, shareholders, or Affiliates, other than expense advances made by the Company to its officers and employees in the
ordinary course of business The Company will not increase the salary of any executive officer, or the remuneration of any director.

 

 

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(d) Restrictions on Investments. Other than as permitted by this Agreement, the Company will not purchase or acquire or invest in, or agree to purchase or acquire or invest in the business, property, or assets of, or any securities of,
any other company or business, provided however, that the Company may enter into contracts relating to the expansion of its business and may invest its Excess Cash as defined below in: securities issued or directly and fully guaranteed or insured by the United States government or any agency thereof having maturities of not more than one year from the date of acquisition; certificates of deposit or eurodollar certificates
of deposit, having maturities of not more than one hundred eighty days from the date of acquisition, or one year from the date of acquisition in the case of certificates of deposit or eurodollar certificates of deposit being used to secure the Company's reimbursement obligations under letters of credit (provided that nothing contained herein shall be construed to permit letters of credit not otherwise permitted under this Agreement); commercial paper of any Person that is not a subsidiary or an Affiliate of the
Company, maturing within one hundred eiahtv davs after the date of acquisition0 bank loan participations* and money market instruments having maturities of not more than one hundred eighty days from the date of acquisition, or one year from the date of acquisition in the case of money
market instruments being used to secure the Company's reimbursement obligations under letters of credit (provided that nothing contained herein shall be construed to permit letters of credit not otherwise permitted under this Agreement); in all cases of such credit quality as a prudent business person would invest in. As used in this Section, "Excess Cash" shall mean that portion of the proceeds of the Bridge Notes that has not been invested as described
in Section 3 hereof.

 

(e)     Change in Business; Operations. The Company will not cause or effect any change in or addition to the primary business of the Company that has not been approved by Purchaser, such that more than 20% of the consolidated net earnings of the Company are derived from a business other than the business in which
the Company was engaged on the date hereof as reflected in the applicable last SEC Document filed prior to the First Closing ("Change in Business"). The business of the Company and its subsidiaries shall not be conducted in violation of any law, ordinance, or regulation of any governmental entity.

 

(f)     Exceptions With Consent of Purchasers. The Company may seek an exception to any prohibited action under this Section by first, giving written notice to Purchaser of Bridge Note under this Agreement, along with copies
of all documentation requested by any Purchaser relating to such requested exception, and second, in the sole discretion of Purchaser, satisfactorily responding to any Purchaser inquiries about the requested action. The Company may undertake any such requested action otherwise prohibited by this Section 6 only after receiving the advance written consent of Purchaser hereunder.

 

7. No Waiver: Rights and Remedies Cumulative. No failure on the part of the holder of this Note to exercise, and no delay in exercising any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise by the holder of this Note of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The rights and remedies herein provided are cumulative and not exclusive of any remedies or rights provided by law or by any other agreement between the Maker and the Holder.

 

8. Costs and Expenses. The Maker shall reimburse the holder of this Note for all costs and expenses incurred by it, and shall pay the reasonable fees and disbursements of
counsel to the holder of this Note, in connection with the enforcement of the holder's rights hereunder, whether or not legal proceedings are initiated.

 

9. Amendments. No amendment, modification or waiver of any provision of this Note nor consent to any departure by the Maker therefrom shall be effective unless the same
shall be in writing and signed by the holder of this Note and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

 

10. Governing Law; Jurisdiction and Service of Process. This Note shall be governed by and construed in accordance with the laws of the State of Utah, without giving effect
to conflict of laws. The Maker hereby irrevocably consents to the jurisdiction of the courts of the State of Utah and of any federal court located in such State in connection with any action or proceeding arising out of or relating to this Note, any document or instrument delivered pursuant to, in connection with, or simultaneously with, this Note or a breach of this Note or any such document or instrument. In any such action or proceeding, the Maker waives personal service of any summons, complaint, or other
process and agrees that service thereof may be made in accordance with Section 11 of this Note. Within 30 days after such service, or such other time as may be mutually agreed upon in writing by the attorneys for the parties to such action or proceeding, the Maker shall appear or answer such summons, complaint, or other process. Should the Maker so served fail to appear or answer within such 30-day period or such extended period, as the case may be, the Maker shall be deemed in default and judgment may be entered
by the Holder against the Maker as demanded in any summons, complaint, or other process so served.

    11. Successors and Assigns. This Note shall be binding upon the Maker and its successors and permitted
assigns and the terms hereof shall inure to the benefit of the Holder and its successors and assigns, including subsequent holders hereof.

 

 

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12. Notice, Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be deemed to have been received: (a) upon hand delivery
(receipt acknowledged) or delivery by telecopy or facsimile (with transmission confirmation report) if delivered on a business day during normal business hours where such notice is to be received, or the first business day following such delivery if delivered other than on a business day during normal business hours where such notice is to be received; or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of
such mailing, whichever first shall occur, to the address set forth above or to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 10 except that such change shall not be effective until actual receipt thereof.

 

13. Severability. The provisions of this Note are severable, and if any provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall not in any manner affect such provision in any other jurisdiction or any other provision of this Note in any jurisdiction.

 

14. Waiver of Notice. The Maker hereby waives presentment, demand for payment, protest, notice of protest and all other demands or notices in connection with the delivery,
acceptance, performance, default or enforcement of this Note.

 

15. Set-off. Counterclaim. In the event the holder hereof seeks to enforce its rights under this Note, the Maker waives the right to interpose any set-off or counterclaim
of any nature or description against the holder.

 

16. Headings. The headings in this Note are solely for the convenience of reference and shall be given no effect in the construction or interpretation of this Note.

 

IN WITNESSETH WHEREOF, the undersigned has duly executed this Note as date first above written.

[CORPORATE SEAL]

	
 

COUNTY OF SALT LAKE ) STATE OF UTAH ) Subscribed and sworn to before me this 25th dav of November 2003

 

Notary Public Residing in Salt Lake City, Utah / My Commission Expires: 1/15/2007

 

 

 

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EXHIBIT A 

 

CONVERSION NOTICE

 

Reference is made to terms and conditions of the Note, dated November 25,2003, in the principal amount of $175,000.00, and registered in the name of SovCap Equity Partners, Ltd {NAME OF HOLDER} (the "Note"). In accordance with and pursuant to the terms of the Note, the undersigned hereby
elects to

convert $                            in principal amount of the Note into shares of Common Stock, $ 001 par value

per share (the "Common Stock"), of the Company, by tendering the original Note specified below as of the date specified below.

 

Date of Conversion:                                                                                                        

 

Principal Amount of Note to be converted: Redemption Premium Accrued Interest and/or Fees

 

Total Amount of Note to be Converted

 

Please confirm the following information:

 

Conversion Price:

 

Number of shares of Common Stock to be issued:

 

Please issue the Common Stock into which the Note is being converted in the following name and to the following address:

 

Issue to:                                                    

 

Facsimile Number:

 

Authorization:                                                    

 

By:                                         

Title:                                         

Dated:                                         

 

If electronic book entry transfer, complete the following:

Account Number:                                                    

Transaction Code Number:                                                    

COMPANY ACKNOWLEDGEMENT TO CONVERSION NOTICE

 

ACKNOWLEDGED AND AGREED: CERISTAR, INC.

 

By:___________________________________

Name: Title:

 

Date:

  

6

  

 

IRREVOCABLE STOCK OR BOND POWER

 

For Value received, the undersigned does (do) hereby sell, assign, and transfer to:

 

❖    If stock, complete this portion:

 

shares of the                                                       stock
of_

 

represented by certificate(s) Number(s)_

 

In the name of the undersigned on the books of said company.

 

❖    If Bonds, complete this portion:

 

bonds of  IMHI (fka Ceristar, Inc.)

 

in the principal amount of  $175,000 Number(s) November 25, 2003

 

inclusive standing in the name of the undersigned on books of said company.

 

The undersigned does (do) hereby irrevocably constitute and appoint

[Missing Graphic Reference]

 

attorney to transfer the said stock or bond(s), as the case may be, on the books of said company, with full power of substitution in the premises.

Date

 

 

7

 

 

CERISTAR, INC.PROMISSORY NOTE

$35,000.00

Original Issue Date: May 28, 2004

 

FOR VALUE RECEIVED, the undersigned, CERISTAR, INC., a Delaware corporation with offices at 50 West Broadway, Suite 1100, Salt Lake City, UT, 84101 (the "Maker"), unconditionally promises to pay to the order of SOVCAP EQUITY PARTNERS, LTD., a Bahamas corporation, or its registered assigns (the "Holder"), at its office at c/o Lion Corporate
Securities Ltd., Cumberland House #27, Cumberland Street, P.O. Box N-10818, Nassau, New Providence, The Bahamas or at such other place as may be designated by the holder hereof in writing, the principal sum of THIRTY-FIVE THOUSAND DOLLARS ($35,000.00), without interest, except as specified herein.

 

1. Payments. The Maker agrees to pay the principal of this Note within ten (10) days following demand from the Holder requesting payment, which demand may be made at any
time after the 120th day following the issue date of this Note. The Maker shall have the right to prepay this Note in whole at any time or in part from time to time. Any payments, including prepayments, of principal of this Note, whether upon demand, at the option of the Company, upon default or otherwise shall include a repayment premium equal to the product of (a) the Repayment Percentage (as defined below) and (b) the number of thirty
(30) day periods (rounded up to the next whole number) (each 30-day period referred to as a "Monthly Period") that this Note has been outstanding (computed from the date of issuance of this Note to the date of payment) but in no event higher than the maximum amount permitted by law. For purposes of this Note, the Repayment Percentage shall mean one and one-half percent (1.5%) of the outstanding principal amount of this Note. All payments by the Maker on account of principal, premium, interest or fees hereunder
shall be made in money of the United States of America that at the time of payment is legal tender, by wire transfer of immediately available funds.

 

2. Interest. Without limiting any of the tights of the holder of this Note under Section 4 of this Note, if any payment of principal or premium thereon is not made when
the same shall become due and payable hereunder, interest shall accrue thereon at a rate per annum equal to twelve percent (12%) per annum. Notwithstanding anything to the contrary contained herein, no payments that are considered interest shall accrue or be payable at a rate in excess of the maximum amount permitted by law.

 

3. Use of Proceeds. The Company agrees use the proceeds from the sale and issuance of the Bridge Notes only for payment of following expenses:

 

a. May 2004 budget, as provided by the Company in attached Exhibit B

 

b. Consulting fees, as agreed

 

4. Conversion.

 

(a) At any time after the date that is 120 days following the issue date of this Note and from time to time, the Holder may convert all or any portion of this Note, together with the Repayment Percentage, and accrued and unpaid interest
and fees due on this Note (the "Conversion Amount") into shares of common stock of the Maker (the "Common Stock").

 

(b) If the Holder elects to convert less than the full principal amount of this Note, the Maker shall issue a Note in substantially the same form as this Note, except that the principal amount shall be reduced by the principal amount
so converted (exclusive of the redemption premium).

 

(c) The number of shares of Common Stock issuable upon conversion of this Note is equal to the quotient of the Conversion Amount of that portion of the Note being converted divided by the Conversion Price. Fractional shares will not be
issued. In lieu of any fraction of a share, the Maker shall deliver its check for the dollar amount of the less than full share remainder. For purposes of this Note, the "Conversion Price" shall mean the product of (a) .75 and (b) the average closing bid price of the Common Stock for the five trading days ending on the trading day immediately preceding the Conversion Date.

 

(d) To convert this Note into Common Stock, (the "Conversion Date"), the Holder hereof shall (A) deliver or transmit by facsimile, for receipt on or prior to 11:59 P.M., Eastern Time, on such date, a copy of a fully executed notice of
conversion in the form attached hereto as Exhibit A (the "Conversion Notice") to the Maker or its designated transfer agent for its Common Stock (the "Transfer Agent"), and (B) surrender to a common carrier for delivery to the Maker or the Transfer Agent as soon as practicable following such date, this Note (or an indemnification undertaking with respect to such shares in the case of the loss, theft, or destruction of this Note) and the originally executed Conversion Notice. The date the Maker receives the Conversion
Note and this Note is hereinafter the "Conversion Date."

 

 

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(e) Upon receipt by the Maker of a facsimile copy of a Conversion Notice, the Maker shall immediately send, via facsimile, a confirmation of receipt of such Conversion Notice to Holder. Upon receipt by the Maker or the Transfer Agent
of the Note to be converted pursuant to a Conversion Notice, together with the originally executed Conversion Notice, the Maker or the Transfer Agent (as applicable) shall, within five (5) business days following the date of receipt, (A) issue and surrender to a common carrier for overnight delivery to the address as specified in the Conversion Notice, a certificate, registered in the name of Holder or its designee, for the number of shares of Common Stock to which Holder shall be entitled or (B) credit the aggregate
number of shares of Common Stock to which such Holder shall be entitled to the Holder's or its designee's balance account at The Depository Trust Company.

 

(f) The Person or persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the "Record Holder" or Holder of such shares of Common Stock on the Conversion Date.

 

(g) If the Maker shall fail to issue to Holder within five (5) business days following the date of receipt by the Maker or the Transfer Agent of this Note to be converted pursuant to a Conversion Notice, a certificate for the number of
shares of Common Stock to which each Holder is entitled upon Holder's conversion of this Note, in addition to all other available remedies which such Holder may pursue hereunder, the Maker shall pay additional damages to Holder on each day after the fifth (5th) business day following the date of receipt by the Maker or the Transfer Agent an amount equal to 1.0% of the product of (A) the number of shares of Common Stock not issued to Holder and to which Holder is entitled multiplied by (B) the Closing Bid Price
of the Common Stock on the business day following the date of receipt by the Maker or the Transfer Agent of the Conversion Notice. The foregoing notwithstanding, Holder at its option may withdraw a Conversion Notice, and remain a Holder of this Note, if Holder has otherwise complied with this Section 4.

 

(h) If any adjustment to the Conversion Price to be made pursuant to clause (j) of this Section 4 becomes effective immediately after a record date for an event as therein described, and conversion occurs prior to such event but after
the record date, the Maker may defer issuing, delivering, or paying to Holder any additional shares of Common Stock or check for any cash remainder required by reason of such adjustment until the occurrence of such event, provided that the Maker delivers to Holder a due bill or other appropriate instrument evidencing the Holders' right to receive such additional shares or check upon the occurrence of the event giving rise to the adjustment.

 

(i)           Until such time as this Note has been fully redeemed, the Maker shall

 

reserve out of its authorized but unissued Common Stock enough shares of Common Stock to

 

permit the conversion of the entire Redemption Price and all accrued and unpaid interest due on

 

this Note at any time. All shares of Common Stock issued upon conversion of this Note shall be

 

fully paid and nonassessable. The Maker covenants that if any shares of Common Stock,

 

required to be reserved for purposes of conversion of this Note hereunder, require registration

 

with or approval of any governmental authority under any federal or state law or listing upon any

 

national securities exchange before such shares may be issued upon conversion, the Maker shall

 

in good faith, as expeditiously as possible, endeavor to cause such shares to be duly registered,

 

approved or listed, as the case may be.

 

(j)      The Conversion Price shall be subject to adjustment from time to time as

 

follows:

 

 

9

 

(i)      If the Maker at any time subdivides (by any stock split, stock dividend, recapitalization, or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced.
If the Maker at any time combines (by combination, reverse stock split, or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased.

 

(ii)     Prior to the consummation of any Organic Change (as defined below), the Maker will make appropriate provision (in form and substance satisfactory to the Holder to insure that Holder will thereafter have the right to acquire and receive in lieu of, or in addition to, (as the case may be) the shares of Common
Stock immediately theretofore acquirable and receivable upon the conversion of this Holder's Note, such shares of stock, securities, or assets as may be issued or payable with respect to, or in exchange for, the number of shares of Common Stock immediately theretofore acquirable and receivable upon the conversion of this Note had such Organic Change not taken place. In any such case, the Maker will make appropriate provision (in form and substance satisfactory to Holder with respect to such Holder's rights and
interests to insure that the provisions of this clause (j) will thereafter be applicable. The Maker will not effect any such consolidation, merger, or sale, unless prior to the consummation thereof the successor entity (if other than the Maker) resulting from consolidation or

merger or the entity purchasing such assets assumes, by written instrument (in form and

 

substance satisfactory to Holder), the obligation to deliver to Holder such shares of stock, securities, or assets as, in accordance with the foregoing provisions, that Holder may be entitled to acquire. For purposes of this Agreement, "Organic Change" means any recapitalization, reorganization, reclassification, consolidation, merger, or
sale of all or substantially all of the Maker's assets to another Person (as defined below), or other similar transaction which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities, or assets with respect to or in exchange for Common Stock; and "Person" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, and a government or any department
or agency thereof.

 

(k)     The Holder shall be entitled to piggyback registration rights with respect to the shares of Common Stock issuable upon conversion of this Note by the Holder. The Company agrees to include such shares on the first available registration, including forms S-l, SB-2 or S-3, filed by the Company with Securities
and Exchange Commission.

 

(1)      Unless the Note is under Default (as defined in Section 5 of the Note) or unless prior to an Organic Change (as defined in Section 4(j)(ii) of the Note), in no event shall the Holder be entitled to convert the Notes in excess of that number, which upon giving effect to such conversion, would cause the
aggregate number of shares of Common Stock beneficially owned by the holder and its affiliates to exceed 9.99% of the outstanding shares of the Common Stock following the conversion. For purposes of the foregoing proviso, the aggregate number of shares of common stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon conversion or exercise of the Notes with respect to which the determination is being made, but shall exclude the number of shares
of Common Stock which would be issuable upon (i) conversion of the remaining unconverted Notes owned by the Holder or its affiliates, and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the holder and it affiliates. Except as set forth in the preceding sentence, for purposes of this Section 4(1), beneficial ownership shall be calculated
in accordance with Section 13(d) of the 1934 Act.

 

5. Events of Default. If any of the following conditions or events shall occur and be continuing: (a) the Maker shall default in the payment of principal of this Note when
the same becomes due and payable; (b) the Maker shall admit in writing its inability to pay its debts as such debts become due; (c) the Maker shall make a general assignment for the benefit of creditors; (d) the Maker shall commence a voluntary case under the Federal Bankruptcy Code (as now or hereafter in effect); (e) the Maker shall file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, or adjustment of debts; (f) there shall have been instituted against the Maker any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings for relief under the Federal Bankruptcy Code or any other law relating to bankruptcy, insolvency or adjustment of debts, which are not dismissed within sixty (60) days after such institution; or (g) the Maker shall take any action for the purposes of effecting any of the foregoing; then, and in any such event, the Holder may at any time (unless all defaults shall theretofore have been remedied) at its option,
declare this Note to be due and payable, whereupon this Note shall forthwith mature and become due and payable, together with interest accrued thereon, without presentment, demand, protest or notice, all of which are hereby waiver.

 

6. NEGATIVE COVENANTS. The provisions of this Section 6 shall remain in effect so long as any of the Bridge Notes shall remain outstanding.

 

(a)     Restrictions on Debt. Hereafter, the Company will not create, assume, or incur or become or at any time be liable in respect of, any Debt, except: Bridge Notes issued pursuant to this Agreement; Debt outstanding on the date hereof to the extent reflected on the most recent balance sheet of the Company or incurred
in the ordinary course of business thereafter and debt incurred to accomplish duties and obligations of the Company under contracts to provide customer premises equipment, services, or other related obligations to existing or new customers of the Company as a result of business contracts; Purchase money security interests not to exceed $250,000 per year; and Secured debt in an aggregate principal amount up to $20 million.

(i)      Definition of Debt. For purposes of this Agreement, the capitalized term "Debt" of any Person shall mean: all indebtedness of such Person for borrowed money, including without limitation obligations evidenced by bonds, debentures, Bridge Notes, or other similar instrument; all indebtedness guaranteed
in any manner by such Person, or in effect guaranteed by such Person through an agreement to purchase, contingent or otherwise; all accounts payable which, to the knowledge of such Person, have remained unpaid for a period of 90 days after the same become due and payable in accordance with their respective terms taking into account any grace period relating to the due date expressly set forth in the applicable invoice with respect to the payment of such accounts payable; all indebtedness secured by any mortgage,
lien, pledge, charge, security interest or other encumbrance upon or in property owned by such Person, even though such Person has not assumed or become liable for the payment of such indebtedness; all indebtedness created or arising under any conditional sale agreement or lease in the nature thereof (including obligations as lessee under leases which shall have been or should be, in accordance with generally accepted accounting principles, recorded as capitalized leases) (but excluding operating leases) or other
title

 

 

10

 

retention agreement with respect to property acquired by such Person, even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession of such property all bankers' acceptances and letters of credit; and liabilities in respect of unfunded vested benefits under Plans covered
by Title IV of ERISA.

 

(b)     Restrictions on Equity Sales. The Company will not offer or enter into an agreement to sell equity securities of the Company, under private placement memorandum or other private offering document or letter, whether of equity securities, convertible debt securities, or securities or instruments convertible
into or exchangeable for debt or equity securities of the Company, except through an underwritten public offering or after receiving approval by the purchaser as described in 6(f) below.

    (c)     Restrictions on Transactions with Affiliates. The Company will not make any loans or advances to any of its officers, shareholders, or Affiliates, other than expense advances made by the Company to its officers and employees in the
ordinary course of business. The Company will not increase the salary of any executive officer, or the remuneration of any director.

 

(d)     Restrictions on Investments. Other than as permitted by this Agreement, the Company will not purchase or acquire or invest in, or agree to purchase or acquire or invest in the business, property, or assets of, or any securities of, any other company or business, provided
however, that the Company may enter into contracts relating to the expansion of its business and may invest its Excess Cash as defined below in: securities issued or directly and fully guaranteed or insured by the United States government or any agency thereof having maturities of not more than one year from the date of acquisition; certificates of deposit or eurodollar certificates of deposit, having maturities of not more than one hundred eighty days from the date of acquisition, or one year from the
date of acquisition in the case of certificates of deposit or eurodollar certificates of deposit being used to secure the Company's reimbursement obligations under letters of credit (provided that nothing contained herein shall be construed to permit letters of credit not otherwise permitted under this Agreement); commercial paper of any Person that is not a subsidiary or an Affiliate of the Company, maturing within one hundred eighty days after the date of acquisition; bank loan participations; and money market
instruments having maturities of not more than one hundred eighty days from the date of acquisition, or one year from the date of acquisition in the case of money market instruments being used to secure the Company's reimbursement obligations under letters of credit (provided that nothing contained herein shall be construed to permit letters of credit not otherwise permitted under this Agreement); in all cases of such credit quality as a prudent business person would invest in. As used in this Section, "Excess
Cash" shall mean that portion of the proceeds of the Bridge Notes that has not been invested as described in Section 3 hereof.

 

(e)     Change in Business; Operations. The Company will not cause or effect any change in or addition to the primary business of the Company that has not been approved by Purchaser, such that more than 20% of the consolidated net earnings of the Company are derived from a business other than the business in which
the Company was engaged on the date hereof as reflected in the applicable last SEC Document filed prior to the First Closing ("Change in

 

Business"). The business of the Company and its subsidiaries shall not be conducted in violation of any law, ordinance, or regulation of any governmental entity.

 

(f)      Exceptions With Consent of Purchasers. The Company may seek an exception to any prohibited action under this Section by first, giving written notice to Purchaser of Bridge Note under this Agreement, along with copies of all documentation
requested by any Purchaser relating to such requested exception, and second, in the sole discretion of Purchaser, satisfactorily responding to any Purchaser inquiries about the requested action. The Company may undertake any such requested action otherwise prohibited by this Section 6 only after receiving the advance written consent of Purchaser hereunder.

 

7. No Waiver; Rights and Remedies Cumulative. No failure on the part of the holder of this Note to exercise, and no delay in exercising any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise by the holder of this Note of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The rights and remedies herein provided are cumulative and not exclusive of any remedies or rights provided by law or by any other agreement between the Maker and the Holder.

 

8. Costs and Expenses. The Maker shall reimburse the holder of this Note for all costs and expenses incurred by it, and shall pay the reasonable fees and disbursements of
counsel to the holder of this Note, in connection with the enforcement of the holder's rights hereunder, whether or not legal proceedings are initiated.

 

9. Amendments. No amendment, modification or waiver of any provision of this Note nor consent to any departure by the Maker therefrom shall be effective unless the same
shall be in writing and signed by the holder of this Note and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

 

10. Governing Law; Jurisdiction and Service of Process. This Note shall be governed by and construed in accordance with the laws of the State of Utah, without giving effect
to conflict of laws. The Maker hereby irrevocably consents to the jurisdiction of the courts of the State of Utah and of any federal court located in such State in connection with any action or proceeding arising out of or relating to this Note, any document or instrument delivered pursuant to, in connection with, or simultaneously with, this Note or a breach of this Note or any such document or instrument. In any such action or proceeding, the Maker waives personal service of any summons, complaint, or other
process and agrees that service thereof may be made in accordance with Section 11 of this Note. Within 30 days after such service, or such other time as may be mutually agreed upon in writing by the attorneys for the parties to such action or proceeding, the Maker shall appear or answer such summons, complaint, or other process. Should the Maker so served fail to appear or answer within such 30-day period or such extended period, as the case may be, the Maker shall be deemed in default and judgment may be entered
by the Holder against the Maker as demanded in any summons, complaint, or other process so served.

 

11. Successors and Assigns. This Note shall be binding upon the Maker and its successors and permitted assigns and the terms hereof shall inure to the benefit of the Holder
and its successors and assigns, including subsequent holders hereof.

 

 

11

 

12. Notice. Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be deemed to have been received: (a) upon hand delivery
(receipt acknowledged) or delivery by telecopy or facsimile (with transmission confirmation report) if delivered on a business day during normal business hours where such notice is to be received, or the first business day following such delivery if delivered other than on a business day during normal business hours where such notice is to be received; or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of
such mailing, whichever first shall occur, to the address set forth above or to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 10 except that such change shall not be effective until actual receipt thereof.

 

13. Severability. The provisions of this Note are severable, and if any provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall not in any manner affect such provision in any other jurisdiction or any other provision of this Note in any jurisdiction.

 

14. Waiver of Notice. The Maker hereby waives presentment, demand for payment, protest, notice of protest and all other demands or notices in connection with the delivery,
acceptance, performance, default or enforcement of this Note.

 

15. Set-off, Counterclaim. In the event the holder hereof seeks to enforce its rights under this Note, the Maker waives the right to interpose any set-off or counterclaim
of any nature or description against the holder.

 

16. Headings. The headings in this Note are solely for the convenience of reference and shall be given no effect in the construction or interpretation of this Note.

 

[signature on next page]

 

IN WITNESSETH WHEREOF, the undersigned has duly executed this Note as date first above written.

 

CERISTAR, INC.

 

 

[CORPORATE SEAL]

 

 

12

 

 

EXHIBIT A

 

CONVERSION NOTICE

 

Reference is made to terms and conditions of the Note, dated April 14, 2004, in the principal amount of $35,000.00, and registered in the name of SovCap Equity Partners, Ltd {NAME OF HOLDER} (the "Note"). In accordance with and pursuant to the terms of the Note, the undersigned hereby
elects to

convert $                                in principal amount of the Note into shares of Common Stock, $.001 par value

per share (the "Common Stock"), of the Company, by tendering the original Note specified below as of the date specified below.

 

Date of Conversion:

 

Principal Amount of Note to be converted: Redemption Premium Accrued Interest and/or Fees

 

Total Amount of Note to be Converted

 

Please confirm the following information:

 

Conversion Price:

 

Number of shares of Common Stock to be issued:

 

Please issue the Common Stock into which the Note is being converted in the following name and to the following address:

 

Issue to:                                                             

 

Facsimile Number:

 

Authorization:                                                             

 

By:                                                

 

Title:                                                

 

Dated:                                                

 

If electronic book entry transfer, complete the following:

Account Number:                                                             

Transaction Code Number:                                                             

Date 11/4/07

Signature BY:    BARRY W. HERMAN PRESIDENT

  

13

  

 

 

COMPANY ACKNOWLEDGEMENT TO CONVERSION NOTICE

 

ACKNOWLEDGED AND AGREED: CERISTAR, INC.

 

By:                                                             

Name: Title:

 

Date:

	 

	
EXHIBIT B CERISTAR BUDGET, DATED APRIL 14, 2004

	
Unit Name CeriStar, Inc. (CTRI)                                        

Fiscal Year 2004                                         

Budget month May 1, 2004                                            

	
Net Investment Ending cash balance

Qwest
        
22,000
  
22,000

American Fork Fiber
    
1,500
  
1,500
  
3,000

Provo City utilities
        
1,978
  
1,978

Provo Cable
        
1,464
  
1,464

Other/Eschelon
        
4,000
  
4,000

Cost of goods sold
    
1,500
  
30,942
  
32,442

Salaries
    
32,000
  
32,000
  
64,000

Commissions
        
15,000
  
15,000

Health insurance
    
5,800
      
5,800

Office rent
    
3,967
      
3,967

D&O Insurance
    
5,609
      
5,609

Billing expenses
    
720
      
720

Customer service
            
0

Employee expenses
    
7,500
  
7,500
  
15,000

Audit & Tax
        
5,000
  
5,000

Legal
        
20,000
  
20,000

Supplies
        
1,000
  
1,000

Marketing
        
2,000
  
2,000

Sales tax
            
0

Website
    
1,000
      
1,000

Miscellaneous
        
1,000
  
1,000

S.G&A
    
56,596

0

83,500

0

140,096

Network capex
    
7,300
      
7,300

Move-ins
    
13,000
      
13,000

Other
            
0

Test equipment
            
0

Switch move to FiberNet
    
5,000
      
5,000

Pulver FreeWorld Dial-up
            
0

Parkway Phase 2
            
0

Equipment
    
25,300

0

0

0

25,300

Conference/marketing
    
1,000
      
1,000

Aggregate Networks
    
3,000
      
3,000

AlphaWest Capital
        
2,000
  
2,000

Fundraising
            
0

Consulting expenses
    
5,000
      
5,000

Research
            
0

B of D stipend
            
0

Interest expense - UTFC
            
o

Interest expense - Ridgeline
            
0

Other
    
9,000

0

2,000

0

11,000

Total Expenses
    
92,396

0

116,442

0

208,838

FourfhGear
    
1,000
      
1,000
  
Office Team
    
1,500
      
1,500
  
David Burns
    
500
      
500
  
Earl Demorest
            
0
  
Internal revenue
            
0
  
Utah state tax commission
            
0
  
Vocal Data
    
10,000
  
10,000
  
20,000
  
Genuity
    
500
  
500
  
1,000
  
Ed Ekstrom
            
0
  
Dave Bailey credit card
            
0
  
American Banknote
            
0
  
Westchester invesment Ptnrs
            
0
  
George Kiser, et al
    
1,000
      
1,000
  
Work Comp
    
1,100
      
1,100
  
Xtend Communications
    
2,500
      
2,500
  
Swindler, Berlin
    
5,000
      
5,000
  
Sreve Stewart
            
0
  
Accounts payable
    
23,100

0

30,500

0

53,600
  

 

Total budget

Total budget                                      (115,496)         0
|          (140,386)                                                   0| (255,882)

 

Submitted by:                         Rob Lester                    

Date Updated:                       May 10, 2004                     

Page 12 of 12

CTRIPromissory Note_052804

  

14

  

IRREVOCABLE STOCK OR BOND POWER

 

For Value received, the undersigned does (do) hereby sell, assign, and transfer to:

 

❖ If stock, complete this portion:

 

shares of the                                                       stock
of                                              

represented by certificate(s) Number(s)                                                                                                                           

In the name of the undersigned on the books of said company.

 

❖ If Bonds, complete this portion:

 

bonds of IMHI (fka Ceristar, Inc.)

 

in the principal amount of $ 35,000 Number(s) May 28, 2009

 

inclusive standing in the name of the undersigned on books of said company.

 

The undersigned does (do) hereby irrevocably constitute and appoint

 

attorney to transfer the said stock or bond(s), as the case may be, on the books of said company, with full power of substitution in the premises.

 

SOVCAP EQUITY PARTNERS. LTD

 

Signature

 

Date

 

Date 11-4-07

Signature

	
  
	
BY: BARRY W. HERMAN PRESIDENT 

  

15

  

 

CERISTAR, INC. PROMISSORY NOTE

 

$69,000.00        

 

Original Issue Date:

June 16, 2004

 

FOR VALUE RECEIVED, the undersigned, CERISTAR, INC., a Delaware corporation with offices at 50 West Broadway, Suite 1100, Salt Lake City, UT, 84101 (the "Maker"), unconditionally promises to pay to the order of SOVCAP EQUITY PARTNERS, LTD., a Bahamas corporation, or its registered assigns (the "Holder"), at its office at c/o Lion Corporate
Securities Ltd., Cumberland House #27, Cumberland Street, P.O. Box N-10818, Nassau, New Providence, The Bahamas or at such other place as may be designated by the holder hereof in writing, the principal sum of SIXTY-NINE THOUSAND DOLLARS ($69,000.00), without interest, except as specified herein.

 

1. Payments. The Maker agrees to pay the principal of this Note within ten (10) days following demand from the Holder requesting payment, which demand may be made at any
time after the 120th day following the issue date of this Note. The Maker shall have the right to prepay this Note in whole at any time or in part from time to time. Any payments, including prepayments, of principal of this Note, whether upon demand, at the option of the Company, upon default or otherwise shall include a repayment premium equal to the product of (a) the Repayment Percentage (as defined below) and (b) the number of thirty
(30) day periods (rounded up to the next whole number) (each 30-day period referred to as a "Monthly Period") that this Note has been outstanding (computed from the date of issuance of this Note to the date of payment) but in no event higher than the maximum amount permitted by law. For purposes of this Note, the Repayment Percentage shall mean one and one-half percent (1.5%) of the outstanding principal amount of this Note. All payments by the Maker on account of principal, premium, interest or fees hereunder
shall be made in money of the United States of America that at the time of payment is legal tender, by wire transfer of immediately available funds.

 

2. Interest. Without limiting any of the rights of the holder of this Note under Section 4 of this Note, if any payment of principal or premium thereon is not made when
the same shall become due and payable hereunder, interest shall accrue thereon at a rate per annum equal to twelve percent (12%) per annum. Notwithstanding anything to the contrary contained herein, no payments that are considered interest shall accrue or be payable at a rate in excess of the maximum amount permitted by law.

 

3. Use of Proceeds. The Company agrees use the proceeds from the sale and issuance of the Bridge Notes only for payment of following expenses:

 

	
a.  
	
June 2004 operating budget, as provided by the Company in attached Exhibit B

 

b. Consulting fees, as agreed

 

4. Conversion.

 

(a) At any time after the date that is 120 days following the issue date of this Note and from time to time, the Holder may convert all or any portion of this Note, together with the Repayment Percentage, and accrued and unpaid interest
and fees due on this Note (the "Conversion Amount") into shares of common stock of the Maker (the "Common Stock").

 

(b) If the Holder elects to convert less than the full principal amount of this Note, the Maker shall issue a Note in substantially the same form as this Note, except that the principal amount shall be reduced by the principal amount
so converted (exclusive of the redemption premium).

 

(c) The number of shares of Common Stock issuable upon conversion of this Note is equal to the quotient of the Conversion Amount of that portion of the Note being converted divided by the Conversion Price. Fractional shares will not be
issued. In lieu of any fraction of a share, the Maker shall deliver its check for the dollar amount of the less than full share remainder. For purposes of this Note, the "Conversion Price" shall mean the product of (a) .75 and (b) the average closing bid price of the Common Stock for the five trading days ending on the trading day immediately preceding the Conversion Date.

 

(d) To convert this Note into Common Stock, (the "Conversion Date"), the Holder hereof shall (A) deliver or transmit by facsimile, for receipt on or prior to 11:59 P.M., Eastern Time, on such date, a copy of a fully executed notice of
conversion in the form attached hereto as Exhibit A (the "Conversion Notice") to the Maker or its designated transfer agent for its Common Stock (the "Transfer Agent"), and (B) surrender to a common carrier for delivery to the Maker or the Transfer Agent as soon as practicable following such date, this Note (or an indernnification undertaking with respect to such shares in the case of the loss, theft, or destruction of this Note) and the originally executed Conversion Notice. The date the Maker receives the Conversion
Note and this Note is hereinafter the "Conversion Date."

 

(e) Upon receipt by the Maker of a facsimile copy of a Conversion Notice, the Maker shall immediately send, via facsimile, a confirmation of receipt of such Conversion Notice to Holder. Upon receipt by the Maker or the Transfer Agent
of the Note to be converted pursuant to a Conversion Notice, together with the originally executed Conversion Notice, the Maker or the Transfer Agent (as applicable) shall, within five (5) business days following the date of receipt, (A) issue and surrender to a common carrier for overnight delivery to the address as specified in the Conversion Notice, a certificate, registered in the name of Holder or its designee, for the number of shares of Common Stock to which Holder shall be entitled or (B) credit the aggregate
number of shares of Common Stock to which such Holder shall be entitled to the Holder's or its designee's balance account at The Depository Trust Company.

 

 

16

 

(f) The Person or persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the "Record Holder" or Holder of such shares of Common Stock on the Conversion Date.

 

(g) If the Maker shall fail to issue to Holder within five (5) business days following the date of receipt by the Maker or the Transfer Agent of this Note to be converted pursuant to a Conversion Notice, a certificate for the number of
shares of Common Stock to which each Holder is entitled upon Holder's conversion of this Note, in addition to all other available remedies which such Holder may pursue hereunder, the Maker shall pay additional damages to Holder on each day after the fifth (5th) business day following the date of receipt by the Maker or the Transfer Agent an amount equal to 1.0% of the product of (A) the number of shares of Common Stock not issued to Holder and to which Holder is entitled multiplied by (B) the Closing Bid Price
of the Common Stock on the business day following the date of receipt by the Maker or the Transfer Agent of the Conversion Notice. The foregoing notwithstanding, Holder at its option may withdraw a Conversion Notice, and remain a Holder of this Note, if Holder has otherwise complied with this Section 4.

 

(h) If any adjustment to the Conversion Price to be made pursuant to clause (j) of this Section 4 becomes effective immediately after a record date for an event as therein described, and conversion occurs prior to such event but after
the record date, the Maker may defer issuing, delivering, or paying to Holder any additional shares of Common Stock or check for any cash remainder required by reason of such adjustment until the occurrence of such event, provided that the Maker delivers to Holder a due bill or other appropriate instrument evidencing the Holders' right to receive such additional shares or check upon the occurrence of the event giving rise to the adjustment.

 

(i)           Until such time as this Note has been fully redeemed, the Maker shall

 

reserve out of its authorized but unissued Common Stock enough shares of Common Stock to

 

permit the conversion of the entire Redemption Price and all accrued and unpaid interest due on

 

this Note at any time. All shares of Common Stock issued upon conversion of this Note shall be

 

fully paid and nonassessable. The Maker covenants that if any shares of Common Stock,

 

required to be reserved for purposes of conversion of this Note hereunder, require registration

 

with or approval of any governmental authority under any federal or state law or listing upon any

 

national securities exchange before such shares may be issued upon conversion, the Maker shall

 

in good faith, as expeditiously as possible, endeavor to cause such shares to be duly registered,

 

approved or listed, as the case may be.

 

(j)      The Conversion Price shall be subject to adjustment from time to time as

 

follows:

 

(i)      If the Maker at any time subdivides (by any stock split, stock dividend, recapitalization, or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced.
If the Maker at any time combines (by combination, reverse stock split, or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased.

 

 

17

 

 

(ii)     Prior to the consummation of any Organic Change (as defined below), the Maker will make appropriate provision (in form and substance satisfactory to the Holder to insure that Holder will thereafter have the right to acquire and receive in lieu of, or in addition to, (as the case may be) the shares of Common
Stock immediately theretofore acquirable and receivable upon the conversion of this Holder's Note, such shares of stock, securities, or assets as may be issued or payable with respect to, or in exchange for, the number of shares of Common Stock immediately theretofore acquirable and receivable upon the conversion of this Note had such Organic Change not taken place. In any such case, the Maker will make appropriate provision (in form and substance satisfactory to Holder with respect to such Holder's rights and
interests to insure that the provisions of this clause (j) will thereafter be applicable. The Maker will not effect any such consolidation, merger, or sale, unless prior to the consummation thereof the successor entity (if other than the Maker) resulting from consolidation or merger or the entity purchasing such assets assumes, by written instrument (in form and substance satisfactory to Holder), the obligation to deliver to Holder such shares of stock, securities, or assets as, in accordance with the foregoing
provisions, that Holder may be entitled to acquire. For purposes of this Agreement, "Organic Change" means any recapitalization, reorganization, reclassification, consolidation, merger, or sale of all or substantially all of the Maker's assets to another Person (as defined below), or other similar transaction which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities, or assets with respect to or in exchange for Common
Stock; and "Person" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, and a government or any department or agency thereof.

 

(k)     The Holder shall be entitled to piggyback registration rights with respect to the shares of Common Stock issuable upon conversion of this Note by the Holder. The Company agrees to include such shares on the first available registration, including forms S-l, SB-2 or S-3, filed by the Company with Securities
and Exchange Commission.

 

(1)      Unless the Note is under Default (as defined in Section 5 of the Note) or unless prior to an Organic Change (as defined in Section 4(j)(ii) of the Note), in no event shall the Holder be entitled to convert the Notes in excess of that number, which upon giving effect to such conversion, would cause the
aggregate number of shares of Common Stock beneficially owned by the holder and its affiliates to exceed 9.99% of the outstanding shares of the Common Stock following the conversion. For purposes of the foregoing proviso, the aggregate number of shares of common stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon conversion or exercise of the Notes with respect to which the determination is being made, but shall exclude the number of shares
of Common Stock which would be issuable upon (i) conversion of the remaining unconverted Notes owned by the Holder or its affiliates, and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the holder and it affiliates. Except as set forth in the preceding sentence, for purposes of this Section 4(1), beneficial ownership shall be calculated
in accordance with Section 13(d) of the 1934 Act.

 

5. Events of Default. If any of the following conditions or events shall occur and be continuing: (a) the Maker shall default in the payment of principal of this Note when
the same becomes due and payable; (b) the Maker shall admit in writing its inability to pay its debts as such debts become due; (c) the Maker shall make a general assignment for the benefit of creditors; (d) the Maker shall commence a voluntary case under the Federal Bankruptcy Code (as now or hereafter in effect); (e) the Maker shall file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, or adjustment of debts; (f) there shall have been instituted against the Maker any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings for relief under the Federal Bankruptcy Code or any other law relating to bankruptcy, insolvency or adjustment of debts, which are not dismissed within sixty (60) days after such institution; or (g) the Maker shall take any action for the purposes of effecting any of the foregoing; then, and in any such event, the Holder may at any time (unless all defaults shall theretofore have been remedied) at its option,
declare this Note to be due and payable, whereupon this Note shall forthwith mature and become due and payable, together with interest accrued thereon, without presentment, demand, protest or notice, all of which are hereby waiver.

 

6. NEGATIVE COVENANTS. The provisions of this Section 6 shall remain in effect so long as any of the Bridge Notes shall remain outstanding.

 

 

18

 

(a)     Restrictions on Debt. Hereafter, the Company will not create, assume, or incur or become or at any time be liable in respect of, any Debt, except: Bridge Notes issued pursuant to this Agreement; Debt outstanding on the date hereof to the extent reflected on the most recent balance sheet of the Company or incurred
in the ordinary course of business thereafter and debt incurred to accomplish duties and obligations of the Company under contracts to provide customer premises equipment, services, or other related obligations to existing or new customers of the Company as a result of business contracts; Purchase money security interests not to exceed $250,000 per year; and Secured debt in an aggregate principal amount up to $20 million.

(i)      Definition of Debt. For purposes of this Agreement, the capitalized term "Debt" of any Person shall mean: all indebtedness of such Person for borrowed money, including without limitation obligations evidenced by bonds, debentures, Bridge Notes, or other similar instrument; all indebtedness guaranteed
in any manner by such Person, or in effect guaranteed by such Person through an agreement to purchase, contingent or otherwise; all accounts payable which, to the knowledge of such Person, have remained unpaid for a period of 90 days after the same become due and payable in accordance with their respective terms taking into account any grace period relating to the due date expressly set forth in the applicable invoice with respect to the payment of such accounts payable; all indebtedness secured by any mortgage,
lien, pledge, charge, security interest or other encumbrance upon or in property owned by such Person, even though such Person has not assumed or become liable for the payment of such indebtedness; all indebtedness created or arising under any conditional sale agreement or lease in the nature thereof (including obligations as lessee under leases which shall have been or should be, in accordance with generally accepted accounting principles, recorded as capitalized leases) (but excluding operating leases) or other
title

 

retention agreement with respect to property acquired by such Person, even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession of such property all bankers' acceptances and letters of credit; and liabilities in respect of unfunded vested benefits under Plans covered
by Title IV of ERISA.

 

(b) Restrictions on Equity Sales. The Company will not offer or enter into an agreement to sell equity securities of the Company, under private placement memorandum or other private offering document or letter, whether of equity securities,
convertible debt securities, or securities or instruments convertible into or exchangeable for debt or equity securities of the Company, except through an underwritten public offering or after receiving approval by the purchaser as described in 6(f) below.

 

(c) Restrictions on Transactions with Affiliates. The Company will not make any loans or advances to any of its officers, shareholders, or Affiliates, other than expense advances made by the Company to its officers and employees in the
ordinary course of business. The Company will not increase the salary of any executive officer, or the remuneration of any director.

 

(d) Restrictions on Investments. Other than as permitted by this Agreement, the Company will not purchase or acquire or invest in, or agree to purchase or acquire or invest in the business, properly, or assets of, or any securities of,
any other company or business, provided however, that the Company may enter into contracts relating to the expansion of its business and may invest its Excess Cash as defined below in: securities issued or directly and fully guaranteed or insured by the United States government or any agency thereof having maturities of not more than one year from the date of acquisition; certificates of deposit or eurodollar certificates of deposit,
having maturities of not more than one hundred eighty days from the date of acquisition, or one year from the date of acquisition in the case of certificates of deposit or eurodollar certificates of deposit being used to secure the Company's reimbursement obligations under letters of credit (provided that nothing contained herein shall be construed to permit letters of credit not otherwise permitted under this Agreement); commercial paper of any Person that is not a subsidiary or an Affiliate of the Company,
maturing within one hundred eighty days after the date of acquisition; bank loan participations; and money market instruments having maturities of not more than one hundred eighty days from the date of acquisition, or one year from the date of acquisition in the case of money market instruments being used to secure the Company's reimbursement obligations under letters of credit (provided that nothing contained herein shall be construed to permit letters of credit not otherwise permitted under this Agreement);
in all cases of such credit quality as a prudent business person would invest in. As used in this Section, "Excess Cash" shall mean that portion of the proceeds of the Bridge Notes that has not been invested as described in Section 3 hereof.

 

(e)     Change in Business; Operations. The Company will not cause or effect any change in or addition to the primary business of the Company that has not been approved by Purchaser, such that more than 20% of the consolidated net earnings of the Company are derived from a business other than the business in which
the Company was engaged on the date hereof as reflected in the applicable last SEC Document filed prior to the First Closing ("Change in

 

Business"). The business of the Company and its subsidiaries shall not be conducted in violation of any law, ordinance, or regulation of any governmental entity.

 

 

19

 

(f)     Exceptions With Consent of Purchasers. The Company may seek an exception to any prohibited action under this Section by first, giving written notice to Purchaser of Bridge Note under this Agreement, along with copies of all documentation
requested by any Purchaser relating to such requested exception, and second, in the sole discretion of Purchaser, satisfactorily responding to any Purchaser inquiries about the requested action. The Company may undertake any such requested action otherwise prohibited by this Section 6 only after receiving the advance written consent of Purchaser hereunder.

 

7. No Waiver; Rights and Remedies Cumulative. No failure on the part of the holder of this Note to exercise, and no delay in exercising any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise by the holder of this Note of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The rights and remedies herein provided are cumulative and not exclusive of any remedies or rights provided by law or by any other agreement between the Maker and the Holder.

 

8. Costs and Expenses. The Maker shall reimburse the holder of this Note for all costs and expenses incurred by it, and shall pay the reasonable fees and disbursements of
counsel to the holder of this Note, in connection with the enforcement of the holder's rights hereunder, whether, or not legal proceedings are initiated.

 

9. Amendments. No amendment, modification or waiver of any provision of this Note nor consent to any departure by the Maker therefrom shall be effective unless the same
shall be in writing and signed by the holder of this Note and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

 

10. Governing Law; Jurisdiction and Service of Process. This Note shall be governed by and construed in accordance with the laws of the State of Utah, without giving effect
to conflict of laws. The Maker hereby irrevocably consents to the jurisdiction of the courts of the State of Utah and of any federal court located in such State in connection with any action or proceeding arising out of or relating to this Note, any document or instrument delivered pursuant to, in connection with, or simultaneously with, this Note or a breach of this Note or any such document or instrument. In any such action or proceeding, the Maker waives personal service of any summons, complaint, or other
process and agrees that service thereof may be made in accordance with Section 11 of this Note. Within 30 days after such service, or such other time as may be mutually agreed upon in writing by the attorneys for the parties to such action or proceeding, the Maker shall appear or answer such summons, complaint, or other process. Should the Maker so served fail to appear or answer within such 30-day period or such extended period, as the case may be, the Maker shall be deemed in default and judgment may be entered
by the Holder against the Maker as demanded in any summons, complaint, or other process so served.

 

11. Successors and Assigns. This Note shall be binding upon the Maker and its successors and permitted assigns and the terms hereof shall inure to the benefit of the Holder
and its successors and assigns, including subsequent holders hereof.

 

12. Notice. Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be deemed to have been received: (a) upon hand delivery
(receipt acknowledged) or delivery by telecopy or facsimile (with transmission confirmation report) if delivered on a business day during normal business hours where such notice is to be received, or the first business day following such delivery if delivered other than on a business day during normal business hours where such notice is to be received; or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of
such mailing, whichever first shall occur, to the address set forth above or to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 10 except that such change shall not be effective until actual receipt thereof.

 

13. Severability. The provisions of this Note are severable, and if any provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall not in any manner affect such provision in any other jurisdiction or any other provision of this Note in any jurisdiction.

 

14. Waiver of Notice. The Maker hereby waives presentment, demand for payment, protest, notice of protest and all other demands or notices in connection with the delivery,
acceptance, performance, default or enforcement of this Note.

 

15. Set-off, Counterclaim. In the event the holder hereof seeks to enforce its rights under this Note, the Maker waives the right to interpose any set-off or counterclaim
of any nature or description against the holder.

 

16. Headings. The headings in this Note are solely for the convenience of reference and shall be given no effect in the construction or interpretation of this Note.

 

[signature on next page]

 

IN WITNESSETH WHEREOF, the undersigned has duly executed this Note as of the date first above written.

	
 

 

20

 

EXHIBIT A

CONVERSION NOTICE

 

Reference is made to terms and conditions of the Note, dated April 14, 2004, in the principal amount of $69,000.00, and registered in the name of SovCap Equity Partners, Ltd. {NAME OF HOLDER} (the "Note"). In accordance with and pursuant to the terms of the Note, the undersigned hereby
elects to

convert $                                in principal amount of the Note into shares of Common Stock, $.001 par value

per share (the "Common Stock"), of the Company, by tendering the original Note specified below as of the date specified below.

 

Date of Conversion:                                                                                                                         

 

Principal Amount of Note to be converted: Redemption Premium Accrued Interest and/or Fees

 

Total Amount of Note to be Converted

 

Please confirm the following information:

 

Conversion Price:

 

Number of shares of Common Stock to be issued:

 

Please issue the Common Stock into which the Note is being converted in the following name and to the following address:

 

Issue to:                                                             

 

Facsimile Number:

 

Authorization:                                                             

 

By:                                                

 

Title:                                                

 

Dated:                                                

 

If electronic book entry transfer, complete the following:

Account Number:                                                             

Transaction Code Number:                                                             

CTRIPromissory Note_061604                                                                                                                   
- 1 -

  

21

  

 

COMPANY ACKNOWLEDGEMENT TO CONVERSION NOTICE

 

ACKNOWLEDGED AND AGREED: CERISTAR, INC.

 

By:                                                             

Name: Title:

 

Date:

CTRIPromissory Note_061604

  

22

  

EXHIBIT B CERISTAR JUNE OPERATING BUDGET

Supplier

United Healthcare

 

Ridgeline

Qwest

Vocal Data

 

Provo Cable

Provo City Utilities

Amer City Fork

 

Eschelon

Elliott Bay Eng

Highland Lakes

Advanced Tel Group

$5,924.00 $5,500.00 $25,000.00 $10,000.00 $1,400.00 $2,000.00 $1,500.00 $2,400.00 $880.00 $728.00 $521.99

 

Amount Current Amount Past Due Total

$5,924.00

$5,500.00 Parkway Eq. $20,000.00 $45,000.00 $9,159.00 $19,159.00 $1,528.16 $2,928.16 $2,015.34 $4,015.34

 

$1,500.00 Fiber Lease $2,400.00 Bandwidth $880.00 $728.00 Billing $521.99 Long Distance

 

 

Wired Attorney SEC Attorney

 

WIRED Settlement

$55,853.99

$35,358.95 $91,212.94

 

$10,000.00 $10,000.00

 

90000 30000 20000 20000 20000

25000 Equipment replacement

	
Payroll Schedule

	
Sub-total

 

	  	  	  	  	  
	
Medicare
	
Soc Sec
	
Payday

Totals
	
Annual Totals
	
Annual

	
43.50
	
166.00
	
3,229.50
	
83,967
	
78,000

	
36.25
	
185,00
	
2,691.25
	
69,973
	
                        65,000

	
41.83
	
178.85
	
3,105.29
	                      80,738	
75,000

	
18.07
	
77.26
	
1,341.48
	
34,379
	
32,400

	
33.46
	
143.08
	
2,484.23
	
64,590
	
60,000

	33.46 	
143.08
	2,484.23	64,590 	60,000 
	
15.62
	
66.77
	
1,159.31
	
30,142
	
28,000

	
33.46
	
143.08
	
2,484.23
	
64,590
	
0,000

	
33.46
	
14108
	
2,484.13
	
64,590
	
60,000

	  	  	
2,000.00
	
48,000
	
48,000

	  	  	
23.463,75
	
606,058
	
566.400

 

 

23

 

 

IRREVOCABLE STOCK OR BOND POWER

 

For Value received, the undersigned does (do) hereby sell, assign, and transfer to:

 

❖ if stock, complete this portion:

 

shares of the                                                       stock
of                                       

 

represented by certificate(s) Number(s)                                                                                                                    

 

In the name of the undersigned on the books of said company,

 

❖ If Bonds, complete this portion:

 

bonds of IMHI (fka Ceristar, Inc.)

 

in the principal amount of $ 69,000 Number(s) June 16, 2004

 

inclusive standing in the name of the undersigned on books of said company.

 

The undersigned does (do) hereby irrevocably constitute and appoint

[Missing Graphic Reference]

 

attorney to transfer the said stock or bond(s), as the case may be, on the books of said company, with full power of substitution in the premises.

 

Date

Signature BY:    BARRY W. HERMAN PRESIDENT

 

11/4/07                                             

Date

 

 

24

 
CERISTAR, INC PROMISSORY NOTE

 

$55,000 00

Original Issue Date July 1,2004

 

FOR VALUE RECEIVED, the undersigned, CERISTAR, INC, a Delaware corporation with offices at 50 West Broadway, Suite 1100, Salt Lake City, UT, 84101 (the "Maker"), unconditionally promises to pay to the order of SOVCAP EQUITY PARTNERS, LTD, a Bahamas corporation, or its registered assigns (the "Holder"), at its office at c/o Lion Corporate
Securities Ltd, Cumberland House #27, Cumberland Street, P O Box N-10818, Nassau, New Providence, The Bahamas or at such other place as may be designated by the holder hereof in writing, the principal sum of FIFTY-FIVE THOUSAND DOLLARS ($55,000.00), without interest, except as specified herein

 

1 Payments. The Maker agrees to pay the principal of this Note within ten (10) days following demand from the Holder requesting payment, which demand may be made at any
time after the 120th day following the issue date of this Note The Maker shall have the right to prepay this Note in whole at any time or in part from time to time. Any payments, including prepayments, of principal of this Note, whether upon demand, at the option of the Company, upon default or otherwise shall include a repayment premium equal to the product of (a) the Repayment Percentage (as defined below) and (b) the number of thirty
(30) day periods (rounded up to the next whole number) (each 30-day period referred to as a "Monthly Period") that this Note has been outstanding (computed from the date of issuance of this Note to the date of payment) but in no event higher than the maximum amount permitted by law For purposes of this Note, the Repayment Percentage shall mean one and one-half percent (15%) of the outstanding principal amount of this Note All payments by the Maker on account of principal, premium, interest or fees hereunder shall
be made in money of the United States of America that at the time of payment is legal tender, by wire transfer of immediately available funds

 

2 Interest. Without limiting any of the rights of the holder of this Note under Section 4 of this Note, if any payment of principal or premium thereon is not made when the
same shall become due and payable hereunder, interest shall accrue thereon at a rate per annum equal to twelve percent (12%) per annum Notwithstanding anything to the contrary contained herein, no payments that are considered interest shall accrue or be payable at a rate in excess of the maximum amount permitted by law

 

3 Use of Proceeds. The Company agrees use the proceeds from the sale and issuance of the Bridge Notes only for payment of following expenses:

 

 

Wired, LLC Settlement Agreement, Commitment Letter attached as Exhibit B

Pemberley development fiber-to-the-premises, equipment installation Consulting fees, as agreed

-12-

CTRIPromissory Note_061604

  

25

  

 

4 Conversion

 

(a) At any time after the date that is 120 days following the issue date of this Note and from time to time, the Holder may convert all or any portion of this Note, together with the Repayment Percentage, and accrued and unpaid interest
and fees due on this Note (the "Conversion Amount") into shares of common stock of the Maker (the "Common Stock")

 

(b) If the Holder elects to convert less than the full principal amount of this Note, the Maker shall issue a Note in substantially the same form as this Note, except that the principal amount shall be reduced by the principal amount
so converted (exclusive of the redemption premium)

 

(c) The number of shares of Common Stock issuable upon conversion of this Note is equal to the quotient of the Conversion Amount of that portion of the Note being converted divided by the Conversion Price Fractional shares will not be
issued In lieu of any fraction of a share, the Maker shall deliver its check for the dollar amount of the less than full share remainder For purposes of this Note, the "Conversion Price" shall mean the product of (a) 75 and (b) the average closing bid price of the Common Stock for the five trading days ending on the trading day immediately preceding the Conversion Date

 

(d) To convert this Note into Common Stock, (the "Conversion Date"), the Holder hereof shall (A) deliver or transmit by facsimile, for receipt on or prior to 11 59 P.M., Eastern Time, on such date, a copy of a fully executed notice of
conversion in the form attached hereto as Exhibit A (the "Conversion Notice") to the Maker or its designated transfer agent for its Common Stock (the "Transfer Agent"), and (B) surrender to a common carrier for delivery to the Maker or the Transfer Agent as soon as practicable following such date, this Note (or an indemnification undertaking with respect to such shares in the case of the loss, theft, or destruction of this Note) and the originally executed Conversion Notice The date the Maker receives the Conversion
Note and this Note is hereinafter the "Conversion Date "

 

(e) Upon receipt by the Maker of a facsimile copy of a Conversion Notice, the Maker shall immediately send, via facsimile, a confirmation of receipt of such Conversion Notice to Holder Upon receipt by the Maker or the Transfer Agent of
the Note to be converted pursuant to a Conversion Notice, together with the originally executed Conversion Notice, the Maker or the Transfer Agent (as applicable) shall, within five (5) business days following the date of receipt, (A) issue and surrender to a common carrier for overnight delivery to the address as specified in the Conversion Notice, a certificate, registered in the name of Holder or its designee, for the number of shares of Common Stock to which Holder shall be entitled or (B) credit the aggregate
number of shares of Common Stock to which such Holder shall be entitled to the Holder's or its designee's balance account at The Depository Trust Company

 

(f) The Person or persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the "Record Holder" or Holder of such shares of Common Stock on the Conversion Date

 

(g) If the Maker shall fail to issue to Holder within five (5) business days following the date of receipt by the Maker or the Transfer Agent of this Note to be converted pursuant
to a Conversion Notice, a certificate for the number of shares of Common Stock to which each Holder is entitled upon Holder's conversion of this Note, in addition to all other available remedies which such Holder may pursue hereunder, the Maker shall pay additional damages to Holder on each day after the fifth (5th) business day following the date of receipt by the Maker or the Transfer Agent an amount equal to 1.0% of the product of (A) the number of shares of Common Stock not issued to Holder and to which Holder
is entitled multiplied by (B) the Closing Bid Price of the Common Stock on the business day following the date of receipt by the Maker or the Transfer Agent of the Conversion Notice The foregoing notwithstanding, Holder at its option may withdraw a Conversion Notice, and remain a Holder of this Note, if Holder has otherwise complied with this Section 4

 

(h) If anv adjustment to the Conversion Price to be made pursuant to clause ffi of this Section 4 becomes effective immediately after a record date for an event as therein described, and conversion
occurs prior to such event but after the record date, the Maker may defer issuing, delivering, or paying to Holder any additional shares of Common Stock or check for any cash remainder required by reason of such adjustment until the occurrence of such event, provided that the Maker delivers to Holder a due bill or other appropriate instrument evidencing the Holders' right to receive such additional shares or check upon the occurrence of the event giving rise to the adjustment

 

 

26

 

(i)           Until such time as this Note has been fully redeemed, the Maker shall

 

reserve out of its authorized but unissued Common Stock enough shares of Common Stock to

 

permit the conversion of the entire Redemption Price and all accrued and unpaid interest due on

 

this Note at any time All shares of Common Stock issued upon conversion of this Note shall be

 

fully paid and nonassessable The Maker covenants that if any shares of Common Stock,

 

required to be reserved for purposes of conversion of this Note hereunder, require registration

 

with or approval of any governmental authority under any federal or state law or listing upon any

 

national securities exchange before such shares may be issued upon conversion, the Maker shall

 

in good faith, as expeditiously as possible, endeavor to cause such shares to be duly registered,

 

approved or listed, as the case may be

 

(j)      The Conversion Price shall be subject to adjustment from time to time as

 

follows:

 

(i)      If the Maker at any time subdivides (by any stock split, stock dividend, recapitalization, or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced
If the Maker at any time combines (by combination, reverse stock split, or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased

 

(ii)     Prior to the consummation of any Organic Change (as defined below), the Maker will make appropriate provision (in form and substance satisfactory to the Holder to insure that Holder will thereafter have the right to acquire and receive in lieu of, or in addition to, (as the case may be) the shares of Common
Stock immediately theretofore acquirable and receivable upon the conversion of this Holder's Note, such shares of stock, securities, or assets as may be issued or payable with respect to, or in exchange for, the number of shares of Common Stock immediately theretofore acquirable and receivable upon the conversion of this Note had such Organic Change not taken place In any such case, the Maker will make appropriate provision (in form and substance satisfactory to Holder with respect to such Holder's rights and
interests to insure that the provisions of this clause (j) will thereafter be applicable The Maker will not effect any such consolidation, merger, or sale, unless prior to the consummation thereof the successor entity (if other than the Maker) resulting from consolidation or merger or the entity purchasing such assets assumes, by written instrument (in form and substance satisfactory to Holder), the obligation to deliver to Holder such shares of stock, securities, or assets as, in accordance with the foregoing
provisions, that Holder may be entitled to acquire For purposes of this Agreement, "Organic Change" means any recapitalization, reorganization, reclassification, consolidation, merger, or sale of all or substantially all of the Maker's assets to another Person (as defined below), or other similar transaction which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities, or assets with respect to or in exchange for Common
Stock, and "Person" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, and a government or any department or agency thereof.

 

 

27

 

(k)     The Holder shall be entitled to piggyback registration rights with respect to the shares of Common Stock issuable upon conversion of this Note by the Holder The Company agrees to include such shares on the first available registration, including forms S-l, SB-2 or S-3, filed by the Company with Securities
and Exchange Commission

 

(1)      Unless the Note is under Default (as defined in Section .5 of the Note) or unless prior to an Organic Change (as defined in Section 4(j)(ii) of the Note), in no event shall the Holder be entitled to convert the Notes in excess of that number, which upon giving effect to such conversion, would cause the
aggregate number of shares of Common Stock beneficially owned by the holder and its affiliates to exceed 9 99% of the outstanding shares of the Common Stock following the conversion For purposes of the foregoing proviso, the aggregate number of shares of common stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon conversion or exercise of the Notes with respect to which the determination is being made, but shall exclude the number of shares
of Common Stock which would be issuable upon (i) conversion of the remaining unconverted Notes owned by the Holder or its affiliates, and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the holder and it affiliates. Except as set forth in the preceding sentence, for purposes of this Section 4(1), beneficial ownership shall be calculated
in accordance with Section 13(d) of the 19.34 Act

 

5       Events of Default If any of the following conditions or events shall occur and be continuing: (a) the Maker shall default in the payment of principal of this Note when the same becomes due and payable, (b) the Maker shall admit in writing
its inability to pay its debts as such debts become due, (c) the Maker shall make a general assignment for the benefit of creditors, (d) the Maker shall commence a voluntary case under the Federal Bankruptcy Code (as now or hereafter in effect), (e) the Maker shall file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, or adjustment of debts, (f) there shall have been instituted against the Maker any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings for relief under the Federal Bankruptcy Code or any other law relating to bankruptcy, insolvency or adjustment of debts, which are not dismissed within sixty (60) days after such institution, or (g) the Maker shall take any action for the purposes of effecting any of the foregoing, then, and in any such event, the Holder may at any time (unless all defaults shall theretofore have been remedied) at its option, declare this Note to be due and payable, whereupon this Note shall forthwith mature
and become due and payable, together with interest accrued thereon, without presentment, demand, protest or notice, all of which are hereby waiver

 

6.        NEGATIVE COVENANTS The provisions of this Section 6 shall remain in effect so long as any of the Bridge Notes shall remain outstanding

 

(a)     Restrictions on Debt   Hereafter, the Company will not create, assume, or incur or become or at any time be liable in respect of, any Debt, except Bridge Notes issued pursuant to this Agreement, Debt outstanding on the date hereof to the extent reflected on the most recent balance sheet of the
Company or incurred in the ordinary course of business thereafter and debt incurred to accomplish duties and obligations of the Company under contracts to provide customer premises equipment, services, or other related obligations to existing or new customers of the Company as a result of business contracts, Purchase money security interests not to exceed $250,000 per year, and Secured debt in an aggregate principal amount up to $20 million

 

(i)      Definition of Debt For purposes of this Agreement, the capitalized term "Debt" of any Person shall mean: all indebtedness of such Person for borrowed money, including without limitation obligations evidenced by bonds, debentures, Bridge Notes, or other similar instrument, all indebtedness guaranteed
in any manner by such Person, or in effect guaranteed by such Person through an agreement to purchase, contingent or otherwise, all accounts payable which, to the knowledge of such Person, have remained unpaid for a period of 90 days after the same become due and payable in accordance with their respective terms taking into account any grace period relating to the due date expressly set forth in the applicable invoice with respect to the payment of such accounts payable, all indebtedness secured by any mortgage,
lien, pledge, charge, security interest or other encumbrance upon or in property owned by such Per son, even though such Person has not assumed or become liable for the payment of such indebtedness, all indebtedness created or arising under any conditional sale agreement or lease in the nature thereof (including obligations as lessee under leases which shall have been or should be, in accordance with generally accepted accounting principles, recorded as capitalized leases) (but excluding operating leases) or
other title

 

retention agreement with respect to property acquired by such Person, even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession of such property all bankers' acceptances and letters of credit, and liabilities in respect of unfunded vested benefits under Plans covered
by Title IV of ERISA

 

 

28

 

(b) Restrictions on Equity Sales The Company will not offer or enter into an agreement to sell equity securities of the Company, under private placement memorandum or other private offering document or letter, whether of equity securities,
convertible debt securities, or securities or instruments convertible into or exchangeable for debt or equity securities of the Company, except through an underwritten public offering or after receiving approval by the purchaser as described in 6(f) below

 

(c) Restrictions on Transactions with Affiliates, The Company will not make anv loans or advances to anv of its officers, shareholders, or Affiliates, other than expense advances made by the Company to its officers and employees in the
ordinary course of business The Company will not increase the salary of any executive officer, or the remuneration of any director

 

(d) Restrictions on Investments Other than as permitted by this Agreement, the Company will not purchase or acquire or invest in, or agree to purchase or acquire or invest in the business, property, or assets of, or any securities of,
any other company or business, provided however, that the Company may enter into contracts relating to the expansion of its business and may invest its Excess Cash as defined below in securities issued or directly and fully guaranteed or insured by the United States government or any agency thereof having maturities of not more than one year from the date of acquisition, certificates of deposit or eurodollar certificates of deposit, having
maturities of not more than one hundred eighty days from the date of acquisition, or one year from the date of acquisition in the case of certificates of deposit or eurodollar certificates of deposit being used to secure the Company's reimbursement obligations under letters of credit (provided that nothing contained herein shall be construed to permit letters of credit not otherwise permitted under this Agreement), commercial paper of any Person that is not a subsidiary or an Affiliate of the Company, maturing
within one hundred eighty days after the date of acquisition, bank loan participations, and money market instruments having maturities of not more than one hundred eighty days from the date of acquisition, or one year from the date of acquisition in the case of money market instruments being used to secure the Company's reimbursement obligations under letters of credit (provided that nothing contained herein shall be construed to permit letters of credit not otherwise permitted under this Agreement), in all cases
of such credit quality as a prudent business person would invest in As used in this Section, "Excess Cash" shall mean that portion of the proceeds of the Bridge Notes that has not been invested as described in Section 3 hereof

 

(e)     Change in Business, Operations The Company will not cause or effect any change in or addition to the primary business of the Company that has not been approved by Purchaser, such that more than 20% of the consolidated net earnings of the Company are derived from a business other than the business in which
the Company was engaged on the date hereof as reflected in the applicable last SEC Document filed prior to the First Closing ("Change in

 

Business") The business of the Company and its subsidiaries shall not be conducted in violation of any law, ordinance, or regulation of any governmental entity

 

(f)      Exceptions With Consent of Purchasers. The Company may seek an exception to any prohibited action under this Section by first, giving written notice to Purchaser of Bridge Note under this Agreement, along with copies of all documentation
requested by any Purchaser relating to such requested exception, and second, in the sole discretion of Purchaser, satisfactorily responding to any Purchaser inquiries about the requested action The Company may undertake any such requested action otherwise prohibited by this Section 6 only after receiving the advance written consent of Purchaser hereunder

 

7 No Waiver. Rights and Remedies Cumulative No failure on the part of the holder of this Note to exercise, and no delay in exercising any right hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise by the holder of this Note of any right hereunder preclude any other or further exercise thereof or the exercise of any other right The rights and remedies herein provided are cumulative and not exclusive of any remedies or rights provided by law or by any other agreement between the Maker and the Holder

 

8 Costs and Expenses The Maker shall reimburse the holder of this Note for all costs and expenses incurred by it, and shall pay the reasonable fees and disbursements of
counsel to the holder of this Note, in connection with the enforcement of the holder's rights hereunder, whether or not legal proceedings are initiated.

 

9 Amendments No amendment, modification or waiver of any provision of this Note nor consent to any departure by the Maker therefrom shall be effective unless the same shall
be in writing and signed by the holder of this Note and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given

 

10 Governing Law. Jurisdiction and Service of Process This Note shall be governed by and construed in accordance with the laws of the State of Utah, without giving effect
to conflict of laws. The Maker hereby irrevocably consents to the jurisdiction of the courts of the State of Utah and of any federal court located in such State in connection with any action or proceeding arising out of or relating to this Note, any document or instrument delivered pursuant to, in connection with, or simultaneously with, this Note or a breach of this Note or any such document or instrument In any such action or proceeding, the Maker waives personal service of any summons, complaint, or other
process and agrees that service thereof may be made in accordance with Section 11 of this Note Within 30 days after such service, or such other time as may be mutually agreed upon in writing by the attorneys for the parties to such action or proceeding, the Maker shall appear or answer such summons, complaint, or other process Should the Maker so served fail to appear or answer within such 30-day period or such extended period, as the case may be, the Maker shall be deemed in default and judgment may be entered
by the Holder against the Maker as demanded in any summons, complaint, or other process so served

 

 

29

 

11 Successors and Assigns This Note shall be binding upon the Maker and its successors and permitted assigns and the terms hereof shall inure to the benefit of the Holder
and its successors and assigns, including subsequent holders hereof

 

12 Notice Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be deemed to have been received: (a) upon hand delivery
(receipt acknowledged) or delivery by telecopy or facsimile (with transmission confirmation report) if delivered on a business day during normal business hours where such notice is to be received, or the first business day following such delivery if delivered other than on a business day during normal business hours where such notice is to be received, or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of
such mailing, whichever first shall occur, to the address set forth above or to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 10 except that such change shall not be effective until actual receipt thereof

 

13 Severability The provisions of this Note are severable, and if any provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall not in any manner affect such provision in any other jurisdiction or any other provision of this Note in any jurisdiction.

 

14.     Waiver of Notice The Maker hereby waives presentment, demand for payment, protest, notice of protest and all other demands or notices in connection with the delivery, acceptance, performance, default or enforcement of this Note

 

15 Set-off Counterclaim In the event the holder hereof seeks to enforce its rights under this Note, the Maker waives the right to interpose any set-off or counterclaim of
any nature or description against the holder

 

16 Headings The headings in this Note are solely for the convenience of reference and shall be given no effect in the construction or interpretation of this Note

 

[signature on next page]

 

IN WITNESSETH WHEREOF, the undersigned has duly executed this Note as of the date first above written

 

 

 

30

 

 

EXHIBIT A- CONVERSION NOTICE

 

Reference is made to terms and conditions of the Note, dated July 1, 2004, in the principal amount of $5.5,000 00 (the "Note"), and registered in the name of SovCap Equity Partners, Ltd In accordance with

and pursuant to the terms of the Note, the undersigned hereby elects to convert $in

principal amount of the Note into shares of Common Stock, $ 001 par value per share (the "Common Stock"), of the Company, by tendering the original Note specified below as of the date specified below

 

Date of Conversion                                                                                                                                

 

Principal Amount of Note to be converted: Redemption Premium Accrued Interest and/or Fees

 

Total Amount of Note to be Converted

 

Please confirm the following information:

 

Conversion Price

 

Number of shares of Common Stock to be issued:

 

Please issue the Common Stock into which the Note is being converted in the following name and to the

 

 

 

Issue to:                                                                

 

Facsimile Number

 

Authorization:                                                                

 

By:                                                  

 

Title                                                  

Dated:                                                  

 

If electronic book entry transfer, complete the following:

Account Number                                                                

Transaction Code Number:                                                                

-2-

 

CTRIPromissory Note_070104

  

31

  

 

COMPANY ACKNOWLEDGEMENT TO CONVERSION NOTICE

 

ACKNOWLEDGED AND AGREED CERISTAR, INC.

 

By:                                                                

Name Title

 

Date;

- 11 -

CTRJ_Promissory Note_070104

  

32

  

IRREVOCABLE STOCK OR BOND POWER

 

For Value received, the undersigned does (do) hereby sell, assign, and transfer to:

 

❖   If stock, complete this portion:

 

shares of the                                                       stock
of_

 

represented by certificate(s) Number(s)_

 

In the name of the undersigned on the books of said company.

 

❖    If Bonds, complete this portion:

 

bonds of   IMHI (fka Ceristar, Inc.)

 

 

in

the principal amount of $ 55,000Number(s) July 1, 2004

 

inclusive standing in the name of the undersigned on books of said company.

 

The undersigned does (do) hereby irrevocably constitute and appoint

[Missing Graphic Reference]

 

attorney to transfer the said stock or bond(s), as the case may be, on the books of said company, with full power of substitution in the premises.

Signature Date BY:    BARRY W. HERMAN

 

PRESIDENT

 

 

33

 

CERISTAR, INC. PROMISSORY NOTE

 

$35,000.00

Original Issue Date July 9, 2004

 

FOR VALUE RECEIVED, the undersigned, CERISTAR, INC , a Delaware corporation with offices at 50 West Broadway, Suite 1100, Salt Lake City, UT, 84101 (the "Maker"), unconditionally promises to pay to the order of SOVCAP EQUITY PARTNERS, LTD, a Bahamas corporation, or its registered assigns (the "Holder"), at its office at c/o Lion Corporate
Securities Ltd., Cumberland House #27, Cumberland Street, P.O BoxN-10818, Nassau, New Providence, The Bahamas or at such other place as may be designated by the holder hereof in writing, the principal sum of THIRTY-FIVE THOUSAND DOLLARS ($35,000.00), without interest, except as specified herein

 

1 Payments. The Maker agrees to pay the principal of this Note within ten (10) days following demand from the Holder requesting payment, which demand may be made at any
time after the 120th day following the issue date of this Note The Maker shall have the right to prepay this Note in whole at any time or in part from time to time. Any payments, including prepayments, of principal of this Note, whether upon demand, at the option of the Company, upon default or otherwise shall include a repayment premium equal to the product of (a) the Repayment Percentage (as defined below) and (b) the number of thirty
(30) day periods (rounded up to the next whole number) (each 30-day period referred to as a "Monthly Period") that this Note has been outstanding (computed from the date of issuance of this Note to the date of payment) but in no event higher than the maximum amount permitted by law. For purposes of this Note, the R-epayment Percentage shall mean one and one-half percent (1.5%) of the outstanding principal amount of this Note All payments by the Maker on account of principal, premium, interest or fees hereunder
shall be made in money of the United States of America that at the time of payment is legal tender, by wire transfer of immediately available funds

 

2 Interest. Without limiting any of the rights of the holder of this Note under Section 4 of this Note, if any payment of principal or premium thereon is not made when the
same shall become due and payable hereunder, interest shall accrue thereon at a rate per annum equal to twelve percent (12%) per annum Notwithstanding anything to the contrary contained herein, no payments that are considered interest shall accrue or be payable at a rate in excess of the maximum amount permitted by law.

 

3 Use of Proceeds. The Company agrees use the proceeds from the sale and issuance of the Bridge Notes only for payment of following expenses:

 

a   July 9, 2004 payroll and other agreed expenses b   Consulting fees, as agreed 4. Conversion

 

(a) At any time after the date that is 120 days following the issue date of this Note and from time to time, the Holder may convert all or any portion of this Note, together with the Repayment Percentage, and accrued and unpaid interest
and fees due on this Note (the "Conversion Amount") into shares of common stock of the Maker (the "Common Stock")

 

(b) If the Holder- elects to convert less than the full principal amount of this Note, the Maker shall issue a Note in substantially the same form as this Note, except that the principal amount shall be reduced by the principal amount
so converted (exclusive of the redemption premium)

 

(c) The number of shares of Common Stock issuable upon conversion of this Note is equal to the quotient of the Conversion Amount of that portion of the Note being converted divided by the Conversion Price Fractional shares will not be
issued In lieu of any fraction of a share, the Maker shall deliver its check for the dollar amount of the less than full share remainder For' purposes of this Note, the "Conversion Price" shall mean the product of (a) 75 and (b) the average closing bid price of the Common Stock for the five trading days ending on the trading day immediately preceding the Conversion Date

 

(d) To convert this Note into Common Stock, (the "Conversion Date"), the Holder hereof shall (A) deliver or transmit by facsimile, for receipt on or prior to 11 59 P.M., Eastern Time, on such date, a copy of a fully executed notice of
conversion in the form attached hereto as Exhibit A (the "Conversion Notice") to the Maker or its designated transfer agent for its Common Stock (the "Transfer Agent"), and (B) surrender to a common carrier for delivery to the Alaker or the Transfer Agent as soon as practicable following such date, this Note (or an indemnification undertaking with respect to such shares in the case of the loss, theft, or destruction of this Note) and the originally executed Conversion Notice. The date the Maker receives the Conversion
Note and this Note is hereinafter the "Conversion Date "

 

(e) Upon receipt by the Maker of a facsimile copy of a Conversion Notice, the Maker shall immediately send, via facsimile, a confirmation of receipt of such Conversion Notice to Holder. Upon receipt by the Maker or the Transfer Agent
of the Note to be converted pursuant to a Conversion Notice, together with the originally executed Conversion Notice, the Maker or the Transfer Agent (as applicable) shall, within five (5) business days following the date of receipt, (A) issue and surrender to a common carrier for overnight delivery to the address as specified in the Conversion Notice, a certificate, registered in the name of Holder or its designee, for the number of shares of Common Stock to which Holder shall be entitled or (B) credit the aggregate
number of shares of Common Stock to which such Holder shall be entitled to the Holder's or its designee's balance account at The Depository Trust Company

 

(f) The Person or persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the "Record Holder" or Holder of such shares of Common Stock on the Conversion Date

 

(g) If the Maker shall fail to issue to Holder within five (5) business days following the date of receipt by the Maker or the Transfer Agent of this Note to be converted pursuant to a Conversion Notice, a certificate for the number of
shares of Common Stock to which each Holder is entitled upon Holder's conversion of this Note, in addition to all other available remedies which such Holder may pursue hereunder, the Maker shall pay additional damages to Holder on each day after the fifth (5th) business day following the date of receipt by the Maker or the Transfer Agent an amount equal to 1.0% of the product of (A) the number of shares of Common Stock not issued to Holder and to which Holder is entitled multiplied by (B) the Closing Bid Price
of the Common Stock on the business day following the date of receipt by the Maker or the Transfer Agent of the Conversion Notice The foregoing notwithstanding, Holder at its option may withdraw a Conversion Notice, and remain a Holder of this Note, if Holder has otherwise complied with this Section 4

 

(h) If any adjustment to the Conversion Price to be made pursuant to clause (j) of this Section 4 becomes effective immediately after a record date for an event as therein described, and conversion occurs prior to such event but after
the record date, the Maker may defer issuing, delivering, or paying to Holder any additional shares of Common Stock or check for any cash remainder required by reason of such adjustment until the occurrence of such event, provided that the Maker delivers to Holder a due bill or other appropriate instrument evidencing the Holders' right to receive such additional shares or check upon the occurrence of the event giving rise to the adjustment

 

34

 

 

(i)           Until such time as this Note has been fully redeemed, the Maker shall

 

reserve out of its authorized but unissued Common Stock enough shares of Common Stock to

 

permit the conversion of the entire Redemption Price and all accrued and unpaid interest due on

 

this Note at any time AH shares of Common Stock issued upon conversion of this Note shall be

 

fully paid and nonassessable The Maker covenants that if any shares of Common Stock,

 

required to be reserved for purposes of conversion of this Note hereunder, require registration

 

with or approval of any governmental authority under any federal or state law or listing upon any

 

national securities exchange before such shares may be issued upon conversion, the Maker shall

 

in good faith, as expeditiously as possible, endeavor to cause such shares to be duly registered,

 

approved or listed, as the case may be

 

(j)      The Conversion Price shall be subject to adjustment from time to time as

 

follows

 

(i)      If the Maker at any time subdivides (by any stock split, stock dividend, recapitalization, or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced
If the Maker at any time combines (by combination, reverse stock split, or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased

 

(ii)     Prior to the consummation of any Organic Change (as defined below), the Maker will make appropriate provision (in form and substance satisfactory to the Holder to insure that Holder will thereafter have the right to acquire and receive in lieu of, or in addition to, (as the case may be) the shares of Common
Stock immediately theretofore acquirable and receivable upon the conversion of this Holder's Note, such shares of stock, securities, or assets as may be issued or payable with respect to, or in exchange for, the number of shares of Common Stock immediately theretofore acquirable and receivable upon the conversion of this Note had such Organic Change not taken place In any such case, the Maker will make appropriate provision (in form and substance satisfactory to Holder with respect to such Holder's rights and
interests to insure that the provisions of this clause (j) will thereafter be applicable. The Maker will not effect any such consolidation, merger, or sale, unless prior to the consummation thereof the successor entity (if other than the Maker) resulting from consolidation or merger or the entity purchasing such assets assumes, by written instrument (in form and substance satisfactory to Holder), the obligation to deliver to Holder such shares of stock, securities, or assets as, in accordance with the foregoing
provisions, that Holder may be entitled to acquire For purposes of this Agreement, "Organic Change" means any recapitalization, reorganization, reclassification, consolidation, merger, or sale of all or substantially all of the Maker's assets to another Person (as defined below), or other similar transaction which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities, or assets with respect to or in exchange for Common
Stock, and "Person" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, and a government or any department or agency thereof.

 

 

35

 

(k)     The Holder shall be entitled to piggyback registration rights with respect to the shares of Common Stock issuable upon conversion of this Note by the Holder The Company agrees to include such shares on the first available registration, including forms S-l, SB-2 or S-3, filed by the Company with Securities
and Exchange Commission

 

(1)      Unless the Note is under Default (as defined in Section 5 of the Note) or unless prior to an Organic Change (as defined in Section 4(j)(ii) of the Note), in no event shall the Holder be entitled to convert the Notes in excess of that number, which upon giving effect to such conversion, would cause the
aggregate number of shares of Common Stock beneficially owned by the holder and its affiliates to exceed 9 99% of the outstanding shares of the Common Stock following the conversion For purposes of the foregoing proviso, the aggregate number of shares of common stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon conversion or exercise of the Notes with respect to which the determination is being made, but shall exclude the number of shares
of Common Stock which would be issuable upon (i) conversion of the remaining unconverted Notes owned by the Holder or its affiliates, and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the holder and it affiliates. Except as set forth in the preceding sentence, for purposes of this Section 4(1), beneficial ownership shall be calculated
in accordance with Section 1.3(d) of the 1934 Act

 

5 Events of Default If any of the following conditions or events shall occur and be continuing (a) the Maker shall default in the payment of principal of this Note when
the same becomes due and payable, (b) the Maker shall admit in writing its inability to pay its debts as such debts become due, (c) the Maker shall make a general assignment for the benefit of creditors, (d) the Maker shall commence a voluntary case under the Federal Bankruptcy Code (as now or hereafter in effect), (e) the Maker shall file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, or adjustment of debts, (f) there shall have been instituted against the Maker any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings for relief under the Federal Bankruptcy Code or any other law relating to bankruptcy, insolvency or adjustment of debts, which are not dismissed within sixty (60) days after such institution, or (g) the Maker shall take any action for the purposes of effecting any of the foregoing, then, and in any such event, the Holder may at any time (unless all defaults shall theretofore have been remedied) at its option,
declare this Note to

 

together with interest accrued thereon, without presentment, demand, protest or notice, all of which are hereby waiver

 

6 NEGATIVE COVENANTS. The provisions of this Section 6 shall remain in effect so long as any of the Bridge Notes shall remain outstanding

 

(a)     Restrictions on Debt   Hereafter, the Company will not create, assume, or incur or become or at any time be liable in respect of, any Debt, except: Bridge Notes issued pursuant to this Agreement, Debt outstanding on the date hereof to the extent reflected on the most recent balance sheet of
the Company or incurred in the ordinary course of business thereafter and debt incurred to accomplish duties and obligations of the Company under contracts to provide customer premises equipment, services, or other related obligations to existing or new customers of the Company as a result of business contracts, Purchase money security interests not to exceed $250,000 per year, and Secured debt in an aggregate principal amount up to $20 million

 

(i)      Definition of Debt For purposes of this Agreement, the capitalized term "Debt" of any Person shall mean all indebtedness of such Person for borrowed money, including without limitation obligations evidenced by bonds, debentures, Bridge Notes, or other similar instrument, all indebtedness guaranteed
in any manner by such Person, or in effect guaranteed by such Person through an agreement to purchase, contingent or otherwise, all accounts payable which, to the knowledge of such Person, have remained unpaid for a period of 90 days after the same become due and payable in accordance with their respective terms taking into account any grace period relating to the due date expressly set forth in the applicable invoice with respect to the payment of such accounts payable, all indebtedness secured by any mortgage,
lien, pledge, charge, security interest or other encumbrance upon or in property owned by such Person, even though such Person has not assumed or become liable for the payment of such indebtedness, all indebtedness created or arising under any conditional sale agreement or lease in the nature thereof (including obligations as lessee under leases which shall have been or should be, in accordance with generally accepted accounting principles, recorded as capitalized leases) (but excluding operating leases) or other
title

 

retention agreement with respect to property acquired by such Person, even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession of such property all bankers' acceptances and letters of credit, and liabilities in respect of unfunded vested benefits under Plans covered
by Title IV of ERISA

 

(b) Restrictions on Equity Sales The Company will not offer or enter into an agreement to sell equity securities of the Company, under private placement memorandum or other private offering document or letter, whether of equity securities,
convertible debt securities, or securities or instruments convertible into or exchangeable for debt or equity securities of the Company, except through an underwritten public offering or after receiving approval by the purchaser as described in 6(f) below

 

(c) Restrictions on Transactions with Affiliates The Company will not make any loans or advances to any of its officers, shareholders, or Affiliates, other than expense advances made by the Company to its officers and employees in the
ordinary course of business The Company will not increase the salary of any executive officer, or the remuneration of any director

 

 

36

 

(d) Restrictions on Investments Other than as permitted by this Agreement, the Company will not purchase or acquire or invest in, or agree to purchase or acquire or invest in the business, property, or assets of, or any securities of,
any other company or business, provided however, that the Company may enter into contracts relating to the expansion of its business and may invest its Excess Cash as defined below in: securities issued or directly and fully guaranteed or insured by the United States government or any agency thereof having maturities of not more than one year from the date of acquisition, certificates of deposit or eurodollar certificates of deposit,
having maturities of not more than one hundred eighty days from the date of acquisition, or one year from the date of acquisition in the case of certificates of deposit or eurodollar certificates of deposit being used to secure the Company's reimbursement obligations under letters of credit (provided that nothing contained herein shall be construed to permit letters of credit not otherwise permitted under this Agreement), commercial paper of any Person that is not a subsidiary or an Affiliate of the Company,
maturing within one hundred eighty days after the date of acquisition, bank loan participations, and money market instruments having maturities of not more than one hundred eighty days from the date of acquisition, or one year from the date of acquisition in the case of money market instruments being used to secure the Company's reimbursement obligations under letters of credit (provided that nothing contained herein shall be construed to permit letters of credit not otherwise permitted under this Agreement),
in all cases of such credit quality as a prudent business person would invest in As used in this Section, "Excess Cash" shall mean that portion of the proceeds of the Bridge Notes that has not been invested as described in Section 3 hereof

 

(e)     Change in Business, Operations The Company will not cause or effect any change in or addition to the primary business of the Company that has not been approved by Purchaser, such that more than 20% of the consolidated net earnings of the Company are derived from a business other than the business in which
the Company was engaged on the date hereof as reflected in the applicable last SEC Document filed prior to the First Closing ("Change in

 

Business") The business of the Company and its subsidiaries shall not be conducted in violation of any law, ordinance, or regulation of any governmental entity

 

(f)      Exceptions With Consent of Purchasers The Company may seek an exception to any prohibited action under this Section by first, giving written notice to Purchaser of Bridge Note under this Agreement, along with copies of all documentation
requested by any Purchaser relating to such requested exception, and second, in the sole discretion of Purchaser, satisfactorily responding to any Purchaser inquiries about the requested action The Company may undertake any such requested action otherwise prohibited by this Section 6 only after receiving the advance written consent of Purchaser hereunder

 

7 No Waiver; Rights and Remedies Cumulative No failure on the part of the holder of this Note to exercise, and no delay in exercising any right hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise by the holder of this Note of any right hereunder preclude any other or further exercise thereof or the exercise of any other right The rights and remedies herein provided are cumulative and not exclusive of any remedies or rights provided by law or by any other agreement between the Maker and the Holder

 

8 Costs and Expenses The Maker shall reimburse the holder of this Note for all costs and expenses incurred by it, and shall pay the reasonable fees and disbursements of
counsel to the holder of this Note, in connection with the enforcement of the holder's rights hereunder, whether or not legal proceedings are initiated

 

9 Amendments No amendment, modification or waiver of any provision of this Note nor consent to any departure by the Maker therefrom shall be effective unless the same shall
be in writing and signed by the holder of this Note and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given

 

10 Governing Law, Jurisdiction and Service of Process This Note shall be governed by and construed in accordance with the laws of the State of Utah, without giving effect
to conflict of laws The Maker hereby irrevocably consents to the jurisdiction of the courts of the State of Utah and of any federal court located in such State in connection with any action or proceeding arising out of or relating to this Note, any document or instrument delivered pursuant to, in connection with, or simultaneously with, this Note or a breach of this Note or any such document or instrument. In any such action or proceeding, the Maker waives personal service of any summons, complaint, or other
process and agrees that service thereof may be made in accordance with Section 11 of this Note Within 30 days after such service, or such other time as may be mutually agreed upon in writing by the attorneys for the parties to such action or proceeding, the Maker shall appear or answer such summons, complaint, or other process Should the Maker so served fail to appear or answer within such 30-day period or such extended period, as the case may be, the Maker shall be deemed in default and judgment may be entered
by the Holder against the Maker as demanded in any summons, complaint, or other process so served

 

 

37

 

11 Successors and Assigns This Note shall be binding upon the Maker and its successors and permitted assigns and the terms hereof shall inure to the benefit of the Holder
and its successors and assigns, including subsequent holders hereof

 

12 Notice Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be deemed to have been received (a) upon hand delivery
(receipt acknowledged) or delivery by telecopy or facsimile (with transmission confirmation report) if delivered on a business day during normal business hours where such notice is to be received, or the first business day following such delivery if delivered other than on a business day during normal business hours where such notice is to be received, or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of
such mailing, whichever first shall occur, to the address set forth above or to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 10 except that such change shall not be effective until actual receipt thereof.

 

13 Severability The provisions of this Note are severable, and if any provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall not in any manner affect such provision in any other jurisdiction or any other provision of this Note in any jurisdiction

 

14 Waiver of Notice The Maker hereby waives presentment, demand for payment, protest, notice of protest and all other demands or notices in connection with the delivery,
acceptance, performance, default or enforcement of this Note

 

15 Set-off, Counterclaim In the event the holder hereof seeks to enforce its rights under this Note, the Maker waives the right to interpose any set-off or counterclaim
of any nature or description against the holder

 

16 Headings The headings in this Note are solely for the convenience of reference and shall be given no effect in the construction or interpretation of this Note

 

[signature on next page]

 

IN WITNESSETH WHEREOF, the undersigned has duly executed this Note as of the date first above written

 

[Missing Graphic Reference]

 

 

38

 

EXHIBIT A

 

CONVERSION NOTICE 

 

Reference is made to terms and conditions of the Note, dated July 9, 2004, in the principal amount of $35,000 00 (the "Note"), and registered in the name of SovCap Equity Partners, Ltd In accordance
with

and pursuant to the terms of the Note, the undersigned hereby elects to convert $in

principal amount of the Note into shares of Common Stock, $.001 par value per share (the "Common Stock"), of the Company, by tendering the original Note specified below as of the date specified below

 

Date of Conversion                                                                          

 

Principal Amount of Note to be converted

Redemption Premium                                                                          

Accrued Interest and/or Fees

Total Amount of Note to be Converted

 

Please confirm the following information:

Conversion Price:

 

Number of shares of Common Stock to be issued

 

Please issue the Common Stock into which the Note is being converted in the following name and to the

 

Issue to:

 

Facsimile Number

 

Authorization:

 

By:                                                  

Title                                                  

 

Dated                                                  

 

If electronic book entry transfer, complete the following

Account Number:                                                                

Transaction Code Number:                                                                

  

39

  

COMPANY ACKNOWLEDGEMENT CONVERSION NOTICE

 

ACKNOWLEDGED AND AGREED CERISTAR, INC.

 

By                                                                

Name: Title

 

Date:

- 11 -

CTRI_Promissory Note_070904

  

40

  

IRREVOCABLE STOCK OR BOND POWER

 

For Value received, the undersigned does (do) hereby sell, assign, and transfer to:

 

If stock, complete this portion:

 

shares of the                                                       stock
of

 

represented by certificate(s) Number(s)_

 

In the name of the undersigned on the books of said compay.

 

If Bonds, complete this portion:

 

bonds of IMHI (fka Ceristar, Inc.)

 

in the principal amount of $35,000 Number(s)  July 9, 2004

 

inclusive standing in the name of the undersigned on books of said company.

 

The undersigned does (do) hereby irrevocably constitute and appoint

[Missing Graphic Reference]

 

attorney to transfer the said stock or bond(s), as the case may be, on the books of said company, with full power of substitution in the premises.

Date

Date

Signature BY:    BARRY W. HERMAN PRESIDENT

  

41

  

 

 

CERISTAR, INC. PROMISSORY NOTE

$36,300.00

Original Issue Date: August 23, 2004

 

FOR VALUE RECEIVED, the undersigned, CERISTAR, INC., a Delaware corporation with offices at 50 West Broadway, Suite 1100, Salt Lake City, UT, 84101 (the "Maker"), unconditionally promises to pay to the order of SOVCAP EQUITY PARTNERS, LTD., a Bahamas corporation, or its registered assigns (the "Holder"), at its office at c/o Lion Corporate
Securities Ltd., Cumberland House #27, Cumberland Street, P.O. Box N-10818, Nassau, New Providence, The Bahamas or at such other place as may be designated by the holder hereof in writing, the principal sum of THIRTY-SIX THOUSAND, THREE HUNDRED DOLLARS ($36,300.00), without interest, except as specified herein.

 

1. Payments. The Maker agrees to pay the principal of this Note within ten (10) days following demand from the Holder requesting payment, which demand may be made at any
time after the 120ta day following the issue date of this Note. The Maker shall have the right to prepay this Note in whole at any time or in part from time to time. Any payments, including prepayments, of principal of this Note, whether upon demand, at the option of the Company, upon default or otherwise shall include a repayment premium equal to the product of (a) the Repayment Percentage (as defined below) and (b) the number of thirty
(30) day periods (rounded up to the next whole number) (each 30-day period referred to as a "Monthly Period") that this Note has been outstanding (computed from the date of issuance of this Note to the date of payment) but in no event higher than the maximum amount permitted by law. For purposes of this Note, the Repayment Percentage shall mean one and one-half percent (1.5%) of the outstanding principal amount of this Note. All payments by the Maker on account of principal, premium, interest or fees hereunder
shall be made in money of the United States of America that at the time of payment is legal tender, by wire transfer of immediately available funds.

 

2. Interest. Without limiting any of the rights of the holder of this Note under Section 4 of this Note, if any payment of principal or premium thereon is not made when
the same shall become due and payable hereunder, interest shall accrue thereon at a rate per annum equal to twelve percent (12%) per annum. Notwithstanding anything to the contrary contained herein, no payments that are considered interest shall accrue or be payable at a rate in excess of the maximum amount permitted by law.

 

3. Use of Proceeds. The Company agrees use the proceeds from the sale and issuance of the Bridge Notes only for payment of following expenses:

 

a. Operating expenses, as agreed

b. Payroll

c. Consulting fees, as agreed

 

CTRIPromissory Note_082304

  

42

  

4. Conversion

 

(a) At any time after the date that is 120 days following the issue date of this Note and from time to time, the Holder may convert all or any portion of this Note, together with the Repayment Percentage, and accrued and unpaid interest
and fees due on this Note (the "Conversion Amount") into shares of common stock of the Maker (the "Common Stock").

 

(b) If the Holder elects to convert less than the full principal amount of this Note, the Maker shall issue a Note in substantially the same form as this Note, except that the principal amount shall be reduced by the principal amount
so converted (exclusive of the redemption premium).

 

(c) The number of shares of Common Stock issuable upon conversion of this Note is equal to the quotient of the Conversion Amount of that portion of the Note being converted divided by the Conversion Price. Fractional shares will not be
issued. In lieu of any fraction of a share, the Maker shall deliver its check for the dollar amount of the less than full share remainder. For purposes of this Note, the "Conversion Price" shall mean the product of (a) .75 and (b) the average closing bid price of the Common Stock for the five trading days ending on the trading day immediately preceding the Conversion Date.

 

(d) To convert this Note into Common Stock, (the "Conversion Date"), the Holder hereof shall (A) deliver or transmit by facsimile, for receipt on or prior to 11:59 P.M., Eastern Time, on such date, a copy of a fully executed notice of
conversion in the form attached hereto as Exhibit A (the "Conversion Notice") to the Maker or its designated transfer agent for its Common Stock (the "Transfer Agent"), and (B) surrender to a common carrier for delivery to the Maker or the Transfer Agent as soon as practicable following such date, this Note (or an indemnification undertaking with respect to such shares in the case of the loss, theft, or destruction of this Note) and the originally executed Conversion Notice. The date the Maker receives the Conversion
Note and this Note is hereinafter the "Conversion Date."

 

(e) Upon receipt by the Maker of a facsimile copy of a Conversion Notice, the Maker shall immediately send, via facsimile, a confirmation of receipt of such Conversion Notice to Holder. Upon receipt by the Maker or the Transfer Agent
of the Note to be converted pursuant to a Conversion Notice, together with the originally executed Conversion Notice, the Maker or the Transfer Agent (as applicable) shall, within five (5) business days following the date of receipt, (A) issue and surrender to a common carrier for overnight delivery to the address as specified in the Conversion Notice, a certificate, registered in the name of Holder or its designee, for the number of shares of Common Stock to which Holder shall be entitled or (B) credit the aggregate
number of shares of Common Stock to which such Holder shall be entitled to the Holder's or its designee's balance account at The Depository Trust Company.

 

(f) The Person or persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the "Record Holder" or Holder of such shares of Common Stock on the Conversion Date.

 

(a) 

-2-

CTRIPromissory Note_082304

  

43

  

 

(g) If the Maker shall fail to issue to Holder within five (5) business days following the date of receipt by the Maker or the Transfer Agent of this Note to be converted pursuant to a Conversion Notice, a certificate for the number of
shares of Common Stock to which each Holder is entitled upon Holder's conversion of this Note, in addition to all other available remedies which such Holder may pursue hereunder, the Maker shall pay additional damages to Holder' on each day after the fifth (5th) business day following the date of receipt by the Maker or the Transfer Agent an amount equal to 1.0% of the product of (A) the number of shares of Common Stock not issued to Holder and to which Holder is entitled multiplied by (B) the Closing Bid Price
of the Common Stock on the business day following the date of receipt by the Maker or the Transfer Agent of the Conversion Notice. The foregoing notwithstanding, Holder at its option may withdraw a Conversion Notice, and remain a Holder of this Note, if Holder has otherwise complied with this Section 4.

 

(h) If any adjustment to the Conversion Price to be made pursuant to clause (j) of this Section 4 becomes effective immediately after a record date for an event as therein described, and conversion occurs prior to such event but after
the record date, the Maker may defer issuing, delivering, or paying to Holder any additional shares of Common Stock or check for any cash remainder required by reason of such adjustment until the occurrence of such event, provided that the Maker delivers to Holder a due bill or other appropriate instrument evidencing the Holders' right to receive such additional shares or check upon the occurrence of the event giving rise to the adjustment.

 

(i)          Until such time as this Note has been fully redeemed, the Maker shall

 

reserve out of its authorized but unissued Common Stock enough shares of Common Stock to

 

permit the conversion of the entire Redemption Price and all accrued and unpaid interest due on

 

this Note at any time. All shares of Common Stock issued upon conversion of this Note shall be

 

fully paid and nonassessable. The Maker covenants that if any shares of Common Stock,

 

required to be reserved for purposes of conversion of this Note hereunder, require registration

 

with or approval of any governmental authority under any federal or state law or listing upon any

 

national securities exchange before such shares may be issued upon conversion, the Maker shall

 

in good faith, as expeditiously as possible, endeavor to cause such shares to be duly registered,

 

approved or listed, as the case may be.

 

(j)     The Conversion Price shall be subject to adjustment from time to time as

 

follows:

 

(i)      If the Maker at any time subdivides (by any stock split, stock dividend, recapitalization, or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced.
If the Maker at any time combines (by combination, reverse stock split, or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased.

 

(ii)     Prior to the consummation of any Organic Change (as defined below), the Maker will make appropriate provision (in form and substance satisfactory to the Holder to insure that Holder will thereafter have the right to acquire and receive in lieu of, or in addition to, (as the case may be) the shares of Common
Stock immediately theretofore acquirable and receivable upon the conversion of this Holder's Note, such shares of stock, securities, or assets as may be issued or payable with respect to, or in exchange for, the number of shares of Common Stock immediately theretofore acquirable and receivable upon the conversion of this Note had such Organic Change not taken place. In any such case, the Maker will make appropriate provision (in form and substance satisfactory to Holder with respect to such Holder's rights and
interests to insure that the provisions of this clause (j) will thereafter be applicable. The Maker will not effect any such consolidation, merger, or sale, unless prior to the consummation thereof the successor entity (if other than the Maker) resulting from consolidation or merger or the entity purchasing such assets assumes, by written instrument (in form and

satisfactory to Holder), the obligation to deliver to Holder such shares of stock, securities, or assets as, in accordance with the foregoing provisions, that Holder may be entitled to acquire. For purposes of this Agreement, "Organic Change" means any recapitalization, reorganization, reclassification, consolidation, merger, or sale of
all or substantially all of the Maker's assets to another Person (as defined below), or other similar transaction which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities, or assets with respect to or in exchange for Common Stock; and "Person" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, and a government or any department or
agency thereof.

 

(k)     The Holder shall be entitled to piggyback registration rights with respect to the shares of Common Stock issuable upon conversion of this Note by the Holder. The Company agrees to include such shares on the first available registration, including forms S-l, SB-2 or S-3, filed by the Company with Securities
and Exchange Commission.

 

 

44

 

(1)      Unless the Note is under Default (as defined in Section 5 of the Note) or unless prior to an Organic Change (as defined in Section 4(j)(ii) of the Note), in no event shall the Holder be entitled to convert the Notes in excess of that number, which upon giving effect to such conversion, would cause the
aggregate number of shares of Common Stock beneficially owned by the holder and its affiliates to exceed 9.99% of the outstanding shares of the Common Stock following the conversion. For purposes of the foregoing proviso, the aggregate number of shares of common stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon conversion or exercise of the Notes with respect to which the determination is being made, but shall exclude the number of shares
of Common Stock which would be issuable upon (i) conversion of the remaining unconverted Notes owned by the Holder or its affiliates, and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the holder and it affiliates. Except as set forth in the preceding sentence, for purposes of this Section 4(1), beneficial ownership shall be calculated
in accordance with Section 13(d) of the 1934 Act.

 

5. Events of Default. If any of the following conditions or events shall occur and be continuing: (a) the Maker shall default in the payment of principal of this Note when
the same becomes due and payable; (b) the Maker shall admit in writing its inability to pay its debts as such debts become due; (c) the Maker shall make a general assignment for the benefit of creditors; (d) the Maker shall commence a voluntary case under the Federal Bankruptcy Code (as now or hereafter in effect); (e) the Maker shall file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, or adjustment of debts; (f) there shall have been instituted against the Maker any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings for relief under the Federal Bankruptcy Code or any other law relating to bankruptcy, insolvency or adjustment of debts, which are not dismissed within sixty (60) days after such institution; or (g) the Maker shall take any action for the purposes of effecting any of the foregoing; then, and in any such event, the Holder may at any time (unless all defaults shall theretofore have been remedied) at its option,
declare this Note to be due and payable, whereupon this Note shall forthwith mature and become due and payable, together with interest accrued thereon, without presentment, demand, protest or notice, all of which are hereby waiver.

 

6. NEGATIVE COVENANTS. The provisions of this Section 6 shall remain in effect so long as any of the Bridge Notes shall remain outstanding.

 

(a)     Restrictions on Debt. Hereafter, the Company will not create, assume, or incur or become or at any time be liable in respect of, any Debt, except: Bridge Notes issued pursuant to this Agreement; Debt outstanding on the date hereof to the extent reflected on the most recent balance sheet of the Company or incurred
in the ordinary course of business thereafter and debt incurred to accomplish duties and obligations of the Company under contracts to provide customer premises equipment, services, or other related obligations to existing or new customers of the Company as a result of business contracts; Purchase money security interests not to exceed $250,000 per year; and Secured debt in an aggregate principal amount up to $20 million.

(i)      Definition of Debt. For purposes of this Agreement, the capitalized term "Debt" of any Person shall mean: all indebtedness of such Person for borrowed money, including without limitation obligations evidenced by bonds, debentures, Bridge Notes, or other similar instrument; all indebtedness guaranteed
in any manner by such Person, or in effect guaranteed by such Person through an agreement to purchase, contingent or otherwise; all accounts payable which, to the knowledge of such Person, have remained unpaid for a period of 90 days after the same become due and payable in accordance with their respective terms taking into account any grace period relating to the due date expressly set forth in the applicable invoice with respect to the payment of such accounts payable; all indebtedness secured by any mortgage,
lien, pledge, charge, security interest or other encumbrance upon or in property owned by such Person, even though such Person has not assumed or become liable for the payment of such indebtedness; all indebtedness created or arising under any conditional sale agreement or lease in the nature thereof (including obligations as lessee under leases which shall have been or should be, in accordance with generally accepted accounting principles, recorded as capitalized leases) (but excluding operating leases) or other
title

 

retention agreement with respect to property acquired by such Person, even though the rights and remedies of the seller or lender- under such agreement in the event of default are limited to repossession of such property all bankers' acceptances and letters of credit; and liabilities in respect of unfunded vested benefits under Plans covered
by Title IV of ERISA.

 

 

45

 

(b) Restrictions on Equity Sales. The Company will not offer or enter into an agreement to sell equity securities of the Company, under private placement memorandum or other private offering document or letter, whether of equity securities,
convertible debt securities, or securities or instruments convertible into or exchangeable for debt or equity securities of the Company, except through an underwritten public offering or after receiving approval by the purchaser as described in 6(f) below.

 

(c) Restrictions on Transactions with Affiliates. The Company will not make any loans or advances to any of its officers, shareholders, or Affiliates, other than expense advances made by the Company to its officers and employees in the
ordinary course of business. The Company will not increase the salary of any executive officer, or the remuneration of any director.

 

(d)     Restrictions on Investments. Other than as permitted by this Agreement, the Company will not purchase or acquire or invest in, or agree to purchase or acquire or invest in the business, property, or assets of, or any securities of, any other company or business, provided
however, that the Company may enter into contracts relating to the expansion of its business and may invest its Excess Cash as defined below in: securities issued or directly and fully guaranteed or insured by the United States government or any agency thereof having maturities of not more than one year from the date of acquisition; certificates of deposit or eurodollar certificates of deposit, having maturities of not more than one hundred eighty days from the date of acquisition, or one year from the
date of acquisition in the case of certificates of deposit or eurodollar certificates of deposit being used to secure the Company's reimbursement obligations under letters of credit (provided that nothing contained herein shall be construed to permit letters of credit not otherwise permitted under this Agreement); commercial paper of any Person that is not a subsidiary or an Affiliate of the Company, maturing within one hundred eighty days after the date of acquisition; bank loan participations; and money market
instruments having maturities of not more than one hundred eighty days from the date of acquisition, or one year from the date of acquisition in the case of money market instruments being used to secure the Company's reimbursement obligations under letters of credit (provided that nothing contained herein shall be construed to permit letters of credit not otherwise permitted under this Agreement); in all cases of such credit quality as a prudent business person would invest in. As used in this Section, "Excess
Cash" shall mean that portion of the proceeds of the Bridge Notes that has not been invested as described in Section 3 hereof.

 

(e)     Change in Business; Operations. The Company will not cause or effect any change in or addition to the primary business of the Company that has not been approved by Purchaser, such that more than 20% of the consolidated net earnings of the Company are derived from a business other than the business in which
the Company was engaged on the date hereof as reflected in the applicable last SEC Document filed prior to the First Closing ("Change in

 

Business"). The business of the Company and its subsidiaries shall not be conducted in violation of any law, ordinance, or regulation of any governmental entity.

 

(f)      Exceptions With Consent of Purchasers. The Company may seek an exception to any prohibited action under this Section by first, giving written notice to Purchaser of Bridge Note under this Agreement, along with copies of all documentation
requested by any Purchaser relating to such requested exception, and second, in the sole discretion of Purchaser, satisfactorily responding to any Purchaser inquiries about the requested action. The Company may undertake any such requested action otherwise prohibited by this Section 6 only after receiving the advance written consent of Purchaser hereunder.

 

7. No Waiver; Rights and Remedies Cumulative. No failure on the part of the holder of this Note to exercise, and no delay in exercising any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise by the holder of this Note of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The rights and remedies herein provided are cumulative and not exclusive of any remedies or rights provided by law or by any other agreement between the Maker and the Holder.

 

8. Costs and Expenses. The Maker shall reimburse the holder of this Note for all costs and expenses incurred by it, and shall pay the reasonable fees and disbursements of
counsel to the holder of this Note, in connection with the enforcement of the holder's rights hereunder, whether or not legal proceedings are initiated.

 

9. Amendments. No amendment, modification or waiver of any provision of this Note nor consent to any departure by the Maker therefrom shall be effective unless the same
shall be in writing and signed by the holder of this Note and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

 

10. Governing Law; Jurisdiction and Service of Process. This Note shall be governed by and construed in accordance with the laws of the State of Utah, without giving effect
to conflict of laws. The Maker hereby irrevocably consents to the jurisdiction of the courts of the State of Utah and of any federal court located in such State in connection with any action or proceeding arising out of or relating to this Note, any document or instrument delivered pursuant to, in connection with, or simultaneously with, this Note or a breach of this Note or any such document or instrument. In any such action or proceeding, the Maker waives personal service of any summons, complaint, or other
process and agrees that service thereof may be made in accordance with Section 11 of this Note. Within 30 days after such service, or such other time as may be mutually agreed upon in writing by the attorneys for the parties to such action or proceeding, the Maker shall appear or answer such summons, complaint, or other process. Should the Maker so served fail to appear or answer within such 30-day period or such extended period, as the case may be, the Maker shall be deemed in default and judgment may be entered
by the Holder against the Maker as demanded in any summons, complaint, or other process so served.

 

 

46

 

11. Successors and Assigns. This Note shall be binding upon the Maker and its successors and permitted assigns and the terms hereof shall inure to the benefit of the Holder
and its successors and assigns, including subsequent holders hereof.

 

12. Notice. Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be deemed to have been received: (a) upon hand delivery
(receipt acknowledged) or delivery by telecopy or facsimile (with transmission confirmation report) if delivered on a business day during normal business hours where such notice is to be received, or the first business day following such delivery if delivered other than on a business day during normal business hours where such notice is to be received; or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of
such mailing, whichever first shall occur, to the address set forth above or to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 10 except that such change shall not be effective until actual

 

13. Severability. The provisions of this Note are severable, and if any provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall not in any manner affect such provision in any other jurisdiction or any other provision of this Note in any jurisdiction.

 

14. Waiver of Notice. The Maker hereby waives presentment, demand for payment, protest, notice of protest and all other demands or notices in connection with the delivery,
acceptance, performance, default or enforcement of this Note.

 

15. Set-off, Counterclaim. In the event the holder hereof seeks to enforce its rights under this Note, the Maker waives the right to interpose any set-off or counterclaim
of any nature or description against the holder,

 

16. Headings. The headings in this Note are solely for the convenience of reference and shall be given no effect in the construction or interpretation of this Note.

 

[signature on next page]

 

IN WITNESSETH WHEREOF, the undersigned has duly executed this Note as of the date first above written..

 

[Missing Graphic Reference]

 

 

47

 

 

EXHIBIT A

 

CONVERSION NOTICE

 

Reference is made to terms and conditions of the Note, dated August 23, 2004, in the principal amount of §36,300.00 (the "Note"), and registered in the name of SovCap Equity Partners, Ltd. In accordance with

and pursuant to the terms of the Note, the undersigned hereby elects to convert $                                                                                                                                in

principal amount of the Note into shares of Common Stock, $ .001 par value per share (the "Common

Stock"), of the Company, by tendering the original Note specified below as of the date specified below.

 

Date of Conversion:                                                                                                                        

 

Principal Amount of Note to be converted: Redemption Premium Accrued Interest and/or Fees

 

Total Amount of Note to be Converted

 

Please confirm the following information:

 

Conversion Price:

 

Number of shares of Common Stock to be issued:

 

Please issue the Common Stock into which the Note is being converted in the following name and to the following address:

 

Issus to:

 

Facsimile Number:

 

Authorization:                                                             

 

By:                                                

Title:                                                

 

Dated:                                                

 

If electronic book entry transfer, complete the following:

Account Number:                                                             

Transaction Code Number:                                                           

-3-

CTRIPromissory Note_082304

  

48

  

COMPANY ACKNOWLEDGEMENT TO CONVERSION NOTICE

 

ACKNOWLEDGED AND AGREED: CERISTAR, INC.

 

By:                                                            

Name: Title:

 

Date:

CTRIPromissory Note_082304

  

49

  

IRREVOCABLE STOCK OR BOND POWER

 

For Value received, the undersigned does (do) hereby sell, assign, and transfer to:

 

❖   If stock, complete this portion:

 

shares of the                                                       stock
of_

 

represented by certificate(s) Number(s)_

 

In the name of the undersigned on the books of said company.

 

❖   If Bonds, complete this portion:

 

bonds of IMHI (fka Ceristar, Inc.

 

in the principal amount of $ 36,300                                                                           Number(s)
August 23, 2004

 

 

inclusive standing in the name of the undersigned on books of said company.

 

The undersigned does (do) hereby irrevocably constitute and appoint

 

attorney to transfer the said stock or bond(s), as the case may be, on the books of said company, with full power of substitution in the premises.

 

 

Date

Signature BY:    BARRY W. HERMAN PRESIDENT

  

50

  

ENDAVO MEDIA AND COMMUNICATIONS, INC. PROMISSORY NOTE

$20,000

Original Date: August 19, 2005

 

FOR VALUE RECEIVED, the undersigned, ENDAVO MEDIA AND COMMUNICATIONS, INC, a Delaware corporation with offices at 50West Broadway, Suite 400, Salt Lake City, UT 84101 (the "Maker"), unconditionally promises to pay to the order of SOVCAP EQUITY PARTNERS, LTD., a Bahamas corporation, or its registered assigns (the "Holder"), at its office at
c/o Lion Corporate Securities Ltd., Cumberland House #27, Cumberland Street, P.O. Box N-10818, Nassau, New Providence, The Bahamas or at such other place as may be designated by the holder hereof in writing, the principal sum of TWENTY THOUSAND DOLLARS ($20,000), together with interest, as specified herein.

 

1. Payments. The Maker agrees to pay the principal of this Note and any accrued interest thereon immediately upon demand from the Holder requesting payment, which demand
may be made at any time after 45 days from the issue date of this Note. The Maker shall have the right to prepay this Note in whole at any time or in part from time to time upon ten (10) business days notice. All payments by the Maker on account of principal, premium, interest or fees hereunder shall be made in money of the United States of America that at the time of payment is legal tender, by wire transfer of immediately available funds.

 

2. Interest. Interest on this Note shall accrue at the rate of six percent (6%) per annum on the unpaid principal balance from the date hereof until the principal sum has
been paid in full. Without limiting any of the rights of the holder of this Note under Section 4 of this Note, if any payment of principal or premium thereon is not made when the same shall become due and payable hereunder, a premium shall accrue on the principal amount due at a rate per annum equal to twenty-four percent (24%) per annum from the due date (upon demand). Notwithstanding anything to the contrary contained herein, no payments that are considered interest shall accrue or be payable at a rate in excess
of the maximum amount permitted by law.

 

3. Events of Default. If any of the following conditions or events shall occur and be continuing: (a) the Maker shall default in the payment of principal of or interest
on this Note when the same becomes due and payable; (b) the Maker shall admit in writing its inability to pay its debts as such debts become due; (c) the Maker shall make a general assignment for the benefit of creditors; (d) the Maker shall commence a voluntary case under the Federal Bankruptcy Code (as now or hereafter in effect); (e) the Maker shall file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, or adjustment of debts; (f) there shall have been instituted against
the Maker any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings for relief under the Federal Bankruptcy Code or any other law relating to bankruptcy, insolvency or adjustment of debts, which are not dismissed within sixty (60) days after such institution; or (g) the Maker shall take any action for the purposes of effecting any of the foregoing; then, and in any such event, the Holder may at any time (unless all defaults shall theretofore have been remedied) at
its option, declare this Note to be due and payable, whereupon this Note shall forthwith mature and become due and payable, together with interest accrued thereon, without presentment, demand, protest or notice, all of which are hereby waived.

 

 

NY\25530U

  

51

  

 

4. No Waiver; Rights and Remedies Cumulative. No failure on the part of the holder of this Note to exercise, and no delay in exercising any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise by the holder of this Note of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The rights and remedies herein provided are cumulative and not exclusive of any remedies or rights provided by law or by any other agreement between the Maker and the Holder.

 

5. Costs and Expenses. The Maker shall reimburse the holder of this Note for all costs and expenses incurred by it, and shall pay the reasonable fees and disbursements of
counsel to the holder of this Note, in connection with the enforcement of the holder's rights hereunder, whether or not legal proceedings are initiated.

 

6. Amendments. No amendment, modification or waiver of any provision of this Note nor consent to any departure by the Maker therefrom shall be effective unless the same
shall be in writing and signed by the holder of this Note and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

 

7. Governing Law; Jurisdiction and Service of Process. This Note shall be governed by and construed in accordance
with the laws of the State of Utah, without giving effect to conflict of laws. The Maker hereby irrevocably consents to the jurisdiction of the courts of the State of Utah and of any federal court located in such State in connection with any action or proceeding arising out of or relating to this Note, any document or instrument delivered pursuant to, in connection with, or simultaneously with, this Note or a breach of this Note or any such document or instrument. In any such action or proceeding, the Maker waives
personal service of any summons, complaint, or other process and agrees that service thereof may be made in accordance with Section 10 of this Note. Within 30 days after such service, or such other time as may be mutually agreed upon in writing by the attorneys for the parties to such action or proceeding, the Maker shall appear or answer such summons, complaint, or other process. Should the Maker so served fail to appear or answer within such 30-day period or such extended period, as the case may be, the Maker
shall be deemed in default and judgment may be entered by the Holder against the Maker as demanded in any summons, complaint, or other process so served.

 

8. Successors and Assigns. This Note shall be binding upon the Maker and its successors and permitted assigns and the terms hereof shall inure to the benefit of the Holder
and its successors and assigns, including subsequent holders hereof.

 

9. Notice. Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be deemed to have been received: (a) upon hand delivery
(receipt acknowledged) or delivery by telecopy or facsimile (with transmission confirmation report) if delivered on a business day during normal business hours where such notice is to be received, or the first business day following such delivery if delivered other than on a business day during normal business hours where such notice is to be received; or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of
such mailing, whichever first shall occur, to the address set forth above or to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 9 except that such change shall not be effective until actual receipt thereof.

 

4. 

2

NY\255301 1

  

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10. Severability. The provisions of this Note are severable, and if any provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall not in any manner affect such provision in any other jurisdiction or any other provision of this Note in any jurisdiction.

 

11. Waiver of Notice. The Maker hereby waives presentment, demand for payment, protest, notice of protest and all other demands or notices in connection with the delivery,
acceptance, performance, default or enforcement of this Note.

 

12. Set-off, Counterclaim. In the event the holder hereof seeks to enforce its rights under this Note, the Maker waives the right to interpose any set-off or counterclaim
of any nature or description against the holder.

 

13. Headings. The headings in this Note are solely for the convenience of reference and shall be given no effect in the construction or interpretation of this Note.

 

[signature on next page]

3

NY\255.301 1

  

53

  

 

IN WITNESSETH WHEREOF, the undersigned has duly executed this Note as of the date first above written.

 

ENDAVO MEDIA AND COMMUNICATIOS, INC.

 

[CORPORATE SEAL]

4

NYV255301 1

  

54

  

  

55

  

ENDAVO MEDIA AND COMMUNICATIONS, INC. PROMISSORY NOTE

 

$4,500                    

                                                                                      
Original Date September 9, 2005

 

FOR VALUE RECEIVED, the undersigned, ENDAVO MEDIA AND COMMUNICATIONS, INC, a Delaware corporation with offices at 50West Broadway, Suite 400, Salt Lake City, UT 84101 (the "Maker"), unconditionally promises to pay to the order of SOVCAP EQUITY PARTNERS, LTD , a Bahamas corporation, or its registered assigns (the "Holder"), at its office at
c/o Lion Corporate Securities Ltd , Cumberland House #27, Cumberland Street, P.O. Box N-10818, Nassau, New Providence, The Bahamas or at such other place as may be designated by the holder hereof in writing, the principal sum of FOUR THOUSAND FIVE HUNDRED DOLLARS ($4,500), together with interest, as specified herein

 

1 Payments. The Maker agrees to pay the principal of this Note and any accrued interest thereon immediately upon demand from the Holder requesting payment, which demand
may be made at any time after 45 days from the issue date of this Note The Maker shall have the right to prepay this Note in whole at any time or in part from time to time upon ten (10) business days notice All payments by the Maker on account of principal, premium, interest or fees hereunder shall be made in money of the United States of America that at the time of payment is legal tender, by wire transfer of immediately available funds

 

2 Interest. Interest on this Note shall accrue at the rate of six percent (6%) per annum on the unpaid principal balance from the date hereof until the principal sum has
been paid in full Without limiting any of the rights of the holder of this Note under Section 4 of this Note, if any payment of principal or premium thereon is not made when the same shall become due and payable hereunder, a premium shall accrue on the principal amount due at a rate per annum equal to twenty=four percent (24%) per annum from the due date (upon demand) Notwithstanding anything to the contrary contained herein, no payments that are considered interest shall accrue or be payable at a rate in excess
of the maximum amount permitted by law

 

3 Events of Default If any of the following conditions or events shall occur and be continuing; (a) the Maker shall default in the payment of principal of or interest on
this Note when the same becomes due and payable; (b) the Maker shall admit in writing its inability to pay its debts as such debts become due, (c) the Maker shall make a general assignment for the benefit of creditors, (d) the Maker shall commence a voluntary case under the Federal Bankruptcy Code (as now or hereafter in effect), (e) the Maker shall file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, or adjustment of debts; (f) there shall have been instituted against
the Maker any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings for relief under the Federal Bankruptcy Code or any other law relating to bankruptcy, insolvency or adjustment of debts, which are not dismissed within sixty (60) days after such institution, or (g) the Maker shall take any action for the purposes of effecting any of the foregoing, then, and in any such event, the Holder may at any time (unless ail defaults shall theretofore have been remedied) at
its option, declare this Note to be due and payable, whereupon this Note shall forthwith mature and become due and payable, together with interest accrued thereon, without presentment, demand, protest or notice, all of which are hereby waived

 

NY\255301.1

  

56

  

 

4 No Waiver; Rights and Remedies Cumulative. No failure on the part of the holder of this Note to exercise, and no delay in exercising any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise by the holder of this Note of any right hereunder preclude any other or further exercise thereof or the exercise of any other right The rights and remedies herein provided are cumulative and not exclusive of any remedies or rights provided by law or by any other agreement between the Maker and the Holder

 

5 Costs and Expenses The Maker shall reimburse the holder of this Note for all costs and expenses incurred by it, and shall pay the reasonable fees and disbursements of
counsel to the holder of this Note, in connection with the enforcement of the holder's rights hereunder, whether or not legal proceedings are initiated

 

6 Amendments No amendment, modification or waiver of any provision of this Note nor consent to any departure by the Maker therefrom shall be effective unless the same shall
be in writing and signed by the holder of this Note and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given

 

7 Governing Law; Jurisdiction and Service of Process This Note shall be governed by and construed in accordance
with the laws of the State of Utah, without giving effect to conflict of laws The Maker hereby irrevocably consents to the jurisdiction of the courts of the State of Utah and of any federal court located in such State in connection with any action or proceeding arising out of or relating to this Note, any document or instrument delivered pursuant to, in connection with, or simultaneously with, this Note or a breach of this Note or any such document or instrument In any such action or proceeding, the Maker waives
personal service of any summons, complaint, or other process and agrees that service thereof may be made in accordance with Section 10 of this Note Within 30 days after such service, or such other time as may be mutually agreed upon in writing by the attorneys for the parties to such action or proceeding, the Maker shall appear or answer such summons, complaint, or other process Should the Maker so served fail to appear or answer within such 30-day period or such extended period, as the case may be, the Maker
shall be deemed in default and judgment may be entered by the Holder against the Maker as demanded in any summons, complaint, or other process so served

 

8 Successors and Assigns. This Note shall be binding upon the Maker and its successors and permitted assigns and the terms hereof shall inure to the benefit of the Holder
and

 

its successors and assigns, including subsequent holders hereof

 

9 Notice. Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be deemed to have been received (a) upon hand delivery
(receipt acknowledged) or delivery by telecopy or facsimile (with transmission confirmation report) if delivered on a business day during normal business hours where such notice is to be received, or the first business day following such delivery if delivered other than on a business day during normal business hours where such notice is to be received, or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of
such mailing, whichever first shall occur, to the address set forth above or to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 9 except that such change shall not be effective until actual receipt thereof.

 

9 

2

NY\255301.1

  

57

  

 

10 Severability The provisions of this Note are severable, and if any provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall not in any manner affect such provision in any other jurisdiction or any other provision of this Note in any jurisdiction.

 

11 Waiver of Notice The Maker hereby waives presentment, demand for payment, protest, notice of protest and all other demands or notices in connection with the delivery,
acceptance, performance, default or enforcement of this Note

 

12 Set-off. Counterclaim In the event the holder hereof seeks to enforce its rights under this Note, the Maker waives the right to interpose any set-off or counterclaim
of any nature or description against the holder

 

13 Headings The headings in this Note are solely for the convenience of reference and shall be given no effect in the construction or interpretation of this Note

 

[signature on next page]

3

NY\255301.1

  

58

  

 

IN WITNESSETH WHEREOF, the undersigned has duly executed this Note as of the date first above written

[Missing Graphic Reference]

 

ENDAVO MEDIA AND COMMUNTCATONS< INC

[CORPORATE SEAL]

  

59

  

IRREVOCABLE STOCK OR BOND POWER

 

For Value received, the undersigned does (do) hereby sell, assign, and transfer to:

 

If stock, complete this portion:

 

shares of the                                                       stock
of

 

represented by certificate(s) Number(s)_

 

In the name of the undersigned on the books of said company.

 

If Bonds, complete this portion:

 

bonds of  IMHI (fka Endavo Media)

 

in the principal amount of $ 4,500 Number(s) September 9, 2005

inclusive standing in the name of the undersigned on books of said company.

 

The undersigned does (do) hereby irrevocably constitute and appoint

 

attorney to transfer the said stock or bond(s), as the case may be, on the books of said company, with full power of substitution in the premises.

 

[Missing Graphic Reference]

 

Date

 

Date

 

11/14/07

 

 

60

 

 

ENDAVO MEDIA AND COMMUNICATIONS, INC PROMISSORY NOTE

 

$12,500                                                                                                           

December 16, 2005

 

FOR VALUE RECEIVED, the undersigned, ENDAVO MEDIA AND COMMUNICATIONS, INC, a Delaware corporation with offices at 50West Broadway, Suite 400, Salt Lake City, UT 84101 (the "Maker"), unconditionally promises to pay to the order of SOVCAP EQUITY PARTNERS, LTD , a Bahamas corporation, or its registered assigns (the "Holder"), at its office at
c/o Lion Corporate Securities Ltd, Cumberland House #27, Cumberland Street, P O Box N-10818, Nassau, New Providence, The Bahamas or at such other place as may be designated by the holder hereof in writing, the principal sum of TWELVE THOUSAND FIVE-HUNDRED DOLLARS ($12,500), together with interest, as specified herein

 

1       Demand Payments. The Maker agrees to pay the principal of this Note and any accrued interest thereon immediately upon demand from the Holder requesting payment, which demand may be made at any time after 45 days from the issue date of this Note. The Maker shall have the right to prepay this Note
in whole at any time or in part from time to time upon ten (10) business days notice All payments by the Maker on account of principal, premium, interest or fees hereunder shall be made in money of the United States of America that at the time of payment is legal tender, by wire transfer of immediately available funds

 

2.      Mandatory Payments. The Maker agrees to make mandatory payments to the Holder in an amount equaling ten percent (10%) of gross profits (net revenue after cost of sales) received by the Company during each fiscal quarter, as reported by the
Company Payments shall be made to the Holder within ten (10) days of the date the Maker is able to produce financial statements or no later than the date upon which the Maker files financial statements with the Securities and Exchange Commission (SEC) Mandatory payments made shall be applied to reduce the outstanding principal amount of this Note, along with accrued interest, until the Note is paid in full by the Maker, whether by Mandatory or Demand Payments

 

3 Interest. Interest on this Note shall accrue at the rate of twelve percent (12%) per annum on the unpaid principal balance from the date hereof until the principal sum has been paid in full Without limiting any of the rights of the
holder of this Note under Section 4 of this Note, if any payment of principal or premium thereon is not made when the same shall become due and payable hereunder, a premium shall accrue on the principal amount due at a rate per annum equal to twenty-four percent (24%) per annum from the due date (upon demand) Notwithstanding anything to the contrary contained herein, no payments that are considered interest shall accrue or be payable at a rate in excess of the maximum amount permitted by law

 

4 Events of Default If any of the following conditions or events shall occur and be continuing (a) the Maker shall default in the payment of principal of or interest on
this Note when the same becomes due and payable, (b) the Maker shall admit in writing its inability to pay its debts as such debts become due, (c) the Maker shall make a general assignment for the benefit ->f creditors, (d) the Maker shall commence a voluntary case under the Federal Bankruptcy Code

	
  
	
">ow or hereafter in effect); (e) the Maker shall file a petition seeking to take advantage of any v relating to bankruptcy, insolvency, or adjustment of debts, (f) there shall have been

BY:    BARRY W. HERMAN PRESIDENT

  

61

  

 

IN WITNESSETH WHEREOF, the undersigned has duly executed this Note as of the date first above written

 

ENDAVO MEDIA AND COMMUNICATONS< INC

 

 

NY\255301.1

  

62

  

IRREVOCABLE STOCK OR BOND POWER

 

For Value received, the undersigned does (do) hereby sell, assign, and transfer to:

 

♦>    If stock, complete this portion:

 

shares of the                                                       stock
of                                              

represented by certificate(s) Number(s)                                                                                                                           

In the name of the undersigned on the books of said company.

 

❖   If Bonds, complete this portion:

 

bonds of   IMHI (fka Endavo Media)

 

in the principal amount of $   12,500     Numbers)  December 16, 2005

 

inclusive standing in the name of the undersigned on books of said company.

 

The undersigned does (do) hereby irrevocably constitute and appoint

[Missing Graphic Reference]

 

attorney to transfer the said stock or bond(s), as the case may be, on the books of said company, with full power of substitution in the premises.

 

Date

 

Date 11/4/07 

 

 

63

 
ENDAVO MEDIA AND COMMUNICATIONS, INC. PROMISSORY NOTE

                                  

        December 22, 2005

$20,500

 

FOR VALUE RECEIVED, the undersigned, ENDAVO MEDIA AND COMMUNICATIONS, INC, a Delaware corporation with offices at 50West Broadway, Suite 400, Salt Lake City, UT 84101 (the "Maker"), unconditionally promises to pay to the order of SOVCAP EQUITY PARTNERS, LTD , a Bahamas corporation, or its registered assigns (the "Holder"), at its office at
c/o Lion Corporate Securities Ltd., Cumberland House #27, Cumberland Street, P O Box N-10818, Nassau, New Providence, The Bahamas or at such other place as may be designated by the holder hereof in writing, the principal sum of TWENTY THOUSAND FIVE-HUNDRED DOLLARS ($20,500), together with interest, as specified herein

 

1 Demand Payments. The Maker agrees to pay the principal of this Note and any accrued interest thereon immediately upon demand from the Holder requesting payment, which
demand may be made at any time after 45 days from the issue date of this Note The Maker shall have the right to prepay this Note in whole at any time or in part from time to time upon ten (10) business days notice All payments by the Maker on account of principal, premium, interest or fees hereunder shall be made in money of the United States of America that at the time of payment is legal tender, by wire transfer of immediately available funds

 

2 Mandatory Payments. The Maker agrees to make mandatory payments to the Holder in an amount equaling ten percent (10%) of gross profits (net revenue after cost of sales)
received by the Company during each fiscal quarter, as reported by the Company Payments shall be made to the Holder within ten (10) days of the date the Maker is able to produce financial statements or no later than the date upon which the Maker files financial statements with the Securities and Exchange Commission (SEC) Mandatory payments made shall be applied to reduce the outstanding principal amount of this Note, along with accrued interest, until the Note is paid in full by the Maker, whether by Mandatory
or Demand Payments

 

3 Interest. Interest on this Note shall accrue at the rate of twelve percent (12%) per annum on the unpaid principal balance from the date hereof until the principal sum
has been paid in full Without limiting any of the rights of the holder of this Note under Section 4 of this Note, if any payment of principal or premium thereon is not made when the same shall become due and payable hereunder, a premium shall accrue on the principal amount due at a rate per annum equal to twenty-four percent (24%) per annum from the due date (upon demand). Notwithstanding anything to the contrary contained herein, no payments that are considered interest shall accrue or be payable at a rate in
excess of the maximum amount permitted by law

 

4 Events of Default If any of the following conditions or events shall occur and be continuing (a) the Maker shall default in the payment of principal of or interest on
this Note when the same becomes due and payable, (b) the Maker shall admit in writing its inability to pay its debts as such debts become due, (c) the Maker shall make a general assignment for the benefit of creditors, (d) the Maker shall commence a voluntary case under the Federal Bankruptcy Code (as now or hereafter in effect); (e) the Maker shall file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, or adjustment of debts, (f) there shall have been

 

 

Signature BY:    BARRY W. HERMAN

 

PRESIDENT

  

64

  

 

instituted against the Maker any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings for relief under the Federal Bankruptcy Code or any other law relating to bankruptcy, insolvency or adjustment of debts, which are not dismissed within sixty (60) days after such institution, or (g) the Maker
shall take any action for the purposes of effecting any of the foregoing, then, and in any such event, the Holder may at any time (unless all defaults shall theretofore have been remedied) at its option, declare this Note to be due and payable, whereupon this Note shall forthwith mature and become due and payable, together with interest accrued thereon, without presentment, demand, protest or notice, all of which are hereby waived

 

5 No Waiver; Rights and Remedies Cumulative No failure on the part of the holder of this Note to exercise, and no delay in exercising any right hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise by the holder of this Note of any right hereunder preclude any other or further exercise thereof or the exercise of any other right The rights and remedies herein provided are cumulative and not exclusive of any remedies or rights provided by law or by any other agreement between the Maker and the Holder

 

6 Costs and Expenses The Maker shall reimburse the holder of this Note for all costs and expenses incurred by it, and shall pay the reasonable fees and disbursements of
counsel to the holder of this Note, in connection with the enforcement of the holder's rights hereunder, whether or not legal proceedings are initiated

 

7 Amendments No amendment, modification or waiver of any provision of this Note nor consent to any departure by the Maker therefrom shall be effective unless the same shall
be in writing and signed by the holder of this Note and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given

 

8 Governing Law, jurisdiction and Service of Process This Note shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect
to conflict of laws The Maker hereby irrevocably consents to the jurisdiction of the courts of the State of Delaware and of any federal court located in such State in connection with any action or proceeding arising out of or relating to this Note, any document or instrument delivered pursuant to, in connection with, or simultaneously with, this Note or a breach of this Note or any such document or instrument In any such action or proceeding, the Maker waives personal service of any summons, complaint, or other
process and agrees that service thereof may be made in accordance with Section 10 of this Note Within 30 days after such service, or such other time as may be mutually agreed upon in writing by the attorneys for the parties to such action or proceeding, the Maker shall appear or answer such summons, complaint, or other process Should the Maker so served fail to appear or answer within such 30-day period or such extended period, as the case may be, the Maker shall be deemed in default and judgment may be entered
by the Holder against the Maker as demanded in any summons, complaint, or other process so served

 

9 Successors and Assigns This Note shall be binding upon the Maker and its successors and permitted assigns and the terms hereof shall inure to the benefit of the Holder
and its successors and assigns, including subsequent holders hereof.

 

10 Notice Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be deemed to have been received: (a) upon hand delivery

 

5 

 

NYY25530M

  

65

  

 

(receipt acknowledged) or delivery by telecopy or facsimile (with transmission confirmation report) if delivered on a business day during normal business hours where such notice is to be received, or the first business day following such delivery if delivered other than on a business day during normal business hours where such notice is to
be received, or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever first shall occur, to the address set forth above or to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 9 except that such change shall not be effective until actual receipt thereof

 

11 Severability The provisions of this Note are severable, and if any provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall not in any manner affect such provision in any other jurisdiction or any other provision of this Note in any jurisdiction

 

12 Waiver of Notice The Maker hereby waives presentment, demand for payment, protest, notice of protest and all other demands or notices in connection with the delivery,
acceptance, performance, default or enforcement of this Note

 

13 Set-off Counterclaim In the event the holder hereof seeks to enforce its rights under this Note, the Maker waives the right to interpose any set-off or counterclaim of
any nature or description against the holder

 

14 Headings The headings in this Note are solely for the convenience of reference and shall be given no effect in the construction or interpretation of this Note

 

[signature on next page]

 

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66

  

IN WITNESSETH WHEREOF, the undersigned has duly executed this Note as of the date first above written

ENDAVO MEDIA AND COMMUNICATONS, INC

 

	
  
	
/Paul Hamm President

NYA255301.1 

  

67

  

 

IRREVOCABLE STOCK OR BOND POWER

 

For Value received, the undersigned does (do) hereby sell, assign, and transfer to:

 

❖   If stock, complete this portion:

 

shares of the                                                       stock
of

 

represented by certificate(s) Number(s)_

 

In the name of the undersigned on the books of said company.

 

If Bonds, complete this portion:

 

bonds of  IMHI (fka Endavo Media)

in

 

the principal amount of $ 20,500 Number(s) December 23, 2005

 

inclusive standing in the name of the undersigned on books of said company.

 

The undersigned does (do) hereby irrevocably constitute and appoint

 

attorney to transfer the said stock or bond(s), as the case may be, on the books of said company, with full power of substitution in the premises.

 

SOVCAP EQUITY PARTNERS, LTD

	
Date

 

 

 

Date 11/4/07

 

[Missing Graphic Reference]

Signature BY:    BARRY W. HERMAN PRESIDENT

 

 

68

 

ENDAVO MEDIA AND COMMUNICATIONS, INC PROMISSORY NOTE

 

 

$20,000                                                                                                          

 August 19, 2005

 

FOR VALUE RECEIVED, the undersigned, ENDAVO MEDIA AND COMMUNICATIONS, INC, a Delaware corporation with offices at 50West Broadway, Suite 400, Salt Lake City, UT 84101 (the "Maker"), unconditionally promises to pay to the order of SOVCAP EQUITY PARTNERS, LTD , a Bahamas corporation, or its registered assigns (the "Holder"), at its office at
c/o Lion Corporate Securities Ltd, Cumberland House #27, Cumberland Street, P O Box N-10818, Nassau, New Providence, The Bahamas or at such other place as may be designated by the holder hereof in writing, the principal sum of TWENTY THOUSAND DOLLARS ($20,000), together with interest, as specified herein

 

1 Payments. The Maker agrees to pay the principal of this Note and any accrued inter est thereon immediately upon demand from the Holder requesting payment, which demand
may be made at any time after 45 days from the issue date of this Note The Maker shall have the right to prepay this Note in whole at any time or in part from time to time upon ten (10) business days notice All payments by the Maker on account of principal, premium, interest or fees hereunder shall be made in money of the United States of America that at the time of payment is legal tender, by wire transfer of immediately available funds

 

2 Interest. Interest on this Note shall accrue at the rate of six percent (6%) per annum on the unpaid principal balance from the date hereof until the principal sum has
been paid

in full Without limiting any of the rights of the holder of this Note under Section 4 of this Note, if any payment of principal or premium thereon is not made when the same shall become due and payable hereunder, a premium shall accrue on the principal amount due at a rate per annum equal to twenty-four percent (24%) per annum from the due
date (upon demand) Notwithstanding anything to the contrary contained herein, no payments that are considered interest shall accrue or be payable at a rate in excess of the maximum amount permitted by law

 

3.       Events of Default If any of the following conditions or events shall occur and be continuing: (a) the Maker shall default in the payment of principal of or interest on this Note when the same becomes due and payable, (b) the Maker
shall admit in writing its inability to pay its debts as such debts become due, (c) the Maker shall make a general assignment for the benefit of creditors, (d) the Maker shall commence a voluntary case under the Federal Bankruptcy Code (as now or hereafter in effect), (e) the Maker shall file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, or adjustment of debts; (f) there shall have been instituted against the Maker any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings, or other proceedings for relief under the Federal Bankruptcy Code or any other law relating to bankruptcy, insolvency or adjustment of debts, which are not dismissed within sixty (60) days after such institution, or (g) the Maker shall take any action for the purposes of effecting any of the foregoing, then, and in any such event, the Holder may at any time (unless all defaults shall theretofore have been remedied) at its option, declare this Note to be due and payable, whereupon this
Note shall forthwith mature and become due and payable, together with interest accrued thereon, without presentment, demand, protest or notice, all of which are hereby waived

  

69

  

 

4 No Waiver. Rights and Remedies Cumulative No failure on the part of the holder of this Note to exercise, and no delay in exercising any right hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise by the holder of this Note of any right hereunder preclude any other or further exercise thereof or the exercise of any other right The rights and remedies herein provided are cumulative and not exclusive of any remedies or rights provided by law or by any other agreement between the Maker and the Holder

 

5 Costs and Expenses The Maker shall reimburse the holder of this Note for all costs and expenses incurred by it, and shall pay the reasonable fees and disbursements of
counsel to the holder of this Note, in connection with the enforcement of the holder's rights hereunder, whether or not legal proceedings are initiated

 

6 Amendments No amendment, modification or waiver of any provision of this Note nor consent to any departure by the Maker therefrom shall be effective unless the same shall
be in writing and signed by the holder of this Note and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given

 

7 Governing Law; Jurisdiction and Service of Process This Note shall be governed by and construed in accordance with the laws of the State of Utah, without giving effect
to conflict of laws The Maker hereby irrevocably consents to the jurisdiction of the courts of the State of Utah and of any federal court located in such State in connection with any action or proceeding arising out of or relating to this Note, any document or instrument delivered pursuant to, in connection with, or simultaneously with, this Note or a breach of this Note or any such document or instrument In any such action or proceeding, the Maker waives personal service of any summons, complaint, or other process
and agrees that service thereof may be made in accordance with Section 10 of this Note Within 30 days after such service, or such other time as may be mutually agreed upon in writing by the attorneys for the parties to such action or

 

to appeal or answer within such 30-day period or such extended period, as the case may be, the Maker shall be deemed in default and judgment may be entered by the Holder against the Maker as demanded in any summons, complaint, or other process so served

 

8 Successors and Assigns This Note shall be binding upon the Maker and its successors and permitted assigns and the terms hereof shall inure to the benefit of the Holder
and

 

its successors and assigns, including subsequent holders hereof

 

9 Notice Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be deemed to have been received: (a) upon hand delivery

(receipt acknowledged) or delivery by telecopy or facsimile (with transmission confirmation report) if delivered on a business day during normal business hours where such notice is to be received, or the first business day following such delivery if delivered other than on a business day during normal business hours where such notice is to
be received, or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever first shall occur, to the address set forth above or to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 9 except that such change shall not be effective until actual receipt thereof

 

NY\255301.1

  

70

  

 

10 Severability The provisions of this Note are severable, and if any provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall not in any manner affect such provision in any other jurisdiction or any other provision of this Note in any jurisdiction

 

11 Waiver of Notice The Maker hereby waives presentment, demand for payment, protest, notice of protest and all other demands or notices in connection with the delivery,
acceptance, performance, default or enforcement of this Note

 

12 Set-off Counterclaim In the event the holder hereof seeks to enforce its rights under this Note, the Maker waives the right to interpose any set-off or counterclaim of
any nature or description against the holder

 

13 Headings The headings in this Note are solely for the convenience of reference and shall be given no effect in the construction or interpretation of this Note

 

[signature on next page]

 

NY\255301.1

  

71

  

 

IN WITNESSETH WHEREOF, the undersigned has duly executed this Note as of the date first above written

 

ENDAVO MEDIA AND COMMUNICATONS, INC

 

 

[CORPORATE SEAL]

 

 

NY\255301..1

  

72

  

IRREVOCABLE STOCK OR BOND POWER

 

For Value received, the undersigned does (do) hereby sell, assign, and transfer to:

 

❖    If stock, complete this portion:

 

shares of the                                                       stock
of

 

represented by certificate(s) Number(s)_

 

In the name of the undersigned on the books of said company.

 

If Bonds, complete this portion:

 

.bonds of  IMHI (fka Endavo Media)

 

in the principal amount of $ 20,000 Number(s) August 19, 2005

 

inclusive standing in the name of the undersigned on books of said company.

 

The undersigned does (do) hereby irrevocably constitute and appoint

 

attorney to transfer the said stock or bond(s), as the case may be, on the books of said company, with full power of substitution in the premises.

 

SOVCAP EQUITY PARTNERS, LTD, Signature

[Missing Graphic Reference]

 

Date

Date 11/4/07

 

 

73

 

ENDAVO MEDIA AND COMMUNICATIONS. INC PROMISSORY NOTE

 

$3,000                                                                                          

 January 6, 2006

 

FOR VALUE RECEIVED, the undersigned, ENDAVO MEDIA AND COMMUNICATIONS. INC, a Delaware corporation with offices at SOWest Broadway, Suite 400, Salt Lake City, UT 84101 (the "Maker"), unconditionally promises to pay to the order of SOVCAP EQUITY PARTNERS, LTD, a Bahamas corporation, or its registered assigns (the "Holder"), at its office at
c/o Lion Corporate Securities Ltd, Cumberland House #27, Cumberland Street, P O Box N-10818, Nassau, New Providence, The Bahamas or at such other place as may be designated by the holder hereof in writing, the principal sum of THREE THOUSAND DOLLARS ($3,000), together with interest, as specified herein

 

1 Demand Payments. The Maker agrees to pay the principal of this Note and any accrued interest thereon immediately upon demand from the Holder requesting payment, which
demand may be made at any time after 45 days from the issue date of this Note The Maker shall have the right to prepay this Note in whole at any time or in part from time to time upon ten (10) business days notice All payments by the Maker on account of principal, premium, interest or fees hereunder shall be made in money of the United States of America that at the time of payment is legal tender, by wire transfer of immediately available funds

 

2 Mandatory Payments. The Maker agrees to make mandatory payments to the Holder in the event the Maker receives the earlier of net revenues or equity or debt financing as
follows 1) the Maker shall make Mandatory Payments in an amount equaling ten percent (10%) of gross profits (net revenue after cost of sales) received by the Company during each fiscal quarter, as reported by the Company, or 2) the Maker shall make Mandator/ Payments in amount equaling five percent (5%) of any equity or debt financing received by the company Payments shall be made to the Holder within ten (10) days of
the date the Maker is able to produce financial statements, no later than the date upon which the Maker files financial statements with the Securities and Exchange Commission (SEC), or of the date the Maker closes a financing Mandatory payments made shall be applied to reduce the outstanding principal amount of this Note, along with accrued interest, until the Note is paid in full by the Maker, whether paid by Mandatory or Demand Payments

 

3 Interest, interest on this Note shall accrue at the rate of twelve percent (12%) per annum on the unpaid principal balance from the date hereof until the principal sum
has been paid in full Without limiting any of the rights of the holder of this Note under Section 4 of this Note, if any payment of principal or premium thereon is not made when the same shall become due and payable hereunder, a premium shall accrue on the principal amount due at a rate per annum equal to twenty-four percent (24%) per annum from the due date (upon demand) Notwithstanding anything to the contrary contained herein, no payments that are considered interest shall accrue or be payable at a rate in
excess of the maximum amount permitted by law

 

4 Events of Default. If any of the following conditions or events shall occur and be continuing: (a) the Maker shall default in the payment of principal of or interest on
this Note when the same becomes due and payable; (b) the Maker shall admit in writing its inability to pay its debts as such debts become due, (c) the Maker shall make a general assignment for the benefit

 

of creditors, (d) the Maker shall commence a voluntary case under the Federal Bankruptcy Code (as now or hereafter in effect); (e) the Maker shall file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, or adjustment of debts, (f) there shall have been instituted against the Maker any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings for relief under the Federal Bankruptcy Code or any other law relating to bankruptcy, insolvency or adjustment of debts, which are not dismissed within sixty (60) days after such institution, or (g) the Maker shall take any action for the purposes of effecting any of the foregoing, then, and in any such event, the Holder may at any time (unless all defaults shall theretofore have been remedied) at its option, declare this Note to be due
and payable, whereupon this Note shall forthwith mature and become due and payable, together with interest accrued thereon, without presentment, demand, protest or notice, all of which are hereby waived

 

5 No Waiver; Rights and Remedies Cumulative No failure on the part of the holder of this Note to exercise, and no delay in exercising any right hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise by the holder of this Note of any right hereunder preclude any other or further exercise thereof or the exercise of any other right The rights and remedies herein provided are cumulative and not exclusive of any remedies or rights provided by law or by any other agreement between the Maker and the Holder

 

6 Costs and Expenses The Maker shall reimburse the holder of this Note for all costs and expenses incurred by it, and shall pay the reasonable fees and disbursements of
counsel to the holder of this Note, in connection with the enforcement of the holder's rights hereunder, whether or not legal proceedings are initiated.

 

7.      Amendments No amendment, modification or waiver of any provision of this Note nor consent to any departure by the Maker therefrom shall be effective unless the same shall be in writing and signed by the holder of this Note and then such
waiver or consent shall be effective only in the specific instance and for the specific purpose for' which given.

 

8 Governing Law. Jurisdiction and Service of Process This Note shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect
to conflict of laws The Maker hereby irrevocably consents to the jurisdiction of the courts of the State of Delaware and of any federal court located in such State in connection with any action or proceeding arising out of or relating to this Note, any document or instrument delivered pursuant to, in connection with, or simultaneously with, this Note or a breach of this Note or any such document or instrument In any such action or proceeding, the Maker waives personal service of any summons, complaint, or other
process and agrees that service thereof may be made in accordance with Section 10 of this Note Within 30 days after such service, or such other time as may be mutually agreed upon in writing by the attorneys for the parties to such action or proceeding, the Maker shall appear or answer such summons, complaint, or other process Should the Maker so served fail to appear or answer within such 30-day period or such extended period, as the case may be, the Maker shall be deemed in default and judgment may be entered
by the Holder against the Maker as demanded in any summons, complaint, or other process so served

 

9 Successors and Assigns. This Note shall be binding upon the Maker and its successors and permitted assigns and the terms hereof shall inure to the benefit of the Holder
and its successors and assigns, including subsequent holders hereof

 

Signature

	
  
	
BY: BARRY W. HERMAN PRESIDENT 

  

74

  

 

10 Notice Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be deemed to have been received (a) upon hand delivery
(receipt acknowledged) or delivery by telecopy or facsimile (with transmission confirmation report) if delivered on a business day during normal business hours where such notice is to be received, or the first business day following such delivery if delivered other than on a business day during normal business hours where such notice is to be received; or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of
such mailing, whichever first shall occur, to the address set forth above or to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 9 except that such change shall not be effective until actual receipt thereof

 

11 Severability The provisions of this Note are severable, and if any provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall not in any manner affect such provision in any other jurisdiction or any other provision of this Note in any jurisdiction

 

12 Waiver of Notice. The Maker hereby waives presentment, demand for payment, protest, notice of protest and all other demands or notices in connection with the delivery,
acceptance, performance, default or enforcement of this Note

 

13 Set-off. Counterclaim. In the event the holder hereof seeks to enforce its rights under this Note, the Maker waives the right to interpose any set-off or counterclaim
of any nature or description against the holder

 

14 Headings The headings in this Note are solely for the convenience of reference and shall be given no effect in the construction or interpretation of this Note

 

[signature on next page]

 

IN WITNESSETH WHEREOF, the undersigned has duly executed this Note as of the date first above written

 

ENDAVO MEDIA AND COMMUNICATONS< INC

 

By                          

Paul D Hamm President

 

NY\255301..1

  

75

  

	
  
	
 

ENDAVO MEDIA AND COMMUNICATIONS, INC. PROMISSORY NOTE

 

$3,000 

                                                                                               January
18, 2006

 

FOR VALUE RECEIVED, the undersigned, ENDAVO MEDIA AND COMMUNICATIONS, INC, a Delaware corporation with offices at 50West Broadway, Suite 400, Salt Lake City, UT 84101 (the "Maker"), unconditionally promises to pay to the order of SOVCAP EQUITY PARTNERS, LTD , a Bahamas corporation, or its registered assigns (the "Holder"), at its office at
c/o Lion Corporate Securities Ltd , Cumberland House #27, Cumberland Street, P O Box N-10818, Nassau, New Providence, The Bahamas or at such other place as may be designated by the holder hereof in writing, the principal sum of THREE THOUSAND DOLLARS ($3,000), together with interest, as specified herein

 

1 Demand Payments. The Maker agrees to pay the principal of this Note and any accrued interest thereon immediately upon demand from the Holder requesting payment, which
demand may be made at any time after 45 days from the issue date of this Note The Maker shall have the right to prepay this Note in whole at any time or in part from time to time upon ten (10) business days notice All payments by the Maker on account of principal, premium, interest or fees hereunder shall be made in money of the United States of America that at the time of payment is legal tender, by wire transfer of immediately available funds

 

2 Mandatory Payments. The Maker agrees to make mandatory payments to the Holder in the event the Maker receives the earlier of net revenues or financing as follows: 1) the
Maker shall make Mandatory Payments in an amount equaling ten percent (10%) of gross profits (net revenue after cost of sales) received by the Company during each fiscal quarter, as reported by the Company, or 2) the Maker shall make Mandatory Payments in amount equaling five percent (5%) of any equity or debt financing received by the company Payments shall be made to the Holder within ten (10) days of the date the Maker is able to produce financial statements, no later than the date upon which the Maker files
financial statements with the Securities and Exchange Commission (SEC), or of the date the Maker closes a financing Mandatory payments made shall be applied to reduce the outstanding principal amount of this Note, along with accrued interest, until the Note is paid in full by the Maker, whether paid by Mandatory or Demand Payments

 

3 Interest. Interest on this Note shall accrue at the rate of twelve percent (12%) per annum on the unpaid principal balance from the date hereof until the principal sum
has been paid in full Without limiting any of the rights of the holder of this Note under Section 4 of this Note, if any payment of principal or premium thereon is not made when the same shall become due and payable hereunder, a premium shall accrue on the principal amount due at a rate per annum equal to twenty-four percent (24%) per annum from the due date (upon demand) Notwithstanding anything to the contrary contained herein, no payments that are considered interest shall accrue or be payable at a rate in
excess of the maximum amount permitted by law

 

4 Events of Default If any of the following conditions or events shall occur and be continuing (a) the Maker shall default in the payment of principal of or interest on
this Note when the same becomes due and payable, (b) the Maker shall admit in writing its inability to pay its debts as such debts become due, (c) the Maker shall make a general assignment for the benefit

 

1 

NY\25530L1

  

76

  

 

of creditors, (d) the Maker shall commence a voluntary case under the Federal Bankruptcy Code (as now or hereafter in effect), (e) the Maker shall file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, or adjustment of debts, (f) there shall have been instituted against the Maker any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings for relief under the Federal Bankruptcy Code or any other law relating to bankruptcy, insolvency or adjustment of debts, which are not dismissed within sixty (60) days after such institution, or (g) the Maker shall take any action for the purposes of effecting any of the foregoing, then, and in any such event, the Holder may at any time (unless all defaults shall theretofore have been remedied) at its option, declare this Note to be due
and payable, whereupon this Note shall forthwith mature and become due and payable, together with interest accrued thereon, without presentment, demand, protest or notice, all of which are hereby waived

 

5 No Waiver, Rights and Remedies Cumulative No failure on the part of the holder of this Note to exercise, and no delay in exercising any right hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise by the holder of this Note of any right hereunder preclude any other or further exercise thereof or the exercise of any other right The rights and remedies herein provided are cumulative and not exclusive of any remedies or rights provided by law or by any other agreement between the Maker and the Holder

 

6 Costs and Expenses The Maker shall reimburse the holder of this Note for all costs and expenses incurred by it, and shall pay the reasonable fees and disbursements of
counsel to the holder of this Note, in connection with the enforcement of the holder's rights hereunder, whether or not legal proceedings are initiated

 

7,       Amendments No amendment, modification or waiver of any provision of this Note nor consent to any departure by the Maker therefrom shall be effective unless the same shall be in writing and signed by the holder of tins Note and then
such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given

 

8       Governing Law. Jurisdiction and Service of Process This Note shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to conflict of laws. The Maker hereby irrevocably consents to
the jurisdiction of the courts of the State of Delaware and of any federal court located in such State in connection with any action or proceeding arising out of or relating to this Note, any document or instrument delivered pursuant to, in connection with, or simultaneously with, this Note or a breach of this Note or any such document or instrument In any such action or proceeding, the Maker waives personal service of any summons, complaint, or other process and agrees that service thereof may be made in accordance
with Section 10 of this Note Within 30 days after such service, or such other time as may be mutually agreed upon in writing by the attorneys for the parties to such action or proceeding, the Maker shall appear or answer such summons, complaint, or other process Should the Maker so served fail to appear or answer within such 30-day period or such extended period, as the case may be, the Maker shall be deemed in default and judgment may be entered by the Holder against the Maker as demanded in any summons, complaint,
or other process so served

 

9.       Successors and Assigns. This Note shall be binding upon the Maker and its successors and permitted assigns and the terms hereof shall inure to the benefit of the Holder and its successors and assigns, including subsequent holders hereof

2

NY\255301..1

  

77

  

 

10 Notice. Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be deemed to have been received: (a) upon hand delivery
(receipt acknowledged) or delivery by telecopy or facsimile (with transmission confirmation report) if delivered on a business day during normal business hours where such notice is to be received, or the first business day following such delivery if delivered other than on a business day during normal business hours where such notice is to be received, or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of
such mailing, whichever first shall occur, to the address set forth above or to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 9 except that such change shall not be effective until actual receipt thereof

 

11 Severability The provisions of this Note are severable, and if any provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall not in any manner affect such provision in any other jurisdiction or any other provision of this Note in any jurisdiction

 

12 Waiver of Notice. The Maker hereby waives presentment, demand for payment, protest, notice of protest and all other demands or notices in connection with the delivery,
acceptance, performance, default or enforcement of this Note

 

13 Set-off Counterclaim In the event the holder hereof seeks to enforce its rights under this Note, the Maker waives the right to interpose any set-off or counterclaim of
any nature

or description against the holder

 

14 Headings The headings in this Note are solely for the convenience of reference anu Snail be given no effect in the
construction or interpretation of this Note.

 

[signature on next page]

 

IN WITNESSETH WHEREOF, the undersigned has duly executed this Note as of the date first above written

[Missing Graphic Reference]

 

ENDAVO MEDIA AND COMMUNICATOR, INC.

3

NYV255301 1

  

78

  

	
  
	
ENDAVO MEDIA AND COMMUNICATIONS, INC. PROMISSORY NOTE 

 

$5,000                                                                                                        

February 3, 2006

 

FOR VALUE RECEIVED, the undersigned, ENDAVO MEDIA AND COMMUNICATIONS, INC, a Delaware corporation with offices at 50West Broadway, Suite 400, Salt Lake City, UT 84101 (the "Maker"), unconditionally promises to pay to the order of SOVCAP EQUITY PARTNERS, LTD , a Bahamas corporation, or its registered assigns (the "Holder"), at its office at
c/o Lion Corporate Securities Ltd, Cumberland House #27, Cumberland Street, P O Box N-10818, Nassau, New Providence, The Bahamas or at such other place as may be designated by the holder hereof in writing, the principal sum of FIVE THOUSAND DOLLARS ($5,000), together with interest, as specified herein

 

1 Demand Payments. The Maker agrees to nay the principal of this Note and any accrued interest thereon immediately upon demand from the Holder requesting payment, which
demand may be made at any time after 45 days from the issue date of this Note The Maker shall have the right to prepay this Note in whole at any time or in part from time to time upon ten (10) business days notice All payments by the Maker on account of principal, premium, interest or fees hereunder shall be made in money of the United States of America that at the time of payment is legal tender, by wire transfer of immediately available funds

 

2 Mandatory Payments. The Maker agrees to make mandatory payments to the Holder in the event the Maker receives the earlier of net revenues or financing as follows; 1) the
Maker shall make Mandatory Payments in an amount equaling ten percent (10%) of gross profits (net revenue after cost of sales) received by the Company during each fiscal quarter, as reported by the Company, or 2) the Maker shall make Mandatory Payments in amount equaling five percent (5%) of any equity or debt financing received by the company Payments shall be made to the Holder within ten (10) days of the date the Maker is able to produce financial statements, no later than the date upon which the Maker files
financial statements with the Securities and Exchange Commission (SEC), or of the date the Maker closes a financing Mandatory payments made shall be applied to reduce the outstanding principal amount of this Note, along with accrued interest, until the Note is paid in full by the Maker, whether paid by Mandatory or Demand Payments

 

3 Interest. Interest on this Note shall accrue at the rate of twelve percent (12%) per annum on the unpaid principal balance from the date hereof until the principal sum
has been paid in full Without limiting any of the rights of the holder of this Note under Section 4 of this Note, if any payment of principal or premium thereon is not made when the same shall become due and payable hereunder, a premium shall accrue on the principal amount due at a rate per annum equal to twenty-four percent (24%) per annum from the due date (upon demand) Notwithstanding anything to the contrary contained herein, no payments that are considered interest shall accrue or be payable at a rate in
excess of the maximum amount permitted by law

 

4 Events of Default If any of the following conditions or events shall occur and be continuing (a) the Maker shall default in the payment of principal of or interest on
this Note when the same becomes due and payable, (b) the Maker shall admit in writing its inability to pay its debts as such debts become due, (c) the Maker shall make a general assignment for the benefit

 

1 

NYV255301.

  

79

  

 

of creditors, (d) the Maker shall commence a voluntary case under the Federal Bankruptcy Code (as now or hereafter in effect), (e) the Maker shall file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, or adjustment of debts, (f) there shall have been instituted against the Maker any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings for' relief under the Federal Bankruptcy Code or any other law relating to bankruptcy, insolvency or adjustment of debts, which are not dismissed within sixty (60) days after such institution, or (g) the Maker shall take any action for the purposes of effecting any of the foregoing, then, and in any such event, the Holder may at any time (unless all defaults shall theretofore have been remedied) at its option, declare this Note to be due
and payable, whereupon this Note shall forthwith mature and become due and payable, together with interest accrued thereon, without presentment, demand, protest or notice, all of which are hereby waived

 

5 No Waiver; Rights and Remedies Cumulative No failure on the part of the holder of this Note to exercise, and no delay in exercising any right hereunder shall operate as
a

waiver thereof; nor shall any single or partial exercise by the holder of this Note of any right hereunder preclude any other or further exercise thereof or the exercise of any other right The rights and remedies herein provided are cumulative and not exclusive of any remedies or rights provided by law or by any other agreement between the
Maker and the Holder

 

6 Costs and Expenses The Maker shall reimburse the holder of this Note for all costs and expenses incurred by it, and shall pay the reasonable fees and disbursements of
counsel to the holder of this Note, in connection with the enforcement of the holder's rights hereunder, whether or not legal proceedings are initiated.

 

7 Amendments No amendment, modification or waiver of any provision of this Note nor consent to any departure by the Maker therefrom shall be effective unless the same shall
be in writing and signed by the holder of this Note and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given

 

8.       Governing Law. Jurisdiction and Seivice of Process This Note shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to conflict of laws The Maker hereby irrevocably consents to
the jurisdiction of the courts of the State of Delaware and of any federal court located in such State in connection with any action or proceeding arising out of or relating to this Note, any document or instrument delivered pursuant to, in connection with, or simultaneously with, this Note or a breach of this Note or any such document or instrument In any such action or proceeding, the Maker waives personal service of any summons, complaint, or other process and agrees that service thereof may be made in accordance
with Section 10 of this Note Within 30 days after such service, or such other time as may be mutually agreed upon in writing by the attorneys for the parties to such action or proceeding, the Maker shall appear or answer such summons, complaint, or other process Should the Maker so served fail to appear or answer within such 30-day period or such extended period, as the case may be, the Maker shall be deemed in default and judgment may be entered by the Holder against the Maker as demanded in any summons, complaint,
or other process so served

 

9       Successors and Assigns This Note shall be binding upon the Maker and its successors and permitted assigns and the terms hereof shall inure to the benefit of the Holder and its successors and assigns, including subsequent holders hereof.

 

NY\255301..1

  

80

  

 

10 Notice Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be deemed to have been received (a) upon hand delivery
(receipt acknowledged) or delivery by telecopy or facsimile (with transmission confirmation report) if delivered on a business day during normal business hours where such notice is to be received, or the first business day following such delivery if delivered other than on a business day during normal business hours where such notice is to be received, or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of
such mailing, whichever first shall occur, to the address set forth above or to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 9 except that such change shall not be effective until actual receipt thereof

 

11 Severability The provisions of this Note are severable, and if any provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall not in any manner affect such provision in any other jurisdiction or any other provision of this Note in any jurisdiction

 

12 Waiver of Notice. The Maker hereby waives presentment, demand for payment, protest, notice of protest and all other demands or notices in connection with the delivery,
acceptance, performance, default or enforcement of this Note

 

13 Set-off Counterclaim In the event the holder hereof seeks to enforce its rights under this Note, the Maker waives the right to interpose any set-off or counterclaim of
any nature or description against the holder

 

14 Headings The headings in this Note are solely for the convenience of reference and shall be given no effect in the construction or interpretation of this Note

 

[signature on next page]

 

NY\255301.1

  

81

  

 

IN WITNESSETH WHEREOF, the undersigned has duly executed this Note as of the date first above written

[Missing Graphic Reference]

 

ENDAVO MEDIA AND COMMUNICATOR, INC.

A

NY\25530U

  

82

  

ENDAVO MEDIA AND COMMUNICATIONS, INC. PROMISSORY NOTE

 

$50,000                                                                                                               

 February 24, 2006

 

FOR VALUE RECEIVED, the undersigned, ENDAVO MEDIA AND COMMUNICATIONS, INC, a Delaware corporation with offices at 10 Glenlake Parkway, Suite 130, Atlanta, GA 30328 (the "Maker"), unconditionally promises to pay to the order of SOVCAP EQUITY PARTNERS LTD , a Bahamas Limited Partnership, or its registered assigns (the "Holder"), at such place
as may be designated by the holder hereof in writing, the principal sum of FIFTY THOUSAND DOLLARS ($50,000), together with interest, as specified herein

 

1 Demand Payments. The Maker' agrees to pay the principal of this Note and any accrued interest thereon immediately upon demand from the Holder requesting payment, which
demand may be made at any time after 45 days from the issue date of this Note The Maker shall have the right to prepay this Note in whole at any time or in part from time to time upon ten (10) business days notice. All payments by the Maker on account of principal, premium, interest or fees hereunder shall be made in money of the United States of America that at the time of payment is legal tender, by wire transfer of immediately available funds

 

2 Interest. Interest on this Note shall accrue at the rate of twelve percent (12%) per annum on the unpaid principal balance from the date hereof until the principal sum
has been paid in full Without limiting any of the rights of the holder of this Note under Section 4 of this Note, if any payment of principal or premium thereon is not made when the same shall become due and payable hereunder, a premium shall accrue on the principal amount due at a rate per annum equal to twenty-four percent (24%) per annum from the due date (upon demand) Notwithstanding anything to the contrary contained herein, no payments that are considered interest shall accrue or be payable at a rate in
excess of the maximum amount permitted by law

 

3 Events of Default If any of the following conditions or events shall occur and be continuing (a) the Maker shall default in the payment of principal of or interest on
this Note when the same becomes due and payable, (b) the Maker shall admit in writing its inability to pay its debts as such debts become due, (c) the Maker shall make a general assignment for the benefit of creditors, (d) the Maker shall commence a voluntary case under the Federal Bankruptcy Code (as now or hereafter in effect); (e) the Maker shall file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, or adjustment of debts, (f) there shall have been instituted against
the Maker any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings for relief under the Federal Bankruptcy Code or any other law relating to bankruptcy, insolvency or adjustment of debts, which are not dismissed within sixty (60) days after such institution, or (g) the Maker shall take any action for the purposes of effecting any of the foregoing, then, and in any such event, the Holder may at any time (unless all defaults shall theretofore have been remedied) at
its option, declare this Note to be due and payable, whereupon this Note shall forthwith mature and become due and payable, together with interest accrued thereon, without presentment, demand, protest or notice, all of which are hereby waived

 

4 No Waiver, Rights and Remedies Cumulative. No failure on the part of the holder of this Note to exercise, and no delay in exercising any right hereunder shall operate
as a

 

1 

NY\255301,1

  

83

  

 

waiver thereof; nor shall any single or partial exercise by the holder of this Note of any right hereunder preclude any other or further exercise thereof or the exercise of any other right The rights and remedies herein provided are cumulative and not exclusive of any remedies or rights provided by law or by any other agreement between the
Maker and the Holder

 

5 Costs and Expenses The Maker shall reimburse the holder of this Note for all costs and expenses incurred by it, and shall pay the reasonable fees and disbursements of
counsel to the holder of this Note, in connection with the enforcement of the holder's rights hereunder, whether or not legal proceedings are initiated

 

6 Amendments No amendment, modification or waiver of any provision of this Note nor consent to any departure by the Maker therefrom shall be effective unless the same shall
be in writing and signed by the holder of this Note and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given

 

7 Governing Law; Jurisdiction and Service of Process This Note shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect
to conflict of laws The Maker hereby irrevocably consents to the jurisdiction of the courts of the State of Delaware and of any federal court located in such State in connection with any action or proceeding arising out of or relating to this Note, any document or instrument delivered pursuant to, in connection with, or simultaneously with, this Note or a breach of this Note or any such document or instrument In any such action or proceeding, the Maker waives personal service of any summons, complaint, or other
process and agrees that service thereof may be made in accordance with Section 10 of this Note Within 30 days after such service, or such other time as may be mutually agreed upon in writing by the attorneys for the parties to such action or proceeding, the Maker shall appear or answer such summons, complaint, or other process Should the Maker so served fail to appear or answer within such 30-day period or such extended period, as the case may be, the Maker shall be deemed in default and judgment may be entered
by the Holder against the Maker as demanded in any summons, complaint, or other process so served

 

8 Successors and Assigns This Note shall be binding upon the Maker and its successors and permitted assigns and the terms hereof shall inure to the benefit of the Holder
and its successors and assigns, including subsequent holders hereof

 

9 Notice Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be deemed to have been received (a) upon hand delivery
(receipt acknowledged) or delivery by telecopy or facsimile (with transmission confnmation report) if delivered on a business day during normal business hours where such notice is to be

 

day during normal business hours where such notice is to be received, or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever first shall occur, to the address set forth above or to such other address as the party
shall have furnished in writing in accordance with the provisions of this Section 9 except that such change shall not be effective until actual receipt thereof.

 

10 Severability. The provisions of this Note are severable, and if any provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or

 

 

2

NY\255301..1

  

84

  

 

unenforceability shall not in any manner affect such provision in any other jurisdiction or any other provision of this Note in any jurisdiction

 

11 Waiver of Notice The Maker hereby waives presentment, demand for payment, protest, notice of protest and all other demands or notices in connection with the delivery,
acceptance, performance, default or enforcement of this Note

 

12 Set-off Counterclaim In the event the holder hereof seeks to enforce its rights under this Note, the Maker waives the right to interpose any set-off or counterclaim of
any nature or description against the holder

 

13 Headings The headings in this Note are solely for the convenience of reference and shall be given no effect in the construction or interpretation of this Note

 

[signature on next page]

3

NY\255301.1

  

85

  

 

IN WITNESSETH WHEREOF, the undersigned has duly executed this Note as of the date first above written

[Missing Graphic Reference]

 

ENDAVO MEDIA AND COMMUNICATIONS, INC.

  

86

  

 

For Value received, the undersigned does (do) hereby sell, assign, and transfer to:

 

♦:♦ If stock, complete this portion:

 

shares of the                                                  stock
of

 

represented by certificate^) Number(s)_

 

In the name of the undersigned on the books of said company. ❖ If Bonds, complete this portion:

bonds of IMHI (fka Endavo Media)

 

in the principal amount of $ 50,000 Numbers)    February 24, 2006

 

inclusive standing in the name of the undersigned on books of said company. The undersigned does (do) hereby irrevocably constitute and appoint

 

attorney to transfer the said stock or bond(s), as the case may be, on the books of said company, with full power of substitution in the premises.

	
nature 1 \ Date lire v Date

 

  

87

  

 

INTEGRATED MEDIA HOLDINGS, INC. PROMISSORY NOTE

August 1, 2006

 

$32,500 00

 

FOR VALUE RECEIVED, the undersigned, INTEGRATED MEDIA HOLDINGS, INC., a Delaware corporation with offices at 10 Glenlake Parkway, Suite 130, Atlanta, GA 30328 (the "Maker"), unconditionally promises to pay to the order of SovCap Equity Partners, LTD , a Bahamas Limited Partnership (the "Holder"), at such place as may he designated by the
Holder hereof in writing, the principal sum of THIRTY TWO THOUSAND, FIVE HUNDRED DOLLARS ($32,500 00), without interest, except as specified herein

 

1 Payments. The Maker agrees to pay the principal of this Note within ten (10) days following demand from the Holder requesting payment, which demand may be made at any time after the 60th day
following the issue date of this Note The Maker shall have the right to prepay this Note in whole at any time or in part from time to time Any payments, including prepayments, of principal of this Note, whether upon demand, at the option of the Company, upon default or otherwise shall include a repayment premium equal to the product of (a) the Repayment Percentage (as defined below) and (b) the number of thirty (30) day periods (rounded up to the next whole number) (each 30-day period referred to as a "Monthly
Period") that this Note has been outstanding (computed from the date of issuance of this Note to the date of payment) but in no event higher than the maximum amount permitted by law For purposes of this Note, the Repayment Percentage shall mean one and one-half percent (1.5%) of the outstanding principal amount of this Note All payments by the Maker on account of principal, premium, interest or fees hereunder shall be made in money of the United States of America that at the time of payment is legal tender, by
wire transfer of immediately available funds

 

2 Interest. Without limiting any of the rights of the holder of this Note under Section 4 of this Note, if any payment of principal or premium thereon is not made when the
same shall become due and payable hereunder, interest shall accrue thereon at a rate per annum equal to twelve percent (12%) per annum Notwithstanding anything to the contrary contained herein, no payments that are considered interest shall accrue or be payable at a rate in excess of the maximum amount permitted by law

 

3 Use of Proceeds.  The Company agrees use the proceeds from the sale and issuance of the Bridge Notes only for payment of following expenses

 

a   WV Fiber LLC Asset Purchase and related costs b   Working capital

 

4 Conversion.

 

(a)     At any time after the date that is ninety (90) days following the issue date of this Note and from time to time, the Holder may convert all or any portion of this Note, together with the Repayment Percentage, and accrued and unpaid interest and fees due on this Note (the "Conversion Amount") into shares of
common stock of the Maker (the "Common Stock")

 

(b) If the Holder elects to convert less than the full principal amount of this Note, the Maker shall issue a Note in substantially the same form as this Note, except that the principal amount shall be reduced by the principal amount
so converted (exclusive of the redemption premium).

 

(c) The number of shares of Common Stock issuable upon conversion of this Note is equal to the quotient of the Conversion Amount of that portion of the Note being converted divided by the Conversion Price Fractional shares will not be
issued In lieu of any fraction of a share, the Maker shall deliver its check for the dollar amount of the less than full share remainder For purposes of this Note, the "Conversion Price" shall mean $0 25

 

(d) To convert this Note into Common Stock, (the "Conversion Date"), the Holder hereof shall (A) deliver or transmit by facsimile, for receipt on or prior to 11 59 P.M., Eastern Time, on such date, a copy of a fully executed notice of
conversion in the form attached hereto as Exhibit A (the "Conversion Notice") to the Maker or its designated transfer agent for its Common Stock (the "Transfer Agent"), and (B) surrender to a common carrier for delivery to the Maker or the Transfer Agent as soon as practicable following such date, this Note (or an indemnification undertaking with respect to such shares in the case of the loss, theft, or destruction of this Note) and the originally executed Conversion Notice The date the Maker receives the Conversion
Note and this Note is hereinafter the "Conversion Date "

 

 

88

 

(e) Upon receipt by the Maker of a facsimile copy of a Conversion Notice, the Maker shall immediately send, via facsimile, a confirmation of receipt of such Conversion Notice to Holder Upon receipt by the Maker or the Transfer Agent of
the Note to be converted pursuant to a Conversion Notice, together with the originally executed Conversion Notice, the Maker or the Transfer Agent (as applicable) shall, within five (5) business days following the date of receipt, (A) issue and surrender to a common carrier for overnight delivery to the address as specified in the Conversion Notice, a certificate, registered in the name of Holder or its designee, for the number of shares of Common Stock to which Holder shall be entitled or (B) credit the aggregate
number of shares of Common Stock to which such Holder shall be entitled to the Holder's or its designee's balance account at The Depository Trust Company

 

(f) The Person or persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the "Record Holder" or Holder of such shares of Common Stock on the Conversion Date

 

(g) If the Maker shall fail to issue to Holder within five (5) business days following the date of receipt by the Maker or the Transfer Agent of this Note to be converted pursuant to a Conversion Notice, a certificate for the number of
shares of Common Stock to which each Holder is entitled upon Holder's conversion of this Note, in addition to all other available remedies which such Holder may pursue hereunder, the Maker shall pay additional damages to Holder on each day after the fifth (5th) business day following the date of receipt by the Maker or the Transfer Agent an amount equal to 10% of the product of (A) the number of shares of Common Stock not issued to Holder and to which Holder is entitled multiplied by (B) the Closing Bid Price
of the Common Stock on the business day following the date of receipt by the Maker or the Transfer Agent of the Conversion Notice The foregoing notwithstanding, Holder at its option may withdraw a Conversion Notice, and remain a Holder of this Note, if Holder has otherwise complied with this Section 4

 

(h)           If any adjustment to the Conversion Price to be made pursuant to clause (j)

 

of this Section 4 becomes effective immediately after a record date for an event as therein

 

described, and conversion occurs prior to such event but after the record date, the Maker may

 

defer issuing, delivering, or paying to Holder any additional shares of Common Stock or check

 

for any cash remainder required by reason of such adjustment until the occurrence of such event,

 

provided that the Maker delivers to Holder a due bill or other appropriate instrument evidencing

 

the Holders' right to receive such additional shares or check upon the occurrence of the event

 

giving rise to the adjustment

 

(i)           Until such time as this Note has been fully redeemed, the Maker shall

 

reserve out of its authorized but unissued Common Stock enough shares of Common Stock to

 

permit the conversion of the entire Redemption Price and all accrued and unpaid interest due on

 

this Note at any time All shares of Common Stock issued upon conversion of this Note shall be

 

fully paid and nonassessable The Maker covenants that if any shares of Common Stock,

 

required to be reserved for purposes of conversion of this Note hereunder, require registration

 

with or approval of any governmental authority under any federal or state law or listing upon any

 

national securities exchange before such shares may be issued upon conversion, the Maker shall

 

in good faith, as expeditiously as possible, endeavor to cause such shares to be duly registered,

 

approved or listed, as the case may be

 

 

89

 

(j)      The Conversion Price shall be subject to adjustment from time to time as

 

follows.

 

(i) If the Maker at any time subdivides (by any stock split, stock dividend, recapitalization, or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect
immediately prior to such subdivision will be proportionately reduced If the Maker at any time combines (by combination, reverse stock split, or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased

 

(ii) Prior to the consummation of any Organic Change (as defined below), the Maker will make appropriate provision (in form and substance satisfactory to the Holder to insure that Holder will thereafter have the right to acquire and
receive in lieu of, or in addition to, (as the case may be) the shares of Common Stock immediately theretofore acquirable and receivable upon the conversion of this Holder's Note, such shares of stock, securities, or assets as may be issued or payable with respect to, or in exchange for, the number of shares of Common Stock immediately theretofore acquirable and receivable upon the conversion of this Note had such Organic Change not taken place. In any such case, the Maker will make appropriate provision (in
form and substance satisfactory to Holder with respect to such Holder's rights and interests to insure that the provisions of this clause (j) will thereafter be applicable. The Maker will not effect any such consolidation, merger, or sale, unless prior to the consummation thereof the successor entity (if other than the Maker) resulting from consolidation or merger or the entity purchasing such assets assumes, by written instrument (in form and substance satisfactory to Holder), the obligation to deliver to Holder
such shares of stock, securities, or assets as, in accordance with the foregoing provisions, that Holder may be entitled to acquire For purposes of this Agreement, "Organic Change" means any

 

recapitalization, reorganization, reclassification, consolidation, merger, or sale of all or substantially all of the Maker's assets to another Person (as defined below), or other similar transaction which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock,
securities, or assets with respect to or in exchange for Common Stock, and "Person" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, and a government or any department or agency thereof

 

(k)     The Holder shall be entitled to piggyback registration rights with respect to the shares of Common Stock issuable upon conversion of this Note by the Holder The Company agrees to include such shares on the first available registration, including forms S-l, SB-2 or S-3, filed by the Company with Securities
and Exchange Commission

 

5       Events of Default If any of the following conditions or events shall occur and be continuing (a) the Maker shall default in the payment of principal of this Note when the same becomes due and payable, (b) the Maker shall admit in writing
its inability to pay its debts as such debts become due, (c) the Maker shall make a general assignment for the benefit of creditors, (d) the Maker shall commence a voluntary case under the Federal Bankruptcy Code (as now or hereafter in effect), (e) the Maker shall file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, or adjustment of debts, (f) there shall have been instituted against the Maker any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings for relief under the Federal Bankruptcy Code or any other law relating to bankruptcy, insolvency or adjustment of debts, which are not dismissed within sixty (60) days after such institution, or (g) the Maker shall take any action for the purposes of effecting any of the foregoing, then, and in any such event, the Holder may at any time (unless all defaults shall theretofore have been remedied) at its option, declare this Note to be due and payable, whereupon this Note shall forthwith mature
and become due and payable, together with interest accrued thereon, without presentment, demand, protest or notice, all of which are hereby waiver

 

6.        NEGATIVE COVENANTS The provisions of this Section 6 shall remain in effect so long as any of the Bridge Notes shall remain outstanding

 

(a) Restrictions on Transactions with Affiliates The Company will not make any loans or advances to any of its officers, shareholders, or Affiliates, other than expense advances made by the Company to its officers and employees in the
ordinary course of business The Company will not increase the salary of any executive officer, or the remuneration of any director

 

 

90

 

(b) Restrictions on Investments. Other than as permitted by this Agreement, the Company will not purchase or acquire or invest in, or agree to purchase or acquire or invest in the business, property, or assets of, or any securities of,
any other company or business, provided however, that the Company may enter into contracts relating to the expansion of its business and may invest its Excess Cash as defined below in: securities issued or directly and fully guaranteed or insured by the United States government or any agency thereof having maturities of not more than one year from the date of acquisition, certificates of deposit or eurodollar certificates of deposit,
having maturities of not more than one hundred eighty days from the date of acquisition, or one year from the date of acquisition in the case of certificates of

 

deposit or eurodollar certificates of deposit being used to secure the Company's reimbursement obligations under letters of credit (provided that nothing contained herein shall be construed to permit letters of credit not otherwise permitted under this Agreement), commercial paper of any Person that is not a subsidiary or an Affiliate of the
Company, maturing within one hundred eighty days after the date of acquisition, bank loan participations, and money market instruments having maturities of not more than one hundred eighty days from the date of acquisition, or one year from the date of acquisition in the case of money market instruments being used to secure the Company's reimbursement obligations under letters of credit (provided that nothing contained herein shall be construed to permit letters of credit not otherwise permitted under this Agreement),
in all cases of such credit quality as a prudent business person would invest in As used in this Section, "Excess Cash{ XE "Excess Cash"}" shall mean that portion of the proceeds of the Bridge Notes that has not been invested as described in Section 3 hereof

 

(c) Change in Business, Operations The Company will not cause or effect any change in or addition to the primary business of the Company that has not been approved by Purchaser, such that more than 20% of the consolidated net earnings
of the Company are derived from a business other than the business in which the Company was engaged on the date hereof as reflected in the applicable last SEC Document filed prior to the First Closing ("Change in Business { XE "Change in Business"}") The business of the Company and its subsidiaries shall not be conducted in violation of any law, ordinance, or regulation of any governmental entity

 

(d) Exceptions With Consent of Purchasers The Company may seek an exception to any prohibited action under this Section by first, giving written notice to Purchaser
of Bridge Note under this Agreement, along with copies of all documentation requested by any Purchaser relating to such requested exception, and second, in the sole discretion of Purchaser, satisfactorily responding to any Purchaser inquiries about the requested action The Company may undertake any such requested action otherwise prohibited by this Section 6 only after receiving the advance written consent of Purchaser hereunder

 

7 No Waiver, Rights and Remedies Cumulative No failure on the part of the holder of this Note to exercise, and no delay in exercising any right hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise by the holder of this Note of any right hereunder preclude any other or further exercise thereof or the exercise of any other right The rights and remedies herein provided are cumulative and not exclusive of any remedies or rights provided by law or by any other agreement between the Maker and the Holder

 

8 Costs and Expenses The Maker shall reimburse the holder of this Note for all costs and expenses incurred by it, and shall pay the reasonable fees and disbursements of
counsel to the holder of this Note, in connection with the enforcement of the holder's rights hereunder, whether or not legal proceedings are initiated

 

9 Amendments. No amendment, modification or waiver of any provision of this Note nor consent to any departure by the Maker therefrom shall be effective unless the same shall
be in writing and signed by the holder of this Note and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given

 

10 Governing Law, Jurisdiction and Service of Process This Note shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect
to conflict of laws The Maker hereby irrevocably consents to the jurisdiction of the courts of the

 

State of Delaware and of any federal court located in such State in connection with any action or proceeding arising out of or relating to this Note, any document or instrument delivered pursuant to, in connection with, or simultaneously with, this Note or a breach of this Note or any such document or instrument In any such action or proceeding,
the Maker waives personal service of any summons, complaint, or other process and agrees that service thereof may be made in accordance with Section 11 of this Note Within 30 days after such service, or such other time as may be mutually agreed upon in writing by the attorneys for the parties to such action or proceeding, the Maker shall appear or answer such summons, complaint, or other process Should the Maker so served fail to appear or answer within such 30-day period or such extended period, as the case
may be, the Maker shall be deemed in default and judgment may be entered by the Holder against the Maker as demanded in any summons, complaint, or other process so served

 

11 Successors and Assigns This Note shall be binding upon the Maker and its successors and permitted assigns and the terms hereof shall inure to the benefit of the Holder
and its successors and assigns, including subsequent holders hereof

 

 

91

 

12 Notice Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be deemed to have been received: (a) upon hand delivery
(receipt acknowledged) or delivery by telecopy or facsimile (with transmission confirmation report) if delivered on a business day during normal business hours where such notice is to be received, or the first business day following such delivery if delivered other than on a business day during normal business hours where such notice is to be received, or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of
such mailing, whichever first shall occur, to the address set forth above or to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 10 except that such change shall not be effective until actual receipt thereof

 

13 Severability The provisions of this Note are severable, and if any provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall not in any manner affect such provision in any other jurisdiction or any other provision of this Note in any jurisdiction

 

14 Waiver of Notice The Maker hereby waives presentment, demand for payment, protest, notice of protest and all other demands or notices in connection with the delivery,
acceptance, performance, default or enforcement of this Note

 

15 Set-off Counterclaim In the event the holder hereof seeks to enforce its rights under this Note, the Maker waives the right to interpose any set-off or counterclaim of
any nature or description against the holder

 

16 Headings The headings in this Note are solely for the convenience of reference and shall be given no effect in the construction or interpretation of this Note

 

[signature on next page]

[Missing Graphic Reference]

 

IN WITNESSETH WHEREOF, the undersigned has duly executed this Note as of the date first above written

[CORPORATE SEAL]

 

 

92

 

 

EXHIBIT A

 

Reference is made to terms and conditions of the Note in the principal amount of $[] registered

in the name of {NAME OF HOLDER} (the "Note"). In accordance with and pursuant to the terms of the

Note, the undersigned hereby elects to convert $                                                                                                in
principal amount of the Note into

shares of Common Stock, $.001 par value per share (the "Common Stock"), of the Company, by tendering the original Note specified below as of the date specified below

 

Date of Conversion:                                                                                                                                

 

Principal Amount of Note to be converted Redemption Premium Accrued Interest and/or Fees

 

Total Amount of Note to be Converted

 

Please confirm the following information:

 

Conversion Price

 

Number of shares of Common Stock to be issued:

 

Please issue the Common Stock into which the Note is being converted in the following name and to the following address:

 

Issue to:                                                            

 

Facsimile Number

 

Authorization                                                                

 

By                                                  

Title:                                                  

 

Dated                                                  

 

If electronic book entry transfer, complete the following

Account Number:                                                                

Transaction Code Number                                                                

 

 

93

 

 

COMPANY ACKNOWLEDGEMENT TO

CONVERSION NOTICE

 

ACKNOWLEDGED AND AGREED INTEGRATED MEDIA HOLDINGS, INC.

 

By                                                              

Name Title:

 

Date

  

94

  

 

For Value received, the undersigned does (do) hereby sell, assign, and transfer to:

 

❖ If stock, complete this portion:

 

shares of the                                                       stock
of                                                 

 

represented by certificate(s) Number(s)                                                                                                                              

 

In the name of the undersigned on the books of said company.

 

❖ If Bonds, complete this portion:

 

bonds of IMHI

 

in the principal amount of $ 32,500                                                                           Number(s)
August 1, 2006

 

inclusive standing in the name of the undersigned on books of said company.

 

The undersigned does (do) hereby irrevocably constitute and appoint

[Missing Graphic Reference]

 

attorney to transfer the said stock or bond(s), as the case may be, on the books of said company, with full power of substitution in the premises.

 

Date

 

Date 11/4/07

  

95

  

 

INTEGRATED MEDIA HOLDINGS, INC. PROMISSORY NOTE

$12,000. 00                                                                                                      

    November 14, 2006

 

FOR VALUE RECEIVED, the undersigned, INTEGRATED MEDIA HOLDINGS, INC., a Delaware corporation with offices at 10 Glenlake Parkway, Suite 130, Atlanta, GA 30328 (the "Maker"), unconditionally promises to pay to the order of SovCap Equity Partners, LTD , a Bahamas Limited Partnership (the "Holder"), at such place as may be designated by the
Holder hereof in writing, the principal sum of TWELVE THOUSAND DOLLARS ($12,000 00), without interest, except as specified herein

 

1 Payments. The Maker agrees to pay the principal of this Note within ten (10) days following demand from the Holder requesting payment, which demand may be made at any
time after the issue date of this Note The Maker shall have the right to prepay this Note in whole at any time or in part from time to time Any payments, including prepayments, of principal of this Note, whether upon demand, at the option of the Company, upon default or otherwise shall include a repayment premium equal to the product of (a) the Repayment Percentage (as defined below) and (b) the number of thirty (30) day periods (rounded up to the next whole number) (each 30-day period referred to as a "Monthly
Period") that this Note has been outstanding (computed from the date of issuance of this Note to the date of payment) but in no event higher than the maximum amount permitted by law. For purposes of this Note, the Repayment Percentage shall mean one and one-half percent (L.5%) of the outstanding principal amount of this Note All payments by the Maker on account of principal, premium, interest or fees hereunder shall be made in money of the United States of America that at the time of payment is legal tender,
by wire transfer of immediately available funds

 

2 Interest. Without limiting any of the rights of the holder of this Note under Section 4 of this Note, if any payment of principal or premium thereon is not made when the
same shall become due and payable hereunder, interest shall accrue thereon at a rate per annum equal to twelve percent (12%) per annum. Notwithstanding anything to the contrary contained herein, no payments that are considered interest shall accrue or be payable at a rate in excess of the maximum amount permitted by law

 

3 Use of Proceeds. The Company agrees use the proceeds from the sale and issuance of the Bridge Notes only for payment of following expenses:

 

a   WV Fiber LLC Asset Purchase and related costs b   Working capital

 

4 Conversion

 

(a)     At any time after the date that is ninety (90) days following the issue date of this Note and from time to time, the Holder may convert all or any portion of this Note, together with the Repayment Percentage, and accrued and unpaid interest and fees due on this Note (the "Conversion Amount") into shares of
common stock of the Maker (the "Common Stock")

 

(b) If the Holder elects to convert less than the full principal amount of this Note, the Maker shall issue a Note in substantially the same form as this Note, except that the principal amount shall be reduced by the principal amount
so converted (exclusive of the redemption premium)

 

(c) The number of shares of Common Stock issuable upon conversion of this Note is equal to the quotient of the Conversion Amount of that portion of the Note being converted divided by the Conversion Price Fractional shares will not be
issued In lieu of any fraction of a share, the Maker shall deliver its check for the dollar amount of the less than full share remainder For purposes of this Note, the "Conversion Price" shall mean $0 25

 

(d) To convert this Note into Common Stock, (the "Conversion Date"), the Holder hereof shall (A) deliver or transmit by facsimile, for receipt on or prior to 11 59 P.M., Eastern Time, on such date, a copy of a fully executed notice of
conversion in the form attached hereto as Exhibit A (the "Conversion Notice") to the Maker or its designated transfer agent for its Common Stock (the "Transfer Agent"), and (B) surrender to a common carrier for delivery to the Maker or the Transfer Agent as soon as practicable following such date, this Note (or an indemnification undertaking with respect to such shares in the case of the loss, theft, or destruction of this Note) and the originally executed Conversion Notice The date the Maker receives the Conversion
Note and this Note is hereinafter the "Conversion Date "

 

(e) Upon receipt by the Maker of a facsimile copy of a Conversion Notice, the Maker shall immediately send, via facsimile, a confirmation of receipt of such Conversion Notice to Holder Upon receipt by the Maker or the Transfer Agent of
the Note to be converted pursuant to a Conversion Notice, together with the originally executed Conversion Notice, the Maker or the Transfer Agent (as applicable) shall, within five (5) business days following the date of receipt, (A) issue and surrender to a common carrier for overnight delivery to the address as specified in the Conversion Notice, a certificate, registered in the name of Holder or its designee, for the number of shares of Common Stock to which Holder shall be entitled or (B) credit the aggregate
number of shares of Common Stock to which such Holder shall be entitled to the Holder's or its designee's balance account at The Depository Trust Company

 

 

96

 

(f) The Person or persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the "Record Holder" or Holder of such shares of Common Stock on the Conversion Date

 

(g) If the Maker shall fail to issue to Holder within five (5) business days following the date of receipt by the Maker or the Transfer Agent of this Note to be converted pursuant to a Conversion Notice, a certificate for the number of
shares of Common Stock to which each Holder is entitled upon Holder's conversion of this Note, in addition to all other available remedies which such Holder may pursue hereunder, the Maker shall pay additional damages to Holder on each day after the fifth (5th) business day following the date of receipt by the Maker or the Transfer Agent an amount equal to 1 0% of the product of (A) the number of shares of Common Stock not issued to Holder and to which Holder is entitled multiplied by (B) the Closing Bid Price
of the Common Stock on the business day following the date of receipt by the Maker or the Transfer Agent of the Conversion Notice The foregoing notwithstanding, Holder at its option may withdraw a Conversion Notice, and remain a Holder of this Note, if Holder has otherwise complied with this Section 4

 

(h)           If any adjustment to the Conversion Price to be made pursuant to clause (j)

 

of this Section 4 becomes effective immediately after a record date for an event as therein

 

described, and conversion occurs prior to such event but after the record date, the Maker may

 

defer issuing, delivering, or paying to Holder any additional shares of Common Stock or check

 

for any cash remainder required by reason of such adjustment until the occurrence of such event,

 

provided that the Maker delivers to Holder a due bill or other appropriate instrument evidencing

 

the Holders' right to receive such additional shares or check upon the occurrence of the event

 

giving rise to the adjustment

 

(i)           Until such time as this Note has been fully redeemed, the Maker shall

 

reserve out of its authorized but unissued Common Stock enough shares of Common Stock to

 

permit the conversion of the entire Redemption Price and all accrued and unpaid interest due on

 

this Note at any time All shares of Common Stock issued upon conversion of this Note shall be

 

fully paid and nonassessable. The Maker covenants that if any shares of Common Stock,

 

required to be reserved for purposes of conversion of this Note hereunder, require registration

 

with or approval of any governmental authority under any federal or state law or listing upon any

 

national securities exchange before such shares may be issued upon conversion, the Maker shall

 

in good faith, as expeditiously as possible, endeavor to cause such shares to be duly registered,

 

approved or listed, as the case may be

 

(j)      The Conversion Price shall be subject to adjustment from time to time as

 

follows

 

 

97

 

(i) If the Maker at any time subdivides (by any stock split, stock dividend, recapitalization, or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect
immediately prior to such subdivision will be proportionately reduced If the Maker at any time combines (by combination, reverse stock split, or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased

 

(ii) Prior to the consummation of any Organic Change (as defined below), the Maker will make appropriate provision (in form and substance satisfactory to the Holder to insure that Holder will thereafter have the right to acquire and
receive in lieu of, or in addition to, (as the case may be) the shares of Common Stock immediately theretofore acquirable and receivable upon the conversion of this Holder's Note, such shares of stock, securities, or assets as may be issued or payable with respect to, or in exchange for, the number of shares of Common Stock immediately theretofore acquirable and receivable upon the conversion of this Note had such Organic Change not taken place In any such case, the Maker will make appropriate provision (in form
and substance satisfactory to Holder with respect to such Holder's rights and interests to insure that the provisions of this clause (j) will thereafter be applicable The Maker will not effect any such consolidation, merger, or sale, unless prior to the consummation thereof the successor entity (if other than the Maker) resulting from consolidation or merger or the entity purchasing such assets assumes, by written instrument (in form and substance satisfactory to Holder), the obligation to deliver to Holder such
shares of stock, securities, or assets as, in accordance with the foregoing provisions, that Holder may be entitled to acquire For purposes of this Agreement, "Organic Change" means any

 

recapitalization, reorganization, reclassification, consolidation, merger, or sale of all or substantially all of the Maker's assets to another Person (as defined below), or other similar transaction which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock,
securities, or assets with respect to or in exchange for Common Stock, and "Person" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, and a government or any department or agency thereof

 

(k)     The Holder shall be entitled to piggyback registration rights with respect to the shares of Common Stock issuable upon conversion of this Note by the Holder The Company agrees to include such shares on the first available registration, including forms S-l, SB-2 or S-3, filed by the Company with Securities
and Exchange Commission

 

5 Events of Default If any of the following conditions or events shall occur and be continuing (a) the Maker shall default in the payment of principal of this Note when
the same becomes due and payable, (b) the Maker shall admit in writing its inability to pay its debts as such debts become due, (c) the Maker shall make a general assignment for the benefit of creditors, (d) the Maker shall commence a voluntary case under the Federal Bankruptcy Code (as now or hereafter in effect); (e) the Maker shall file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, or adjustment of debts, (f) there shall have been instituted against the Maker any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings for relief under the Federal Bankruptcy Code or any other law relating to bankruptcy, insolvency or adjustment of debts, which are not dismissed within sixty (60) days after such institution; or (g) the Maker shall take any action for the purposes of effecting any of the foregoing, then, and in any such event, the Holder may at any time (unless all defaults shall theretofore have been remedied) at its option,
declare this Note to be due and payable, whereupon this Note shall forthwith mature and become due and payauie, together with interest accrued thereon, without presentment, demand, protest or notice, all of which are hereby waiver.

 

6 NEGATIVE COVENANTS The provisions of this Section 6 shall remain in effect so long as any of the Bridge Notes shall remain outstanding

 

(a) Restrictions on Transactions with Affiliates The Company will not make any loans or advances to any of its officers, shareholders, or Affiliates, other than expense advances made by the Company to its officers and employees in the
ordinary course of business The Company will not increase the salary of any executive officer, or the remuneration of any director

 

(b) Restrictions on Investments Other than as permitted by this Agreement, the Company will not purchase or acquire or invest in, or agree to purchase or acquire or invest in the business, property, or assets of, or any securities of,
any other company or business, provided however, that the Company may enter into contracts relating to the expansion of its business and may invest its Excess Cash as defined below in: securities issued or directly and fully guaranteed or insured by the United States government or any agency thereof having maturities of not more than one year from the date of acquisition, certificates of deposit or eurodollar certificates of deposit,
having maturities of not more than one hundred eighty days from the date of acquisition, or one year from the date of acquisition in the case of certificates of

 

deposit or eurodollar certificates of deposit being used to secure the Company's reimbursement obligations under letters of credit (provided that nothing contained herein shall be construed to permit letters of credit not otherwise permitted under this Agreement), commercial paper of any Person that is not a subsidiary or an Affiliate of the
Company, maturing within one hundred eighty days after the date of acquisition, bank loan participations, and money market instruments having maturities of not more than one hundred eighty days from the date of acquisition, or one year from the date of acquisition in the case of money market instruments being used to secure the Company's reimbursement obligations under letters of credit (provided that nothing contained herein shall be construed to permit letters of credit not otherwise permitted under this Agreement),
in all cases of such credit quality as a prudent business person would invest in As used in this Section, "Excess Cash" shall mean that portion of the proceeds of the Bridge Notes that has not been invested as described in Section 3 hereof

 

(c) Change in Business, Operations The Company will not cause or effect any change in or addition to the primary business of the Company that has not been approved by Purchaser, such that more than 20% of the consolidated net earnings
of the Company are derived from a business other than the business in which the Company was engaged on the date hereof as reflected in the applicable last SEC Document filed prior to the First Closing ("Change in Business") The business of the Company and its subsidiaries shall not be conducted in violation of any law, ordinance, or regulation of any governmental entity

 

(d) Exceptions With Consent of Purchasers The Company may seek an exception to any prohibited action under this Section by first, giving written notice to Purchaser
of Bridge Note under this Agreement, along with copies of all documentation requested by any Purchaser relating to such requested exception, and second, in the sole discretion of Purchaser, satisfactorily responding to any Purchaser inquiries about the requested action The Company may undertake any such requested action otherwise prohibited by this Section 6 only after receiving the advance written consent of Purchaser hereunder

 

98

 

 

7 No Waiver; Rights and Remedies Cumulative No failure on the part of the holder of this Note to exercise, and no delay in exercising any right hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise by the holder of this Note of any right hereunder preclude any other or further exercise thereof or the exercise of any other right The rights and remedies herein provided are cumulative and not exclusive of any remedies or rights provided by law or by any other agreement between the Maker and the Holder

 

8 Costs and Expenses The Maker shall reimburse the holder of this Note for all costs and expenses incurred by it, and shall pay the reasonable fees and disbursements of
counsel to the holder of this Note, in connection with the enforcement of the holder's rights hereunder, whether or not legal proceedings are initiated

 

9 Amendments No amendment, modification or waiver of any provision of this Note nor consent to any departure by the Maker therefrom shall be effective unless the same shall
be in writing and signed by the holder of this Note and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given

 

10 Governing Law. Jurisdiction and Service of Process This Note shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect
to conflict of laws. The Maker hereby irrevocably consents to the jurisdiction of the courts of the

 

State of Delaware and of any federal court located in such State in connection with any action or proceeding arising out of or relating to this Note, any document or instrument delivered pursuant to, in connection with, or simultaneously with, this Note or a breach of this Note or any such document or instrument In any such action or proceeding,
the Maker waives personal service of any summons, complaint, or other process and agrees that service thereof may be made in accordance with Section 11 of this Note Within 30 days after such service, or such other time as may be mutually agreed upon in writing by the attorneys for the parties to such action or proceeding, the Maker shall appear or answer such summons, complaint, or other process Should the Maker so served fail to appear or answer within such 30-day period or such extended period, as the case
may be, the Maker shall be deemed in default and judgment may be entered by the Holder against the Maker as demanded in any summons, complaint, or other process so served

 

11 Successors and Assigns This Note shall be binding upon the Maker and its successors and permitted assigns and the terms hereof shall inure to the benefit of the Holder
and its successors and assigns, including subsequent holders hereof

 

12 Notice. Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be deemed to have been received (a) upon hand delivery
(receipt acknowledged) or delivery by telecopy or facsimile (with transmission confirmation report) if delivered on a business day during normal business hours where such notice is to be received, or the first business day following such delivery if delivered other than on a business day during normal business hours where such notice is to be received; or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of
such mailing, whichever first shall occur, to the address set forth above or to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 10 except that such change shall not be effective until actual

i-u         c

igi/cijji u1cicu1

 

13 Severability The provisions of this Note are severable, and if any provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall not in any manner affect such provision in any other jurisdiction or any other provision of this Note in any jurisdiction

 

14 Waiver of Notice The Maker hereby waives presentment, demand for payment, protest, notice of protest and all other demands or notices in connection with the delivery,
acceptance, performance, default or enforcement of this Note

 

1.5      Set-off Counterclaim In the event the holder hereof seeks to enforce its rights under this Note, the Maker waives the right to interpose any set-off or counterclaim of any nature or description against the holder

 

16      Headings The headings in this Note are solely for the convenience of reference and shall be given no effect in the construction or interpretation of this Note

 

[signature on next page]

 

IN WITNESSETH WHEREOF, the undersigned has duly executed this Note as of the date first above written

[Missing Graphic Reference]

	
  
	
Name: Paul D. Hamm Title President

 

[CORPORATE SEAL]

 

 

 

99

 

 

EXHIBIT A

CONVERSION NOTICE

 

Reference is made to terms and conditions of the Note in the principal amount of $12,000.00 registered in the name of SovCap Equity Partners, Ltd (the "Note") In accordance with and pursuant to the terms of

the Note, the undersigned hereby elects to convert $                                                                                                in
principal amount of the Note into

shares of Common Stock, $ 001 par value per share (the "Common Stock"), of the Company, by tendering the original Note specified below as of the date specified below.

 

Date of Conversion                                                                                                                                

 

Principal Amount of Note to be converted: Redemption Premium Accrued Interest and/or Fees

 

Total Amount of Note to be Converted

 

Please confirm the following information:

 

Conversion Price

 

Number of shares of Common Stock to be issued:

 

Please issue the Common Stock into which the Note is being converted in the following name and to the following address

 

Issue to                                                                

 

Facsimile Number

 

Authorization

 

By                                                  

Title                                                  

 

Dated                                                  

 

If electronic book entry transfer, complete the following

Account Number:                                                                

Transaction Code Number:                                                                

 

 

100

 

 

COMPANY ACKNOWLEDGEMENT TO

CONVERSION NOTICE

 

ACKNOWLEDGED AND AGREED INTEGRATED MEDIA HOLDINGS, INC.

 

By                                                             

Name Title

  

101

  

IRREVOCABLE STOCK OR BOND POWER

 

For Value received, the undersigned does (do) hereby sell, assign, and transfer to:

 

❖    if stock, complete this portion:

 

shares of the                                                       stock
of

 

represented by certificate(s) Number(s)_

 

In the name of the undersigned on the books of said company.

 

If Bonds, complete this portion:

 

    bonds of IMHI (fka, Endavo Media)

 

in the principal amount of $   11,000 Number(s) January 18, 2006; February 3, 2006; January 6, 2006.

 

inclusive standing in the name of the undersigned on books of said company.

 

The undersigned does (do) hereby irrevocably constitute and appoint

 

attorney to transfer the said stock or bond(s), as the case may be, on the books of said company, with full power of substitution in the premises.

 

Signature

	
  
	
BY: BARRY W. HERMAN PRESIDENT 

  

102Exhibit 4.2

 

 

 

AVI
BIOPHARMA, INC.

Issuer

 

AND

 

[                    
]

Trustee

 

 

INDENTURE

 

Dated
as of [           ], [
           ]

 

 

Senior
Debt Securities

 

 

 

 

CROSS-REFERENCE TABLE (1)

 

	
  Section of Trust Indenture Act of 1939, as
  Amended

  	
   

  	
  Indenture

  	
   

  
	
  310(a)

  	
   

  	
  7.10

  	
   

  
	
  310(b)

  	
   

  	
  7.09; 7.11

  	
   

  
	
  310(c)

  	
   

  	
  Inapplicable

  	
   

  
	
  311(a)

  	
   

  	
  7.14(a)

  	
   

  
	
  311(b)

  	
   

  	
  7.14(b)

  	
   

  
	
  311(c)

  	
   

  	
  Inapplicable

  	
   

  
	
  312(a)

  	
   

  	
  5.02(a)

  	
   

  
	
  312(b)

  	
   

  	
  5.02(c)

  	
   

  
	
  312(c)

  	
   

  	
  5.02(c)

  	
   

  
	
  313(a)

  	
   

  	
  5.04(a)

  	
   

  
	
  313(b)

  	
   

  	
  5.04(b)

  	
   

  
	
  313(c)

  	
   

  	
  5.04(a);

  	
   

  
	
   

  	
   

  	
  5.04(b)

  	
   

  
	
  313(d)

  	
   

  	
  5.04(c)

  	
   

  
	
  314(a)

  	
   

  	
  5.03; 4.06

  	
   

  
	
  314(b)

  	
   

  	
  Inapplicable

  	
   

  
	
  314(c)

  	
   

  	
  13.07

  	
   

  
	
  314(d)

  	
   

  	
  Inapplicable

  	
   

  
	
  314(e)

  	
   

  	
  13.07

  	
   

  
	
  314(f)

  	
   

  	
  Inapplicable

  	
   

  
	
  315(a)

  	
   

  	
  7.01(a);

  	
   

  
	
   

  	
   

  	
  7.03

  	
   

  
	
  315(b)

  	
   

  	
  7.02

  	
   

  
	
  315(c)

  	
   

  	
  7.01

  	
   

  
	
  315(d)

  	
   

  	
  7.01(b); 

  	
   

  
	
   

  	
   

  	
  7.01(c)

  	
   

  
	
  315(e)

  	
   

  	
  6.07; 7.07

  	
   

  
	
  316(a)

  	
   

  	
  6.06 8.04

  	
   

  
	
  316(b)

  	
   

  	
  6.04

  	
   

  
	
  316(c)

  	
   

  	
  8.01

  	
   

  
	
  317(a)

  	
   

  	
  6.02

  	
   

  
	
  317(b)

  	
   

  	
  4.03

  	
   

  
	
  318(a)

  	
   

  	
  13.08

  	
   

  

 

(1)                                  This Cross-Reference Table does not
constitute part of the Indenture and shall not have any bearing on the
interpretation of any of its terms or provisions.

 

 

TABLE OF CONTENTS(2)

 

	
  ARTICLE
  I DEFINITIONS AND RULES OF CONSTRUCTION

  	
   

  	
  1

  	
   

  
	
  Section 1.01
  Definitions of Terms

  	
   

  	
  1

  	
   

  
	
  Section 1.02
  Rules of Construction

  	
   

  	
  4

  	
   

  
	
  ARTICLE
  II ISSUE, DESCRIPTION, TERMS, EXECUTION, REGISTRATION AND EXCHANGE OF
  SECURITIES

  	
   

  	
  4

  	
   

  
	
  Section 2.01
  Designation and Terms of Securities

  	
   

  	
  4

  	
   

  
	
  Section 2.02
  Form of Securities and Trustee’s Certificate

  	
   

  	
  6

  	
   

  
	
  Section 2.03
  Denominations: Provisions for Payment

  	
   

  	
  6

  	
   

  
	
  Section 2.04
  Execution and Authentication

  	
   

  	
  7

  	
   

  
	
  Section 2.05
  Registration of Transfer and Exchange

  	
   

  	
  7

  	
   

  
	
  Section 2.06
  Temporary Securities

  	
   

  	
  8

  	
   

  
	
  Section 2.07
  Mutilated, Destroyed, Lost or Stolen Securities

  	
   

  	
  8

  	
   

  
	
  Section 2.08
  Cancellation

  	
   

  	
  9

  	
   

  
	
  Section 2.09
  Benefits of Indenture

  	
   

  	
  9

  	
   

  
	
  Section 2.10
  Authenticating Agent

  	
   

  	
  9

  	
   

  
	
  Section 2.11
  Global Securities

  	
   

  	
  10

  	
   

  
	
  ARTICLE
  III REDEMPTION OF SECURITIES AND SINKING FUND PROVISIONS

  	
   

  	
  11

  	
   

  
	
  Section 3.01
  Redemption

  	
   

  	
  11

  	
   

  
	
  Section 3.02
  Notice of Redemption

  	
   

  	
  11

  	
   

  
	
  Section 3.03
  Payment Upon Redemption

  	
   

  	
  11

  	
   

  
	
  Section 3.04
  Sinking Fund

  	
   

  	
  12

  	
   

  
	
  Section 3.05
  Satisfaction of Sinking Fund Payments with Securities

  	
   

  	
  12

  	
   

  
	
  Section 3.06
  Redemption of Securities for Sinking Fund

  	
   

  	
  12

  	
   

  
	
  ARTICLE
  IV COVENANTS

  	
   

  	
  13

  	
   

  
	
  Section 4.01
  Payment of Principal, Premium and Interest

  	
   

  	
  13

  	
   

  
	
  Section 4.02
  Maintenance of Office or Agency

  	
   

  	
  13

  	
   

  
	
  Section 4.03
  Paying Agents

  	
   

  	
  13

  	
   

  
	
  Section 4.04
  Appointment to Fill Vacancy in Office of Trustee

  	
   

  	
  14

  	
   

  
	
  Section 4.05
  Compliance with Consolidation Provisions

  	
   

  	
  14

  	
   

  
	
  Section 4.06
  Statement by Officers as to Default

  	
   

  	
  14

  	
   

  
	
  ARTICLE
  V SECURITYHOLDERS’ LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE

  	
   

  	
  14

  	
   

  
	
  Section 5.01
  Company to Furnish Trustee Names and Addresses of Securityholders

  	
   

  	
  14

  	
   

  
	
  Section 5.02
  Preservation Of Information; Communications With Securityholders

  	
   

  	
  14

  	
   

  
	
  Section 5.03
  Reports by the Company

  	
   

  	
  15

  	
   

  
	
  Section 5.04
  Reports by the Trustee

  	
   

  	
  15

  	
   

  
	
  ARTICLE
  VI REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT

  	
   

  	
  15

  	
   

  
	
  Section 6.01
  Events of Default

  	
   

  	
  15

  	
   

  
	
  Section 6.02
  Collection of Indebtedness and Suits for Enforcement by Trustee

  	
   

  	
  17

  	
   

  
	
  Section 6.03
  Application of Moneys Collected

  	
   

  	
  18

  	
   

  
	
  Section 6.04
  Limitation on Suits

  	
   

  	
  18

  	
   

  
	
  Section 6.05
  Rights and Remedies Cumulative; Delay or Omission Not Waiver

  	
   

  	
  19

  	
   

  
	
  Section 6.06
  Control by Securityholders

  	
   

  	
  19

  	
   

  
	
  Section 6.07
  Undertaking to Pay Costs

  	
   

  	
  19

  	
   

  
	
  ARTICLE
  VII CONCERNING THE TRUSTEE

  	
   

  	
  20

  	
   

  
	
  Section 7.01
  Certain Duties and Responsibilities of Trustee

  	
   

  	
  20

  	
   

  
	
  Section 7.02
  Notice of Defaults

  	
   

  	
  20

  	
   

  
	
  Section 7.03
  Certain Rights of Trustee

  	
   

  	
  21

  	
   

  
	
  Section 7.04
  Trustee Not Responsible for Recitals or Issuance or Securities

  	
   

  	
  21

  	
   

  
	
  Section 7.05
  May Hold Securities

  	
   

  	
  22

  	
   

  
	
  Section 7.06
  Moneys Held in Trust

  	
   

  	
  22

  	
   

  
	
  Section 7.07
  Compensation and Reimbursement

  	
   

  	
  22

  	
   

  

 

 

	
  Section 7.08
  Reliance on Officers’ Certificate

  	
   

  	
  22

  	
   

  
	
  Section 7.09
  Disqualification; Conflicting Interests

  	
   

  	
  22

  	
   

  
	
  Section 7.10
  Corporate Trustee Required; Eligibility

  	
   

  	
  22

  	
   

  
	
  Section 7.11
  Resignation and Removal; Appointment of Successor

  	
   

  	
  23

  	
   

  
	
  Section 7.12
  Acceptance of Appointment By Successor

  	
   

  	
  24

  	
   

  
	
  Section 7.13
  Merger, Conversion, Consolidation or Succession to Business

  	
   

  	
  25

  	
   

  
	
  Section 7.14
  Preferential Collection of Claims Against the Company

  	
   

  	
  25

  	
   

  
	
  ARTICLE
  VIII CONCERNING THE SECURITYHOLDERS

  	
   

  	
  25

  	
   

  
	
  Section 8.01
  Evidence of Action by Securityholders

  	
   

  	
  25

  	
   

  
	
  Section 8.02
  Proof of Execution by Securityholders

  	
   

  	
  25

  	
   

  
	
  Section 8.03
  Who May be Deemed Owners

  	
   

  	
  26

  	
   

  
	
  Section 8.04
  Certain Securities Owned by Company Disregarded

  	
   

  	
  26

  	
   

  
	
  Section 8.05
  Actions Binding on Future Securityholders

  	
   

  	
  26

  	
   

  
	
  ARTICLE
  IX SUPPLEMENTAL INDENTURES

  	
   

  	
  26

  	
   

  
	
  Section 9.01
  Supplemental Indentures Without the Consent of Securityholders

  	
   

  	
  26

  	
   

  
	
  Section 9.02
  Supplemental Indentures With Consent of Securityholders

  	
   

  	
  27

  	
   

  
	
  Section 9.03
  Effect of Supplemental Indentures

  	
   

  	
  28

  	
   

  
	
  Section 9.04
  Securities Affected by Supplemental Indentures

  	
   

  	
  28

  	
   

  
	
  Section 9.05
  Execution of Supplemental Indentures

  	
   

  	
  28

  	
   

  
	
  ARTICLE
  X SUCCESSOR ENTITY

  	
   

  	
  28

  	
   

  
	
  Section 10.01
  Company May Consolidate, Etc.

  	
   

  	
  28

  	
   

  
	
  Section 10.02
  Successor Entity Substituted

  	
   

  	
  29

  	
   

  
	
  Section 10.03
  Evidence of Consolidation, Etc.

  	
   

  	
  29

  	
   

  
	
  ARTICLE
  XI SATISFACTION AND DISCHARGE; DEFEASANCE

  	
   

  	
  29

  	
   

  
	
  Section 11.01
  Satisfaction and Discharge

  	
   

  	
  29

  	
   

  
	
  Section 11.02
  Defeasance

  	
   

  	
  30

  	
   

  
	
  Section 11.03
  Deposited Moneys to be Held in Trust

  	
   

  	
  31

  	
   

  
	
  Section 11.04
  Payment of Moneys Held by Paying Agents

  	
   

  	
  31

  	
   

  
	
  Section 11.05
  Repayment to Company

  	
   

  	
  31

  	
   

  
	
  ARTICLE
  XII IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS

  	
   

  	
  31

  	
   

  
	
  Section 12.01
  No Recourse

  	
   

  	
  31

  	
   

  
	
  ARTICLE
  XIII MISCELLANEOUS PROVISIONS

  	
   

  	
  32

  	
   

  
	
  Section 13.01
  Effect on Successors and Assigns

  	
   

  	
  32

  	
   

  
	
  Section 13.02
  Actions by Successor

  	
   

  	
  32

  	
   

  
	
  Section 13.03
  Surrender of Company Powers

  	
   

  	
  32

  	
   

  
	
  Section 13.04
  Notices

  	
   

  	
  32

  	
   

  
	
  Section 13.05
  Governing Law

  	
   

  	
  32

  	
   

  
	
  Section 13.06
  Treatment of Securities as Debt

  	
   

  	
  32

  	
   

  
	
  Section 13.07
  Compliance Certificates and Opinions

  	
   

  	
  32

  	
   

  
	
  Section 13.08
  Payments on Business Days

  	
   

  	
  33

  	
   

  
	
  Section 13.09
  Conflict with Trust Indenture Act

  	
   

  	
  33

  	
   

  
	
  Section 13.10
  Counterparts

  	
   

  	
  33

  	
   

  
	
  Section 13.11
  Separability

  	
   

  	
  33

  	
   

  
	
  Section 13.12
  Assignment

  	
   

  	
  33

  	
   

  

 

(2)                                  This Table of Contents does not
constitute part of the Indenture and shall not have any bearing on the
interpretation of any of its terms or provisions.

 

ii

 

INDENTURE, dated as of [
      ], [
           ], between AVI
BioPharma, Inc., an Oregon corporation (the “Company”), and [ ], as
trustee (the “Trustee”):

 

WHEREAS, for its lawful
corporate purposes, the Company has duly authorized the execution and delivery
of this Indenture to provide for the issuance of unsecured debt securities
(hereinafter referred to as the “Securities”), in an unlimited aggregate
principal amount to be issued from time to time in one or more series as in
this Indenture provided, as registered Securities without coupons, to be
authenticated by the certificate of the Trustee;

 

WHEREAS, to provide the
terms and conditions upon which the Securities are to be authenticated, issued
and delivered, the Company has duly authorized the execution of this Indenture;
and

 

WHEREAS, all things
necessary to make this Indenture a valid agreement of the Company, in
accordance with its terms, have been done.

 

NOW, THEREFORE, in
consideration of the premises and the purchase of the Securities by the holders
thereof, it is mutually covenanted and agreed as follows for the equal and
ratable benefit of the holders of Securities or of series thereof.

 

ARTICLE
I

DEFINITIONS AND RULES OF CONSTRUCTION

 

Section 1.01
Definitions of Terms.

 

The terms defined in this
Section (except as in this Indenture otherwise expressly provided or
unless the context otherwise requires) for all purposes of this Indenture and
of any indenture supplemental hereto shall have the respective meanings
specified in this Section and shall include the plural as well as the
singular. All other terms used in this Indenture that are defined in the Trust
Indenture Act of 1939, as amended, or that are by reference in said Trust
Indenture Act defined in the Securities Act of 1933, as amended (except as
herein otherwise expressly provided or unless the context otherwise requires),
shall have the meanings assigned to such terms in said Trust Indenture Act and
in said Securities Act as in force at the date of the execution of this
instrument.

 

“Authenticating Agent” means an
authenticating agent with respect to all or any of the series of Securities
appointed with respect to all or any series of the Securities by the Trustee
pursuant to Section 2.10.

 

“Bankruptcy Law” means Title 11, U.S. Code,
or any similar federal or state law for the relief of debtors.

 

“Board of Directors” means the Board of
Directors of the Company or any duly authorized committee of such Board.

 

“Board Resolution” means a copy of a
resolution certified by the Secretary or an Assistant Secretary of the Company
to have been duly adopted by the Board of Directors and to be in full force and
effect on the date of such certification.

 

“Business Day” means, with respect to any
series of Securities, any day other than a day on which Federal or State
banking institutions in the City of Portland, Oregon, are authorized or
obligated by law, executive order or regulation to close.

 

“Certificate” means a certificate signed by
the principal executive officer, the principal financial officer or the
principal accounting officer of the Company. The Certificate need not comply
with the provisions of Section 13.07.

 

“Company” means AVI BioPharma, Inc., a
corporation duly organized and existing under the laws of the State of Oregon,
and, subject to the provisions of Article X, shall also include its
successors and assigns.

 

“Corporate Trust Office” means the office of
the Trustee at which, at any particular time, its corporate trust business
shall be principally administered, which office at the date hereof is located
at [ ], except that

 

 

whenever a provision
herein refers to an office or agency of the Trustee in the City of Portland,
Oregon, such office is located, at the date hereof, at [ ].

 

“Covenant Defeasance” has the meaning given
in Section 11.02.

 

“Custodian” means any receiver, trustee,
assignee, liquidator or similar official under any Bankruptcy Law.

 

“Default” means any event, act or condition
that with notice or lapse of time, or both, would constitute an Event of
Default.

 

“Defaulted Interest” has the meaning given
in Section 2.03.

 

“Depositary” means, with respect to
Securities of any series, for which the Company shall determine that such
Securities will be issued as a Global Security, The Depository Trust Company,
New York, New York, another clearing agency, or any successor registered as a
clearing agency under the Securities and Exchange Act of 1934, as amended (the “Exchange
Act”), or other applicable statute or regulation, which, in each case, shall be
designated by the Company pursuant to either Section 2.01 or 2.11.

 

“Event of Default” means, with respect to
Securities of a particular series any event specified in Section 6.01,
continued for the period of time, if any, therein designated.

 

“Exchange Act” means the Securities Exchange
Act of 1934, as amended, or any successor statute or statutes thereto.

 

“Global Security” means, with respect to any
series of Securities, a Security executed by the Company and delivered by the
Trustee to the Depositary or pursuant to the Depositary’s instruction, all in
accordance with the Indenture, which shall be registered in the name of the
Depositary or its nominee.

 

“Governmental Obligations” means securities
that are (i) direct obligations (other than obligations subject to
variation in principal repayment) of the United States of America for the
payment of which its full faith and credit is pledged or (ii) obligations
of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America, the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America that, in either case, are not callable or redeemable prior to
maturity at the option of the issuer thereof, and shall also include a
depositary receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act of 1933, as amended) as custodian with respect to any such
Governmental Obligation or a specific payment of principal of or interest on
any such Governmental Obligation held by such custodian for the account of the
holder of such depositary receipt; provided, however, that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depositary receipt from any amount received by
the custodian in respect of the Governmental Obligation or the specific payment
of principal of or interest on the Governmental Obligation evidenced by such
depositary receipt.

 

“Herein”, “hereof”
and “hereunder”, and other words
of similar import, refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.

 

“Indenture” means this instrument as
originally executed or as it may from time to time be supplemented or amended
by one or more indentures supplemental hereto entered into in accordance with
the terms hereof, including, for all purposes of this instrument and any such
supplemental indenture, the provisions of the Trust Indenture Act that are
deemed to be a part of and govern this instrument and any such supplemental
indenture, respectively. The term “Indenture” shall also include the terms of
particular series of Securities established as contemplated by Section 2.01.

 

“Interest Payment Date”, when used with
respect to any installment of interest on a Security of a particular series,
means the date specified in such Security or in a Board Resolution or in an
indenture supplemental hereto with respect to such series as the fixed date on
which an installment of interest with respect to Securities of that series is
due and payable.

 

“Legal Defeasance” has the meaning given in Section 11.02.

 

“Officers’ Certificate” means a certificate
signed by the President or a Vice President and by the Treasurer or an
Assistant Treasurer or the Controller or an Assistant Controller or the
Secretary or an Assistant Secretary of the Company that is delivered to the
Trustee in accordance with the terms hereof.

 

2

 

Each such certificate
shall include the statements provided for in Section 13.07, if and to the
extent required by the provisions thereof.

 

“Opinion of Counsel” means an opinion in
writing of legal counsel, who may be an employee of or counsel for the Company
that is delivered to the Trustee in accordance with the terms hereof. Each such
opinion shall include the statements provided for in Section 13.07, if and
to the extent required by the provisions thereof.

 

“Original Issue Discount Security” means any
Security which provides for an amount less than the principal amount thereof to
be due and payable upon a declaration of acceleration of the maturity thereof
pursuant to Section 6.01.

 

“Outstanding”, when used with reference to
Securities of any series, means, subject to the provisions of Section 8.04,
as of any particular time, all Securities of that series theretofore
authenticated and delivered by the Trustee under this Indenture, except (a) Securities
theretofore canceled by the Trustee or any paying agent, or delivered to the
Trustee or any paying agent for cancellation or that have previously been
canceled; (b) Securities or portions thereof for the payment or redemption
of which moneys or Governmental Obligations in the necessary amount shall have
been deposited in trust with the Trustee or with any paying agent (other than
the Company) or shall have been irrevocably set aside and segregated in trust
by the Company (if the Company shall act as its own paying agent); provided,
however, that if such Securities or portions of such Securities are to be
redeemed prior to the maturity thereof, notice of such redemption shall have
been given as in Article III or provision satisfactory to the Trustee
shall have been made for giving such notice; and (c) Securities in lieu of
or in substitution for which other Securities shall have been authenticated and
delivered pursuant to the terms of Section 2.07; provided, however, that
in determining whether the holders of the requisite principal amount of the
Outstanding Securities have given, made or taken any request, demand, authorization,
direction, notice, consent, waiver or other action hereunder as of any date,
the principal amount of an Original Issue Discount Security which shall be
deemed to be Outstanding shall be the amount of the principal thereof which
would be due and payable as of such date upon acceleration of the maturity
thereof to such date pursuant to Section 6.01.

 

“Person” means any individual, corporation,
limited liability company, partnership, joint-venture, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.

 

“Predecessor Security” of any particular
Security means every previous Security evidencing all or a portion of the same
debt as that evidenced by such particular Security; and, for the purposes of
this definition, any Security authenticated and delivered under Section 2.07
in lieu of a lost, destroyed or stolen Security shall be deemed to evidence the
same debt as the lost, destroyed or stolen Security.

 

“Responsible Officer” when used with respect
to the Trustee means the Chairman of the Board of Directors, the President, any
Vice President, the Secretary, the Treasurer, any trust officer, any corporate
trust officer or any other officer or assistant officer of the Trustee
customarily performing functions similar to those performed by the Persons who
at the time shall be such officers, respectively, or to whom any corporate
trust matter is referred because of his or her knowledge of and familiarity
with the particular subject.

 

“Securities” means the debt Securities
authenticated and delivered under this Indenture.

 

“Securityholder”, “holder of Securities”,
“registered holder”, or other
similar term, means the Person or Persons in whose name or names a particular
Security shall be registered on the books of the Company kept for that purpose
in accordance with the terms of this Indenture.

 

“Security Register” has the meaning given in
Section 2.05.

 

“Security Registrar” has the meaning given
in Section 2.05.

 

“Subsidiary” means, with respect to any
Person, (i) any corporation at least a majority of whose outstanding
Voting Stock shall at the time be owned, directly or indirectly, by such Person
or by one or more of its Subsidiaries or by such Person and one or more of its
Subsidiaries, (ii) any general partnership, limited liability company,
joint venture or similar entity, at least a majority of whose outstanding
partnership or similar interests shall at the time be owned by such Person, or
by one or more of its

 

3

 

Subsidiaries, or by such
Person and one or more of its Subsidiaries and (iii) any limited
partnership of which such Person or any of its Subsidiaries is a general
partner.

 

“Trustee” means [ ], and, subject to the
provisions of Article VII, shall also include its successors and assigns,
and, if at any time there is more than one Person acting in such capacity
hereunder, “Trustee” shall mean each such Person. The term “Trustee” as used
with respect to a particular series of the Securities shall mean the trustee
with respect to that series.

 

“Trust Indenture Act” means the Trust
Indenture Act of 1939, as amended, subject to the provisions of
Sections 9.01, 9.02, and 10.01, as in effect at the date of execution of
this instrument.

 

“Voting Stock”, as applied to stock of any
Person, means shares, interests, participations or other equivalents in the
equity interest (however designated) in such Person having ordinary voting
power for the election of a majority of the directors (or the equivalent) of
such Person, other than shares, interests, participations or other equivalents
having such power only by reason of the occurrence of a contingency.

 

Section 1.02
Rules of Construction.

 

For all purposes of this
Indenture, except as otherwise expressly provided or unless the context
otherwise requires:

 

(1) the terms
defined in this Article have the meanings assigned to them in this Article and
include the plural as well as the singular;

 

(2) all other terms
used herein which are defined in the Trust Indenture Act, either directly or by
reference therein, have the meanings assigned to them therein;

 

(3) all accounting
terms not otherwise defined herein have the meanings assigned to them in
accordance with generally accepted accounting principles in the United States
of America, and, except as otherwise herein expressly provided, the term “generally
accepted accounting principles” with respect to any computation required or
permitted hereunder shall mean such accounting principles as are generally
accepted in the United States of America at the date of such computation; and

 

(4) the words “herein”,
“hereof” and “hereunder” and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision.

 

ARTICLE
II

ISSUE, DESCRIPTION, TERMS, EXECUTION, REGISTRATION AND EXCHANGE OF SECURITIES

 

Section 2.01
Designation and Terms of Securities.

 

The aggregate principal
amount of Securities that may be authenticated and delivered under this
Indenture is unlimited. The Securities may be issued in one or more series up
to the aggregate principal amount of Securities of that series from time to
time authorized by or pursuant to a Board Resolution or pursuant to one or more
indentures supplemental hereto. Prior to the initial issuance of Securities of
any series, there shall be established in or pursuant to a Board Resolution,
and set forth in an Officers’ Certificate, or established in one or more
indentures supplemental hereto:

 

	
   

  	
  (1)

  	
   

  	
  the title of the
  Security of the series (which shall distinguish the Securities of the series
  from all other Securities);

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (2)

  	
   

  	
  any limit upon the
  aggregate principal amount of the Securities of that series that may be
  authenticated and delivered under this Indenture (except for Securities
  authenticated and delivered upon registration of transfer of, or in exchange
  for, or in lieu of, other Securities of that series);

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (3)

  	
   

  	
  the date or dates on
  which the principal of the Securities of the series is payable and the place(s) of
  payment;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (4)

  	
   

  	
  the rate or rates at
  which the Securities of the series shall bear interest or the manner of
  calculation of such rate or rates, if any;

  

 

4

 

	
   

  	
  (5)

  	
   

  	
  the date or dates from
  which such interest shall accrue, the Interest Payment Dates on which such
  interest will be payable or the manner of determination of such Interest
  Payment Dates, the place(s) of payment, and the record date or other
  method for the determination of holders to whom interest is payable on any
  such Interest Payment Dates;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (6)

  	
   

  	
  the right, if any, to
  extend the interest payment periods and the duration of such extension;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (7)

  	
   

  	
  the period or periods
  within which, the price or prices at which and the terms and conditions upon
  which, Securities of the series may be redeemed, in whole or in part, at the
  option of the Company;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (8)

  	
   

  	
  the obligation, if any,
  of the Company to redeem or purchase Securities of the series pursuant to any
  sinking fund or analogous provisions (including payments made in cash in
  satisfaction of future sinking fund obligations) or at the option of a holder
  thereof and the period or periods within which, the price or prices at which,
  and the terms and conditions upon which, Securities of the series shall be
  redeemed or purchased, in whole or in part, pursuant to such obligation;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (9)

  	
   

  	
  the form of the
  Securities of the series including the form of the Trustee’s certificate of
  authentication for such series;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (10)

  	
   

  	
  if other than denominations
  of one thousand U.S. dollars ($1,000) or any integral multiple thereof, the
  denominations in which the Securities of the series shall be issuable;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (11)

  	
   

  	
  any and all other terms
  with respect to such series (which terms shall not be inconsistent with the
  terms of this Indenture, as amended by any supplemental indenture) including
  any terms which may be required by or advisable under United States laws or
  regulations or advisable in connection with the marketing of Securities of
  that series;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (12)

  	
   

  	
  whether the Securities
  are issuable as a Global Security and, in such case, the identity of the
  Depositary for such series;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (13)

  	
   

  	
  whether the Securities
  will be convertible into shares of common stock or other securities of the
  Company and, if so, the terms and conditions upon which such Securities will
  be so convertible, including the conversion price and the conversion period;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (14)

  	
   

  	
  if other than the
  principal amount thereof, the portion of the principal amount of Securities
  of the series which shall be payable upon declaration of acceleration of the
  maturity thereof pursuant to Section 6.01;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (15)

  	
   

  	
  any additional or
  different Events of Default or restrictive covenants provided for with
  respect to the Securities of the series;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (16)

  	
   

  	
  if applicable, that the
  Securities of the series, in whole or in specified part, shall be defeasible
  pursuant to Section 11.02 and, if other than by a Board Resolution, the
  manner in which any election by the Company to defease such Securities shall
  be evidenced; and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (17)

  	
   

  	
  if other than the
  currency of the United States of America, the currency, currencies or
  currency units in which the principal of or any premium or interest on any
  Securities of the series shall be payable and the manner of determining the
  equivalent thereof in the currency of the United States of America for any
  purpose, including for purposes of the definition of “Outstanding” in Section 1.01.

  

 

All Securities of any one
series shall be substantially identical except as to denomination and except as
may otherwise be provided in or pursuant to any such Board Resolution or in any
indentures supplemental hereto. If any of the terms of the series are
established by action taken pursuant to a Board Resolution, a copy of an
appropriate record of such action shall be certified by the Secretary or an
Assistant Secretary of the Company and delivered to the Trustee at or prior to
the delivery of the Officers’ Certificate setting forth the terms of the
series. Securities of any particular series may be issued at various times,
with different dates on which the principal or any installment of principal is
payable, with different rates of interest, if any, or different methods by
which rates of interest may be determined, with different dates on which such
interest may be payable and with different redemption dates. Notwithstanding Section 2.01(2) and
unless 

 

5

 

otherwise expressly
provided with respect to a series of Securities, the aggregate principal amount
of a series of Securities may be increased and additional Securities of such
series may be issued up to the maximum aggregate principal amount authorized
with respect to such series as increased.

 

Section 2.02
Form of Securities and Trustee’s Certificate.

 

The Securities of any
series and the Trustee’s certificate of authentication to be borne by such
Securities shall be substantially of the tenor and purport as set forth in one
or more indentures supplemental hereto or as provided in a Board Resolution and
as set forth in an Officers’ Certificate. The Securities may have such letters,
numbers or other marks of identification or designation and such legends or
endorsements printed, lithographed or engraved thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Indenture,
or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which Securities of that series may be listed, or to conform
to usage.

 

Section 2.03
Denominations: Provisions for Payment.

 

The Securities shall be
issuable as registered Securities and in the denominations of one thousand U.S.
dollars ($1,000) or any integral multiple thereof, subject to Section 2.01(10).
The Securities of a particular series shall bear interest payable on the dates
and at the rates specified or provided for with respect to that series. Except
as contemplated by Section 2.01(17), the principal of and the interest on
the Securities of any series, as well as any premium thereon in case of
redemption thereof prior to maturity, shall be payable in the coin or currency
of the United States of America that at the time is legal tender for public and
private debt, at the office or agency of the Company maintained for that
purpose in the City of Portland, State of Oregon; provided, however, that at
the option of the Company payment of interest may be made by check mailed to
the address of the Person entitled thereto as such address shall appear in the
Security Register. Each Security shall be dated the date of its authentication
by the Trustee. Except as contemplated by Section 2.01(4), interest on the
Securities shall be computed on the basis of a 360-day year composed of twelve
30-day months. Except as contemplated by Section 2.01(5), the interest
installment on any Security that is payable, and is punctually paid or duly
provided for, on any Interest Payment Date for Securities of that series shall
be paid to the Person in whose name said Security (or one or more Predecessor
Securities) is registered at the close of business on the regular record date
for such interest installment. In the event that any Security of a particular
series or portion thereof is called for redemption and the redemption date is
subsequent to a regular record date with respect to any Interest Payment Date
and prior to such Interest Payment Date, interest on such Security will be paid
upon presentation and surrender of such Security as provided in Section 3.03.
Any interest on any Security that is payable, but is not punctually paid or
duly provided for, on any Interest Payment Date for Securities of the same
series (herein called “Defaulted Interest”) shall forthwith cease to be payable
to the registered holder on the relevant regular record date by virtue of
having been such holder; and such Defaulted Interest shall be paid by the
Company, at its election, as provided in clause (1) or clause (2) below:

 

(1) The Company may
make payment of any Defaulted Interest on Securities to the Persons in whose
names such Securities (or their respective Predecessor Securities) are
registered at the close of business on a special record date for the payment of
such Defaulted Interest, which shall be fixed in the following manner: the
Company shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each such Security and the date of the proposed payment,
and at the same time the Company shall deposit with the Trustee an amount of
money equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the Trustee for
such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to such
Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix
a special record date for the payment of such Defaulted Interest which shall
not be more than 15 nor less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee shall promptly
notify the Company of such special record date and, in the name and at the
expense of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the special record date therefor to be mailed, first
class postage prepaid, to each Securityholder at his or her address as it
appears in the Security Register (as hereinafter defined), not less than
10 days prior to such special record date. Notice of the proposed payment
of such Defaulted Interest and the special record date therefor having been
mailed as aforesaid, such Defaulted

 

6

 

Interest shall be paid to
the Persons in whose names such Securities (or their respective Predecessor
Securities) are registered on such special record date.

 

(2) The Company may
make payment of any Defaulted Interest on any Securities in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which such Securities may be listed, and upon such notice as may be required by
such exchange, if, after notice given by the Company to the Trustee of the
proposed payment pursuant to this clause, such manner of payment shall be
deemed practicable by the Trustee. Unless otherwise set forth in a Board
Resolution or one or more indentures supplemental hereto establishing the terms
of any series of Securities pursuant to Section 2.01 hereof, the term “regular
record date” as used in this Section with respect to a series of
Securities with respect to any Interest Payment Date for such series shall mean
either the fifteenth day of the month immediately preceding the month in which
an Interest Payment Date established for such series pursuant to Section 2.01
hereof shall occur, if such Interest Payment Date is the first day of a month,
or the last day of the month immediately preceding the month in which an
Interest Payment Date established for such series pursuant to Section 2.01
hereof shall occur, if such Interest Payment Date is the fifteenth day of a
month, whether or not such date is a Business Day. Subject to the foregoing
provisions of this Section, each Security of a series delivered under this
Indenture upon transfer of or in exchange for or in lieu of any other Security
of such series shall carry the rights to interest accrued and unpaid, and to
accrue, that were carried by such other Security.

 

Section 2.04
Execution and Authentication.

 

The Securities shall be
signed on behalf of the Company by two officers designated in the bylaws or by
the Board of Directors (individually, a “Designated Officer”). Signatures may
be in the form of a manual or facsimile signature. The Company may use the
facsimile signature of any Person who shall have been a Designated Officer,
notwithstanding the fact that at the time the Securities shall be authenticated
and delivered or disposed of such Person shall have ceased to be a Designated
Officer, of the Company. The Securities may contain such notations, legends or
endorsements required by law, stock exchange rule or usage. A Security
shall not be valid until authenticated manually by an authorized signatory of
the Trustee, or by an Authenticating Agent. Such signature shall be conclusive
evidence that the Security so authenticated has been duly authenticated and
delivered hereunder and that the holder is entitled to the benefits of this
Indenture. At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Securities of any series executed by
the Company to the Trustee for authentication, together with a written order of
the Company for the authentication and delivery of such Securities, signed by
its President or any Vice President and its Secretary or any Assistant
Secretary, and the Trustee in accordance with such written order shall
authenticate and deliver such Securities. In authenticating such Securities and
accepting the additional responsibilities under this Indenture in relation to
such Securities, the Trustee shall be entitled to receive, and (subject to Section 7.01)
shall be fully protected in relying upon, an Opinion of Counsel stating that
the form and terms thereof have been established in conformity with the
provisions of this Indenture and that such Securities, when authenticated and
delivered by the Trustee and issued by the Company in the manner and subject to
any conditions specified in such Opinion of Counsel, will constitute valid and
legally binding obligations of the Company enforceable in accordance with their
terms, subject to any Bankruptcy Law or other insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors’ rights and to general equity principles. The Trustee
shall not be required to authenticate such Securities if the issue of such
Securities pursuant to this Indenture will affect the Trustee’s own rights,
duties or immunities under the Securities and this Indenture or otherwise in a
manner that is not reasonably acceptable to the Trustee.

 

Section 2.05
Registration of Transfer and Exchange.

 

(a) Securities of
any series may be exchanged upon presentation thereof at the office or agency
of the Company designated for such purpose in the City of Portland, State of
Oregon, for other Securities of such series of authorized denominations, and
for a like aggregate principal amount, upon payment of a sum sufficient to
cover any tax or other governmental charge in relation thereto, all as provided
in this Section. In respect of any Securities so surrendered for exchange, the
Company shall execute, the Trustee shall authenticate and such office or agency
shall deliver in exchange therefor the

 

7

 

Security or Securities of
the same series that the Securityholder making the exchange shall be entitled
to receive, bearing numbers not contemporaneously outstanding.

 

(b) The Company
shall keep, or cause to be kept, at its office or agency designated for such
purpose in the City of Portland, State of Oregon, or such other location
designated by the Company a register or registers (herein referred to as the “Security
Register”) in which, subject to such reasonable regulations as it may
prescribe, the Company shall register the Securities and the transfers of
Securities as in this Article provided and which at all reasonable times
shall be open for inspection by the Trustee. The registrar for the purpose of
registering Securities and transfer of Securities as herein provided shall be
appointed as authorized by Board Resolution (the “Security Registrar”). Upon
surrender for transfer of any Security at the office or agency of the Company
designated for such purpose, the Company shall execute, the Trustee shall
authenticate and such office or agency shall deliver in the name of the
transferee or transferees a new Security or Securities of the same series as
the Security presented for a like aggregate principal amount. All Securities
presented or surrendered for exchange or registration of transfer, as provided
in this Section, shall be accompanied (if so required by the Company or the
Security Registrar) by a written instrument or instruments of transfer, in form
satisfactory to the Company or the Security Registrar, duly executed by the
registered holder or by such holder’s duly authorized attorney in writing.

 

(c) No service
charge shall be made for any exchange or registration of transfer of
Securities, or issue of new Securities in case of partial redemption of any
series, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge in relation thereto, other than exchanges
pursuant to Section 2.06, Section 3.03(b) and Section 9.04
not involving any transfer. The Company shall not be required (i) to
issue, exchange or register the transfer of any Securities during a period
beginning at the opening of business 15 days before the day of the mailing
of a notice of redemption of less than all the Outstanding Securities of the
same series and ending at the close of business on the day of such mailing, nor
(ii) to register the transfer of or exchange any Securities of any series
or portions thereof called for redemption. The provisions of this Section 2.05
are, with respect to any Global Security, subject to Section 2.11 hereof.

 

Section 2.06
Temporary Securities.

 

Pending the preparation
of definitive Securities of any series, the Company may execute, and the
Trustee shall authenticate and deliver, temporary Securities (printed,
lithographed or typewritten) of any authorized denomination. Such temporary
Securities shall be substantially in the form of the definitive Securities in
lieu of which they are issued, but with such omissions, insertions and
variations as may be appropriate for temporary Securities, all as may be
determined by the Company. Every temporary Security of any series shall be
executed by the Company and be authenticated by the Trustee upon the same
conditions and in substantially the same manner, and with like effect, as the
definitive Securities of such series. Without unnecessary delay the Company
will execute and will furnish definitive Securities of such series and
thereupon any or all temporary Securities of such series may be surrendered in
exchange therefor (without charge to the holders), at the office or agency of
the Company designated for the purpose in the City of Portland, State of Oregon,
and the Trustee shall authenticate and such office or agency shall deliver in
exchange for such temporary Securities an equal aggregate principal amount of
definitive Securities of such series, unless the Company advises the Trustee to
the effect that definitive Securities need not be executed and furnished until
further notice from the Company. Until so exchanged, the temporary Securities
of such series shall be entitled to the same benefits under this Indenture as
definitive Securities of such series authenticated and delivered hereunder.

 

Section 2.07
Mutilated, Destroyed, Lost or Stolen Securities.

 

In case any temporary or
definitive Security shall become mutilated or be destroyed, lost or stolen, the
Company (subject to the next succeeding sentence) shall execute, and upon the
Company’s request the Trustee (subject as aforesaid) shall authenticate and
deliver, a new Security of the same series, bearing a number not
contemporaneously outstanding, in exchange and substitution for the mutilated
Security, or in lieu of and in substitution for the Security so destroyed, lost
or stolen. In every case the applicant for a substituted Security shall furnish
to the Company and the Trustee such security or indemnity as may be required by
them to save each of them harmless, and, in every case of destruction, loss or
theft, the applicant shall also furnish to the Company and the Trustee evidence
to their satisfaction of the destruction, loss or theft of the applicant’s
Security and of the ownership thereof. The Trustee may authenticate any

 

8

 

such substituted Security
and deliver the same upon the written request or authorization of any officer
of the Company. Upon the issuance of any substituted Security, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee) connected therewith. In case
any Security that has matured or is about to mature shall become mutilated or
be destroyed, lost or stolen, the Company may, instead of issuing a substitute
Security, pay or authorize the payment of the same (without surrender thereof
except in the case of a mutilated Security) if the applicant for such payment
shall furnish to the Company and the Trustee such security or indemnity as they
may require to save them harmless, and, in case of destruction, loss or theft,
evidence to the satisfaction of the Company and the Trustee of the destruction,
loss or theft of such Security and of the ownership thereof. Every replacement
Security issued pursuant to the provisions of this Section shall
constitute an additional contractual obligation of the Company whether or not
the mutilated, destroyed, lost or stolen Security shall be found at any time,
or be enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Securities of the
same series duly issued hereunder. All Securities shall be held and owned upon
the express condition that the foregoing provisions are exclusive with respect
to the replacement or payment of mutilated, destroyed, lost or stolen
Securities, and shall preclude (to the extent lawful) any and all other rights
or remedies, notwithstanding any law or statute existing or hereafter enacted
to the contrary with respect to the replacement or payment of negotiable
instruments or other securities without their surrender.

 

Section 2.08
Cancellation.

 

All Securities
surrendered for the purpose of payment, redemption, exchange or registration of
transfer shall, if surrendered to the Company or any paying agent, be delivered
to the Trustee for cancellation, or, if surrendered to the Trustee, shall be
cancelled by it, and no Securities shall be issued in lieu thereof except as
expressly required or permitted by any of the provisions of this Indenture. On
request of the Company at the time of such surrender, the Trustee shall deliver
to the Company canceled Securities held by the Trustee. In the absence of such
request the Trustee may dispose of canceled Securities in accordance with its
standard procedures and deliver a certificate of disposition to the Company. If
the Company shall otherwise acquire any of the Securities, however, such
acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented by such Securities unless and until the same are
delivered to the Trustee for cancellation.

 

Section 2.09
Benefits of Indenture.

 

Nothing in this Indenture
or in the Securities, express or implied, shall give or be construed to give to
any Person, other than the parties hereto and the holders of the Securities any
legal or equitable right, remedy or claim under or in respect of this
Indenture, or under any covenant, condition or provision herein contained; all
such covenants, conditions and provisions being for the sole benefit of the
parties hereto and of the holders of the Securities.

 

Section 2.10
Authenticating Agent.

 

So long as any of the
Securities of any series remain Outstanding there may be an Authenticating
Agent for any or all such series of Securities which the Trustee shall have the
right to appoint. Said Authenticating Agent shall be authorized to act on
behalf of the Trustee to authenticate Securities of such series issued upon
exchange, transfer or partial redemption thereof, and Securities so
authenticated shall be entitled to the benefits of this Indenture and shall be
valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. All references in this Indenture to the authentication of Securities
by the Trustee shall be deemed to include authentication by an Authenticating
Agent for such series. Each Authenticating Agent shall be acceptable to the
Company and shall be a corporation that has a combined capital and surplus, as most
recently reported or determined by it, sufficient under the laws of any
jurisdiction under which it is organized or in which it is doing business to
conduct a trust business, and that is otherwise authorized under such laws to
conduct such business and is subject to supervision or examination by Federal
or State authorities. If at any time any Authenticating Agent shall cease to be
eligible in accordance with these provisions, it shall resign immediately. Any
Authenticating Agent may at any time resign by giving written notice of
resignation to the Trustee and to the Company. The Trustee may at any time (and
upon request by the Company shall) terminate the agency of any Authenticating
Agent by giving written notice of termination to such Authenticating Agent and
to the Company. Upon resignation, termination or cessation

 

9

 

of eligibility of any
Authenticating Agent, the Trustee may appoint an eligible successor
Authenticating Agent acceptable to the Company. Any successor Authenticating
Agent, upon acceptance of its appointment hereunder, shall become vested with
all the rights, powers and duties of its predecessor hereunder as if originally
named as an Authenticating Agent pursuant hereto.

 

Any corporation into
which an Authenticating Agent may be merged or converted or with which it may
be consolidated, or any corporation resulting from any merger, conversion or
consolidation to which such Authenticating Agent shall be a party, or any
corporation succeeding to the corporate agency or corporate trust business of
an Authenticating Agent, shall continue to be an Authenticating Agent, provided
that such corporation shall be otherwise eligible under this Section, without
the execution or filing of any paper or any further act on the part of the
Trustee or the Authenticating Agent.

 

Section 2.11
Global Securities.

 

(a) If the Company
shall establish pursuant to Section 2.01 that the Securities of a
particular series are to be issued as a Global Security, then the Company shall
execute and the Trustee shall, in accordance with Section 2.04,
authenticate and deliver, a Global Security that

 

	
   

  	
  (1)

  	
   

  	
  shall represent, and
  shall be denominated in an amount equal to the aggregate principal amount of,
  all or a portion of the Outstanding Securities of such series,

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (2)

  	
   

  	
  shall be registered in
  the name of the Depositary or its nominee,

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (3)

  	
   

  	
  shall be delivered by
  the Trustee to the Depositary or pursuant to the Depositary’s instruction and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (4)

  	
   

  	
  shall bear a legend
  substantially to the following effect: “Except as otherwise provided in Section 2.11
  of the Indenture, this Security may be transferred, in whole but not in part,
  only to the Depositary, another nominee of the Depositary or to a successor
  Depositary or to a nominee of such successor Depositary.”

  

 

(b) Notwithstanding
the provisions of Section 2.05, the Global Security of a series may be
transferred, in whole but not in part and in the manner provided in Section 2.05,
only to the Depositary for such series, another nominee of the Depositary for
such series, or to a successor Depositary for such series selected or approved
by the Company or to a nominee of such successor Depositary.

 

(c) If at any time
the Depositary for a series of the Securities notifies the Company that it is
unwilling or unable to continue as Depositary for such series or if at any time
the Depositary for such series shall no longer be registered or in good
standing under the Exchange Act, or other applicable statute or regulation, and
a successor Depositary for such series is not appointed by the Company within
90 days after the Company receives such notice or becomes aware of such
condition, as the case may be, this Section 2.11 shall no longer be
applicable to the Securities of such series and the Company will execute, and
subject to Section 2.05, the Trustee will authenticate and deliver the
Securities of such series in definitive registered form without coupons, in
authorized denominations, and in an aggregate principal amount equal to the
principal amount of the Global Security of such series in exchange for such
Global Security. In addition, the Company may at any time determine that the
Securities of any series shall no longer be represented by a Global Security
and that the provisions of this Section 2.11 shall no longer apply to the
Securities of such series. In such event the Company will execute and subject
to Section 2.05, the Trustee, upon receipt of an Officers’ Certificate
evidencing such determination by the Company, will authenticate and deliver the
Securities of such series in definitive registered form without coupons, in
authorized denominations, and in an aggregate principal amount equal to the
principal amount of the Global Security of such series in exchange for such Global
Security. Upon the exchange of the Global Security for such Securities in
definitive registered form without coupons, in authorized denominations, the
Global Security shall be canceled by the Trustee. Such Securities in definitive
registered form issued in exchange for the Global Security pursuant to this Section 2.11(c) shall
be registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect participants
or otherwise, shall instruct the Trustee. The Trustee shall deliver such
Securities to the Depositary for delivery to the Persons in whose names such
Securities are so registered.

 

10

 

ARTICLE III

REDEMPTION OF SECURITIES AND SINKING FUND PROVISIONS

 

Section 3.01
Redemption.

 

The Company may redeem
the Securities of any series issued hereunder on and after the dates and in
accordance with the terms established for such series pursuant to Section 2.01
hereof.

 

Section 3.02
Notice of Redemption.

 

(a) In case the
Company shall desire to exercise such right to redeem all or, as the case may
be, a portion of the Securities of any series in accordance with the right
reserved so to do, the Company shall, or shall cause the Trustee to, give
notice of such redemption to holders of the Securities of such series to be
redeemed by mailing, first class postage prepaid, a notice of such redemption
not less than 30 days and not more than 90 days before the date fixed
for redemption of that series to such holders at their last addresses as they
shall appear upon the Security Register unless a shorter period is specified in
the Securities to be redeemed. Any notice that is mailed in the manner herein
provided shall be conclusively presumed to have been duly given, whether or not
the registered holder receives the notice. In any case, failure duly to give
such notice to the holder of any Security of any series designated for
redemption in whole or in part, or any defect in the notice, shall not affect
the validity of the proceedings for the redemption of any other Securities of
such series or any other series. In the case of any redemption of Securities
prior to the expiration of any restriction on such redemption provided in the
terms of such Securities or elsewhere in this Indenture, the Company shall
furnish the Trustee with an Officers’ Certificate evidencing compliance with
any such restriction. Each such notice of redemption shall specify the date
fixed for redemption and the redemption price at which Securities of that
series are to be redeemed, and shall state that payment of the redemption price
of such Securities to be redeemed will be made at the office or agency of the
Company in the City of Portland, State of Oregon, upon presentation and
surrender of such Securities, that interest accrued to the date fixed for
redemption will be paid as specified in said notice, that from and after said
date interest will cease to accrue, that the redemption is for a sinking fund,
if such is the case, and the CUSIP number of the Securities and state that no
representation is made as to the correctness or accuracy of the CUSIP number,
if any, listed in the notice or printed on the Securities. If less than all the
Securities of a series are to be redeemed, the notice to the holders of
Securities of that series to be redeemed in whole or in part shall specify the
particular Securities to be so redeemed. In case any Security is to be redeemed
in part only, the notice that relates to such Security shall state the portion
of the principal amount thereof to be redeemed, and shall state that on and
after the redemption date, upon surrender of such Security, a new Security or
Securities of such series in principal amount equal to the unredeemed portion
thereof will be issued.

 

(b) If less than all
the Securities of a series are to be redeemed, the Company shall give the
Trustee at least 45 days’ notice (unless a shorter period is satisfactory
to the Trustee) in advance of the date fixed for redemption as to the aggregate
principal amount of Securities of the series to be redeemed, and thereupon the
Trustee shall select in a manner that complies with the requirements, if any,
of any applicable stock exchange or which the Securities are listed and that
the Trustee deems appropriate and fair in its discretion and that may provide
for the selection of a portion or portions (equal to one thousand U.S. dollars
($1,000) or any integral multiple thereof) of the principal amount of such Securities
of a denomination larger than $1,000, the Securities to be redeemed and shall
thereafter promptly notify the Company in writing of the numbers of the
Securities to be redeemed, in whole or in part. The Company may, if and
whenever it shall so elect, by delivery of instructions signed on its behalf by
its President or any Vice President, instruct the Trustee or any paying agent
to call all or any part of the Securities of a particular series for redemption
and to give notice of redemption in the manner set forth in this Section, such
notice to be in the name of the Company or its own name as the Trustee or such
paying agent as it may deem advisable. In any case in which notice of
redemption is to be given by the Trustee or any such paying agent, the Company
shall deliver or cause to be delivered to, or permit to remain with, the
Trustee or such paying agent, as the case may be, such Security Register,
transfer books or other records, or suitable copies or extracts therefrom,
sufficient to enable the Trustee or such paying agent to give any notice by
mail that may be required under the provisions of this Section.

 

Section 3.03
Payment Upon Redemption.

 

(a) If the giving of
notice of redemption shall have been completed as above provided, the
Securities or portions of Securities of the series to be redeemed specified in
such notice shall become due and payable on the date and at the place stated in
such notice at the applicable redemption price, together with interest

 

11

 

accrued to the date fixed
for redemption and interest on such Securities or portions of Securities shall
cease to accrue on and after the date fixed for redemption, unless the Company
shall default in the payment of such redemption price and accrued interest with
respect to any such Security or portion thereof. On presentation and surrender
of such Securities on or after the date fixed for redemption at the place of
payment specified in the notice, said Securities shall be paid and redeemed at
the applicable redemption price for such series, together with interest accrued
thereon to the date fixed for redemption (but if the date fixed for redemption
is an Interest Payment Date, the interest installment payable on such date
shall be payable to the registered holder at the close of business on the
applicable record date pursuant to Section 2.03).

 

(b) Upon
presentation of any Security of such series that is to be redeemed in part
only, the Company shall execute and the Trustee shall authenticate and the
office or agency where the Security is presented shall deliver to the holder
thereof, at the expense of the Company, a new Security of the same series of
authorized denominations in principal amount equal to the unredeemed portion of
the Security so presented.

 

Section 3.04
Sinking Fund.

 

The provisions of
Sections 3.04, 3.05 and 3.06 shall be applicable to any sinking fund for
the retirement of Securities of a series, except as otherwise specified as
contemplated by Section 2.01 for Securities of such series. The minimum
amount of any sinking fund payment provided for by the terms of Securities of
any series is herein referred to as a “mandatory sinking fund payment,” and any
payment in excess of such minimum amount provided for by the terms of
Securities of any series is herein referred to as an “optional sinking fund
payment”. If provided for by the terms of Securities of any series, the cash
amount of any sinking fund payment may be subject to reduction as provided in Section 3.05.
Each sinking fund payment shall be applied to the redemption of Securities of
any series as provided for by the terms of Securities of such series.

 

Section 3.05
Satisfaction of Sinking Fund Payments with Securities.

 

The Company,

 

	
   

  	
  (1)

  	
   

  	
  may deliver Outstanding
  Securities of a series (other than any Securities previously called for
  redemption) and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (2)

  	
   

  	
  may apply as a credit
  Securities of a series that have been redeemed either at the election of the
  Company pursuant to the terms of such Securities or through the application
  of permitted optional sinking fund payments pursuant to the terms of such
  Securities, in each case in satisfaction of all or any part of any sinking
  fund payment with respect to the Securities of such series required to be
  made pursuant to the terms of such Securities as provided for by the terms of
  such series, provided that such Securities have not been previously so
  credited. Such Securities shall be received and credited for such purpose by
  the Trustee at the redemption price specified in such Securities for
  redemption through operation of the sinking fund and the amount of such
  sinking fund payment shall be reduced accordingly.

  

 

Section 3.06
Redemption of Securities for Sinking Fund.

 

Not less than
45 days (unless a shorter period is satisfactory to the Trustee) prior to
each sinking fund payment date for any series of Securities, the Company will
deliver to the Trustee an Officers’ Certificate specifying the amount of the
next ensuing sinking fund payment for that series pursuant to the terms of the
series, the portion thereof, if any, that is to be satisfied by delivering and
crediting Securities of that series pursuant to Section 3.05 and the basis
for such credit and will, together with such Officers’ Certificate, deliver to
the Trustee any Securities to be so delivered. Not less than 30 days
before each such sinking fund payment date the Trustee shall select the
Securities to be redeemed upon such sinking fund payment date in the manner
specified in Section 3.02 and cause notice of the redemption thereof to be
given in the name of and at the expense of the Company in the manner provided
in Section 3.02. Such notice having been duly given, the redemption of
such Securities shall be made upon the terms and in the manner stated in Section 3.03.

 

12

 

ARTICLE
IV

COVENANTS

 

Section 4.01
Payment of Principal, Premium and Interest.

 

The Company will duly and
punctually pay or cause to be paid the principal of (and premium, if any) and
interest on the Securities of each series at the time and place and in the
manner provided herein and established with respect to such Securities.

 

Section 4.02
Maintenance of Office or Agency.

 

So long as any series of
the Securities remain Outstanding, the Company agrees to maintain an office or
agency in the City of Portland, State of Oregon, with respect to each such
series and at such other location or locations as may be designated as provided
in this Section 4.02, where (i) Securities of that series may be
presented for payment, (ii) Securities of that series may be presented as
herein above authorized for registration of transfer and exchange, and (iii) notices
and demands to or upon the Company in respect of the Securities of that series
and this Indenture may be given or served, such designation to continue with
respect to such office or agency until the Company shall, by written notice
signed by its President or a Vice President and delivered to the Trustee,
designate some other office or agency in the City of Portland, State of Oregon
for such purposes or any of them. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, notices and demands may
be made or served at the Corporate Trust Office of the Trustee, and the Company
hereby appoints the Trustee as its agent to receive all such presentations,
notices and demands.

 

The Company may also from
time to time designate one or more other offices or agencies where the
Securities of one or more series may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the City of
Portland, State of Oregon for Securities of any series for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.

 

Section 4.03
Paying Agents.

 

(a) If the Company
shall appoint one or more paying agents for all or any series of the
Securities, other than the Trustee, the Company will cause each such paying
agent to execute and deliver to the Trustee an instrument in which such agent
shall agree with the Trustee, subject to the provisions of this Section:

 

	
   

  	
  (1)

  	
   

  	
  that it will hold all
  sums held by it as such agent for the payment of the principal of (and
  premium, if any) or interest on the Securities of that series (whether such
  sums have been paid to it by the Company or by any other obligor of such
  Securities) in trust for the benefit of the Persons entitled thereto;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (2)

  	
   

  	
  that it will give the
  Trustee notice of any failure by the Company (or by any other obligor of such
  Securities) to make any payment of the principal of (and premium, if any) or
  interest on the Securities of that series when the same shall be due and
  payable;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (3)

  	
   

  	
  that it will, at any time
  during the continuance of any failure referred to in the preceding paragraph
  (a)(2) above, upon the written request of the Trustee, forthwith pay to
  the Trustee all sums so held in trust by such paying agent; and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (4)

  	
   

  	
  that it will perform
  all other duties of paying agent as set forth in this Indenture.

  

 

(b) If the Company
shall act as its own paying agent with respect to any series of the Securities,
it will on or before each due date of the principal of (and premium, if any) or
interest on Securities of that series, set aside, segregate and hold in trust
for the benefit of the Persons entitled thereto a sum sufficient to pay such
principal (and premium, if any) or interest so becoming due on Securities of
that series until such sums shall be paid to such Persons or otherwise disposed
of as herein provided and will promptly notify the Trustee of such action, or
any failure (by it or any other obligor on such Securities) to take such
action. Whenever the Company shall have one or more paying agents for any
series of Securities, it will, prior to each due date of the principal of (and
premium, if any) or interest on any Securities of that series, deposit with the
paying agent a sum sufficient to pay the principal (and premium, if any) or
interest so becoming due, such sum to be held in trust for the benefit of the
Persons entitled to such principal, premium or

 

13

 

interest, and (unless
such paying agent is the Trustee) the Company will promptly notify the Trustee
of this action or failure so to act.

 

(c) Notwithstanding
anything in this Section to the contrary,

 

	
   

  	
  (1)

  	
   

  	
  the agreement to hold
  sums in trust as provided in this Section is subject to the provisions
  of Section 11.05, and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (2)

  	
   

  	
  the Company may at any
  time, for the purpose of obtaining the satisfaction and discharge of this
  Indenture or for any other purpose, pay, or direct any paying agent to pay,
  to the Trustee all sums held in trust by the Company or such paying agent,
  such sums to be held by the Trustee upon the same terms and conditions as
  those upon which such sums were held by the Company or such paying agent;
  and, upon such payment by any paying agent to the Trustee, such paying agent
  shall be released from all further liability with respect to such money.

  

 

Section 4.04
Appointment to Fill Vacancy in Office of Trustee.

 

The Company, whenever
necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in
the manner provided in Section 7.11, a Trustee, so that there shall at all
times be a Trustee hereunder.

 

Section 4.05
Compliance with Consolidation Provisions.

 

The Company will not,
while any of the Securities remain Outstanding, consolidate with or merge into
any other Person, in either case where the Company is not the survivor of such
transaction, or sell, convey, transfer or otherwise dispose of its property as
an entirety or substantially as an entirety to any other Person unless the
provisions of Article X hereof are complied with.

 

Section 4.06
Statement by Officers as to Default.

 

The Company will deliver
to the Trustee, within 90 days after the end of each fiscal year of the
Company, a Certificate, stating whether or not to the best knowledge of the
signer thereof the Company is in default in the performance and observance of
any of the terms, provisions and conditions of this Indenture (without regard
to any period of grace or requirement of notice provided hereunder) and, if the
Company shall be in default, specifying all such defaults and the nature and
status thereof of which such signer may have knowledge.

 

ARTICLE
V

SECURITYHOLDERS’ LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE

 

Section 5.01
Company to Furnish Trustee Names and Addresses of Securityholders.

 

The Company will furnish
or cause to be furnished to the Trustee

 

	
   

  	
  (1)

  	
   

  	
  not more than
  15 days after each regular record date (as defined in Section 2.03)
  a list, in such form as the Trustee may reasonably require, of the names and
  addresses of the holders of each series of Securities as of such regular
  record date, provided that the Company shall not be obligated to furnish or
  cause to furnish such list at any time that the list shall not differ in any
  respect from the most recent list furnished to the Trustee by the Company and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (2)

  	
   

  	
  at such other times as
  the Trustee may request in writing within 30 days after the receipt by
  the Company of any such request, a list of similar form and content as of a
  date not more than 15 days prior to the time such list is furnished;

  

 

provided, however, that,
in either case, no such list need be furnished for any series for which the
Trustee shall be the Security Registrar.

 

Section 5.02
Preservation Of Information; Communications With Securityholders.

 

(a) The Trustee
shall preserve, in as current a form as is reasonably practicable, all
information as to the names and addresses of the holders of Securities
contained in the most recent list furnished to it as provided in Section 5.01
and as to the names and addresses of holders of Securities received by the Trustee
in its capacity as Security Registrar (if acting in such capacity).

 

14

 

(b) The Trustee may
destroy any list furnished to it as provided in Section 5.01 upon receipt
of a new list so furnished.

 

(c) Securityholders
may communicate as provided in Section 312(b) of the Trust Indenture
Act with other Securityholders with respect to their rights under this
Indenture or under the Securities.

 

Section 5.03
Reports by the Company.

 

(a) The Company
covenants and agrees to file with the Trustee, within 15 days after the
Company files the same with the Commission, copies of the annual reports and of
the information, documents and other reports (or copies of such portions of any
of the foregoing as the Commission may from time to time by rules and
regulations prescribe) that the Company may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the
Exchange Act; or, if the Company is not required to file information, documents
or reports pursuant to either of such sections, then to file with the Trustee
and the Commission, in accordance with the rules and regulations
prescribed from time to time by the Commission, such of the supplementary and
periodic information, documents and reports that may be required pursuant to Section 13
of the Exchange Act, in respect of a security listed and registered on a
national securities exchange as may be prescribed from time to time in such rules and
regulations.

 

(b) The Company
covenants and agrees to file with the Trustee and the Commission, in accordance
with the rules and regulations prescribed from to time by the Commission,
such additional information, documents and reports with respect to compliance
by the Company with the conditions and covenants provided for in this Indenture
as may be required from time to time by such rules and regulations.

 

(c) The Company
covenants and agrees to transmit by mail, first class postage prepaid, or
reputable overnight delivery service or electronic method that provides for
evidence of receipt, to the Securityholders, as their names and addresses
appear upon the Security Register, within 30 days after the filing thereof
with the Trustee, such summaries of any information, documents and reports
required to be filed by the Company pursuant to subsections (a) and (b) of
this Section as may be required by rules and regulations prescribed
from time to time by the Commission.

 

Section 5.04
Reports by the Trustee.

 

(a) On or before [ ]
in each year in which any of the Securities are Outstanding, the Trustee shall
transmit by mail, first class postage prepaid, to the Securityholders, as their
names and addresses appear upon the Security Register, a brief report dated as
of the preceding [ ], if and to the extent required under Section 313(a) of
the Trust Indenture Act.

 

(b) The Trustee
shall comply with Section 313(b) and 313(c) of the Trust
Indenture Act.

 

(c) A copy of each
such report shall, at the time of such transmission to Securityholders, be
filed by the Trustee with the Company, with each stock exchange upon which any
Securities are listed (if so listed) and also with the Commission. The Company
agrees to notify the Trustee when any Securities become listed on any stock
exchange.

 

ARTICLE
VI

REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT

 

Section 6.01
Events of Default.

 

(a) Whenever used
herein with respect to Securities of a particular series, “Event of Default”
means any one or more of the following events that has occurred and is
continuing (whatever the reason for such Event of Default and whether it shall
be voluntary or involuntary or be effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):

 

	
   

  	
  (1)

  	
   

  	
  the Company defaults in
  the payment of any installment of interest upon any of the Securities of that
  series, as and when the same shall become due and payable, and continuance of
  such default for a period of 90 days; provided, however, that a valid
  extension of an interest payment period by the Company in accordance with the
  terms of any indenture supplemental hereto shall not constitute a default in
  the payment of interest for this purpose;

  

 

15

 

	
   

  	
  (2)

  	
   

  	
  the Company defaults in
  the payment of the principal of (or premium, if any, on) any of the
  Securities of that series as and when the same shall become due and payable
  whether at maturity, upon redemption, by declaration or otherwise, or in any
  payment required by any sinking or analogous fund established with respect to
  that series; provided, however, that a valid extension of the maturity of
  such Securities in accordance with the terms of any indenture supplemental
  hereto shall not constitute a default in the payment of principal or premium,
  if any;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (3)

  	
   

  	
  the Company fails to
  observe or perform any other of its covenants or agreements with respect to
  that series contained in this Indenture or otherwise established with respect
  to that series of Securities pursuant to Section 2.01 hereof (other than
  a covenant or agreement that has been expressly included in this Indenture
  solely for the benefit of one or more series of Securities other than such
  series) for a period of 90 days after the date on which written notice
  of such failure, requiring the same to be remedied and stating that such
  notice is a “Notice of Default” hereunder, shall have been given to the
  Company by the Trustee, by registered or certified mail, or to the Company
  and the Trustee by the holders of at least 25% in principal amount of the
  Securities of that series at the time Outstanding;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (4)

  	
   

  	
  the Company pursuant to
  or within the meaning of any Bankruptcy Law

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (i)

  	
  commences a voluntary
  case,

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (ii)

  	
  consents to the entry
  of an order for relief against it in an involuntary case,

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (iii)

  	
  consents to the
  appointment of a Custodian of it or for all or substantially all of its
  property or

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (iv)

  	
  Makes a general
  assignment for the benefit of its creditors; or

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (5)

  	
   

  	
  a court of competent
  jurisdiction enters an order under any Bankruptcy Law that

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (i)

  	
  is for relief against
  the Company in an involuntary case,

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (ii)

  	
  appoints a Custodian of
  the Company or for all or substantially all of its property, or

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (iii)

  	
  orders the liquidation
  of the Company, and the order remains unstayed and in effect for
  90 days.

  

 

(b) In each and
every such case, unless the principal of all the Securities of that series
shall have already become due and payable, either the Trustee or the holders of
not less than 25% in aggregate principal amount of the Securities of that
series then Outstanding hereunder, by notice in writing to the Company (and to
the Trustee if given by such Securityholders), may declare the principal of all
the Securities of that series to be due and payable immediately, and upon any
such declaration the same shall become and shall be immediately due and
payable.

 

(c) At any time
after the principal of the Securities of that series shall have been so
declared due and payable, and before any judgment or decree for the payment of
the moneys due shall have been obtained or entered as hereinafter provided, the
holders of a majority in aggregate principal amount of the Securities of that series
then Outstanding hereunder, by written notice to the Company and the Trustee,
may rescind and annul such declaration and its consequences if:

 

	
   

  	
  (1)

  	
   

  	
  the Company has paid or
  deposited with the Trustee a sum sufficient to pay all matured installments
  of interest upon all the Securities of that series and the principal of (and
  premium, if any, on) any and all Securities of that series that shall have
  become due otherwise than by acceleration (with interest upon such principal
  and premium, if any, and, to the extent that such payment is enforceable
  under applicable law, upon overdue installments of interest, at the rate per
  annum expressed in the Securities of that series to the date of such payment
  or deposit) and the amount payable to the Trustee under Section 7.07,
  and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (2)

  	
   

  	
  any and all Events of
  Default under the Indenture with respect to such series, other than the
  nonpayment of principal on Securities of that series that shall not have
  become due by their terms, shall have been remedied or waived as provided in Section 6.06.
  No such rescission 

  

 

16

 

	
   

  	
   

  	
   

  	
  and annulment shall
  extend to or shall affect any subsequent default or impair any right
  consequent thereon.

  

 

(d) In case the
Trustee shall have proceeded to enforce any right with respect to Securities of
that series under this Indenture and such proceedings shall have been
discontinued or abandoned because of such rescission or annulment or for any
other reason or shall have been determined adversely to the Trustee, then and
in every such case, subject to any determination in such proceedings, the
Company, and the Trustee shall be restored respectively to their former
positions and rights hereunder, and all rights, remedies and powers of the
Company and the Trustee shall continue as though no such proceedings had been
taken.

 

Section 6.02
Collection of Indebtedness and Suits for Enforcement by Trustee.

 

(a) The Company
covenants that

 

	
   

  	
  (1)

  	
   

  	
  in case it shall
  default in the payment of any installment of interest on any of the
  Securities of a series, as and when the same shall have become due and
  payable, and such default shall have continued for a period of 90 days,
  or

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (2)

  	
   

  	
  in case it shall
  default in the payment of the principal of (or premium, if any, on) any of
  the Securities of a series when the same shall have become due and payable,
  whether upon maturity of the Securities of a series or upon redemption or
  upon declaration, pursuant to any sinking or analogous fund established with
  respect to that series or otherwise,

  

 

then, upon demand of the
Trustee, the Company will pay to the Trustee, for the benefit of the holders of
the Securities of that series, the whole amount that then shall have been
become due and payable on all such Securities for principal (and premium, if
any) or interest, or both, as the case may be, with interest upon the overdue
principal (and premium, if any) and (to the extent that payment of such
interest is enforceable under applicable law) upon overdue installments of interest
at the rate per annum expressed in the Securities of that series; and, in
addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, and the amount payable to the Trustee under Section 7.07.

 

(b) If the Company
shall fail to pay such amounts forthwith upon such demand, the Trustee, in its
own name and as trustee of an express trust, shall be entitled and empowered to
institute any action or proceedings at law or in equity for the collection of
the sums so due and unpaid, and may prosecute any such action or proceeding to
judgment or final decree, and may enforce any such judgment or final decree
against the Company or other obligor upon the Securities of that series and
collect the moneys adjudged or decreed to be payable in the manner provided by
law out of the property of the Company or other obligor upon the Securities of
that series, wherever situated.

 

(c) In case of any
receivership, insolvency, liquidation, bankruptcy, reorganization,
readjustment, arrangement, composition or judicial proceedings affecting the
Company, or its creditors or property, the Trustee shall have power to
intervene in such proceedings and take any action therein that may be permitted
by the court and shall (except as may be otherwise provided by law) be entitled
to file such proofs of claim and other papers and documents as may be necessary
or advisable in order to have the claims of the Trustee and of the holders of
Securities of such series allowed for the entire amount due and payable by the
Company under the Indenture at the date of institution of such proceedings and
for any additional amount that may become due and payable by the Company after
such date, and to collect and receive any moneys or other property payable or deliverable
on any such claim, and to distribute the same after the deduction of the amount
payable to the Trustee under Section 7.07; and any receiver, assignee or
trustee in bankruptcy or reorganization is hereby authorized by each of the
holders of Securities of such series to make such payments to the Trustee, and,
in the event that the Trustee shall consent to the making of such payments
directly to such Securityholders, to pay to the Trustee any amount due it under
Section 7.07.

 

(d) All rights of
action and of asserting claims under this Indenture, or under any of the terms
established with respect to Securities of that series, may be enforced by the
Trustee without the possession of any of such Securities, or the production
thereof at any trial or other proceeding relative thereto, and any such suit or
proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after
provision for payment to the Trustee of any amounts due under Section 7.07,
be for the ratable benefit of the holders of the Securities of such series. In
case of an

 

17

 

Event of Default
hereunder, the Trustee may in its discretion proceed to protect and enforce the
rights vested in it by this Indenture by such appropriate judicial proceedings
as the Trustee shall deem most effectual to protect and enforce any of such
rights, either at law or in equity or in bankruptcy or otherwise, whether for
the specific enforcement of any covenant or agreement contained in the
Indenture or in aid of the exercise of any power granted in this Indenture, or
to enforce any other legal or equitable right vested in the Trustee by this
Indenture or by law. Nothing contained herein shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities of that series or the rights of any holder
thereof or to authorize the Trustee to vote in respect of the claim of any
Securityholder in any such proceeding.

 

Section 6.03
Application of Moneys Collected.

 

Any moneys collected by
the Trustee pursuant to this Article with respect to a particular series
of Securities shall be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of such moneys on account
of principal (or premium, if any) or interest, upon presentation of the
Securities of that series, and notation thereon of the payment, if only
partially paid, and upon surrender thereof if fully paid:

 

FIRST: To the payment of
costs and expenses of collection and of all amounts payable to the Trustee
under Section 7.07;

 

SECOND: To the payment of
the amounts then due and unpaid upon Securities of such series for principal
(and premium, if any) and interest, in respect of which or for the benefit of
which such money has been collected, ratably, without preference or priority of
any kind, according to the amounts due and payable on such Securities for
principal (and premium, if any) and interest, respectively.

 

Section 6.04
Limitation on Suits.

 

No holder of any Security
of any series shall have any right by virtue or by availing of any provision of
this Indenture to institute any suit, action or proceeding in equity or at law
upon or under or with respect to this Indenture or for the appointment of a
receiver or trustee, or for any other remedy hereunder, unless

 

	
   

  	
  (1)

  	
   

  	
  such holder previously
  shall have given to the Trustee written notice of an Event of Default and of
  the continuance thereof with respect to the Securities of such series
  specifying such Event of Default, as hereinbefore provided;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (2)

  	
   

  	
  the holders of not less
  than 25% in aggregate principal amount of the Securities of such series then
  Outstanding shall have made written request upon the Trustee to institute
  such action, suit or proceeding in its own name as trustee hereunder;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (3)

  	
   

  	
  such holder or holders
  shall have offered to the Trustee such reasonable indemnity as it may require
  against the costs, expenses and liabilities to be incurred therein or
  thereby; and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (4)

  	
   

  	
  the Trustee for
  60 days after its receipt of such notice, request and offer of
  indemnity, shall have failed to institute any such action, suit or proceeding
  and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (5)

  	
   

  	
  during such 60 day
  period, the holders of a majority in principal amount of the Securities of
  that series do not give the Trustee a direction inconsistent with the
  request. Notwithstanding anything contained herein to the contrary, the right
  of any holder of any Security to receive payment of the principal of (and
  premium, if any) and interest on such Security, as therein provided, on the
  respective due dates expressed in such Security (or in the case of
  redemption, on the redemption date), or to institute suit for the enforcement
  of any such payment on or after such respective dates or redemption date,
  shall not be impaired or affected without the consent of such holder and by
  accepting a Security hereunder it is expressly understood, intended and
  covenanted by the taker and holder of every Security of such series with
  every other such taker and holder and the Trustee, that no one or more
  holders of Securities of such series shall have any right in any manner
  whatsoever by virtue or by availing of any provision of this Indenture to
  affect, disturb or prejudice the rights of the holders of any other of such
  Securities, or to obtain or seek to obtain priority over or preference to any
  other such holder, or to enforce any right under this Indenture, except in

  

 

18

 

	
   

  	
   

  	
   

  	
  the manner herein
  provided and for the equal, ratable and common benefit of all holders of
  Securities of such series. For the protection and enforcement of the
  provisions of this Section, each and every Securityholder and the Trustee
  shall be entitled to such relief as can be given either at law or in equity.

  

 

Section 6.05
Rights and Remedies Cumulative; Delay or Omission Not Waiver.

 

(a) Except as
otherwise provided in Section 2.07, all powers and remedies given by this Article to
the Trustee or to the Securityholders shall, to the extent permitted by law, be
deemed cumulative and not exclusive of any other powers and remedies available
to the Trustee or the holders of the Securities, by judicial proceedings or
otherwise, to enforce the performance or observance of the covenants and
agreements contained in this Indenture or otherwise established with respect to
such Securities.

 

(b) No delay or omission
of the Trustee or of any holder of any of the Securities to exercise any right
or power accruing upon any Event of Default occurring and continuing as
aforesaid shall impair any such right or power, or shall be construed to be a
waiver of any such default or on acquiescence therein; and, subject to the
provisions of Section 6.04, every power and remedy given by this Article or
by law to the Trustee or the Securityholders may be exercised from time to
time, and as often as shall be deemed expedient, by the Trustee or by the
Securityholders.

 

Section 6.06
Control by Securityholders.

 

The holders of a majority
in aggregate principal amount of the Securities of any series at the time
Outstanding, determined in accordance with Section 8.01, shall have the right
to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee with respect to such series; provided, however, that such direction
shall not be in conflict with any rule of law or with this Indenture or be
unduly prejudicial to the rights of holders of Securities of any other series
at the time Outstanding determined in accordance with Section 8.01.
Subject to the provisions of Section 7.01, the Trustee shall have the
right to decline to follow any such direction if the Trustee in good faith
shall, by a Responsible Officer or Officers of the Trustee, determine that the
proceeding so directed would involve the Trustee in personal liability. The
holders of a majority in aggregate principal amount of the Securities of any
series at the time Outstanding affected thereby, determined in accordance with Section 8.01,
may on behalf of the holders of all of the Securities of such series waive any
past default in the performance of any of the covenants contained herein or
established pursuant to Section 2.01 with respect to such series and its
consequences, except a default in the payment of the principal of (or premium,
if any) or interest on, any of the Securities of that series as and when the
same shall become due by the terms of such Securities otherwise than by
acceleration (unless such default has been cured and a sum sufficient to pay
all matured installments of interest and principal and any premium has been
deposited with the Trustee (in accordance with Section 6.01(c)) or in
respect of a covenant or provision hereof which under Article IX cannot be
modified or amended without the consent of the holder of each Outstanding
Security affected. Upon any such waiver, the default covered thereby shall be
deemed to be cured for all purposes of this Indenture and the Company, the
Trustee and the holders of the Securities of such series shall be restored to
their former positions and rights hereunder, respectively; but no such waiver
shall extend to any subsequent or other default or impair any right consequent
thereon.

 

Section 6.07
Undertaking to Pay Costs.

 

All parties to this
Indenture agree, and each holder of any Securities by such holder’s acceptance
thereof shall be deemed to have agreed, that any court may in its discretion
require, in any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken or omitted
by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys’ fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Securityholder, or group of
Securityholders, holding more than 25% in aggregate principal amount of the
Outstanding Securities of any series, or to any suit instituted by any
Securityholder for the enforcement of the payment of the principal of (or
premium, if any) or interest on any Security of such series, on or after the
respective due dates expressed in such Security or established pursuant to this
Indenture.

 

19

 

ARTICLE VII

CONCERNING THE TRUSTEE

 

Section 7.01
Certain Duties and Responsibilities of Trustee.

 

(a) The Trustee,
prior to the occurrence of an Event of Default with respect to the Securities
of a series and after the curing of all Events of Default with respect to the
Securities of that series that may have occurred, shall undertake to perform
with respect to the Securities of such series such duties and only such duties
as are specifically set forth in this Indenture, and no implied covenants shall
be read into this Indenture against the Trustee. In case an Event of Default
with respect to the Securities of a series has occurred (that has not been
cured or waived), the Trustee shall exercise with respect to Securities of that
series such of the rights and powers vested in it by this Indenture, and use
the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.

 

(b) No provision of
this Indenture shall be construed to relieve the Trustee from liability for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:

 

	
   

  	
  (1)

  	
   

  	
  prior to the occurrence
  of an Event of Default with respect to the Securities of a series and after
  the curing or waiving of all such Events of Default with respect to that
  series that may have occurred: the duties and obligations of the Trustee
  shall with respect to the Securities of such series be determined solely by
  the express provisions of this Indenture, and the Trustee shall not be liable
  with respect to the Securities of such series except for the performance of
  such duties and obligations as are specifically set forth in this Indenture,
  and no implied covenants or obligations shall be read into this Indenture
  against the Trustee; and in the absence of bad faith on the part of the
  Trustee, the Trustee may with respect to the Securities of such series
  conclusively rely, as to the truth of the statements and the correctness of
  the opinions expressed therein, upon any certificates or opinions furnished
  to the Trustee and conforming to the requirements of this Indenture; but in
  the case of any such certificates or opinions that by any provision hereof
  are specifically required to be furnished to the Trustee, the Trustee shall
  be under a duty to examine the same to determine whether or not they conform
  to the requirement of this Indenture;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (2)

  	
   

  	
  the Trustee shall not
  be liable for any error of judgment made in good faith by a Responsible
  Officer or Responsible Officers of the Trustee, unless it shall be proved
  that the Trustee, was negligent in ascertaining the pertinent facts;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (3)

  	
   

  	
  the Trustee shall not
  be liable with respect to any action taken or omitted to be taken by it in
  good faith in accordance with the direction of the holders of not less than a
  majority in principal amount of the Securities of any series at the time
  Outstanding relating to the time, method and place of conducting any
  proceeding for any remedy available to the Trustee, or exercising any trust
  or power conferred upon the Trustee under this Indenture with respect to the
  Securities of that series; and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (4)

  	
   

  	
  None of the provisions
  contained in this Indenture shall require the Trustee to expend or risk its
  own funds or otherwise incur personal financial liability in the performance
  of any of its duties or in the exercise of any of its rights or powers, if
  there is reasonable ground for believing that the repayment of such funds or
  liability is not reasonably assured to it under the terms of this Indenture
  or adequate indemnity against such risk is not reasonably assured to it.

  

 

Section 7.02
Notice of Defaults.

 

If a Default occurs
hereunder with respect to Securities of any series and is known to a
Responsible Officer of the Trustee, the Trustee shall give the holders of
Securities of such series notice of such Default as and to the extent provided
by the Trust Indenture Act; provided, however, that in the case of any Default
of the character specified in clause (3) of Section 6.01(a) with
respect to Securities of such series, no such notice to holders shall be given
until at least 30 days after the occurrence thereof.

 

20

 

Section 7.03
Certain Rights of Trustee.

 

Except as otherwise
provided in Section 7.01:

 

(a) The Trustee may
rely and shall be protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond, security or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;

 

(b) Any request,
direction, order or demand of the Company mentioned herein shall be
sufficiently evidenced by a Board Resolution or an instrument signed in the
name of the Company, by the President or any Vice President and by the
Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer
thereof (unless other evidence in respect thereof is specifically prescribed herein);

 

(c) The Trustee may
consult with counsel and the written advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection in respect of
any action taken or suffered or omitted hereunder in good faith and in reliance
thereon;

 

(d) The Trustee
shall be under no obligation to exercise any of the rights or powers vested in
it by this Indenture at the request, order or direction of any of the
Securityholders, pursuant to the provisions of this Indenture, unless such
Securityholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities that may be incurred
therein or thereby; nothing contained herein shall, however, relieve the
Trustee of the obligation, upon the occurrence of an Event of Default with
respect to a series of the Securities (that has not been cured or waived) to
exercise with respect to Securities of that series such of the rights and
powers vested in it by this Indenture, and to use the same degree of care and
skill in their exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs;

 

(e) The Trustee
shall not be liable for any action taken or omitted to be taken by it in good
faith and believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Indenture;

 

(f) The Trustee
shall not be bound to make any investigation into the facts or matters stated
in any resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond, security, or other papers or
documents, unless requested in writing so to do by the holders of not less than
a majority in principal amount of the Outstanding Securities of the particular
series affected thereby (determined as provided in Section 8.04);
provided, however, that if the payment within a reasonable time to the Trustee
of the costs, expenses or liabilities likely to be incurred by it in the making
of such investigation is, in the opinion of the Trustee, not reasonably assured
to the Trustee by the security afforded to it by the terms of this Indenture,
the Trustee may require reasonable indemnity against such costs, expenses or
liabilities as a condition to so proceeding. The reasonable expense of every
such examination shall be paid by the Company or, if paid by the Trustee, shall
be repaid by the Company upon demand; and

 

(g) The Trustee may
execute any of the trusts or powers hereunder or perform any duties hereunder
either directly or by or through agents or attorneys and the Trustee shall not
be responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder.

 

Section 7.04
Trustee Not Responsible for Recitals or Issuance or Securities.

 

(a) The recitals
contained herein and in the Securities shall be taken as the statements of the
Company, and the Trustee assumes no responsibility for the correctness of the
same.

 

(b) The Trustee
makes no representations as to the validity or sufficiency of this Indenture or
of the Securities.

 

(c) The Trustee
shall not be accountable for the use or application by the Company of any of
the Securities or of the proceeds of such Securities, or for the use or
application of any moneys paid over by the Trustee in accordance with any
provision of this Indenture or established pursuant to Section 2.01, or
for the use or application of any moneys received by any paying agent other
than the Trustee.

 

21

 

Section 7.05
May Hold Securities.

 

The Trustee or any paying
agent or Security Registrar, in its individual or any other capacity, may
become the owner or pledgee of Securities with the same rights it would have if
it were not Trustee, paying agent or Security Registrar.

 

Section 7.06
Moneys Held in Trust.

 

Subject to the provisions
of Section 11.05, all moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the extent
required by law. The Trustee shall be under no liability for interest on any
moneys received by it hereunder except such as it may agree with the Company to
pay thereon.

 

Section 7.07
Compensation and Reimbursement.

 

(a) The Company
covenants and agrees to pay to the Trustee, and the Trustee shall be entitled
to, such reasonable compensation (which shall not be limited by any provision
of law in regard to the compensation of a trustee of an express trust), as the
Company, and the Trustee may from time to time agree in writing, for all
services rendered by it in the execution of the trusts hereby created and in
the exercise and performance of any of the powers and duties hereunder of the
Trustee, and, except as otherwise expressly provided herein, the Company will
pay or reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Indenture (including the reasonable compensation
and the expenses and disbursements of its counsel and of all Persons not
regularly in its employ) except any such expense, disbursement or advance as
may arise from its negligence or bad faith. The Company also covenants to
indemnify the Trustee (and its officers, agents, directors and employees) for,
and to hold it harmless against, any loss, liability or expense incurred
without negligence or bad faith on the part of the Trustee and arising out of
or in connection with the acceptance or administration of this trust, including
the costs and expenses of defending itself against any claim of liability in
the premises.

 

(b) The obligations
of the Company under this Section to compensate and indemnify the Trustee
and to pay or reimburse the Trustee for expenses, disbursements and advances
shall constitute additional indebtedness hereunder. Such additional
indebtedness shall be secured by a lien prior to that of the Securities upon
all property and funds held or collected by the Trustee as such, except funds
held in trust for the benefit of the holders of particular Securities.

 

Section 7.08
Reliance on Officers’ Certificate.

 

Except as otherwise
provided in Section 7.01, whenever in the administration of the provisions
of this Indenture the Trustee shall deem it necessary or desirable that a
matter be proved or established prior to taking or suffering or omitting to
take any action hereunder, such matter (unless other evidence in respect
thereof be herein specifically prescribed) may, in the absence of negligence or
bad faith on the part of the Trustee, be deemed to be conclusively proved and
established by an Officers’ Certificate delivered to the Trustee and such
certificate, in the absence of negligence or bad faith on the part of the
Trustee, shall be full warrant to the Trustee for any action taken, suffered or
omitted to be taken by it under the provisions of this Indenture upon the faith
thereof.

 

Section 7.09
Disqualification; Conflicting Interests.

 

If the Trustee has or shall
acquire any “conflicting interest” within the meaning of Section 310(b) of
the Trust Indenture Act, the Trustee and the Company shall in all respects
comply with the provisions of Section 310(b) of the Trust Indenture
Act, subject to the penultimate paragraph thereof.

 

Section 7.10
Corporate Trustee Required; Eligibility.

 

There shall at all times
be a Trustee with respect to the Securities issued hereunder which shall at all
times be a corporation organized and doing business under the laws of the United
States of America or any State or Territory thereof or of the District of
Columbia, or a corporation or other Person permitted to act as trustee by the
Commission, authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least 100 million U.S. dollars
($100,000,000), and subject to supervision or examination by Federal, State,
Territorial, or District of Columbia authority. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid

 

22

 

supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. The
Company may not, nor may any Person directly or indirectly controlling,
controlled by, or under common control with the Company, serve as Trustee. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, the Trustee shall resign immediately in the manner
and with the effect specified in Section 7.11.

 

Section 7.11
Resignation and Removal; Appointment of Successor.

 

(a) The Trustee or
any successor hereafter appointed, may at any time resign with respect to the
Securities of one or more series by giving written notice thereof to the
Company and by transmitting notice of resignation by mail, first class postage
prepaid, to the Securityholders of such series, as their names and addresses
appear upon the Security Register. Upon receiving such notice of resignation,
the Company shall promptly appoint a successor trustee with respect to
Securities of such series by written instrument, in duplicate, executed by
order of the Board of Directors, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the successor trustee. If no
successor trustee shall have been so appointed and have accepted appointment
within 30 days after the mailing of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee with respect to Securities of such series,
or any Securityholder of that series who has been a bona fide holder of a
Security or Securities for at least six months may on behalf of himself and all
others similarly situated, petition any such court for the appointment of a
successor trustee. Such court may thereupon after such notice, if any, as it
may deem proper and prescribe, appoint a successor trustee.

 

(b) In case at any
time any one of the following shall occur:

 

	
   

  	
  (1)

  	
   

  	
  the Trustee shall fail
  to comply with the provisions of Section 7.09 after written request therefor
  by the Company or by any Securityholder who has been a bona fide holder of a
  Security or Securities for at least six months; or

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (2)

  	
   

  	
  the Trustee shall cease
  to be eligible in accordance with the provisions of Section 7.10 and
  shall fail to resign after written request therefor by the Company or by any
  such Securityholder; or

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (3)

  	
   

  	
  the Trustee shall
  become incapable of acting, or shall be adjudged a bankrupt or insolvent, or
  commence a voluntary bankruptcy proceeding, or a receiver of the Trustee or
  of its property shall be appointed or consented to, or any public officer
  shall take charge or control of the Trustee or of its property or affairs for
  the purpose of rehabilitation, conservation or liquidation, then, in any such
  case, the Company may remove the Trustee with respect to all Securities and
  appoint a successor trustee by written instrument, in duplicate, executed by
  order of the Board of Directors, one copy of which instrument shall be
  delivered to the Trustee so removed and one copy to the successor trustee,
  or, unless, in the case of a failure to comply with Section 7.09, the
  Trustee’s duty to resign is stayed as provided in the penultimate paragraph
  of Section 310(b) of the Trust Indenture Act, any Securityholder
  who has been a bona fide holder of a Security or Securities for at least six
  months may, on behalf of that holder and all others similarly situated,
  petition any court of competent jurisdiction for the removal of the Trustee
  and the appointment of a successor trustee. Such court may thereupon after
  such notice, if any, as it may deem proper and prescribe, remove the Trustee
  and appoint a successor trustee.

  

 

(c) The holders of a
majority in aggregate principal amount of the Securities of any series at the
time Outstanding may at any time remove the Trustee with respect to such series
by so notifying the Trustee and the Company and may appoint a successor Trustee
for such series with the consent of the Company.

 

(d) Any resignation
or removal of the Trustee and appointment of a successor trustee with respect
to the Securities of a series pursuant to any of the provisions of this Section shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 7.12.

 

(e) Any successor
trustee appointed pursuant to this Section may be appointed with respect
to the Securities of one or more series or all of such series, and at any time
there shall be only one Trustee with respect to the Securities of any
particular series.

 

23

 

Section 7.12
Acceptance of Appointment By Successor.

 

(a) In case of the
appointment hereunder of a successor trustee with respect to all Securities,
every such successor trustee so appointed shall execute, acknowledge and
deliver to the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor trustee, without any further act,
deed or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on the request of the Company or the
successor trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor trustee all
the rights, powers, and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor trustee all property and money held by
such retiring Trustee hereunder.

 

(b) In case of the
appointment hereunder of a successor trustee with respect to the Securities of
one or more (but not all) series, the Company, the retiring Trustee and each
successor trustee with respect to the Securities of one or more series shall
execute and deliver an indenture supplemental hereto wherein each successor
trustee shall accept such appointment and which

 

	
   

  	
  (1)

  	
   

  	
  shall contain such
  provisions as shall be necessary or desirable to transfer and confirm to, and
  to vest in, each successor trustee all the rights, powers, trusts and duties
  of the retiring Trustee with respect to the Securities of that or those
  series to which the appointment of such successor trustee relates,

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (2)

  	
   

  	
  shall contain such
  provisions as shall be deemed necessary or desirable to confirm that all the
  rights, powers, trusts and duties of the retiring Trustee with respect to the
  Securities of that or those series as to which the retiring Trustee is not
  retiring shall continue to be vested in the retiring Trustee, and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (3)

  	
   

  	
  shall add to or change
  any of the provisions of this Indenture as shall be necessary to provide for
  or facilitate the administration of the trusts hereunder by more than one
  Trustee, it being understood that nothing herein or in such supplemental
  indenture shall constitute such Trustees co-trustees of the same trust, that
  each such Trustee shall be trustee of a trust or trusts hereunder separate
  and apart from any trust or trusts hereunder administered by any other such
  Trustee and that no Trustee shall be responsible for any act or failure to
  act on the part of any other Trustee hereunder; and upon the execution and
  delivery of such supplemental indenture the resignation or removal of the
  retiring Trustee shall become effective to the extent provided therein, such
  retiring Trustee shall with respect to the Securities of that or those series
  to which the appointment of such successor trustee relates have no further
  responsibility for the exercise of rights and powers or for the performance
  of the duties and obligations vested in the Trustee under this Indenture, and
  each such successor trustee, without any further act, deed or conveyance,
  shall become vested with all the rights, powers, trusts and duties of the
  retiring Trustee with respect to the Securities of that or those series to
  which the appointment of such successor trustee relates; but, on request of
  the Company or any successor trustee, such retiring Trustee shall duly
  assign, transfer and deliver to such successor trustee, to the extent
  contemplated by such supplemental indenture, the property and money held by
  such retiring Trustee hereunder with respect to the Securities of that or
  those series to which the appointment of such successor trustee relates.

  

 

(c) Upon request of
any such successor trustee, the Company shall execute any and all instruments
for more fully and certainly vesting in and confirming to such successor
trustee all such rights, powers and trusts referred to in paragraph (a) or
(b) of this Section, as the case may be.

 

(d) No successor
trustee shall accept its appointment unless at the time of such acceptance such
successor trustee shall be qualified and eligible under this Article.

 

(e) Upon acceptance
of appointment by a successor trustee as provided in this Section, the Company
shall transmit notice of the succession of such trustee hereunder by mail,
first class postage prepaid, to the Securityholders, as their names and
addresses appear upon the Security Register. If the Company fails to transmit
such notice within ten days after acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be transmitted at the
expense of the Company.

 

24

 

Section 7.13
Merger, Conversion, Consolidation or Succession to Business.

 

Any corporation into
which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided that such corporation shall be
qualified under the provisions of Section 7.09 and eligible under the
provisions of Section 7.10, without the execution or filing of any paper or
any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.

 

Section 7.14
Preferential Collection of Claims Against the Company.

 

The Trustee shall comply
with Section 311(a) of the Trust Indenture Act, excluding any
creditor relationship described in Section 311(b) of the Trust
Indenture Act. A Trustee who has resigned or been removed shall be subject to Section 311(a) of
the Trust Indenture Act to the extent included therein.

 

ARTICLE
VIII

CONCERNING THE SECURITYHOLDERS

 

Section 8.01
Evidence of Action by Securityholders.

 

Whenever in this
Indenture it is provided that the holders of a majority or specified percentage
in aggregate principal amount of the Securities of a particular series may take
any action (including the making of any demand or request, the giving of any
notice, consent or waiver or the taking of any other action), the fact that at
the time of taking any such action the holders of such majority or specified
percentage of that series have joined therein may be evidenced by any
instrument or any number of instruments of similar tenor executed by such
holders of Securities of that series in Person or by agent or proxy appointed
in writing. If the Company shall solicit from the Securityholders of any series
any request, demand, authorization, direction, notice, consent, waiver or other
action, the Company may, at its option, as evidenced by an Officers’
Certificate, fix in advance a record date for such series for the determination
of Securityholders entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other action, but the Company shall have
no obligation to do so. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other action may be given
before or after the record date, but only the Securityholders of record at the
close of business on the record date shall be deemed to be Securityholders for
the purposes of determining whether Securityholders of the requisite proportion
of Outstanding Securities of that series have authorized or agreed or consented
to such request, demand, authorization, direction, notice, consent, waiver or
other action, and for that purpose the Outstanding Securities of that series
shall be computed as of the record date; provided, however, that no such
authorization, agreement or consent by such Securityholders on the record date
shall be deemed effective unless it shall become effective pursuant to the
provisions of this Indenture not later than six months after the record date.

 

Section 8.02
Proof of Execution by Securityholders.

 

Subject to the provisions
of Section 7.01, proof of the execution of any instrument by a
Securityholder (such proof will not require notarization) or his agent or proxy
and proof of the holding by any Person of any of the Securities shall be
sufficient if made in the following manner:

 

	
   

  	
  (a)

  	
   

  	
  The fact and date of
  the execution by any such Person of any instrument may be proved in any
  reasonable manner acceptable to the Trustee.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
   

  	
  The ownership of
  Securities shall be proved by the Security Register of such Securities or by
  a certificate of the Security Registrar thereof.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
   

  	
  The Trustee may require
  such additional proof of any matter referred to in this Section as it
  shall deem necessary.

  

 

25

 

Section 8.03
Who May be Deemed Owners.

 

Prior to the due
presentment for registration of transfer of any Security, the Company, the
Trustee, any paying agent and any Security Registrar may deem and treat the
Person in whose name such Security shall be registered upon the books of the
Company as the absolute owner of such Security (whether or not such Security
shall be overdue and notwithstanding any notice of ownership or writing thereon
made by anyone other than the Security Registrar) for the purpose of receiving
payment of or on account of the principal of (and premium, if any) and (subject
to Section 2.03) interest on such Security and for all other purposes; and
neither the Company nor the Trustee nor any paying agent nor any Security
Registrar shall be affected by any notice to the contrary.

 

Section 8.04
Certain Securities Owned by Company Disregarded.

 

In determining whether
the holders of the requisite aggregate principal amount of Securities of a
particular series have concurred in any direction, consent of waiver under this
Indenture, the Securities of that series that are owned by the Company or any
other obligor on the Securities of that series or by any Person directly or
indirectly controlling or controlled by or under common control with the Company
or any other obligor on the Securities of that series shall be disregarded and
deemed not to be Outstanding for the purpose of any such determination, except
that for the purpose of determining whether the Trustee shall be protected in
relying on any such direction, consent or waiver, only Securities of such
series that the Trustee actually knows are so owned shall be so disregarded.
The Securities so owned that have been pledged in good faith may be regarded as
Outstanding for the purposes of this Section, if the pledgee shall establish to
the satisfaction of the Trustee the pledgee’s right so to act with respect to
such Securities and that the pledgee is not a Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Company or any such other obligor. In case of a dispute as to such right,
any decision by the Trustee taken upon the advice of counsel shall be full
protection to the Trustee.

 

Section 8.05
Actions Binding on Future Securityholders.

 

At any time prior to (but
not after) the evidencing to the Trustee, as provided in Section 8.01, of
the taking of any action by the holders of the majority or percentage in
aggregate principal amount of the Securities of a particular series specified
in this Indenture in connection with such action, any holder of a Security of
that series that is shown by the evidence to be included in the Securities the
holders of which have consented to such action may, by filing written notice
with the Trustee, and upon proof of holding as provided in Section 8.02,
revoke such action so far as concerns such Security. Except as aforesaid any
such action taken by the holder of any Security shall be conclusive and binding
upon such holder and upon all future holders and owners of such Security, and
of any Security issued in exchange therefor, on registration of transfer
thereof or in place thereof, irrespective of whether or not any notation in
regard thereto is made upon such Security. Any action taken by the holders of
the majority or percentage in aggregate principal amount of the Securities of a
particular series specified in this Indenture in connection with such action
shall be conclusively binding upon the Company, the Trustee and the holders of
all the Securities of that series.

 

ARTICLE
IX

SUPPLEMENTAL INDENTURES

 

Section 9.01
Supplemental Indentures Without the Consent of Securityholders.

 

In addition to any
supplemental indenture otherwise authorized by this Indenture, the Company and
the Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act as then in effect), without the consent of the
Securityholders, for one or more of the following purposes:

 

	
   

  	
  (1)

  	
   

  	
  to cure any ambiguity,
  defect, or inconsistency herein or in the Securities of any series;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (2)

  	
   

  	
  to comply with Article X;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (3)

  	
   

  	
  to provide for
  uncertificated Securities in addition to or in place of certificated
  Securities;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (4)

  	
   

  	
  to add to the covenants
  of the Company for the benefit of the holders of all or any series of
  Securities (and if such covenants are to be for the benefit of less than all
  series of Securities, stating that such covenants are expressly being
  included solely for the benefit of such series) or to surrender any right or
  power herein conferred upon the Company or to add any 

  

 

26

 

	
   

  	
   

  	
   

  	
  additional Events of
  Default for the benefit of the holders of all or any series of Securities
  (and if such additional Events of Default are to be for the benefit of less
  than all series of Securities, stating that such additional Events of Default
  are expressly being included solely for the benefit of such series);

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (5)

  	
   

  	
  to add to, delete from,
  or revise the conditions, limitations, and restrictions on the authorized
  amount, terms, or purposes of issue, authentication, and delivery of
  Securities (prior to the issuance thereof), as herein set forth;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (6)

  	
   

  	
  to make any change that
  does not adversely affect the rights of any Securityholder in any material
  respect;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (7)

  	
   

  	
  to provide for the
  issuance of and establish the form and terms and conditions of the Securities
  of any series as provided in Section 2.01, to establish the form of any
  certifications required to be furnished pursuant to the terms of this
  Indenture or any series of Securities, or to add to the rights of the holders
  of any series of Securities; or

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (8)

  	
   

  	
  to evidence and provide
  for the acceptance of appointment hereunder by a successor Trustee with
  respect to the Securities of one or more series and to add to or change any
  of the provisions of this Indenture as shall be necessary to provide for or
  facilitate the administration of the trusts hereunder by more than one
  Trustee, pursuant to the requirements of Section 7.12.

  

 

The Trustee is hereby
authorized to join with the Company in the execution of any such supplemental
indenture, and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
any such supplemental indenture that affects the Trustee’s own rights, duties
or immunities under this Indenture or otherwise.

 

Any supplemental
indenture authorized by the provisions of this Section may be executed by
the Company and the Trustee without the consent of the holders of any of the
Securities at the time Outstanding, notwithstanding any of the provisions of Section 9.02.

 

Section 9.02
Supplemental Indentures With Consent of Securityholders.

 

With the consent
(evidenced as provided in Section 8.01) of the holders of not less than a
majority in aggregate principal amount of the Securities of each series
affected by such supplemental indenture or indentures at the time Outstanding,
the Company and the Trustee may from time to time and at any time enter into an
indenture or indentures supplemental hereto (which shall conform to the
provisions of the Trust Indenture Act as then in effect) for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of any supplemental indenture or of modifying
in any manner not covered by Section 9.01 the rights of the holders of the
Securities of such series under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the holders of each
Security then Outstanding and affected thereby:

 

(1) change the
maturity of the principal of, or any installment of principal of or interest
on, any Security, or reduce the principal amount thereof or the rate of
interest thereon or any premium payable upon the redemption thereof, or reduce
the amount of the principal of an Original Issue Discount Security or any other
Security which would be due and payable upon a declaration of acceleration of
the maturity thereof pursuant to Section 6.01 or change the coin or
currency in which any Security or any premium or interest thereon is payable,
or impair the right to institute suit for the enforcement of any such payment
on or after the maturity thereof (or, in the case of redemption, on or after
the redemption date), or

 

(2) reduce the
percentage in principal amount of the Outstanding Securities of any series, the
consent of whose holders is required for any such supplemental indenture, or
the consent of whose holders is required for any waiver of certain defaults
hereunder and their consequences provided for in this Indenture, or

 

(3) modify any of
the provisions of this Section or Section 6.06 relating to waivers of
default, except to increase any such percentage or to provide that certain
other provisions of this Indenture cannot be modified or waived without the
consent of the holder of each Outstanding Security affected thereby; provided,
however, that this clause shall not be deemed to require the consent of any
holder with respect to

 

27

 

changes in the references
to “the Trustee” and concomitant changes in this Section, or the deletion of
this proviso, in accordance with the requirements of Sections 7.12 and
9.01(8).

 

A supplemental indenture
which changes or eliminates any covenant or other provision of this Indenture
which has expressly been included solely for the benefit of one or more
particular series of Securities, or which modifies the rights of the holders of
Securities of such series with respect to such covenant or other provision,
shall be deemed not to affect the rights under this Indenture of the holders of
Securities of any other series. It shall not be necessary for the consent of
the Securityholders of any series affected thereby under this Section to
approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such consent shall approve the substance thereof.

 

Section 9.03
Effect of Supplemental Indentures.

 

Upon the execution of any
supplemental indenture pursuant to the provisions of this Article or of Section 10.01,
this Indenture shall, with respect to such series, be and be deemed to be
modified and amended in accordance therewith and the respective rights,
limitations of rights, obligations, duties and immunities under this Indenture
of the Trustee, the Company and the holders of Securities of the series
affected thereby shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and amendments, and all
the terms and conditions of any such supplemental indenture shall be and be
deemed to be part of the terms and conditions of this Indenture for any and all
purposes.

 

Section 9.04
Securities Affected by Supplemental Indentures.

 

Securities of any series,
affected by a supplemental indenture, authenticated and delivered after the
execution of such supplemental indenture pursuant to the provisions of this Article or
of Section 10.01, may bear a notation in form approved by the Company,
provided such form meets the requirements of any exchange upon which such
series may be listed, as to any matter provided for in such supplemental
indenture. If the Company shall so determine, new Securities of that series so
modified as to conform, in the opinion of the Board of Directors of the
Company, to any modification of this Indenture contained in any such
supplemental indenture may be prepared by the Company, authenticated by the
Trustee and delivered in exchange for the Securities of that series then
Outstanding.

 

Section 9.05
Execution of Supplemental Indentures.

 

Upon the request of the
Company, accompanied by its Board Resolutions authorizing the execution of any
such supplemental indenture, and upon the filing with the Trustee of evidence
of the consent of Securityholders required to consent thereto as aforesaid, the
Trustee shall join with the Company in the execution of such supplemental
indenture unless such supplemental indenture affects the Trustee’s own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may in its discretion but shall not be obligated to enter into such
supplemental indenture.

 

Promptly after the
execution by the Company and the Trustee of any supplemental indenture pursuant
to the provisions of this Section, the Trustee shall transmit by mail, first
class postage prepaid, a notice, setting forth in general terms the substance
of such supplemental indenture, to the Securityholders of all series affected
thereby as their names and addresses appear upon the Security Register. Any
failure of the Trustee to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such supplemental
indenture.

 

ARTICLE
X

SUCCESSOR ENTITY

 

Section 10.01
Company May Consolidate, Etc.

 

Nothing contained in this
Indenture or in any of the Securities shall prevent any consolidation or merger
of the Company with or into any other Person (whether or not affiliated with
the Company) or successive consolidations or mergers in which the Company or
its successor or successors shall be a party or parties, or shall prevent any
sale, conveyance, transfer or other disposition of the property of the Company
or its successor or successors as an entirety, or substantially as an entirety,
to any other Person (whether or not affiliated with the Company or its
successor or successors) authorized to acquire and operate the same; provided,
however, the Company hereby covenants and agrees that, upon any such
consolidation or merger (in each case, if the Company is not the survivor of
such transaction), sale, conveyance, transfer or other

 

28

 

disposition, the due and
punctual payment of the principal of (and premium, if any) and interest on all
of the Securities of all series in accordance with the terms of each series,
according to their tenor and the due and punctual performance and observance of
all the covenants and conditions of this Indenture or established with respect
to each series of Securities pursuant to Section 2.01 to be kept or
performed by the Company shall be expressly assumed, by supplemental indenture
(which shall conform to the provisions of the Trust Indenture Act, as then in
effect) satisfactory in form to the Trustee executed and delivered to the
Trustee by the entity formed by such consolidation, or into which the Company
shall have been merged, or by the entity which shall have acquired such property.

 

Section 10.02
Successor Entity Substituted.

 

(a) In case of any
such consolidation, merger, sale, conveyance, transfer or other disposition and
upon the assumption by the successor entity by supplemental indenture, executed
and delivered to the Trustee and satisfactory in form to the Trustee, of the
due and punctual payment of the principal of (and premium, if any) and interest
on all of the Securities of all series Outstanding and the due and punctual
performance of all of the covenants and conditions of this Indenture or
established with respect to each series of the Securities pursuant to Section 2.01
to be performed by the Company, such successor entity shall succeed to and be
substituted for the Company with the same effect as if it had been named as the
Company herein, and thereupon the predecessor corporation shall be relieved of
all obligations and covenants under this Indenture and the Securities.

 

(b) In case of any
such consolidation, merger, sale, conveyance, transfer or other disposition such
changes in phraseology and form (but not in substance) may be made in the
Securities thereafter to be issued as may be appropriate.

 

(c) Nothing
contained in this Article shall require any action by the Company in the
case of a consolidation or merger of any Person into the Company where the
Company is the survivor of such transaction, or the acquisition by the Company,
by purchase or otherwise, of all or any part of the property of any other
Person (whether or not affiliated with the Company).

 

Section 10.03
Evidence of Consolidation, Etc. to Trustee.

 

The Trustee, subject to
the provisions of Section 7.01, may receive an Opinion of Counsel as
conclusive evidence that any such consolidation, merger, sale, conveyance,
transfer or other disposition, and any such assumption, comply with the
provisions of this Article.

 

ARTICLE
XI

SATISFACTION AND DISCHARGE; DEFEASANCE

 

Section 11.01
Satisfaction and Discharge.

 

This Indenture will be
discharged and will cease to be of further effect with respect to a series of
Securities (except as to any surviving rights of registration of transfer or
exchange of such series of Securities herein expressly provided for), and the
Trustee, at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture with respect to such
series, when:

 

	
   

  	
  (1)

  	
   

  	
  either (A) all
  Securities of that series theretofore authenticated and delivered (other than
  (i) any Securities that shall have been destroyed, lost or stolen and
  that shall have been replaced or paid as provided in Section 2.07 and (ii) Securities
  for whose payment money or noncallable Governmental Obligations have
  theretofore been deposited in trust or segregated and held in trust by the
  Company and thereafter repaid to the Company or discharged from such trust,
  as provided in Section 11.05) have been delivered to the Trustee for
  cancellation; or (B) all Securities of such series not theretofore
  delivered to the Trustee for cancellation (i) have become due and
  payable, or (ii) will by their terms become due and payable within one
  year or (iii) are to be called for redemption within one year under
  arrangements satisfactory to the Trustee for the giving of notice of
  redemption, and the Company shall deposit or cause to be deposited with the
  Trustee as trust funds in trust for the purpose (x) moneys in an amount,
  or (y) noncallable Governmental Obligations the scheduled principal of
  and interest on which in accordance with their terms will provide, not later
  than the due date of any payment, money in an amount, or (z) a
  combination thereof, sufficient, in

  

 

29

 

	
   

  	
   

  	
   

  	
  the case of (y) or
  (z), in the opinion of a nationally recognized firm of independent public
  accountants expressed in a written certification thereof delivered to the
  Trustee, to pay and discharge, at maturity or upon redemption, all Securities
  of that series not theretofore delivered to the Trustee for cancellation,
  including principal (and premium, if any) and interest due or to become due
  to such date of maturity or date fixed for redemption, as the case may be;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (2)

  	
   

  	
  the Company has paid or
  caused to be paid all other sums payable hereunder with respect to such
  series by the Company; and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (3)

  	
   

  	
  the Company has delivered
  to the Trustee an Officers’ Certificate and an Opinion of Counsel, each
  stating that all the conditions precedent herein provided for relating to the
  satisfaction and discharge of this Indenture with respect to such series of
  Securities have been complied with.

  

 

Notwithstanding the
satisfaction and discharge of this Indenture with respect to a series of
Securities, the obligations of the Trustee under Section 7.07 and, if
money shall have been deposited with the Trustee pursuant to subclause (y) of
clause (1) of this Section, the obligations of the Trustee under
Sections 11.03 and 11.05 shall survive.

 

Section 11.02
Defeasance.

 

The Company may, at its
option and at any time (including notwithstanding the exercise by the Company
of a Covenant Defeasance (as defined herein)), elect to have its obligations
discharged with respect to a series of the Securities (“Legal Defeasance”).
Such Legal Defeasance means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by such series of Securities,
except for (a) the rights of holders to receive payments in respect of the
principal of (and premium, if any) and interest on the Securities when such
payments are due solely from the trust fund described in this Section, (b) the
Company’s obligations with respect to such series of Securities concerning
issuing temporary Securities, registration of transfer or exchange of such
series of Securities, mutilated, destroyed, lost or stolen Securities of such
series and the maintenance of an office or agency for payments, (c) the
rights, powers, trust, duties and immunities of the Trustee and the Company’s
obligations in connection therewith and (d) the Legal Defeasance
provisions of this Indenture. In addition, the Company may, at its option and
at any time, elect to have the obligations of the Company released with respect
to covenants provided with respect to such series of Securities under Section 2.01(15),
9.01(4) and 9.01(7) of this Indenture (“Covenant Defeasance”) and
thereafter any omission to comply with such obligations shall not constitute a
Default or Event of Default with respect to such series of Securities. In the
event of Covenant Defeasance, those events described under Section 6.01(a) with
respect to the foregoing covenants will no longer constitute an Event of
Default with respect to such series of Securities.

 

In order to exercise
either Legal Defeasance or Covenant Defeasance:

 

	
   

  	
  (1)

  	
   

  	
  the Company must
  irrevocably deposit with the Trustee, in trust, for the benefit of the
  holders of such series, (A) moneys in an amount, or (B) noncallable
  Governmental Obligations the scheduled principal of and interest on which in
  accordance with their terms will provide, not later than the due date of any
  payment, money in an amount, or (C) a combination thereof, sufficient,
  in the case of (B) or (C), in the opinion of a nationally recognized
  firm of independent public accountants expressed in a written certification
  thereof delivered to the Trustee, to pay and discharge, at maturity or upon
  redemption, the principal of (and premium, if any) and interest on such
  series of Securities on the stated date for payment thereof or on the
  applicable redemption date, as the case may be;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (2)

  	
   

  	
  in the case of Legal
  Defeasance, the Company shall have delivered to the Trustee an Opinion of
  Counsel confirming that (A) the Company has received from, or there has
  been published by, the Internal Revenue Service a ruling or (B) since
  the date of this Indenture, there has been a change in the applicable federal
  income tax law, in either case to the effect that, and based thereon such
  Opinion of Counsel shall confirm that, the holders of such series of
  Securities will not recognize income, gain or loss for federal income tax
  purposes as a result of such Legal Defeasance and will be subject to federal
  income tax on the same amounts, in the same manner and at the same times as
  would have been the case if such Legal

  

 

30

 

	
   

  	
   

  	
   

  	
  Defeasance had not
  occurred;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (3)

  	
   

  	
  in the case of Covenant
  Defeasance, the Company shall have delivered to the Trustee an Opinion of
  Counsel confirming that the holders of such series of Securities will not
  recognize income, gain or loss for federal income tax purposes as a result of
  such Covenant Defeasance and will be subject to federal income tax on the
  same amounts, in the same manner and at the same times as would have been the
  case if such Covenant Defeasance had not occurred;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (4)

  	
   

  	
  no Default or Event of
  Default with respect to the Securities of such series shall have occurred and
  be continuing on the date of such deposit or insofar as Events of Default
  under clauses (4) and (5) of Section 6.01(a) are
  concerned, at any time in the period ending on the 91st day after the date of
  deposit;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (5)

  	
   

  	
  the Company shall have
  delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel,
  each stating that all conditions precedent provided for or relating to the
  Legal Defeasance or the Covenant Defeasance, as the case may be, have been
  complied with; and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (6)

  	
   

  	
  if such series of
  Securities are to be redeemed prior to final maturity (other than from
  mandatory sinking fund payments or analogous payments), notice of such
  redemption shall have been duly given pursuant to this Indenture or provision
  therefor satisfactory to the Trustee shall have been made.

  

 

Section 11.03
Deposited Moneys to be Held in Trust.

 

All moneys or
Governmental Obligations deposited with the Trustee pursuant to
Sections 11.01 or 11.02 shall be held in trust and shall be available for
payment as due, either directly or through any paying agent (including the
Company acting as its own paying agent), to the holders of the particular
series of Securities for the payment or redemption of which such moneys or
Governmental Obligations have been deposited with the Trustee.

 

Section 11.04
Payment of Moneys Held by Paying Agents.

 

In connection with the
satisfaction and discharge of this Indenture all moneys or Governmental
Obligations then held by any paying agent under the provisions of this
Indenture shall, upon demand of the Company, be paid to the Trustee and
thereupon such paying agent shall be released from all further liability with
respect to such moneys or Governmental Obligations.

 

Section 11.05
Repayment to Company.

 

Any moneys or
Governmental Obligations deposited with any paying agent or the Trustee, or
then held by the Company, in trust for payment of principal of (or premium, if
any) or interest on the Securities of a particular series that are not applied
but remain unclaimed by the holders of such Securities for at least two years
after the date upon which the principal of (and premium, if any) or interest on
such Securities shall have respectively become due and payable, shall be repaid
to the Company on May 31 of each year or (if then held by the Company)
shall be discharged from such trust; and thereupon the paying agent and the
Trustee shall be released from all further liability with respect to such
moneys or Governmental Obligations, and the holder of any of the Securities
entitled to receive such payment shall thereafter, as an unsecured general
creditor, look only to the Company for the payment thereof as an unsecured
general creditor, unless an abandoned property law designates another Person.

 

ARTICLE
XII

IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS

 

Section 12.01
No Recourse.

 

No recourse under or upon
any obligation, covenant or agreement of this Indenture, or of any Security, or
for any claim based thereon or otherwise in respect thereof, shall be had
against any incorporator, stockholder, officer or director, past, present or
future as such, of the Company or of any predecessor or successor corporation,
either directly or through the Company or any such predecessor or successor
corporation, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise; it being
expressly understood that this Indenture and the obligations

 

31

 

issued hereunder are
solely corporate obligations, and that no such personal liability whatever
shall attach to, or is or shall be incurred by, the incorporators,
stockholders, officers or directors as such, of the Company or of any
predecessor or successor corporation, or any of them, because of the creation
of the indebtedness hereby authorized, or under or by reason of the
obligations, covenants or agreements contained in this Indenture or in any of
the Securities or implied therefrom; and that any and all such personal
liability of every name and nature, either at common law or in equity or by
constitution or statute, of, and any and all such rights and claims against,
every such incorporator, stockholder, officer or director as such, because of
the creation of the indebtedness hereby authorized, or under or by reason of
the obligations, covenants or agreements contained in this Indenture or in any
of the Securities or implied therefrom, are hereby expressly waived and
released as a condition of, and as a consideration for, the execution of this
Indenture and the issuance of such Securities.

 

ARTICLE
XIII

MISCELLANEOUS PROVISIONS

 

Section 13.01
Effect on Successors and Assigns.

 

All the covenants,
stipulations, promises and agreements in this Indenture contained by or on
behalf of the Company shall bind its successors and assigns, whether so
expressed or not.

 

Section 13.02
Actions by Successor.

 

Any act or proceeding by
any provision of this Indenture authorized or required to be done or performed
by any board, committee or officer of the Company shall and may be done and
performed with like force and effect by the corresponding board, committee or
officer of any corporation that shall at the time be the lawful successor of
the Company.

 

Section 13.03
Surrender of Company Powers.

 

The Company by instrument
in writing executed by authority of its Board of Directors and delivered to the
Trustee may surrender any of the powers reserved to the Company, and thereupon
such power so surrendered shall terminate both as to the Company and as to any
successor corporation.

 

Section 13.04
Notices.

 

Except as otherwise
expressly provided herein any notice or demand that by any provision of this
Indenture is required or permitted to be given or served by the Trustee or by
the holders of Securities to or on the Company may be given or served by being
deposited first class postage prepaid in a post-office letterbox addressed
(until another address is filed in writing by the Company with the Trustee), as
follows: [                    ].
Any notice, election, request or demand by the Company or any Securityholder to
or upon the Trustee shall be deemed to have been sufficiently given or made,
for all purposes, if given or made in writing at the Corporate Trust Office of
the Trustee.

 

Section 13.05
Governing Law.

 

This Indenture and each
Security shall be deemed to be a contract made under the internal laws of the
State of Oregon, and for all purposes shall be construed in accordance with the
laws of said State.

 

Section 13.06
Treatment of Securities as Debt.

 

It is intended that the
Securities will be treated as indebtedness and not as equity for federal income
tax purposes. The provisions of this Indenture shall be interpreted to further
this intention.

 

Section 13.07
Compliance Certificates and Opinions.

 

(a) Upon any
application or demand by the Company to the Trustee to take any action under
any of the provisions of this Indenture, the Company, shall furnish to the
Trustee an Officers’ Certificate stating that all conditions precedent provided
for in this Indenture relating to the proposed action have been complied with
and an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent have been complied with, except that in the case of any
such application or demand as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or demand, no additional certificate or opinion need be
furnished.

 

32

 

(b) Each certificate
or opinion provided for in this Indenture and delivered to the Trustee with
respect to compliance with a condition or covenant in this Indenture shall
include

 

	
   

  	
  (1)

  	
   

  	
  a statement that the
  Person making such certificate or opinion has read such covenant or
  condition;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (2)

  	
   

  	
  a brief statement as to
  the nature and scope of the examination or investigation upon which the
  statements or opinions contained in such certificate or opinion are based;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (3)

  	
   

  	
  a statement that, in
  the opinion of such Person, he has made such examination or investigation as
  is necessary to enable him to express an informed opinion as to whether or
  not such covenant or condition has been complied with; and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (4)

  	
   

  	
  a statement as to
  whether or not, in the opinion of such Person, such condition or covenant has
  been complied with.

  

 

Section 13.08
Payments on Business Days.

 

Except as provided
pursuant to Section 2.01 pursuant to a Board Resolution, and as set forth
in an Officers’ Certificate, or established in one or more indentures
supplemental to this Indenture, in any case where the date of maturity of
interest or principal of any Security or the date of redemption of any Security
shall not be a Business Day, then payment of interest or principal (and
premium, if any) may be made on the next succeeding Business Day with the same
force and effect as if made on the nominal date of maturity or redemption, and
no interest shall accrue for the period after such nominal date.

 

Section 13.09
Conflict with Trust Indenture Act.

 

If and to the extent that
any provision of this Indenture limits, qualifies or conflicts with the duties
imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act,
such imposed duties shall control. If any provision of this Indenture modifies
or excludes any provision of the Trust Indenture Act which may be so modified
or excluded, the latter provision shall be deemed to apply to this Indenture as
so modified or to be excluded, as the case may be.

 

Section 13.10
Counterparts.

 

This Indenture may be
executed in any number of counterparts, each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.

 

Section 13.11
Separability.

 

In case any one or more
of the provisions contained in this Indenture or in the Securities of any
series shall for any reason be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions of this Indenture or of such Securities, but this
Indenture and such Securities shall be construed as if such invalid or illegal
or unenforceable provision had never been contained herein or therein.

 

Section 13.12
Assignment.

 

The Company will have the
right at all times to assign any of its rights or obligations under this
Indenture to a direct or indirect wholly-owned Subsidiary of the Company,
provided that, in the event of any such assignment, the Company, will remain
liable for all such obligations. Subject to the foregoing, the Indenture is
binding upon and inures to the benefit of the parties thereto and their
respective successors and assigns. This Indenture may not otherwise be assigned
by the parties thereto.

 

[Signature Page Follows.]

 

33

 

IN WITNESS WHEREOF, the
parties hereto have caused this Indenture to be duly executed all as of the day
and year first above written.

 

	
   

  	
  AVI BIOPHARMA, INC.

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  
	
   

  	
  [
                      
  ], as Trustee

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  

 

34

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