Exhibit 10.76

 

STOCK PURCHASE AGREEMENT

 

This Stock Purchase Agreement (“Agreement”) is made and entered into this 26th
day of November, 2008 by and among Arthur Lipper, M.D. (“Purchaser”), as buyer,
Osmundo R.  Saguil, 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 Fourth 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 November       , 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:

 

Osmundo R. Saguil, M.D.

 

 

c/o Prospect Medical Group, Inc.

 

 

1920 E. 17th Street, Suite 200

 

 

Santa Ana, CA 92705

 

 

 

If to Purchaser:

 

 

 

 

 

 

 

 

 

 

 

 

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”:

 

 

 

ARTHUR LIPPER, M.D.

 

OSMUNDO R. SAGUIL, M.D.

 

 

 

 

 

 

By:

            /s/ Arthur Lipper, M.D.

 

By:

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

 

Arthur Lipper, M.D.

 

 

Osmundo R. Saguil, 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 Arthur Lipper, 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 Osmundo R.
Saguil, 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 23rd day of November, 2008.

 

Signature:

/s/ Allyson Lipper

 

 

Printed or Typed Name:

Allyson Lipper

 

 

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