Exhibit 10.75

 

STOCK PURCHASE AGREEMENT

 

This Stock Purchase Agreement (“Agreement”) is made and entered into this 8th
day of August, 2008 by and among Osmundo R. Saguil, M.D. (“Purchaser”), as
buyer, Jacob Y. Terner, M.D. (“Seller”), as seller, Prospect Medical
Group, Inc., a California professional corporation (“Company”) and Prospect
Medical Systems, Inc., a Delaware corporation (“PMS”).

 

RECITALS

 

This Agreement is made with reference to the following facts and circumstances:

 

A.                                   Seller is a physician licensed in the State
of California and the record owner of four thousand (4,000) shares (the
“Shares”) of common stock of Company, representing one hundred percent (100%) of
the issued and outstanding shares of Company.

 

B.                                     Purchaser is a physician licensed in the
State of California.

 

C.                                     PMS is the manager of Company pursuant to
a long term management agreement and was the holder of an option to buy the
Shares of Company.

 

D.                                    PMS assigned the option to Purchaser so
that Purchaser, as a duly licensed physician, could serve as the nominee
shareholder of Company.

 

E.                                      Purchaser exercised the option to
purchase the Shares and desires to effectuate the transfer of the Shares
pursuant to this Agreement.

 

F.                                      As a result of Purchaser’s purchase of
the Shares, Purchaser will hold all the issued and outstanding shares of
Company.

 

G.                                     Seller desires to sell the Shares to
Purchaser and Purchaser desires to purchase the Shares from Seller, on the terms
and conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the covenants and conditions contained
herein and for other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:

 

1.                                      PURCHASE AND SALE OF STOCK

 

1.1                                 The Shares.  Pursuant to the terms and
conditions set forth herein, on the Closing Date, Seller shall sell, convey,
transfer, and deliver to Purchaser all right, title, and interest in and to the
Shares.

 

2.                                      PURCHASE PRICE

 

2.1                                 Consideration for the Shares.  Subject to
the terms and conditions of this Agreement and in full consideration of the sale
and issuance of the Shares, Purchaser shall receive One Thousand Dollars
($1,000.00) as payment (the “Purchase Price”) on the Closing

 

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Date for the Shares.  PMS shall advance the Purchase Price to Purchaser, for
Purchaser’s payment to Seller of such Purchase Price.

 

3.                                      TRANSFER OF SHARES

 

3.1                                 Transfer.  In order to effectuate the
transfer of record title to the Shares to Purchaser, on the Closing Date, Seller
shall issue to Purchaser all stock certificates representing the Shares, with a
stock power duly endorsed for transfer (“Stock Power”), along with any other
documents reasonably requested by Purchaser to effectuate the purposes of this
Agreement.  Notwithstanding the foregoing, Purchaser acknowledges that that the
stock certificate representing the Shares is currently in the possession of the
Company’s lender (“Lender”) as evidence of the pledge of the Shares as
collateral for the Company’s loan pursuant to the terms of that First Lien
Pledge Agreement and the Second Lien Pledge Agreement, copies of which have been
previously delivered to Purchaser (the “Pledge Agreements”).  Purchaser
acknowledges that the Shares will continue to be collateral for the Company’s
loan (which is also the loan for the Company’s affiliates) after the purchase
hereunder.  As a result, on the Closing Date, Seller shall deliver the Stock
Power duly endorsed in blank and the Company and PMS, shall work with Lender to
obtain a return of the original stock certificate for the Shares so that such
stock certificate can be cancelled and a new stock certificate issued in the
name of Purchaser.  The new stock certificate representing the Shares will then
be returned to Lender, along with a Stock Power signed by Purchaser for the
benefit of Lender.

 

4.                                      REPRESENTATIONS, WARRANTIES AND
COVENANTS OF COMPANY

 

Company represents and warrants to Purchaser that:

 

4.1                                 Organization and Authority.  Company is a
California professional corporation duly formed, legally existing and in good
standing under the laws of the State of California.  Seller is the sole
shareholder of Company.  Company has full power and authority to enter into this
Agreement, to carry out and perform his obligations hereunder and to consummate
the transactions contemplated hereby.

 

4.2                                 Authorization and Enforceability.  Company
has duly authorized, executed and delivered this Agreement.  Assuming the
Purchaser, Seller and PMS duly authorize, execute and deliver it, this Agreement
is enforceable against Company.

 

4.3                                 Title.  Seller is the record owner of and
has good and valid record title to and has the full right to sell, convey and
transfer the Shares under the terms of this Agreement.  The Shares are
encumbered by (a) the Pledge Agreements, and (b) a Third Amended and Restated
Assignable Option Agreement (“Existing Assignable Option Agreement”) between
Company, PMS and Seller which gives PMS the authority at any time during the
term of the Existing Assignable Option Agreement to designate the owner of the
Shares.  A copy of the Existing Assignable Option Agreement has been delivered
to Purchaser.

 

4.4                                 No Violation of Other Agreements.  Neither
this Agreement nor any of the transactions contemplated hereby conflicts and
will not conflict with or result in the breach of any of the terms or provisions
of, or constitute a default under, any contractual obligation to which Company
is a party or by which Company, or the Shares, is bound, or any legal

 

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requirement applicable to Company or the Shares.  No approval is required to be
obtained by Company in connection with the execution, delivery and performance
of this Agreement or the transactions contemplated hereby.

 

4.5                                 No Other Representations.  No oral or
written representation inconsistent with this Agreement has been made to
Purchaser.

 

5.                                      REPRESENTATIONS, WARRANTIES AND
COVENANTS OF PMS

 

PMS represents and warrants to Purchaser, PMS and Company that:

 

5.1                                 Organization and Authority.  PMS is a
Delaware corporation duly formed, legally existing and in good standing under
the laws of the State of Delaware and qualified to do business in the State of
California.  PMS has full power and authority to enter into this Agreement, to
carry out and perform his obligations hereunder and to consummate the
transactions contemplated hereby.

 

5.2                                 Authorization and Enforceability.  PMS has
duly authorized, executed and delivered this Agreement.  Assuming the Purchaser,
Seller and Company duly authorize, execute and deliver it, this Agreement is
enforceable against PMS.

 

5.3                                 No Violation of Other Agreements.  Neither
this Agreement nor any of the transactions contemplated hereby conflicts and
will not conflict with or result in the breach of any of the terms or provisions
of, or constitute a default under, any contractual obligation to which PMS is a
party or by which PMS, or the Shares, is bound, or any legal requirement
applicable to PMS or the Shares.  No approval is required to be obtained by PMS
in connection with the execution, delivery and performance of this Agreement or
the transactions contemplated hereby.

 

5.4                                 No Other Representations.  No oral or
written representation inconsistent with this Agreement has been made to
Purchaser.

 

6.                                      REPRESENTATIONS, WARRANTIES AND
COVENANTS OF SELLER

 

Seller represents and warrants to Purchaser, PMS and Company that:

 

6.1                                 Title.  Seller is the record owner of the
Shares.  Seller has not (i) granted any option, warrant or other right to any
person to acquire any of the Shares or any other security of, or equity interest
in, Company, or (ii) any contractual obligation that could have the same
effect.  Seller hereby discloses to Purchaser that the Shares are encumbered by
(a) the Pledge Agreements, and (b) the Existing Assignable Option Agreement
which gives PMS the authority at any time during the term of the Existing
Assignable Option Agreement to designate the owner of the Shares.  Other than
the encumbrances described above or any encumbrances that could be deemed to
exist as a result of the operation of the Company in its ordinary course, Seller
has not encumbered or placed any liens on the Shares.

 

6.2                                 No Violation of Other Agreements.  Neither
this Agreement nor any of the transactions contemplated hereby conflicts and
will not conflict with or result in the breach of

 

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any of the terms or provisions of, or constitute a default under, any
contractual obligation to which Seller is a party or by which Seller, or the
Shares, is bound, or any legal requirement applicable to Seller or the Shares. 
No approval is required to be obtained by Seller in connection with the
execution, delivery and performance of this Agreement or the transactions
contemplated hereby.

 

6.3                                 No Other Representations.  No oral or
written representation inconsistent with this Agreement has been made to
Purchaser.

 

6.4                                 Access to Independent Counsel.  Seller has
had ample opportunity to consult independent legal counsel with respect to this
Agreement and has not relied upon Company’s counsel for legal advice.

 

7.                                      REPRESENTATIONS, WARRANTIES AND
COVENANTS OF PURCHASER

 

Purchaser hereby represents and warrants to Seller, Company and PMS that:

 

7.1                                 No Violation of Other Agreements.  Neither
this Agreement nor any of the transactions contemplated hereby conflicts and
will not conflict with or result in the breach of any of the terms or provisions
of, or constitute a default under, any contractual obligation to which Purchaser
is a party or by which Purchaser is bound, or any legal requirement applicable
to Purchaser.  No approval is required to be obtained by Purchaser in connection
with the execution, delivery and performance of this Agreement or the
transactions contemplated hereby.

 

7.2                                 Access to Properties, Books and Records. 
Purchaser acknowledges that he has been afforded reasonable access to all
properties, books and records of Company with respect to the Shares, the
Existing Assignable Option Agreement, and the Pledge Agreements.

 

7.3                                 Access to Independent Counsel.  Purchaser
has had ample opportunity to consult independent legal counsel with respect to
this Agreement and has not relied upon Company’s counsel for legal advice.

 

8.                                      COVENANTS AND AGREEMENTS OF THE PARTIES

 

8.1                                 Publicity.  Neither Purchaser nor Seller
shall, at any time on or after the date hereof, issue any publicity or written
or oral statement, or otherwise disclose the existence of this Agreement or any
of the terms or conditions hereof, or disclose the contemplation, implementation
or consummation of any of the transactions intended hereby, without the prior
written consent of the Company and PMS.  Notwithstanding the foregoing,
Purchaser and Seller acknowledge that the Company and PMS are part of the
Prospect family of companies and that Prospect Medical Holdings, Inc., a
Delaware corporation, is a public company required to file annual and periodic
disclosure filings with the Securities and Exchange Commission.  Purchaser and
Seller acknowledge that this Agreement, and any agreement referenced herein or
contemplated hereby, may be filed as an exhibit to such securities’ filings.

 

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9.                                      CLOSING DATE; CLOSING CONDITIONS;
EFFECTUATION OF CLOSING

 

9.1                                 Closing Date.  The transactions contemplated
by this Agreement shall be consummated at the “Closing”, at such location
mutually agreed to by the parties.  The Closing Date shall be August 8, 2008, or
on such other date mutually agreed to by the parties.

 

9.2                                 Conditions to Closing.

 

(a)                                  Purchaser shall have executed (i) the
Assignable Option Agreement between PMS, Company and Purchaser, in the form
attached hereto as Exhibit A., (ii) pledge agreements prepared by Lender in the
form attached hereto as Exhibit B and Exhibit C.

 

(b)                                 Seller shall have received evidence
reasonably satisfactory to Seller that the Pledge Agreements, and any uniform
commercial code filings which were filed to perfect Lender’s security interest
in the Shares naming Seller, have or will be terminated by Lender promptly upon
the closing of the transactions under this Agreement.

 

9.3                                 Effectuation of Closing.  At Closing,
assuming the satisfaction of the terms and conditions of sale set forth in this
Agreement, Seller shall deliver to Purchaser the Stock Power and Seller shall
receive the Purchase Price.

 

10.                               MISCELLANEOUS

 

10.1                           Entire Agreement.  This Agreement, together with
all documents referred to herein, constitutes the entire agreement between the
parties with respect to the subject matter hereof, supersedes all other and
prior agreements on the same subject, whether written or oral, and contains all
of the covenants and agreements between the parties with respect to the subject
matter hereof.  Each party to this Agreement acknowledges that no
representations, inducements, promises, or agreements, orally or otherwise, have
been made by the other party, or by anyone acting on behalf of any party, that
are not embodied herein, and that no other agreement, statement, or promise not
contained in this Agreement shall be valid or binding.

 

10.2                           Successors and Assigns.  This Agreement shall be
binding upon and shall inure to the benefit of the parties and their respective
heirs, legal representatives, and permitted successors and assigns.  No party
may assign this Agreement or the rights, interests or obligations hereunder. 
Any assignment or delegation in contravention of this Section shall be null and
void.

 

10.3                           Counterparts.  This Agreement, and any amendments
thereto, may be executed in counterparts, each of which shall constitute an
original document, but which together shall constitute one and the same
instrument.

 

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

 

10.5                           Notices.  Any notices required or permitted to be
given hereunder by any party to the other shall be in writing and shall be
deemed delivered upon personal delivery; twenty-four

 

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(24) hours following deposit with a courier for overnight delivery; or
seventy-two (72) hours following deposit in the U.S.  Mail, registered or
certified mail, postage prepaid, return-receipt requested, addressed to the
parties at the following addresses or to such other addresses as the parties may
specify in writing:

 

If to
Seller:                                                                                      
Jacob Y.  Terner, M.D.
c/o Prospect Medical Group, Inc.
1920 E.  17th Street, Suite 200
Santa Ana, CA 92705

 

If to Purchaser:                                                              
Osmundo R.  Saguil, M.D.
c/o Prospect Medical Group, Inc.
1920 E.  17th Street, Suite 200
Santa Ana, CA 92705

 

10.6                           Governing Law.  This Agreement shall be governed
by and construed in accordance with the laws of the State of California.

 

10.7                           Amendment.  This Agreement may be amended at any
time by agreement of the parties, provided that any amendment shall be in
writing and executed by all parties.

 

10.8                           Severability.  If any provision of this Agreement
is held by a court of competent jurisdiction to be invalid or unenforceable, the
remaining provisions will nevertheless continue in full force and effect, unless
such invalidity or unenforceability would defeat an essential business purpose
of this Agreement.

 

10.9                           Survival of Representations and Warranties. 
Except as expressly stated to the contrary herein, the representations and
warranties of Purchaser and Seller contained in this Agreement or in any
certificate or document delivered pursuant to the provisions hereof shall
survive the Closing Date for a period of one (1) year.

 

10.10                     Time of Essence.  Time is expressly made of the
essence of this Agreement and each and every provision hereof of which time of
performance is a factor.

 

10.11                     Dispute Resolution.  If the parties to this Agreement
cannot settle grievances or disputes between them in an informal and expeditious
fashion, the dispute shall be submitted, upon the motion of either party, to
arbitration in Los Angeles County, California, in accordance with the commercial
rules of the American Arbitration Association and applying the laws of the State
of California.  Except as may be expressly provided to the contrary in this
Agreement, the arbitration procedure described in this Section shall be the sole
means of resolving any disputes hereunder.  The parties agree that the decision
of the arbitrator shall be final and binding as to each of them, and judgment
thereon may be entered in any court having jurisdiction thereof.  During the
pendency of any such arbitration and until final judgment thereon has been
entered, this Agreement shall remain in full force and effect unless otherwise
terminated as provided hereunder.  The provisions of this Section 10.11 shall
survive the expiration or sooner termination of this Agreement regardless of the
cause of such termination.

 

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10.12                     Venue.  In the event of any litigation under this
Agreement, the parties agree that the venue for such litigation shall be Los
Angeles County, California.

 

10.13                     Attorneys’ Fees.  Should either party hereto institute
any action or procedure to enforce this Agreement or any provision hereof, or
for damages by reason of any alleged breach of this Agreement or of any
provision hereof, or for a declaration of rights hereunder (including without
limitation arbitration), the prevailing party in any such action or proceeding
shall be entitled to receive from the other party all costs and expenses,
including without limitation reasonable attorneys’ fees, incurred by the
prevailing party in connection with such action or proceeding.

 

10.14                     Further Assurances.  The parties shall take such
actions and execute and deliver such further documentation as may reasonably be
required in order to give effect to the transactions contemplated by this
Agreement and the intentions of the parties hereto.

 

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

 

“Purchaser”:

 

“Seller”:

 

 

 

OSMUNDO R. SAGUIL, M.D.

 

JACOB Y. TERNER, M.D.

 

 

 

 

 

 

By:

/s/ Osmundo R. Saguil, M.D.

 

By:

/s/ Jacob Y. Terner, M.D.

 

 

Osmundo R. Saguil, M.D.

 

 

Jacob Y. Terner, M.D.

 

 

 

 

 

 

 

“Company”:

 

“PMS”:

 

 

 

PROSPECT MEDICAL GROUP, INC.

 

PROSPECT MEDICAL SYSTEMS, INC.

 

 

 

 

 

 

By:

/s/ Samuel S. Lee

 

By:

/s/ Samuel S. Lee

 

Samuel S. Lee

 

 

Samuel S. Lee

 

Senior VP

 

 

Chairman of the Board

 

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Exhibit D

 

SPOUSAL JOINDER AND CONSENT

 

I am the spouse of Osmundo R.  Saguil, M.D.  (“Purchaser”).  To the extent that
I have any interest in any of the Shares (as that term is defined in the Stock
Purchase Agreement (“Agreement”) entered into as of this date, by and among
Jacob Y.  Terner, M.D., as seller, Prospect Medical Group, Inc.  (“Company”) and
Prospect Medical Systems, Inc.  (“PMS”), I hereby join in the Agreement and
agree to be bound by its terms and conditions to the same extent as my spouse. 
I have read the Agreement, understand its terms and conditions, and to the
extent that I have felt it necessary, I have retained independent legal counsel
to advise me concerning the legal effect of this Agreement and this Spousal
Joinder and Consent.

 

I understand and acknowledge that Purchaser is relying on the validity and
accuracy of this Spousal Joinder and Consent in entering into this Agreement.

 

Executed this                day of August, 2008.

 

 

Signature:

 

 

 

 

 

 

 

Printed or Typed Name:

 

 

 

 

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