EXHIBIT 4.3
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR ANY
STATE SECURITIES LAWS AND NEITHER SUCH SHARES NOR ANY INTEREST THEREIN
MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS
(1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER
THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT.
IN ADDITION, A PREFERRED STOCK PURCHASE AGREEMENT DATED AS OF MAY 18TH,
2006 (THE "PURCHASE AGREEMENT"), A COPY OF WHICH MAY BE OBTAINED FROM
THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICE, CONTAINS CERTAIN
ADDITIONAL AGREEMENTS BETWEEN THE PARTIES WITH RESPECT TO THIS WARRANT.
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FAMILY HOME HEALTH SERVICES INC.
COMMON STOCK PURCHASE WARRANT "B"
No. W-_______ Holder: ____________________________
____________________________
Number of Shares: ___________________ ____________________________
____________________________
Original Issue Date: May 24, 2006
Expiration Date: May 24, 2011
Exercise Price per Share: $ 0.75
Family Home Health Services Inc., a company organized and existing under the
laws of the State of Nevada (the "COMPANY"), hereby certifies that, for value
received, BARRON PARTNERS LP, or its registered assigns (the "WARRANT HOLDER"),
is entitled, subject to the terms set forth below, to purchase from the Company
up to _________________________ (________________) shares (as adjusted from time
to time as provided in Section 7, the "WARRANT SHARES") of common stock, $.001
par value (the "COMMON STOCK"), of the Company at a price of Seventy-Five Cents
($0.75) per Warrant Share (as adjusted from time to time as provided in Section
7, the "EXERCISE PRICE"), at any time and from time to time from and after the
date thereof and through and including 5:00 p.m. New York City time on May 24,
2011 (or eighteen months after effectiveness of a Registration Statement
subsequent to the issuance hereof (such
eighteen months to be extended by one month for each month or portion of a month
during which a Registration Statement's effectiveness has lapsed or been
suspended), whichever is longer) (the "EXPIRATION DATE"), and subject to the
following terms and conditions:
1. REGISTRATION OF WARRANT. The Company shall register this Warrant upon
records to be maintained by the Company for that purpose (the "WARRANT
REGISTER"), in the name of the record Warrant Holder hereof from time to time.
The Company may deem and treat the registered Warrant Holder as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Warrant Holder, and for all other purposes, and the Company shall not be
affected by notice to the contrary.
2. INVESTMENT REPRESENTATION. The Warrant Holder by accepting this
Warrant represents that the Warrant Holder is acquiring this Warrant for its own
account or the account of an affiliate for investment purposes and not with the
view to any offering or distribution and that the Warrant Holder will not sell
or otherwise dispose of this Warrant or the underlying Warrant Shares in
violation of applicable securities laws. The Warrant Holder acknowledges that
the certificates representing any Warrant Shares will bear a legend indicating
that they have not been registered under the United States Securities Act of
1933, as amended (the "1933 ACT") and may not be sold by the Warrant Holder
except pursuant to an effective registration statement or pursuant to an
exemption from registration requirements of the 1933 Act and in accordance with
federal and state securities laws. If this Warrant was acquired by the Warrant
Holder pursuant to the exemption from the registration requirements of the 1933
Act afforded by Regulation S thereunder, the Warrant Holder acknowledges and
covenants that this Warrant may not be exercised by or on behalf of a Person
during the one year distribution compliance period (as defined in Regulation S)
following the date hereof. "PERSON" means an individual, partnership, firm,
limited liability company, trust, joint venture, association, corporation, or
any other legal entity.
3. VALIDITY OF WARRANT AND ISSUE OF SHARES. The Company represents and
warrants that this Warrant has been duly authorized and validly issued and
warrants and agrees that all of the Common Stock that may be issued upon the
exercise of the rights represented by this Warrant will, when issued upon such
exercise, be duly authorized, validly issued, fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issue thereof. The
Company further warrants and agrees that during the period within which the
rights represented by this Warrant may be exercised, the Company will at all
times have authorized and reserved a sufficient number of shares of Common Stock
to provide for the exercise of the rights represented by this Warrant.
4. REGISTRATION OF TRANSFERS AND EXCHANGE OF WARRANTS.
a. Subject to compliance with the legend set forth on the face
of this Warrant, the Company shall register the transfer of any portion of this
Warrant in the Warrant Register, upon surrender of this Warrant with the Form of
Assignment attached hereto duly completed and signed, to the Company at the
office specified in or pursuant to Section 13. Upon any such registration or
transfer, a new warrant to purchase
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Common Stock, in substantially the form of this Warrant (any such new warrant, a
"NEW WARRANT"), evidencing the portion of this Warrant so transferred shall be
issued to the transferee and a New Warrant evidencing the remaining portion of
this Warrant not so transferred, if any, shall be issued to the transferring
Warrant Holder. The acceptance of the New Warrant by the transferee thereof
shall be deemed the acceptance of such transferee of all of the rights and
obligations of a Warrant Holder.
b. This Warrant is exchangeable, upon the surrender hereof by
the Warrant Holder to the office of the Company specified in or pursuant to
Section 13 for one or more New Warrants, evidencing in the aggregate the right
to purchase the number of Warrant Shares which may then be purchased hereunder.
Any such New Warrant will be dated the date of such exchange.
5. EXERCISE OF WARRANTS.
a. Upon surrender of this Warrant with the Form of Election to
Purchase attached hereto duly completed and signed to the Company, at its
address set forth in Section 13, and upon payment and delivery of the Exercise
Price per Warrant Share multiplied by the number of Warrant Shares that the
Warrant Holder intends to purchase hereunder, in lawful money of the United
States of America, in cash or by certified or official bank check or checks, to
the Company, all as specified by the Warrant Holder in the Form of Election to
Purchase, the Company shall promptly (but in no event later than 7 business days
after the Date of Exercise (as defined herein)) issue or cause to be issued and
cause to be delivered to or upon the written order of the Warrant Holder and in
such name or names as the Warrant Holder may designate (subject to the
restrictions on transfer described in the legend set forth on the face of this
Warrant), a certificate for the Warrant Shares issuable upon such exercise, with
such restrictive legend as required by the 1933 Act. Any person so designated by
the Warrant Holder to receive Warrant Shares shall be deemed to have become
holder of record of such Warrant Shares as of the Date of Exercise of this
Warrant.
b. A "DATE OF EXERCISE" means the date on which the Company
shall have received (i) this Warrant (or any New Warrant, as applicable), with
the Form of Election to Purchase attached hereto (or attached to such New
Warrant) appropriately completed and duly signed, and (ii) payment of the
Exercise Price for the number of Warrant Shares so indicated by the Warrant
Holder to be purchased.
c. This Warrant shall be exercisable at any time and from time
to time for such number of Warrant Shares as is indicated in the attached Form
of Election to Purchase. If less than all of the Warrant Shares which may be
purchased under this Warrant are exercised at any time, the Company shall issue
or cause to be issued, at its expense, a New Warrant evidencing the right to
purchase the remaining number of Warrant Shares for which no exercise has been
evidenced by this Warrant.
d. (i) Notwithstanding anything contained herein to the contrary
but subject to Section 6, the holder of this Warrant may, at its election
exercised in its sole discretion, exercise this Warrant in whole or in part by
delivering to the Company a duly
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executed Form of Election to Purchase marked "Cashless Exercise" and designating
the number of Warrant Shares desired by the Warrant Holder out of the total for
which the Warrant is exercisable and, in lieu of making the cash payment
otherwise contemplated to be made to the Company upon such exercise in payment
of the Aggregate Exercise Price, elect instead to receive upon such exercise the
"NET NUMBER" of shares of Common Stock determined according to the following
formula (a "CASHLESS EXERCISE"):
Net Number = (A x (B - C))/B
(ii) For purposes of the foregoing formula:
A= the total number shares with respect to which this
Warrant is then being exercised.
B= the last reported sale price (as reported by
Bloomberg) of the Common Stock on the trading day
immediately preceding the date of the Exercise Notice.
C= the Warrant Exercise Price then in effect at the
time of such exercise.
e. The Warrant Holder agrees not to elect a Cashless Exercise
for a period of six (6) months from original issue date of this Warrant. The
Warrant Holder also agrees not to elect a Cashless Exercise so long as there is
an effective registration statement for the Warrant Shares.
6. MAXIMUM EXERCISE. The Warrant Holder shall not be entitled to
exercise this Warrant on a Date of Exercise in connection with that number of
shares of Common Stock which would be in excess of the sum of (i) the number of
shares of Common Stock beneficially owned by the Warrant Holder and its
affiliates on an exercise date, and (ii) the number of shares of Common Stock
issuable upon the exercise of this Warrant with respect to which the
determination of this limitation is being made on an exercise date, which would
result in beneficial ownership by the Warrant Holder and its affiliates of more
than 4.9% of the outstanding shares of Common Stock on such date. This Section 6
may be waived or amended only with the consent of the Warrant Holder and the
consent of holders of a majority of the shares of outstanding Common Stock of
the Company who are not Affiliates. For the purposes of the immediately
preceding sentence, the term "AFFILIATE" shall mean any person: (a) that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Company; or (b) who
beneficially owns (i) any shares of the Company's Series A Convertible Preferred
Stock, (ii) the Company's Common Stock Purchase Warrant "A"or "C" dated May 24,
2006, or (iii) this Warrant. For the purposes of the immediately preceding
sentence, beneficial ownership shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended (the "1934 Act"), and
Regulation 13d-3 thereunder.
7. CALL BY THE COMPANY. This Warrant contains a callable feature
requiring the automatic exercise at any time prior to the Expiration Date if the
closing price of the
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Company's common stock is equal to or in excess of the callable price of $ 1.30
for a period of at least seventeen (17) out of twenty (20) consecutive trading
days and there is an effective Registration Statement covering the shares of
Common Stock underlying this Warrant ("Automatic Exercise"). Upon occurrence of
the Automatic Exercise, the Company shall provide the Holder with notice of such
Automatic Conversion ("Automatic Exercise Notice"). Upon receipt of the
Automatic Exercise Notice, the Holder must (i) exercise, in whole or in part,
this Warrant within ten (10) days; or (ii) notify the Company of its intent to
transfer this Warrant pursuant to Section 4 of this Warrant. In the event that
the Holder elects to transfer this Warrant pursuant to Section 4 of this
Warrant, then the subsequent holder of this Warrant must exercise this Warrant
on or before the thirtieth (30) day after notification of intent to transfer
this Warrant. In the event that this Warrant is exercised, the Holder must
deliver to the Company at its office at the address set forth in Section 13, on
or before 5:00 p.m., Eastern Time, on the required date, (i) Form of Election to
Purchase properly executed and completed by Holder or an authorized officer
thereof, (ii) a check or wire transfer payable to the order of the Company, in
an amount equal to the product of the Exercise Price MULTIPLIED BY the number of
Warrant Shares specified in the Exercise Notice, AND (iii) this Warrant. If the
Holder does not exercise this Warrant within ten (10) days from receipt of the
Automatic Exercise Notice or, in the event that this Warrant has been
transferred pursuant to Section 4 of this Warrant, the subsequent holder of this
Warrant does not exercise this Warrant within thirty (30) days after
notification of intent to transfer this Warrant, then this Warrant will expire.
Notwithstanding anything to the contrary contained in this Section 7, the
Warrant Holder shall not be required, compelled or otherwise forced to exercise
any portion of this Warrant which would result in beneficial ownership by the
Warrant Holder and its affiliates of more than 4.9% of the then outstanding
number of shares of Common Stock on such date. For the purposes of the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the 1934 Act as amended, and Regulation 13d-3
thereunder.
8. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. The character of
the shares of stock or other securities at the time issuable upon exercise of
this Warrant and the Exercise Price therefore, are subject to adjustment upon
the occurrence of the following events, and all such adjustments shall be
cumulative:
a. ADJUSTMENT FOR STOCK SPLITS, STOCK DIVIDENDS,
RECAPITALIZATIONS, ETC. The Exercise Price of this Warrant and the number of
shares of Common Stock or other securities at the time issuable upon exercise of
this Warrant shall be appropriately adjusted to reflect any stock dividend,
stock split, combination of shares, reclassification, recapitalization or other
similar event affecting the number of outstanding shares of stock or securities.
b. ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER, ETC. In
case of any consolidation or merger of the Company with or into any other
corporation, entity or person, or any other corporate reorganization, in which
the Company shall not be the continuing or surviving entity of such
consolidation, merger or
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reorganization (any such transaction being hereinafter referred to as a
"REORGANIZATION"), then, in each case, the Warrant Holder, on exercise hereof at
any time after the consummation or effective date of such Reorganization (the
"EFFECTIVE DATE"), shall receive, in lieu of the shares of stock or other
securities at any time issuable upon the exercise of the Warrant issuable on
such exercise prior to the Effective Date, the stock and other securities and
property (including cash) to which such holder would have been entitled upon the
Effective Date if such holder had exercised this Warrant immediately prior
thereto (all subject to further adjustment as provided in this Warrant).
c. CERTIFICATE AS TO ADJUSTMENTS. In case of any adjustment or
readjustment in the price or kind of securities issuable on the exercise of this
Warrant, the Company will promptly give written notice thereof to the holder of
this Warrant in the form of a certificate, certified and confirmed by the Board
of Directors of the Company, setting forth such adjustment or readjustment and
showing in reasonable detail the facts upon which such adjustment or
readjustment is based.
d. THE COMPANY FAILS TO MEET CERTAIN INCOME PER SHARE
PROJECTIONS. In the event the Company has income of between $0.098 and $0.059
(40% Decline) (where such income in this paragraph shall always be defined as
operating income on a fully diluted basis (fully-diluted includes all
potentially dilutive securities and derivatives, such as warrants, options,
convertible preferred, convertible debt, common shares, etc. outstanding (in or
out of the money as of the date of the end of the reported period) as reported
for the audited fiscal year ended December 31st, 2006 from continuing operations
before any non-recurring items) then the then current Exercise Price to the
Warrant Holder at the time the audited numbers are reported to the SEC shall be
decreased proportionately by 0% if the income is $0.098 per share or greater and
by a maximum of 40% if the income is $0.059 per share (40% decrease). For
example if the income is $0.078 per share (20% Decline) then the then current
Exercise Price shall be reduced by 20%. In the event the Company has income of
any amount below $0.059 per share, then the then current Exercise Price shall be
decreased by 40% and not more, and if the Company has no income or negative
income, then the then current Exercise Price shall be decreased by 70% and not
more. Any adjustment pursuant to this Section 7(d) shall be made within five
business days of the audited numbers being reported to the SEC.
e. THE COMPANY SELLS, GRANTS OR ISSUES ANY SHARES, OPTIONS,
WARRANTS, OR ANY INSTRUMENT CONVERTIBLE INTO SHARES OR EQUITY IN ANY FORM BELOW
THE EXERCISE PRICE PER SHARE OF THE WARRANT. Except for the issuance of (i)
shares of Common Stock or options to employees, officers or directors of the
Company pursuant to any stock or option plan duly adopted by a majority of the
non-employee members of the Board of Directors of the Company or a majority of
the members of a committee of non-employee directors established for such
purpose, (ii) securities upon the exercise of or conversion of any securities
issued hereunder, and of any convertible securities, options or warrants issued
and outstanding on the date of this Warrant, provided that such securities have
not been amended since the date of this Warrant to increase the number of such
securities, (iii) securities issued pursuant to acquisitions or strategic
transactions, provided any such issuance shall only be to a person which is,
itself or through its
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subsidiaries, an operating company in a business synergistic with the business
of the Company and in which the Company receives benefits in addition to the
investment of funds, but shall not include a transaction in which the Company is
issuing securities primarily for the purpose of raising capital or to an entity
whose primary business is investing in securities, and (iv) shares issued in a
firm commitment or best efforts underwritten public offering pursuant to a
registration statement on Form S-1 or Form SB-2 under the Securities Act of
1933, as amended, the public offering price of which was not less than $2.50 per
share (as adjusted for any stock splits, stock dividends, combinations,
subdivisions, recapitalizations or the like) and $20.0 million in the aggregate,
in the event the Company sells, grants or issues any shares, options, warrants,
or any instrument convertible into shares or equity in any form below the
current Exercise Price per share of the warrant, then the current exercise price
per share for the warrant shall be reduced to such lower price.
The provisions of this Section 8(e) shall not apply to any issuance of warrants
or shares for which an adjustment is provided under Sections 8(a), 8(b) or 8(d).
9. FRACTIONAL SHARES. The Company shall not be required to issue or
cause to be issued fractional Warrant Shares on the exercise of this Warrant.
The number of full Warrant Shares that shall be issuable upon the exercise of
this Warrant shall be computed on the basis of the aggregate number of Warrants
Shares purchasable on exercise of this Warrant so presented. If any fraction of
a Warrant Share would, except for the provisions of this Section 9, be issuable
on the exercise of this Warrant, the Company shall, at its option, (i) pay an
amount in cash equal to the Exercise Price multiplied by such fraction or (ii)
round the number of Warrant Shares issuable, up to the next whole number.
10. SALE OR MERGER OF THE COMPANY. Upon a Change in Control, the
restriction contained in Section 6 shall immediately be released and the Warrant
Holder will have the right to exercise this Warrant concurrently with such
Change in Control event. For purposes of this Warrant, the term "Change in
Control" shall mean:
(i) the sale of all then outstanding shares of Common Stock of
the Company or the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of the
directors, in an amount sufficient to elect a majority of the Company Board of
Directors; (ii) the sale or transfer of stock sufficient to create a new
controlling interest in the Company; or (iii) the consummation of the sale or
other disposition of all or substantially all of the assets or operations of the
Company other than: (A) a sale of assets in a bankruptcy or insolvency
proceeding or (B) the commencement of a bankruptcy case by the Company (or by
another entity in the event of an involuntary filing) under 11 U.S.C. sections
301, 302, 303 and 304, or the emergence of the Company from bankruptcy.
11. NOTICE OF INTENT TO SELL OR MERGE THE COMPANY. The Company will
give Warrant Holder ten (10) business days notice before the event of a sale of
all or substantially all of the assets of the Company or the merger or
consolidation of the Company in a transaction in which the Company is not the
surviving entity.
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12. ISSUANCE OF SUBSTITUTE WARRANT. In the event of a merger,
consolidation, recapitalization or reorganization of the Company or a
reclassification of Company shares of stock, which results in an adjustment to
the number of shares subject to this Warrant and/or the Exercise Price
hereunder, the Company agrees to issue to the Warrant Holder a substitute
Warrant reflecting the adjusted number of shares and/or Exercise Price upon the
surrender of this Warrant to the Company.
13. NOTICE. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given (i) on the date they are
delivered if delivered in person; (ii) on the date initially received if
delivered by facsimile transmission followed by registered or certified mail
confirmation; (iii) on the date delivered by an overnight courier service; or
(iv) on the third business day after it is mailed by registered or certified
mail, return receipt requested with postage and other fees prepaid as follows:
If to the Company:
-----------------
Family Home Health Services Inc.
801 West Ann Arbor Trail
Suite 200
Plymouth, MI 48170
Attention: President and Chief Executive Officer
With a copy to:
--------------
Butzel Long
150 W. Jefferson Ave., Suite 100
Detroit, MI 48226-4050
Facsimile No.: (313) 225-7080
Attn: Robert A. Hudson, Esq.
If to the Warrant Holder:
------------------------
Barron Partners LP
Barron Capital Advisors LLC,
Managing Partner
Attn: Andrew Barron Worden
730 Fifth Avenue, 9th Floor
New York NY 10019
tel 212-659-7790
14. MISCELLANEOUS.
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a. This Warrant shall be binding on and inure to the benefit of
the parties hereto and their respective successors and permitted assigns. This
Warrant may be amended only by a writing signed by the Company and the Warrant
Holder.
b. Nothing in this Warrant shall be construed to give to any
person or corporation other than the Company and the Warrant Holder any legal or
equitable right, remedy or cause of action under this Warrant; this Warrant
shall be for the sole and exclusive benefit of the Company and the Warrant
Holder.
c. This Warrant shall be governed by, construed and enforced in
accordance with the internal laws of the State of New York without regard to the
principles of conflicts of law thereof.
d. The headings herein are for convenience only, do not
constitute a part of this Warrant and shall not be deemed to limit or affect any
of the provisions hereof.
e. In case any one or more of the provisions of this Warrant
shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby and the parties will attempt in good
faith to agree upon a valid and enforceable provision which shall be a
commercially reasonably substitute therefore, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.
f. The Warrant Holder shall not, by virtue hereof, be entitled
to any voting or other rights of a shareholder of the Company, either at law or
equity, and the rights of the Warrant Holder are limited to those expressed in
this Warrant.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by the authorized officer as of the date first above stated.
FAMILY HOME HEALTH SERVICES INC., a Nevada corporation
By: _________________________________________________
Name: _______________________________________________
Its: President and Chief Executive Officer
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FORM OF ELECTION TO PURCHASE
(To be executed by the Warrant Holder to exercise the right to
purchase shares of Common Stock under the foregoing Warrant)
To: FAMILY HOME HEALTH SERVICES, INC.:
In accordance with the Warrant enclosed with this Form of
Election to Purchase, the undersigned hereby irrevocably
elects to purchase ______________ shares of Common Stock
("Common Stock"), $.001 par value, of FAMILY HOME HEALTH
SERVICES INC and encloses the warrant and $______ for each
Warrant Share being purchased or an aggregate of
$________________ in cash or certified or official bank check
or checks, which sum represents the aggregate Exercise Price
(as defined in the Warrant) together with any applicable taxes
payable by the undersigned pursuant to the Warrant.
The undersigned requests that certificates for the shares of Common Stock
issuable upon this exercise be issued in the name of:
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
(Please print name and address)
____________________________________________________________
(Please insert Social Security or Tax Identification Number)
If the number of shares of Common Stock issuable upon this exercise shall not be
all of the shares of Common Stock which the undersigned is entitled to purchase
in accordance with the enclosed Warrant, the undersigned requests that a New
Warrant (as defined in the Warrant) evidencing the right to purchase the shares
of Common Stock not issuable pursuant to the exercise evidenced hereby be issued
in the name of and delivered to:
____________________________________________________________
____________________________________________________________
____________________________________________________________
(Please print name and address)
Dated: _________________ Name of Warrant Holder:
(Print) _____________________________
(By:) _______________________________
(Name:) _____________________________
(Title:) ____________________________
Signature must conform in all respects
to name of Warrant Holder as specified
on the face of the Warrant
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