UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT,
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: February 25, 2009
(Date of earliest event reported)
COMPREHENSIVE CARE CORPORATION
(Exact Name of Registrant as Specified in Charter)
| Delaware | 1-9927 | 95-2594724 | ||
|
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
|
3405 West Dr. Martin Luther King Jr. Boulevard Suite 101 Tampa, Florida |
33607 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (813) 288-4808
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 1.01. | Entry into a Material Definitive Agreement. |
Comprehensive Care Corporation (“CompCare” or the “Company”) entered into Subscription Agreements with Howard M. Jenkins and Harry Ross on February 25 and 26, 2009, respectively (“the Agreements”). Mr. Jenkins purchased 6,000,000 shares of CompCare common stock, par value $0.01 per share (“CompCare Shares”), for $1,500,000 and Mr. Ross purchased 400,000 CompCare Shares for $100,000 (the “Transaction”). CompCare intends to use the net proceeds from the sale of the securities hereunder for working capital and in sales and marketing to help accelerate new business. Copies of the Agreements are attached hereto as Exhibit 10.1 and 10.2.
Prior to the Transaction, Mr. Jenkins had owned 2,000,000 CompCare Shares acquired on January 20, 2009, as a result of a merger between CompCare and Core Corporate Consulting Group, Inc. The merger is described in detail in the Form 8-K filed with the SEC on January 23, 2009. As a result of the Transaction, Mr. Jenkins now owns 8,000,000 CompCare Shares representing a beneficial ownership of 34.2% of the outstanding stock of CompCare.
Prior to the Transaction, Mr. Ross had owned 1,200,000 CompCare shares and a $200,000 convertible promissory note, paying monthly interest of 8.5% per annum and maturing on August 31, 2011, convertible at the noteholder’s option at anytime prior to maturity into 800,000 shares of CompCare common stock. As a result of the Transaction, Mr. Ross now owns a $200,000 promissory note convertible into 800,000 shares and 1,600,000 shares of CompCare common stock, which represents a beneficial ownership of 9.9% of the outstanding stock of CompCare.
| Item 3.02. | Unregistered Sale of Equity Securities. |
The information disclosed in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 3.02.
The CompCare Shares were sold to these individuals in a private placement not involving a public offering. Based on certain representations and warranties of these individuals in their respective Agreements, CompCare relied on Section 4(2) of the Securities Act for an exemption from the registration requirements of the Securities Act. The CompCare Shares purchased have not been registered under the Securities Act of 1933, as amended, and may not be sold in the United States absent registration or an applicable exemption from registration requirements.
| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Changes to Officers
On February 26, 2009, Giuseppe (Joe) Crisafi was appointed as the Company’s Chief Financial Officer. Mr. Crisafi will report jointly to the Company’s Chief Executive Officer and the Board
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of Directors. The Company and Mr. Crisafi have not yet executed a written agreement, however, the parties have agreed that the material terms of such an agreement will include a term of three years and a base salary of $390,000 per annum increased annually by an amount no less than an amount equal to the percentage increase in the consumer price index for the Tampa, Florida metropolitan area. The Company has the right to defer any part of such compensation. The Company has initially elected to defer a part of Mr. Crisafi’s salary and as such, Mr. Crisafi will receive $205,000 on an annualized basis with the remainder of his base compensation being deferred until the Company reaches certain milestones, which are yet undefined. In addition Mr. Crisafi will be entitled to a special bonus in the amount equal to one percent of the Company’s pre-tax profits from the preceding year (as determined by the application of generally accepted accounting principles), up to the first $1,000,000 of such profits; plus an additional sum equal to two percent of the Company’s pre-tax profits for all sums over $1,000,000. In the event Mr. Crisafi’s employment is terminated without cause 12 months from a change in control, the Company shall pay to Mr. Crisafi a lump sum amount equal to the aggregate of (i) any accrued unpaid salary; (ii) any accrued but unpaid expenses; (iii) any accrued but unpaid bonuses; (iv) unissued warrants, if any; and (v) the total compensation which would have been paid to Mr. Crisafi through five full years of compensation from the date of termination.
On February 26, 2009, Robert L. Landis was appointed as the Company’s Chief Accounting Officer. Mr. Landis will report directly to the Company’s Chief Financial Officer. The Company and Mr. Landis have not yet executed a written agreement, however, the parties have agreed that the material terms of such an agreement will include a term of three years and a base salary of $191,500 per annum increased annually by an amount no less than an amount equal to the percentage increase in the consumer price index for the Tampa, Florida metropolitan area. In addition, Mr. Landis will receive a signing bonus of $20,000 plus 500,000 shares of the Company’s common stock. In the event Mr. Landis’ employment is terminated without cause 12 months from a change in control, the Company shall pay to Mr. Landis a lump sum amount equal to the aggregate of (i) any accrued unpaid salary; (ii) any accrued but unpaid expenses; (iii) any accrued but unpaid bonuses; (iv) unissued warrants, if any; and (v) the total compensation which would have been paid to Mr. Landis through three full years of compensation from the date of termination.
Resignation of Directors
As a result of a corporate reorganization and not as the result of any disagreement with the Company, Robert J. Landis, resigned as a director of the Company, effective February 25, 2009.
Election of Directors
On February 26, 2009, Giuseppe (Joe) Crisafi was elected to the Company’s Board of Directors.
Giuseppe (Joe) Crisafi, 39, has over 20 years experience in Finance and has worked in a number of industries internationally, including healthcare, banking, public accounting and utilities. Prior to joining CompCare, Mr. Crisafi served as a Director and the Chief Financial Officer of Core Corporate Consulting Group, Inc. from November 2008 to January 2009. He also served as the Chief Financial Officer of The Amacore Group, Inc. from September 2007 to August 2008.
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During the period January 2007 to September 2007, Mr. Crisafi provided specialist consulting services to Madison Partners, a public accounting firm in Australia. From August 2005 to December 2006 he was Vice President of Finance at Lehman Brothers. He operated his own consulting practice from November 2000 to September 2003. Prior to starting his own consulting practice, Mr. Crisafi was a Director at KPMG, where he worked for 10 years in the Forensic, Risk Management, Corporate Finance and Corporate Turnaround divisions. Mr. Crisafi holds an MBA degree from Columbia University, a Diploma in Applied Investment & Finance awarded by the Securities Institution of Australia, and a Bachelors of Economics degree from Monash University. He is a CPA in the United States and a Chartered Accountant in Australia.
| Item 8.01. | Other Events. |
Following a meeting of the Board of Directors held on February 26, 2009, CompCare authorized its transfer agent to cancel 6,292,266 shares held by its wholly owned subsidiary, Core Corporate Consulting Group, Inc.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits. |
|
10.1 |
Subscription Agreement dated February 23, 2009 between Comprehensive Care Corporation and Howard M. Jenkins | |
|
10.2 |
Subscription Agreement dated February 26, 2009 between Comprehensive Care Corporation and Harry Ross | |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.
| COMPREHENSIVE CARE CORPORATION | ||
| By: |
/s/ Giuseppe Crisafi |
|
| Name: | Giuseppe Crisafi | |
| Title: | Chief Financial Officer | |
Date: March 3, 2009
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Exhibit 10.1
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (the “Agreement”) is entered as of February 23, 2009, by and between Comprehensive Care Corporation, Inc., a Delaware Corporation (the “Company”), and the investor whose name appears at the end of the Agreement (“Purchaser”).
RECITALS
The Company wishes to obtain financing and Purchaser desires to provide such financing to The Company through the purchase of the Company’s Class A common stock (the “Securities”) being privately offered by the Company.
NOW, THEREFORE, in consideration of the premises hereof and the agreements set forth herein below, the parties hereto hereby agree as follows:
1. Sale and Purchase of the Securities. Subject to the terms and conditions herein, on the Closing Date, as defined in Section 2 hereof, The Company agrees to issue and sell, and Purchaser agrees to purchase Six Million (6,000,000) Securities for the aggregate consideration of One-Million Five-Hundred Thousand Dollars ($1,500,000.00) (the “Purchase Price”).
2. Closing. The closing of the purchase and sale of the Securities hereunder (the “Closing”) shall be held on February 23, 2009 (the “Closing Date”) with the signing of this Agreement and payment of the Purchase Price.
3. Delivery by the Company. Within five (5) business days following the Closing, the Company shall deliver to Purchaser the Securities executed by the appropriate officers and registered in Purchaser’s name.
4. Delivery by Purchaser. Purchaser shall deliver the Purchase Price, as defined in Section 1 herein, by check, wire transfer or bank check.
5. Representation by Purchaser. Purchaser represents and warrants to the Company as follows:
(a) Access to Information. Purchaser has had access to all material and relevant information concerning the Company necessary to enable Purchaser to make an informed investment decision with respect to his/her investment in the Company. Purchaser acknowledges that he/she or his/her representative has had the opportunity to ask questions of and receive answers from and to obtain additional information from the Company or its representatives concerning the terms and conditions of the acquisition of the Securities and the present and proposed business and financial condition of the Company and has had all such questions answered to his/her satisfaction and has been supplied all information requested. The Company acknowledges its understating that Purchaser has relied on the information so provided.
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(b) Financial Matters and Sophistication . Purchaser or his/her representatives has such knowledge and experience in business and financial matters, such that he/she is capable of evaluating the merits and risks of investing in the Company. Purchaser represents that he/she is (i) an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities and Exchange Act of 1933, as amended (the “1933 Act”); (ii) is capable of assuming the risk of investing in the Company; and (iii) satisfies the suitability standards of the Company as an individual as set forth in sub-paragraphs “6 (i)” and “6 (ii)” below.
(c) Investment Intent.
(i) Purchaser is acquiring the Securities for his/her own account and not on behalf on any other person.
(ii) Purchaser is acquiring the Securities for investment and not with a view to distribution or with the intent to divide its participation with others by reselling or otherwise distributing the Securities.
(iii) Neither Purchaser nor the Company nor anyone acting on their behalf has paid or will pay any commission or other remuneration to any person in connection with the purchase of the Securities; and,
(iv) Purchaser will not sell the Securities without registration under the 1933 Act and any applicable State securities laws, or unless the Company receives an opinion of counsel reasonably acceptable to it (as to both counsel and the opinion) to the effect that such registration is not necessary. This subparagraph (c)(iv) is subject to the language in paragraph “7.”
6. Important Considerations;_Suitability Standards-Who Should Invest
INVESTMENT IN THE SECURITIES INVOLVES A HIGH DEGREE OF RISK AND IS SUITABLE ONLY FOR PERSONS OF SUBSTANTIAL FINANCIAL RESOURCES WHO HAVE NO NEED FOR LIQUIDITY IN THEIR INVESTMENT
A substantial number of State securities commissions have established investor suitability standards for the marketing within their respective jurisdictions of restricted securities. Some have also established minimum levels for purchases in their states. The reasons for these standards appear to be, among others, the relative lack of liquidity of securities of such programs as compared with other securities investments. Investment in the Securities involves a high degree of risk and is suitable only for persons of substantial financial means who have no need for liquidity in their investments.
The Company has adopted as a general investor suitability standard the requirement that each subscriber for the Securities represent in writing that the
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subscriber: (a) is acquiring the Securities for investment and not with a view to resale or distribution; (b) can bear the economic risk of losing its entire investment; (c) his/her overall commitment to investments which are not readily marketable is not disproportionate to his/her net worth and an investment in the Securities will not cause such overall commitment to become excessive; (d) has adequate means of providing for his/her current needs and personal contingencies and has no need for liquidity in this investment in the Securities; (e) has evaluated all the risks of investing in the Company; and, (f) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of investing in the Company or is relying on his/her own purchaser representative, in making an investment decision.
In addition, all subscribers for the Securities must be extremely sophisticated investors with substantial net worth and experience in making investments of this nature and be “accredited investors,” as defined in Rule 501 of Regulation D under the Act, by meeting any of the following conditions (please check appropriate box) :
¨ (i) has an individual income in excess of $200,000 in each of the two most recent years or joint income with his or her subscriber spouse in excess of $300,000 in each of those years, and he or she reasonably expects an income in excess of the aforesaid levels in the current year; or
x (ii) he or she has an individual net worth, or a joint net worth with his or her spouse, at the time of his or her purchase in excess of $1,000,000 (net worth for these purposes includes homes, home furnishings and automobiles); or
¨ (iii) he or she otherwise satisfies the Company that he or she is an accredited investor as defined in Rule 501 under the Act.
Other categories of investors included within the definition of accredited investor including the following: certain institutional investors, including certain banks, whether acting in their individual or fiduciary capacities; certain insurance companies; federally registered investment companies; business development companies (as defined under the Investment Company Act of 1940); tax exempt organizations (as defined in the Investment Advisers Act of 1940); tax exempt organizations (as defined in Section 501(c) (3) of the Internal Revenue Code) with total assets in excess of $5,000,000; entities in which all the equity owners are accredited investors and certain affiliates of the Company.
A partnership subscriber, which satisfies the requirements set forth in clauses (a) through (f) above, shall satisfy the suitability standards if it is an accredited investor by reason of clause (iii) above, or if all of its partners are accredited investors. A corporate subscriber, which satisfies the requirements set forth in clauses (a) through (f) above, shall satisfy the investor suitability standards if it is an accredited investor by reason of clause (iii) above, or if all of its shareholders are accredited investors. Corporate subscribers must have net worth of at least three (3) times the amount of their investment in the Securities.
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The suitability standards referred to above represent minimum suitability requirements for prospective purchasers and the satisfaction of such standards by a prospective purchaser does not necessarily mean that the Securities is a suitable investment for such purchaser. The Company may, in circumstances it deems appropriate, modify such requirements. The Company may also reject subscriptions for whatever reason, in its sole discretion, it deems appropriate.
7. Understanding of Nature of Securities. Purchaser understands that:
(a) The Securities issuable there under have not been registered under the 1933 Act or any State securities laws and are being issued and sold in reliance upon certain of the exemptions contained in the 1933 Act and under applicable State securities laws;
(b) The Securities are “restricted securities” as that term is defined in Rule 144 promulgated under the 1933 Act;
(c) The Securities cannot be sold or transferred without registration under the 1933 Act and applicable state securities laws, or unless the Company receives an opinion of counsel reasonable acceptable to it (as to both counsel and the opinion) that such registration is not necessary;
(d) The Securities, and any certificates issued in replacement therefore, shall bear the following legend, in addition to any legend required by law or otherwise;
“The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended. The securities represented by this certificate have been taken by the registered owner for investment, and without a view to resale or distribution thereof, and may not be transferred or disposed of without an opinion of counsel satisfactory to the issuer that such transfer or disposition does not violate the Securities Act of 1933, as amended, or the rules and regulations thereunder.”
(e) Only the Company can register the Securities under the 1933 Act and applicable State securities laws;
(f) Other than as set forth below, no representations have been made to Purchaser that the Company will register the Securities under the 1933 Act or any applicable State securities laws, or with respect to compliance with any exemption therefrom; and
(g) The Company may, from time to time, make stop transfer notations in its transfer records to ensure compliance with the 1933 Act.
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8. Warranties and Representation of the Company. The Company represents and warrants to Purchaser as follows:
(a) Organization and Standing of the Company. The Company is a duly organized and validly existing corporation in good standing under the laws of the State of Delaware with adequate power and authority to conduct the business in which it is now engaged and has the corporate power and authority to enter into this Agreement, and is in good standing in such other states of jurisdictions as is necessary to enable it to carry on its business.
(b) Corporate Power and Authority. The execution and delivery of this Agreement and the transaction contemplated hereby has been duly authorized by the Company’s Board of Directors. No other corporate proceeding on the part of the Company is necessary to authorize this Agreement or the consummation of the transaction contemplated hereby. When duly executed and delivered by the parties hereto, this Agreement will constitute a valid and legally binding obligation of the Company enforceable against the Company in accordance with its terms.
(c) Securities. All the Securities have been duly authorized and, upon issuance and sale pursuant to the terms of this Agreement, will have been validly issued fully paid and non-assessable and will be free and clear of all liens, claims and encumbrances.
9. Notices. All notices, requests, consents or other communications required or permitted hereunder shall be in writing and shall be hand delivered or mailed first class postage prepaid, registered or certified mail, to the following address:
In the case of the Company:
John Hill
Chief Executive Officer
3405 W. Martin Luther King Jr. Blvd, Suite 101
Tampa, FL 33607
In the case of Purchaser, to the address set forth at the end of this Agreement or to such other addresses as may be specified in accordance herewith from time to time.
Such notices and other communications shall, for all purposes of this Agreement, be treated as being effective upon being delivered personally or, if sent by mail, five days after the same has been deposited in a regularly maintained receptacle for the deposit of United States mail, addressed as set forth above, and postage prepaid.
10. Parties in Interest. All the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successor and permitted assigns of the parties hereto, provided that this Agreement and the interests herein may not be assigned by either party without the express written consent of the other party.
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11. Governing Law. The laws of the State of Delaware shall govern the construction of the terms and of this Agreement.
12. Sections and Other Headings. The section and other headings contained in this Agreement are for the convenience of reference only, do not constitute part of this Agreement or otherwise affect any of the provision hereof.
13. Counterpart Signatures. This Agreement may be signed in counterpart and all counterparts together shall become effective only when the counterpart(s) have been executed and delivered by and on behalf of the Company and the Purchaser.
IN WITNESS WHEREOF, intending to be legally bound, the parties hereto have caused this Agreement to be signed by their duly authorized offices.
| Comprehensive Care Corporation, Inc. | ||||||
| By: |
/s/ John Hill |
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| John Hill | ||||||
| Chief Executive Officer | ||||||
| Purchaser | ||||||
| By: |
/s/ Howard Jenkins |
|||||
| Print Name: Howard M. Jenkins | ||||||
| Address of Purchaser: | ||||||
| Social Security No. or Tax I.D. No.: | ||||||
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Exhibit 10.2
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (the “Agreement”) is entered as of February 26, 2009, by and between Comprehensive Care Corporation, Inc., a Delaware Corporation (the “Company”), and the investor whose name appears at the end of the Agreement (“Purchaser”).
RECITALS
The Company wishes to obtain financing and Purchaser desires to provide such financing to The Company through the purchase of the Company’s Class A common stock (the “Securities”) being privately offered by the Company.
NOW, THEREFORE, in consideration of the premises hereof and the agreements set forth herein below, the parties hereto hereby agree as follows:
1. Sale and Purchase of the Securities. Subject to the terms and conditions herein, on the Closing Date, as defined in Section 2 hereof, The Company agrees to issue and sell, and Purchaser agrees to purchase Four Hundred Thousand (400,000) Securities for the aggregate consideration of One Hundred Thousand Dollars ($100,000.00) (the “Purchase Price”).
2. Closing. The closing of the purchase and sale of the Securities hereunder (the “Closing”) shall be held on February 26, 2009 (the “Closing Date”) with the signing of this Agreement and payment of the Purchase Price.
3. Delivery by the Company. Within five (5) business days following the Closing, the Company shall deliver to Purchaser the Securities executed by the appropriate officers and registered in Purchaser’s name.
4. Delivery by Purchaser. Purchaser shall deliver the Purchase Price, as defined in Section 1 herein, by check, wire transfer or bank check.
5. Representation by Purchaser. Purchaser represents and warrants to the Company as follows:
(a) Access to Information. Purchaser has had access to all material and relevant information concerning the Company necessary to enable Purchaser to make an informed investment decision with respect to his/her investment in the Company. Purchaser acknowledges that he/she or his/her representative has had the opportunity to ask questions of and receive answers from and to obtain additional information from the Company or its representatives concerning the terms and conditions of the acquisition of the Securities and the present and proposed business and financial condition of the Company and has had all such questions answered to his/her satisfaction and has been supplied all information requested. The Company acknowledges its understating that Purchaser has relied on the information so provided.
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(b) Financial Matters and Sophistication . Purchaser or his/her representatives has such knowledge and experience in business and financial matters, such that he/she is capable of evaluating the merits and risks of investing in the Company. Purchaser represents that he/she is (i) an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities and Exchange Act of 1933, as amended (the “1933 Act”); (ii) is capable of assuming the risk of investing in the Company; and (iii) satisfies the suitability standards of the Company as an individual as set forth in sub-paragraphs “6 (i)” and “6 (ii)” below.
(c) Investment Intent.
(i) Purchaser is acquiring the Securities for his/her own account and not on behalf on any other person.
(ii) Purchaser is acquiring the Securities for investment and not with a view to distribution or with the intent to divide its participation with others by reselling or otherwise distributing the Securities.
(iii) Neither Purchaser nor the Company nor anyone acting on their behalf has paid or will pay any commission or other remuneration to any person in connection with the purchase of the Securities; and,
(iv) Purchaser will not sell the Securities without registration under the 1933 Act and any applicable State securities laws, or unless the Company receives an opinion of counsel reasonably acceptable to it (as to both counsel and the opinion) to the effect that such registration is not necessary. This subparagraph (c)(iv) is subject to the language in paragraph “7.”
6. Important Considerations;_Suitability Standards-Who Should Invest
INVESTMENT IN THE SECURITIES INVOLVES A HIGH DEGREE OF RISK AND IS SUITABLE ONLY FOR PERSONS OF SUBSTANTIAL FINANCIAL RESOURCES WHO HAVE NO NEED FOR LIQUIDITY IN THEIR INVESTMENT
A substantial number of State securities commissions have established investor suitability standards for the marketing within their respective jurisdictions of restricted securities. Some have also established minimum levels for purchases in their states. The reasons for these standards appear to be, among others, the relative lack of liquidity of securities of such programs as compared with other securities investments. Investment in the Securities involves a high degree of risk and is suitable only for persons of substantial financial means who have no need for liquidity in their investments.
The Company has adopted as a general investor suitability standard the requirement that each subscriber for the Securities represent in writing that the
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subscriber: (a) is acquiring the Securities for investment and not with a view to resale or distribution; (b) can bear the economic risk of losing its entire investment; (c) his/her overall commitment to investments which are not readily marketable is not disproportionate to his/her net worth and an investment in the Securities will not cause such overall commitment to become excessive; (d) has adequate means of providing for his/her current needs and personal contingencies and has no need for liquidity in this investment in the Securities; (e) has evaluated all the risks of investing in the Company; and, (f) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of investing in the Company or is relying on his/her own purchaser representative, in making an investment decision.
In addition, all subscribers for the Securities must be extremely sophisticated investors with substantial net worth and experience in making investments of this nature and be “accredited investors,” as defined in Rule 501 of Regulation D under the Act, by meeting any of the following conditions (please check appropriate box) :
¨ (i) has an individual income in excess of $200,000 in each of the two most recent years or joint income with his or her subscriber spouse in excess of $300,000 in each of those years, and he or she reasonably expects an income in excess of the aforesaid levels in the current year; or
¨ (ii) he or she has an individual net worth, or a joint net worth with his or her spouse, at the time of his or her purchase in excess of $1,000,000 (net worth for these purposes includes homes, home furnishings and automobiles); or
¨ (iii) he or she otherwise satisfies the Company that he or she is an accredited investor as defined in Rule 501 under the Act.
Other categories of investors included within the definition of accredited investor including the following: certain institutional investors, including certain banks, whether acting in their individual or fiduciary capacities; certain insurance companies; federally registered investment companies; business development companies (as defined under the Investment Company Act of 1940); tax exempt organizations (as defined in the Investment Advisers Act of 1940); tax exempt organizations (as defined in Section 501(c) (3) of the Internal Revenue Code) with total assets in excess of $5,000,000; entities in which all the equity owners are accredited investors and certain affiliates of the Company.
A partnership subscriber, which satisfies the requirements set forth in clauses (a) through (f) above, shall satisfy the suitability standards if it is an accredited investor by reason of clause (iii) above, or if all of its partners are accredited investors. A corporate subscriber, which satisfies the requirements set forth in clauses (a) through (f) above, shall satisfy the investor suitability standards if it is an accredited investor by reason of clause (iii) above, or if all of its shareholders are accredited investors. Corporate subscribers must have net worth of at least three (3) times the amount of their investment in the Securities.
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The suitability standards referred to above represent minimum suitability requirements for prospective purchasers and the satisfaction of such standards by a prospective purchaser does not necessarily mean that the Securities is a suitable investment for such purchaser. The Company may, in circumstances it deems appropriate, modify such requirements. The Company may also reject subscriptions for whatever reason, in its sole discretion, it deems appropriate.
7. Understanding of Nature of Securities. Purchaser understands that:
(a) The Securities issuable there under have not been registered under the 1933 Act or any State securities laws and are being issued and sold in reliance upon certain of the exemptions contained in the 1933 Act and under applicable State securities laws;
(b) The Securities are “restricted securities” as that term is defined in Rule 144 promulgated under the 1933 Act;
(c) The Securities cannot be sold or transferred without registration under the 1933 Act and applicable state securities laws, or unless the Company receives an opinion of counsel reasonable acceptable to it (as to both counsel and the opinion) that such registration is not necessary;
(d) The Securities, and any certificates issued in replacement therefore, shall bear the following legend, in addition to any legend required by law or otherwise;
“The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended. The securities represented by this certificate have been taken by the registered owner for investment, and without a view to resale or distribution thereof, and may not be transferred or disposed of without an opinion of counsel satisfactory to the issuer that such transfer or disposition does not violate the Securities Act of 1933, as amended, or the rules and regulations thereunder.”
(e) Only the Company can register the Securities under the 1933 Act and applicable State securities laws;
(f) Other than as set forth below, no representations have been made to Purchaser that the Company will register the Securities under the 1933 Act or any applicable State securities laws, or with respect to compliance with any exemption therefrom; and
(g) The Company may, from time to time, make stop transfer notations in its transfer records to ensure compliance with the 1933 Act.
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8. Warranties and Representation of the Company. The Company represents and warrants to Purchaser as follows:
(a) Organization and Standing of the Company. The Company is a duly organized and validly existing corporation in good standing under the laws of the State of Delaware with adequate power and authority to conduct the business in which it is now engaged and has the corporate power and authority to enter into this Agreement, and is in good standing in such other states of jurisdictions as is necessary to enable it to carry on its business.
(b) Corporate Power and Authority. The execution and delivery of this Agreement and the transaction contemplated hereby has been duly authorized by the Company’s Board of Directors. No other corporate proceeding on the part of the Company is necessary to authorize this Agreement or the consummation of the transaction contemplated hereby. When duly executed and delivered by the parties hereto, this Agreement will constitute a valid and legally binding obligation of the Company enforceable against the Company in accordance with its terms.
(c) Securities . All the Securities have been duly authorized and, upon issuance and sale pursuant to the terms of this Agreement, will have been validly issued fully paid and non-assessable and will be free and clear of all liens, claims and encumbrances.
9. Notices. All notices, requests, consents or other communications required or permitted hereunder shall be in writing and shall be hand delivered or mailed first class postage prepaid, registered or certified mail, to the following address:
In the case of the Company:
John Hill
Chief Executive Officer
3405 W. Martin Luther King Jr. Blvd, Suite 101
Tampa, FL 33607
In the case of Purchaser, to the address set forth at the end of this Agreement or to such other addresses as may be specified in accordance herewith from time to time.
Such notices and other communications shall, for all purposes of this Agreement, be treated as being effective upon being delivered personally or, if sent by mail, five days after the same has been deposited in a regularly maintained receptacle for the deposit of United States mail, addressed as set forth above, and postage prepaid.
10. Parties in Interest. All the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successor and permitted assigns of the parties hereto, provided that this Agreement and the interests herein may not be assigned by either party without the express written consent of the other party.
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11. Governing Law. The laws of the State of Delaware shall govern the construction of the terms and of this Agreement.
12. Sections and Other Headings. The section and other headings contained in this Agreement are for the convenience of reference only, do not constitute part of this Agreement or otherwise affect any of the provision hereof.
13. Counterpart Signatures . This Agreement may be signed in counterpart and all counterparts together shall become effective only when the counterpart(s) have been executed and delivered by and on behalf of the Company and the Purchaser.
IN WITNESS WHEREOF, intending to be legally bound, the parties hereto have caused this Agreement to be signed by their duly authorized offices.
| Comprehensive Care Corporation, Inc. | ||||||
| By: |
/s/ John Hill |
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| John Hill | ||||||
| Chief Executive Officer | ||||||
| Purchaser | ||||||
| By: |
/s/ Harry Ross |
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| Harry Ross | ||||||
| Address of Purchaser: | ||||||
| Social Security No. or Tax I.D. No.: | ||||||
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