Exhibit 10.73

 

SECOND AMENDED AND RESTATED OPTION AGREEMENT

 

THIS SECOND AMENDED AND RESTATED OPTION AGREEMENT (“Agreement”) is dated as of
August 8, 2008, by and between Prospect Medical Group, Inc., a California
professional corporation (“PMG”) and Osmundo R. Saguil, M.D. (“Physician”), with
reference to the following facts:

 

RECITALS

 

A.            Physician acquired record title to PMG’s shares (“Shares”) in
Nuestra Familia Medical Group, Inc. (“Nuestra”) pursuant to a Stock Purchase
Agreement with the previous record holder, Jacob Y. Terner, M.D. (“Prior
Physician”).

 

B.            PMG and the Prior Physician were parties to an Amended and
Restated Option Agreement effective August 8, 2007 (the “Prior Option
Agreement”) wherein the Prior Physician granted PMG an assignable option to
acquire the Shares.

 

C.            A condition of Physician’s acquisition of record title to the
Shares, was Physician’s agreement to grant PMG an assignable option to acquire
the Shares, as more fully set forth herein.

 

D.            PMG and Physician desire to amend and restate the Prior Option
Agreement in its entirety.

 

NOW, THEREFORE, in consideration of the foregoing promises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties, PMG and Physician agree as follows:

 

1.             GRANT OF OPTION.  Physician hereby grants to PMG the assignable
right to designate a successor purchaser (“Successor Purchaser”) of the Shares
(the “Option”).

 

2.             TERM OF AGREEMENT.  The term of this Agreement commences as of
the day and year first above written and continues for thirty (30) years
(“Term”).

 

3.             OPTION PRICE.  The purchase price for the Option (the “Option
Price”) is One Dollar ($1.00) and Physician acknowledges receipt of such
payment.

 

4.             EXERCISE OF OPTION.  Subject to applicable law:

 

4.1           During the Term of this Agreement, PMG may elect to exercise the
Option at any time.

 

4.2           To the extent that the Option is exercised by PMG, PMG will send
Physician a written notice (the “Stock Exercise Notice”) specifying the Stock to
be purchased and the name of the Successor Purchaser who will exercise the
Option.

 

4.3           PMG may cancel any Stock Exercise Notice at any time.

 

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4.4           Physician shall cooperate with PMG or any Successor Purchaser in
any due diligence.

 

5.             ASSIGNMENT OF THE OPTION.  PMG may elect to assign the Option to
any person, by a written assignment, signed by both PMG and the assignee.  The
assignee shall agree as a condition of the assignment to be bound by the terms
of this Agreement.

 

6.             PURCHASE PRICE OF THE SHARES.

 

6.1           PURCHASE PRICE.  The purchase price for the Shares to be purchased
pursuant to the exercise of the Option shall be $1.00 (“Stock Purchase Price”). 
PMG shall cause the Successor Purchaser to pay Physician the Stock Purchase
Price.

 

6.2           CLOSING.  The transactions contemplated by this Agreement are to
close fifteen (15) days after the date of the Stock Exercise Notice (“Closing”),
unless extended by PMG.

 

7.             ADDITIONAL OBLIGATIONS OF PHYSICIAN.

 

7.1           AFFIRMATIVE COVENANTS.  Physician shall:

 

(a)           ACCESS.  Permit PMG, its representatives, and its agents access to
inspect the Shares certificate at any time, and to make copies of records
pertaining to the Shares, at reasonable times at PMG’s request;

 

(b)           REPORTS.  Furnish PMG any reports relating to the Shares at PMG’s
request;

 

(c)           DELIVERY OF CERTIFICATES.  Deliver to PMG all certificates
heretofore issued representing all of the Shares held by Physician, and each
certificate hereafter issued representing any Share, with each certificate
endorsed in blank for transfer.

 

7.2           NEGATIVE COVENANTS.  Without the prior written consent of PMG,
Physician shall not:

 

(a)           TRANSFER.  Other than as contemplated by the First Lien Pledge
Agreement by and among Physician, PMG, Prospect Medical Holdings, Inc.
(“Holdings”), Prospect Medical Systems, Inc. (“PMS”), Bank of America, N.A., as
administrative agent and the Second Lien Pledge Agreement by and among
Physician, PMG, Holdings, PMS, Bank of America, N.A., as administrative agent
(the “Pledge Agreement”), sell, lease, transfer, or otherwise dispose of the
Shares;

 

(b)           DEBT.  Incur, guarantee, assume or otherwise become liable for any
borrowing or increase any existing indebtedness; or discharge or cancel any debt
owed to Physician;

 

(c)           NO FURTHER HYPOTHECATION.  Other than as contemplated by the
Pledge Agreements, pledge, hypothecate, encumber, redeem or dispose of the
Shares or

 

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any interest therein until all of Physician’s obligations under this Agreement
have been fully satisfied or the Stock has been released;

 

8.             CONFIDENTIALITY; SUBORDINATION.

 

8.1           The parties shall use all good faith efforts to keep the contents
of this Agreement and all other aspects of the negotiations preceding execution
of this Agreement confidential.  Unless required by law, neither Physician nor
PMG shall disclose the contents of this Agreement or the negotiations leading to
this Agreement to third parties without the prior written consent of the other
party.  PMG shall ensure that all of the assignees likewise comply with the
obligations of confidentiality imposed by this Section, except that PMG and the
assignees may disclose the contents of such to their respective agents,
representatives, contractors, and employees to the extent necessary to exercise
their respective rights or perform their respective obligations hereunder.

 

8.2           Notwithstanding anything herein to the contrary, each of PMG, PMS
and Holdings hereby subordinates all of its rights under this Agreement to the
rights of the First Lien Administrative Agent and the Second Lien Administrative
Agent under the Pledge Agreements until the indefeasible payment in full in cash
of all Obligations (as such term is defined in each of the respective Credit
Agreements) and termination of all commitments to lend under the First Lien
Credit Agreement.

 

9.             GENERAL.

 

9.1           COMPLIANCE WITH LAW.  PMG and Physician shall comply with all
applicable requirements of the Joint Commission on the Accreditation of
Healthcare Organizations, the Medicare and Medicaid programs, applicable state
law and regulations, and other licensing and accreditation authorities.

 

9.2           RELATIONSHIP OF PARTIES.  In the exercise of their respective
rights and the performance of their respective obligations under this Agreement,
PMG on the one hand and Physician (or any assignee) on the other hand are acting
in the capacity of the grantor and grantee of an option to purchase the Shares,
and nothing in this Agreement is intended nor shall be construed to create
between the parties an employer/employee relationship, a partnership or joint
venture relationship or a landlord/tenant relationship.

 

9.3           ASSIGNMENT.  All of PMG’s rights and duties under this Agreement
may be assigned or delegated by PMG including, but not limited to, Bank of
America, N.A., in its capacity as Administrative Agent and/or control agent
under the First Lien Credit Agreement, dated as of August 8, 2007 (as amended,
supplemented, restated, or modified from time to time, the “First Lien Credit
Agreement”) among Holdings, PMG, Bank of America, N.A., as First Lien
Administrative Agent, and the Lenders party thereto, and the Second Lien Credit
Agreement, dated as of August 8, 2007 (as amended, supplemented, restated or
modified from time to time, the “Second Lien Credit Agreement” and together with
the First Lien Credit Agreement, the “Credit Agreements”) among Holdings, PMG,
Bank of America, N.A., as Second Lien Administrative Agent, and the Lenders
party thereto.  Notwithstanding any other provision of this Agreement, neither
this Agreement nor the rights and duties of this Agreement may be

 

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assigned or delegated by Physician.  This Agreement binds the successors, heirs,
and authorized assignees of the parties.

 

9.4           ENTIRE AGREEMENT.  Except as expressly provided in this Agreement
to the contrary, this Agreement, including its incorporated exhibits,
constitutes the entire agreement between the parties with respect to the Option,
and 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.  Except as expressly provided
in this Agreement to the contrary, each party to this Agreement acknowledges
that no representations, inducements, promises, or agreements, orally or
otherwise, have been made by any other party hereto, or by anyone acting on
behalf of any party hereto, that are not embodied herein, and that no agreement,
statement, or promise not contained in this Agreement shall be valid or binding.

 

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

 

9.6           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.

 

9.7           NOTICES.  Any notices required or permitted to be given hereunder
by any party to another shall be in writing and shall be deemed delivered upon
personal delivery, twenty-four (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 PMG:

 

Prospect Medical Group
1920 East 17th Street, Suite 200
Santa Ana, California 92705

 

If to Physician:

 

Osmundo R. Saguil, M.D.
c/o Prospect Medical Group
1920 East 17th Street, Suite 200
Santa Ana, California 92705

 

9.8           GOVERNING LAW.  This Agreement shall be governed by and construed
in accordance with the laws of the State of California.

 

9.9           AMENDMENT.  This Agreement may be amended at any time by agreement
of PMG and Physician, provided that any amendment shall be in writing and
executed by PMG and Physician.

 

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9.10         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.

 

9.11         FEES AND EXPENSES.  PMG shall bear all expenses, including, without
limitation, attorneys’ and accountants’ fees, incurred in connection with the
preparation of this Agreement and the transactions contemplated hereby.

 

9.12         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.

 

9.13         ATTORNEYS’ FEES.  Should any of the parties hereto institute any
action or procedure to enforce this Agreement or any provision hereof (including
without limitation, arbitration), 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, by means of 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.

 

9.14         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.

 

9.15         RIGHTS CUMULATIVE.  The various rights and remedies herein granted
to the respective parties hereto shall be cumulative and in addition to any
other rights any such party may be entitled to under law.  The exercise of one
or more rights or remedies by a party shall not impair the right of such party
to exercise any other right or remedy, at law or equity.

 

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IN WITNESS WHEREOF, PMG and Physician execute this Agreement as set forth below.

 

“PROSPECT MEDICAL GROUP, INC.”,
a California professional corporation

 

“PHYSICIAN”

 

 

 

 

 

 

/s/ Samuel S. Lee

 

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

Samuel S. Lee

 

Osmundo R. Saguil, M.D.

Senior Vice President

 

 

 

 

 

 

Acknowledged and Agreed:

 

The undersigned acknowledges and agrees that after the date hereof references to
“Physician” under this Agreement shall refer solely to Dr. Saguil and that the
undersigned is no longer be a party to this Agreement.

 

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

 

Jacob Y. Terner, M.D.

 

 

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SPOUSAL JOINDER AND CONSENT

 

I am the spouse of Osmundo R. Saguil, M.D., the holder of the record title to
the shares of Prospect Medical Group, Inc., a California professional medical
corporation (“PMG”) in Nuestra Familia Medical Group, Inc., a California
professional medical corporation (“Physician”).  To the extent that I have any
interest in any of the Shares (as that term is defined in the Second Amended and
Restated Option Agreement (the “Option Agreement”), entered into as of this
date, by and among Physician and PMG, I hereby join in the Option Agreement and
agree to be bound by its terms and conditions to the same extent as my spouse. 
I have read the Option Agreement, understand its terms and conditions, and to
the extent that I have felt it necessary, have retained independent legal
counsel to advise me concerning the legal effect of the Option Agreement and
this Spousal Joinder and Consent.

 

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

 

Executed this          day of August     , 2008.

 

 

Signature:

 

 

 

Printed or Typed Name:

 

 

 

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