Exhibit 10.7

 

IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

 

January 13, 2006

 

 

Transfer Online, Inc.

227 S.W. Pine Street, Suite 300

Portland, Oregon 97204

 

 

 

RE:

TRANSAX INTERNATIONAL, LTD.

 

Ladies and Gentlemen:

 

Reference is made to that certain Investment Agreement (the “Investment
Agreement”) of even date herewith between Transax International, Ltd., a
corporation organized and existing under the laws of the state of Colorado (the
“Company”) and Cornell Capital Partners, LP (the “Buyer”) In connection with the
Investment Agreement, the Company shall sell to the Buyer and the Buyer shall
purchase from the Company up to Sixteen Thousand (16,000) shares of Series A
Preferred Shares (the “Series A Preferred Shares”) which are convertible into
shares of the Company’s common stock, par value $0.00001 per share (the “Common
Stock”), at the Buyer’s discretion. The Company has also issued the Buyer
warrants (collectively, the “Warrant”) to purchase up to 5,000,000 shares of
Common Stock. These instructions relate to the following stock or proposed stock
issuances or transfers:

 

 

•

Shares of Common Stock issuable upon conversion of the Series A Preferred Shares
(the “Conversion Shares”).

 

 

•

Shares of Common Stock issuable upon the exercise of the Warrant (the “Warrant
Shares”).

 

This letter shall serve as our irrevocable authorization and direction to
Transfer Online, Inc. (the “Transfer Agent”) to do the following:

 

 

1.

Conversion Shares.

 

 

a.

Instructions Applicable to Transfer Agent. With respect to the Conversion
Shares, the Transfer Agent shall issue the Conversion Shares to the Buyer from
time to time upon delivery to the Transfer Agent of a properly completed and
duly executed Conversion Notice (the “Conversion Notice”), in the form attached
hereto as Exhibit I, delivered on behalf of the Company to the Transfer Agent by
the Escrow Agent. Upon receipt of a Conversion Notice, the Transfer Agent shall
within three (3) Trading Days thereafter (i) issue and

 

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surrender to a common carrier for overnight delivery to the address as specified
in the Conversion Notice, a certificate, registered in the name of the Buyer or
its designees, for the number of shares of Common Stock to which the Buyer shall
be entitled as set forth in the Conversion Notice or (ii) provided the Transfer
Agent is participating in The Depository Trust Company (“DTC”) Fast Automated
Securities Transfer Program, upon the request of the Buyer, credit such
aggregate number of shares of Common Stock to which the Buyer shall be entitled
to the Buyer or its designees’ balance account with DTC through its Deposit
Withdrawal At Custodian (“DWAC”) system provided the Buyer causes its bank or
broker to initiate the DWAC transaction. For purposes hereof “Trading Day” shall
mean any day on which the Nasdaq Market is open for customary trading.

 

 

b.

The Company hereby confirms to the Transfer Agent and the Buyer that
certificates representing the Conversion Shares shall not bear any legend
restricting transfer and should not be subject to any stop-transfer restrictions
and shall otherwise be freely transferable on the books and records of the
Company; provided that counsel to the Company delivers (i) the Notice of
Effectiveness set forth in Exhibit II attached hereto and (ii) an opinion of
counsel in the form set forth in Exhibit III attached hereto, and that if the
Conversion Shares are not registered for sale under the Securities Act of 1933,
as amended, then the certificates for the Conversion Shares shall bear the
following legend:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A FORM REASONABLY
ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID
ACT.”

 

 

c.

In the event that counsel to the Company fails or refuses to render an opinion
as required to issue the Conversion Shares in accordance with the preceding
paragraph (either with or without restrictive legends, as applicable), then the
Company irrevocably and expressly authorizes counsel to the Buyer to render such
opinion. The Transfer Agent shall accept and be entitled to rely on such opinion
for the purposes of issuing the Conversion Shares.

 

 

d.

Instructions Applicable to Escrow Agent. Upon the Escrow Agent’s receipt of a
properly completed Conversion Notice from the Buyer, the Escrow Agent shall,
within one (1) Trading Day thereafter, send to the Transfer Agent the Conversion
Notice, with a copy to the Company, which shall constitute an

 

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irrevocable instruction to the Transfer Agent to process such Conversion Notice
in accordance with the terms of these instructions.

 

 

e.

The Transfer Agent shall reserve for issuance to the Buyer at least 25,000,000
Conversion Shares and 5,000,000 Warrant Shares. All such shares shall remain in
reserve with the Transfer Agent until the Buyer provides the Transfer Agent,
with copy to the Company, instructions that the Conversion Shares or any part of
them shall be taken out of reserve and shall no longer be subject to the terms
of these instructions.

 

 

f.

The Transfer Agent shall rely exclusively on the Conversion Notice and shall
have no liability for relying on such instructions. Any Conversion Notice
delivered hereunder shall constitute an irrevocable instruction to the Transfer
Agent to process such notice or notices in accordance with the terms thereof.
Such notice or notices may be transmitted to the Transfer Agent by facsimile or
any commercially reasonable method.

 

 

g.

The Company hereby confirms to the Transfer Agent and the Buyer that no
instructions other than as contemplated herein will be given to Transfer Agent
by the Company with respect to the matters referenced herein. The Company hereby
authorizes the Transfer Agent, and the Transfer Agent shall be obligated, to
disregard any contrary instructions received by or on behalf of the Company.

 

 

2.

Warrant Shares.

 

 

a.

Instructions Applicable to Transfer Agent. With respect to the Warrant Shares,
the Transfer Agent shall issue the Warrant Shares to the Buyer from time to time
upon delivery to the Transfer Agent of a properly completed and duly executed
notice of the Buyer’s election to exercise the Warrant (the “Exercise Notice”),
in the form attached to the Warrant, specifying the number of Warrant Shares to
be issued, delivered on behalf of the Company to the Transfer Agent by the
Escrow Agent. Upon receipt of an Exercise Notice, the Transfer Agent shall use
its best efforts to within three (3) Trading Days thereafter (i) issue and
surrender to a common carrier for overnight delivery to the address as specified
in the Exercise Notice, a certificate, registered in the name of the Buyer or
its designees, for the number of shares of Common Stock to which the Buyer shall
be entitled as set forth in the Exercise Notice or (ii) provided Transfer Agent
are participating in The Depository Trust Company (“DTC”) Fast Automated
Securities Transfer Program, upon the request of the Buyer, credit such
aggregate number of shares of Common Stock to which the Buyer shall be entitled
to the Buyer’s or its designees’ balance account with DTC through its Deposit
Withdrawal At Custodian (“DWAC”) system provided the Buyer causes its bank or
broker to initiate the DWAC transaction. For purposes hereof “Trading Day” shall
mean any day on which the Nasdaq Market is open for customary trading.

 

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The Company hereby confirms to the Transfer Agent and the Buyer that
certificates representing the Warrant Shares shall not bear any legend
restricting transfer and should not be subject to any stop-transfer restrictions
and shall otherwise be freely transferable on the books and records of the
Company; provided that counsel to the Company delivers (i) the Notice of
Effectiveness set forth in Exhibit II attached hereto and (ii) an opinion of
counsel in the form set forth in Exhibit III attached hereto, and that if the
Warrant Shares are not registered for sale under the Securities Act of 1933, as
amended, then the certificates for the Warrant Shares shall bear the restrictive
legend referenced above in Section 1b.

 

 

b.

In the event that counsel to the Company fails or refuses to render an opinion
as required to issue the Warrant Shares in accordance with the preceding
paragraph (either with or without restrictive legends, as applicable), then the
Company irrevocably and expressly authorizes counsel to the Buyer to render such
opinion. The Transfer Agent shall accept and be entitled to rely on such opinion
for the purposes of issuing the Warrant Shares.

 

 

c.

Instructions Applicable to Escrow Agent. Upon the Escrow Agent’s receipt of a
properly completed exercise notice substantially in the form attached as an
exhibit to the Warrant and the Aggregate Exercise Price (as defined in the
Warrant), the Escrow Agent shall, within one (1) Trading Day thereafter, send to
the Transfer Agent an Exercise Notice, which shall constitute an irrevocable
instruction to the Transfer Agent to process such Exercise Notice in accordance
with the terms of these instructions.

 

3.            Certain Notice Regarding the Escrow Agent. The Company and the
Transfer Agent hereby acknowledge that the Escrow Agent is general counsel to
the Buyer, a partner of the general partner of the Buyer and counsel to the
Buyer in connection with the transactions contemplated and referred herein. The
Company and the Transfer Agent agree that in the event of any dispute arising in
connection with this Agreement or otherwise in connection with any transaction
or agreement contemplated and referred herein, the Escrow Agent shall be
permitted to continue to represent the Buyer and neither the Company nor the
Transfer Agent will seek to disqualify such counsel.

 

 

4.

Other Agreements.

 

The Company hereby agrees that it shall not replace the Transfer Agent as the
Company’s transfer agent without the prior written consent of the Buyer.

 

If the Transfer Agent shall provided the Company thirty (30) days advance
written notice before resigning as the transfer agent of the Company during the
term of this agreement. The Company shall promptly provide notice of such
resignation to the Buyer, and the Company shall within five (5) days of such
notice to the Buyer obtain a suitable replacement transfer agent that will agree
to be bound by the terms and conditions of these Transfer Agent Instructions.

 

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The Company and the Transfer Agent hereby acknowledge and confirm that complying
with the terms of this Agreement does not and shall not prohibit the Transfer
Agent from satisfying any and all fiduciary responsibilities and duties it may
owe to the Company.

 

The Company and the Transfer Agent acknowledge that the Buyer is relying on the
representations and covenants made by the Company and the Transfer Agent
hereunder and are a material inducement to the Buyer purchasing the Series A
Preferred Shares. The Company and the Transfer Agent further acknowledge that
without such representations and covenants of the Company and the Transfer Agent
made hereunder, the Buyer would not purchase the Series A Preferred Shares.

 

Each party hereto specifically acknowledges and agrees that in the event of a
breach or threatened breach by a party hereto of any provision hereof, the Buyer
may be irreparably damaged and that damages at law may be an inadequate remedy
if these Irrevocable Transfer Agent Instructions were not specifically enforced.
Therefore, in the event of a breach or threatened breach by a party hereto,
including, without limitation, the attempted termination of the agency
relationship created by this instrument, the Buyer shall be entitled to pursue,
in addition to all other rights or remedies, to an injunction restraining such
breach, without being required to show any actual damage or to post any bond or
other security, and/or to a decree for specific performance of the provisions of
these Irrevocable Transfer Agent Instructions.

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

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IN WITNESS WHEREOF, the parties have caused this letter agreement regarding
Irrevocable Transfer Agent Instructions to be duly executed and delivered as of
the date first written above.

 

 

COMPANY:

 

 

 

TRANSAX INTERNATIONAL, LTD.

 

 

 

By:   /s/ Stephen Walters

 

Name: Stephen Walters

 

Title:   President and CEO

 

 

 

 

 

ESCROW AGENT:

 

 

 

___________________________________

 

David Gonzalez, Esq.

 

 

 

 

 

CORNELL CAPITAL PARTNERS, LP

 

 

 

By:       Yorkville Advisors, LLC

 

Its:        General Partner

 

 

 

By:       _____________________________

 

Name: Mark Angelo

 

Its:        Portfolio Manager

 

TRANSFER ONLINE, INC.

 

By:

______________________________

Name:

______________________________

Title:

______________________________

 

 

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EXHIBIT I

 

TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

 

FORM OF CONVERSION NOTICE

 

Reference is made to the Certificate of Designation of Series A Convertible
Preferred Stock of TRansax International, Ltd. (the “Company”) and the shares of
Series A Convertible Preferred Stock issued thereunder (“Series A Preferred
Shares”). In accordance with and pursuant to the Series A Preferred Shares, the
undersigned hereby elects to convert Series A Preferred Shares into shares of
common stock, par value $0.001 per share (the “Common Stock”), of the Company
for the amount indicated below as of the date specified below.

 

Conversion Date:

____________________________

 

 

Amount to be converted:

$___________________________

 

 

Conversion Price:

$___________________________

 

 

Shares of Common Stock Issuable:

____________________________

 

 

Amount of Series A Preferred Shares unconverted:

$___________________________

 

 

 

 

Please issue the shares of Common Stock in the following name and to the
following address:

 

Issue to:

___________________________________

 

 

Authorized Signature:

___________________________________

 

 

Name:

___________________________________

 

 

Title:

___________________________________

 

 

Phone #:

___________________________________

 

 

Broker DTC Participant Code:

___________________________________

 

 

Account Number*:

___________________________________

 

 

 

 

* Note that receiving broker must initiate transaction on DWAC System.

 

EXHIBIT I-1

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EXHIBIT II

 

TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

 

FORM OF NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT

 

_________, 2006

 

________

 

Attention:

 

RE:

TRANSAX INTERNATIONAL, LTD.

 

Ladies and Gentlemen:

 

We are counsel to TRansax International, Ltd., (the “Company”), and have
represented the Company in connection with that certain Certificate of
Designation of Series A Convertible Preferred Stock of the Company and the
shares of Series A Convertible Preferred Stock issued thereunder (“Series A
Preferred Shares”) to Cornell Capital Partners, LP (the “Buyer”). The Company
has issued to the Buyer shares of Series A Preferred Shares, which shall be
convertible into shares (the “Conversion Shares”) of the Company’s common stock,
par value $0.001 per share (the “Common Stock”), in accordance with the terms of
the Series A Preferred Shares. The Company also has entered into an Investor
Registration Rights Agreement, dated as of January ___, 2006, with the Buyer
(the “Investor Registration Rights Agreement”) pursuant to which the Company
agreed, among other things, to register the Conversion Shares under the
Securities Act of 1933, as amended (the “1933 Act”). In connection with the
Company’s obligations under the Investment Agreement and the Investor
Registration Rights Agreement, on _______, 2006, the Company filed a
Registration Statement (File No. ___-_________) (the “Registration Statement”)
with the Securities and Exchange Commission (the “SEC”) relating to the sale of
the Conversion Shares.

 

In connection with the foregoing, we advise the Transfer Agent that a member of
the SEC’s staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at ____ P.M.
on __________, 2006 and we have no knowledge, after telephonic inquiry of a
member of the SEC’s staff, that any stop order suspending its effectiveness has
been issued or that any proceedings for that purpose are pending before, or
threatened by, the SEC and the Conversion Shares are available for sale under
the 1933 Act pursuant to the Registration Statement.

 

The Buyer has confirmed that they shall comply with all securities laws and
regulations applicable to it including applicable prospectus delivery
requirements upon sale of the Conversion Shares.

 

EXHIBIT II-1

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Very truly yours,

 

 

By:_______________________________

 

 

 

EXHIBIT II-2

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EXHIBIT III

 

TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

 

FORM OF OPINION

 

_________ 2006

 

VIA FACSIMILE AND REGULAR MAIL

 

________

 

 

Attention:

 

 

RE:

TRANSAX INTERNATIONAL, LTD.

 

Ladies and Gentlemen:

 

We have acted as special counsel to TRansax International, Ltd. (the “Company”),
in connection with the registration of ___________ shares (the “Shares”) of its
common stock with the Securities and Exchange Commission (the “SEC”). We have
not acted as your counsel. This opinion is given at the request and with the
consent of the Company.

 

In rendering this opinion we have relied on the accuracy of the Company’s
Registration Statement on Form SB-2, as amended (the “Registration Statement”),
filed by the Company with the SEC on _________ ___, 2006. The Company filed the
Registration Statement on behalf of certain selling stockholders (the “Selling
Stockholders”). This opinion relates solely to the Selling Shareholders listed
on Exhibit “A” hereto and number of Shares set forth opposite such Selling
Stockholders’ names. The SEC declared the Registration Statement effective on
__________ ___, 2006.

 

We understand that the Selling Stockholders acquired the Shares in a private
offering exempt from registration under the Securities Act of 1933, as amended.
Information regarding the Shares to be sold by the Selling Shareholders is
contained under the heading “Selling Stockholders” in the Registration
Statement, which information is incorporated herein by reference. This opinion
does not relate to the issuance of the Shares to the Selling Stockholders. The
opinions set forth herein relate solely to the sale or transfer by the Selling
Stockholders pursuant to the Registration Statement under the Federal laws of
the United States of America. We do not express any opinion concerning any law
of any state or other jurisdiction.

 

In rendering this opinion we have relied upon the accuracy of the foregoing
statements.

 

EXHIBIT III-1

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Based on the foregoing, it is our opinion that the Shares have been registered
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended, and that ________ may remove the restrictive legends contained on the
Shares. This opinion relates solely to the number of Shares set forth opposite
the Selling Stockholders listed on Exhibit “A” hereto.

 

This opinion is furnished to Transfer Agent specifically in connection with the
issuance of the Shares, and solely for your information and benefit. This letter
may not be relied upon by Transfer Agent in any other connection, and it may not
be relied upon by any other person or entity for any purpose without our prior
written consent. This opinion may not be assigned, quoted or used without our
prior written consent. The opinions set forth herein are rendered as of the date
hereof and we will not supplement this opinion with respect to changes in the
law or factual matters subsequent to the date hereof.

 

Very truly yours,

 

 

By:_______________________________

 

 

 

EXHIBIT III-2

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EXHIBIT “A”

 

(LIST OF SELLING STOCKHOLDERS)

 

 

Name:

No. of Shares:

 

 

 

 

 

EXHIBIT A-1

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