Exhibit 10.3
FAMILY HOME HEALTH SERVICES, INC.
PLACEMENT AGENT AGREEMENT
Made Effective: January 25, 2006
Westminster Securities Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned, Family Home Health Services, Inc., a Nevada
corporation (the "Company"), proposes to issue and sell a maximum of $1,750,000
of investment units ("Units") (the "Maximum Offering"). The terms and conditions
of the sale, issuance, and rights held by the securities underlying these Units
will be as set forth in the purchase agreement among the Company and the
investors in the offering ("Investor(s)") which shall be prepared by the Company
and subject to the approval of the Placement Agent (together with all exhibits,
schedules and supplements thereto, the "Subscription Documents"). The Units, the
preferred stock underlying the Units ("Preferred"), the common stock underlying
the Preferred ("Shares"), the warrants underlying the Units ("Warrants"), the
common stock underlying the Warrants ("Warrant Shares"), and the Placement Agent
Warrants (as hereinafter defined) are referred to collectively herein as the
"Equity".
The offering of Units in the Company (the "Offering") will be conducted
on a "best efforts" basis. As used herein, including with respect to the
representations and warranties contained herein, unless the context otherwise
requires, the term "Company" shall include the Company together with all of its
direct and indirect wholly owned subsidiaries, and all representations and
warranties of the Company herein shall also be deemed made on behalf of and with
respect to each such subsidiary of the Company. This Placement Agent Agreement
("Agreement") is to confirm the arrangements with you (the "Placement Agent"),
with respect to the sale of the Units by the Placement Agent as exclusive agent
for the Company in the Offering.
The Offering will not be registered with the Securities and Exchange
Commission ("SEC") nor with any state securities authority, but rather will be
offered as a private placement pursuant to an exemption from registration under
Regulation D ("Regulation D") promulgated under Section 4(2) and Rule 506 of the
Securities Act of 1933, as amended ("Securities Act"), and available state
securities law exemptions. The Units are to be sold in the Offering only to
"accredited investors", as that term is defined in Regulation D, pursuant to the
Subscription Documents.
SECTION 1. Description of Common Stock. The Equity shall conform in all
respects to descriptions thereof contained in the Subscription Documents.
SECTION 2. Representations and Warranties of the Company. The Company
hereby represents, warrants and covenants with the Placement Agent as follows:
(a) The Subscription Documents, copies of which will be delivered to
the Placement Agent, will disclose all information concerning the Company which
would be material to an investment decision by a reasonable accredited financial
investor. The date on which the Offering is authorized by the Company to
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commence is May 18, 2006 and is herein called the "Commencement Date." The time
and date of each issuance of Units hereunder is herein called the "Issuance
Date" or the "Closing."
(b) The Company is duly incorporated and validly existing as a
corporation in good standing under the laws of the state of its incorporation,
having corporate power and authority to own its properties and conduct its
business and is duly qualified and in good standing in each foreign jurisdiction
where the conduct of its business so requires such qualification. No direct or
indirect rights to acquire Common Stock exist, except as have been previously
disclosed to the public or as disclosed in the Subscription Documents.
(c) The Company's Annual Report on Form 10-KSB, to be filed no later
than May 17, 2006 with the SEC (the "Form 10-KSB"), contains the audited
financial statements of the Company. The Company has previously provided to the
Investors the unaudited financial statements of the Company for the three-,
six-, nine-, and twelve-month periods ended December 31, 2005 and for the three
month period ended March 31, 2006 (collectively, the "Financial Statements").
The Financial Statements, fairly present the information purported to be shown
therein of the Company, at the respective dates to which they apply; and such
Financial Statements have been prepared in conformity with GAAP consistently
applied throughout the periods involved and are in accordance in all material
respects with the books and records of the Company.
(d) The assets of the Company, as shown in the Financial Statements,
are owned by the Company with good title, free and clear of all liens,
encumbrances and equities of record or otherwise, except (i) those specifically
referred to in the Subscription Documents, (ii) those which do not materially
adversely affect the use or value of such assets, (iii) the lien of current
taxes not now due or which are being contested in good faith and for which
adequate reserves have been set aside and (iv) those disclosed in the Financial
Statements. The Company has the full right, power and authority to maintain and
operate its business and properties as the same are now operated or proposed to
be operated and is complying with all laws, ordinances and regulations
applicable thereto, except where the failure to so comply would not have a
material adverse effect on the Company.
(e) There are no actions, suits or proceedings at law or in equity
pending, or to the Company's knowledge threatened, against the Company before or
by any federal or state commission, regulatory body, administrative agency or
other governmental body wherein, either in any case or in the aggregate, an
unfavorable ruling, decision or finding would materially adversely affect the
business, franchise, licenses, permits, operations or financial condition of the
Company which are not disclosed in the Subscription Documents.
(f) The execution and delivery by the Company of this Agreement, the
consummation and performance of the transactions herein contemplated, and
compliance with the terms of this Agreement and the Subscription Documents by
the Company will not conflict with, result in a breach of, or constitute a
material default under, the Certificate or Articles of Incorporation or the
bylaws of the Company, in each case as amended, or any indenture, mortgage, deed
of trust or other agreement or instrument to which the Company is now a party or
by which it or any of its assets or properties is bound, or any law, order,
rule, regulation, writ, injunction, judgment or decree of any government,
governmental instrumentality or court, domestic or foreign, having jurisdiction
over the Company or any of its business or properties, to the extent that such
conflict, breach or default would have a material adverse effect on the Company,
and its subsidiaries as a whole, or their respective businesses, properties or
financial condition on a consolidated basis.
(g) Except as set forth in the Subscription Documents or the Form
10-KSB, all material licenses,
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permits, approvals, leases, contracts and agreements referred to in the
Subscription Documents (including the Financial Statements), along with all
other material licenses, permits, approvals, leases, governmental authorizations
or contracts to which the Company is a party, have been obtained and are valid
and in full force and effect and neither the Company nor, to the knowledge of
the Company, any other party is in default thereunder, and to the knowledge of
the Company, no event has occurred which with the passage of time or the giving
of notice, or both, would constitute a default thereunder. There are no
proceedings pending, or to the knowledge of the Company threatened, seeking to
cancel, terminate or limit such licenses, approvals or permits.
(h) Except as described in the Subscription Documents, the Company has
timely filed all federal, state and local tax returns required to be filed,
including without limitation, all sales tax returns, or has obtained extensions
thereof and has paid, or is contesting in good faith, all taxes shown on such
returns.
(i) The Company will use the proceeds from the sale of the Preferred
Stock and the Warrants (excluding amounts paid by the Company for legal,
investment banking and administrative fees in connection with the sale of such
securities) for working capital and acquisitions; provided that the Company may
also: (a) purchase up to Five Hundred Thousand Dollars ($500,000) worth of
common stock from ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ at a price not to exceed Forty Cents ($0.40)
per share; (b) lend up to Two Hundred And Fifty Thousand Dollars ($250,000) to
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ on terms reasonably acceptable to the Company; and/or, (c)
reduce the Company's bank debt by up to One Million Dollars ($1,000,000).
(j) Except as set forth in the Subscription Documents: (i) the Company
owns or possesses adequate licenses or other valid rights to use all patents,
patent rights, trademarks, trademark rights, trade names, trade name rights,
trade secrets, copyright registrations, know-how and other proprietary
information (collectively, "Rights") necessary to the conduct of the business of
the Company as presently being conducted; (ii) the validity of such Rights and
the title thereto of the Company has not been questioned in any litigation to
which the Company is or has been a party, nor, to the best knowledge of the
Company, is any such litigation threatened, other than as set forth in the
Subscription Documents; (iii) to the best knowledge of the Company, the conduct
of the business of the Company as now conducted does not and will not conflict
with Rights of others in any way which has or might reasonably be deemed to have
a material adverse effect on the Company; and (iv) no proceedings are pending
against the Company nor, to the best knowledge of the Company, are any
proceedings threatened against the Company, alleging any violation of Rights of
any third person. The Company does not know of (x) any use that has heretofore
been or is now being made of any Rights owned by the Company, except by the
Company or by a person duly licensed by it to use the same under an agreement
described in the Subscription Documents or (y) any material infringement of any
Right owned by or licensed by or to the Company. To the best knowledge of the
Company, all Rights heretofore owned or held by any agent, independent
contractor, employee or officer of the Company or any subsidiary thereof and
used in the business of the Company in any manner have been duly and effectively
transferred to the Company. The consummation of the transactions contemplated by
this Agreement will not alter or impair the rights and interests of the Company
in any of the items referred to in this paragraph or disclosed in the
Subscription Documents as it relates to intangible property rights.
(k) All of the representations, agreements and warranties in this
Section 2 shall survive delivery of and payment for all or any part of the Units
for three years from and after such delivery and payment.
(l) The Company has no subsidiaries other than those disclosed in the
Form 10-KSB.
SECTION 3. Issuance, Sale and Delivery of the Units.
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(a) The Company hereby agrees to sell the Units directly through the
Placement Agent on a "best efforts" basis. The proceeds of the Offering will be
deposited in an account in the name of or for the benefit of the Company (the
"Offering Account"). Unless a Closing is held by May 31, 2006 the Offering will
terminate and all funds theretofore received from the sale of the Units will be
promptly returned to the subscribers without deduction therefrom or interest
thereon.
(b) All checks or wire transfers for the purchase of Units shall be
deposited in the Offering Account. Upon receipt thereof or on such scheduled
Issuance Date as the Company and the Placement Agent May agree, the Company
shall issue the Units and, simultaneously with the delivery of the Units, the
Company, or its counsel, shall deliver to the Placement Agent's counsel such
opinions, documents and certificates as are provided for herein.
(c) The parties hereto represent that at each Issuance Date, the
representations and warranties herein contained, and the statements contained in
all certificates theretofore or simultaneously delivered by any party to another
pursuant to this Agreement, shall be true and correct.
SECTION 4. Covenants of the Company. The Company covenants and agrees
with the Placement Agent that:
(a) On the Commencement Date, and on each Issuance Date, the
Subscription Documents (as amended or as supplemented, if the same shall have
been amended or supplemented) will not contain an untrue statement of a material
fact and will not omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(b) The Company will prepare promptly upon the reasonable request of
the Placement Agent, such amendments or supplements to the Subscription
Documents, in such form as in the opinion of counsel to the Placement Agent May
be reasonably necessary or advisable in connection with the Offering. In
addition, if at any time prior to the last date on which Units shall be issued,
(i) an event relating to or affecting the Company shall have occurred which, in
the judgment of the Company or in the opinion of counsel for the Placement
Agent, would cause the Subscription Documents as then in effect to include an
untrue statement of a material fact or to omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, or (ii)
it is otherwise necessary to amend or supplement the Subscription Documents, the
Company shall promptly notify the Placement Agent of the occurrence and shall
promptly prepare and deliver to the Placement Agent, without charge, sufficient
copies of an amended or supplemented Subscription Documents, and shall use its
reasonable best efforts to cause the appropriate state securities authorities to
take any required action with regard to any amendment as may be necessary to
permit the lawful use of the Subscription Documents in connection with the
Offering.
(c) The Company's counsel shall prepare and file any necessary filings,
in the reasonable opinion of Company's counsel or Placement Agent's counsel,
under the state securities, or so-called "blue sky" laws and regulations (the
"Blue Sky Laws") and the Company shall pay the filing fees and all other
expenses in connection with any such qualification in such jurisdictions as the
Placement Agent shall designate, and to continue such qualification in effect so
long as required for the purposes of the Offering; provided, however, that the
Company shall not be required to qualify as a foreign corporation or to file a
consent to service of process in any jurisdiction in any action other than one
arising out of the offering or sale of the Units. The Company will provide
copies to the Placement Agent of all documents, exhibits and information filed
in connection with the qualification of the Units for sale under the Blue Sky
Laws.
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(d) The Company, at its own expense, will give and continue to give
such financial statements and other information to and as May be required by the
proper public bodies of the jurisdictions in which the Offering May be
qualified.
(e) The Company will pay all cash and security-based compensation and
expenses due to the Placement Agent in the manner, amounts and at times set
forth in the engagement letter made effective as of January 25, 2006 between the
Placement Agent and the Company ("Engagement Letter"), except that the Equity
Fee (as defined in the Engagement Letter) shall be reduced to Five Percent (5%)
for purposes of this Offering only. The warrants issuable to the Placement Agent
or its assignees pursuant to Section 4 of the Engagement Letter ("Placement
Agent Warrants") shall be exercisable at any time from the Issuance Date through
the last expiration date of any of the Warrants. The Placement Agent Warrants
and the shares of Common Stock issuable upon exercise of the Placement Agent
Warrants shall have registration, anti-dilution and other rights identical to
the Shares and Warrant Shares included in or issuable upon sale of the Units. In
the event that any payment due to the Placement Agent hereunder shall not be
made when due, interest shall accrue on the unpaid balance of such overdue
payments at the rate of twelve percent (12%) per annum until paid.
(f) The forms of Preferred, Warrant and Placement Agent Warrant shall
contain customary registration rights, anti-dilution protection and such other
information, representations, warranties and covenants as shall be reasonably
acceptable to Placement Agent, the Company and their respective counsel.
(g) The Company shall not release any Offering documents or the
Subscription Documents unless they are reasonably acceptable to Placement Agent
and its counsel.
Except as described in the Subscription Documents or the Form 10-KSB,
all material licenses, permits, approvals or governmental authorization
necessary to permit the Company to conduct its business will be valid on each
Issuance Date, the Company shall in all material respects be complying therewith
and there shall be no proceedings pending, or to the knowledge of the Company
threatened, seeking to cancel, terminate, suspend or limit any such licenses,
permits, approvals or governmental authorization.
(i) At each Issuance Date, the Company shall not have failed to qualify
to do business as a foreign corporation in any jurisdiction where required,
except where failure to so qualify would not have a material adverse effect on
the Company or where any qualification is required solely as a result of
conducting business over the Internet.
(j) At the Commencement Date and at each Issuance Date, the Company
will be validly existing as a corporation in good standing under the laws of the
state of its incorporation, having corporate power and authority to own its
properties and conduct its business, and will have a capitalization as described
in the Subscription Documents. Following the date of publication of the
Subscription Documents and prior to the final Issuance Date, the only additional
securities issued in addition to those described in the previous sentence shall
be the Equity.
(k) At Closing, (i) the Equity will conform, in all material respects,
to all statements with regard thereto contained in the Subscription Documents,
(ii) the Equity shall have been duly and validly authorized by proper corporate
authority, (iii) each portion of the Equity, when issued, exercised and/or paid
for (as applicable), or otherwise earned, each in accordance with its terms,
will be validly issued, fully paid and nonassessable and (iv) all shares of
Common Stock that comprise the Equity shall have been duly and validly reserved
for issuance. The Company shall ensure that all exercises properly requested
shall be effected promptly by the Company.
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SECTION 5. Indemnification.
(a) In addition to the indemnification provisions of the Engagement
Letter, the Company hereby agrees to indemnify and hold harmless the Placement
Agent, its directors, officers, agents, employees, members, affiliates, counsel
and each other person or entity who controls the Placement Agent within the
meaning of Section 15 of the Securities Act (collectively, the "Agent
Indemnified Parties") from and against any and all losses, claims, damages or
liabilities (or actions in respect thereof), joint or several, to which they or
any of them may become subject under the Securities Act or any other statute or
at common law, and to reimburse such Agent Indemnified Parties for any
reasonable legal or other expense (including the cost of any investigation and
preparation) incurred by them in connection with any litigation, whether or not
resulting in any liability, but only insofar as such losses, claims, liabilities
and litigation arise out of or are based upon (i) any untrue statement or
alleged untrue statement of a material fact required to be stated in the
Subscription Documents or necessary to make the statements therein not
misleading, or omission to state therein a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
are made, not misleading (including, but not limited to, any documents deemed to
be incorporated into the Subscription Documents by reference), (ii) any breach
by the Company of any representation, warranty or covenant contained herein,
(iii) any matter otherwise relating to, arising out of or in connection with the
Offering or (iv) Placement Agent's service as Placement Agent hereunder;
provided, however, that the indemnity provisions contained in this subsection
(a) shall not apply to (x) amounts paid in settlement of any such litigation if
such settlement is effected without the consent of the Company (which shall not
be unreasonably withheld, delayed or denied), or (y) the Placement Agent or any
other Agent Indemnified Parties in respect of any such losses, claims, damages,
liabilities or actions (A) arising out of, or based upon any such untrue
statement or alleged untrue statement, or any such omission or alleged omission,
if such statement or omission was made in reliance upon information furnished in
writing to the Company by the Placement Agent or such Agent Indemnified Parties
specifically for use in connection with the preparation of the Subscription
Documents or any amendment thereof or supplement thereto or (B) arising from the
willful misconduct or gross negligence of the Placement Agent or any other Agent
Indemnified Party.
The Company will reimburse all Agent Indemnified Parties for all
reasonable expenses (including, but not limited to, reasonable fees and
disbursements of counsel for the Agent Indemnified Parties) incurred by any such
Agent Indemnified Parties in connection with investigating, preparing and
defending any such action or claim, whether or not in connection with pending or
threatened litigation in connection with the transaction to which an Agent
Indemnified Party is a party, as such expenses are incurred or paid. The
Placement Agent agrees, within ten (10) days of receipt, to notify the Company
in writing of the receipt of written notice of the commencement of any action
against it or against any other Agent Indemnified Parties, in respect of which
indemnity may be sought from the Company on account of the indemnity provisions
contained in this subsection (a), but the failure to timely give such notice
shall not act to eliminate the Company's obligations hereunder except to the
extent the Company can demonstrate actual prejudice therefrom. In case any such
action shall be brought against the Placement Agent or any other Agent
Indemnified Parties, the Company shall be entitled to participate in (and, to
the extent that it shall wish, to direct) the defense thereof at its own
expense, but such defense shall be conducted by counsel reasonably satisfactory
to the Placement Agent or such other Agent Indemnified Parties.
(b) The indemnity provision set forth herein, and the representations
and warranties of the Company set forth in this Agreement, shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of the Placement Agent or by or on behalf of any of the Agent
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Indemnified Parties, subject to the limitations contained herein, and shall
survive the delivery of the Units, and any successor of the Placement Agent or
any other Agent Indemnified Parties shall be entitled to the benefit of the
respective indemnity provisions.
(c) In order to provide for just and equitable contribution in any case
in which (i) any person entitled to indemnification under this Section 5 makes
claim for indemnification pursuant hereto but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that this Section 5 provides for indemnification in such case, or (ii)
contribution under the Securities Act may be required on the part of any such
person in circumstances for which indemnification is provided under this Section
5, then and in each such case, the Company and the Placement Agent shall
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject (after any contribution from others) in such proportion so that
the Placement Agent is responsible for an aggregate of seven percent (7.0%) of
the gross proceeds received by the Company on account of the sale of Units
(being the Placement Agent's cash commission), and the Company is responsible
for the remaining portion; provided however, that in any such case, no person
guilty of a fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
Promptly after receipt by any party to this Agreement (or its
representative) of notice of the commencement of any action, suit or proceeding,
such party will, if a claim for contribution in respect thereof is to be made
against another party (the "Contributing Party"), notify the Contributing Party
in writing of the commencement thereof, but the omission to so notify the
Contributing Party will not relieve it from any liability which it may have to
any other party other than for contribution hereunder. In case any such action,
suit or proceeding is brought against any party and such party so notifies a
Contributing Party or his or its representative of the commencement thereof
within the aforesaid period, the Contributing Party will be entitled to
participate therein, with the notifying party and any other Contributing Party
similarly notified. Any such Contributing Party shall not be liable to any party
seeking contribution on account of any settlement of any claim, action or
proceeding effected by such party seeking contribution without the written
consent of such Contributing Party. The contribution provisions contained in
this Section 5 are in addition to any other rights or remedies which the Company
and the Placement Agent may have hereunder or otherwise.
SECTION 6. Effectiveness of Agreement. This Agreement shall become
effective as of the date hereof.
SECTION 7. Conditions of the Placement Agent's Obligations. The
Placement Agent's obligation to act as the agent of the Company hereunder, and
the Placement Agent's obligation to use its best efforts to find purchasers for
the Units, shall be subject to the satisfactory completion of its due diligence
examination and the accuracy, as of each Issuance Date, of the representations
and warranties on the part of the Company herein contained, to the performance
by the Company of all its agreements herein contained, to the fulfillment of or
compliance by the Company with all covenants and conditions hereof, and to the
following additional conditions:
(a) The Placement Agent shall not have disclosed in writing to the
Company that the Subscription Documents or any amendment or supplement thereto
contains an untrue statement of a fact which in the opinion of counsel to the
Placement Agent, is material or omits to state a fact which, in the opinion of
such counsel, is material and is required to be stated therein or is necessary
to make the statements therein not misleading.
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(b) Between the date hereof and each Issuance Date, the Company shall
not have sustained any loss on account of fire, explosion, flood, accident,
calamity or other cause, of such character as shall, in the sole discretion of
the Placement Agent, materially adversely affect its business or property.
(c) Between the date hereof and each Issuance Date, there shall be no
litigation instituted, or to the knowledge of the Company threatened, against
the Company and there shall be no proceeding instituted or threatened against
the Company or before or by any federal or state commission, regulatory body or
administrative agency or other governmental body, domestic or foreign, wherein
an unfavorable ruling, decision or finding would materially adversely affect the
business, franchises, licenses, permits, operations, prospects, financial
condition or income of the Company.
(d) During the period subsequent to the Commencement Date and prior to
each Issuance Date, the Company (i) shall have conducted its business in the
usual and ordinary manner as the same was being conducted on the Commencement
Date and (ii) the Company shall not have suffered or experienced any materially
adverse change in its financial condition or prospects.
(e) The authorization of the Units, the Placement Agent Warrants, the
Equity, the Subscription Documents, and all corporate proceedings and other
legal matters incident thereto and to this Agreement shall be reasonably
satisfactory in all material respects to counsel to the Placement Agent.
(f) The Company shall have furnished to the Placement Agent the opinion
of its counsel dated as of each Issuance Date substantially in the form attached
hereto as Exhibit A.
(g) The Company shall have furnished to the Placement Agent a
certificate of the Chief Executive Officer and the Chief Financial Officer of
the Company dated as of each Issuance Date in the form attached hereto as
Exhibit B.
All the opinions, letters, certificates and evidence mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance satisfactory to
Placement Agent's counsel, whose approval shall not be unreasonably withheld.
SECTION 8. Termination.
(a) This Agreement may be terminated by the Placement Agent by notice
to the Company in the event that the Company shall have failed or been unable to
comply with any of the terms, conditions or provisions of this Agreement on the
part of the Company to be performed, complied with or fulfilled within the
respective times herein provided for, unless compliance therewith or performance
or satisfaction thereof shall have been expressly waived by the Placement Agent
in writing.
(b) This Agreement may be terminated by the Placement Agent by notice
to the Company at any time if, in the sole judgment of the Placement Agent, the
Offering or the sale or the payment for or the delivery of the Units is rendered
impracticable or inadvisable because (i) additional material governmental
restrictions not in force and effect on the date hereof shall have been imposed
upon trading in securities generally, or minimum or maximum prices shall have
been generally established, or trading in securities generally on the Pink
Sheets or Over-The-Counter Bulletin Board shall have been suspended or a general
banking moratorium shall have been established by federal or New York State
authorities, (ii) a war, major hostilities, terrorist or similar activity, act
of God or other calamity shall have occurred which materially adversely affects
the ability of the Placement Agent to perform its obligations hereunder, (iii)
of a material adverse change in the condition (financial or otherwise) of the
Company, its business or business prospects or (iv) the Placement Agent, in its
sole discretion, shall be dissatisfied with the results
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of its due diligence investigation.
(c) Any termination of this Agreement pursuant to this section shall be
without liability of any character (including, but not limited to, loss of
anticipated profits or consequential damages) on the part of any party hereto,
except that the Company shall remain obligated to pay the costs and expenses
provided to be paid by it specified in Section 4(e) through the date of
termination, and the Company shall be obligated to pay all losses, claims,
damages or liabilities, joint or several, payable by the Company under Section
5(a).
SECTION 9. Finders. Except as the parties may specifically identify in
the Subscription Documents, the Company and the Placement Agent mutually
represent that they know of no third party who rendered any service in
connection with the introduction of the Company to the Placement Agent and who
is making a claim against anyone for a "finder's fee" or similar type of fee in
connection with the Offering. Each party hereby indemnifies the other against
any claims by any person known to it and not known to the other parties hereto,
who shall claim to have rendered services in connection with the introduction of
the Company to the Placement Agent or to have such a claim and who shall make a
claim for a fee in connection therewith.
SECTION 10. Placement Agent's Representations and Warranties. The
Placement Agent represents and warrants to and agrees with the Company that:
(a) The Placement Agent is registered as a broker-dealer with the
Securities and Exchange Commission and is a member in good standing of the
National Association of Securities Dealers, Inc. ("NASD"). At all times while
making sales of the Units, the Placement Agent will remain a member in good
standing of the NASD.
(b) The Placement Agent will not effect sales of the Units in any
jurisdiction unless it or its representative is duly licensed to effect sales in
such jurisdiction and the offer and sale of the Units are registered or exempt
from registration in such jurisdiction.
(c) With respect to the Placement Agent's participation in the offer
and sale of the Company's securities pursuant to the Subscription Documents, the
Placement Agent shall comply with any applicable requirements of the 1933 Act,
the Securities Exchange Act of 1934, as amended, and the published rules and
regulations of the Commission thereunder, and the applicable state securities or
blue sky laws, and the Rules of the NASD.
(d) The Placement Agent shall not give or provide any information or
make any representation other than those contained in the Subscription Documents
or any other document provided to the Placement Agent for such purpose by the
Company.
(e) The Placement Agent has duly authorized this Agreement and this
Agreement is the valid, binding and enforceable obligation of the Placement
Agent.
SECTION 11. Notice. Except as otherwise expressly provided in this
Agreement, (a) whenever notice is required by the provisions of this Agreement
to be given to the Company, such notice shall be given in writing, addressed to
the Company at the address set forth in the Subscription Documents, with a copy
to Butzel Long, ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, Attn:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.; and, (b) whenever notice is required by the provisions
of this Agreement to be given to the Placement Agent, such notice shall be in
writing addressed to the Placement Agent at the address set forth above, with a
copy to
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
SECTION 12. Miscellaneous.
(a) This Agreement is made solely for the benefit of the Placement
Agent, the Company and any controlling person referred to in Section 15 of the
Securities Act, and their respective successors and assigns, and no other person
shall acquire or have any right under or by virtue of this Agreement. The term
"successor" or the term "successors and assigns" as used in this Agreement shall
not include any purchaser, as such, of any of the Units.
(b) The headings in this Agreement are for reference only and shall not
limit or otherwise affect any of the terms or provisions hereof.
(c) This Agreement relates solely to the Offering. The Engagement
Letter shall continue to remain in full force and effect, as supplemented
herein, and shall survive any termination of this Agreement. The terms of the
Engagement Letter shall prevail over and supersede any conflicting term, part or
provision of this Agreement.
(d) The provisions of this Agreement shall be deemed severable, so that
if any part, section or provision hereof shall be declared unlawful or
unenforceable, the remaining parts, sections or provisions hereof shall not be
affected thereby and shall remain in full force and effect.
(e) This Agreement shall be deemed to have been drafted jointly by the
parties hereto.
(f) The Placement Agent shall have the right to associate itself with
such other members of the NASD and/or foreign investment firms duly licensed, if
required, in their respective locales offering the Units only offshore to the
United States as additional agents as the Placement Agent May elect, in its sole
discretion. Such additional agents may become selected dealers subject to this
Agreement in the sole discretion of the Placement Agent by signing a Selected
Dealer Agreement in form satisfactory to the Placement Agent. The Placement
Agent shall have the right to share any compensation due to the Placement Agent
hereunder, with such additional agents and in such amounts as the Placement
Agent deems fit, in its sole judgment. In addition, such additional agents shall
be afforded the same indemnification by the Company as offered to the Placement
Agent hereunder.
(g) The validity, interpretation and construction of this Agreement,
and of each part hereof, will be governed by the local laws of the State of New
York, without giving effect to its conflict of law principles or rules. In the
event of a dispute, the parties hereto agree to be bound by the arbitration
procedures of the American Arbitration Association, and that such arbitration
shall take place in the New York City metropolitan area. In actions not
involving collection by the Placement Agent of compensation and/or reimbursement
expenses, the prevailing party shall be reimbursed by the nonprevailing party
for all reasonable attorney's fees and costs (including all arbitration costs)
incurred by the prevailing party in resolving such dispute. In any action in
which Placement Agent seeks compensation and/or reimbursement of expenses, the
Company shall reimburse Placement Agent for all costs associated with such
action (including but not limited to reasonable attorney fees) as and when the
Placement Agent provides the Company with invoices for such costs and expenses.
(h) This Agreement may be executed in counterparts, each of which shall
be deemed an original and all of which together will constitute one and the same
instrument.
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(i) Westminster shall not be obligated to provide advice or perform
services to the Company that are not specifically addressed in this Agreement
and/or the Engagement Letter. The obligations of Westminster described in this
Agreement and the Engagement Letter consist solely of best efforts services to
the Company. In no event shall Westminster be required or permitted without
express authorization by this Agreement to make decisions for the Company or to
provide legal or accounting services. All final decisions with respect to acts
of the Company or its affiliates, whether or not made pursuant to or in reliance
upon information or advice furnished by Westminster hereunder, shall be those of
the Company or such affiliates, and Westminster shall under no circumstances be
liable for any expense incurred or loss suffered by the Company as a consequence
of such decisions.
(j) This Agreement shall be binding upon and inure to the benefit of
the parties and their respective successors and authorized assigns. Any attempt
by either party to assign any rights, duties, or obligations which may, arise
under this Agreement without the prior written consent of the other party shall
be void.
(k) This Agreement, its Exhibits, and the Engagement Letter contain the
entire agreement between the parties with respect to the subject matter hereof,
and neither party is relying on any agreement, representation, warranty, or
other understanding not expressly stated in the Agreement, its Exhibits and/or
the Engagement Letter.
(l) The parties acknowledge that certain provisions of this Agreement
must survive any termination or expiration thereof in order to be fair and
equitable to the party to whom any promise or duty to perform is owed under such
provision prior to such termination or expiration of the Agreement. Therefore,
the parties agree that the provisions of Sections 1, 2, 3, 4, 5, 7, 8(c), 9, 10,
11, and 12 shall survive the termination or expiration of this Agreement for the
period required to meet and satisfy any obligations and promises arising therein
and thereunder
Please confirm that the foregoing correctly sets forth the Agreement
between the Placement Agent and the Company.
FAMILY HOME HEALTH SERVICES, INC.
By:
--------------------------------------
▇▇▇▇▇ ▇▇▇▇▇, President & CEO
We hereby confirm as of the date hereof that the above letter sets
forth the agreement between the Company and us.
WESTMINSTER SECURITIES CORPORATION
By:
--------------------------------------
▇▇▇▇ ▇. ▇'▇▇▇▇, President & CEO
11
EXHIBIT A
FORM OF LEGAL OPINION
[Date]
Westminster Securities Corporation
▇▇▇ ▇▇▇▇ ▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We have acted as counsel to Family Home Health Services, Inc., a Nevada
corporation (the "Company"), in connection with the execution and delivery by
the Company of each Subscription Agreement (the "Subscription Agreements"), by
and among the Company and the investors identified on each signature page
thereto (the "Investors") as of the date above ("Closing"). (CAPITALIZED TERMS
NOT OTHERWISE DEFINED HEREIN ARE DEFINED AS SET FORTH IN THE SUBSCRIPTION
AGREEMENT.)
We have participated in the preparation and negotiation of the
Subscription Agreements and the other documents referred to therein. We also
have examined such certificates of public officials, corporate documents and
records and other certificates, opinions, agreements and instruments and have
made such other investigations as we have deemed necessary in connection with
the opinions hereinafter set forth.
Based on the foregoing and upon such investigation as we have deemed
necessary, we give you our opinion as follows:
The Company is a corporation duly organized, validly existing and in good
standing under the laws of Nevada. The Company has all requisite power and
authority, and all material governmental licenses, authorizations, consents
and approvals, required to own and operate its properties and assets and to
carry on its business as now conducted and as proposed to be conducted (all
as described in the Subscription Agreements). The Company is duly qualified
to transact business and is in good standing in each jurisdiction in which
the failure to qualify could have a Material Adverse Effect on the Company.
The Company has all requisite power and authority to execute, deliver and
perform the Subscription Agreements, and to issue, sell and deliver the
Preferred, the Shares, the Warrants, and the Warrant Shares, pursuant to
the Subscription Agreements and to carry out and perform its obligations
under, and to consummate the transactions contemplated by, the Subscription
Agreements.
All action on the part of the Company, its directors and its stockholders
necessary for the authorization, execution and delivery by the Company of
the Subscription Agreements, the authorization, issuance, sale and delivery
of the Preferred and Warrants pursuant to the Subscription
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Agreements, the issuance and delivery of the Shares and the Warrant Shares,
and the consummation by the Company of the transactions contemplated by the
Subscription Agreements has been duly taken. The Subscription Agreements
have been duly and validly executed and delivered by the Company and
constitute the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with their terms, except (a)
that such enforceability May be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights in general and
(b) that the remedies of specific performance and injunctive and other
forms of injunctive relief May be subject to equitable defenses.
After giving effect to the transactions contemplated by the Subscription
Agreements, and immediately after the Closing, the authorized capital stock
of the Company will consist of: an aggregate of _________ shares of Common
Stock, of which ________ shares will be issued and outstanding, and
_________ shares will be reserved for issuance upon conversion of issued
and outstanding options, warrants and other derivative securities,
__________ shares will be reserved for issuance to employees, officers and
directors under [Employee / Officers Incentive Plan], of which __________
shares are subject to currently outstanding incentive stock option grants
and __________ shares are subject to currently outstanding non-qualified
stock option grants, and __________ shares will be reserved for issuance
upon conversion of Preferred and exercise of Warrants. All presently issued
and outstanding shares of Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable and free of any
preemptive or similar rights, and have been issued in compliance with
applicable securities laws and regulations; provided that we render no
opinion hereunder as to compliance with the securities laws of Canada or
its provinces. The Preferred and the Warrants which are being issued on the
date hereof or within ten (10) days hereafter pursuant to the Subscription
Agreements have been duly authorized and validly issued and are fully paid
and nonassessable and free of preemptive or similar rights, and have been
issued in compliance with applicable United States securities laws, rules
and regulations. The Shares and Warrant Shares have been duly and validly
authorized and reserved for issuance, and when issued in accordance with
the conversion of the Preferred or the exercise of the Warrants in
accordance with their terms, will be validly issued, fully paid and
nonassessable, and free of any preemptive or similar rights. To our
knowledge, other than the commitment to the Placement Agent pursuant to the
Placement Agent Agreement and engagement letter, there are no other
options, warrants, conversion privileges or other rights presently
outstanding to purchase or otherwise acquire from the Company any capital
stock or other securities of the Company, or any other agreements to issue
any such securities or rights. The rights, privileges and preferences of
the Common Stock are as stated in the Company's Articles of Incorporation.
Based in part upon the representations of the Purchasers contained in the
Subscription Agreements, the Preferred, the Shares, the Warrants and the
Warrant Shares May be issued to the Investors without registration under
the Securities Act of 1933, as amended (the "1933 Act").
The execution, delivery and performance by the Company of, and the
compliance by the Company with the terms of, the Subscription Agreements
and the issuance, sale and delivery of the Preferred, the Shares, the
Warrants and the Warrant Shares pursuant to the Subscription Agreements do
not (a) conflict with or result in a violation of any provision of law,
rule or regulation having applicability to the Company or of the
certificate of incorporation or by-laws or other similar organizational
documents of the Company, (b) conflict with, result in a breach of or
constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or result in or permit the termination
or modification of, any agreement, instrument, order, writ, judgment or
decree known to us to which the Company is a party or is subject or (c)
result in the creation or imposition of any lien,
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claim or encumbrance on any of the Company's assets or properties.
To our knowledge, except as disclosed in the Subscription Documents there
is no claim, action, suit, proceeding, arbitration, investigation or
inquiry, pending or threatened, before any court or governmental or
administrative body or agency, or any private arbitration tribunal, against
the Company or its Subsidiaries, or any of its officers, directors or
employees (in connection with the discharge of their duties as officers,
directors and employees), or affecting any of its properties or assets.
No consent, license, permit, waiver, approval or authorization of, or
designation, declaration, registration or filing with, any court,
governmental or regulatory authority, or self-regulatory organization, is
required in connection with the valid execution, delivery and performance
by the Company of the Documents, or the offer, sale, issuance or delivery
of the Preferred, the Shares, the Warrants and the Warrant Shares or the
consummation of the transactions contemplated thereby.
The Company is not an Investment Company within the meaning of the
Investment Company Act of 1940, as amended.
We confirm that the Company has no subsidiaries.
This opinion is for the benefit of Westminster Securities Corporation and each
of the Investors.
Very truly yours,
14
EXHIBIT B
FORM OF OFFICER'S CERTIFICATE
[Date]
Westminster Securities Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We, the Chief Executive Officer and Chief Financial Officer of Family Home
Health Services, Inc. (the "Company"), in connection with the execution and
delivery by the Company of each Subscription Agreement (the "Subscription
Agreements"), by and among the Company and the investors identified on each
signature page thereto (the "Investors") as of the date above ("Closing"), do
hereby certify as follows (Capitalized terms not otherwise defined herein are
defined as set forth in the Subscription Agreements.):
(i) The representations and warranties of the Company in each
Subscription Agreement are true and correct in all material respects at and as
of the Closing and the Company has complied in all material respects with all
the agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing.
(ii) The Agreement and any amendments and supplements thereto, and
all statements contained therein, are true and correct, and neither the
Agreement nor any amendment or supplement thereto includes any untrue statement
of a material fact or omits to state any material fact required to be stated
therein in light of the circumstances in which they were made or necessary to
make the statements therein not misleading, and since the Commencement Date,
there has occurred no event required to be set forth in an amended or
supplemented Agreement which has not been so set forth.
Very truly yours,
--------------------------- -----------------------------
▇▇▇▇▇ ▇▇▇▇▇
Chief Executive Officer Chief Financial Officer
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