EXHIBIT 99.4
This Warrant has not been registered under the Securities Act of 1933, as
amended (the "Securities Act"), or under applicable state securities laws.
Except as provided herein, this Warrant may not be sold, offered for sale,
pledged or hypothecated in the absence of an effective registration statement as
to this Warrant under the Securities Act and applicable state securities laws or
an opinion of counsel reasonably satisfactory to Transnational Financial
Network, Inc. that such registration is not required or unless sold pursuant to
the provisions of Rule 144 of the Securities Act.
Transnational Financial Network, Inc.
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WARRANT TO PURCHASE STOCK
[Insert funding date of Stock Purchase Agreement]
1. Grant. Transnational Financial Network, Inc., a California
corporation (the "Company"), for value received hereby grants to Pegasus Funds
TFN Partners, LP, a Texas Limited Partnership (the "Holder") under the terms
herein the right from time to time to subscribe for and purchase up to 1,650,000
shares of the Company's authorized but unissued no par value common stock (the
"Common Stock"), which number of shares shall be subject to adjustment as
provided below, and which shares upon payment of the aggregate Exercise Price
(as hereinafter defined) shall be fully paid and non-assessable. The Company's
no par value common shares are sometimes hereinafter referred to as Common
Stock. The Common Stock shares issuable under this Warrant are sometimes
hereinafter referred to as the Warrant Shares.
2. Term. The right to exercise this Warrant shall commence on the date
hereof and shall expire at 11:59 p.m. Pacific Time on June 30, 2009 (the
"Exercise Period").
3. Exercise Price. The per share exercise price of this Warrant (the
"Original Exercise Price") shall be at $0.70 per share. The Original Exercise
Price shall be subject to certain adjustments from time to time as set forth in
paragraph 4 below, with such Original Exercise Price, as adjusted, hereinafter
referred to as the Exercise Price.
4. Adjustments upon Certain Capital Events.
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(a) Stock Split or Dividend; Adjustment to Exercise Price and
Number of Warrant Shares. In case the shares of Common Stock at any time
outstanding shall be subdivided into a greater or combined into a lesser number
of shares of Common Stock, by stock-split, reverse split or otherwise, or in
case shares of Common Stock shall be issued as a stock dividend, the Exercise
Price shall be increased or decreased, as applicable, to an amount which shall
bear the same relation to the Exercise Price in effect immediately prior to such
subdivision, combination or stock dividend as the total number of shares of
Common Stock outstanding immediately prior to such subdivision, combination or
stock dividend shall bear to the total number of shares of Common Stock
outstanding immediately after such subdivision, combination or stock dividend;
likewise, in case of such subdivision, combination or stock dividend, the number
of Warrant Shares shall be increased or decreased as applicable, to the number
which shall bear the same relation to the number of Warrant Shares obtainable
hereunder immediately prior to such event, as the total number of shares of
Common Stock outstanding immediately after such event shall bear to the total
number of shares of Common Stock outstanding immediately prior to such event. An
adjustment made pursuant to this subparagraph 4(a) shall become effective
immediately after the effective date of such subdivision, combination or stock
dividend retroactive to the record date, if any, for such subdivision,
combination or stock dividend.
(b) Merger, Reclassification, etc. In case of any capital
reorganization, or any reclassification of the Common Stock of the Company, or
in case of any consolidation of the Company with or the merger of the Company
into any other corporation or other entity (other than a consolidation or merger
in which the Company is the continuing corporation) or in case of the sale of
all or substantially all of the property and assets of the Company to any other
corporation or other entity, this Warrant shall, effective upon such
reorganization, reclassification, consolidation, merger or sale be exercisable
upon the terms and conditions specified herein, for the number of shares of
stock or other securities or property of the Company, or of the corporation,
person or other entity resulting from such consolidation or surviving such
merger or to which such sale shall be made, as the case may be, which the Holder
of this Warrant would have been entitled to receive had this Warrant been
exercised immediately prior to such reorganization, reclassification,
consolidation, merger or sale or any record date with respect thereto. In any
such case, if necessary, the provision set forth in this Warrant with respect to
the rights and interests thereafter of the Holder shall be appropriately
adjusted by the Board of Directors so as to be applicable, as nearly as may
reasonably be possible, to any shares of stock or other securities or property
thereafter deliverable on the exercise of this Warrant. The subdivision or
combination of shares of Common Stock at any time outstanding into a greater or
lesser number of shares of Common Stock which results in adjustment pursuant to
subparagraph 4(a) above shall not be deemed to be a reclassification of the
Common Stock of the Company for the purposes of this subparagraph 4(b). The
Company shall not effect any such consolidation, merger, or sale, unless prior
to or simultaneously with the consummation thereof the successor corporation (if
other than the Company) resulting from such consolidation or merger or the
corporation purchasing such assets shall assume, by written instrument executed
and delivered to the Company, the obligation to deliver to the Holder such
shares of stock, securities or assets to which in accordance with the foregoing
provisions, such Holder may be entitled, as well as any other obligations
arising under this Warrant.
(c) Notice of Adjustment. Whenever the number of Warrant Shares or
the Exercise Price is adjusted, as herein provided, the Company shall promptly
notify the Holder in writing of such adjustment(s) and shall deliver to such
Holder a statement setting forth the number of Warrant Shares and the Exercise
Price after such adjustment(s), setting forth a brief statement of the facts
requiring such adjustment(s) and setting forth the computation by which such
adjustment(s) was made;
(d) Statement of Warrant. The form of this Warrant need not be
changed because of any change in the Exercise Price or in the number of Warrant
Shares.
5. Reservation and Authorization of Common Stock. The Company covenants
and agrees (a) that all shares of Common Stock which may be issued upon the
exercise of this Warrant will, upon issuance, be validly issued, fully paid and
nonassessable and free of all transfer taxes, liens and charges with respect to
the issue thereof, (b) that during the Exercise Period, the Company will at all
times have authorized, and reserved for the purpose of issue or transfer upon
exercise of this warrant, sufficient shares of Common Stock to provide for the
exercise of this Warrant and (c) that the Company will take all such action as
may be necessary to ensure that the shares of Common Stock issuable upon the
exercise of this Warrant may be so issued without violation of any applicable
law or regulation, or any requirement of any securities exchange upon which any
capital stock of the Company may be listed.
6. Closing of Books. The Company will at no time close its transfer
books against the transfer of this Warrant or of any shares of Common Stock or
other securities issuable upon the exercise of this Warrant in any manner which
interferes with the timely exercise of this Warrant.
7. Exchange of Shares for Exercise Price. The Holder at its option may
provide the Exercise Price for Warrant Shares by reducing the number of shares
for which the Warrant is otherwise exercisable by the number of shares having an
aggregate Fair Market Value (as defined below) on the Exercise Date equal to the
aggregate Exercise Price being paid by such reduction. For purposes of this
Warrant, "Fair Market Value" of a share of Common Stock shall mean the average
of the most recent 20 trading days' closing price of the Common Stock as
reported for that day by the principal national or regional stock exchange on
which the Common Stock is listed, or if the Common Stock is not listed on any
such exchange, as reported by the National Association of Securities Dealers
Automated Quotation Systems ("NASDAQ"), or if such Common Stock is not quoted on
NASDAQ, as reported by the National Quotation Bureau Incorporated. If the Fair
Market Value cannot be established as described above, the Fair Market Value
shall be the fair market value of the Common Stock of the Company as determined
in good faith by the Board of Directors of the Company.
8. Exercise Procedure. This Warrant may be exercised by the Holder, in
whole or in part (but not as to a fractional share of Common Stock), by
presenting it and tendering the Exercise Price for the Warrant Shares as to
which the Warrant is being exercised in legal tender or by bank's, cashier's or
certified check to the Company, or by reducing the number of shares for which
this Warrant may be exercised pursuant to Paragraph 7 above, at 000 Xxxxxxx
Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, along with a duly exercised written
subscription substantially in the form of Exhibit 1 hereof. The date on which
this Warrant is thus surrendered, accompanied by tender or payment as herein
provided, is referred to herein as the Exercise Date. The Company shall
forthwith, but in no event later than ten (10) business days after the Exercise
Date, at its expense (including the payment of issuance taxes), issue and
deliver to the Holder certificate(s) representing the number of shares of Common
Stock so purchased, together with any cash for fractional shares of Common Stock
paid pursuant to paragraph 9 below. Such shares of Common Stock shall be deemed
issued to the Holder for all purposes as of the opening of business on the
Exercise Date notwithstanding any delay in the actual issuance. Unless this
Warrant has expired, a new Warrant representing the portion of this Warrant, if
any, that shall not have been exercised also shall be delivered to the Holder
within such time.
9. Fractional Interest. The Company shall not be required to issue
fractional shares of Common Stock on the exercise of this Warrant. The number of
full shares of Common Stock which shall be issuable upon such exercise shall be
computed on the basis of the aggregate number of whole shares of Common Stock
purchasable on exercise of the Warrant (or portion thereof so presented). If any
fraction of a share of Common Stock would, except for the provisions of this
paragraph 9 be issuable on the exercise of the Warrant (or proportion thereof so
presented), the Company shall pay an amount in cash calculated by it to be equal
to the product yielded by the multiplication of (i) the Fair Market Value of a
share of Common Stock (as defined in paragraph 7 above) on the Exercise Date by
(ii) the fraction of a share of Common Stock which the Holder would otherwise be
entitled to receive as a result of such exercise.
10. Resale of Warrant or Shares. Neither this Warrant nor the
securities issuable upon exercise of this Warrant have been registered under the
Securities Act, or under the securities laws of any state. Neither this Warrant
nor such securities when issued may be sold, transferred, pledged or
hypothecated, directly or indirectly, in whole or in part, in the absence of (i)
an effective registration statement for this Warrant or such securities, as the
case may be, under the Securities Act and such registration or qualification as
may be necessary under the securities laws of any state, or (ii) if requested by
the Company, an opinion of counsel reasonably satisfactory to the Company that
such registration or qualification is not required. In the absence of such an
effective registration statement or opinion of counsel, the Company shall cause
a certificate or certificates evidencing all or any of the securities issued
upon exercise of this Warrant prior to said registration and qualification of
such securities to bear the following legend:
"The shares evidenced by this certificate have not been registered under the
Securities Act of 1933, as amended (the "Act"), or under the securities laws of
any state. These shares may not be sold, transferred, pledged or hypothecated,
directly or indirectly, in whole or in part, in the absence of an effective
registration statement under the Act, as amended, and such registration or
qualification as may be necessary under the securities laws of any state, or an
opinion of counsel reasonably satisfactory to the Company that such registration
or qualification is not required."
11. Transfer. This Warrant shall be registered on the books of the
Company which shall be kept at its principal office for that purpose, and shall
be transferable in whole or in part but only on such books by the Holder in
person or by duly authorized attorney with written notice substantially in the
form of Exhibit 2 hereof, and only in compliance with paragraph 10. The Company
may issue appropriate stop orders to its transfer agent to prevent a transfer in
violation of paragraph 10.
12. Registration Rights. The Holder has no rights of registration of
the Warrant Shares under this Agreement.
13. Notice. Any time notice is required by this Warrant to be given to
the Holder, such notice shall be provided by first class mail, postage prepaid
or by facsimile transmission or any other means of physical delivery reasonably
calculated to reach the Holder at least as quickly as first class mail, to the
address or facsimile telephone number of the Holder specified below:
Pegasus Funds TFN Partners, LP, a Texas Limited Partnership
0000 Xxxxxx Xxxx
Xxxxx 0000
Xxxxxx, XX 00000
14. Replacement of Warrant. At the request of the Holder and on
production of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of this Warrant (and in the case of loss,
theft, or destruction, if required by the Company, upon delivery of an indemnity
agreement with surety in such reasonable amount as the Company may determine
thereof), the Company at its expense will issue in lieu thereof a new Warrant of
like tenor, representing the right to subscribe for and purchase the number of
shares of Common Stock which may be subscribed for and purchased hereunder.
15. Investment Covenant. The Holder, by its acceptance hereof,
covenants that this Warrant is, and any stock issued hereunder will be, acquired
solely for investment purposes, and that the Holder will not distribute the same
in violation of any state or federal law or regulation.
16. Due Incorporation, Authority, Etc. Company represents that it is
duly incorporated under the laws of the State of California; that it has been
duly authorized by all necessary corporate action to give this Warrant to
Holder; and that this Warrant, when executed on Company's behalf by the person
named below will be binding upon Company in accordance with the terms and
conditions set forth in this Warrant.
17. Entire Agreement. This Warrant Agreement constitutes the complete
and entire agreement between the Company and the Holder regarding the terms of
the Warrant described herein.
18. Venue. The interpretation, performance and enforcement of this
Agreement shall be governed by the laws of the state of California.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed on
its behalf by its undersigned officer, and its corporate seal to be hereunto
affixed, as of the date first above written.
Transnational Financial Network, Inc.
By:-----------------------------------
Xxxxxx Xxxxxxx
Chief Executive Officer
[Corporate Seal]
Attest: _______________________
Secretary
Dated: [Insert date]
Exhibit 1
FORM OF ELECTION TO PURCHASE
To: Transnational Financial Network, Inc.
Ladies and Gentlemen:
The undersigned hereby irrevocably elects to exercise its right under
the attached Warrant by purchasing ____________________ shares of the Common
Stock of the Company, and herewith tenders in payment for such shares the
exercise price of $_____________________ all in accordance with the terms of the
attached Warrant. The undersigned requests that the certificate(s) for such
shares be issued in the name of _________________________ whose taxpayer number
is _________________ and whose address is __________________________
_______________________ and that such certificates (and any cash delivered
therewith) be delivered to _______________________________ whose address is
_____________________ _____________________________.
Date:_____________________
Signed:_____________________________________
(Signature must conform in all respects to name of Xxxxxx as specified
on face of the Warrant.)
Name of Holder:
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(please print)
Address of Holder:
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Exhibit 2
ASSIGNMENT SEPARATE FROM WARRANT
FOR VALUE RECEIVED,
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does hereby assign and transfer unto -----------------------------------------a
Warrant to Purchase ____________ shares of Transnational Financial Network's
(the "Company") Common Stock together with all right, title and interest
xxxxxxx; and does hereby irrevocably appoint Xxxxxx Xxxxxxx attorney to transfer
said Warrant on the Company's books of with full power of substitution in the
premises.
Done this ___ day of ________________, _________.
Signed:
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By:
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Its:
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