exv10w2



 





Exhibit 10.2




LIMITED LIABILITY COMPANY MEMBERSHIP INTEREST




PURCHASE AGREEMENT




AMONG




HYTHIAM, INC. (“BUYER”)




AND




WOODCLIFF
HEALTHCARE INVESTMENT PARTNERS, LLC

 (“COMPANY”)




AND




THE MEMBERS OF THE COMPANY




(“SELLERS”)




AS OF




JANUARY 12, 2007




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TABLE OF CONTENTS




	 	 	 	 	 
	§1. Definitions
	 	 	1	 
	 
	 	 	 	 
	§2. Purchase and Sale of Target Shares
	 	 	4	 
	 
	 	 	 	 
	(a) Basic Transaction
	 	 	4	 
	(b) Purchase Price
	 	 	4	 
	(c) Closing
	 	 	5	 
	(d) Deliveries at Closing
	 	 	5	 
	 
	 	 	 	 
	§3. Representations and Warranties Concerning Transaction
	 	 	5	 
	 
	 	 	 	 
	(a) Sellers’ Representations and Warranties
	 	 	5	 
	(b) Buyer’s Representations and Warranties
	 	 	6	 
	 
	 	 	 	 
	§4. Representations and Warranties Concerning Company
	 	 	7	 
	 
	 	 	 	 
	(a) Organization, Qualification, and Corporate Power
	 	 	7	 
	(b) Capitalization
	 	 	8	 
	(c) Non-contravention
	 	 	8	 
	(d) Brokers’ Fees
	 	 	8	 
	(e) Title to Assets
	 	 	8	 
	(f) Subsidiaries
	 	 	8	 
	(g) Financial Statement
	 	 	8	 
	(h) Events Subsequent to Formation
	 	 	9	 
	(i) Undisclosed Liabilities
	 	 	10	 
	(j) Legal Compliance
	 	 	10	 
	(k) Tax Matters
	 	 	11	 
	(l) Real Property
	 	 	12	 
	(m) Intellectual Property
	 	 	12	 
	(n) Tangible Assets
	 	 	12	 
	(o) Contracts
	 	 	12	 
	(p) Powers of Attorney
	 	 	13	 
	(q) Insurance
	 	 	13	 
	(r) Litigation
	 	 	14	 
	(s) Product Liability
	 	 	14	 
	(t) Employees
	 	 	14	 
	(u) Guaranties
	 	 	14	 
	(v) Environmental, Health, and Safety Matters
	 	 	14	 
	(w) Certain Business Relationships with Target and Its Subsidiaries
	 	 	14	 
	(x) Stockholders
	 	 	14	 
	(y) Disclosure
	 	 	14	 
	 
	 	 	 	 
	§5. Intentionally Omitted
	 	 	14	 
	 
	 	 	 	 
	§6. Post-Closing Covenants
	 	 	15	 
	 
	 	 	 	 
	(a) General
	 	 	15	 
	(b) Litigation Support
	 	 	15	 
	(c) Transition
	 	 	15	 
	(d) Confidentiality
	 	 	15	 






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	§7. Conditions to Obligation to Close
	 	 	15	 
	 
	 	 	 	 
	(a) Conditions to Buyer’s Obligation
	 	 	16	 
	(b) Conditions to Sellers’ Obligation
	 	 	17	 
	 
	 	 	 	 
	§8. Remedies For Breaches of this Agreement
	 	 	18	 
	 
	 	 	 	 
	(a) Survival of Representations and Warranties
	 	 	18	 
	(b) Indemnification Provisions for Buyer’s Benefit
	 	 	18	 
	(c) Indemnification Provisions for Sellers’ Benefit
	 	 	18	 
	(d) Matters Involving Third Parties
	 	 	18	 
	(e) Determination of Adverse Consequences
	 	 	19	 
	(f) Other Indemnification Provisions
	 	 	20	 
	(g) Limitation of Liability
	 	 	20	 
	 
	 	 	 	 
	§9. Tax Matters
	 	 	20	 
	 
	 	 	 	 
	(a) Tax Indemnification
	 	 	20	 
	(b) Straddle Period
	 	 	20	 
	(c) Responsibility for Filing Tax Returns
	 	 	21	 
	(d) Cooperation on Tax Matters
	 	 	21	 
	(e) Tax Sharing Agreements
	 	 	21	 
	(f) Certain Taxes and Fees
	 	 	21	 
	(g) Exclusive Remedy for Tax Matters
	 	 	21	 
	(h) Refunds
	 	 	22	 
	(i) Tax Reporting
	 	 	22	 
	 
	 	 	 	 
	§10. Termination
	 	 	22	 
	 
	 	 	 	 
	(a) Termination of Agreement
	 	 	22	 
	(b) Effect of Termination
	 	 	22	 
	 
	 	 	 	 
	§11. Miscellaneous
	 	 	22	 
	 
	 	 	 	 
	(a) Nature of Sellers’ Obligations
	 	 	22	 
	(b) Press Releases and Public Announcements
	 	 	23	 
	(c) No Third-Party Beneficiaries
	 	 	23	 
	(e) Succession and Assignment
	 	 	23	 
	(g) Headings
	 	 	23	 
	(h) Notices
	 	 	23	 
	(i) Governing Law
	 	 	24	 
	(j) Amendments and Waivers
	 	 	24	 
	(k) Severability
	 	 	24	 
	(l) Expenses
	 	 	24	 
	(m) Construction
	 	 	24	 
	(n) Incorporation of Exhibits, Annexes, and Schedules
	 	 	25	 
	(o) Specific Performance
	 	 	25	 
	(p) Arbitration
	 	 	25	 
	(q) Tax Disclosure Authorization
	 	 	25	 
	(r) State Securities Laws
	 	 	26	 
	(s) Counterparts
	 	 	26	 
	(t) Entire Agreement
	 	 	26	 






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LIMITED LIABILITY COMPANY MEMBERSHIP INTEREST PURCHASE AGREEMENT




     This Limited Liability Company Membership Interest Purchase Agreement (this “Agreement”) is
entered into as of January 12, 2007, by and among Hythiam, Inc., a Delaware corporation (“Buyer”),
Woodcliff Healthcare Investment Partners, LLC, a Delaware limited liability company (the
“Company”), and the members of the Company listed on Exhibit A hereto (each a “Seller” and
collectively, “Sellers”). Buyer and Sellers are referred to collectively herein as the “Parties.”



     Sellers in the aggregate own all of the outstanding limited liability company membership
interests of the Company.



     This Agreement contemplates a transaction in which Buyer will purchase from Sellers, and
Sellers will sell to Buyer, all of the outstanding membership interests of Company in return for
cash and shares of common stock of Buyer.



     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.



     §1. Definitions



     “Accredited Investor” has the meaning set forth in Regulation D promulgated under the
Securities Act.



     “Adverse Consequences” to a Person means the amount of any loss, cost, expense, damage or
liability, including interest, fines, reasonable legal and accounting fees and expenses of such
Person, reduced by the amount of any offsetting recovery, settlement or payment received by such
Person in connection with the circumstances giving rise to such Adverse Consequences.



     “Affiliate” has the meaning set forth in Rule 12b-2 of the regulations promulgated under the
Securities Exchange Act.



     “Affiliated Group” means any affiliated group within the meaning of Code §1504(a) or any
similar group defined under a similar provision of state, local or foreign law.



     “Basis” means any past or present fact, situation, circumstance, status, condition, activity,
practice, plan, occurrence, event, incident, action, failure to act, or transaction that forms or
could form the basis for any specified consequence.



     “Buyer” has the meaning set forth in the preface above.



     “Closing” has the meaning set forth in §2(c) below.



     “Closing Date” has the meaning set forth in §2(c) below.



     “Code” means the Internal Revenue Code of 1986, as amended.



     “Company” has the meaning set forth in the preface above.



     “Company Interest” means any membership interest of the Company, any economic interest in the
Company, and any other right or interest in the Company, including “Units” as such term is defined
in the Operating Agreement.



     “CompCare” means Comprehensive Care Corporation, a Delaware corporation.



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     “Commission” means the U.S. Securities and Exchange Commission.



     “Confidential Information” means any information concerning the businesses and affairs of the
Company that is not already generally available to the public.



     “Controlled Group” has the meaning set forth in Code §1563.



     “Disclosure Schedule” has the meaning set forth in §4 below.



     “Environmental, Health, and Safety Requirements” will mean, as amended and as now and
hereafter in effect, all federal, state, local, and foreign statutes, regulations, ordinances, and
other provisions having the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations, and all common law concerning public health and
safety, worker health and safety, pollution, or protection of the environment, including, without
limitation, all those relating to the presence, use, production, generation, handling,
transportation, treatment, storage, disposal, distribution, labeling, testing, processing,
discharge, release, threatened release, control, or cleanup of any hazardous materials, substances,
or wastes, chemical substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals,
petroleum products or by products, asbestos, polychlorinated biphenyls, noise, or radiation.



     “Escrow” means the escrow established with the Escrow Holder pursuant to this Agreement and
the Escrow Agreement.



     “Escrow Agreement” means an escrow agreement substantially in the form attached hereto as
Exhibit B.



     “Escrow Holder” means Thelen Reid Brown Raysman & Steiner LLP.



     “Financial Statements” has the meaning set forth in §4(g) below.



     “Force Majeure Event” has the meaning set forth in §4(bb) below.



     “GAAP” means United States generally accepted accounting principles as in effect from time to
time, consistently applied.



     “Indemnified Party” has the meaning set forth in §8(d) below.



     “Indemnifying Party” has the meaning set forth in §8(d) below.



     “Knowledge” includes actual knowledge and knowledge that a Party should have after reasonable
investigation.



     “Leases” means all leases, subleases, licenses, concessions and other agreements (written or
oral), including all amendments, extensions, renewals, guaranties, and other agreements with
respect thereto, pursuant to which Company holds any Leased Real Property, including the right to
all security deposits and other amounts and instruments deposited by or on behalf of Company
thereunder.



     “Liability” means any liability or obligation of whatever kind or nature (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become due), including any
liability for Taxes.



     “Lien” means any mortgage, pledge, lien, encumbrance, charge, or other security interest.



5









 





     “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, 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).



     “Most Recent Balance Sheet” means the balance sheet contained within the Most Recent Financial
Statements.



     “Most Recent Financial Statements” has the meaning set forth in §4(g) below.



     “Necessary Items” has the meaning set forth in §4(bb) below.



     “Operating Agreement” means the current Limited Liability Company Operating Agreement of the
Company, dated as of May 9, 2005.



     “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.



     “Per Share Price” means $9.30.



     “Person” means an individual, a partnership, a corporation, a limited liability company, an
association, a joint interests 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).



     “Prime Rate” means the commercial prime lending rate as published in the most recent Wall
Street Journal as of the date hereof.



     “Purchase Price” has the meaning set forth in §2(b) below.



     “Real Property” has the meaning set forth in §4(l) below.



     “Securities Act” means the Securities Act of 1933, as amended.



     “Securities Exchange Act” means the Securities Exchange Act of 1934, as amended.



     “Securities Purchase Agreement” means that certain Securities Purchase Agreement between
Company and CompCare, dated as of June 14, 2005.



     “Seller” has the meaning set forth in the preface above.



     “Sellers’ Representative” means Nicholas Lewin.



     “Shares” means shares of common stock, par value $0.0001, of Buyer that are registered
pursuant to an effective registration statement under the Securities Act and for which Buyer uses
reasonable best efforts to maintain effective until the earlier of the date that all Shares have
been sold or may be sold publicly under Rule 144.



     “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 entitled (without regard to the occurrence of any contingency) to vote
in the election of managers, managers, or trustees thereof is at the time



6









 







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. Notwithstanding the foregoing, the term “Subsidiary” does not
include CompCare for purposes of this Agreement.



     “Tax” or “Taxes” means any federal, state, local, or foreign income, gross receipts, license,
payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental
(including taxes under Code §59A), customs duties, membership interests, franchise, profits,
withholding, social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not and including any obligations to indemnify or otherwise assume or
succeed to the Tax liability of any other Person.



     “Tax Return” means any return, declaration, report, claim for refund, or information return or
statement relating to Taxes, including any schedule or attachment thereto, and including any
amendment thereof.



     “Third-Party Claim” has the meaning set forth in §8(d) below.



     §2. Purchase and Sale of Company Interests.



     (a) Basic Transaction. On and subject to the terms and conditions of this Agreement, Buyer
agrees to purchase from each Seller, and each Seller agrees to sell to Buyer, all of his or her or
its Company Interests for the consideration specified below in this §2.



     (b) Purchase Price. Buyer agrees to pay to Sellers the following (collectively, the “Purchase
Price”):




     (i) At or prior to the Closing, the sum of nine million dollars ($9,000,000) in cash,
less three million six hundred thousand dollars ($3,600,000) in cash previously deposited
with the Escrow Holder (if so deposited), by wire transfer or delivery of other immediately
available funds to an account specified by Escrow Holder; at the Closing, the Escrow Holder
shall apply the Purchase Price as provided in the Escrow Agreement to satisfy all
obligations of the Company, which are set forth on §4(e) of the Disclosure Schedule, then
distribute the remainder to the Sellers’ Representative for distribution to the Sellers in
proportion to their respective ownership interests in the Company as set forth on
Exhibit A; plus




     (ii) Two Hundred Fifteen Thousand Fifty Three (215,053) Shares by delivery to the
Escrow Holder of one or more certificates for the Shares in the name of Sellers’
Representative within sixty (60) days of the Closing Date for Sellers’ Representative to
hold, sell or distribute the proceeds to Sellers in proportion to their respective ownership
interests in the Company as set forth on Exhibit A; provided, however, that if Buyer
does



7









 







not have sufficient Shares available at such time, it shall deposit with the Escrow
Holder (A) on the sixty first (61st) day after the Closing Date, any available
Shares plus cash equal to the interest on two million dollars ($2,000,000) (less the value
of the Shares, if any, based on the Per Share Price, deposited into the Escrow on or prior
to such sixty-first (61st) day) at the Prime Rate from the Closing Date through
such date; (B) on any day between the sixty first (61st) and one hundred and
twentieth (120th) day after the Closing Date, deliver any additional available
registered Shares up to the full amount of Shares required to be delivered by Buyer,
together with cash in the amount of additional interest on the value of such additional
Shares (at the Per Share Price) at the Prime Rate from the Closing Date through the date the
Shares are deposited; and (C) if Buyer does not have sufficient registered Shares to deliver
the full amount of Shares required to be delivered by Buyer by the one hundred twenty first
(121st) day after the Closing Date, it shall deposit in cash any remaining
Purchase Price not paid in Shares (assuming the Per Share Price), by wire transfer or
delivery of other immediately available funds to the account specified by Escrow Holder.



     (c) Closing. The closing of the transactions contemplated by this Agreement (the “Closing”)
shall take place at the offices of Escrow Holder in Los Angeles, California, commencing at 9:00
a.m. local time on the business day following the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions contemplated hereby (other than
conditions with respect to actions the respective Parties will take at the Closing itself) or such
other date as Buyer and Sellers’ Representative may mutually determine (the “Closing Date”);
provided, however, that the Closing Date shall be no later than three (3) business days from the
date hereof.



     (d) Deliveries at Closing. At the Closing, (i) Sellers will deliver to Buyer the various
certificates, instruments, and documents referred to in §7(a) below, (ii) Buyer will deliver to
Sellers the various certificates, instruments, and documents referred to in §7(b) below.



     (e) Sellers’ Appointment of Sellers’ Representative. Unless expressly provided to the
contrary in this Agreement, Sellers hereby appoint Sellers’ Representative as their agent and sole
representative to act on their behalf under this Agreement and the Escrow Agreement including,
without limitation, holding or distributing the Purchase Price as provided in the Escrow Agreement,
and acknowledge that Buyer is entitled to rely upon such appointment for all purposes in connection
with this Agreement and the transactions contemplated hereby.



     §3. Representations and Warranties Concerning Transaction.



     (a) Sellers’ Representations and Warranties. Each Seller represents and warrants to Buyer
that the statements contained in this §3(a) 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(a)) with
respect to himself, herself, or itself.




     (i) Organization of Certain Sellers. Seller (if a corporation or other entity) is duly
organized, validly existing, and in good standing under the laws of the jurisdiction of its
incorporation or other formation.




     (ii) Authorization of Transaction. Seller has full power and authority (including, if
applicable, full corporate or other entity power and authority) to execute and deliver this



8









 







Agreement and to perform his, her, or its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of Seller, enforceable in accordance
with its terms and conditions. Seller need not give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or governmental agency in
order to consummate the transactions contemplated by this Agreement. The execution,
delivery, and performance of this Agreement and all other agreements contemplated hereby
have been duly authorized by Seller.




     (iii) Non-contravention. Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (A) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which Seller is subject or,
if Seller is an entity, any provision of its charter, bylaws, or other governing documents,
(B) conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license, instrument, or other
arrangement to which Seller is a party or by which he, she, or it is bound or to which any
of his, her, or its assets are subject, or (C) result in the imposition or creation of a
Lien upon or with respect to the Company Interests.




     (iv) Brokers’ Fees. Seller has no Liability to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions contemplated by this Agreement.




     (v) Company Interests. Seller holds of record and owns beneficially the number or
percentage of Company Interests set forth next to his, her, or its name in Exhibit
A, free and clear of any restrictions on transfer (other than any restrictions under the
Securities Act and state securities laws), Taxes, Liens, options, warrants, purchase rights,
contracts, commitments, equities, claims, and demands. Seller is not a party to any option,
purchase right, or other contract or commitment (other than this Agreement) that could
require Seller to sell, transfer, or otherwise dispose of any membership interests of
Company. Seller is not a party to any voting trust, proxy, or other agreement or
understanding with respect to the voting of any membership interests of Company.




     (vi) Investment. Seller (A) understands that the Shares have not been registered under
the Securities Act, or under any state securities laws, and are being offered and sold in
reliance upon federal and state exemptions for transactions not involving any public
offering, (B) is acquiring the Shares solely for his, her, or its own account for investment
purposes, and not with a view to the distribution thereof, (C) is a sophisticated investor
with knowledge and experience in business and financial matters, (D) has reviewed the public
reports filed by Buyer with the Commission under the Securities Exchange Act, and has had
the opportunity to obtain additional information as desired in order to evaluate the merits
and the risks inherent in holding the Shares, (E) is able to bear the economic risk and lack
of liquidity inherent in holding the Shares, and (F) is an Accredited Investor for the
reasons set forth on Exhibit A hereto.



     (b) Buyer’s Representations and Warranties. Buyer represents and warrants to Sellers that the
statements contained in this §3(b) 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(b).



9









 






     (i) Organization of Buyer. Buyer is a corporation duly organized, validly existing, and
in good standing under the laws of the state of Delaware, the jurisdiction of its
incorporation.




     (ii) Authorization of Transaction. Buyer has full power and authority (including full
corporate or other entity power and authority) to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement constitutes the valid and legally binding
obligation of Buyer, enforceable in accordance with its terms and conditions. Buyer need not
give any notice to, make any filing with, or obtain any authorization, consent, or approval
of any government or governmental agency in order to consummate the transactions
contemplated by this Agreement. The execution, delivery, and performance of this Agreement
and all other agreements contemplated hereby have been duly authorized by Buyer.




     (iii) Non-contravention. Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (A) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which Buyer is subject or
any provision of its charter, bylaws, or other governing documents or (B) conflict with,
result in a breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any notice under
any agreement, contract, lease, license, instrument, or other arrangement to which Buyer is
a party or by which it is bound or to which any of its assets are subject.




     (iv) Brokers’ Fees. Buyer has no Liability to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions contemplated by this Agreement for
which any Seller could become liable or obligated.




     (v) Investment. Buyer is not acquiring the Company Interests with a view to or for sale
in connection with any distribution thereof within the meaning of the Securities Act.




     (vi) Form S-3 Eligibility. Buyer is currently eligible to register the resale of the
Shares by the Sellers on Form S-3 promulgated under the Securities Act, and Buyer hereby
covenants and agrees to use its reasonable best efforts to maintain its eligibility to use
Form S-3 until the Registration Statement covering the resale of the Shares shall have been
filed with, and declared effective by, the Commission.



     §4. Representations and Warranties Concerning Company. Each of the Sellers represents and
warrants to Buyer 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 disclosure schedule delivered by Sellers to Buyer on the date hereof
(the “Disclosure Schedule”). The Disclosure Schedule will be arranged in paragraphs corresponding
to the lettered and numbered paragraphs contained in this §4.



     (a) Organization, Qualification, and Corporate Power. Company is a limited liability company
duly organized, validly existing, and in good standing under the laws of the state of Delaware, the
jurisdiction of its formation. Company is duly authorized to conduct business and is in good
standing under the laws of each jurisdiction where such qualification is required.



10









 




Company has full corporate power and authority and all licenses, permits, and authorizations
necessary to carry on the businesses in which it is engaged and in which it has been engaged and to
own and use the properties owned and used by it. §4(a) of the Disclosure Schedule lists the
members, managers, officers and employees of Company. Sellers have delivered to Buyer correct and
complete copies of the Certificate of Formation and Operating Agreement (as amended to date). The
minute books (containing the records of meetings of the members, managers, and any committees or
boards), the membership record books for Company are correct and complete. Company is not in
default under or in violation of any provision of its certificate of formation or operating
agreement.




     (b) Capitalization. The entire authorized membership interests of Company consist of three
million six hundred ninety seven thousand five hundred (3,697,500) Units (as such term is defined
in the Operating Agreement), one hundred percent (100%) of which are owned and controlled by
Sellers. All of the issued and outstanding Company Interests have been duly authorized, are
validly issued, fully paid, and non-assessable, and are held of record by the respective Sellers as
set forth on Exhibit A. There are no outstanding or authorized options, 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
membership interests. There are no outstanding or authorized interest appreciation, phantom
interests, profit participation, or similar rights with respect to Company. There are no voting
trusts, proxies, or other agreements or understandings with respect to the voting of the membership
interests of Company.



     (c) Non-contravention. Neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which Company is subject or any provision of the
charter or bylaws of Company or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument,
or other arrangement to which Company is a party or by which it is bound or to which any of its
assets is subject (or result in the imposition of any Lien upon any of its assets). Company does
not need to give any notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement.



     (d) Brokers’ Fees. Company has no Liability to pay any fees, commissions or payments to any
broker, finder, Seller, or agent with respect to the transactions contemplated by this Agreement or
any transaction with CompCare.



     (e) Title to Assets. Except for the matters set forth on §4(e) of the Disclosure Schedule
that will be satisfied from the Escrow, Company has good and marketable title, free and clear of
all Liens, to one million seven hundred thirty-nine thousand one hundred thirty (1,739,130) shares
of common stock and fourteen thousand four hundred (14,400) shares of Series A Convertible
Preferred Stock of CompCare, the conversion of which would result in Company holding over fifty
percent (50%) of the outstanding shares of voting stock of CompCare immediately following such
conversion.



11









 





     (f) Subsidiaries. Company has no Subsidiaries. Company does not control directly or
indirectly or have any direct or indirect equity participation in any corporation, partnership,
trust, or other business association that is not a Subsidiary of Company. Company does not own or
have any right to acquire, directly or indirectly, any outstanding membership interests of, or
other equity interests in, any Person other than CompCare.



     (g) Financial Statement. Attached as Exhibit C are the following financial
statements: balance sheets, income statements, cash flows, and changes in equity (collectively, the
“Financial Statements”) as of December 31, 2006. The Financial Statements present fully, fairly
and accurately the financial condition of the Company as of the date thereof, are correct and
complete, and are consistent with the books and records of Company (which books and records are
correct and complete).



     (h) Events Subsequent to Formation. Since the date of the Operating Agreement, there has not
been any Material Adverse Change with respect to Company (other than any Material Adverse Change
with respect to CompCare), and since August 31, 2006, to the Knowledge of the Sellers, there has
not been any Material Adverse Change with respect to CompCare (i) of a nature that would be
required to be disclosed in a periodic report or (ii) that would have a Material Adverse Effect on
its financial statements, in each case other than as disclosed in CompCare’s public reports or
provided to Buyer in writing on or prior to January 9, 2007 (including, without limitation, the
draft of CompCare’s Form 10-Q for its second quarter operations that was provided to Buyer on or
before January 9, 2007). Without limiting the generality of the foregoing, since that date, except
as set forth on §4(h) of the Disclosure Schedule:




     (i) Company has not sold, leased, transferred, or assigned any of its assets, tangible
or intangible, other than for a fair consideration in the Ordinary Course of Business;




     (ii) Company has not entered into any agreement, contract, lease, or license (or series
of related agreements, contracts, leases, and licenses) either involving more than one
thousand dollars ($1,000.00) or outside the Ordinary Course of Business;




     (iii) no party (including Company) has accelerated, terminated, modified, or cancelled
any agreement, contract, lease, or license (or series of related agreements, contracts,
leases, and licenses) involving more than one thousand dollars ($1,000) to which Company is
a party or by which it is bound;




     (iv) Company has not imposed any Liens upon any of its assets, tangible or intangible;




     (v) Company has not made any capital expenditure (or series of related capital
expenditures) either involving more than one thousand dollars ($1,000) or outside the
Ordinary Course of Business;




     (vi) Company has not made any capital investment in, any loan to, or any acquisition of
the securities or assets of, any other Person (or series of related capital investments,
loans, and acquisitions) either involving more than one thousand dollars ($1,000) or outside
the Ordinary Course of Business;




     (vii) Company has not issued any note, bond, or other debt security or created,
incurred, assumed, or guaranteed any indebtedness for borrowed money or capitalized



12









 







lease obligation either involving more than one hundred dollars ($100) singly or one
thousand dollars ($1,000) in the aggregate;




     (viii) Company has not delayed or postponed the payment of accounts payable and other
Liabilities outside the Ordinary Course of Business;




     (ix) Company has not cancelled, compromised, waived, or released any right or claim (or
series of related rights and claims) either involving more than one thousand dollars
($1,000) or outside the Ordinary Course of Business;




     (x) Company has not transferred, assigned, or granted any license or sublicense of any
rights under or with respect to any Intellectual Property;




     (xi) there has been no change made or authorized in the charter or bylaws of Company;




     (xii) Company has not issued, sold, or otherwise disposed of any of its membership
interests, or granted any options, warrants, or other rights to purchase or obtain
(including upon conversion, exchange, or exercise) any of its membership interests;




     (xiii) Company has not declared, set aside, or paid any dividend or made any
distribution with respect to its membership interests (whether in cash or in kind) or
redeemed, purchased, or otherwise acquired any of its membership interests;




     (xiv) Company has not experienced any damage, destruction, or loss (whether or not
covered by insurance) to its property;




     (xv) Company has not made any loan to, or entered into any other transaction with, any
of its managers, officers, and employees outside the Ordinary Course of Business;




     (xvi) Company has not entered into or terminated any employment contract or collective
bargaining agreement, written or oral, or modified the terms of any existing such contract
or agreement;




     (xvii) Company has not granted any increase in the base compensation of any of its
managers, officers, and employees outside the Ordinary Course of Business;




     (xviii) Company has not adopted, amended, modified, or terminated any bonus, profit
sharing, incentive, severance, or other plan, contract, or commitment for the benefit of any
of its managers, officers, and employees (or taken any such action with respect to any other
Employee Benefit Plan);




     (xix) Company has not made any other change in employment terms for any of its
managers, officers, and employees outside the Ordinary Course of Business;




     (xx) Company has not made or pledged to make any charitable or other capital
contribution outside the Ordinary Course of Business;




     (xxi) there has not been any other material occurrence, event, incident, action,
failure to act, or transaction outside the Ordinary Course of Business involving Company;




     (xxii) Company has not discharged a material Liability or Lien outside the Ordinary
Course of Business;



13









 






     (xxiii) Company has not made any loans or advances of money; and




     (xxiv) Company has not committed to any of the foregoing.



     (i) Undisclosed Liabilities. Except as set forth on §4(i) of the Disclosure Schedule, Company
does not have any Liability, and Sellers have no knowledge of any present or threatened action,
suit, proceeding, hearing, investigation, charge, complaint, claim, or demand against Company
giving rise to any Liability.



     (j) Legal Compliance. Company has complied with all applicable laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and charges thereunder
and including the Foreign Corrupt Practices Act, 15 U.S.C. 78dd-1 et seq.) of federal, state,
local, and foreign governments (and all agencies thereof), and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been filed or commenced
against any of them alleging any failure so to comply.



     (k) Tax Matters.




     (i) Company has filed all Tax Returns that it was required to file under applicable
laws and regulations. All such Tax Returns were materially correct and complete in all
respects and were prepared in substantial compliance with all applicable laws and
regulations. All Taxes due and owing by Company (whether or not shown on any Tax Return)
have been paid. Company is not currently the beneficiary of any extension of time within
which to file any Tax Return. No claim has ever been made by an authority in a jurisdiction
where Company does not file Tax Returns that Company is or may be subject to Tax by that
jurisdiction. There are no Liens for Taxes (other than Taxes not yet due and payable) upon
any of the assets of Company.




     (ii) Company has withheld and paid all Taxes required to have been withheld and paid in
connection with any amounts paid or owing to any employee, independent contractor, creditor,
interests holder, or other third party.




     (iii) Company does not expect any authority to assess any additional Taxes for any
period for which Tax Returns have been filed. No foreign, federal, state, or local Tax
audits or administrative or judicial Tax proceedings are pending or being conducted with
respect to Company. Company has not received from any foreign, federal, state, or local Tax
authority (including jurisdictions where Company has not filed Tax Returns) any (i) notice
indicating an intent to open an audit or other review, (ii) request for information related
to Tax matters, or (iii) notice of deficiency or proposed adjustment for any amount of Tax
proposed, asserted, or assessed by any Tax authority against Company. §4(k) of the
Disclosure Schedule lists all federal, state, local, and foreign income Tax Returns filed
with respect to Company for Tax periods ended on or after January 1, 2004 and indicates
those Tax Returns, if any, that currently are the subject of audit by applicable Tax
authorities. Sellers have delivered to Buyer correct and complete copies of all federal
income Tax Returns, examination reports, and statements of deficiencies assessed against or
agreed to by Company filed or received since January 1, 2004.




     (iv) Company has not waived any statute of limitations in respect of Taxes or agreed to
any extension of time with respect to a Tax assessment or deficiency.




     (v) Company has disclosed on its federal income Tax Returns all positions taken therein
that could give rise to a substantial understatement of federal income Tax within



14









 







the meaning of Code §6662. Company is not a party to or bound by any Tax allocation or
sharing agreement. Company does not have any Liability for the Taxes of any Person (other
than Company or any of its members) as a transferee or successor, by contract, or otherwise.




     (vii) Company will not be required to include any item of income in, or exclude any
item of deduction from, taxable income for any Tax period (or portion thereof) ending after
the Closing Date as a result of any:




     (A) change in method of accounting for a Tax period ending on or prior to the
Closing Date;




     (B) “closing agreement” as described in Code §7121 (or any corresponding or
similar provision of state, local or foreign income Tax law) executed on or prior to
the Closing Date;




     (C) intercompany transaction or excess loss account described in Treasury
Regulations under Code §1502 (or any corresponding or similar provision of state,
local or foreign income Tax law);




     (D) installment sale or open transaction disposition made on or prior to the
Closing Date; or




     (E) prepaid amount received on or prior to the Closing Date.




     (x) Company has been classified as a partnership for state and federal income Tax
purposes since its inception.



     (l) Real Property. The Company does not own, control, lease or occupy, and has never owned,
controlled, leased or occupied, any Real Property, and is not and has never been a party to any
Lease.



     (m) Intellectual Property.




     (i) Company owns and possesses or has the right to use pursuant to a valid and
enforceable written license, sublicense, agreement, or permission all Intellectual Property
necessary or desirable for the operation of the business of Company as presently conducted
or previously conducted.




     (ii) Company has not interfered with, infringed upon, misappropriated, or otherwise
come into conflict with any Intellectual Property rights of third parties, and none of
Sellers and the managers and officers (and employees with responsibility for Intellectual
Property matters) of Company has ever received any charge, complaint, claim, demand, or
notice alleging any such interference, infringement, misappropriation, or violation
(including any claim that Company must license or refrain from using any Intellectual
Property rights of any third party).



     (n) Tangible Assets. Company does not own, lease or use, and has never owned, leased or
used, any machinery, equipment, and other tangible assets in the conduct of its business.



     (o) Contracts. §4(o) of the Disclosure Schedule lists the following contracts and other
agreements to which Company is a party:



15









 






     (i) any agreement (or group of related agreements) for the lease of personal property
to or from any Person providing for lease payments in excess of one thousand dollars
($1,000) per annum;




     (ii) any agreement (or group of related agreements) for the purchase or sale of raw
materials, commodities, supplies, products, or other personal property, or for the
furnishing or receipt of services, the performance of which will extend over a period of
more than 1 year, result in a loss to Company, or involve consideration in excess of one
thousand dollars ($1,000);




     (iii) any agreement concerning a partnership or joint venture;




     (iv) any agreement (or group of related agreements) under which it has created,
incurred, assumed, or guaranteed any indebtedness for borrowed money, or any capitalized
lease obligation, in excess of one thousand dollars ($1,000) or under which it has imposed a
Lien on any of its assets, tangible or intangible;




     (v) any agreement concerning confidentiality or non-competition;




     (vi) any agreement with any of Sellers and their Affiliates (other than Company);




     (vii) any profit sharing, interests option, interests purchase, interests appreciation,
deferred compensation, severance, or other plan or arrangement for the benefit of its
current or former managers, officers, and employees;




     (viii) any collective bargaining agreement;




     (ix) any agreement for the employment of any individual on a full-time, part-time,
consulting, or other basis providing annual compensation in excess of one thousand dollars
($1,000) or providing severance benefits;




     (x) any agreement under which it has advanced or loaned any amount to any of its
managers, officers, and employees;




     (xi) any agreement under which the consequences of a default or termination could have
a Material Adverse Effect;




     (xii) any agreement under which it has granted any Person any registration rights
(including, without limitation, demand and piggyback registration rights);




     (xiii) any settlement, conciliation or similar agreement, the performance of which will
involve payment after the date hereof consideration in excess of one thousand dollars
($1,000), or imposition of monitoring or reporting obligations to any Governmental Entity;




     (xiv) any agreement under which Company has advanced or loaned any other Person amounts
in the aggregate exceeding one thousand dollars ($1,000); or




     (xv) any other agreement (or group of related agreements) the performance of which
involves consideration in excess of one thousand dollars ($1,000).


Sellers have delivered to Buyer a correct and complete copy of each written agreement (as amended
to date) listed in §4(o) of the Disclosure Schedule and a written summary setting forth the terms
and conditions of each material oral agreement the Company has entered into. With respect to each
such agreement: (A) the agreement is legal, valid, binding, enforceable, and in


16









 






full force and effect; (B) the agreement will continue to be legal, valid, binding, enforceable,
and in full force and effect on identical terms following the consummation of the transactions
contemplated hereby; (C) no party is in breach or default, and no event has occurred that with
notice or lapse of time would constitute a breach or default, or permit termination, modification,
or acceleration, under the agreement; and (D) no party has repudiated any provision of the
agreement.




     (p) Powers of Attorney. There are no outstanding powers of attorney executed on behalf of
Company.



     (q) Insurance. Company has no insurance policies.



     (r) Litigation. §4(r) of the Disclosure Schedule sets forth each instance in which Company
(i) is subject to any outstanding injunction, judgment, order, decree, ruling, or charge or (ii) is
a party or is threatened to be made a party to any action, suit, proceeding, hearing, or
investigation of, in, or 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. None of the actions, suits, proceedings, hearings, and
investigations set forth in §4(r) of the Disclosure Schedule could result in any Material Adverse
Change. Neither Company nor any of the Sellers has knowledge of any action, suit, proceeding,
hearing, or investigation threatened against Company.



     (s) Product Liability. Company does not have any Liability (and there is no Basis for any
present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against any of them giving rise to any Liability) arising out of any injury to individuals
or property.



     (t) Employees.




     (i) The Company does not have, and has never had, any employees.




     (ii) There are no contracts or agreements with any managers, members or officers of
Company.



     (u) Guaranties. Company is not a guarantor or otherwise liable for any Liability (including
indebtedness) of any other Person.



     (v) Environmental, Health, and Safety Matters.




     (i) Company has complied and is in compliance with all Environmental, Health, and
Safety Requirements.




     (ii) Company has not received any written or oral notice, report or other information
regarding any actual or alleged violation of Environmental, Health, and Safety Requirements,
or any Liabilities, including any investigatory, remedial or corrective obligations,
relating to any of them or their facilities arising under Environmental, Health, and Safety
Requirements.




     (iii) Company has not assumed, or otherwise become subject to, any Liability, including
without limitation any obligation for corrective or remedial action, of any other Person
relating to Environmental, Health, and Safety Requirements.



     (w) Certain Business Relationships with Company. None of Sellers, their Affiliates, or any
of their managers, members, officers, directors, employees, and agents has been involved in



17









 







any business arrangement or relationship with Company within the past 12 months, and none owns
any asset, tangible or intangible, that is used in the business of Company.



     (x) Stockholders. The Company does not have a class of voting stock that is: (i) listed on
a national securities exchange; (ii) authorized for quotation on The NASDAQ Stock Market; or (iii)
held of record by more than 2,000 stockholders.



     (y) Disclosure. The representations and warranties contained in this §4 do not contain any
untrue statement of a fact or omit to state any fact necessary in order to make the statements and
information contained in this §4 not misleading.



     §5. Intentionally omitted.



     §6. Post-Closing Covenants. The Parties agree as follows with respect to the period following
the Closing:



     (a) General. In case at any time after the Closing any further actions are necessary or
desirable to carry out the purposes of this Agreement, each of the Parties will take such further
actions (including the execution and delivery of such further instruments and documents) as any
other Party may request, all at the sole cost and expense of the requesting Party (except as
provided in §6(b) and unless the requesting Party is entitled to indemnification therefor under §8
below). Sellers acknowledge and agree that from and after the Closing Buyer will be entitled to
possession of all documents, books, records (including Tax records), agreements, and financial data
of any sort relating to Company.



     (b) Litigation Support. In the event and for so long as any Party actively is contesting or
defending against any action, suit, proceeding, hearing, investigation, charge, complaint, claim,
or demand in connection with (i) any transaction contemplated under this Agreement or (ii) any
fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing Date involving Company,
each of the other Parties will cooperate with him, her, or it and his, her, or its counsel in the
contest or defense, make available his, her, or its personnel, and provide such testimony and
access to his, her, or its books and records as will be necessary in connection with the contest or
defense, all at the sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefor under §8 below).



     (c) Transition. None of Sellers will take any action that is designed or intended to have
the effect of discouraging CompCare or any other business associate of Company from maintaining the
same business relationships with Company after the Closing as it maintained with Company prior to
the Closing. Each of Sellers will refer all customer inquiries relating to the business of Company
to Buyer from and after the Closing.



     (d) Confidentiality. Each Seller will treat and hold as such all of the Confidential
Information, refrain from using any of the Confidential Information except in connection with this
Agreement, and deliver promptly to Buyer or destroy, at the request and option of Buyer, all
tangible embodiments (and all copies) of the Confidential Information that are in his, her, or its
possession. In the event that any Seller is requested or required pursuant to written or oral
question or request for information or documents in any legal proceeding, interrogatory, subpoena,
civil investigative demand, or similar process to disclose any Confidential Information, such
Seller will notify Buyer promptly of the request or requirement so that Buyer may seek an
appropriate protective order or waive compliance with the provisions of this §6(e).



18









 




If, in the absence of a protective order or the receipt of a waiver hereunder, any of Sellers
is, on the advice of counsel, compelled to disclose any Confidential Information to any tribunal or
else stand liable for contempt, such Seller may disclose the Confidential Information to the
tribunal; provided, however, that the disclosing Seller will use his, her, or its best efforts to
obtain, at the request and expense of Buyer, an order or other assurance that confidential
treatment will be accorded to such portion of the Confidential Information required to be disclosed
as Buyer will designate. The foregoing provisions will not apply to any Confidential Information
that is generally available to the public immediately prior to the time of disclosure unless such
Confidential Information is so available due to the actions of a Seller in violation of this §6(d).




     §7. Conditions to Obligation to Close.



     (a) Conditions to Buyer’s Obligation. Buyer’s obligation to consummate the transactions to
be performed by it in connection with the Closing is subject to satisfaction of the following
conditions:




     (i) the representations and warranties set forth in §3(a) and §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;




     (ii) Sellers will have performed and complied with all of their 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 Sellers 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;




     (iii) 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 Buyer to own the Company Interests and to
control Company, or (D) adversely affect the right 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);




     (iv) Sellers will have delivered to Buyer all books and records with respect to
Company, including without limitation all financial and accounting records, within any
Sellers’ possession, custody or control;




     (v) Sellers will have delivered to Buyer a certificate to the effect that each of the
conditions specified above in §7(a)(i)-(iv) is satisfied in all respects;




     (vi) Buyer will have received from counsel to Sellers an opinion in form and substance
as set forth in Exhibit D-1 attached hereto, addressed to Buyer and on which Buyer
will be entitled to rely, and dated as of the Closing Date;



19









 






     (vii) Buyer will have received the resignations, effective as of the Closing, of each
manager and officer of Company;




     (viii) Sellers will have delivered to Buyer a copy of the certificate of formation of
Company certified on or within four business days before the Closing Date by the Secretary
of State of Delaware;




     (ix) Sellers will have delivered to Buyer a copy of a certificate of good standing of
Company issued on or within four days before the Closing Date by the Secretary of State of
Delaware and of each jurisdiction in which Company is qualified to do business;




     (x) Sellers will have delivered to Buyer a certificate of the secretary managing member
of Company, dated the Closing Date, in form and substance as set forth in Exhibit
D-2, as to: (A) no amendments to the certificate of formation of Company since the date
of the certificate of formation delivered pursuant to clause (viii) above; (B) the operating
agreement (or other governing documents) of Company; and (C) resolutions of the manager(s)
or other authorizing body (or a duly authorized committee thereof) of Company relating to
this Agreement and the transactions contemplated hereby;




     (xi) Sellers will have delivered to Buyer adopted resolutions or unanimous written
consent of the board of directors of CompCare appointing three (3) new directors acceptable
to Buyer, together with immediately effective resignations of three (3) of the current
directors acceptable to Buyer; and




     (xii) Sellers shall have taken all reasonably necessary actions and provided all
certificates, opinions, instruments and other documents reasonably required to effect the
transactions contemplated hereby.


Buyer may waive any condition specified in this §7(a) if it executes a writing so stating at or
prior to the Closing.




     (b) Conditions to Sellers’ Obligation. The obligation of Sellers to consummate the
transactions to be performed by them in connection with the Closing is subject to satisfaction of
the following conditions:




     (i) the representations and warranties set forth in §3(b) 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;




     (ii) 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;




     (iii) no action, suit, or proceeding will be pending or threatened before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction, judgment, order,



20









 







decree, ruling, or charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement or (B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation (and no such injunction, judgment, order,
decree, ruling, or charge will be in effect);




     (iv) Buyer will have delivered to Sellers a certificate to the effect that each of the
conditions specified above in §7(b)(i)-(iii) is satisfied in all respects; and




     (v) Sellers will have received from counsel to Buyer an opinion in form and substance
as set forth in Exhibit E attached hereto, addressed to Sellers and on which Sellers
will be entitled to rely, and dated as of the Closing Date.


Sellers’ Representative may waive any condition specified in this §7(b) on behalf of all Sellers if
he executes a writing so stating at or prior to the Closing.




     §8. Remedies for Breaches of This Agreement.



     (a) Survival of Representations and Warranties.



     All of the representations and warranties of the Parties contained in this Agreement will
survive the Closing hereunder (even if the damaged Party knew or had reason to know of any
misrepresentation or breach of warranty or covenant, taking into account the disclosures on the
Disclosure Schedule, at the time of Closing) and continue in full force and effect for one (1) year
thereafter.



     (b) Indemnification Provisions for Buyer’s Benefit.



          (i) In the event any Seller breaches (or in the event any third party alleges facts that, if
true, would mean any Seller has breached) any of his, her, or its representations, warranties, and
covenants contained herein and, provided that Buyer makes a written claim for indemnification
against any Seller pursuant to §11(h) below within the survival period pursuant to §8(a) above,
then each Seller will be obligated jointly and severally to indemnify Buyer from and against the
entirety of any Adverse Consequences that Buyer may suffer resulting from, arising out of, relating
to, or caused by the breach (or the alleged breach).




          (ii) Each Seller shall jointly and severally to indemnify Buyer in perpetuity from and
against the entirety of any Adverse Consequences Buyer may suffer from Liabilities to the extent
resulting from, arising out of, relating to, or caused by facts or circumstances regarding Company
or its assets occurring or in existence on or prior to the Closing Date; provided, however, that
Sellers shall not be required to indemnify Buyer to the extent such Liabilities arise primarily
from the gross negligence or intentional misconduct of Buyer.




     (c) Indemnification Provisions for Sellers’ Benefit.



          (i) In the event Buyer breaches (or in the event any third party alleges facts that, if true,
would mean Buyer has breached) any of its representations, warranties, and covenants contained
herein and, provided that any Seller makes a written claim for indemnification against Buyer
pursuant to §11(h) below within such survival period pursuant to §8(a) above, then Buyer will
indemnify each Seller from and against the entirety of any Adverse Consequences that Seller may
suffer resulting from, arising out of, relating to, or caused by the breach (or the alleged
breach).

21









 









          (ii) Buyer shall indemnify Sellers in perpetuity from and against the entirety of any Adverse
Consequences Sellers may suffer from Liabilities to the extent resulting from, arising out of,
relating to, or caused by facts or circumstances regarding Company or its assets occurring, or
(except with regard to communications, negotiations or agreements between Buyer and CompCare) first
existing, after the Closing Date; provided, however, that Buyer shall not be required to indemnify
Sellers to the extent such Liabilities arise primarily from the gross negligence or intentional
misconduct of a Seller.




     (d) Matters Involving Third Parties.




     (i) If any third party notifies any Party (the “Indemnified Party”) with respect to any
matter (a “Third-Party Claim”) that may give rise to a claim for indemnification against any
other Party (the “Indemnifying Party”) under this §8, then the Indemnified Party will
promptly notify each Indemnifying Party thereof in writing; provided, however, that no delay
on the part of the Indemnified Party in notifying any Indemnifying Party will relieve the
Indemnifying Party from any obligation hereunder unless (and then solely to the extent) the
Indemnifying Party is thereby prejudiced.




     (ii) Any Indemnifying Party will have the right to defend the Indemnified Party against
the Third-Party Claim with counsel of his, her, or its choice reasonably satisfactory to the
Indemnified Party so long as (A) the Indemnifying Party notifies the Indemnified Party in
writing within 30 days after the Indemnified Party has given notice of the Third-Party Claim
that the Indemnifying Party will indemnify the Indemnified Party from and against the
entirety of any Adverse Consequences the Indemnified Party may suffer resulting from,
arising out of, relating to, in the nature of, or caused by the Third-Party Claim, (B) the
Indemnifying Party provides the Indemnified Party with evidence reasonably acceptable to the
Indemnified Party that the Indemnifying Party will have the financial resources to defend
against the Third-Party Claim and fulfill its indemnification obligations hereunder, (C) the
Third-Party Claim involves only money damages and does not seek an injunction or other
equitable relief, (D) settlement of, or an adverse judgment with respect to, the Third Party
Claim is not, in the good faith judgment of the Indemnified Party, likely to establish a
precedential custom or practice materially adverse to the continuing business interests or
the reputation of the Indemnified Party, and (E) the Indemnifying Party conducts the defense
of the Third-Party Claim actively and diligently.




     (iii) So long as the Indemnifying Party is conducting the defense of the Third-Party
Claim in accordance with §8(d)(ii) above, (A) the Indemnified Party may retain separate
co-counsel at his, her, or its sole cost and expense and participate in the defense of the
Third-Party Claim, (B) the Indemnified Party will not consent to the entry of any judgment
on or enter into any settlement with respect to the Third-Party Claim without the prior
written consent of the Indemnifying Party (not to be unreasonably withheld), and (C) the
Indemnifying Party will not consent to the entry of any judgment on or enter into any
settlement with respect to the Third-Party Claim without the prior written consent of the
Indemnified Party (not to be unreasonably withheld).




     (iv) In the event any of the conditions in §8(d)(ii) above is or becomes unsatisfied,
however, (A) the Indemnified Party may defend against, and consent to the entry of any
judgment on or enter into any settlement with respect to, the Third-Party Claim in any



22









 







manner his, her, or it may reasonably deem appropriate (and the Indemnified Party need
not consult with, or obtain any consent from, any Indemnifying Party in connection
therewith), (B) the Indemnifying Parties will reimburse the Indemnified Party promptly and
periodically for the costs of defending against the Third-Party Claim (including reasonable
attorneys’ fees and expenses), and (C) the Indemnifying Parties will remain responsible for
any Adverse Consequences the Indemnified Party may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the Third-Party Claim to the fullest extent
provided in this §8, provided, however, that in no event shall the Indemnifying Party be
responsible for the fees of more than one counsel at any time.



     (e) Determination of Adverse Consequences. All indemnification payments under this §8 and
§9(a) will be deemed adjustments to the Purchase Price.



     (f) Other Indemnification Provisions. Except as provided in §9, the foregoing
indemnification provisions are in addition to, and not in derogation of, any statutory, equitable,
or common law remedy (including without limitation any such remedy arising under Environmental,
Health, and Safety Requirements) any Party may have with respect to Company or the transactions
contemplated by this Agreement. Each Seller hereby agrees that he, she, or it will not make any
claim for indemnification against Company by reason of the fact that he, she, or it was a director,
officer, employee, or agent of any such entity or was serving at the request of any such entity as
a partner, trustee, director, officer, employee, or agent of another entity (whether such claim is
for judgments, damages, penalties, fines, costs, amounts paid in settlement, losses, expenses, or
otherwise and whether such claim is pursuant to any statute, charter document, bylaw, agreement, or
otherwise) with respect to any action, suit, proceeding, complaint, claim, or demand brought by
Buyer against such Seller (whether such action, suit, proceeding, complaint, claim, or demand is
pursuant to this Agreement, applicable law, or otherwise).



     (g) Limitation of Liability. Notwithstanding anything to the contrary in this Agreement, in
no event shall any Party be liable to the other Party for (i) an amount in excess of the Purchase
Price or (ii) consequential, indirect, special or punitive damages, and each Party hereby expressly
releases the other Party therefrom. Notwithstanding anything to the contrary in this §8, no Party
shall be entitled to indemnification unless and until the aggregate amount of Adverse Consequences
incurred by such party for which indemnification is otherwise available under this §8 exceeds
seventy-five thousand dollars ($75,000.00) and then such Party shall be entitled to indemnification
for the full amount of such Adverse Consequences.



     §9. Tax Matters. The following provisions will govern the allocation of responsibility as
between Buyer and Sellers for certain Tax matters following the Closing Date:



     (a) Tax Indemnification.



          (i) By Sellers. Each Seller will jointly and severally indemnify Company, its Subsidiaries,
Buyer, and each Buyer Affiliate and hold them harmless from and against (without duplication), any
loss, claim, liability, expense, or other damage attributable to (i) all Taxes (or the non-payment
thereof) of Company or Seller for all Tax periods ending on or before the Closing Date and the
portion through the end of the Closing Date of any Tax period that includes (but does not end on)
the Closing Date (“Pre-Closing Tax Period”), (ii) any breach of the representations contained in
Section 4(k) taking into account the limitations provided in Section 8, and (iii) any and all Taxes
of any person (other than Company) imposed on Company as a

23









 








transferee or successor, by contract or pursuant to any law, rule, or regulation, which Taxes
relate to an event or transaction occurring on or before the Closing.




          (ii) By Buyer. Buyer will indemnify each Seller, their respective Subsidiaries, and each
Seller Affiliate and hold them harmless from and against (without duplication), any loss, claim,
liability, expense, or other damage attributable to (i) all Taxes (or the non-payment thereof) of
Company for all Tax periods ending after the Closing Date and the portion after the Closing Date of
any Tax period that includes (but does not end on) the Closing Date (“Post-Closing Tax Period”) and
(iii) any and all Taxes of any person (other than Company) imposed on Company as a transferee or
successor, by contract or pursuant to any law, rule, or regulation, which Taxes relate to an event
or transaction occurring after the Closing.




     (b) Straddle Period. In the case of any Tax period that includes (but does not end on) the
Closing Date (a “Straddle Period”), the amount of any Taxes based on or measured by income or
receipts of Company for the Pre-Closing Tax Period will be determined based on an interim closing
of the books as of the close of business on the Closing Date (and for such purpose, the Tax period
of any partnership or other pass-through entity in which Company holds a beneficial interest will
be deemed to terminate at such time) and the amount of other Taxes of Company for a Straddle Period
that relates to the Pre-Closing Tax Period will be deemed to be the amount of such Tax for the
entire Tax period multiplied by a fraction the numerator of which is the number of days in the Tax
period ending on the Closing Date and the denominator of which is the number of days in such
Straddle Period.



     (c) Responsibility for Filing Tax Returns. Buyer will prepare or cause to be prepared and file
or cause to be filed all Tax Returns for Company required to be filed after the Closing Date other
than Tax Returns for Pre-Closing Tax Periods.



     (d) Cooperation on Tax Matters.



     (i) Buyer, Company, and Sellers will cooperate fully, as and to the extent reasonably
requested by the other Party, in connection with the filing of Tax Returns pursuant to this §9(d)
and any audit, litigation or other proceeding with respect to Taxes. Such cooperation will include
the retention and (upon the other Party’s request) the provision of records and information that
are reasonably relevant to any such audit, litigation or other proceeding and making employees
available on a mutually convenient basis to provide additional information and explanation of any
material provided hereunder. Sellers shall control and have the ability to settle or compromise any
audit, litigation or other proceeding which potentially gives rise to an obligation of Sellers to
indemnify Buyer under Section 9(a)(1) or which otherwise potentially impacts the Taxes of Company’s
members.



     (ii) Buyer and Sellers further agree, upon request, to provide the other Party with all
information that either Party may be required to report pursuant to Code §6043, or Code §6043A, or
Treasury Regulations promulgated thereunder.



     (e) Tax Sharing Agreements. All Tax sharing agreements or similar agreements with respect to
or involving Company will be terminated as of the Closing Date and, after the Closing Date, Company
will not be bound thereby or have any liability thereunder.



     (f) Certain Taxes and Fees. All transfer, documentary, sales, use, stamp, registration and
other such Taxes, and all conveyance fees, recording charges and other fees and charges (including
any penalties and interest) incurred in connection with consummation of the



24









 







transactions contemplated by this Agreement will be borne by Sellers when due, and Sellers
will, at their own expense, file all necessary Tax Returns and other documentation with respect to
all such Taxes, fees and charges.



     (g) Exclusive Remedy for Tax Matters. The indemnities provided for in this §9 shall be the
exclusive remedies of the Parties and their respective officers, directors, employees, Affiliates,
agents, representatives, successors and assigns for any inaccuracy or breach of any representation,
warranty or covenant of Parties contained herein with respect to Taxes and matters related thereto
and the Parties shall not be entitled to a rescission of this Agreement or to any further
indemnification or other rights or claims of any nature whatsoever in respect thereof, all of which
the parties hereto hereby waive, provided, however, that the foregoing shall not limit the right of
any party to assert a claim based on fraud.



     (h) Refunds. Any Tax refund (including any interest with respect thereto) attributable to a
Pre-Closing Tax Period shall be for the account of Sellers and Buyer shall promptly pay or cause to
be paid to Sellers any such refund received by Buyer with respect to the Company.



     (i) Tax Reporting. The Parties agree to report this transaction in accordance with Revenue
Procedure 99-6, 1999-1 C.B. 187 and in accordance with the final allocation schedule described in
this Section 9(i).



     §10. Termination.



     (a) Termination of Agreement. The Parties may terminate this Agreement as provided below:




     (i) Buyer and Sellers may terminate this Agreement by mutual written consent at any
time prior to the Closing;




     (ii) Buyer may terminate this Agreement by giving written notice to Sellers’
Representative at any time prior to the Closing (A) in the event any of Sellers has breached
any material representation, warranty, or covenant contained in this Agreement in any
material respect, Buyer has notified Sellers’ Representative of the breach, and the breach
has continued without cure for a period of 10 days after the notice of breach or (B) if the
Closing will not have occurred within three (3) business days of the date hereof, by reason
of the failure of any condition precedent under §7(a) hereof (unless the failure results
primarily from Buyer itself breaching any representation, warranty, or covenant contained in
this Agreement); and




     (iv) Sellers may terminate this Agreement by giving written notice to Buyer at any time
prior to the Closing (A) in the event Buyer has breached any material representation,
warranty, or covenant contained in this Agreement in any material respect, any Seller has
notified Buyer of the breach, and the breach has continued without cure for a period of 10
days after the notice of breach or (B) if the Closing will not have occurred within three
(3) business days of the date hereof, by reason of the failure of any condition precedent
under §7(b) hereof (unless the failure results primarily from any Seller breaching any
representation, warranty, or covenant contained in this Agreement).



     (b) Effect of Termination. If any Party terminates this Agreement pursuant to §10(a) above,
all rights and obligations of the Parties hereunder will terminate without any Liability of any
Party to any other Party (except for any Liability of any Party then in breach).



25









 





     §11. Miscellaneous.



     (a) Nature of Sellers’ Obligations.




     (i) The covenants of each Seller in §2(a) above concerning the sale of his, her, or its
Company Interests to Buyer and the representations and warranties of each Seller in §3(a)
above concerning the transaction are individual, and not joint and several, obligations.
This means that the particular Seller making the representation, warranty, or covenant will
be solely responsible to the extent provided in §8(b)(ii) above for any Adverse Consequences
Buyer may suffer as a result of any breach thereof.




     (ii) The remainder of the representations, warranties, and covenants in this Agreement
are joint and several obligations. This means that each Seller will be responsible to the
extent provided in §8(b)(i) and (iii) above for the entirety of any Adverse Consequences
Buyer may suffer as a result of any breach thereof.



     (b) Press Releases and Public Announcements. No Party will issue any press release or make
any public announcement relating to the subject matter of this Agreement without the prior written
approval of Buyer; provided, however, that any Party may make any public disclosure it believes in
good faith is required by applicable law or any listing or trading agreement concerning its
publicly traded securities (in which case the disclosing Party will use its reasonable best efforts
to advise the other Parties prior to making the disclosure).



     (c) No Third-Party Beneficiaries. This Agreement will not confer any rights or remedies upon
any Person other than the Parties and their respective successors and permitted assigns.



     (e) Succession and Assignment. This Agreement will be binding upon and inure to the benefit
of the Parties named herein and their respective successors and permitted assigns. No Party may
assign either this Agreement or any of his, her, or its rights, interests, or obligations hereunder
without the prior written approval of Buyer and Sellers’ Representative; provided,
however , that Buyer may (i) assign any or all of its rights and interests hereunder to one or
more of its Affiliates and (ii) designate one or more of its Affiliates to perform its obligations
hereunder (in any or all of which cases Buyer nonetheless will remain responsible for the
performance of all of its obligations hereunder).



     (g) Headings. The section headings contained in this Agreement are inserted for convenience
only and will not affect in any way the meaning or interpretation of this Agreement.



     (h) Notices. All notices, requests, demands, claims, and other communications hereunder will
be in writing. Any notice, request, demand, claim, or other communication hereunder will be deemed
duly given (i) when delivered personally to the recipient, (ii) 1 business day after being sent to
the recipient by reputable overnight courier service (charges prepaid), (iii) 1 business day after
being sent to the recipient by facsimile transmission or electronic mail, or (iv) 4 business days
after being mailed to the recipient by certified or registered mail, return receipt requested and
postage prepaid, and addressed to the intended recipient as set forth below:


If to Sellers:



Nicholas Lewin

535 Madison Avenue, 35th Floor

New York, NY 10022





26









 







Fax: (212) 898-1161



Copy to:



E. Ann Gill, Esq.

Thelen Reid Brown Raysman & Steiner LLP

875 Third Avenue, 10th Floor

New York, NY 10022

Fax: (212) 603-2001



If to Buyer:



Hythiam, Inc.

11150 Santa Monica Blvd., Suite 1500

Los Angeles, California 90025

Attn: Chief Executive Officer

Fax: (310) 444-5300



Copy to:



John C. Kirkland, Esq.

Dreier Stein & Kahan LLP

1620 26th Street

6th Floor, North Tower

Santa Monica, California 90404

Fax: (424) 202-5250



Any Party may change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties notice in the manner
herein set forth.




     (i) 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 law
provision or rule that would cause the application of the laws of any jurisdiction other than the
State of Delaware.



     (j) Amendments and Waivers. No amendment of any provision of this Agreement will be valid
unless the same will be in writing and signed by Buyer and Sellers’ Representative. No waiver by
any Party of any provision of this Agreement or any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, will be valid unless the same will be
in writing and signed by the Party making such waiver nor will such waiver be deemed to extend to
any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such default,
misrepresentation, or breach of warranty or covenant.



     (k) Severability. Any term or provision of this Agreement that is invalid or unenforceable
in any situation in any jurisdiction will not affect the validity or enforceability of the
remaining terms and provisions hereof or the validity or enforceability of the offending term or
provision in any other situation or in any other jurisdiction.



27









 





     (l) Expenses. Each Buyer, Seller, Company, and Company Subsidiary will bear his, her, or its
own costs and expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby; provided, however, that Sellers will also bear
the costs and expenses of Company (including all of their legal fees and expenses) in connection
with this Agreement and the transactions contemplated hereby in the event that the transactions
contemplated by this Agreement are consummated.



     (m) Construction. The Parties have participated jointly in the negotiation and drafting of
this Agreement. In the event an ambiguity or question of intent or interpretation arises, this
Agreement will be construed as if drafted jointly by the Parties and no presumption or burden of
proof will arise favoring or disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local, or foreign statute or law
will be deemed also to refer to all rules and regulations promulgated thereunder, unless the
context requires otherwise. The word “including” will mean including without limitation. The
Parties intend that each representation, warranty, and covenant contained herein will have
independent significance. If any Party has breached any representation, warranty, or covenant
contained herein in any respect, the fact that there exists another representation, warranty, or
covenant relating to the same subject matter (regardless of the relative levels of specificity)
that the Party has not breached will not detract from or mitigate the fact that the Party is in
breach of the first representation, warranty, or covenant.



     (n) Incorporation of Exhibits, Annexes, and Schedules. The Exhibits, Annexes, and Schedules
identified in this Agreement are incorporated herein by reference and made a part hereof.



     (o) Specific Performance. Each Party acknowledges and agrees that the other Parties would be
damaged irreparably in the event any provision of this Agreement is not performed in accordance
with its specific terms or otherwise is breached, so that a Party will be entitled to injunctive
relief to prevent breaches of this Agreement and to enforce specifically this Agreement and the
terms and provisions hereof in addition to any other remedy to which such Party may be entitled, at
law or in equity. In particular, the Parties acknowledge that the business of Company is unique and
recognize and affirm that in the event Sellers breach this Agreement, money damages would be
inadequate and Buyer would have no adequate remedy at law, so that Buyer will have the right, in
addition to any other rights and remedies existing in its favor, to enforce its rights and the
other Parties’ obligations hereunder not only by action for damages but also by action for specific
performance, injunctive, and/or other equitable relief.



     (p) Arbitration. Any dispute, controversy or claim arising out of or relating to this
Agreement will be resolved by final and binding arbitration before a retired judge at JAMS or its
successor in Santa Monica, California. The prevailing party will be awarded its arbitration,
expert and attorney fees, costs and expenses. Judgment on any interim of final award of the
arbitrator may be entered in any court of competent jurisdiction.



     (q) Tax Disclosure Authorization. Notwithstanding anything herein to the contrary, the
Parties (and each Affiliate and Person acting on behalf of any Party) agree that each Party (and
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



28









 







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 may 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.



     (r) State Securities Laws. The sale of the Shares which are the subject of this Agreement
has not been qualified with the Commissioner of Corporations of the State of California and the
issuance of the securities or the payment or receipt of any part of the consideration therefore
prior to the qualification is unlawful, unless the sale of securities is exempt from the
qualification by Section 25102 of the California Corporations Code. The rights of all Parties to
this Agreement are expressly conditioned upon the qualification being obtained unless the sale is
so exempt.



     (s) Counterparts. This Agreement may be executed in one or more counterparts (including by
means of facsimile), each of which will be deemed an original but all of which together will
constitute one and the same instrument.



     (t) Entire Agreement. This Agreement (including the documents referred to herein)
constitutes the entire agreement among the Parties and supersedes any prior understandings,
agreements, or representations by or among the Parties, written or oral, to the extent they relate
in any way to the subject matter hereof.



29









 





     IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first above
written.



	 	 	 	 	 
	BUYER:	 	 
	 
	 	 	 	 
	HYTHIAM, INC.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Terren S. Peizer
 

	 	 
	Its: Chairman and CEO	 	 






	 	 	 
	THE
FOREGOING IS ACKNOWLEDGED  

AND AGREED TO BY COMPANY:
	 	 
	 
	 	 
	WOODCLIFF HEALTHCARE INVESTMENT 

PARTNERS, LLC
	 	 
	 
	 	 
	/s/ Nicholas Lewin
 

Nicholas Lewin, Managing Member

	 	 
	 
	 	 
	SELLERS:
	 	 
	 
	 	 
	Tanglewood Investment Partners
	 	 
	 
	 	 
	/s/ Nicholas Lewin
 

Nicholas Lewin, Manager

	 	 
	 
	 	 
	/s/ Gavin Scotti
 

Gavin Scotti

	 	 
	 
	 	 
	/s/ Steve Nelson
 

Steve Nelson

	 	 
	 
	 	 
	/s/ Richard Danzig
 

Richard Danzig

	 	 





Signature page to Limited Liability Company Membership Interest Purchase Agreement




 









 






	 	 	 
	/s/ Thomas B. DeCea
 

Thomas B. DeCea

	 	 
	 
	 	 
	/s/ Tony Milone
 

Tony Milone

	 	 
	 
	 	 
	/s/ Jim Doody
 

Jim Doody

	 	 
	 
	 	 
	/s/ Kevin Harrington
 

Kevin Harrington

	 	 
	 
	 	 
	/s/ Steve Nichols
 

Steve Nichols

	 	 
	 
	 	 
	/s/ Marc Mazur
 

Marc Mazur

	 	 
	 
	 	 
	/s/ Marty Rucidio
 

Marty Rucidio

	 	 
	 
	 	 
	/s/ Brian Walsh
 

Brian Walsh

	 	 
	 
	 	 
	/s/ Jerry Devine
 

Jerry Devine

	 	 






Signature page to Limited Liability Company Membership Interest Purchase Agreement (cont.)