Document:

CONSULTING
AGREEMENT

 

THIS
CONSULTING AGREEMENT
(“Agreement”) is made and entered into effective as of September 17, 2004, (the
“Effective Date”) by and between CeriStar, Inc., a Delaware corporation, (the
“Company”), whose address is 50 West Broadway, Suite 1100, Salt Lake City, Utah
84101 and Trufello Associates, Ltd. (the “Consultant”), whose address is Hunkins
Waterfront Plaza, P.O. Box 556, Main Street, Memorial Square, Nevis, West
Indies.

Recitals

A. The
Company wishes to engage the services of the Consultant to advise and consult
with the Company on certain business and financial matters as set forth in this
Agreement.

B. The
Consultant has extensive experience in investment banking, business and
financial consulting, and entrepreneurial executive management. As a result, the
Consultant has the expertise to advise and assist the Company in developing a
successful business plan, and in evaluating businesses that may be likely
candidates to strategically partner with the Company.

C. The
Company wishes to engage the services of the Consultant as an independent
contractor to advise and consult with it with respect to (i) developing a
successful business plan, (ii) exploring strategic alliances, partnering
opportunities and other cooperative ventures, (iii) evaluating possible
acquisition and strategic partnering candidates, and marketing opportunities for
the Company, (iv) the Company’s business development activities, including major
geographic and service expansion plans, (v) the Company’s merger and acquisition
strategies, including the evaluation of targets and the structuring of
transactions; (vi) the Company’s employee relations; and (vii) the Company’s
marketing strategy; all on the terms and subject to the conditions set forth in
this Agreement.

D. The
Consultant is willing to accept such engagement, on the terms set forth in this
Agreement.

Now
therefore, in consideration of the foregoing recitals and the mutual covenants
and obligations contained in this Agreement, including the payment of fees and
other good and valuable consideration contained herein, the parties agree as
follows:

1.
Engagement.

1.1. Engagement. The
Company hereby engages the Consultant to perform the Services, as defined and
set forth in paragraph 1.4, for the Term as defined and set forth in paragraph
1.2, and the Consultant hereby accepts this engagement, on the terms and subject
to the conditions set forth in this Agreement

1.2. Term. The term
of the Consultant’s engagement under this Agreement shall be for the period
beginning on the Effective Date and ending when terminated as provided in
paragraph 4 below.

1.3. Relationship. The
relationship between the Company and the Consultant created by this Agreement is
that of independent contractors, and the Consultant is not and shall not be
deemed to be an employee of the Company for any purpose.

1.4. Services. The
following services (the “Services”) shall be rendered, from time to time by the
Consultant during the Term, as the Company may request, solely for the Company’s
benefit and not for the benefit of any third party:

 

(a) Assist
management with the development of a successful business plan for the
Company.

 

(b) Explore
strategic alliances, partnering opportunities and other cooperative ventures for
the Company within and without the Company’s present industry focus.

 

 

(c) Evaluate
possible acquisition and strategic partnering candidates, and marketing
opportunities for the Company.

 

(d) Evaluate
the Company’s business development activities, including major geographic and
service expansion plans.

 

(e) Evaluate
the Company’s merger and acquisition strategies, including the evaluation of
targets and the structuring of transactions.

 

(f) Evaluate
the Company’s employee relations.

 

(g) Evaluate
the Company’s marketing strategy.

 

(h) Advise
and consult with the Company’s board of directors (the “Board”) and executive
officers with respect to any of the above described matters.

1.5. No
Capital Raising Services. The
Services do not include consulting with or advising or assisting the Company, in
any manner (i) in connection with the offer or sale of securities in any
capital-raising transaction, or (ii) to directly or indirectly promote or
maintain a market for any of the Company’s securities.

1.6. No
Investment Advisory or Brokerage Services; No Legal Services. The
Services do not include requiring the Consultant to engage in any activities for
which an investment advisor’s registration or license is required under the U.S.
Investment Advisors Act of 1940, or under any other applicable federal or state
law; or for which a “broker’s” or “dealer’s” registration or license is required
under the U.S. Securities Exchange Act of 1934, or under any other applicable
federal or state law. Consultant’s work on this engagement shall not constitute
the rendering of legal advice, or the providing of legal services, to the
Company. Accordingly, Consultant shall not express any legal opinions with
respect to any matters affecting the Company. Consultant’s work on this
engagement shall not consist of effecting transactions in the Company’s
securities and Consultant shall not provide any securities broker-dealer
services to the Company. 

1.7. Location. The
Company and the Consultant intend that the Services shall be rendered primarily
from the Consultant’s offices in Nevis, West Indies and may be rendered by
telephone and e-mail communication. The Consultant understands and acknowledges
it may be necessary to travel to perform the Services, and that the Consultant
shall be required to do so at its own expense (the Consultant’s Fee having been
agreed to in consideration thereof). The Consultant shall not be required to
perform any services in the United States, or in any manner that would subject
the Consultant’s Fee defined in paragraph 2.1 below to United States federal or
state income taxation. The Consultant shall, if requested by the Company and at
the Company’s expense, attend meetings of the Company’s board of directors (the
“Board”) at reasonable times, provided that the Company shall have provided the
Consultant with an opinion of tax counsel satisfactory to the Consultant that
doing so will not subject the Consultant’s Fee to United States federal income
taxation. The Consultant shall be reasonably available by telephone to consult
with the Board at regular and special meetings thereof.

1.8. Time;
Non-exclusive. The
Consultant shall devote as much time to the performance of the Services as is
reasonably necessary, but the Consultant shall not be required to devote any
fixed number of hours or days to the performance of the Services. The Company
recognizes that the Consultant has and will continue to have other clients and
business, and agrees that this engagement is non-exclusive.

1.9. Support
Staff and Facilities. The
Consultant shall furnish its own support staff, office, telephone, and other
facilities and equipment necessary to the performance of the Services, and the
Company shall not be required to provide the Consultant with any such staff,
facilities or equipment.

1.10. Confidentiality. The
Consultant shall not disclose any non-public, confidential or proprietary
information, including but not limited to confidential information concerning
the Company’s products, methods, engineering designs and standards, analytical
techniques, technical information, customer information, or employee
information, unless required to do so by applicable law.

 

2

 

2.
 Consultant’s
Fees and Expenses.

2.1. The
Consultant’s Fee. The
Consultant agrees to accept compensation for its services under this Agreement
in the form of shares of the Company’s common stock, rather than in cash, on the
following terms:

(a) The
Company shall issue and deliver to the Consultant, as a fee for its Services
under this Agreement (the “Consultant’s Fee”) 512,000 of the Company’s Common
Stock (the “Shares”), 1,000,000 Class A Warrants each to purchase one share of
common stock at a price of $.035 per share and 600,000 Class B Warrants each to
purchase one share of common stock at a price of $.28 per share (the “Warrants”)
at any time prior to the expiration of six months after the date hereof, all of
which shall be fully earned and non-refundable in consideration of its execution
of this Agreement. The Company shall issue the Shares and Warrants in the name
of Roger Brewer, the Consultant’s Nominee Advisor.

(b) In
connection with the formation of a strategic plan for 2004, the Board adopted a
directors and officers stock option and stock award plan (the “Plan”). The
Company filed a registration statement on Form S-8 (the “Registration
Statement”) with the Securities and Exchange Commission (the “SEC”) that
registers the issuance of shares of common stock, preferred stock and options
under the terms of the Plan. The Company shall issue the Consultant’s Fee
pursuant to and in accordance with the Plan. The certificates representing the
Shares and Warrants shall be free and clear of any legends or
restrictions.

 

(c) The
Company shall issue instructions to its transfer agent to issue the certificates
representing the Shares and Warrants, free and clear of any legend, restriction
or stop order, and deliver the shares, so registered, to Consultant. The Company
warrants that the Shares and Warrants as well as the shares of common stock
usable upon their conversion shall be freely transferable on the books and
records of the Company. Nothing in this Section 2.1(c) shall affect in any way
the Consultant’s obligations and agreement to comply with all applicable
securities laws upon resale of the Shares and Warrants as well as the shares of
common stock usable upon their conversion. 

(d) If the
Company shall merge or consolidate with or into another corporation for the
purpose of changing the corporate domicile, then, as a result of such
consolidation or merger, the Company, or such successor, as the case may be,
shall make lawful and adequate provision whereby the holder of the Shares and
Warrants shall receive the kind and amount of securities receivable immediately
prior to such consolidation or merger without the necessity of any further
action on the part of either the Company or the holder of the Shares and
Warrants.

2.2. Offset;
Withholding; Taxes. The
Company shall pay the Consultant’s Fee to the Consultant without offset,
deduction or withholding of any kind or for any purpose. The Consultant shall
pay any federal, state and local taxes payable by it with respect to the
Consultant’s Fee, and shall indemnify the Company against and hold it harmless
from any such taxes.

2.3. The
Consultant’s Expenses. Except
for expenses incurred in attending meetings of the Board as set forth in
paragraph 2.7 above and such other expenses as the Company shall first expressly
agree in writing to pay or reimburse to Consultant, the Consultant shall pay all
expenses incurred by it in connection with its performance of the Services under
this Agreement.

3. Representations,
Warranties and Covenants:

3.1. Representations
and Warranties of the Company. The
Company represents and warrants to and covenants with the Consultant
that:

(a) Incorporation,
Good Standing, and Due Qualification. The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of Delaware; has the corporate power and authority to
own its assets and to transact the business in which it is now engaged and
proposes to be engaged in; and is duly qualified as a foreign corporation and in
good standing under the laws of each other jurisdiction in which such
qualification is required.

 

3

 

(b) Power
and Authority. The
execution, delivery and performance by the Company of this Agreement, including
the issuance of the Shares and Warrants have been duly authorized by all
necessary corporate action and do not and will not (i) require any consent or
approval of the Company’s shareholders; (ii) contravene the Company’s articles
of incorporation or bylaws; (iii) violate any provision of any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
presently in effect having applicability to the Company; (iv) result in a breach
of or constitute a default under any agreement or other instrument to which the
Company is a party.

(c) Legally
Enforceable Agreement. This
Agreement is the, legal, valid and binding obligation of the Company,
enforceable against it in accordance with its terms, except to the extent that
such enforcement may be limited by applicable bankruptcy, insolvency and other
similar laws affecting creditors’ rights generally.

(d) The
Shares and Warrants. The
Shares and Warrants as well as the shares of common stock usable upon their
conversion are duly and validly authorized, and when issued will be fully paid
and nonassessable.

3.2. Representations
and Warranties of the Consultant. The
Consultant represents and warrants to and covenants with the Company that:

(a) Incorporation,
Good Standing, and Due Qualification. The
Consultant is a corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation; has the
corporate power and authority to own its assets and to transact the business in
which it is now engaged and proposes to be engaged in; and is duly qualified as
a foreign corporation and in good standing under the laws of each other
jurisdiction in which such qualification is required.

(b) Power
and Authority. The
execution, delivery and performance by the Consultant of this Agreement, have
been duly authorized by all necessary corporate action and do not and will not
(i) require any consent or approval of the Consultant’s stockholders; (ii)
contravene the Consultant’s charter or bylaws; (iii) violate any provision of
any law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to the
Consultant; (iv) result in a breach of or constitute a default under any
agreement or other instrument to which the Consultant is a party.

(c) Legally
Enforceable Agreement. This
Agreement is the legal, valid and binding obligation of the Consultant,
enforceable against it in accordance with its terms, except to the extent that
such enforcement may be limited by applicable bankruptcy, insolvency and other
similar laws affecting creditors’ rights generally.

(d) The
Consultant is an accredited investor as defined in SEC Rule 501(a).

(e) The
Consultant has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of its election to receive
the Consultant’s Fee in the form of the Shares and Warrants, rather than in
cash.

(f) Roger
Brewer, is the Consultant’s Nominee Advisor.

(g) Neither
Consultant nor Mr. Brewer:

(i) is the
subject of any court order, judgment or decree, not subsequently reversed,
suspended or vacated, permanently or temporarily enjoining it or him from, or
otherwise limiting their involvement in any of the following
activities:

 

4

 

(A) Acting as
a futures commission merchant, introducing broker, commodity trading advisor,
commodity pool operator, floor broker, leverage transaction merchant, any other
person regulated by the Commodity Futures Trading Commission (“CFTC”) or any
associated person of any of the foregoing, or as an investment adviser,
underwriter, broker or dealer in securities, or as an affiliated person,
director or employee of any investment company, bank, savings and loan
association or insurance company, or engaging in or continuing any conduct or
practice in connection with such activity;

(B) Engaging
in any type of business practice; or

(C) Engaging
in any activity in connection with the purchase or sale of any security or
commodity, or in connection with any violation of federal or state securities
laws or federal commodities laws.

(ii) was the
subject of any order, judgment or decree, not subsequently reversed, suspended
or vacated, of any federal or state authority barring, suspending or otherwise
limiting for more than 60 days its or his right to engage in any activity
described in subparagraph (i) above, or to be associated with persons engaged in
any such activity.

(iii) was found
by a court in a civil action or by the Securities and Exchange Commission
(“SEC”) to have violated any federal or state securities law, and the judgment
in such civil action or finding by the SEC has not been subsequently reversed,
suspended or vacated.

(iv) was found
by a court in a civil action or by the CFTC to have violated any federal
commodities law, and the judgment in such civil action or finding by the CFTC
has not been subsequently reversed, suspended or vacated.

4. Termination.
This
Agreement may not be terminated prior to the expiration of the
Term:

5. Confidential
Information.

5.1. The
parties hereto recognize that a major need of the Company is to preserve its
specialized knowledge, trade secrets, and confidential information. The strength
and good will of the Company is derived from the specialized knowledge, trade
secrets, and confidential information generated from experience with the
activities undertaken by the Company and its subsidiaries. The disclosure of
this information and knowledge to competitors would be beneficial to them and
detrimental to the Company, as would the disclosure of information about the
marketing practices, pricing practices, costs, profit margins, design
specifications, analytical techniques, and similar items of the Company and its
subsidiaries. By reason of his being a Consultant to the Company, Consultant has
or will have access to, and will obtain, specialized knowledge, trade secrets
and confidential information about the Company’s operations and the operations
of its subsidiaries, which operations extend through the United States.
Therefore, Consultant recognizes that the Company is relying on these agreements
in entering into this Agreement.

5.2
During and after the Term Consultant will not use, disclose to others, or
publish any inventions or any confidential business information about the
affairs of the Company, including but not limited to confidential information
concerning the Company’s products, methods, engineering designs and standards,
analytical techniques, technical information, customer information, employee
information, and other confidential information acquired by him in the course of
his past or future services for the Company. Consultant agrees to hold as the
Company’s property all memoranda, books, papers, letters, formulas and other
data, and all copies thereof and therefrom, in any way relating to the Company’s
business and affairs, whether made by him or otherwise coming into his
possession, and on termination of his consultancy, or on demand of the Company,
at any time, to deliver the same to the Company within twenty four hours of such
termination or demand.

 

5

 

5.3
During the Term Consultant will not induce any employee of the Company to leave
the Company’s employ or hire any such employee (unless the Board of Directors of
the Company shall have authorized such employment and the Company shall have
consented thereto in writing).

6. General
Provisions.

6.1. Entire
Agreement; Modification; Waivers. This
Agreement contains the entire agreement of the parties, and supersedes any prior
agreements with respect to its subject matter. There are no agreements,
understandings or arrangements of the parties with respect to the subject matter
of this Agreement that are not contained herein. This Agreement shall not be
modified except by an instrument in writing signed by the parties. No waiver of
any provision of this Agreement shall be effective unless made in writing and
signed by the party making the waiver. The waiver of any provision of this
Agreement shall not be deemed to be a waiver of any other provision or any
future waiver of the same provision.

6.2.
Notices. All
notices given under this Agreement shall be in writing, addressed to the parties
as set forth below, and shall be effective on the earliest of (i) the date
received, or (ii) on the second business day after delivery to a major
international air delivery or air courier service (such as Federal Express or
Network Couriers):

	
      If
      to the Company:

      CeriStar,
      Inc.

      50
      West Broadway, Suite 1100

      Salt
      Lake City, Utah 84101

      Attention:
      Paul D. Hamm, CEO
	 	
      If
      to the Consultant:

      Trufello
      Associates, Ltd.

      Hunkins
      Waterfront Plaza

      P.O.
      Box 556, Main Street

      Memorial
      Square

      Nevis,
      West Indies

      Attention:
      Roger Brewer, President

6.3. Governing
Law. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York; provided,
however, that if
any provision of this Agreement is unenforceable under such law but is
enforceable under the laws of the State of Delaware, then Delaware law shall
govern the construction and enforcement of that provision.

 

6.4. Jurisdiction
and Venue. The
courts of the State of New York sitting in City of New York, Burrough of
Manhattan (the “Manhattan Courts”) shall have exclusive jurisdiction to hear,
adjudicate, decide, determine and enter final judgment in any action, suit,
proceeding, case, controversy or dispute, whether at law or in equity or both,
and whether in contract or tort or both, arising out of or related to this
Agreement, or the construction or enforcement hereof or thereof (any such
action, suit, proceeding, case, controversy or dispute, a “Related Action”). The
Company and the Consultant hereby irrevocably consent and submit to the
exclusive personal jurisdiction of the Manhattan Courts to hear, adjudicate,
decide, determine and enter final judgment in any Related Action. The Company
and the Consultant hereby irrevocably waive and agree not to assert any right or
claim that it is not personally subject to the jurisdiction of the Manhattan
Courts in any Related Action, including any claim of forum
non conveniens or that
the Manhattan Courts are not the proper venue or form to adjudicate any Related
Action. If any Related Action is brought or maintained in any court other than
the Manhattan Courts, then that court shall, at the request of the Company or
the Consultant, dismiss that action. The parties may enter a judgment rendered
by the Manhattan Courts under this Agreement for enforcement in the courts of
Delaware and the party against whom such judgment is taken will not contest the
authority of such courts to enforce such a judgment.

 

6.5. Waiver
of Jury Trial. The
Company and the Consultant hereby waive trial by jury in any Related Action.

 

6.6 Attorney’s
Fees.
The
prevailing party in any Related Action shall be entitled to recover that party’s
costs of suit, including reasonable attorney’s fees.

6.7 Binding
Effect. This
Agreement shall be binding on, and shall inure to the benefit of the parties and
their respective successors in interest.

6

 

6.8 Construction,
Counterparts. This
Agreement shall be construed as a whole and in favor of the validity and
enforceability of each of its provisions, so as to carry out the intent of the
parties as expressed herein. Headings are for the convenience of reference, and
the meaning and interpretation of the text of any provision shall take
precedence over its heading. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original, but all of which,
taken together shall constitute one agreement. A faxed copy or photocopy of a
party’s signature shall be deemed an original for all purposes.

IN
WITNESS WHEREOF, the
parties have executed this Agreement effective as of the Effective
Date

 

	The Company:	 	 	The Consultant: 
	 	 	 	 
	CERISTAR, INC. 	 	 	TRUFELLO ASSOCIATES LTD. 
	 	 	 	 
	 	 	 	 
	By /s/ Paul D.
      Hamm	 	 	By /s/ Roger
      Brewer
	
      

      Paul D. Hamm, CEO	 	 	
      

      Roger Brewer, Nominee Advisor/Authorized
      Signatory

 

7CERISTAR,
INC. 

PROMISSORY
NOTE

 

	
      $_________
	
      _________
      ___, _____

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
_________________________ ($________), 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:

 

4.  Conversion.

(a)   
At any
time after the date that is 60 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.

 

2

 

(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 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.

 

3

 

(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-1, 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 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.

 

4

 

(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.

 

5

 

(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.

6

 

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 unen-forceable 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]

 

7

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

	 	 	 
	 	CERISTAR,
      INC.
	 
 	 
 	 
 
		By:  	
	 	
      

      Name:
	 	Title: 
	 	 
	[CORPORATE SEAL] 	 

 

8

 

EXHIBIT
A

 

CONVERSION
NOTICE

 

Reference
is made to terms and conditions of the Note in the principal amount of
$_________ 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: 
	 	 
	 	 	 

 

9

COMPANY ACKNOWLEDGEMENT 

TO

CONVERSION
NOTICE

 

	ACKNOWLEDGED AND
    AGREED: 	 	 
	 	 	 	 
	CERISTAR,
      INC. 	 	 

 

 

	
       By:
	 	 	 
	 	Name: 	 	 
	 	Title: 	 	 
	 	 	 	 
	
      Date:
	 	 	 

 

 

10

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