PROMISSORY NOTE
MAY 17, 2005
JERSEY CITY, NEW JERSEY $255,237.00
FOR VALUE RECEIVED, the undersigned, TRANSAX INTERNATIONAL LIMITED, a Colorado
corporation (the "Company"), promises to pay CORNELL CAPITAL PARTNERS, LP (the
"Lender") at 101 Hudson Street, Suite 3700, Jersey City, New Jersey 07302 or
other address as the Lender shall specify in writing, the principal sum of TWO
HUNDRED FIFTY FIVE THOUSAND TWO HUNDRED THIRTY SEVEN DOLLARS ($255,237.00) and
interest on the unpaid principal balance of this Promissory Note (the "Note")
at the annual rate of twelve percent (12%), accruing monthly, on the following
terms:
Recitals:
On or about October 25, 2004, the Company and the Lender entered into a
Securities Purchase Agreement, pursuant to which the Lender purchased two (2)
five (5%) secured convertible debentures. The initial convertible debenture in
the original principal amount of One Hundred Twenty Five Thousand Dollars
($125,000) was dated October 25, 2004 and the second convertible debenture in
the original principal amount of One Hundred Twenty Five Thousand Dollars
($125,000) was dated January 4, 2005. The Company hereby acknowledges and
agrees that the Lender has fully performed all of its obligations under the
Securities Purchase Agreement (the "SPA") and all other agreements entered into
thereunder, and that the Company has no defenses, set offs or offsets against
the enforcement by the Lender of such obligations. All of the Company's
obligations owed to the Lender were secured by a series of pledge and escrow
agreements (collectively, the "Pledge Agreements"), each dated on or about
October 21, 2004. On the date hereof, the parties desire to restructure the
two (2) five (5%) secured convertible debentures (collectively, the "Original
Debentures"), which have an outstanding principal balance of Two Hundred Fifty
Thousand Dollars ($250,000), plus accrued but unpaid interest of Five Thousand
Two Hundred and Thirty Seven Dollars ($5,237) on the terms set forth herein.
This Note represents the outstanding principal balance of Two Hundred Fifty
Thousand Dollars ($250,000), plus accrued but unpaid interest through April 30,
2005. This Note shall be secured by the Pledge Agreements as if this Note were
originally secured thereunder.
The parties hereby terminate the Original Debentures, the Irrevocable
Transfer Agent Instructions and the Investor Registration Rights Agreement
dated as of October 25, 2004, relating to the SPA. The parties hereto
expressly intend for this Note to replace and supersede the Original
Debentures. The SPA and the Pledge Agreements shall remain in full force and
effect, including, without limitation, the restrictions on the issuance of
securities and other negative covenants contained in the SPA, except as
provided for above.
1. PRINCIPAL AND INTEREST. For value received, the Company hereby promises
to pay to the order of the Lender in accordance with the payment schedule set
forth on SCHEDULE "A" hereto. The outstanding principal balance shall accrue
interest at a rate of 12%, accruing monthly.
2. PREPAYMENT FEE; PENALTY.There shall be no prepayment fee or penalty.
3. WAIVER AND CONSENT. To the fullest extent permitted by law and except as
otherwise provided herein, the Company waives demand, presentment, protest,
notice of dishonor, suit against or joinder of any other person, and all other
requirements necessary to charge or hold the Company liable with respect to
this Note.
4. COSTS, INDEMNITIES AND EXPENSES. If an Event of Default occurs, as
described in Section 5 below, the Company agrees to pay all reasonable fees and
costs incurred by the Lender in collecting or securing or attempting to collect
or secure this Note, including reasonable attorneys' fees and expenses, whether
or not involving litigation, collecting upon any judgments and/or appellate or
bankruptcy proceedings. The Company agrees to pay any documentary stamp taxes,
intangible taxes or other taxes which may now or hereafter apply to this Note
or any payment made in respect of this Note, and the Company agrees to
indemnify and hold the Lender harmless from and against any liability, costs,
attorneys' fees, penalties, interest or expenses relating to any such taxes, as
and when the same may be incurred.
5. EVENT OF DEFAULT. An "Event of Default" shall be deemed to have occurred
upon the occurrence of any of the following: (i) the Company should fail for
any reason or for no reason to make any payment of the principal, interest,
costs, indemnities, or expenses pursuant to this Note within fifteen (15)
calendar days of the date due as prescribed herein; (ii) failure by the Company
for ten (10) calendar days after notice to it to satisfy any of its other
obligations or requirements or comply with any of its other agreements under
this Note; (iii) any proceedings under any bankruptcy laws of the United States
of America or under any insolvency, not disclosed to the Lender,
reorganization, receivership, readjustment of debt, dissolution, liquidation or
any similar law or statute of any jurisdiction now or hereinafter in effect
(whether in law or at equity) is filed by or against the Company or for all or
any part of its property; (iv) a breach or non-compliance with any provision
under any Pledge Agreement; or (v) a breach or non-compliance with any other
contract or agreement between the Company and the Lender, including, without
limitation, the SPA, which is not cured by the Company by any applicable cure
period therein. Upon an Event of Default, the entire principal balance and
accrued interest outstanding under this Note, and all other obligations of the
Company under this Note, shall be immediately due and payable without any
action on the part of the Lender, interest shall accrue on the unpaid principal
balance at twenty four percent (24%) per year or the highest rate permitted by
applicable law, if lower, up to and including the collection of any judgment
that the Lender may entitled and the Lender shall be entitled to seek and
institute any and all remedies available to it.
6. MAXIMUM INTEREST RATE. In no event shall any agreed to or actual
interest charged, reserved or taken by the Lender as consideration for this
Note exceed the limits imposed by New Jersey law. In the event that the
interest provisions of this Note shall result at any time or for any reason in
an effective rate of interest that exceeds the maximum interest rate permitted
by applicable law, then without further agreement or notice the obligation to
be fulfilled shall be automatically reduced to such limit and all sums received
by the Lender in excess of those lawfully collectible as interest shall be
applied against the principal of this Note immediately upon the Lender's
receipt thereof, with the same force and effect as though the Company had
specifically designated such extra sums to be so applied to principal and the
Lender had agreed to accept such extra payment(s) as a premium-free prepayment
or prepayments.
7. SECURED NATURE OF THE NOTE. This Note is secured by the Pledge
Agreements.
8. CANCELLATION OF NOTE. Upon the repayment by the Company of all of its
obligations hereunder to the Lender, including, without limitation, the
principal amount of this Note, plus accrued but unpaid interest, the
indebtedness evidenced hereby shall be deemed canceled and paid in full.
Except as otherwise required by law or by the provisions of this Note, payments
received by the Lender hereunder shall be applied first against expenses and
indemnities, next against interest accrued on this Note, and next in reduction
of the outstanding principal balance of this Note.
9. SEVERABILITY. If any provision of this Note is, for any reason, invalid
or unenforceable, the remaining provisions of this Note will nevertheless be
valid and enforceable and will remain in full force and effect. Any provision
of this Note that is held invalid or unenforceable by a court of competent
jurisdiction will be deemed modified to the extent necessary to make it valid
and enforceable and as so modified will remain in full force and effect.
10. AMENDMENT AND WAIVER. This Note may be amended, or any provision of this
Note may be waived, provided that any such amendment or waiver will be binding
on a party hereto only if such amendment or waiver is set forth in a writing
executed by the parties hereto. The waiver by any such party hereto of a
breach of any provision of this Note shall not operate or be construed as a
waiver of any other breach.
11. SUCCESSORS. Except as otherwise provided herein, this Note shall bind
and inure to the benefit of and be enforceable by the parties hereto and their
permitted successors and assigns.
12. ASSIGNMENT. This Note shall not be directly or indirectly assignable or
delegable by the Company. The Lender may assign this Note.
13. NO STRICT CONSTRUCTION. The language used in this Note will be deemed to
be the language chosen by the parties hereto to express their mutual intent,
and no rule of strict construction will be applied against any party.
14. FURTHER ASSURANCES. Each party hereto will execute all documents and
take such other actions as the other party may reasonably request in order to
consummate the transactions provided for herein and to accomplish the purposes
of this Note.
15. NOTICES, CONSENTS, ETC. Any notices, consents, waivers or other
communications required or permitted to be given under the terms hereof must be
in writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one (1) trading day after deposit
with a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile
numbers for such communications shall be:
If to Company: Transax International Limited
5201 Blue Lagoon Drive, 8th Floor
Miami, Florida 33126
Attention: Stephen Walters
Telephone: (305) 629-3090
Facsimile: (305) 629-3092
With a Copy to: Kirkpatrick & Lockhart Nicholson Graham, LLP
201 South Biscayne Boulevard, Suite 2000
Miami, Florida 33131
Attention: Clayton E. Parker, Esquire
Telephone: (305) 539-3306
Facsimile: (305) 358-7095
If to the Lender: Cornell Capital Partners, LP
101 Hudson Street, Suite 3700
Jersey City, New Jersey 07302
Attention: Mark A. Angelo
Telephone: (201) 985-8300
Facsimile: (201) 985-8744
or at such other address and/or facsimile number and/or to the attention of
such other person as the recipient party has specified by written notice given
to each other party three (3) trading days prior to the effectiveness of such
change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by a nationally recognized overnight delivery
service, shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.
16. REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The
Lender's remedies provided in this Note shall be cumulative and in addition to
all other remedies available to the Lender under this Note, at law or in equity
(including a decree of specific performance and/or other injunctive relief), no
remedy of the Lender contained herein shall be deemed a waiver of compliance
with the provisions giving rise to such remedy and nothing herein shall limit
the Lender's right to pursue actual damages for any failure by the Company to
comply with the terms of this Note. No remedy conferred under this Note upon
the Lender is intended to be exclusive of any other remedy available to the
Lender, pursuant to the terms of this Note or otherwise. No single or partial
exercise by the Lender of any right, power or remedy hereunder shall preclude
any other or further exercise thereof. The failure of the Lender to exercise
any right or remedy under this Note or otherwise, or delay in exercising such
right or remedy, shall not operate as a waiver thereof. Every right and remedy
of the Lender under any document executed in connection with this transaction
may be exercised from time to time and as often as may be deemed expedient by
the Lender. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Lender and that the remedy at law
for any such breach may be inadequate. The Company therefore agrees that, in
the event of any such breach or threatened breach, the Lender shall be
entitled, in addition to all other available remedies, to an injunction
restraining any breach, and specific performance without the necessity of
showing economic loss and without any bond or other security being required.
17. GOVERNING LAW; JURISDICTION. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
the internal laws of the State of New Jersey, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of New
Jersey or any other jurisdictions) that would cause the application of the laws
of any jurisdictions other than the State of New Jersey. Each party hereby
irrevocably submits to the exclusive jurisdiction of the Superior Court of the
State of New Jersey sitting in Hudson County, New Jersey and the United States
Federal District Court for the District of New Jersey sitting in Newark, New
Jersey, for the adjudication of any dispute hereunder or in connection herewith
or therewith, or with any transaction contemplated hereby or discussed herein,
and hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law.
18. NO INCONSISTENT AGREEMENTS. None of the parties hereto will hereafter
enter into any agreement, which is inconsistent with the rights granted to the
parties in this Note.
19. THIRD PARTIES. Nothing herein expressed or implied is intended or shall
be construed to confer upon or give to any person or entity, other than the
parties to this Note and their respective permitted successor and assigns, any
rights or remedies under or by reason of this Note.
20. WAIVER OF JURY TRIAL. AS A MATERIAL INDUCEMENT FOR THE LENDER TO LOAN TO
THE COMPANY THE MONIES HEREUNDER, THE COMPANY HEREBY WAIVES ANY RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS AGREEMENT AND/OR ANY
AND ALL OF THE OTHER DOCUMENTS ASSOCIATED WITH THIS TRANSACTION.
21. ENTIRE AGREEMENT. This Note (including any recitals hereto) set forth
the entire understanding of the parties with respect to the subject matter
hereof, and shall not be modified or affected by any offer, proposal, statement
or representation, oral or written, made by or for any party in connection with
the negotiation of the terms hereof, and may be modified only by instruments
signed by all of the parties hereto.
[REMAINDER OF PAGE INTENTIONALY LEFT BLANK]
IN WITNESS WHEREOF, this Promissory Note is executed by the undersigned
as of the date hereof.
CORNELL CAPITAL PARTNERS, LP
By: Yorkville Advisors, LLC
Its: General Partner
By: ______________________________
Name: Mark Angelo
Its: Portfolio Manager
TRANSAX INTERNATIONAL LIMITED
By: _____________________________
Name: Stephen Walters
Title:CEO
SCHEDULE A
PRINCIPAL $ 255,237
TERM 12 months
INTEREST RATE 12%
MONTHLY PAYMENT
(BY LAST DAY OF MONTH IN ARREARS) REMAINING
ORIGINAL INTEREST (PRINCIPAL AND PRINCIPAL
PERIOD FACE VALUE RATE INTEREST) PRINCIPAL INTEREST BALANCE
A A*B B
June 1, 2005 255,237 1.00% 2,552 0 2,552 255,237
July 1, 2005 255,237 1.00% 2,552 0 2,552 255,237
August 1, 2005 255,237 1.00% 2,552 0 2,552 255,237
September 1, 2005 255,237 1.00% 33,357 30,679 2,552 224,432
October 1, 2005 255,237 1.00% 33,357 30,986 2,235 193,320
November 1, 2005 255,237 1.00% 33,357 31,296 1,925 161,896
December 1, 2005 255,237 1.00% 33,357 31,608 1,612 130,158
January 1, 2006 255,237 1.00% 33,357 31,925 1,296 98,102
February 1, 2006 255,237 1.00% 33,357 32,244 977 65,726
March 1, 2006 255,237 1.00% 33,357 32,566 655 33,027
April 1, 2006 255,237 1.00% 33,357 32,892 329 0
TOTALS 274,512 255,237 19,237