AGREEMENT AND PLAN OF MERGER BETWEEN HYTHIAM, INC. AND COMPREHENSIVE CARE CORPORATION AS OF January 18, 2007
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BETWEEN
HYTHIAM, INC.
AND
COMPREHENSIVE CARE CORPORATION
AS OF
January 18, 2007
1
TABLE OF CONTENTS
§1. Definitions |
4 | |||
§2. Basic Transaction |
7 | |||
(a) The Merger |
7 | |||
(b) The Closing |
7 | |||
(c) Actions at the Closing |
7 | |||
(d) Effect of Merger |
7 | |||
(e) Payment Procedure |
8 | |||
(f) Closing of Transfer Records |
8 | |||
§3. Targets Representations and Warranties |
8 | |||
(a) Organization, Qualification, and Corporate Power |
9 | |||
(b) Capitalization |
9 | |||
(c) Authorization of Transaction |
9 | |||
(d) Non-contravention |
9 | |||
(e) Filings with SEC |
10 | |||
(f) Financial Statements |
10 | |||
(g) Events Subsequent to Most Recent Fiscal Quarter End |
10 | |||
(h) Undisclosed Liabilities |
10 | |||
(i) Brokers Fees |
10 | |||
(j) Continuity of Business Enterprise |
10 | |||
(k) Disclosure |
10 | |||
§4. Buyers Representations and Warranties |
11 | |||
(a) Organization |
11 | |||
(b) Capitalization |
11 | |||
(c) Authorization of Transaction |
11 | |||
(d) Non-contravention |
11 | |||
(e) Brokers Fees |
12 | |||
(f) Continuity of Business Enterprise |
12 | |||
(g) Disclosure |
12 | |||
§5. Covenants |
12 | |||
(a) General |
12 | |||
(b) Notices and Consents |
12 | |||
(c) Regulatory Matters and Approvals |
12 | |||
(d) Fairness Opinion and Comfort Letters |
13 | |||
(e) Listing of Buyer Shares |
13 | |||
(f) Operation of Business |
13 | |||
(g) Full Access |
14 | |||
(h) Notice of Developments |
14 | |||
(i) Exclusivity |
14 | |||
(j) Insurance and Indemnification |
14 | |||
(k) Continuity of Business Enterprise |
14 | |||
§6. Conditions to Obligation to Close |
15 | |||
(a) Conditions to Buyer’s Obligation |
15 | |||
(b) Conditions to Company’s Obligation |
16 | |||
§7. Termination |
17 | |||
(a) Termination of Agreement |
17 |
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(b) Effect of Termination |
18 | |||
§8. Miscellaneous |
19 | |||
(a) Survival |
19 | |||
(b) Press Releases and Public Announcements |
19 | |||
(c) No Third-Party Beneficiaries |
19 | |||
(d) Succession and Assignment |
19 | |||
(e) Headings |
19 | |||
(f) Notices |
19 | |||
(g) Governing Law |
19 | |||
(h) Amendments and Waivers |
20 | |||
(i) Severability |
20 | |||
(j) Expenses |
20 | |||
(k) Construction |
21 | |||
(l) Incorporation of Exhibits and Schedules |
21 | |||
(m) Arbitration |
21 | |||
(n) State Securities Laws |
21 | |||
(o) Tax Disclosure Authorization |
21 | |||
(p) Entire Agreement |
20 | |||
(q) Counterparts |
20 |
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this “Agreement”) is entered into as of January 18, 2007,
by and between Hythiam, Inc., a Delaware corporation (“Buyer”), HCCC Acquisition Corporation, a
Delaware corporation and newly-formed wholly-owned subsidiary of Buyer (“Merger Sub”), and
Comprehensive Care Corporation, a Delaware corporation (“Company”). Buyer, Merger Sub and Company
are referred to collectively herein as the “Parties.”
This Agreement contemplates a tax-free merger of Merger Sub with and into Company in a
reorganization pursuant to Code 368(a)(1)(A). Company Stockholders will receive Buyer stock in
exchange for their Company stock. The Parties expect that the Merger will further their business
objectives, including providing Company with access to needed additional capital and providing
Buyer with an expanded ability to offer its products and services.
Now, therefore, in consideration of the premises and the mutual promises herein made, and in
consideration of the representations, warranties, and covenants herein contained, the Parties agree
as follows.
“Affiliate” has the meaning set forth in Rule 12b-2 of the regulations promulgated under the
Securities Exchange Act.
“Buyer” has the meaning set forth in the preface above.
“Buyer-owned Share” means any Company Share that Buyer owns beneficially.
“Buyer Share” means any share of the common stock, $0.0001 par value per share, of Buyer.
“Certificate of Merger” has the meaning set forth in §2(c) below.
“Closing” has the meaning set forth in §2(b) below.
“Closing Date” has the meaning set forth in §2(b) below.
“Company” has the meaning set forth in the preface above.
“Company Comfort Letter” has the meaning set forth in §5(d) below.
“Company Disclosure Schedule” has the meaning set forth in §3 below.
“Company Share” means any share of the common stock, $0.01 par value per share, of Company.
“Company Stockholder” means any Person who or that holds any Company Shares.
“Confidential Information” means any information concerning the business and affairs of
Company and its Subsidiaries that is not already generally available to the public.
“Conversion Ratio” has the meaning set forth in §2(d)(v) below.
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“DGCL” means the General Corporation Law of the State of Delaware, as amended.
“Dissenting Share” means any Company Share held of record by any stockholder who or that has
exercised his, her, or its appraisal rights under the DGCL.
“Effective Time” has the meaning set forth in §2(d)(i) below.
“Exchange Agent” has the meaning set forth in §2(e) below.
“Fairness Opinion” has the meaning set forth in §5(d) below.
“GAAP” means United States generally accepted accounting principles as in effect from time to
time, consistently applied.
“Information Statement” means the definitive information statement relating to Company
stockholder approval of the Merger.
“IRS” means the Internal Revenue Service.
“Knowledge” includes actual knowledge and knowledge that a Party should have after reasonable
investigation.
“Lien” means any mortgage, pledge, lien, encumbrance, charge, or other security interest.
“Material Adverse Effect” or “Material Adverse Change” means any effect or change that would
be (or could reasonably be expected to be) materially adverse to the business, assets, condition
(financial or otherwise), operating results, operations, or business prospects of Company and its
Subsidiaries, taken as a whole, or to the ability of Sellers to consummate timely the transactions
contemplated hereby (regardless of whether or not such adverse effect or change can be or has been
cured at any time or whether Buyer has knowledge of such effect or change on the date hereof),
including any adverse change, event, development, or effect arising from or relating to (a) general
business or economic conditions, including such conditions related to the business of Company and
its Subsidiaries, (b) national or international political or social conditions, including the
engagement by the United States in hostilities, whether or not pursuant to the declaration of a
national emergency or war, or the occurrence of any military or terrorist attack upon the United
States, or any of its territories, possessions, or diplomatic or consular offices or upon any
military installation, equipment or personnel of the United States, (c) financial, banking, or
securities markets (including any suspension of trading in, or limitation on prices for, securities
on The Nasdaq Global Market for a period in excess of three hours or any decline of either the Dow
Xxxxx Industrial Average or the Standard & Poor’s Index of 500 Industrial Companies by an amount in
excess of 15% measured from the close of business on the date hereof), (d) changes in United States
generally accepted accounting principles, (e) changes in laws, rules, regulations, orders, or other
binding directives issued by any governmental entity, and (f) the taking of any action contemplated
by this Agreement and the other agreements contemplated hereby.
“Merger” has the meaning set forth in §2(a) below.
“Merger Sub” has the meaning set forth in the preface above.
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“Most Recent Fiscal Quarter End” has the meaning set forth in §3(f) below.
“Ordinary Course of Business” means the ordinary course of business consistent with past
custom and practice (including with respect to quantity and frequency).
“Party” has the meaning set forth in the preface above.
“Person” means an individual, a partnership, a corporation, a limited liability company, an
association, a joint stock company, a trust, a joint venture, an unincorporated organization, any
other business entity, or a governmental entity (or any department, agency, or political
subdivision thereof).
“Prospectus” means the final prospectus relating to the registration of the Buyer Shares under
the Securities Act.
“Public Report” has the meaning set forth in §3(e) below.
“Registration Statement” has the meaning set forth in §5(c)(i) below.
“Requisite Company Stockholder Approval” means the affirmative vote of the holders of a
majority of the Company Shares in favor of this Agreement and the Merger.
“SEC” means the Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended.
“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Subsidiary” means, with respect to any Person, any corporation, limited liability company,
partnership, association, or other business entity of which (i) if a corporation, a majority of the
total voting power of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers, or trustees thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof or (ii) if a limited liability company,
partnership, association, or other business entity (other than a corporation), a majority of the
partnership or other similar ownership interests thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination
thereof and for this purpose, a Person or Persons own a majority ownership interest in such a
business entity (other than a corporation) if such Person or Persons will be allocated a majority
of such business entity’s gains or losses or will be or control any managing director or general
partner of such business entity (other than a corporation). The term “Subsidiary” will include all
Subsidiaries of such Subsidiary.
“Surviving Corporation” has the meaning set forth in §2(a) below.
§2. Basic Transaction.
6
(c) Actions at the Closing. At the Closing, (i) Company will deliver to Buyer the various
certificates, instruments, and documents referred to in §6(a) below, (ii) Buyer and Merger Sub will
deliver to Company the various certificates, instruments, and documents referred to in §6(b) below,
(iii) Buyer and Company will file with the Secretary of State of the State of Delaware a
Certificate of Merger in the form attached hereto as Exhibit A (the “Certificate of Merger”), and
(iv) Buyer will deliver to the Exchange Agent in the manner provided below in this §2 the
certificate evidencing the Buyer Shares issued in the Merger.
(i) General. The Merger will become effective at the time (the “Effective Time”) Buyer
and Merger Sub file the Certificate of Merger with the Secretary of State of the State of
Delaware. The Merger will have the effect set forth in the DGCL. The Surviving Corporation
may, at any time after the Effective Time, take any action (including executing and
delivering any document) in the name and on behalf of either Buyer or Company in order to
carry out and effectuate the transactions contemplated by this Agreement.
(ii) Certificate of Incorporation. The certificate of incorporation of Company in
effect at and as of the Effective Time will remain the certificate of incorporation of
Surviving Corporation without any modification or amendment in the Merger.
(iii) Bylaws. The bylaws of Company in effect at and as of the Effective Time will
remain the bylaws of Surviving Corporation without any modification or amendment in the
Merger.
(iv) Directors and Officers. The directors and officers of Company in place at and as
of the Effective Time will become the directors and officers of Surviving Corporation and
retain their respective positions and terms of office.
(v) Conversion of Company Shares. At and as of the Effective Time, (A) each twelve (12)
Company Shares (other than any Dissenting Share or Buyer-owned Share) will be converted into
the right to receive one (1) Buyer Share (the ratio of Buyer Shares to Company Shares is
referred to herein as the “Conversion Ratio”), (B) each Dissenting Share will be converted
into the right to receive payment from Surviving Corporation with respect thereto in
accordance with the provisions of the DGCL, and (C) each Buyer-owned Share will be canceled;
provided, however, that the Conversion Ratio will be subject to equitable adjustment in the
event of any stock split, stock dividend, reverse stock split, or other change in the number
of Company Shares outstanding. No Company Share will be deemed to be outstanding or to have
any rights other than those set forth
above in this §2(d)(v) after the Effective Time. All fractional shares shall be paid
out in cash.
7
(i) Immediately after the Effective Time, Buyer will (A) furnish to American Stock
Transfer & Trust Company (the “Exchange Agent”) an instruction, irrevocable for a period of
at least 90 days, to issue stock certificates representing that number of Buyer Shares equal
to the product of (I) the Conversion Ratio times (II) the number of outstanding Company
Shares (other than any Dissenting Shares and Buyer-owned Shares) and (B) mail a letter of
transmittal (with instructions for its use) in the form attached hereto as Exhibit B to each
record holder of outstanding Company Shares for the holder to use in surrendering the
certificates that represented his, her, or its Company Shares in exchange for a certificate
representing the number of Buyer Shares to which he, she, or it is entitled.
(ii) Buyer will not pay any dividend or make any distribution on Buyer Shares (with a
record date at or after the Effective Time) to any record holder of outstanding Company
Shares until the holder surrenders for exchange his, her, or its certificates that
represented Company Shares.
(iii) Buyer may instruct the Exchange Agent not to issue any Buyer Shares remaining
unclaimed 90 days after the Effective Time, and thereafter each remaining record holder of
outstanding Company Shares will be entitled to look to Buyer (subject to abandoned property,
escheat, and other similar laws) as a general creditor thereof with respect to the Buyer
Shares and dividends and distributions thereon to which he, she, or it is entitled upon
surrender of his, her, or its certificates.
(iv) Buyer will pay all charges and expenses of the Exchange Agent.
§3. Company’s Representations and Warranties. Company represents and warrants to Buyer that
the statements contained in this §3 are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this §3), except as set forth in
the Public Reports or in the disclosure schedule accompanying this Agreement and initialed by the
Parties (the “Company Disclosure Schedule”), which Company Disclosure Schedule shall be deemed a
part hereof. The Company Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this §3.
8
and 60,000 shares of
Preferred Stock, of which 14,400 shares of Series A Convertible Preferred Stock are issued and
outstanding. All of the issued and outstanding Company Shares Series A Convertible Preferred
shares have been duly authorized and are validly issued, fully paid, and non-assessable. There are
no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments that could require Company to issue,
sell, or otherwise cause to become outstanding any of its capital stock. There are no outstanding
or authorized stock appreciation, phantom stock, profit participation, or similar rights with
respect to Company.
9
in or incorporated
by reference into these Public Reports (including the related notes and schedules) have been
prepared in accordance with GAAP throughout the periods covered thereby (except as may be otherwise
indicated in such financial statements or the notes thereto), and present fairly the financial
condition of Company and its Subsidiaries as of the indicated dates and the results of operations
of Company and its Subsidiaries for the indicated periods, are correct and complete in all material
respects, and are consistent with the books and records of Company and its Subsidiaries; provided,
however, that the interim statements are subject to normal year-end adjustments.
§4. Buyers Representations and Warranties. Buyer represents and warrants to Company that
the statements contained in this §4 are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this §4), except as set forth in
the Buyer Disclosure Schedule. The Buyer Disclosure Schedule will be arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this 4.
10
11
statement of a
material fact or omit to state a material fact necessary in order to make the statements made
therein, in light of the circumstances under which they will be made, not misleading.
§5. Covenants. The Parties agree as follows with respect to the period from and after the
execution of this Agreement.
(i) Securities Act, Securities Exchange Act, and State Securities Laws. Company will
prepare and file with SEC a preliminary information statement under the Securities Exchange
Act as soon as practicable, but in no event later than ten (10) days after the date of this
Agreement. Buyer will prepare and file with SEC a registration statement under the
Securities Act relating to the offering and issuance of the Buyer Shares (the “Registration
Statement”). The filing Party in each instance will use its best efforts to respond to the
comments of SEC thereon and will make any further filings (including amendments and
supplements) in connection therewith that may be necessary, proper, or advisable. Buyer will
provide Company, and Company will provide Buyer, with whatever information and assistance in
connection with the foregoing filings the filing Party may request. Buyer will take all
actions that may be necessary, proper, or advisable under state securities laws in
connection with the offering and issuance of the Buyer Shares.
(ii) DGCL. Company will mail the Information Statement as soon as permitted under the
Securities Exchange Act in order that Buyer may vote its shares of Company in favor of the
adoption of this Agreement and the approval of the Merger in accordance with the DGCL.
12
(the “Company Comfort
Letter”). Each of the Fairness Opinion and the Company Comfort Letter will be satisfactory to Buyer
in form and substance.
(i) neither Company nor any of its Subsidiaries will authorize or effect any change in
its charter or bylaws;
(ii) neither Company nor any of its Subsidiaries will grant any options, warrants, or
other rights to purchase or obtain any of its capital stock or issue, sell, or otherwise
dispose of any of its stock (except upon the conversion or exercise of options, warrants,
and other rights currently outstanding);
(iii) neither Company nor any of its Subsidiaries will declare, set aside, or pay any
dividend or distribution with respect to its stock (whether in cash or in kind), or redeem,
repurchase, or otherwise acquire any of its capital stock;
(iv) neither Company nor any of its Subsidiaries will issue any note, bond, or other
debt security or create, incur, assume, or guarantee any indebtedness for borrowed money or
capitalized lease obligation outside the Ordinary Course of Business;
(v) neither Company nor any of its Subsidiaries will impose any Lien upon any of its
assets outside the Ordinary Course of Business;
(vi) neither Company nor any of its Subsidiaries will make any capital investment in,
make any loan to, or acquire the securities or assets of any other Person outside the
Ordinary Course of Business;
(vii) neither Company nor any of its Subsidiaries will make any change in employment
terms for any of its directors, officers, and employees outside the Ordinary Course of
Business; and
(viii) neither Company nor any of its Subsidiaries will commit to any of the foregoing.
13
contemplated by this §5(g) as
Confidential Information , will not use any of the Confidential Information except in connection
with this Agreement, and, if this Agreement is terminated for any reason whatsoever, agrees to
return to Company all tangible embodiments (and all copies) thereof that are in its possession.
(i) Buyer will provide each individual who served as a director or officer of Company
at any time prior to the Effective Time with liability insurance for a period of 36 months
after the Effective Time no less favorable in coverage and amount than any applicable
insurance in effect for Buyer’s officers and directors.
(ii) Company, as the Surviving Corporation in the Merger, will observe any
indemnification provisions now existing in the certificate of incorporation or bylaws of
Company for the benefit of any individual who served as a director or officer of Company at
any time prior to the Effective Time.
(iii) Buyer will indemnify each individual who served as a director or officer of
Company at any time prior to the Effective Time from and against any and all actions, suits,
proceedings, hearings, investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines,
costs, amounts paid in settlement, liabilities, obligations, taxes, liens, losses, expenses,
and fees, including all court costs and reasonable attorneys’ fees and expenses, resulting
from, arising out of, relating to, in the nature of, or caused by this Agreement or any of
the transactions contemplated herein.
14
Company shall promptly
deliver to Buyer an update to the Company Disclosure Schedule specifying such change and shall use
its best efforts to remedy same, as applicable.
(i) this Agreement and the Merger will have received the Requisite Company Stockholder
Approval;
(ii) Company and its Subsidiaries will have procured all of the third-party consents
specified in §5(b) above;
(iii) the representations and warranties set forth in §3 above will be true and correct
in all material respects at and as of the Closing Date, except to the extent that such
representations and warranties are qualified by the term “material,” or contain terms such
as “Material Adverse Effect” or “Material Adverse Change,” in which case such
representations and warranties (as so written, including the term “material” or “Material”)
will be true and correct in all respects at and as of the Closing Date;
(iv) Company will have performed and complied with all of its covenants hereunder in
all material respects through the Closing, except to the extent that such covenants are
qualified by the term material, or contain terms such as “Material Adverse Effect” or
“Material Adverse Change,” in which case Company will have performed and complied with all
of such covenants (as so written, including the term “material” or “Material”) in all
respects through the Closing;
(v) no action, suit, or proceeding will be pending or threatened before (or that could
come before) any court or quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before (or that could come before) any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following consummation, (C)
adversely affect the right of Surviving Corporation to own the former
assets, to operate the former business, and to control the former Subsidiaries of
Company, or (D) adversely affect the right of any of the former Subsidiaries of Company to
own its assets and to operate its business (and no such injunction, judgment, order, decree,
ruling, or charge will be in effect);
(vi) Company will have delivered to Buyer a certificate to the effect that each of the
conditions specified above in §6(a)(i)-(v) is satisfied in all respects;
(vii) the Registration Statement will have become effective under the Securities Act;
(viii) the Buyer Shares that will be issued in the Merger will have been approved for
listing on Nasdaq, subject to official notice of issuance;
15
(ix) Buyer will have received from counsel to Company an opinion in form and substance
as set forth in Exhibit C attached hereto, addressed to Buyer, and dated as of the Closing
Date;
(x) Buyer’s and Company’s Board of Directors shall have finally approved and ratified
the Merger and the agreements and documents contemplated thereby, including without
limitation this Agreement, the Company Disclosure Schedule, Company Information Statement,
and Registration Statement, within ten (10) days of the date of this Agreement; and
(xi) all actions to be taken by Company in connection with consummation of the
transactions contemplated hereby and all certificates, opinions, instruments, and other
documents required to effect the transactions contemplated hereby will be satisfactory in
form and substance to Buyer.
Buyer may waive any condition specified in this §6(a) if it executes a writing so stating at or
prior to the Closing.
(i) this Agreement and the Merger will have received the Requisite Company Stockholder
Approval;
(ii) the Registration Statement will have become effective under the Securities Act;
(iii) the representations and warranties set forth in §4 above will be true and correct
in all material respects at and as of the Closing Date, except to the extent that such
representations and warranties are qualified by the term “material,” or contain terms such
as “Material Adverse Effect” or “Material Adverse Change,” in which case such
representations and warranties (as so written, including the term “material” or “Material”)
will be true and correct in all respects at and as of the Closing Date;
(iv) Buyer will have performed and complied with all of its covenants hereunder in all
material respects through the Closing, except to the extent that such covenants are
qualified by the term “material,” or contain terms such as “Material Adverse Effect” or
“Material Adverse Change,” in which case Buyer will have performed and complied with
all of such covenants (as so written, including the term “material” or “Material”) in all
respects through the Closing;
(v) there will not be any judgment, order, decree, stipulation, injunction, or charge
in effect preventing consummation of any of the transactions contemplated by this Agreement;
(vi) Buyer will have delivered to Company a certificate to the effect that each of the
conditions specified above in §6(b)(ii)-(v) is satisfied in all respects;
16
(vii) Company will have received from counsel to Buyer an opinion in form and substance
as set forth in Exhibit D attached hereto, addressed to Company, and dated as of the Closing
Date;
(viii) Buyer’s and Company’s Board of Directors shall have finally approved and
ratified the Merger and the agreements and documents contemplated thereby, including without
limitation this Agreement, the Company Disclosure Schedule, Company Information Statement,
and Registration Statement, within ten (10) days of the date of this Agreement; and
(ix) all actions to be taken by Buyer in connection with consummation of the
transactions contemplated hereby and all certificates, opinions, instruments, and other
documents required to effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to Company.
Company may waive any condition specified in this §6(b) if it executes a writing so stating at or
prior to the Closing.
§7. Termination.
(i) the Parties may terminate this Agreement by mutual written consent at any time
prior to the Effective Time;
(ii) Buyer may terminate this Agreement by giving written notice to Company at any time
prior to the Effective Time (A) in the event Company has breached any material
representation, warranty, or covenant contained in this Agreement in any material respect,
Buyer has notified Company of the breach, and the breach has continued without cure for a
period of 30 days after the notice of breach or (B) if the Closing will not have occurred on
or before December 31, 2007, by reason of the failure of any condition precedent under §6(a)
hereof (unless the failure results primarily from Buyer breaching any representation,
warranty, or covenant contained in this Agreement);
(iii) Company may terminate this Agreement by giving written notice to Buyer at any
time prior to the Effective Time (A) in the event Buyer has breached any material
representation, warranty, or covenant contained in this Agreement in any material respect,
Company has notified Buyer of the breach, and the breach has continued without cure for
a period of thirty (30) days after the notice of breach; (B) if the Closing will not have
occurred on or before December 31, 2007, by reason of the failure of any condition precedent
under §6(b) hereof (unless the failure results primarily from Company breaching any
representation, warranty, or covenant contained in this Agreement);
(iv) Company may terminate
this Agreement by giving written notice to Buyer at any time prior to the Effective Time if
required to permit the directors to discharge their fiduciary duties in accordance with Section
5(i) hereof, in the event that (i) a third party makes a good faith unsolicited superior offer to
acquire all the stock of Company that the board of directors of Company determines in good faith,
with advise of counsel and a competent financial advisor, is more favorable to the stockholders compared to the
transaction provided for in this Agreement, is reasonably capable of being consummated, and has any
necessary financing in place, (ii) Buyer fails to make an offer that is at least as favorable to stockholders
within five (5) business days of written notice of the foregoing, and (iii) Company’s
stockholders fail to approve the transaction provided for in this Agreement, or Company pays Buyer a
termination fee equal to the amount of all of Buyer’s fees, costs and expenses arising out of or
relating to this Agreement, the circumstances leading up to the negotiation and execution of this
Agreement, or the transactions provided for herein;
17
(v) Either Party may terminate this Agreement by giving written notice to the other
Party if this Agreement and the Merger shall not have received the Requisite Company
Stockholder Approval as required by Section 6 above;
(vi) Either Party may terminate this Agreement by giving written notice to the other
Party if a permanent injunction or other order by any court which would make illegal or
prohibit the consummation of the Merger shall have been issued and shall have become final
and nonappealable.
(vii) Either Party may terminate this Agreement by giving written notice to the other
Party in the event that either Buyer’s or Company’s Board of Directors shall not have
finally approved and ratified the Merger and the agreements and documents contemplated
thereby, including without limitation this Agreement, the Company Disclosure Schedule,
Company Information Statement, and Registration Statement, within ten (10) days of the date
of this Agreement
§8. Miscellaneous.
18
If to Company:
Comprehensive Care Corporation
0000 X. Xx. Xxxxxx Xxxxxx Xxxx, Xx. Blvd, Suite 101
Xxxxx, Xxxxxxx 00000
Attn: Chief Financial Officer
Fax: (000) 000-0000
0000 X. Xx. Xxxxxx Xxxxxx Xxxx, Xx. Blvd, Suite 101
Xxxxx, Xxxxxxx 00000
Attn: Chief Financial Officer
Fax: (000) 000-0000
Copy to:
Xxxxxxx X. Xxx, Esq.
Xxxxxxxxx Xxxxxxx, LLP
000 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Xxxxxxx X. Xxx, Esq.
Xxxxxxxxx Xxxxxxx, LLP
000 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
If to Buyer:
Hythiam, Inc.
00000 Xxxxx Xxxxxx Xxxx., Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Chief Executive Officer
Fax: (000) 000-0000
00000 Xxxxx Xxxxxx Xxxx., Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Chief Executive Officer
Fax: (000) 000-0000
Copy to:
Xxxx X. Xxxxxxxx, Esq.
Xxxxxx Xxxxx & Xxxxx LLP
0000 00xx Xxxxxx, Xxxxx 000X
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
0000 00xx Xxxxxx, Xxxxx 000X
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Any Party may send any notice, request, demand, claim, or other communication hereunder to the
intended recipient at the address set forth above using any other means (including personal
delivery, expedited courier, messenger service, telecopy, telex, ordinary mail, or electronic
mail), but no such notice, request, demand, claim, or other communication will be deemed to have
been duly given unless and until it actually is received by the intended recipient. Any Party may
change the address to which notices, requests, demands, claims, and other communications hereunder
are to be delivered by giving the other Party notice in the manner herein set forth.
(g) Governing Law. This Agreement will be governed by and construed in accordance with the
domestic laws of the State of Delaware without giving effect to any choice or conflict of
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law
provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware.
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each employee, representative, and other agent of such Party) may disclose to any and all Persons,
without limitation of any kind, the transaction’s tax treatment and tax structure (as such terms
are used in Code §6011 and §6112 and regulations thereunder) contemplated by this agreement and all
materials of any kind (including opinions or other tax analyses) provided to such Party or such
Person relating to such tax treatment and tax structure, except to the extent necessary to comply
with any applicable federal or state securities laws; provided, however, that such disclosure many
not be made until the earlier of date of (A) public announcement of discussions relating to the
transaction, (B) public announcement of the transaction, or (C) execution of an agreement to enter
into the transaction. This authorization is not intended to permit disclosure of any other
information including (without limitation) (A) any portion of any materials to the extent not
related to the transaction’s tax treatment or tax structure, (B) the identities of participants or
potential participants, (C) the existence or status of any negotiations, (D) any pricing or
financial information (except to the extent such pricing or financial information is related to the
transaction’s tax treatment or tax structure), or (E) any other term or detail not relevant to the
transaction’s tax treatment or the tax structure.
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COMPANY: | ||||
COMPREHENSIVE CARE CORPORATION | ||||
By:
|
/s/ Xxxx Xxxx Xxxxxxx | |||
Its:
|
President and CEO | |||
By:
|
/s/ Xxxxxx X. Xxxxxx | |||
Its:
|
Chairman and CFO | |||
BUYER: | ||||||
HYTHIAM, INC. | ||||||
By: | /s/ Xxxxxx X. Xxxxxx | |||||
Its: | Chairman and CEO | |||||
By: | /s/ Xxxxxxx X. Xxxxxxxx | |||||
Its: | Senior Executive VP | |||||
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