EXHIBIT 99.5
COMPANY VOTING AGREEMENT
This COMPANY VOTING AGREEMENT ("Agreement") is made as of May __, 2006, between
Transnational Financial Network, Inc., a California corporation ("TFN"), Pegasus
Funds TFN Partners, LPLC, a Texas Limited Liability CompanyPartnership
("Pegasus"), and the undersigned Stockholder ("Stockholder").
RECITALS:
WHEREAS, concurrently with the execution and delivery of this Agreement, TFN and
Pegasus are entering into a subscription agreement whereby TFN will issue to
Pegasus Common Stock and Warrants, subject to Pegasus approval of TFN ("Common
Stock Purchase Agreement"); and
WHEREAS, as of the date hereof, Pegasus is the Beneficial Owner (as
defined below) of Subject Shares (as defined below); and
WHEREAS, in order to induce TFN and Pegasus to agree to the issuance of
such shares, Pegasus, TFN and Stockholder has agreed to enter into this
Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and of the
covenants and agreements set forth herein and in the Common Stock Purchase
Agreement, and intending to be legally bound hereby, the parties agree as
follows:
1. Definitions
(a) "Beneficially Own" or "Beneficial Owner" with respect to any securities
means having "beneficial ownership" as determined pursuant to Rule 13d-3 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
(b) "Company Capital Stock" means shares of TFN's common stock, no par value per
share.
(c) "Company Options and Other Rights" means options, warrants and other rights
to acquire, directly or indirectly, shares of Company Capital Stock.
(d) "Expiration Date" means the earlier to occur of the earlier of (i) June 1,
2009; and or (ii) the date on which a majority of the outstanding shares of
common stock of TFN are acquired by a third party operating entity; or (iii) on
June 1, 2008, if TFN fails to have earnings for the preceding 12 months (
1(d)(ii) and (iii) hereof the "Voting Termination Date").
(e) "Subject Shares" means (i) all shares of Company Capital Stock Beneficially
Owned by Pegasus as of the date of this Agreement; (ii) all additional shares of
Company Capital Stock of which Pegasus acquires Beneficial Ownership during the
period from the date of this Agreement through the Expiration Date, and (iii)
for purposes of Pegasus's obligations under Sections 2(a) and (b) hereof, all
shares of capital stock of TFN Beneficially Owned by Pegasus at each election of
directors specified therein.all TFN shares that have been purchase pursuant to
that Common Stock Purchase Agreement of even date herewith that are then
beneficially owned by Pegasus.
2. Voting
(a) Pegasus hereby agrees that, prior to the Expiration Date or the Voting
Termination Date, at any meeting of the stockholders of TFN, however called, and
in any written action by consent of stockholders of TFN, Pegasus shall cause to
be counted as present thereat for purposes of establishing a quorum and shall
vote, or cause to be voted, any and all Subject Shares Beneficially Owned by
Pegasus as of the record date of such meeting or written consent with respect to
each election of directors of TFN until the earlier of the Expiration Date or
Voting Termination Date, in favor of Xxxxxx Xxxxxxx, Xxxxx Xxxxxxx, and others
nominated by Xxxxxx Xxxxxxx, or in lieu thereof, Xxxxx Xxxxxxx, such that with
Xxxxxx Xxxxxxx and Xxxxx Xxxxxxx the nominees constitute the majority of the
TFN's board of directors. Xxxxxx Xxxxxxx and Xxxxx Xxxxxxx shall, during the
same time periods, vote in favor of one nominee of Pegasus.
(b) Pegasus, Xxxxxx Xxxxxxx, Xxxxx Xxxxxxx also agrees to vote all of his, her
or its shares from time to time and at all times until the earlier of the
Expiration Date or the Voting Termination Date, in whatever manner as shall be
necessary to ensure that the director(s) elected pursuant to Section 2(a) of
this Agreement may not be removed from office (other than for cause) unless (A)
such removal is directed or approved by Xxxxxx Xxxxxxx, or in lieu thereof,
Xxxxx Xxxxxxx. Pegasus, Xxxxxx Xxxxxxx, and Xxxxx Xxxxxxx agrees to execute any
written consents required to effectuate the obligations of this Agreement.
(c) Prior to the Expiration Date or the Voting Termination Date, as the case may
be, Pegasus, Xxxxxx Xxxxxxx and Xxxxx Xxxxxxx shall not enter into any agreement
or understanding with any Person to vote or give instructions in any manner
inconsistent with Section 2(a).
3. No Restrictions on Transfer. It is understood and agreed that (i) this
Agreement does not prohibit the Pegasus from selling or otherwise transferring
the Subject Shares, provided, however, that it shall be a condition to any such
sale or transfer of the Subject Shares that the transferee agrees to become a
party to this Agreement.
4. Covenants of Pegasus. The Pegasus covenants and agrees for the benefit of TFN
that, unless waived by TFN's board of directors, until the earlier of the Voting
Expiration Date or the Expiration Date, Pegasus will not:
(a) sell, transfer, pledge, hypothecate, encumber, assign, tender or otherwise
dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, pledge, hypothecation,
encumbrance, assignment, tender or other disposition of, (i) any Subject Shares
or any interest therein, or (ii) any Company Options and Other Rights or any
interest therein; provided, however, that Pegasus may convert, exercise or
exchange Company Options and Other Rights into or for shares of Company Capital
Stock in which event such shares of Capital Stock shall become and be deemed
Subject Shares subject to all the terms and conditions of this Agreement;
(b) grant any powers of attorney or proxies or consents in respect of any of the
Subject Shares, deposit any of such Subject Shares into a voting trust, or enter
into a voting agreement with respect to any of such Subject Shares; and
5. Representations and Warranties of Pegasus. Pegasus represents and warrants to
TFN and the Stockholder as follows:
(a) As of the date of this Agreement and at all times through the earlier of the
Voting Expiration Date or the Expiration Date:
(i) Pegasus is and will be the Beneficial Owner (free and clear of any
encumbrances or restrictions) of the outstanding shares of Company Capital Stock
set forth under the heading "Shares of Company Capital Stock Beneficially
Owned", on the signature page hereof.
(ii) Pegasus is and will be the Beneficial Owner (free and clear of any
encumbrances or restrictions) of the outstanding Company Options and Other
Rights set forth under the heading "Company Options and Other Rights
Beneficially Owned" on the signature page hereof (except to the extent that such
Company Options and Other Rights are converted into, exercised or exchanged for
shares of Company Capital Stock); and
(iii) Pegasus does not directly or indirectly Beneficially Own any shares of
Company Capital Stock or Company Options or Other Rights or other securities of
the Company, other than the shares of Company Capital Stock and Company Options
and Other Rights set forth on the signature page hereof.
(b) Pegasus has and will have the legal capacity, power and authority to enter
into and perform all of Pegasus's obligations under this Agreement. This
Agreement has been duly executed and delivered by Pegasus and, upon its
execution and delivery by Pegasus, will constitute a legal, valid and binding
obligation of Pegasus, enforceable against Pegasus in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or relating to
creditors rights generally, and the availability of injunctive relief and other
equitable remedies.
(c) The execution, delivery and performance by Pegasus of this Agreement will
not (i) conflict with, require a consent, waiver or approval under, or result in
a breach of or default under, any of the terms of any contract, commitment or
other obligation (written or oral) to which Pegasus is a party or by which any
of Pegasus's assets may be bound, and the organizational documents of Pegasus,
or (ii) violate any order, writ injunction, decree, judgment, order, statute,
rule or regulation applicable to Pegasus or any of its assets.
(d) No filing with, and no permit, authorization, consent or approval of, any
state or federal public body or authority is a pre-condition for the execution
of this Agreement by Pegasus and the consummation by Pegasus of the transactions
contemplated hereby.
6. Adjustments; Additional Shares. In the event (a) of any stock dividend, stock
split, merger, recapitalization, reclassification, combination, exchange of
shares or the like of the capital stock of TFN, of or affecting the Subject
Shares or (b) that Pegasus shall become the Beneficial Owner of any additional
shares of Company Capital Stock or other securities entitling the holder thereof
to vote or give consent with respect to the matters set forth in Section 2(a),
then the terms of this Agreement shall apply to the shares of Company Capital
Stock or other instruments or documents held by Pegasus immediately following
the effectiveness of the events described in clause (a) or Pegasus becoming the
Beneficial Owner thereof as described in clause (b), as though, in either case,
they were Subject Shares hereunder.
7. Amendments and Waivers. Any provision of this Agreement may be amended or
waived if, and only if, such amendment or waiver is in writing and is signed, in
the case of an amendment, by each party to this Agreement, or in the case of a
waiver, by the party against whom the waiver is to be effective. No failure or
delay by any party in exercising any right or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. To the maximum extent permitted by Law, (a) no waiver that may be
given by a party shall be applicable except in the specific instance for which
it was given and (b) no notice to or demand on one party shall be deemed to be a
waiver of any obligation of such party or the right of the party giving such
notice or demand to take further action without notice or demand.
8. Assignment. This Agreement may not be assigned by either party hereto without
the prior written consent of the other party. Subject to the foregoing, all of
the terms and provisions of this Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective executors, heirs, personal
representatives, successors and assigns.
9. Entire Agreement. This Agreement and the documents, instruments and other
agreements specifically referred to herein or delivered pursuant hereto, set
forth the entire understanding of the parties with respect to the subject matter
hereof. Any and all previous agreements and understandings between or among the
parties regarding the subject matter hereof, whether written or oral, are
superseded by this Agreement.
10. Notices. Any notice, request, demand, waiver, consent, approval or other
communication which is required or permitted hereunder shall be in writing and
shall be deemed given (a) on the date established by the sender as having been
delivered personally; (b) on the date delivered by a private courier as
established by the sender by evidence obtained from the courier; (c) on the date
sent by facsimile, with confirmation of transmission, if sent during normal
business hours of the recipient, if not, then on the next business day; or (d)
on the fifth day after the date mailed, by certified or registered mail, return
receipt requested, postage prepaid. Such communications, to be valid, must be
addressed as follows:
If to TFN, to:
Transnational Financial Network, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx, Chief Executive Officer
Facsimile: (000) 000-0000
If to Pegasus:
W. Xxxxx Xxxxx, Jr.
0000 Xxxxxx Xxxx
Xxxxx 0000
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
or to such other address or to the attention of such Person or Persons as the
recipient party has specified by prior written notice to the sending party (or
in the case of counsel, to such other readily ascertainable business address as
such counsel may hereafter maintain). If more than one method for sending notice
as set forth above is used, the earliest notice date established as set forth
above shall control.
12. Captions. All captions contained in this Agreement are for convenience of
reference only, do not form a part of this Agreement and shall not affect in any
way the meaning or interpretation of this Agreement.
13. Counterparts. This Agreement may be executed in counterparts, and either
party may execute such counterpart, both of which when executed and delivered
shall be deemed to be an original and which counterparts taken together shall
constitute but one and the same instrument.
14. Severability; Enforcement. Any provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
15. Specific Performance. Pegasus acknowledges that the agreements contained in
this Agreement are an integral part of the transactions contemplated by the
Common Stock Purchase Agreement, and that, without these agreements, TFN and the
Stockholder would not enter into the Common Stock Purchase Agreement, and
acknowledges that damages would be an inadequate remedy for any breach by
Pegasus of the provisions of this Agreement. Accordingly, Pegasus agrees that
Pegasus's obligations hereunder shall be specifically enforceable and Pegasus
shall not take any action to impede the other from seeking to enforce such right
of specific performance.
16. Governing Law. This Agreement shall be governed by and interpreted and
enforced in accordance with the Laws of the State of California, without giving
effect to any choice of Law or conflict of Laws rules or provisions (whether of
the State of California or any other jurisdiction) that would cause the
application of the Laws of any jurisdiction other than the State of California.
Each party irrevocably submits to the exclusive jurisdiction of (a) California,
and (b) the United States District Court for the Northern District of
California, for the purposes of any Action arising out of this Agreement or any
transaction contemplated hereby. Each party agrees to commence any such Action
either in the United States District Court for the Northern District of
California or if such Action may not be brought in such court for jurisdictional
reasons, in the Superior Court of the State of California, San Francisco County.
Each party further agrees that service of any process, summons, notice or
document by U.S. registered mail to such party's respective address set forth
above shall be effective service of process for any Action in California with
respect to any matters to which it has submitted to jurisdiction in this Section
15. Each party irrevocably and unconditionally waives any objection to the
laying of venue of any Action arising out of this Agreement or the transactions
contemplated hereby in (i) the United States District Court for the Northern
District of California, or (ii) the Superior Court of the State of California
San Francisco County, and hereby further irrevocably and unconditionally waives
and agrees not to plead or claim in any such court that any such Action brought
in any such court has been brought in an inconvenient forum.
[Signature Page To Follow]
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto all as of the day and year first above written.
TRANSNATIONAL FINANCIAL
NETWORK, INC.
By: _____________________________
Name: Xxxxxx Xxxxxxx
Title: Chief Executive Officer
XXXXXX XXXXXXX
By: _____________________________
Name: Xxxxxx Xxxxxxx, individually
XXXXX XXXXXXX
By: _____________________________
Name: Xxxxx Xxxxxxx, individually
Pegasus Funds TFN Partners, LP, a Texas Limited Partnership PEGASUS
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By: _____________________________
Name:
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