**Exhibit 10.15**

** **

**AMENDED AND RESTATED**

**EXECUTIVE EMPLOYMENT AGREEMENT**

 

THISAMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement’) isentered into and made effective as of May 12, 2009 (the “Effective Date”),by and between Prospect Medical Holdings, Inc., a Delaware corporation (“Company”or “Employer”), and Samuel S. Lee, an individual (“Executive”).

 

WHEREAS,Executive and Alta Hospitals System, LLC (“Alta”) entered into that certainExecutive Employment Agreement, dated August 8, 2007 (the “OriginalAgreement”), as a condition to the closing of the transactions under that certainAgreement and Plan of Reorganization, dated as of July 25, 2007, (the “ReorganizationAgreement”), among Company, Alta (as the merger subsidiary), Alta Healthcare System, Inc.(“Former Alta”), and the shareholders of Former Alta (capitalized terms usedbut not otherwise defined herein have the respective meanings ascribed to themin the Reorganization Agreement);

 

WHEREAS,the Original Agreement was amended by that certain First Amendment to ExecutiveEmployment Agreement, dated March 19, 2008 (the “First Amendment”), by andamong Company, Alta and Executive, which amendment principally provided that,in addition to his positions and duties held with Alta, Executive also servesas the Chief Executive Officer of Company;

 

WHEREAS,the Original Agreement (as amended by the First Amendment) was further amendedby that certain Second Amendment to Executive Employment Agreement, dated July 8,2008 (the “Second Amendment”), by and among Company, Alta and Executive, whichamendment principally provided for a new base salary for Executive and aone-time “Turnaround Services Bonus;” and

 

WHEREAS,the Original Agreement (as amended by the First and Second Amendments) wasfurther amended by that certain Third Amendment to Executive EmploymentAgreement, dated February 12, 2009 (the “Third Amendment”), by and amongCompany and Executive, which  amendmentprovided for a new base salary for Executive, a PMH EBITDA based bonus, and a discretionarybonus; and

 

WHEREAS,the parties hereto deem it to be in their best interests to amend and restatethe Original Agreement (as amended by the First, Second, and Third Amendments) inits entirety and to, therefore, adopt this Agreement to govern their respectiverights and obligations in connection with the subject matter hereof;

 

NOW,THEREFORE, the parties agree as follows:

 

1.             TERM OF EMPLOYMENT.  Company hereby employs Executive andExecutive accepts such employment, upon the terms and conditions set forthherein, for a term commencing as of August 8, 2007, and ending on August 7,2012, unless terminated in accordance with the termination provisions of Section 5below (the “Term”).

 

2.             DUTIES.  During the Term, Executive shall be ChiefExecutive Officer of Company, and until a suitable replacement is found, Company’swholly-owned subsidiary, Alta.  Duringthe Term, Executive shall also serve, without additional compensation, as adirector 

 

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and/or officer of such other subsidiaries or affiliates of Company ashe or Company’s Board of Directors deems appropriate.

 

3.             NECESSARY SERVICES.

 

a.             Performance of Duties.  Executive agrees that he will at all timesfaithfully, industriously and to the best of his ability, experience andtalents, perform all of the duties that may be assigned to him hereunder.  Such duties shall be of a kind that aretypically assigned to, and reasonably commensurate with, the position of ChiefExecutive Officer of a similar size company within the same industry as Company.  Executive acknowledges that the Board ofDirectors of Company shall assign his duties as Chief Executive Officer of Companyand, in the case of Executive’s position as Chief Executive Officer of Alta,the Board of Directors of Company and/or the Manager(s) of Alta, shallassign such tasks to Executive which are commensurate with such position.

 

b.             Faithful and Diligent Performance.  During the Term, Executive agrees to devotesuch time, energy, skill and efforts to the performance of his duties hereunderas are necessary to allow Executive to faithfully and diligently further thebusiness and interests of the Company; provided, however, that Executive’sobligations hereunder shall not preclude Executive from (i) working orinvolving himself in any other business venture so long as it does notmaterially detract from Executive’s ability to provide services to the Company andany directorships or committee positions he is then serving under the terms ofthis Agreement (including not conflicting with the provisions of Subsection (c) below));or (ii) engaging in additional activities in connection with personalinvestments and/or community affairs that are not inconsistent with his dutieshereunder, including serving on boards of directors of non-competing businessesor entities.  Executive currently residesand may at his discretion continue to reside in Los Angeles County, California(the “County”).  Company shall notrelocate Executive to another location outside of the County without his priorwritten consent.

 

c.             Services by Executive.  Executive agrees that, during the period ofhis employment, Executive shall provide personal services to the Company oraffiliated entities of the Company pursuant to this Agreement, and Executivewill not, within the California counties of Los Angeles, San Bernardino andOrange, without the prior written consent of Employer, acting through its Boardof Directors (which consent may be granted or withheld in the sole and absolutediscretion of Company), individually or in any combination, directly orindirectly, as an owner, shareholder, director, officer, trustee, partner,associate, consultant, principal, agent, contractor, employee or otherwise:

 

i.              engage, participate in, form, contract, aid, or holdany interest in an independent physician association (“IPA”) or managed careorganization (including but not limited to an HMO, PPO, or self-insuredemployer plan), or otherwise engage in any business with an IPA or managed careorganization (including but not limited to an HMO, PPO, or self-insuredemployer plan), which is, or as of Executive’s engagement or participation,would become, competitive with any aspect of the business or operations of theCompany or its affiliates ( a “Competing Business”);

 

ii.             engage in theRestricted Activities in the Territory, as set forth in Section 8.9 of theReorganization Agreement (subject to Section 8.9(b) thereof).

 

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4.             COMPENSATION.

 

a.             Base Salary.  Company shall pay Executive an annual basesalary of Nine Hundred Fifty Thousand Dollars ($950,000 per annum) (the “BaseSalary”), effective retroactively as of April 1, 2009.  Payments shall be made in periodicinstallments in accordance with the normal payroll practices of Company, as suchmay be changed from time to time; provided, however, that in order to giveretroactive effect to Executive’s Base Salary as of April 1, 2009,Executive’s next regularly scheduled Base Salary payment installment shall beadjusted to include such additional amounts as may be necessary to account forthe difference between the aggregate payments actually received by Executive inall periodic payments made subsequent to October 1, 2008 and the aggregatepayments which would have been received by Executive in such periodic paymentshad such payments reflected the foregoing Base Salary as of April 1, 2009.  The Base Salary may be increased but notdecreased.

 

b.             Employee Benefits.  Executive shall be entitled to participate inall of the employee benefit and fringe benefit plans and programs available toother executive employees of Company, as such may be changed from time to time. Company retains the right to modify oreliminate such plans and programs as well.

 

c.             Deductions and Withholding.  Executive hereby agrees that Employer maydeduct and withhold from the compensation payable to Executive hereunder anyamounts of money required to be deducted or withheld by Employer under theprovisions of any and all applicable local, state or federal statutes or regulationsor any amendments thereto hereafter enacted requiring the withholding ordeducting of compensation.

 

d.             Equity Incentive Plan.  Executive shall be eligible to participate inany executive equity incentive plan adopted by the Compensation Committee and/orBoard of Directors of Company.

 

e.             Annual Bonus.  Executive shall be entitled to receive, on an annualbasis, a bonus determined in accordance with criteria regarding the attainmentof certain EBITDA targets by Employer, which criteria and targets shall beestablished by the Compensation Committee of the Board of Directors of Company foreach fiscal year.

 

i.              EBITDA Definition.  Forpurposes of this Agreement, the phrase “EBITDA” shall mean earnings as reportedby the Company before interest, taxes, depreciation and amortization.  In connection with the EBITDA Based Bonus,EBITDA shall be solely derived from the operation of the Hospital Servicessegment and IPA management segment, excluding allocations of expenses paiddirectly by Company, other than such expenses as Company and Executive, intheir reasonable good faith judgment, agree are being paid by Company for thebenefit of the reporting segments.

 

ii.             Partial Year. For any partial year (i.e., a year in which, due to the expiration ortermination of this Agreement, Executive does not serve as an employee of Companyfor the entire year), then the EBITDA of Company as of the last fiscal quarterending prior to the date of expiration or termination of this Agreement shallbe annualized for purposes of determining whether any bonuses are payable toExecutive with respect to such year and, if any such bonus is payable (i.e., ifthe EBITDA of Company, as so annualized, satisfies the applicable requiredEBITDA Amount for such year) then Executive shall be entitled to a pro-rata 

 

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portion of theBonus Amount, calculated as (x) the applicable Bonus Amount multiplied by (y) afraction, the numerator of which is the number of days elapsed in such year asof the date of expiration or termination of this Agreement, and the denominatorof which is 365.

 

iii.            EBITDA Calculation.  EachAnnual Bonus shall be deemed to vest and accrue at the end of the last day ofthe fiscal year for which it is earned. Each Annual Bonus shall be paid as soon as practicable following the completionand filing of the Company’s year end fiscal audit, and subject to thecertification of the Chief Financial Officer of the Company and approval of theCompensation Committee of Company’s Board of Directors.

 

f.              Discretionary Bonus.  Executive shall be eligible for discretionarybonuses (each, a “Discretionary Bonus”) at such times and in suchamounts, if any, as determined in the sole discretion of the CompensationCommittee of Company’s Board of Directors.

 

g.             Vacation.  During the Term, Executive shall be entitledto four (4) weeks paid vacation each year in accordance with the vacationpolicies of Company.

 

5.             TERMINATION.

 

a.             Termination by Company For Cause And OtherSpecified Events.  Executive’semployment with Company may be terminated by Employer upon any of the eventsspecified below:

 

i.              Upon the death of Executive, or (at the election of Company,upon 30 days’ prior written notice to Executive) the permanent disability ofExecutive, “permanent disability” being defined as any continuous loss ofone-half (1⁄2) or more of the time spent by Executive in the usual dailyperformance of his duties as a result of physical or mental illness for acontinuous period in excess of ninety (90) days; provided, however, that the “permanentdisability” of Executive shall be determined by a medical doctor selected bywritten agreement of Company and Executive upon the request of either party bywritten notice to the other.  If Companyand Executive cannot agree on the selection of a medical doctor, each of themwill select a medical doctor and the two medical doctors will select a thirdmedical doctor who will determine whether Executive has a permanentdisability.  The determination of themedical doctor selected under this Section 5(a)(i) will be binding onboth parties.

 

ii.             At the election of Company upon the dismissal ofExecutive by Company for Cause.  Forpurposes of this Agreement, “Cause” shall be deemed to exist if Executive: (1) materiallybreaches this Agreement, which breach is not remedied by Executive within thirty(30) days after receipt of written notice from Company that specifies inreasonable detail the nature of such breach; provided, however, that if suchbreach cannot be reasonably remedied within such 30-day period, Executive shallbe given a reasonable period of time thereafter for cure purposes; (2) isconvicted of a felony; (3) engages in one or more acts involving fraud orserious moral turpitude that materially adversely affects the Company; or (4) 

 

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misappropriates assets or engages in gross misconduct that materiallyadversely affects the Company. Termination under this subparagraph shall be effective immediately uponwritten notice by Company.

 

b.             Compensation Following Termination For CauseAnd Other Specified Events.  In the event Company’s employment isterminated pursuant to Subsection (a) above, Company shall pay toExecutive the portion of the total amount of the Base Salary earned through thedate of termination and the pro-rata portion of any EBITDA Bonus earned for theperiod commencing on the first day of the then current year and ending on thedate of termination (and any EBITDA Bonus or Discretionary Bonus owed for theprior year but not yet paid).  Inaddition, Executive shall be paid any vacation, PTO, or other compensation thathas accrued pursuant to Company’s written policies but has not been used, plusany amount of reimbursement for reasonable business expenses incurred byExecutive through the date of termination in accordance with Section 6hereof.  Otherwise, Company shall have noobligation to make payments to, or bestow benefits upon, Executive followingthe date of termination.

 

c.             Termination by Company Without Cause.  Notwithstanding the above-stated provisions,Company retains the right to terminate Executive’s employment “at-will,” eitherwith or without cause and in its sole discretion; provided, however, that ifCompany elects to exercise its right to terminate without cause under thisprovision, Company shall promptly pay to Executive (as soon as possible, but inno event later than 2.5 months after the end of the calendar year in which suchtermination occurs), via wire transfer of immediately available funds to anaccount designated by Executive, an aggregate lump sum amount (the “SeveranceAmount”) equal to the sum of (i) his Base Salary for a period commencingon the date of termination and ending on the date which is three (3) yearsfollowing the date of termination; (ii) the aggregate amount of anyvacation, PTO, or other compensation that has accrued pursuant to Employer’swritten policies but has not been used as of the date of termination; (iii) thepro-rata portion of the EBITDA Bonuses earned for the period commencing on thefirst day of the then current year and ending on the date of termination (andany EBITDA Bonus or Discretionary Bonus owed for the prior year but not yetpaid); and (iv) any amount of reimbursement for reasonable businessexpenses incurred by Executive through the date of termination in accordancewith Section 6 hereof.  Except asotherwise provided in this Section 5(c), Company shall have no obligationto make payments to, or bestow benefits upon, Executive following the date oftermination.

 

d.             Termination by Executive for Good Reason.  Notwithstanding anything in this Agreement tothe contrary, Executive may terminate his employment hereunder at any timeduring the Term for Good Reason (as hereinafter defined) upon written notice toEmployer of the occurrence of a breach enumerated below and the failure ofCompany to timely cure such breach.  Forpurposes of this Agreement, the term “Good Reason” means (i) Company’smaterial breach of this Agreement; (ii) a change in Executive’s title,responsibilities or duties to a materially lesser status or degree than histitle, responsibilities or duties as of the Effective Date; (iii) afailure by Company to make any payment to Executive when due; (iv) therelocation of Company’s principal executive offices outside of Los AngelesCounty or any other action by Employer which breaches or otherwise deprivesExecutive of his rights under Section 3(b) hereof; or (v) anysubstantial, adverse change or termination of the benefits provided toExecutive hereunder.  Company shallremedy any breach within thirty (30) days after receipt of written notice fromExecutive that specifies in reasonable detail the nature of such breach;provided, however, that if such breach cannot be reasonably remedied withinsuch 30-day period, 

 

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Company shall be given a reasonable period of time thereafter for curepurposes.  In the event that Executiveterminates his employment hereunder for Good Reason pursuant to this Section 5(d),Company shall promptly pay (as soon as possible, but in no event later than 2.5months after the end of the calendar year in which such termination occurs) toExecutive the Severance Amount via wire transfer of immediately available fundsto an account designated by Executive.

 

e.             Return of Company’s Property.  Upon expiration of this Agreement, or in theevent Executive’s employment is terminated for any reason during the Term ofthis Agreement, Company may, at its option, require Executive to vacate hisoffices immediately, and to cease all activities on Company’s behalf.  Executive agrees that upon receiving noticeof termination of his employment in any manner, he will immediately deliver to Companyall notebooks, brochures, documents, memoranda, reports, price lists, files,invoices, purchase orders, books, correspondence, customer lists, or otherwritten or graphical records, and the like, primarily relating to the businessor work of Employer, which are or have been in his possession or under hiscontrol.  Executive hereby expresslyacknowledges that all such materials referenced above are the property of Company.

 

6.             EXPENSES.  Company shall pay for or reimburse Executivefor all properly documented reasonable business expenses incurred or paid forby Executive in the performance of his duties hereunder, including expendituresfor travel, mileage and other authorized expenses, subject to such writtenpolicies or guidelines and/or requirements for verification as Company may, inits sole and absolute discretion, establish.

 

7.             CONFIDENTIALITY AND TRADE SECRETS.

 

a.             Confidential Information.  Executive shall keep in strictest confidenceall information relating to the business, affairs, customers and suppliers ofthe Company, or their parent or affiliates (collectively hereinafter referredto as “Trade Secrets”), including, among other things but without limitation, theCompany’s cost of performing services, pricing formulae, methods or procedures,and customer lists, which Executive may acquire during the performance of hisservices and duties hereunder and which is not otherwise generally known to thepublic.  Executive acknowledges that suchTrade Secrets are of great value, and have been developed and/or acquired atgreat expense to the Company and the Company would not enter into this contractof employment and such information would not be made available to Executive inExecutive’s fiduciary capacity unless the Company were assured that all suchinformation will be used for the exclusive benefit of the Company.  Accordingly, during the term of thisAgreement, and at all times thereafter, Executive shall not publish,communicate, divulge, disclose or use, whether or not for his own benefit, anysuch information without the prior written consent of Company, except (i) inthe course of performing his duties hereunder; (ii) to the extent that anysuch information is in the public domain other than as a result of Executive’sbreach of any of his obligations hereunder; or (iii) where required to bedisclosed by applicable law, court order, subpoena or other government process.

 

b.             Solicitation of Employees, Contractors,Customers and Clients. Executive acknowledges that important factors in the Company’s businessand operations are the loyalty and good will of its employees.  Executive further agrees that information asto the identies, responsibilities and capabilities of the Company’s employees,their salaries and benefits, and the other terms of their employment isconfidential and proprietary to the Company and constitutes its valuable tradesecrets.  In addition, Executive aagreesthat the information described in 

 

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Section 7.a. above, including but not limited to informationconcerning the Company’s customers, clients (including, without limitation,third party payors) and contractors, constitute the Company’s valuable tradesecrets.  Accordingly, Executive agreesthat both during the Term and for a period of one year following the expirationor termination of this Agreement, he will not (i) solicit for hire, orinduce any party to solicit for hire, any persons whose identities Executivelearned as a result of Executive’s employment with the Company, who are either  employees of the Company or are independentcontractors or affiliates of independent contractors of the Company since theEffective Date; provided, however, that the foregoing limitation shall notapply to any general solicitation that is not specifically targeted to the Company’semployees, physicians or contractors, (ii) solicit any customers orclients of the Company (including, without limitation, any third party payors)on behalf of a Competing Business within the California counties of LosAngeles, San Bernardino and Orange; or (iii) solicit or induce any partyto solicit, any contractors of the Company or the Company’s affiliates to enterinto the same or a similar type of contrat with any Competing Business withinthe California counties of Los Angeles, San Bernardino and Orange.

 

c.             Ongoing Obligation.  In the event the provisions in this Section 7are more restrictive than permitted by the laws of the jurisdiction in whichenforcement of this provision is sought, such provisions shall be interpretedto extend only over the maximum period of time, range of activities orgeographic area as to which it may be enforceable.

 

8.             REMEDY FOR BREACH.  Executive acknowledges that the services tobe rendered by him hereunder are of a special, unique and extraordinarycharacter, which gives this Agreement a peculiar value to the Company, the lossof which cannot be reasonably or adequately compensated in damages in an actionat law, and a breach by Executive of the provisions of this Agreement willcause the Company irreparable injury.  Itis, therefore, expressly acknowledged that this Agreement may be enforced byinjunction and other equitable remedies, without bond.  Such relief shall not be exclusive, but shallbe in addition to any other rights or remedies the Company may have for suchbreach, and the Company shall be entitled to recover all costs and expenses,including reasonable attorneys’ fees, incurred by reason of any breach of thecovenants of this Agreement.

 

9.             MANDATORY ARBITRATION.

 

9.1           Executive and the Company agree that any and allclaims, disputes, and/or controversies that they may have against the other,arising from or relating to, this Agreement or the Executive’s employment withthe Company, shall be submitted to, and determined exclusively by, bindingarbitration; provided, however, that this Agreement shall not preclude anyparty from seeking injunctive relief in a court of competent jurisdiction.  Arbitration shall be conducted by JudicialArbitration & Mediation Services (“JAMS”), held in Los Angeles County,California, pursuant to the California Arbitration Act and under the EmploymentArbitration Rules and Procedures of JAMS that are in effect at the time anaction is initiated.  Included within thescope of this agreement are all disputes, whether based on tort, contract,statute (including, but not limited to, any claims of discrimination,harassment, or retaliation, whether based on the California Fair Employment andHousing Act, Title VII of the Civil Rights Act of 1964, as amended, or anyother state or federal law or regulation), equity, or otherwise, with theexception of claims arising under the National Labor Relations Act (which arebrought under the auspices of the National Labor Relations Board), claims formedical and 

 

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disability benefits underthe California Workers’ Compensation Act, claims administered under theEmployment Development Department, or as otherwise required by state or federallaw.

 

9.2           The arbitration shall be conducted by a singlearbitrator.  The arbitrator selectedshall be a neutral and qualified individual from a list provided by the JAMS inaccordance with its Employment Arbitration Rules, and shall be mutually agreedupon by the parties.  The arbitratorshall apply the rules of evidence under the California Evidence Code, andall rights to resolution of the dispute by means for motions for summaryjudgment, judgment on the pleadings and judgment under Code of Civil Procedure Section 631.8,shall apply and be observed by the arbitrator. The parties hereto shall have adequate opportunity and procedures fordiscovery, including such written discovery, depositions, exchange ofdocuments, and subpoenas, as permitted by the arbitrator, and in keeping withthe goal of fast, efficient, and cost-effective dispute resolution

 

9.3           Resolution by the arbitrator of any submitted disputeshall be based solely upon the law governing the claims and defenses pleaded,and the arbitrator may not invoke any basis other than such controllinglaw.  The arbitrator shall have theauthority to grant any relief that would be available to any party in a courtof competent jurisdiction, but may not create remedies that would beunavailable in court.  The arbitrator shallmake his or her decision in writing at the earliest convenient date.  The award issued by the arbitrator shallinclude the arbitrator’s reasoned opinion, including a statement of facts andreasons for the decision.  To the maximumextent permitted by law, the decision of the arbitrator shall be final andbinding on the parties to this Agreement and not be subject to appeal.

 

9.4           The Company shall be responsible for all costs thatare unique to arbitration, including arbitration forum costs.  Subject to the foregoing, all other fees andexpenses of the arbitration (including reasonable attorneys’ fees) or anyaction to enforce an arbitration award hereunder, shall be paid by the party orparties that do not prevail in such arbitration.

 

9.5.          The parties agree that all facts and information relatingto any arbitration arising under this Agreement shall be kept confidential tothe extent possible.  The parties agreethat all documents filed with any court or tribunal in connection with theresolution of any dispute hereunder shall be filed under seal to the extentpossible.  The parties further agree andacknowledge that a claim for breach of the agreement to maintainconfidentiality shall not provide an adequate remedy and acknowledge that aclaim for specific performance or injunctive relief is appropriate, which shallnot require security, bond or proof of actual damages.

 

9.6           The parties shall have the right to enforce this Section 9in a court of competent jurisdiction. The parties waive, for themselves and for any person or entity acting onbehalf of or otherwise claiming through them, any right they may otherwise haveto resolve claims by a court or by a jury, except as necessary to enforce anaward rendered in arbitration, to enforce this Section 7, and to seekinjunctive or other equitable relief.

 

10.           ATTORNEYS’ FEES.  In the eventof any dispute (including but not limited to actions, suit, or arbitration)between the parties hereto in connection with this Agreement or Executive’semployment with Company or termination thereof, or to enforce any provision orright hereunder, the prevailing party shall be entitled to an award of allcosts and expenses 

 

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incurred in connectiontherewith, including but not limited to reasonable attorneys’ fees incurred bythe prevailing party.

 

11.           GENERAL PROVISIONS.

 

a.             The failure of Company at any time to enforceperformance by Executive of any provisions of this Agreement shall in no wayaffect Company’s rights thereafter to enforce the same, nor shall the waiver byCompany of any breach of any provision hereof be held to be a waiver of anyother breach of the same or any other provision.

 

b.             This Agreement shall be binding upon and inure tothe benefit of the parties hereto and the successors and assigns of Company;provided, however, it is understood and agreed that the services to be renderedand the duties to be performed by Executive hereunder are of a special, uniqueand personal nature and that it would be difficult or impossible to replacesuch services; by reason thereof, Executive may not assign either the benefitsor the obligations of this Agreement.

 

c.             Any notices, requests, consents, or othercommunications required or permitted under this Agreement shall be in writingand may be delivered in person to the other party, or sent by United Statesmail or commercial courier service.  Theaddresses set forth below shall be deemed sufficient for purposes of providingnotice under this Agreement:

 
|   | To  Executive:                                | Samuel  S. Lee                        |
|--------|-----------------------------------------------|---------------------------------------|
|   | c/o  Prospect Medical Holdings, Inc.     |
|   | 10780  Santa Monica Boulevard, Suite 400 |
|   | Los  Angeles, CA 90025                        |
|   |                                          |
|   | To  Employer:                                 | Prospect  Medical Holdings, Inc. |
|   | 10780  Santa Monica Boulevard, Suite 400 |
|   | Los  Angeles, CA 90025                        |
|   | Attn:  General Counsel                        |

 

Eachparty may change his or its address through written notice in compliance withthis Section.  Written notice provided bymethods other than those specified herein shall be effective if actuallyreceived, in timely fashion, by the other party.

 

d.             This Agreement, together with that certainIndemnification Agreement, dated August 8, 2007, between Company andExecutive, is the entire agreement between the parties hereto with respect tothe subject matter hereof and supersedes all prior oral and written agreementsand negotiations between the parties.

 

e.             The headings of the several paragraphs in thisAgreement are inserted solely for the convenience of the parties and are not apart of and are not intended to govern, limit or aid in the construction of anyterm or provision hereof.  Nothing inthis Agreement shall be deemed to be a limitation on the remedies of any of theparties with respect to the non-compete provisions, or any other provisions, ofthe Reorganization Agreement.

 

f.              This Agreement may not be modified except by awritten instrument signed by all parties hereto.

 

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g.             All clauses and covenants contained in thisAgreement are severable, and in the event any of them shall be held to beinvalid by any court, such clauses or covenants shall be limited as permittedunder applicable law, or, if the same are not susceptible to such limitation,this Agreement shall be interpreted as if such invalid clauses or covenantswere not contained herein.

 

h.             This Agreement is made with reference to the laws ofthe State of California and shall be governed by and construed in accordancetherewith.  Any litigation concerning orto enforce the provisions of this Agreement shall be brought in the courts ofthe State of California.

 

i.              It is intended that this Agreement be drafted andadministered in compliance with Code Section 409A, including, but notlimited to, any future amendments to Code Section 409A, and any otherInternal Revenue Service or other governmental rulings or interpretations (“IRSGuidance”) issued pursuant to Code Section 409A so as not to subject theExecutive to payment of interest or any additional tax under Code Section 409A.  In furtherance thereof, if payment orprovision of any amount or benefit hereunder that is subject to Code Section 409Aat the time specified herein would subject such amount or benefit to anyadditional tax under Code Section 409A, the payment or provision of suchamount or benefit shall be postponed to the earliest commencement date on whichthe payment or provision of such amount or benefit could be made withoutincurring such additional tax.  Inaddition, to the extent that any IRS Guidance issued under Code Section 409Awould result in Executive being subject to the payment of interest or anyadditional tax under Code Section 409A, the parties agree to amend thisAgreement in order to avoid the imposition of any such interest or additionaltax under Code Section 409A, which amendment shall have the minimumeconomic effect necessary and be reasonably determined in good faith byEmployer and Executive.

 

**[SignaturePage Follows]**

 

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INWITNESS WHEREOF, the parties hereto have executed this Amended and RestatedExecutive Employment Agreement as of the date first above written.

 

 
|   | EXECUTIVE                             |
|--------|---------------------------------------|
|   |                                  |
|   |                                  |
|   |                                  |
|   | Samuel  S. Lee                        |
|   |                                  |
|   |                                  |
|   | COMPANY                               |
|   |                                  |
|   | Prospect  Medical Holdings, Inc. |
|   |                                  |
|   |                                  |
|   | By:                                   |   |
|   | Name:                                 |   |
|   | Title:                                |   |
|        |                                       |  |  |  |

 

**[SignaturePage of Amended and Restated Executive Employment Agreement]**

 

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