EXHIBIT 99.7
IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
November 2, 2005
Executive Registrar & Transfer,
Inc.
3615 South Huron Street, Suite 104
Englewood, CO 80110
RE:
ETOTALSOURCE,
INC.
Ladies and Gentlemen:
Reference
is made to that
certain Securities Purchase Agreement (the
"Securities Purchase Agreement") of even date herewith by and between
ETOTALSOURCE, Inc., a Colorado corporation (the
"Company"), and the
Buyers set
forth on Schedule I attached thereto (collectively the "Buyers") and that
certain Warrant of even date herewith, and
the Warrant dated August 19, 2005, by
and between the Company and the Buyers
(collectively, the
"Warrant").
Pursuant
to the Securities Purchase Agreement, the Company shall sell to the
Buyers, an
the Buyers shall purchase from the Company, convertible debentures
(collectively, the "Debentures") in the aggregate principal amount of One
Million Dollars ($1,000,000), plus accrued interest, which are
convertible into
shares of the Company's common stock, no par value per share (the "Common
Stock"), at the Buyers discretion.
These instructions
relate to the
following
stock or proposed stock issuances or
transfers:
1.
The
Company has agreed to issue to the
Buyers up to
218,000,000
shares of the Company's Common Stock upon conversion of the
Debentures
("Conversion Shares")
plus the shares of Common Stock to
be issued to the Buyers upon conversion of accrued interest and
liquidated damages into Common Stock (the "Interest Shares")
2.
The
Company has agreed to issue to the Buyers up to 7,000,000
shares
(the "Warrant Shares")
of the Company's
Common Stock upon exercise
of the Warrant.
This letter shall serve as our irrevocable authorization and direction to
Executive Registrar & Transfer, Inc.
(the "Transfer Agent") to do the following:
1.
Conversion
Shares and Warrant Shares.
a.
Instructions Applicable to Transfer Agent. With respect to the
Conversion Shares, Warrant Shares and the Interest Shares, the
Transfer Agent shall
issue the Conversion Shares, Warrant
Shares and the Interest Shares to the Buyers 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, or a properly
completed Exercise
Notice in the form attached to the Warrant
as Exhibit A thereto
(the "Exercise
Notice"), delivered on
behalf of the Company to the Transfer Agent by David Gonzalez,
Esq. (the "Escrow Agent"). Upon receipt of a Conversion Notice
or
an Exercise Notice,
the Transfer Agent
shall within three
(3) Trading
Days thereafter (i) issue and surrender to a
common carrier
for overnight delivery to the address as
specified in the Conversion Notice or the Exercise
Notice, a
certificate,
registered in the name
of the Buyers
or their
designees, for the
number of shares of Common Stock to which
the Buyers shall be
entitled as set forth
in the Conversion
Notice or Exercise
Notice or (ii) provided Transfer Agent is
participating in The
Depository
Trust Company
("DTC") Fast
Automated Securities Transfer Program, upon the request of the
Buyers, credit such aggregate number of shares of Common Stock
to which the Buyers
shall be entitled to the Buyers' or their
designees' balance
account with DTC through its Deposit
Withdrawal At Custodian ("DWAC") system provided the Buyers
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.
<PAGE>
b. The
Company hereby confirms to the Transfer Agent and the
Buyers that
certificates
representing the Conversion Shares
and 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 Conversion Shares,
Warrant Shares and the Interest Shares
are not registered for
sale under the Securities Act of 1933,
as amended, then the
certificates for the Conversion Shares,
Warrant Shares and
Interest 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 Buyers
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.
2
<PAGE>
d.
Instructions
Applicable to
Escrow Agent. Upon the Escrow
Agent's receipt of a
properly completed conversion notice
substantially in
the form attached as an exhibit to the
Debentures or instructions to exercise the Warrant, the Escrow
Agent shall, within
one (1) Trading Day
thereafter, send
to
the Transfer Agent a
Conversion Notice in
the form attached
hereto as Exhibit I, or an Exercise Notice, which shall
constitute an irrevocable instruction to the Transfer Agent to
process such
Conversion
Notice
or Exercise Notice in
accordance with the terms of these instructions.
2.
All
Shares.
a. The
Transfer Agent shall reserve for issuance to the
Buyers
the Conversion
Shares and
Warrant Shares. All such shares
shall remain in
reserve with the
Transfer Agent until the
Buyers provides
the Transfer Agent instructions that the
shares or any part of them shall be taken out of reserve and
shall no longer be subject to the terms of these instructions.
b. The
Transfer Agent shall
rely exclusively
on the Conversion
Notice or the Exercise
Notice and shall have no liability for
relying on
such instructions. Any Conversion Notice or
Exercise 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.
c. The
Company hereby confirms to the Transfer Agent and the
Buyers 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.
Certain
Notice Regarding the Escrow Agent.
The Company and the
Transfer
Agent hereby acknowledge that the Escrow
Agent is general counsel to the Buyers,
a partner of the general partner of the Buyers and counsel to the Buyers 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
