**Exhibit 2.3**

**STOCKPURCHASE AGREEMENT**

**AMONG**

**PROSPECTMEDICAL GROUP, INC.,**

**PROSPECTMEDICAL HOLDINGS, INC.,**

**UPLANDMEDICAL GROUP, A PROFESSIONAL MEDICAL CORPORATION(dba Upland Medical Group A Professional Corporation),**

**AND**

**JEEREDDIPRASAD, M.D.**

**Datedas of: May 21, 2007**

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**STOCK PURCHASEAGREEMENT**

This Stock Purchase Agreement (the *“Agreement”*) isdated as of May 21, 2007 by and among Prospect Medical Group, Inc., aCalifornia professional corporation (*“**Group”*),Prospect Medical Holdings, Inc., a Delaware corporation and an affiliate ofGroup (*“Holdings”*), UplandMedical Group, A Professional Medical Corporation, dba Upland Medical Group AProfessional Corporation, a California professional corporation (*“ProMed Upland”*), and Jeereddi Prasad,M.D., the sole shareholder of ProMed Upland (the *“ProMedUpland Shareholder”*). TheProMed Upland Shareholder together with ProMed Upland are collectively referredto herein as the *“ProMed Parties”*.

**RECITALS**

A.            WHEREAS, ProMed Upland is a licensed California professional corporation thatoperates as an independent practice association and, as such, contracts withprimary care and specialty physicians (“*ProMedUpland Provider Contracts*”) and providers of ancillary services (*“ProMed Upland Ancillary Service Contracts”*)to provide professional medical services to patients (*“ProMed Upland Enrollees”*) throughcontracts with health plans (*“ProMed Upland Health PlanContracts”*);

B.            WHEREAS, ProMed Health Services Company, aCalifornia corporation (*“ProMed Company”*),through its wholly-owned subsidiary, ProMed Health Care Administrators, aCalifornia corporation (*“ProMed HCA”*) provides management and administrativeservices to independent practice associations and medical groups pursuant tolong-term management agreements, and in such capacity has a managementagreement with ProMed Upland (*“ProMed UplandManagement Agreement”*);

C.            WHEREAS, as a resultof certain common officers, directors and/or shareholders, ProMed Upland is anaffiliate of ProMed Company, ProMed HCA and Pomona Valley Medical Group, Inc.,dba ProMed Health Medical Group Network of Pomona Valley Inc., a Californiaprofessional corporation (*“ProMed Pomona”*),which also operates as anindependent practice association;

D.            WHEREAS, the ProMedUpland Shareholder owns of record and beneficially all of the issued andoutstanding shares of common stock of ProMed Upland (the *“ProMedUpland Shares”*);

E.             WHEREAS,Group is a licensed California professional corporation that operates as anindependent practice association and, as such, contracts with physicians toprovide professional medical services to patients through contracts with healthplans;

F.             WHEREAS,Holdings is an affiliate of Group and, through Holdings’ subsidiaries, providesmanagement and administrative services to independent practice associationspursuant to long-term management agreements, and in such capacity has amanagement agreement with Group and each of Group’s subsidiaries whichprovides, among other things, for the issuance of Holdings’ stock in connectionwith certain acquisitions by Group or Group’s subsidiaries;

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G.            WHEREAS, upon the terms and subject tothe conditions of this Agreement ProMed Upland desires to sell to Group, andGroup desires to purchase from ProMed Upland, all of the ProMed Upland Sharesmaking ProMed Upland a new subsidiary of Group (the *“ProMed Upland Stock Purchase”*);

H.            WHEREAS, in a transaction to accompanythe ProMed Upland Stock Purchase, (i) Group, through a subsidiary, is mergingwith ProMed Pomona with ProMed Pomona as the survivor and constituting a newsubsidiary of Group (the *“ProMed PomonaAcquisition”*), and (ii) Holdings, through a subsidiary, is mergingwith ProMed Company as the survivor and constituting a new subsidiary ofHoldings (the *“ProMed Company Acquisition”*);

I.              WHEREAS, the following individuals areexecutive officers of ProMed Upland, ProMed Company, ProMed HCA and ProMedPomona (i) Jeereddi Prasad, M.D., President of ProMed Company, ProMed HCA andProMed Upland, (ii) Kishan Thapar, M.D., the Chief Executive Officer, ExecutiveDirector and Chief Medical Officer of ProMed Pomona and the Executive Directorof ProMed Company and ProMed HCA and the Executive Director and Chief MedicalOfficer of ProMed Upland, and (iii) Bahram Barhemand, the Chief FinancialOfficer of ProMed Company, ProMed HCA, ProMed Pomona and ProMed Upland (each, a“*ProMed Executive Officer”* andcollectively, the*“ProMed Executive Officers”)*;and

J. WHEREAS, Group, Holdings and the ProMed Partiesdesire to make certain representations and warranties and other agreements inconnection with the ProMed Upland Stock Purchase.

**AGREEMENT**

NOW, THEREFORE, in reliance on the foregoing recitals and in and forthe consideration and representations, warranties, agreements and covenants setforth herein, the parties hereto hereby agree as follows:

**ARTICLE 1.**

**PURCHASE AND SALE OF PROMED UPLAND SHARES**

1.1           Closing; Closing Date.  Theconsummation (the *“Closing”*) of the ProMed UplandStock Purchase and the other transactions contemplated by this Agreement(collectively, the *“Transaction”*),shall take place at 10:00am at the offices of Theodora Oringher Miller &Richman, PC, 2029 Century Park East, 6th Floor, Los Angeles, California on June 1, 2007in the event the conditions precedent to the performance of Group, Holdings andthe ProMed Parties as set forth in Article 6 hereof are satisfied or waived onor before June 1, 2007 (the *“Closing Date”*).

1.2           Transfer of ProMed Upland Shares. At the Closing, the ProMed Upland Shareholders will deliver to Group oneor more certificates representing all of the ProMed Upland Shares, as set forthin Schedule 1.2. Such stock certificates will be duly endorsed in blankfor transfer or shall be presented with stock powers duly endorsed in blank,with such other documents as may be reasonably required by Group to effect avalid transfer of such 

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ProMed Upland Shares by the ProMed Upland Shareholder,free and clear of any claims, demands, liens, mortgages, encumbrances, pledges,security interests, and restrictions of any kind (collectively, *“Liens”*).

1.3           Purchase Price and Payment. In consideration of the sale by the ProMed Upland Shareholder to Groupof the ProMed Upland Shares, Group shall pay, or shall cause Holdings to pay,the ProMed Shareholder the aggregate purchase price of Four Million SevenHundred Thirty Nine Thousand Seven Hundred Thirty ($4,739,730) (the *“Purchase Price”*) as follows at Closing:

(a)           An amount of cash equal to Three Million Nine HundredThirty-Three Thousand Nine Hundred Seventy Six and 00/100 Dollars($3,933,976.00), or if Holdings makes the election set forth in (c) below, suchgreater amount of cash, in immediately available funds (the *“Cash Consideration”*); and

(b)           The balance of the Purchase Price shall be paid inshares of the common stock of Holdings, par value $0.01 per share (*“Holdings Common Stock”*) with the total number of sharesdetermined by dividing (i) the dollar amount of the balance of the PurchasePrice being paid in Holdings Common Stock by (ii) the average of the closingsales prices of Holdings Common Stock as reported by the American Stock Exchangefor the thirty (30) consecutive trading days preceding the day on whichHoldings makes a public announcement concerning the execution of this Agreementrounded down to the nearest whole number (the *“StockConsideration”*). Certificates for fractions of shares of HoldingsCommon Stock will not be issued. In lieu of a fraction of a share of HoldingsCommon Stock, the ProMed Upland Shareholder shall be entitled to receive anamount of cash equal to the fraction of a share of the Holdings Common Stock towhich such ProMed Upland Shareholder would otherwise be entitled, multiplied bythe average 30 day closing sale price referenced above for Holdings’ CommonStock.

(c)           Notwithstanding anything to the contrary herein, whilethe Purchase Price will remain the aggregate amount set forth in Section 1.3herein, Group and Holdings have the option at any time prior to the ClosingDate, to reduce the amount of the Stock Consideration and increase the amountof the Cash Consideration by a like amount resulting in the ProMed UplandShareholder receiving more cash and less Holdings Common Stock. Group’s andHoldings’ option to alter the Stock Consideration and Cash Consideration by alike amount is limited to reductions in Stock Consideration and increases inCash Consideration and thus Group’s and Holdings’ option under this Section1.3(c) does not permit Group or Holdings to reduce the Cash Consideration belowthe amount set forth in Section 1.3(a) above.

*Example:* Currently under (a) and (b) above,  Group and Holdings are paying 83% of the PurchasePrice in cash and 17%, constituting the balance, in Holdings Common Stock.Assuming for purpose of this example that Group and Holdings choose to decreasethe Stock Consideration from the current 17% to 15% of the total Purchase Price,the Stock Consideration would be reduced from the current balance of $805,754to $710,960 (15% of $4,739,730) and the Cash Consideration would increase from$3,933,976 to $4,028,770 (85% of $4,739,730).

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1.4           Purchase Price Allocation. The parties agree that they shall mutually cooperate in completing theallocation of the Purchase Price as shown in Schedule 1.4 prior to theClosing Date, and agree that they shall use such allocation for purposes offederal and state tax reporting. The parties further agree to mutuallycooperate in the filing of Form 8594 with the Internal Revenue Service.

1.5           Piggy-Back Registration Rights.  All Holdings common stock issued as part ofthe Purchase Price shall be entitled to those “piggy-back registration rights”set forth on Exhibit B hereof subject to the ProMed Upland Shareholder’sexecution of the Investment Representation Certificate described in Section 5.7hereof wherein, among other things, the ProMed Upland Shareholder agrees to besubject to the terms and conditions of such piggy-back registration rights setforth in Exhibit B.

1.6           Fair Market Value.  The partiesagree that the Purchase Price reflects the fair market value of the ProMedUpland Shares.

**ARTICLE 2.**

**REPRESENTATIONS AND WARRANTIES OF PROMED UPLAND ANDTHE PROMED UPLAND SHAREHOLDER**

In order to induce Group and Holdings to enter into this Agreement andto consummate the Transaction, ProMed Upland and the ProMed Upland Shareholdermake the representations and warranties set forth in this Article 2.

2.1           Organization; Subsidiaries. ProMed Upland is a professional corporation duly organized, validlyexisting and in good standing in the State of California. ProMed Upland has all requisite corporate power andauthority to own, lease, and operate its assets and to carry on its business asnow being conducted. ProMed Upland has no partially-owned orwholly-owned subsidiaries other than the limited partnership interest in ProMedProperties, LP, a California limited partnership set forth in Section 4.9hereof (*“ProMed LP”*).

2.2           Minute Book and Stock Records. The minute books and stock records of ProMed Upland are complete andaccurate in all material respects and all signatures included therein are thegenuine signatures of the persons indicated as signing. True, correct andcomplete copies of such minute books and stock records (which include acomplete and accurate copy of the Articles of Incorporation and Bylaws and allamendments to both) of ProMed Upland has previously been delivered to Group.ProMed Upland is not in default under or in violation of any provision of itsArticles of Incorporation or its Bylaws.

2.3           Authorization.  ProMed Uplandhas the power and authority to enter into this Agreement and to consummate theTransaction. All actions on the part of ProMed Upland necessary for theauthorization, execution, delivery and performance of this Agreement and theconsummation of the Transaction, including all necessary approvals by theProMed Upland Shareholder, have been or will be taken prior to the ClosingDate, and this Agreement (including exhibits, schedules and the ancillaryagreements) constitutes the legal, valid and binding obligation of ProMedUpland and the ProMed Upland Shareholder enforceable against them in accordancewith its terms, except as enforceability may be restricted, limited or delayedby 

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applicable bankruptcy, insolvency, fraudulentconveyance, or other laws affecting creditor’s rights generally, and except asenforceability is subject to general principles of equity.

2.4           No Consent Required.  Except as setforth on Schedule 2.4, neither the execution and delivery of thisAgreement by ProMed Upland or the ProMed Upland Shareholder, nor theperformance by them of their obligations under this Agreement, requires theconsent, approval, order or authorization of, or registration, declaration orfiling with any governmental entity or any third party that will not have beenobtained and delivered to Group prior to the Closing Date.

2.5           No Violation of Other Agreements; No Conflicts.

(a)           Neither the execution and delivery of this Agreementnor the consummation or performance of the Transaction violates, conflicts withor results in a breach of, or shall violate, conflict with or result in abreach of any lease, contract, document or agreement to which any of the ProMedParties is a party or by which any of the ProMed Parties may be bound.

(b)           Neither the execution and delivery of this Agreementnor the consummation or performance of the Transaction, will, directly orindirectly (with or without the giving of notice, or lapse of time, or both):

(i)            contravene, conflict with, or result in a violation ofany provision of the organizational documents of ProMed Upland;

(ii)           contravene, conflict with, or result in a violation ofany order, judgment or decree to which any of the ProMed Parties may besubject; or

(iii)          contravene, conflict with or result in a violation ofany of the terms or requirements, or give any governmental body the right torevoke, withdraw, suspend, cancel, terminate or modify, any governmentalauthorization that is held by any of the ProMed Parties.

2.6           Capital Structure.  Theauthorized capital stock of ProMed Upland consists of 1,000 shares of commonstock, no par value, of which 100 shares are issued and outstanding. All of theshares of ProMed Upland have been validly issued, are fully paid andnon-assessable, and all are owned by the ProMed Upland Shareholder. There areno options, warrants, rights, shareholder agreements or other instruments oragreements outstanding giving any person the right to acquire any shares ofcapital stock of ProMed Upland, nor are there any commitments to issue orexecute any such options, warrants, rights, shareholder agreements or otherinstruments or agreements. There are no outstanding stock appreciation rightsor similar rights outstanding with respect to any of the capital stock ofProMed Upland nor are there any instruments, or agreements giving anyone theright to acquire any such rights.

2.7           Year End and Certain Interim Financial Statements. ProMed Upland has provided Group with (i) the balance sheets and incomestatements of ProMed Upland, for the fiscal year ended December 31, 2006 assuch has been audited (the *“2006 Year EndFinancial Statements”*) and (ii) the unaudited interim balance sheetsand income statements of ProMed Upland for the monthly periods subsequent toDecember 31, 2006 and ending March 31, 2007 (the *“March Interim Financial Statements*”, which together with all monthly InterimFinancial 

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Statements prior to March1, 2007, the*“Interim Financial Statements”). *The 2006 Year End Financial Statements and the InterimFinancial Statements fairly present in all material respects the financialcondition and results of operation of ProMed Upland as of the date and for theperiods set forth therein and the 2006 Year End Financial Statements and theInterim Financial Statements, have been prepared in accordance with GAAP,applied on a consistent basis throughout the periods covered thereby, except inthe case of the 2006 Year End Financial Statements, as may be indicated in thenotes thereto and except that the Interim Financial Statements do not containnotes and, as unaudited statements, are subject to normal recurring auditadjustments consistent with past practice. Since the date of the FebruaryInterim Financial Statements there has not been any material adverse change tothe financial condition of ProMed Upland, including no material difference inthe assets and liabilities of ProMed Upland as shown on the February InterimFinancial Statements.

2.8           No Undisclosed Liabilities. Except as set forth in Schedule 2.8, ProMed Upland has noliabilities or obligations of any nature (whether absolute, accrued,contingent, or otherwise) except: (i) for those shown on the 2006 Year End FinancialStatements and the March Interim Financial Statements; and (ii) those incurredsubsequent to March 31, 2007 in the ordinary course of business conducted in amanner consistent with past practices and custom. In the case of the IBNR (incurred butnot reported) claim reserve shown on the March Interim Financial Statement or, to the extent aSubsequent Monthly Financial Statement has been delivered prior to the ClosingDate as contemplated by Section 4.3, the amount shown on the latest SubsequentMonthly Financial Statement, reflects an amount of IBNR sufficient to cover allclaims for dates of service prior to the Closing Date.

2.9           Tax Matters.  ProMed Uplandis an “S” corporation and has always been an “S” corporation. ProMed Upland hastimely filed all income and franchise tax returns required to be filed by itand has timely paid in full all Taxes (defined below) owed by it for theperiods ending on December 31, 2006 and has properly accrued, in accordancewith GAAP, on the March Interim Financial Statements all Taxes for all periodsending on March 31, 2007. Except as provided in Schedule 2.9, all taxreturns filed by or on behalf of ProMed Upland are true, accurate and completein all material respects. Except as set forth in Schedule 2.9, (i) noaction or proceeding for the assessment or collection of any Taxes is pendingagainst ProMed Upland, (ii) no deficiency, assessment or other formal claim forany Taxes has been asserted or made against ProMed Upland that has not beenfully paid or finally settled; and (iii) no issue has been formally raised byany taxing authority in connection with an audit or examination of any returnof Taxes. Except as set forth in Schedule 2.9, no federal or stateincome tax returns of ProMed Upland have been audited or examined, and thereare no outstanding agreements or waivers extending the applicable statutoryperiods of limitation for such Taxes for any period. All Taxes that ProMedUpland has been required to collect or withhold have been duly withheld orcollected and, to the extent required, have been paid to the proper taxingauthority. ProMed Upland does not have or will not have in the future anyliability, fixed or contingent, for any unpaid taxes which could result in anyform of transferee liability against Group. *“Taxes”* meanstaxes, charges, fees, levies, or assessments including, without limitation,income, excise, property, withholding, payroll, sales and franchise taxes,imposed by federal, state, county, local or foreign government or subdivisionor agency thereof, and including any interest, penalties or additions.

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2.10         Title to ProMed Pomona Shares. The ProMed Upland Shareholder is, and at the Closing Date will be, theowner, beneficially and of record, of one hundred percent (100%) of the ProMedUpland Shares, free and clear of all Liens.

2.11         Real Property.

(a)           Except for the indirect interest in the buildinglocated at 4150 E. Concours Street, Ontario, CA 91764 (*“OntarioBuilding”*) solely as a result of ProMed Upland’s limited partnershipinterest in ProMed LP which owns five percent (5%) of the Ontario Building,ProMed Upland does not own any real property, nor has it ever owned any realproperty.

(b)           ProMed Upland does not lease, sublease or otherwisehave a right to use or to occupy any real property.

2.12         Tangible Personal Property.

(a)           ProMed Upland has good, marketable and valid title toall tangible personal property owned by it free and clear of all Liens.

(b)           Each item of furniture, equipment and other tangiblepersonal property with an original cost of $1,000 or more that is owned byProMed Upland and used in the conduct of its business is listed in Schedule2.12(b) (the *“Aggregate TangiblePersonal Property”*).

(c)           All items constituting the Aggregate Tangible PersonalProperty will be retained by ProMed Upland until the Closing and consideredpart of the Transaction subject to the disposition in the ordinary course ofbusiness consistent with past practice (the *“TangiblePersonal Property”*). None of the Tangible Personal Property shall besold nor encumbered by a Lien except as specifically contemplated by thisAgreement. All of the Tangible Personal Property is in good operatingcondition, subject to reasonable wear and tear. Except for the representationset forth above, the Tangible Personal Property is sold “AS IS-WHERE IS” withno warranty or representation of any kind as to its physical condition.

2.13         Intellectual Property.  Schedule 2.13 lists all intellectualproperty owned by ProMed Upland. ProMed Upland owns its trade name, as set forthon Schedule 2.13. ProMed Upland does not pay, nor does it know of anyreason it is obligated to pay, any royalties, license fees or other amounts toany person or entity as a result of the use of the trade names set forth on Schedule2.13. ProMed Upland has applied for and received a fictitious name permitfrom the California Medical Board to use the trade name of ProMed Upland andany other trade name set forth on Schedule 2.13, which permits arecurrently outstanding and active (i.e., not delinquent) and will remainoutstanding and active as of the Closing Date. To the knowledge of ProMedUpland, its use of such trade names does not infringe on the rights of anythird party.

2.14         Contracts.  Schedule2.14 sets forth a list of all contracts, arrangements, and commitments(whether oral or written) to which ProMed Upland is a party, or by which it isbound, which are material to the business or operations of ProMed Upland (the *“Material Contracts”*). Material Contracts shall consist ofany contract, arrangement or commitment (i) with insurance companies, managedcare plans, hospitals, employers or other third parties to which health careservices are provided to patients, or (ii) not entered into in the ordinarycourse 

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of business, or (iii) which involves an expenditure orreceipt of funds greater than $10,000 per year; or (iv) which is not terminablewithout penalty and cause on 30 days or less notice, or (v) with physicians orother providers of medical services on behalf of ProMed Upland, or (vi) betweenProMed Upland and any physician or person known to ProMed Upland to be anaffiliate of any physician, regardless of the amount of payments called for,required or made thereunder, or (vii) between ProMed Upland and anyshareholder, executive officer or director of ProMed Upland or an affiliate ofsuch shareholder, executive officer or director (including any contracts withChaparral Medical Group, Inc. dba Chaparral Clinics owned byJeereddi Prasad, M.D.), or (viii) which is an employment agreement, or (ix) any othercontract or agreement whether written or oral to which ProMed Upland is a partyor to which it is bound as to which the breach, nonperformance, cancellation orfailure to renew by any party thereto would have a material adverse effect onthe business, assets, condition (financial or otherwise) or results ofoperations of ProMed Upland. Material Contracts shall specifically include theProMed Upland Management Agreement, the ProMed Upland Provider Contracts, theProMed Upland Health Plan Contracts, and the ProMed Upland Ancillary ServiceContracts. ProMed Upland has, prior to the Closing, delivered to Group acorrect and complete copy of each Contract. Each of the Material Contracts is alegal, valid, binding, enforceable agreement of ProMed Upland, in full forceand effect, except as enforceability may be restricted, limited or delayed byapplicable bankruptcy, insolvency, fraudulent conveyance, or other lawsaffecting creditor’s rights generally, and except as enforceability is subjectto general principles of equity. Except as set forth on Schedule 2.14,there is not now and, to the knowledge of ProMed Upland, there has not beenclaimed or alleged by any person or entity, that a default exists, or an eventthat with notice or lapse of time or both would constitute a default or eventof default, on the part of ProMed Upland, or to the knowledge of ProMed Upland,any other party thereto. Except as set forth on Schedule 2.14, noconsent from, or notice to any third person or governmental entity is requiredin order to maintain in full force and effect any of the Material Contracts,other than consents that have been obtained and are unconditional and in fullforce and effect, except as enforceability may be restricted, limited ordelayed by applicable bankruptcy, insolvency, fraudulent conveyance, or otherlaws affecting creditor’s rights generally, and except as enforceability issubject to general principles of equity, or consents that will be obtainedwhich will be unconditional and in full force and effect, except asenforceability may be restricted, limited or delayed by applicable bankruptcy,insolvency, fraudulent conveyance, or other laws affecting creditor’s rightsgenerally, and except as enforceability is subject to general principles ofequity, and such notices that have been given and copies of such consents havebeen delivered to Group.

All Material Contracts whichconstitute *“affiliate agreements”* are noted as such on Schedule 2.14.

2.15         Legal Proceedings.  Except as setforth on Schedule 2.15(a) (*“Existing/ThreatenedClaims”*), there is no pending claim, suit, action, investigation,legal or administrative proceeding (*“Proceeding”*),and, to the knowledge of ProMed Upland, no person, entity or authority(including, but not limited to, any employee, agent, contractor or provider ofProMed Upland) has threatened to commence any Proceeding or any investigationthat could lead to a Proceeding: (i) against ProMed Upland (including, withoutlimitation, any workers’ compensation, Equal 

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Employment Opportunity Commission or Americans WithDisability Act claims) or that otherwise relates to or may affect the businessof ProMed Upland or any of the other assets owned or used by ProMed Upland; or(ii) that challenges, or that may have the effect of preventing, delaying,making illegal, or otherwise interfering with, any part of the Transaction. Tothe knowledge of ProMed Upland, no person, entity or authority (including, butnot limited to, any employee, agent, contractor or provider of ProMed Upland)has threatened to commence any Proceeding or any investigation that could leadto a Proceeding against any employee, agent, contractor or provider of any ofthe ProMed Parties for conduct which would give rise to a potentialindemnification obligation of ProMed Upland. There is no outstanding order,judgment, writ, injunction or decree of any court or any federal, state, localor other governmental department, commission, board, bureau, agency orinstrumentality, to which ProMed Upland or any of the other assets owned orused by ProMed Upland, is subject that has not been fully complied with to thesatisfaction of such governmental entity. Except as set forth on Schedule2.15(b), to the knowledge of ProMed Upland, the costs of defense, and anyamount that may be owing upon any judgment or settlement of theExisting/Threatened Claims are covered by one or more of the insurance policiesdescribed in Section 2.18, subject only to the customary deductibles setforth in such insurance policies.

2.16         Compliance with Laws.  ProMed Uplandis not in violation of any law, rule, regulation or administrative or judicialorder pertaining to the assets or the business of ProMed Upland (including,without limitation, licensing, health care, federal, state or local lawsrelating to kickbacks, illegal referrals, illegal billings or the like, drugenforcement, securities, zoning, building, environmental, immigration, civilrights and occupational health and safety laws, regulations, ordinances andcodes) which would have a material adverse effect on the assets or the businessof ProMed Upland or would have the effect of delaying, making illegal orotherwise interfering with, any part of the Transaction. To the best of itsknowledge, ProMed Upland has no reason to anticipate that existingcircumstances are likely to result in violations of any of the foregoing.

2.17         Employees.  Set forth on Schedule2.17 are the following:

(a)           A complete and accurate list of the names, titles,dates of hire and rates of pay of all employees of ProMed Upland as of the datehereof. Except as set forth separately on Schedule 2.17, (i) all employees are “atwill” employees, and no written or oral employment, consultant or independentcontractor agreement exists with respect to ProMed Upland to which ProMed Uplandmay be bound, (ii) no employees are members of a labor union in connection withtheir employment with ProMed Upland or subject to a collective bargainingagreement with ProMed Upland, and (iii) to the knowledge of ProMed Upland, noemployees are subject to or party to any contract or agreement restrictingtheir ability to freely engage or compete in any business.

(b)           A description of each employee benefit or compensationplan, including without limitation, pension, retirement, deferred compensation,profit sharing, bonus or incentive, medical, dental, health insurance and lifeinsurance or other employee benefit plans, arrangements or undertakings ofProMed Upland applicable to its employees.

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(c)           A complete and accurate list of all holiday and vacationpay accrued as of March 31, 2007 for all employees of ProMed Upland.

Except as set forth in Schedule 2.17, ProMed Upland is not aparty to, bound by, nor does it maintain or make any contribution to, nor hasit incurred any expense with respect to any employment agreement, pension,retirement, deferred compensation, profit sharing, bonus or incentive plan,medical, dental or other health insurance plan, life insurance plan, or otheremployee benefit plan, program, arrangement or undertaking, whether or notlegally binding (including, without limitation, any “employee benefit plan” asdefined in Section 3(3) of the federal Employee Retirement Income Security Act(*“ERISA”*)), under which employees ofProMed Upland are eligible to participate or derive a benefit (collectively *“Employee Plans”* and individually *“EmployeePlan”*).

(d)           As of the Closing, there will be no liability ofProMed Upland which has not been properly accrued on the ProMed FinancialStatements for any Employee Plan or unpaid compensation, tax withholdings,wrongful termination, Federal Insurance Contribution Act and disabilitypayments of any kind with respect to any employee or independent contractorproviding services to ProMed Upland, including without limitation, vacationpay, sick leave pay, personal day pay, severance pay and bonus pay.

2.18         Insurance.  Schedule2.18 contains a list of all insurance policies maintained by or for thebenefit of ProMed Upland through the Closing Date, including errors andomission, stop-loss (reinsurance), directors and officers, general liability,worker’s compensation and malpractice insurance policies (the *“Insurance Policies”*). The Insurance Policies are in fullforce and effect as of the date hereof in accordance with their respectiveterms, and such Insurance Policies will continue in full force and effectthrough the Closing Date.

2.19         Management; Powers of Attorney.  Schedule2.19 sets forth all current appointed and acting officers and directors ofProMed Upland (or other applicable managers or governing board members) andlists all general and special powers of attorney granted by ProMed Upland,including the names of the attorneys-in-fact appointed under those powers ofattorney and the respective dates in which those powers were granted.

2.20         No Bankruptcy Proceedings. ProMed Upland has not (i) made a general assignment for the benefit ofcreditors, (ii) filed any voluntary petition in bankruptcy or suffered thefiling of an involuntary petition by its creditors, (iii) suffered theappointment of a receiver to take possession of all or substantially all of itsassets, property or business, (iv) suffered the attachment or other judicialseizure of all or substantially all of its assets, property or business, (v)admitted in writing its inability to pay its debts as they come due, or (vi)made an offer of settlement, extension or compromise to its creditorsgenerally.

2.21         Licensure.  As of thedate hereof, each of the employees of ProMed Upland who is required to belicensed in connection with the delivery of health care services is dulylicensed without restriction.

2.22         Environmental.  ProMed Uplandhas complied with all federal, state and local environmental laws, rules andregulations as in effect on the date hereof applicable to its business 

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and its assets. To the knowledge of ProMed Upland, nohazardous or toxic waste, substance, material or pollutant (as those or similarterms are defined under the Comprehensive Environmental Response, Compensation and LiabilityAct of 1980, as amended, 42 U.S.C. 9601 et seq., Toxic Substances Control Act,15 U.S.C. 2601 et seq., the Resource Conservation and Recovery Act of 1976, 42U.S.C. 6901 et seq. or any other applicable federal, state and localenvironmental law, statute, ordinance, order, judgment, rule or regulationrelating to the environment or the protection of human health (*“Environmental Laws”*)), including but not limited to, anyasbestos or asbestos related products, oils or petroleum-derived compounds,CFCs or PCBs, have been released, emitted or discharged or are currentlylocated in, on, under, or about the real property on which the assets or thebusiness of ProMed Upland are located. The assets of ProMed Upland and its usethereof, and ProMed Upland’s operation of its business, is not in violation ofany Environmental Laws nor any occupational, safety and health law now ineffect.

2.23         Confidentiality and Non-Compete Arrangements. Except as set forth on Schedule 2.23, ProMed Upland is not aparty to or is bound or affected by, any confidentiality or non-competeagreements or arrangements, or any acquisition or sale or other agreements thatcontain any confidentiality or non-compete agreements or arrangements, that arecurrently in effect, or are contained in agreements or arrangements that havelapsed but which contain continuing confidentiality or non-compete obligations,agreements or arrangements.

2.24         Inspections.  Schedule2.24 sets forth accurately and fully describes (i) all inspections ofProMed Upland conducted by any governmental agency or health plan at any timeduring the five (5) year period preceding the date of this Agreement, whichinspection detected matters requiring correction or modification, and wheresuch violation has not been resolved to the satisfaction of such inspectingparty. ProMed Upland has delivered a copy of all inspection reports referred toin this Section 2.24 which reflect all matters which were noted by any and allsuch governmental agencies or health plans as requiring correction ormodifications which were requested or recommended.

2.25         Reimbursement Status.  As of thedate hereof:

(a)           To the extent that ProMed Upland is participating inthe Medicare and Medicaid programs or in other applicable governmental healthcare payment programs, and is authorized to receive reimbursement from suchprograms for fees and charges incurred by eligible patients for services ofsuch programs, ProMed Upland knows of no reason why Group Subsidiary will notbe able to continue to participate in such governmental health care paymentprograms to the same extent, if any, that ProMed Upland participates. ProMedUpland has not received any notice that any such license, participation orauthorization has been or is threatened to be terminated or restricted, andProMed Upland does not know of any basis for any such termination orrestriction. To the knowledge of ProMed Upland, there is no federal or stateinvestigation pending or contemplated, that will have an impact upon thereimbursement status of ProMed Upland or ProMed Upland’s ability to operate itsbusiness as currently conducted. ProMed Upland has not received any notice ofaction nor, to the knowledge of ProMed Upland, is there any threatened orlikely action by the Medicare or Medicaid program or any carrier, to recoup orchallenge any Medicare or Medicaid reimbursement that ProMed Upland hasreceived 

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or for which ProMed Upland currently has a claimpending for services rendered in connection with its business.

(b)           All billing practices by ProMed Upland or ProMed HCAon behalf of ProMed Upland, to all third parties including, but not limited to,Medicare, Medicaid and private insurance companies, have been true, fair andcorrect and in compliance with all applicable laws, regulations and policies ofall such third party payors, and neither ProMed Upland nor ProMed HCA on behalfof ProMed Upland has billed for or received any payment or reimbursement inexcess of amounts permitted by law.

2.26         Absence of Certain Business Practices. Neither ProMed Upland nor to the knowledge of ProMed Upland, ProMed HCAon behalf of ProMed Upland, or any of their respective agents, directly orindirectly (i) offered to pay or solicited any remuneration, in cash or inkind, to, or made any financial arrangements with, any past or present customers,past or present suppliers, contractors, third parties, or third party payors ofProMed Upland in order to obtain business or payments from such persons; otherthan entertainment activities in the ordinary and lawful course of business;(ii) given or received, or agreed to give or receive, or is aware that therehas been made or that there is any agreement to make or receive, any gift orgratuitous payment of any kind, nature or description (whether in money,property or services) to any customer or potential customer, supplier orpotential supplier, contractor, third party payor or any other person otherthan in connection with promotional or entertainment activities in the ordinaryand lawful course of business; (iii) made or agreed to make, or is aware thatthere has been made or that there is any agreement to make any contribution,payment or gift of funds or property to, or for the private use of, anygovernmental official, employee or agent where either the contribution, paymentor gift or the purpose of such contribution, payment or gift is or was illegalunder the laws of the United States or under the laws of any state thereof orany other jurisdiction under which such payment, contribution or gift was made;(iv) established or maintained any unrecorded fund or asset for any purpose ormade any false or artificial entries on any of its books or records for anyreason; or (v) made or agreed to make or is aware that there has been made orthat there is any intention to make, any payment to any person with theintention or understanding that any part of such payment would be used for anypurpose other than that described in the documents supporting such payment.

2.27         Permits.  Schedule2.27 sets forth a list of all permits, licenses and approvals from federal,state, local and foreign governmental and regulatory bodies (collectively *“Permits”*) held by ProMed Upland and relating to the assetswhich are a part of the Transaction. Such Permits constitute all of the Permitsnecessary to conduct the business of ProMed Upland, as applicable, in themanner now conducted by ProMed Upland. No breach of any such Permit currentlyexists, nor has any event occurred which through the passage of time or thegiving of notice or both, would constitute a breach thereunder. To theknowledge of ProMed Upland, none of the Permits is to be or proposed to besuspended, canceled or revoked or amended, modified or limited in any fashion.

2.28         Fraud and Abuse.  Except as setforth in Schedule 2.28, neither ProMed Upland, nor any individual orentity having an ownership interest in, or who is an officer, director orlicensed healthcare employee of ProMed Upland has been convicted of, orinvestigated for, a Medicare or Medicaid health program related offense. To theknowledge of ProMed Upland, no 

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individual or entity having an ownership interest in,or who is an officer, director or licensed healthcare employee of ProMed Uplandhas been convicted or charged with any federal or state health program relatedoffense or convicted of, charged with or investigated for a violation offederal or state law related to fraud, theft, embezzlement, breach of fiduciaryresponsibility, financial misconduct, obstruction of an investigation orcontrolled substances, or has been excluded or suspended from participation ina state health program or has been subject to any order or consent decree of,or criminal or civil fine or penalty imposed by, any court or governmentalagency. Except as set forth in Schedule 2.28 no claim, complaint, suit,action, or proceeding (collectively *“Proceeding”*)is pending nor, to the knowledge of ProMed Upland, is any Proceeding threatenedor any investigation that could lead to a Proceeding occurring against ProMedUpland, or any individual or entity having an ownership interest in, or who wasan officer or director of, ProMed Upland, which may result in any restraint,prohibition or the obtaining of damages or any other relief. ProMed Upland hasimplemented a formal compliance program designed to assure compliance with applicablefraud and abuse laws.

2.29         Recoupment.  There is noaction or threatened action for recoupment against ProMed Upland, nor is thereany request for payments by ProMed Upland to Medicare or of reimbursement fromProMed Upland by Medicare, nor by any other agency affiliated with Medicare,nor by or from any third-party reimburser, including, without limitation, anyinsurance carrier, pre-paid plan, or any other similar entity, nor does ProMedUpland have knowledge of any basis for such recoupment by any party. None ofthe accounts of ProMed Upland has been acquired by unlawful specialarrangements or kickbacks, or other unlawful acts.

2.30         Enrollment Information and Eligibility Reports. The enrollment information of ProMed Upland set forth in the March InterimFinancial Statements were prepared from the eligibility reports of the healthplans who are a party to the ProMed Upland Health Care Contracts. Theenrollment information set forth in the March Interim Financial Statementsaccurately and completely describes the information provided in the eligibilityreports of the health plans as to the enrollment numbers of ProMed Upland, andare true, accurate and complete in all material respects.

2.31         Disclosure.  Norepresentation or warranty by ProMed Upland contained in this Agreement or inrespect of the exhibits, schedules, lists or other documents delivered to Groupby ProMed Upland or the ProMed Upland Shareholder and referred to herein ortherein, and no statement contained in any certificate furnished or to befurnished by or on behalf of ProMed Upland pursuant hereto or thereto, or inconnection with the Transaction, contains, or will contain as of the date suchrepresentation or warranty is made or such certificate is or will be furnished,any untrue statement of a material fact, or omits, or will omit to state as ofthe date such representation or warranty is made or such certificate is or willbe furnished, any material fact which is known to the party making therepresentation or warranty to be necessary to make the statements containedherein or therein, in light of the circumstances under which they were made,not misleading.

2.32         Bank Accounts.  A correct andcomplete list of all bank accounts of ProMed Upland (*“ProMed BankAccounts”*) and the persons authorized to access such accounts and toincur indebtedness on behalf of ProMed Upland, is set forth in Schedule 2.32of this Agreement. Except as set forth on Schedule 2.32, all monies inthe ProMed Bank Accounts are in cash (and 

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not securities of any nature) and constitute “goodfunds” subject to immediate withdrawal by Group.

2.33         Brokers’ and Finders’ Fees. Neither ProMed Upland nor the ProMed Upland Shareholder has incurred anyliability to any broker, finder or agent for any brokerage fees, finder’s feesor commissions with respect to the transactions contemplated by this Agreement,and if ProMed Upland or the ProMed Upland Shareholder has incurred any suchliability, such liability shall be and remain the sole responsibility of ProMedUpland and the ProMed Upland Shareholder, and the ProMed Parties shallindemnify, defend and hold Group harmless from and against any and allliabilities, losses, damages, claims, causes of action, costs and expenses(including without limitation, reasonable attorneys’ fees), arising out of orrelating to such liability.

2.34         Primary Care Physicians at Chaparral Clinics. ProMed Upland represents that the primary care physicians at the Chaparral Clinics are exclusive to ProMed Upland and ProMed Pomona.

**ARTICLE 3.**

**REPRESENTATIONS AND WARRANTIES OF GROUPAND HOLDINGS**

In order to induce ProMed Upland and the ProMed Upland Shareholder toenter into this Agreement and to consummate the Transaction, Group and Holdingsmake the representations and warranties set forth in this Article 3.

3.1           Organization.  Group is aprofessional corporation duly organized, validly existing and in good standingunder the laws of the State of California. Holdings is a corporation dulyorganized, validly existing and in good standing under the laws of the State ofDelaware. Each of Group and Holdingshas all requisite authority to own, lease, and operate its assets and to carryon its business as currently being conducted.

3.2           Authorization.  Each of Groupand Holdings has the power and authority to enter into this Agreement and toconsummate the Transaction. All actions on the part of Group and Holdingsnecessary for the authorization, execution, delivery and performance of thisAgreement and the consummation of the Transaction have been or will be takenprior to the Closing Date, and this Agreement (including exhibits, schedulesand the ancillary agreements) constitutes the legal, valid and bindingobligation of Group and Holdings, as applicable, enforceable against them inaccordance with its terms, except as enforceability may be restricted, limitedor delayed by applicable bankruptcy, insolvency, fraudulent conveyance, orother laws affecting creditor’s rights generally, and except as enforceabilityis subject to general principles of equity.

3.3           No Consent Required.  Except as setforth in Schedule 3.3, neither the execution and delivery of thisAgreement by Group or Holdings nor the performance by them of their obligationsunder this Agreement requires the consent, approval, order or authorization of,or registration, declaration or filing with any governmental entity or anythird party that will not have been obtained and delivered to ProMed Uplandprior to the Closing Date.

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3.4           No Violation of Other Agreements; No Conflicts.

(a)           Neither the execution and delivery of this Agreementnor the consummation or performance of the Transaction violates, conflicts withor results in a breach of, or shall violate, conflict with or result in abreach of any lease, contract, document or agreement to which Group and/orHoldings is a party or by which Group and/or Holdings may be bound.

(b)           Neither the execution and delivery of this Agreementnor the consummation or performance of the Transaction will, directly orindirectly (with or without the giving of notice, or lapse of time, or both):

(i)            contravene, conflict with, or result in a violation ofany provision of the organizational documents of Group and/or Holdings;

(ii)           contravene, conflict with, or result in a violationof, any legal requirement or any order, judgment or decree to which Groupand/or Holdings may be subject; or

(iii)          contravene, conflict with, or result in a violation ofany of the terms or requirements of, or give any governmental body the right torevoke, withdraw, suspend, cancel, terminate, or modify, any governmentalauthorization that is held by Group and/or Holdings.

Except as specifically contemplated by this Agreement and as requiredunder the Securities Act and any applicable state securities laws, Holdings isnot required to obtain any consent, authorization or order of, or make anyfiling or registration with, any court or governmental agency in order for itto execute, deliver or perform any of its obligations under or contemplated bythis Agreement in accordance with the terms hereof or thereof. All consents,authorizations, orders, filings and registrations which Holdings is required toobtain pursuant to the preceding sentence have been obtained or will beobtained prior to Closing.

3.5           Capital Structure.  Theauthorized capital stock of Holdings consists of 40,000,000 shares of CommonStock and 5,000,000 shares of preferred stock, par value $0.01 (*“Preferred Stock”*) of which 7,939,990 shares of Common Stockand zero shares of Preferred Stock were issued and outstanding as of May 10,2007 as reflected in Holdings’ most recent quarterly report filed May 15, 2007with the Securities and Exchange Commission (“*SEC”*).All of the outstanding shares have been validly issued and are fully paid andnon-assessable. Except as disclosed in the SEC Documents (as defined inSection 3.7), no shares of Common Stock are subject to outstandingoptions, warrants, rights, shareholder agreements or other instruments oragreements outstanding giving any person the right to acquire any shares ofcapital stock of Holdings, nor are there any commitments to issue or executeany such options, warrants, rights, shareholder agreements or other instrumentsor agreements. There are no outstanding stock appreciation rights or similarrights outstanding with respect to any of the capital stock of Holdings nor arethere any instruments, or agreements giving anyone the right to acquire anysuch rights.

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3.6           Issuance of Securities.  The CommonStock is duly authorized and, upon issuance in accordance with the termshereof, shall be duly issued, fully paid and non-assessable, and free from allLiens.

3.7           SEC Documents; Holdings Consolidated Financial Statements. Since May 27, 2004 when Holdings became an SEC reporting company,Holdings has filed all reports, schedules, forms, statements and otherdocuments required to be filed by it with the SEC under the Securities ExchangeAct of 1934, as amended (the *“Exchange Act”*)(all of the foregoing filed prior to the date hereof or amended after the datehereof and all exhibits included therein and financial statements and schedulesthereto and documents incorporated by reference therein, being hereinafterreferred to as the *“SEC Documents”*).Holdings has delivered to the ProMed Parties or their representatives, or madeavailable through the SEC’s website at http://www.sec.gov, true and completecopies of the SEC Documents. As of their respective dates, the financialstatements of Holdings disclosed in the SEC Documents (the *“HoldingsConsolidated Financial Statements”*) complied as to form in allmaterial respects with applicable accounting requirements and the publishedrules and regulations of the SEC with respect thereto. Such HoldingsConsolidated Financial Statements have been prepared in accordance with GAAP,applied on a consistent basis throughout the periods covered thereby (except(i) as may be otherwise indicated in such Holdings Consolidated Financial Statementsor the notes thereto, or (ii) in the case of unaudited interim statements, tothe extent they may exclude footnotes or may be condensed or summary statementsand, as unaudited statements, are subject to normal recurring audit adjustmentsconsistent with past practice) and, fairly present in all material respects thefinancial position of Holdings as of the dates thereof and the results of itsoperations. The Holdings Consolidated Financial Statements do not contain anyuntrue statement of a material fact or omit to state any material factnecessary in order to make the statements therein, in light of thecircumstances under which they were made, not misleading.

3.8           Legal Proceedings.  There is nopending Proceeding, and, to the knowledge of Group and/or Holdings, no personhas threatened to commence any Proceeding that challenges, or that may have theeffect of preventing, delaying, making illegal, or otherwise interfering with,any part of the Transaction.

3.9           Compliance with Laws.  Neither ofGroup nor Holdings is in violation of any rule, regulation or administrative orjudicial order pertaining to the assets or the business of Group and/orHoldings (including, without limitation, licensing, health care, federal, stateor local laws relating to kickbacks, illegal referrals, illegal billings or thelike, drug enforcement, securities, zoning, building, environmental,immigration, civil rights and occupational health and safety laws, regulations,ordinances and codes) which would have the effect of preventing, delaying,making illegal, or otherwise interfering with, any part of the Transaction. Totheir knowledge, none of Group nor Holdings has any reason to anticipate thatexisting circumstances are likely to result in violations of any of theforegoing.

3.10         Disclosure.  Norepresentation or warranty by Group and/or Holdings contained in this Agreementor in respect of the exhibits, schedules, lists or other documents delivered tothe ProMed Parties by Group and/or Holdings and referred to herein or therein,and no statement contained in any certificate furnished or to be furnished byor on behalf of Group and/or Holdings pursuant hereto or thereto, or inconnection with the transactions contemplated hereby, 

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contains, or will contain as of the date such representationor warranty is made or such certificate is or will be furnished, any untruestatement of a material fact, or omits, or will omit to state as of the datesuch representation or warranty is made or such certificate is or will befurnished, any material fact which is known to the party making therepresentation or warranty to be necessary to make the statements containedherein or therein, in light of the circumstances under which they were made,not misleading.

3.11         Brokers’ and Finders’ Fees.  Neither Group nor Holdings has incurred anyliability to any broker, finder or agent for any brokerage fees, finder’s feesor commissions with respect to the transactions contemplated by this Agreement,and if Group or Holdings has incurred any such liability, such liability shallbe and remain the sole responsibility of Group and Holdings, and Group andHoldings shall indemnify, defend and hold the ProMed Parties harmless from andagainst any and all liabilities, losses, damages, claims, causes of action,costs and expenses (including without limitation, reasonable attorneys’ fees),arising out of or relating to such liability.

3.12         Financing.  Holdings andGroup shall use their best efforts to take, or cause to be taken, all actionsand to do, or cause to be done, all things necessary, proper or advisable toarrange financing acceptable to Holdings and Group to fund the CashConsideration.

**ARTICLE 4.**

**COVENANTS OF PROMED UPLAND AND PROMED UPLANDSHAREHOLDER**

In order to induce Group and Holdings to enter into this Agreement andto consummate the Transaction, ProMed Upland and the ProMed Upland Shareholderenter into the agreements set forth in this Article 4.

4.1           Conduct of Business - Negative Covenants. From the date hereof until the Closing Date, ProMed Upland shall not,without the prior written consent of Group, which consent shall not beunreasonably withheld, conduct the business of ProMed Upland other than in theordinary course of ProMed Upland’s business as conducted through the datehereof or commit or suffer any material act or omission which deviates from theordinary course of ProMed Upland’s business as conducted through the datehereof. Without limiting the generality of the foregoing, from the date ofexecution of this Agreement until the Closing Date, ProMed Upland shall not,without the prior written consent of Group, which consent shall not beunreasonably withheld:

(a)           institute any new method of purchase, sale, lease,management, accounting or operation or engage in any transaction or activity,enter into any agreement or make any commitment or amend any existing materialagreement other than as contemplated by this Agreement, except in the ordinarycourse of its business and consistent with past practice;

(b)           change or amend its Articles of Incorporation orBy-Laws or propose any such change or amendment;

(c)           offer, issue, authorize or sell any shares of thecapital stock or other securities (such term as used in this subsection shallinclude, without limitation, debt securities) of ProMed Upland of any kindwhatsoever, or acquire directly or indirectly, by redemption 

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or otherwise, any such capital stock, reclassify orsplit-up any such capital stock, declare or pay any dividends thereon in cash,securities or other property, or make any other distribution with respectthereto, or grant or enter into any stock options, warrants, or other rights toacquire securities of ProMed Upland or enter into any other contracts orcommitments of any kind with respect to the issuance of additional shares ofcapital stock or other securities of ProMed Upland;

(d)           (i) borrow or agree to borrow any funds, whetherdirectly or by way of guaranty or otherwise, or (ii) except in the ordinarycourse of business and consistent with past practice, incur, or assume orbecome subject to any obligation or liability (absolute or contingent);

(e)           pay, discharge, waive, satisfy, compromise or adjustany claim, liability or obligation (absolute, accrued, contingent or otherwise)of an amount in excess of $10,000, other than as contemplated by this Agreementor occurring in the ordinary course of business and consistent with pastpractice;

(f)            prepay any obligation having a fixed maturity of morethan 90 days from the date such obligation was incurred other than as contemplatedby this Agreement or occurring in the ordinary course of business andconsistent with past practice;

(g)           permit or allow any of its property or assets (real,personal or mixed, tangible or intangible) to be subjected to any mortgage,pledge, lien or other encumbrance except in the ordinary course of business andconsistent with past practice;

(h)           cancel any debts or waive any claims or rights ofsubstantial value or sell, transfer, or otherwise dispose of any of itsproperties or assets, except in the ordinary course of its business andconsistent with past practice;

(i)            dispose of any rights to the use of any patent,trademark, service mark, trade name or copyright, or dispose of or disclose toany person any trade secret, formula, process or know-how not theretofore amatter of public knowledge, except in the ordinary course of its business andconsistent with past practice;

(j)            grant any general increase in the compensation ofofficers or employees (including any such increase pursuant to any bonus, pension,profit sharing or other plan or commitment) or any increase in the compensation(including salary and bonus) payable or to become payable to any officer exceptin the ordinary course of business and consistent with past practice;

(k)           appoint or remove from office any officers of ProMedUpland other than as contemplated by this Agreement;

(l)            make any payment to or sell, transfer or lease anyproperties or assets to, or enter into any agreement or arrangement with, anyof the officers or directors of ProMed Upland or any other affiliate thereof,except in the ordinary course of its business and consistent with pastpractice;

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(m)          enter into any contract, commitment or transaction notin the usual and ordinary course of its business, other than transactionscontemplated by, or referred to in, this Agreement;

(n)           change, or initiate a change of, any of the banking,safe deposit or power of attorney arrangements effective as of the date hereof,except for changes in the signatories on the accounts of ProMed Upland,provided such changes are contemplated by this Agreement and ProMed Uplandshall have given Group prior written notice of any such change in signatoriesand Group approves same;

(o)           write down the value of any inventory (includingwrite-downs by reason of shrinkage or mark-down) or write off as uncollectibleany notes or accounts receivable, except for immaterial write-downs ofinventory or accounts receivable in the ordinary course of business andconsistent with past practice;

(p)           merge, consolidate, reorganize or liquidate ProMedUpland;

(q)           file a voluntary petition on behalf of ProMed Uplandunder the U.S. Bankruptcy Code or any other bankruptcy or insolvency law or anyother law for relief of debtors;

(r)            change, amend or terminate a Material Contractconstituting an affiliate agreement under Section 2.14 except as contemplatedby this Agreement or with the written consent of Group; or

(s)           agree or commit, whether in writing or otherwise, todo any of the foregoing.

Notwithstanding the foregoing, ProMed Upland may at any time prior tothe Closing Date, (i) pay the Stay Bonuses described in Section 5.2 and (ii)distribute cash to the ProMed Upland Shareholder provided such distributionshall not cause ProMed Upland to violate the covenant set forth in Section 4.4or any other representation, warranty, covenant or agreement provided herein.

4.2           Conduct of Business - Affirmative Covenants. Prior to the Closing Date, ProMed Upland will conduct its business inthe ordinary course and will:

(a)           maintain its good standing and qualification to dobusiness in all jurisdictions where it is required to be qualified to dobusiness, and all licenses, permits, franchises, rights and privileges whichare necessary for the conduct of its business;

(b)           continue at its expense to maintain all of itsproperty and equipment in customary repair, order and working condition,reasonable wear and use excepted;

(c)           duly comply with all laws, regulatory requirements andagreements to which it, or any of its properties or assets, is subject or bywhich it is bound;

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(d)           maintain in force and effect the current insuranceupon its properties and with respect to the conduct of its business;

(e)           use best efforts to keep intact its present businessorganization and keep available the services of its present officers, employeesand agents; and

(f)            maintain accurately its books, records and accounts.

4.3           Interim Financial Statements Prior to Closing. ProMed Upland shall provide Group with the interim balance sheets andincome statements of ProMed Upland for each of the monthly periods commencingon March 1, 2007 through the month preceding the Closing Date promptly uponcompletion but in no event later than five days before the Closing Date (the *“Subsequent Monthly Interim Financial Statements”*).The Subsequent Monthly Financial Statements shall fairly present in allmaterial respects the financial condition and results of operation of ProMedUpland as of the date and for the periods set forth therein and shall beprepared in accordance with GAAP, applied on a consistent basis throughout theperiods covered thereby, except that such Subsequent Monthly Interim FinancialStatements may exclude footnotes, and as unaudited statements, are subject tonormal recurring audit adjustments consistent with past practice. On theClosing Date there shall not have been any material adverse change to thefinancial condition of ProMed Upland as shown on the Subsequent MonthlyFinancial Statements, including no material adverse change in the assets andliabilities of ProMed Pomona as shown on the March Interim FinancialStatements; provided, however that Group acknowledges that ProMed Upland maymake the payment of the Stay Bonuses and the distribution to the ProMed UplandShareholder described in the last paragraph of Section 4.1 subject tosatisfaction of the cash Closing requirements set forth in Section 4.4.

4.4           Required Cash and Accounts Receivable at Closing. ProMed Upland shall have at Closing cash and accounts receivable in anamount not less than the total liabilities or obligations of ProMed Upland(whether absolute, accrued, contingent, or otherwise) incurred or accrued as ofthe Closing Date. The cash of ProMed Upland shall include cash sufficient tocover the sum of One Hundred Twenty-Two Thousand Two Hundred Seventy-Two($122,272) in Physician Retention Bonuses which shall be deemed a liability ofProMed Upland. The accounts receivable included in the Subsequent InterimFinancial Statement and the Closing Date Balance Sheet, are or will be, as thecase may be, valid and existing and represent monies due for services performedin the ordinary course of business.

4.5           No Shop.  Between thedate of this Agreement and the Closing Date neither ProMed Upland, nor any ofits affiliates, agents or representatives, shall directly or indirectlysolicit, initiate, encourage, entertain or support any inquiry, proposal, orother offer from any other party relating to any transaction involving,directly or indirectly, the merger of ProMed Upland or the purchase of theassets or stock of ProMed Upland or any possible transaction or series oftransactions as an alternative to the transactions contemplated hereby (*“Competing Proposal”*). To the extent ProMed Upland or theProMed Upland Shareholder or any of ProMed Upland’s affiliates, agents orrepresentatives receives any Competing Proposal, they shall promptly informGroup of such Competing Proposal and shall advise the potential purchaser thatProMed Upland is subject to this Agreement and therefore will not hold anydiscussions with such potential purchaser.

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ProMed Upland and the ProMed Upland Shareholder recognize that (i) thecovenants and the restrictions contained in this Section 4.5 are necessary,fundamental, and required for the protection of the transactions contemplatedby this Agreement; (ii) such covenants relate to matters which are of aspecial, unique, and extraordinary character that gives such covenants aspecial, unique and extraordinary value; and (iii) a breach of the covenantscontained in this Section 4.5 will result in irreparable harm and damage toGroup which cannot be adequately compensated by a monetary award. In the eventof such breach, and without limiting the right of Group to seek any otherremedy or relief to which it may be entitled at law or in equity, each ofProMed Upland and the ProMed Upland Shareholder consent, without challenge orcontest, to the immediate remedy of a temporary restraining order, preliminaryinjunction, or such other form of injunctive or equitable relief in favor ofGroup as may be used by any court of competent jurisdiction to restrain orenjoin ProMed Upland or the ProMed Upland Shareholder from breaching suchcovenant or to specifically enforce the provisions of this Section 4.5. ProMedUpland and the ProMed Upland Shareholder hereby waive any requirements thatGroup secure or post a bond in connection with obtaining injunctive relief orany other equitable relief.

4.6           Records of ProMed Upland. ProMed Upland agrees to deliver or cause to be delivered to Group thefollowing as soon as possible after the execution of this Agreement but in noevent later than ten (10) days after execution of this Agreement: (A) theeligibility tapes for each ProMed Upland Health Care Contract, (B) thephysician credentialing records of all the physicians who are a party to theProMed Upland Provider Contracts, (C) all patient records, including casemanagement reports and notes, claims paid history (at least 24 months), and (D)any and all data relating to ProMed HCA’s management of ProMed Upland. Groupshall maintain the confidentiality of the records delivered pursuant to thisSection 4.6 to the same extent as it is required to apply to the Due DiligenceMaterials described in Section 5.4.

4.7           Enrollment Information and Eligibility Reports. ProMed Upland agrees to deliver to Group as soon as they have beenprepared, all eligibility reports prepared after the date of execution of thisAgreement through and including the Closing Date, and shall certify upondelivery that such reports are true, accurate and complete in all materialrespects, or shall describe any limitations to such certification.

4.8           No Change to Contracts with Chaparral Clinics; NoAdverse Change by Chaparral Clinics to PCP and Specialist Agreements. ProMed Upland represents and agrees that it has not, nor has ProMed HCAon its behalf, amended or otherwise changed any term or condition (includingcapitation or fee for service rates) of any contracts between it and theChaparral Clinics, including agreements for the provision of primary care orspecialist physician services at the Chaparral Clinics, since January 1, 2007,and shall not so amend or change any terms or conditions through the ClosingDate.  As an affiliate of the ChaparralClinics, ProMed Upland and the ProMed Upland Shareholder shall cause theChaparral Clinics not to amend or change any of the Chaparral Clinic’sagreements with its primary care and specialist physicians where such amendmentor change would adversely affect ProMed Upland (including rate increasesaffecting ProMed Upland) for a period of 24 months after the Closing Date,excepting only, in the case of specialist physicians, such annual increases tothe specialist physicians that are approved by Group from time to time, in anamount not to exceed any rate increase received under the commercial HMOcontracts.

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4.9           ProMed LP.  ProMed Uplandis the owner of a 3.8% limited partnership interest in ProMed LP which owns theOntario Building.  ProMed Upland agreesthat it shall sell all of its limited partnership interest in ProMed LP, andshall resign from any management or other positions with ProMed LP, prior tothe Closing Date.  On the Closing Date,(a) all indebtedness and other amounts (i) owed by ProMed Upland to ProMed LPor (ii) owed by ProMed LP to ProMed Upland shall be paid, cancelled, oreliminated (whether or not then due) and (b) any Liens relating to any of theaforesaid indebtedness or amounts shall be cancelled and shall be discharged ofrecord.   On the Closing Date, ProMed Uplandshall not have any obligation, contractual or otherwise, to ProMed LP.

4.10         Closing Date Balance Sheet. Promptly upon completion, but no later than twenty five (25) daysfollowing the Closing Date, the ProMed Upland Shareholder and the ProMed ExecutiveOfficers shall deliver to Group the unaudited balance sheet of ProMed Uplandfor the period ending on the Closing Date prepared in accordance with GAAP.(the“*Closing Date Balance Sheet*”).   As required by Section 4.4, ProMed Uplandshall be obligated to have cash and/or accounts receivable in an amount tocover all of its liabilities or obligations as of the Closing Date, includingthe Physician Retention Bonus.  ProMedUpland hereby covenants that all liabilities and obligations (whether absolute,accrued, contingent, or otherwise) incurred or accrued as of the Closing Dateshall be set forth on the Closing Date Balance Sheet.

**ARTICLE 5.**

**ADDITIONAL AGREEMENTS OF THE PARTIES**

In order to induce Group and Holdings to enter into this Agreement andto consummate the Transaction, ProMed Upland and the ProMed Upland Shareholder,on the one hand, and Group and Holdings, on the other hand, enter into theagreements set forth in this Article 5.

5.1           Non-Competition of the Principal ProMed ExecutiveOfficers.  As material inducement for the Transaction,each of the Principal ProMed Executive Officers are simultaneously herewithexecuting a non-competition agreement. Jeereddi Prasad, M.D. shall execute that non-competition agreementattached as Exhibit C (the *“Prasad Non-CompeteAgreement”*), Kishan Thapar shall execute that non-competitionagreement attached as Exhibit D (the *“Thapar Non-CompeteAgreement”*), and Bahram Bahremand shall execute that non-competitionagreement attached as Exhibit E (the “*Bahremand Non-CompeteAgreement*”, and together with the Prasad Non-Compete Agreement andThapar Non-Compete Agreement are collectively, the *“ExecutiveOfficer Non-Compete Agreements”*). The parties acknowledge that a portion of the Purchase Price is beingallocated to the Executive Officer Non-Compete Agreements (*“CovenantAllocation”*). The Covenant Allocation shall not be deemed anestimate or measurement of damages incurred or suffered by Group or Holdings inthe event of a breach of the Executive Officer Non-Compete Agreements.

5.2           Employees.  The partiesagree that Holdings or one of Holdings’ affiliates will offer an employmentcontract to each of the ProMed Executive Officers, namely: (i) Jeereddi Prasad,M.D., (ii) Kishan Thapar, M.D., and (iii) Bahram Bahremand, commencing atClosing pursuant to the terms and conditions of those employment agreementsattached as Exhibit F (the *“Prasad EmploymentAgreement”*), Exhibit G (the *“Thapar EmploymentAgreement”*) and Exhibit H (the *“Bahremand EmploymentAgreement”*), respectively. The parties acknowledge 

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that as consideration forexecuting the Thapar Employment Agreement and Bahremand Employment Agreement,ProMed Pomona intends to pay stay bonuses in the amount of $63,568 to each ofKishan Thapar, M.D. and Bahram Bahremand prior to the Closing (*“Stay Bonuses”*)

5.3           Knowledge Standard.  Whenever arepresentation, warranty, covenant or agreement is qualified by the statement “tothe knowledge of”, the knowledge of ProMed Upland shall be deemed to be theactual knowledge of Jeereddi Prasad, M.D., President and Chairman of the Boardof ProMed Upland, Kishan Thapar, M.D., Executive Director of ProMed Upland, andBahram Barhemand, Chief Financial Officer of ProMed Upland, in each case afterreasonable inquiry.  Whenever arepresentation, warranty, covenant or agreement is qualified by the statement “tothe knowledge of” any or all of Group, knowledge shall be deemed to be theactual knowledge of Jacob Y. Terner, M.D., Chief Executive Officer of Group,Mike Heather, Chief Financial Officer of Group, and R. Stewart Kahn, Secretaryof Group, in each case after reasonable inquiry.

5.4           Due Diligence Access and Investigation. ProMed Upland shall, through the Closing Date, (a) afford Group and itsrepresentatives and attorneys (collectively, the *“ProspectAdvisors”*) full and free access to ProMed Upland’s properties,contracts, books and records, and other documents and data during normalbusiness hours, (b) furnish Group and the Prospect Advisors with copies of allsuch contracts, books and records, and other existing documents and data asGroup may reasonably request, and (c) furnish Group and the Prospect Advisorswith such additional financial, operating, and other data and information asGroup may reasonably request, including such information necessary to allowGroup to make a determination of the adequacy and sufficiency of the internalcontrols of ProMed Upland (collectively, *“Due Diligence Materials”*).  ProMed Upland shall permit the ProspectAdvisors to make copies of the Due Diligence Materials.  Neither Group nor the Prospect Advisors shalldisclose the contents of any of said Due Diligence Materials to any third partywithout prior written consent of the ProMed Upland Shareholder, except: (i) asrequired by law; (ii) as may be reasonably necessary in connection with anylitigation or dispute arising out of this Agreement or any of the transactionscontemplated hereunder; (iii) information contained in any such materials thatwas already in the possession of Group prior to the date of commencement ofnegotiations between the ProMed Parties and Group; (iv) information containedin any such materials that is or becomes generally available to the publicother than as a result of a disclosure by Group or its agents or employees inviolation of this Section and (v) as necessary in the reasonable operation ofthe business of ProMed Upland and the management obligations of the same afterthe Closing Date.

5.5           Tax Matters; Liability; Preparation  and Filing of Tax Returns.

(a)           Adequate Provision for Taxes. The Subsequent Monthly Interim Financial Statements shall reflect thatProMed Upland has made adequate provision for accrued but unpaid taxes for theperiod covered by such Subsequent Monthly Interim Financial Statements.

(b)           Liability for Taxes.  The ProMedUpland Shareholder will be liable for, and shall have properly accrued on theSubsequent Monthly Interim Financial Statements, all Taxes imposed on ProMedUpland, or for which ProMed Upland may otherwise be liable, for any Pre-ClosingTax Period (as defined below).  TheProMed Upland Shareholder shall also be 

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liable for any Taxesarising as a result of any breach of the representation contained inSection 2.9 and the covenants contained in this Section 5.5, whetherincurred before or after the Closing Date. *“Pre-Closing Tax Period”* means anyperiod (including the portion of any Straddle Period as defined in (c) below)ending on or before the date before the Closing Date.

(c)           Straddle Periods.  Whenever itis necessary to determine the liability for Taxes of ProMed Upland for a periodthat begins before or after the day prior to the Closing Date (a *“Straddle Period”*), the determination of the Taxes of ProMedUpland for the portion of the Straddle Period ending on and including, and theportion of the Straddle Period beginning after, the day prior to the ClosingDate will be determined by assuming that the Straddle Period consisted of twotaxable years or periods, one which ended at the close of the day prior to theClosing Date and the other which began at the beginning of the day of theClosing Date, and, items of income, gain, deduction, loss or credit of ProMedUpland for the Straddle Period will be allocated between two taxable years orperiods on a “closing of the books basis” by assuming that the books of ProMedUpland were closed at the close of the day prior to the Closing Date, provided,however, that exceptions, allowances or deductions that are calculated on anannual basis, such as the deduction for depreciation, will be apportionedbetween such two taxable years or periods on a daily basis.

(d)           Tax Returns.  Group will beresponsible for causing the preparation and filing of all tax returns that arerequired to be filed by or with respect to ProMed Upland for the periodcommencing January 1, 2007 and ending on December 31, 2007 provided, however,that the ProMed Upland Shareholder shall be responsible for and liable for anytaxes due for the Pre-Closing Period which has not been properly accrued on theSubsequent Monthly Interim Financial Statements for the period covered by suchSubsequent Monthly Interim Financial Statements or properly accrued and shownon the records of ProMed Upland for the period ending on the Closing Date.  No later than 30 days before the due date forfiling any tax return described in this subsection (d) which is required to beprepared by Group after Closing involving any Pre-Closing Tax Period, Groupwill deliver such tax return to the ProMed Upland Shareholder for their review.Group and the ProMed Upland Shareholder will attempt to resolve in good faithany disagreement arising out of any tax return. If any such disagreement cannot be resolved, Group and the ProMed UplandShareholder will jointly select an independent accounting firm to act as anarbitrator to resolve such disagreement in accordance with the terms of thisAgreement.  The independent accountingfirm’s determination with respect to any such tax return will be final andbinding upon the parties and all parties will file (or amend, if applicable)their respective tax returns in accordance with such determination.  Any fees and expenses related to theengagement of the independent accounting firm will be shared equally by Groupon the one hand and the ProMed Upland Shareholder on the other hand.

(e)           338 Election and 338 Taxes. Group intends to make an election under Section 338(h)(10) of theInternal Revenue Code of 1986, as amended (the “Code”) to treat the sale of theProMed Upland Shares as a sale of assets by ProMed Upland for income and franchisetax purposes.  Group and the ProMedUpland Shareholder shall duly and timely file, or cause to be duly and timelyfiled, any document necessary to effectuate such election including withoutlimitation, federal Form 8023 (and any similar forms required under state orlocal laws relating to taxes) in accordance with the requirements of Section338 of the Code (or state or local laws relating to the taxes, as the case maybe). The parties shall report the deemed sale 

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consistent with suchallocation for all financial, tax or other purposes, shall not take anyposition inconsistent therewith and shall cooperate with each other to take allactions necessary and appropriate as may be required to effect and preservesuch election.  Anything contained inthis Agreement to the contrary notwithstanding, none of the ProMed UplandShareholder makes any representation or warranty concerning the effectivenessunder the Code (or other comparable provision of law) of any election madepursuant to this Section 5.5(e); and, except where such failure is due to abreach by such party of its obligations under this Section 5.5(e), in no eventshall any of the ProMed Upland Shareholder be liable to Group for the failureof any such election to be effective under the Code (or other comparableprovision of law).

(f)            Contest Provisions.  Promptlyafter receipt by Group or the ProMed Upland Shareholder of written notice ofthe assertion or commencement of any claim, audit, examination or otherproposed change or adjustment by the Internal Revenue Service or any state,local or foreign taxing authority having jurisdiction over ProMed Upland or anyof its assets (*“Tax Authority”*) relating toTaxes of ProMed Upland with respect to a Pre-Closing Tax Period (a *“Tax Claim”*), the recipient will promptly notify Group orthe ProMed Upland Shareholder, as applicable. Such notice will contain factual information (to the extent known)describing the asserted Tax Claim in reasonable detail and will include copiesof any notice or other document received from any Taxing Authority in respectof any such asserted Tax Claim.  Thefailure of the ProMed Upland Shareholder to receive prompt notice from Group asprovided in this Agreement will not relieve the ProMed Upland Shareholder ofany of his indemnification obligations under this Agreement except to theextent such failure has a material adverse effect on the ProMed UplandShareholder’ ability to defend the Tax Claim. The ProMed Upland Shareholder will have the right to represent ProMedUpland’s interests in any Tax audit or administrative or court proceedingrelating to Pre-Closing Tax Periods as to any issues that could materiallyaffect the ProMed Upland Shareholder’ liability for Taxes or indemnificationobligations, and to employ counsel (reasonably acceptable to Group) of theProMed Upland Shareholder’ choice at its expense; provided, however, that Groupand their representatives will be permitted, at their expense, to be present atany such audit or proceeding. Notwithstanding the foregoing, the ProMed Upland Shareholder will not beable to settle, either administratively or after the commencement oflitigation, any claim for Taxes that would adversely affect the liability forTaxes of Group or ProMed Upland for any period after the Closing Date withoutthe written consent of Group unless the ProMed Upland Shareholder makesadequate provision to the satisfaction of Group to indemnify Group against theeffects of any such settlement.

(g)           Assistance and Cooperation. After the Closing Date, the ProMed Upland Shareholder and Group will:

(i)            timely sign and deliver such certificates or forms asmay be reasonably necessary or appropriate to establish an exemption from (orotherwise reduce), or file tax returns or other reports with respect to sales,transfer and similar Taxes;

(ii)           assist as reasonably requested by the other party inpreparing any tax return which such other party is responsible for preparingand filing in accordance with this Section 5.5 (including providing the otherparty with reasonable access to financial records for such purposes);

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(iii)          cooperate in a reasonable manner in preparing for anyaudits of, or disputes with taxing authorities regarding, any tax returns ofProMed Upland; and

(iv)          make available to the other party and to any taxingauthority as reasonably requested all information, records, and documentsrelating to Taxes of ProMed Upland.

5.6           Notification.  Between thedate of this Agreement and the Closing Date, the ProMed Parties on the one handand Group and Holdings on the other hand agree to promptly notify each other inwriting if they become aware of any fact or condition that causes orconstitutes a breach of any of their representations and warranties as of thedate of this Agreement, or if they become aware of the occurrence after thedate of this Agreement of any fact or condition that would (except as expresslycontemplated by this Agreement) cause or constitute a breach of any suchrepresentation or warranty had such representation or warranty been made as ofthe time of occurrence or discovery of such fact or condition.  If prior to the Closing any event, condition,fact or circumstance that is required to be disclosed pursuant to this Section5.6 requires any change to any of the Schedules to this Agreement, or if anysuch event, condition, fact or circumstance would require such a changeassuming a Schedule was dated as of the date of the occurrence, existence ordiscovery of such event, condition, fact or circumstance, then ProMed Uplandand the ProMed Upland Shareholder shall promptly deliver to Group an update tothe Schedule (a *“Schedule Update”*) specifyingsuch change.  Group shall have 5 businessdays to review such Schedule Update and absent an objection by Group withinsuch 5 day period, such Schedule Update shall be deemed to supplement or amendthe Schedule for the purpose of determining the accuracy of any of therepresentations and warranties made by ProMed Upland or the ProMed UplandShareholder in this Agreement as of the Closing.

5.7           Investment Representation Certificate. ProMed Upland acknowledges that the Holdings CommonStock which constitutes the Stock Consideration has not been registered underthe Securities Act of 1933, as amended (the *“Securities Act”*).  ProMed Upland acknowledges that the HoldingsCommon Stock is being offered and sold pursuant to an exemption fromregistration contained in the Securities Act. To rely on such exemption, ProMed Upland acknowledges that it isnecessary that the ProMed Upland Shareholder executes an investmentrepresentation certificate in the form attached as Exhibit I (*“Investment Representation Certificate”*). The ProMed Upland Shareholders acknowledges that his execution of theInvestment Representation Certificate is necessary for the issuance of theStock Consideration and is also a requirement to receive the piggy-backregistration rights described in Section 1.15 hereof

5.8           Attorney Fees of ProMed Upland. The legal fees of ProMed Upland with respect to the negotiation anddrafting of the documentation in connection with the Upland Stock Purchase andthe other transactions contemplated hereunder, which have not been accrued onthe Subsequent Monthly Financial Statements but are still outstandingimmediately after the Closing, shall be borne solely by the ProMed UplandShareholder at no expense to ProMed Upland

5.9           Bank Accounts.  ProMed Uplandshall, prior to the Closing provide, City National Bank, which is the bankwhere the ProMed Bank Accounts are located (*“ProMed Bank”*)with all 

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documentation required tobe provided by ProMed Upland to allow Group access to the funds in the ProMedBank Accounts upon the Closing Date.

5.10         Amendment of Bylaws.  Prior toClosing, ProMed Upland shall amend its Bylaws to allow acquisition of theshares by a California professional corporation whose sole shareholder is alicensed physician such as Group.

5.11         Right of First Refusal.  Group shallhave the right of first refusal (*“Right of First Refusal”*)in the event that the ProMed Upland Shareholder wishes to sell all orsubstantially all the stock, assets or business operations of the ChapparalClinics (a *“Covered Sale”*).  Group can assign its Right of First Refusalto any Affiliate (as defined in the Prasad Non-Compete Agreement).  References to the rights of Group in thisSection 5.11 shall be deemed to include references to each Affiliate of Group.

If at any time the ProMedUpland Shareholder desires to make a Covered Sale, then the ProMed UplandShareholder shall, or shall cause the Chapparal Clinics, to do the following:

(a)           Offer Notice.  ProMed UplandShareholder or Chapparal Clinics shall deliver a written notice of the proposedCovered Sale (the *“Offer Notice”*) to Group. TheOffer Notice shall contain a description of the proposed Covered Sale and theterms of the proposed Covered Sale (the *“Offer”*),including (i) a description of the Covered Sale which is the subject of theproposal, (ii) a description of the type of proposed Covered Sale, includingwhether the Covered Sale will be made pursuant to a transfer of assets orequity interests and whether all or a portion of the assets are a part of theCovered Sale, (iii) the price at which the Covered Sale is proposed to be madeto the proposed purchaser (the *“Offered Price”*),and (iv) the terms of payment of the Offered Price and the other material termsand conditions to the proposed Covered Sale to the proposed purchaser (the *“Offered Terms and Conditions”*).

(b)           Acceptance.  Group or any Affiliate of Group, shall havethe right to purchase the assets and/or stock of the Chapparal Clinicsdescribed in the Offer Notice by written notice of acceptance (the *“Acceptance Notice”*) from Group to ProMed Upland Shareholderwithin 30 days of receipt of the Offer Notice. The failure by Group to deliveran Acceptance Notice within 30 days of receipt of the Offer Notice shall resultin the waiver by Group of its right of first refusal as set forth herein and atermination of the right of first refusal.

(c)           Due Diligence;Purchase and Sale Agreement.  IfGroup accepts the Offer in accordance with this Agreement, it will have thelater of (i) 30 days from the date of the ProMed Upland Shareholder’s receiptof Group’s timely Acceptance Notice or (ii) such other applicable timeframesspecified in the Offer to (1) both commence (*“DueDiligence Start Date”*) and complete its due diligence of theChapparal Clinics and (2) execute a Purchase and Sale Agreement providing forthe Covered Sale on the terms of the Offer, with the Offer Terms andConditions, and at the Offer Price, with customary representations, warranties,covenants and agreements as is typically set forth in a stock or asset sale,and with only such variations from the Offer as the ProMed Upland Shareholderand Group may reasonably agree (*“Acceptable Purchase andSale Agreement”*).  If as aresult of the due diligence review, Group decides not to proceed with theCovered Sale, it shall deliver a written notice of rescission (*“Rescission Notice”*) to ProMed Upland Shareholder on orbefore the date that is 30 days after the later of (i) 

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the Due Diligence StartDate or (ii) such other applicable timeframes specified in the Offer (the datewhich is the later of (i) and (ii) being referred to as the *“Due Diligence Deadline Date”*). Additionally, regardless ofwhether or not Group delivers a Rescission Notice or whether or not Group hascompleted, or even commenced, its due diligence review, if Group, fails toexecute an Acceptable Purchase and Sale Agreement within the later of (i) 45days from the date of the ProMed Upland Shareholder’s receipt of Group’s timelyAcceptance Notice or (ii) such other applicable timeframes specified in theOffer, then Group is deemed to have rescinded its Acceptance Notice and theright of first refusal shall be terminated.

(d)           Closing.  The closingof the Covered Sale pursuant to this Section 5.11 will take place at the timeand place as set forth in the Offer, or upon such other time and place thatProMed Upland Shareholder and Group shall all agree upon; provided, that thedate of closing shall be no later than the later of (A) 60 days of the deliveryof the Acceptance Notice or (B) 10 days after the date all necessary thirdparty consents have been obtained.

5.12         Good Faith.  ProMed Uplandand the ProMed Upland Shareholder on the one hand, and Group and Holdings onthe other hand, agree that they will perform their obligations under thisAgreement in good faith.

5.13         Physician Retention Bonus Pool. The parties acknowledge that the purpose of the Required Minimum Cashamount of $122,272 required by Section 4.4 is to fund a bonus pool (*“Physician Retention Bonus”*) to compensate physicians whoagree to be exclusive to ProMed Upland, Group and Group’s affiliates in a formreasonably acceptable to Group.  Uponreaching such agreement with Group, the physicians set forth on Schedule5.13(a) shall be entitled to such portion of the Physician Retention Bonus asdetermined by Group.  Group acknowledgesthat any physician who agrees to the exclusivity provisions set forth onSchedule 5.13(b) satisfies this requirement. Group agrees to use commercially reasonable efforts to obtain allamendments to the provider agreements evidencing exclusivity and pay out suchPhysician Retention Bonuses on or before September 30, 2007.

5.14         Best Efforts.  So long asthis Agreement remains in effect, ProMed Upland and the ProMed UplandShareholder on the one hand, and Group and Holdings on the other hand, shalluse their respective best efforts to cause the Transaction to be consummated assoon as reasonably practicable.  ProMed Uplandand the ProMed Upland Shareholder on the one hand, and Group and Holdings onthe other hand, shall proceed as soon as practicable in the procurement ofpermits, consents and approvals and in the taking of any other action, and thesatisfaction of all other requirements prescribed by law or otherwise necessaryfor consummation of the Transaction on the terms herein provided, and shalldiligently prosecute the same.

5.15         Post-Closing IBNR Reconciliation. Group, as owner of ProMed Upland after the Closing Date, shall, for theperiod commencing on the Closing Date and ending eighteen (18) monthsthereafter, keep an account of claims received on or after the Closing Date fordates of service prior to the Closing Date and either paid from, or to be paid from,IBNR funds (*“IBNR Claims”*).  On or prior to the date that is seven (7)business days after the second anniversary of the Closing Date (the *“IBNR Reconciliation Date”*), Group and theProMed Upland Shareholder shall effect a reconciliation of the IBNR funds asset forth herein (*“IBNR Reconciliation”*).  To effect the IBNR Reconciliation, theparties shall compare the amount of the IBNR reserve that 

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was set forth on theClosing Date Balance Sheet (*“IBNR Closing Date ReserveAmount”*) to the IBNR Claims. If the IBNR Claims were greater the amount of the IBNR Closing DateReserve Amount plus an additional 10% above such IBNR Closing Date ReserveAmount (*“Downward IBNR Reconciliation Threshold Amount”*)then to the extent of the dollar amount by which the IBNR Claims exceeds theDownward IBNR Reconciliation Threshold Amount (*“ShareholderIBNR Reimbursement Amount”*), Group shall have the right to receivepayment from the ProMed Upland Shareholder in the amount of the ShareholderIBNR Reimbursement Amount.  On the otherhand, if the IBNR Claims were less than the amount of the Closing Date ReserveAmount less an additional 10% below such IBNR Closing Date Reserve Amount (*“Upward IBNR Reconciliation Threshold Amount”*) (suchdifference constituting the *“Group IBNR ReimbursementAmount),* Group shall be required to immediately reimburse the ProMedUpland Shareholder the dollar amount of the Group Reimbursement Amount.

Example: Assume that the IBNR Closing Date ReserveAmount is $5,000,000 and thus the Downward Reconciliation Threshold Amount is$5,500,000 and the Upward Reconciliation Threshold Amount is $4,500,000.  If the IBNR Claims are $5,600,000, thenthe  ProMed Upland Shareholder IBNR ReimbursementAmount that would be owed by the ProMed Upland Shareholder would total $100,000 ($5,600,000 - $5,500,000).  Conversely, if the IBNR Claims are$4,400,000, then the Group IBNR Reimbursement Amount owed by Group to theProMed Upland Shareholder would be $100,000 ($4,500,000 - $4,400,000).

5.16         Post-Closing Balance Sheet Reconciliation: ClosingDate Balance Sheet.   Within three (3) business days of thedelivery of the Closing Date Balance Sheet as provided by Section 4.10, Groupand the ProMed Upland Shareholder shall effect a reconciliation of the cash andaccounts receivable, on the one hand, and the liabilities and obligations ofProMed Upland, on the other hand (the *“Closing Date BalanceSheet Reconciliation”*).  Toeffect the Closing Date Balance Sheet Reconciliation, the parties shall meetand compare the cash and accounts receivable shown on the Closing Date BalanceSheet Reserve Amount (*“Balance Sheet Cash + A/RAmounts”*) to the amount of cash and accounts receivable that was inexistence in ProMed Upland on the Closing Date (in the case of the accountsreceivable the parties will consider any accounts receivable that wasdetermined since the date of the Closing to now be uncollectable and reflectthat as a decrease in the total amount of cash and accounts receivable left inProMed Upland) (*“Closing Date Cash + A/R”*) andwill compare the liabilities and obligations showing on the Closing DateBalance Sheet (*“Balance Sheet Liabilities”*) tothe liabilities and obligations shown on the Subsequent Monthly InterimFinancial Statement for which the Closing Date Cash + A/R relates (*“Originally Estimated Liabilities”*).   If the Balance Sheet Liabilities weregreater than the amount of the Closing Date Cash + A/R, plus anadditional 10% above such Closing Date Cash + A/R (the (*“DownwardBalance Sheet Reconciliation Threshold Amount”*) then to the extentof the dollar amount by which the Balance Sheet Liabilities exceeds theDownward Balance Sheet Reconciliation Threshold Amount (*“ProMedUpland Shareholder Balance Sheet Reimbursement Amount”*), Group shallhave the right to reimbursement of the amount of the ProMed Upland ShareholderBalance Sheet Reimbursement Amount from the ProMed Upland Shareholder.  On the other hand, if the Balance SheetLiabilities were less than the amount of the Closing Date Cash + A/R less anadditional 10% below such Closing Date Cash + A/R (*“UpwardBalance Sheet Reconciliation Threshold Amount”*) (such differenceconstituting the *“Group Balance Sheet Reimbursement Amount),*Group shall be required to immediately reimburse the ProMed Upland Shareholderthe dollar amount of the Group Balance Sheet

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ReimbursementAmount.  The reconciliation hereundershall exclude a reconciliation of IBNR which shall be handled in accordancewith Section 5.15 hereof.

Example: Assume the Closing Date Cash + A/R is$5,000,000, thus the Downward Balance Sheet Reconciliation Threshold Amount is$5,500,000 and the Upward Reconciliation Threshold Amount is $4,500,000.  If the Balance Sheet Liabilities are$5,600,000, then the ProMed Upland Shareholder Balance Sheet ReimbursementAmount that would be owed by the ProMed Upland Shareholder would total $100,000($5,600,000 - $5,500,000).  Conversely,if the Balance Sheet Liabilities are $4,400,000, then the Group Balance SheetReimbursement Amount owed by Group would be $100,000 ($4,500,000 - $4,400,000).

Notwithstanding the foregoing, the reconciliation ofliabilities and obligations in reliance on the Closing Date Balance Sheet shallnot constitute a waiver by Group, the Surviving Corporation or their respectivedirectors, officers, employees, agents and affiliates, or shall not otherwiselimit the indemnification obligations of the ProMed Upland Shareholder underArticle 7 hereof, for a breach of Sections 2.8, 4.4 and/or 4.10 to the extentany liabilities and obligations are not shown on the Closing Date Balance Sheetin accordance with the representations, covenants or agreements of thoseSections as to matters as of the Closing Date or the Effective Time or theaccounts receivable on the Closing Date Balance Sheet, or any portion thereof,is deemed not collectible.

5.17         Further Assurances.  ProMed Upland and the ProMed UplandShareholder on the one hand, and Group and Holdings on the other hand, agreethat at any time and from time to time after the Closing Date they will executeand deliver to any other party such further instruments or documents as mayreasonably be required to give effect to the Transaction.

**ARTICLE 6.**

**DELIVERIES AND CONDITIONS**

6.1           Deliveries by ProMed Upland andthe ProMed Upland Shareholder on the Closing Date.  On the Closing Date, ProMed Upland and the ProMedUpland Shareholder shall deliver to Group and Holdings:

(a)       A copy of the Articles of Incorporationof ProMed Upland, with all amendments thereto, and certificate of good standingfrom the State of California, both of which shall be certified as of a datewithin ten days prior to the Closing Date by the Secretary of State ofCalifornia.

(b)           A certificate of tax good standing ofProMed Upland from the Franchise Tax Board issued as of a date within ten daysof the Closing Date.

(c)           A certificate executed by thePresident of ProMed Upland confirming (i) the truth and correctness in allmaterial respects of all of ProMed Upland’s representations and warranties inthis Agreement as of the Closing Date and as of all times between the datehereof and the Closing Date, and (ii) that all agreements and covenants ofProMed Upland specified herein to be complied with prior to the Closing Datehave been complied with.

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(d)           A certificate of the Secretary ofProMed Upland dated the Closing Date and accompanying resolutions reflectingthat the necessary corporate action by the Board of Directors of ProMed Uplandand by the sole shareholder of ProMed Upland has been taken to authorize theconsummation by ProMed Upland of the Transaction.

(e)           A spousal consent of the ProMedUpland Shareholder for this Agreement.

(f)            Letters of resignation of officersand directors of ProMed Upland as requested by Group.

(g)           Original stock certificatesrepresenting the ProMed Upland Shares duly endorsed in blank for transfer andpresented with stock powers duly endorsed in blank.

(h)           The Prasad Employment Agreement, theThapar Employment Agreement and the Bahremand Employment Agreement.

(i)            The Prasad Non-Compete Agreement,the Thapar Non-Compete Agreement and the Barhemand Non-Compete Agreement.

(j)            A legal opinion from counsel toProMed Upland as to the matters set forth in Exhibit J.

6.2           Conditions to the Obligations ofGroup and Holdings.  The obligationto pay the Purchase Price as set forth in this Agreement and to consummate theTransaction is conditioned upon satisfaction, or waiver by Group and Holdingsin writing, of all of the following on or before the Closing Date:

(a)           All of the representations andwarranties of ProMed Upland and the ProMed Upland Shareholder in this Agreementmust have been accurate in all material respects as of the date of thisAgreement, and must be accurate in all material respects as of the Closing Dateas if made on the Closing Date, except for such representations and warrantiesthat address matters as of a specific date, which need only to have been trueand accurate as of such date.

(b)           All of the agreements, covenants andobligations that ProMed Upland and the ProMed Upland Shareholder are requiredto perform or to comply with pursuant to this Agreement at or prior to theClosing Date must have been duly performed and complied with in all materialrespects.

(c)           Each document required to bedelivered pursuant to Section 6.1 hereof must have been delivered to Group andHoldings.

(d)           Since the date of this Agreement,there must not have been commenced or threatened against the ProMed UplandShareholder, ProMed Upland, or any officer or director of ProMed Upland, anyproceeding (i) involving any challenge to, or seeking damages or other reliefin connection with part of the Transaction, or (ii) that may have the effect ofpreventing, delaying, making illegal, or otherwise interfering with any part ofthe Transaction.

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(e)           Group shall have satisfactorily (inthe sole discretion of Group) completed its due diligence investigation ofProMed Upland.

(f)            Group shall have obtainedsatisfactory (in the sole discretion of Group) financing for the cash portionof the Purchase Price.

(g)           There shall have been no materialadverse changes to the financial condition of ProMed Upland subsequent to itsMarch Interim Financial Statement.

(h)           The parties shall have obtained allnecessary consents and approvals to the Transaction, including, withoutlimitation, all Board of Directors and all shareholder consents and allnecessary consents or approvals of third parties, including HMO consents.

(i)            The parties shall have obtained allnecessary approvals from applicable state and federal regulatory authorities.

(j)            All conditions to the closings ofthe ProMed Pomona Acquisition and the ProMed Company Acquisition, respectively,have been satisfied and the consummation of each transaction is occurringsimultaneously with the Closing herein.

6.3           Deliveries by Group and Holdingson the Closing Date.  On the ClosingDate, Group and Holdings shall deliver to the ProMed Parties.

(a)           Certificates executed by the ChiefExecutive Officer of Group and Holdings confirming (i) the truth andcorrectness in all material respects of all of Group’s, Group Subsidiary’s andHoldings’ representations and warranties in this Agreement as of the ClosingDate and as of all times between the date hereof and the Closing Date, and (ii)that all agreements and covenants of Group and Holdings specified herein to becomplied with prior to the Closing Date have been complied with.

(b)           Certificate of the secretaries ofGroup and Holdings dated the Closing Date, and accompanying resolutionsreflecting that the necessary corporate action by the Board of Directors ofGroup and Holdings to authorize the consummation by Group and Holdings of theTransaction.

(c)           The Prasad Employment Agreement, theThapar Employment Agreement and the Bahremand Employment Agreement.

(d)           The Prasad Non-Compete Agreement, theThapar Non-Compete Agreement and the Barhemand Non-Compete Agreement.

(e)           A legal opinion from counsel to Groupas to the matters set forth in Exhibit M.

(f)            The Purchase Price described inSection 1.3 hereof.

6.4           Conditions to the Obligations ofProMed Upland and the ProMed Upland Shareholder.  The obligations of ProMed Upland and theProMed Upland Shareholder to

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consummate the Transaction is conditioned uponsatisfaction, or waiver by ProMed Upland and the ProMed Upland Shareholder inwriting, of all of the following on or before the Closing Date:

(a)           All of the representations andwarranties of Group and Holdings in this Agreement must have been accurate inall material respects as of the date of this Agreement, and must be accurate inall material respects as of the Closing Date as if made on the Closing Date,except for such representations and warranties that address matters as of aspecific date, which need only to have been true and accurate as of such date.

(b)           All of the agreements, covenants andobligations that Group and Holdings are required to perform or to comply withpursuant to this Agreement at or prior to the Closing Date must have been dulyperformed and complied with in all material respects.

(c)           Each document required to bedelivered pursuant to Section 6.3 hereof must have been delivered to ProMedUpland and the ProMed Upland Shareholder.

(d)           Since the date of this Agreement,there must not have been commenced or threatened against Group, Holdings or anyofficer or director of Group or Holdings, any Proceeding (i) involving anychallenge to, or seeking damages or other relief in connection with, any partof the Transaction, or (ii) that may have the effect of preventing, delaying,making illegal, or otherwise interfering with any part of the Transaction. Anythird party approvals or consents required to be obtained to effectuate theTransaction shall have been received.

**ARTICLE 7.**

**INDEMNIFICATION; REMEDIES**

7.1           Indemnification Period.  As used in this Article 7, the *“Indemnification Period”* shall be thatperiod of time commencing on the Closing Date and continuing for two (2) yearsthereafter.

7.2           Indemnification of Group andHoldings.  The ProMed UplandShareholder shall indemnify, defend and hold harmless Group and Holdings andtheir directors, officers, employees, agents and affiliates from and againstany and all damage, loss, liability and expense (including without limitation(A) reasonable expenses of investigation and reasonable attorneys’ fees andreasonable expenses in connection with any action, suit or proceeding, (B) anyfees and expenses in connection with the retention of counsel to pursueinsurance coverage, (C) any amounts paid to defend, litigate, settle, satisfy ajudgment, or otherwise resolve disputes with the insurance carrier, if any, orthe claimant, and (D) all amounts not covered by insurance incurred or sufferedby Group or Holdings arising out of (i) any breach of the representations,warranties, covenants or agreements of ProMed Upland and/or the ProMed UplandShareholder set forth herein, (ii) any failure by ProMed Upland or the ProMedUpland Shareholder to perform or comply with any covenant contained in thisAgreement that is required to be performed or complied with by ProMed Upland orthe ProMed Upland Shareholder as set forth herein, and/or (iii) any actionagainst Group, Group Subsidiary, Holdings or any of their affiliates arisingfrom or based upon an allegation of intentional tortious conduct any officer,employee or agent of ProMed Upland (including, but not limited to, any claimsof wrongful termination, sexual harassment, racial or sexual discrimination)that occurred prior to the Closing Date (collectively,

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the*“Prospect Indemnifiable Damages”*). Notwithstanding the foregoing, and except as otherwise specificallyprovided in Section 7.4, the ProMed Upland Shareholder shall not be obligatedto indemnify Group or Holdings for any Prospect Indemnifiable Damages thatexceed Five Hundred Thousand Dollars ($500,000) (the *“Indemnification Cap”*). Group, Group and/or Holdings may obtain indemnification for any ProspectIndemnifiable Damages to which this Section 7.2 relates only if it makes aclaim for indemnification within the Indemnification Period defined in Section7.1, except as otherwise provided in Section 7.4

7.3           Indemnification of the ProMedUpland Shareholder.  Group andHoldings, jointly and severally, agree to hold harmless, defend and indemnifythe ProMed Upland Shareholder from and against any and all damage, loss,liability and expense (including without limitation (A) reasonable expenses ofinvestigation and reasonable attorneys’ fees and reasonable expenses inconnection with any action, suit or proceeding, (B) any fees and expenses inconnection with the retention of counsel to pursue insurance coverage, (C) anyamounts paid to defend, litigate, settle, satisfy a judgment, or otherwiseresolve disputes with the insurance carrier, if any, or the claimant; and (D)all amounts not covered by insurance) incurred or suffered by the Seller orProMed Upland Shareholder arising out of (i) any breach of the representations,warranties, covenants or agreements of Group or Holdings set forth herein (ii)any failure by Group or Holdings to perform or comply with any covenantcontained in this Agreement that is required to be performed or complied withby Group or Holdings as set forth herein (the *“SellerIndemnifiable Damages”*). Notwithstanding the foregoing, neither Group nor Holdings shall beobligated to indemnify the ProMed Upland Shareholder for Seller IndemnifiableDamages in excess of the Indemnification Cap. The ProMed Upland Shareholder may obtain indemnification for any ProMedIndemnificable Damages to which this Section 7.3 relates only if it makes aclaim for indemnification within the Indemnification Period defined in Section7.1.

7.4           Exclusion of Prospect IndemnifiableDamages from Indemnification Period and Indemnification Cap.  Notwithstanding anything in this Agreement tothe contrary, neither the Indemnification Period nor the Indemnification Capshall apply to limit Prospect Indemnifiable Damages with respect to claims ofGroup or Holdings described in (i) through (iii) below, which in each case (A)shall be limited as to period by the statute of limitations period applicableto claims of that particular nature and (B) shall be limited as to amount ofthe Purchase Price.

(i)            under Section 7.2(iii);

(ii)           arising out of or related to a breachof any or all of the representations, warranties, covenants or agreements setforth in Section 2. 10; and/or

(iii)          fraud.

7.5           Indemnification Procedures.  A party seeking indemnification (the *“Indemnitee”*) shall use its best efforts to minimize anyliabilities, damages, deficiencies, claims, judgments, assessments, costs andexpenses in respect of which indemnity may be sought under this Agreement.  The Indemnitee shall give prompt writtennotice to the party from whom indemnification is sought (the *“Indemnitor”*) of the assertion of a claim forindemnification, but in no event longer than twenty (20) days after service ofprocess in the event litigation is commenced against the Indemnitee by a thirdparty.  No such notice of assertion of aclaim shall 

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satisfy the requirements of this Section 7.5 unless itdescribes in reasonable detail and in good faith the facts and circumstances,to the extent known by Indemnitee, upon which the asserted claim forindemnification is based.  If any actionor proceeding shall be brought in connection with any liability or claim to beindemnified hereunder, the Indemnitee shall provide the Indemnitor twenty (20)calendar days to decide whether to defend such liability or claim.  During such period, the Indemnitee shall takeall necessary steps to protect the interests of itself and the Indemnitor,including the filing of any necessary responsive pleadings, the seeking ofprovisional relief or other action necessary to maintain the status quo,subject to reimbursement from the Indemnitor of its expenses in doing so.  The Indemnitor shall (with, if necessary,reservation of rights) defend such action or proceeding at its expense, usingcounsel selected by the insurance company insuring against any such claim andundertaking to defend such claim, or by other counsel selected by it andapproved by the Indemnitee, which approval shall not be unreasonably withheldor delayed.  The Indemnitor shall keep theIndemnitee fully apprised at all times of the status of the defense and shallconsult with the Indemnitee prior to the settlement of any indemnifiedmatter.  The Indemnitee agrees to usereasonable efforts to cooperate with the Indemnitor in connection with itsdefense of indemnifiable claims.  In theevent the Indemnitee has a claim or claims against any third party arising outof or connected with the indemnified matter, then upon receipt ofindemnification, the Indemnitee shall fully assign to the Indemnitor the entireclaim or claims to the extent of the indemnification actually paid by theIndemnitor and the Indemnitor shall thereupon be subrogated with respect tosuch claim or claims of the Indemnitee.

7.6           No Effect on ProMed CompanyAcquisition and/or ProMed Pomona Acquisition.  The indemnification limitations contained inthis Article 7 do not serve to limit the indemnification obligations of theProMed Upland Shareholder in the ProMed Company and/or ProMed PomonaAcquisitions.  Therefore, the ProMedUpland Shareholder, as a principal ProMed shareholder and an executive officerin the ProMed Company and/or ProMed Pomona transactions and thus subject to anindemnification obligation in those transactions, shall be obligated toindemnify Group, Holdings, Holdings’ affiliate, ProMed Company or ProMed Pomonato the extent provided in such acquisition documents.

7.7           Determination of AdverseConsequences.  Any calculation ofProspect Indemnifiable Damages in respect of the indemnification obligations ofthe ProMed Upland Shareholder and the under this Article 7 shall be net of theamount of any insurance recovery actually received by any of Group or ProMedUpland.  Group shall use commerciallyreasonable efforts to secure any applicable insurance recoveries to the extentapplicable.

**ARTICLE 8.**

**TERMINATION**

8.1           Termination Events.  The Agreement may, by notice given prior toor at the Closing, be terminated as follows:

(a)           Upon the mutual written consent ofGroup on the one hand and the ProMed Parties on the other hand, this Agreementmay be terminated on such terms and conditions as agreed; or

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(b)           By written notice of Group on the onehand and the ProMed Parties on the other hand if ProMed Upland or the ProMedUpland Shareholder breaches in any material respect any of its representationsor warranties or defaults in any material respect in the observance or in thedue and timely performance of any of its covenants or agreements hereincontained and such breach or default shall not be cured prior to the earlier ofthe Closing Date or 30 days of the date of notice of breach or default servedby Group; or

(c)           By written notice of the ProMedParties on the one hand and to Group on the other hand if Group breaches in anymaterial respect any of its representations or warranties or defaults in anymaterial respect in the observance or in the due and timely performance of anyof its covenants or agreements herein contained and such breach or defaultshall not be cured prior to the earlier of the Closing Date or 30 days of thedate of notice of breach or default served by the ProMed Parties; or

(d)           By written notice of Group to theProMed Parties or by the ProMed Parties to Group if any court of competentjurisdiction shall have issued any order, decree or ruling or taken any otheraction restraining, enjoining or otherwise prohibiting the contemplatedtransactions; or

(e)           By written notice of Group to theProMed Parties, or by the ProMed Parties to Group, if any court, legislativebody or governmental or regulatory authority has taken, or is reasonablyexpected to take, any action that would make the consummation of thetransactions contemplated hereby inadvisable or undesirable as determined byGroup or the ProMed Parties in its sole discretion; or

(f)            By written notice of Group to theProMed Parties if it shall become apparent in the judgment of Group reasonablyexercised that any condition to Group’s obligation to close as set forth inArticle 6 hereof will not be satisfied before the Closing Date; or

(g)           By written notice of the ProMedParties to Group if it shall become apparent in the judgment of the ProMedParties reasonably exercised that any condition to the ProMed Parties’obligation to close as set forth in Article 6 hereof will not be satisfiedbefore the Closing Date.

Notwithstanding the foregoing, no party hereto may effect a terminationhereof at such time such party is in material default or breach of thisAgreement.

8.2           Effect of Termination.  Each party’s right of termination underSection 8.1 is in addition to any other rights it may have under this Agreementor otherwise, and the exercise of a right to termination will not be anelection of remedies.  If this Agreementis terminated pursuant to Section 8.1, all further obligations of the partiesunder this Agreement will terminate, provided, however, that if this Agreementis terminated by a party because of the breach of the Agreement by the otherparty or because one or more of the conditions to the terminating party’sobligations under this Agreement is not satisfied as a result of the otherparty’s failure to comply with its obligations under this Agreement, theterminating party’s right to pursue all legal remedies will survive suchtermination unimpaired.

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8.3           Liquidated Damages.

(a)           Notwithstanding anything to thecontrary in this Agreement, if this Agreement is terminated for any reasonother than pursuant to Section 8.1(a), Section 8.1(c), Section 8.1(d), Section8.1(e) or Section 8.1(g) hereof, the parties agree and acknowledge that Groupwill suffer damages that are not practicable to ascertain.  Accordingly, in the event this Agreement isterminated for any reason other than Section 8.1(a), 8.1(c), Section 8.1(d) ,Section 8.1(e) or Section 8.1(g) hereof, Group shall be entitled to the sum ofTwo Hundred Fifty Thousand Dollars ($250,000) payable by ProMed Upland asliquidated damages.  Group and ProMedUpland agree that the foregoing liquidated damages are reasonable consideringall the circumstances existing as of the date hereof and constitute the partiesgood faith estimate of the actual damages reasonably expected to result fromthe termination of this Agreement other than under Section 8.1(a), Section8.1(c), Section 8.1(d), Section 8.1(e) or Section 8.1(g).  Notwithstanding the foregoing, the partiesagree that if Group receives the $250,000 liquidated damages amount from ProMedUpland as a result of a termination under this Article 8, Group shall not beable to collect any additional liquidated damages fee under its agreement withProMed Pomona, and Holdings shall not be able to collect any additionalliquidated damages under its agreement with ProMed Company and ProMed Pomona,as a result of a termination of those agreements, to the extent Group orHoldings’ receipt of such liquidated damages would exceed $250,000 in theaggregate for the termination of the agreements with ProMed Pomona and ProMedCompany.

(b)           **Notwithstanding anything**to the contrary in this Agreement, if this Agreement is terminated for anyreason other than pursuant to Section 8.1(a), Section 8.1(b), Section 8.1(d),Section 8.1(e) or Section 8.1(f) hereof, the parties agree and acknowledge thatProMed Upland will suffer damages that are not practicable to ascertain.  Accordingly, in the event this Agreement isterminated for any reason other than Section 8.1(a), Section 8.1(b), Section8.1(d), Section 8.1(e) or Section 8.1(f) hereof, ProMed Upland shall beentitled to the sum of Two Hundred Fifty Thousand Dollars ($250,000) payable byGroup as liquidated damages.  Group andProMed Upland agree that the foregoing liquidated damages are reasonableconsidering all the circumstances existing as of the date hereof and constitutethe parties good faith estimate of the actual damages reasonably expected toresult from the termination of this Agreement other than under Section 8.1(a),Section 8.1(b), Section 8.1(d), Section 8.1(e) or Section 8.1(f).  Notwithstanding the foregoing, the partiesagree that if ProMed Upland receives the $250,000 liquidated damages amountfrom Group as a result of a termination under this Article 8, neither ProMedPomona nor ProMed Company shall not be able to collect any additionalliquidated damages fee under the agreements for the ProMed Company Acquisitionand the ProMed Pomona Acquisition as a result of a termination of thoseagreements, to the extent the ProMed Pomona or ProMed Company’s receipt of suchliquidated damages would exceed $250,000 in the aggregate for the terminationof the agreements with ProMed Pomona, ProMed Upland and ProMed Company.

**ARTICLE 9.**

**MISCELLANEOUS**

9.1           Entire Agreement.  This Agreement, together with all exhibitsand schedules hereto, and all documents referred to herein, constitutes theentire agreement between the parties with respect to the subject matter hereof,supersedes all other and prior agreements on the same subject, whether writtenor oral, and contains all of the covenants and agreementsbetween the 

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parties with respect tothe subject matter hereof.  Each party tothis Agreement acknowledges that no representations, inducements, promises, oragreements orally or otherwise, have been made by the party(ies), or by anyoneacting on behalf of any party, that are not identified herein, and that noother agreement, statement, or promise not contained in this Agreement shall bevalid or binding.  Certain mattersthat are listed in the Schedules to this Agreement are for informationalpurposes only and in no event shall the listing of any matters in theseSchedules be deemed to constitute an admission that such matters are requiredto be listed therein by the terms of this Agreement or that such matters areotherwise material.  In no event shallthe listing of any matters in these Schedules be deemed or interpreted tobroaden or otherwise amplify any representations or warranties contained in theAgreement.

9.2           Arbitration.  In the event of a dispute under thisAgreement which is not resolved after good faith negotiation, either Group orGroup Subsidiary on the one hand or the ProMed Parties on the other hand maydemand arbitration of the matter and the matter shall be settled by arbitrationconducted by a single neutral arbitrator. Any such arbitration shall be held in Los Angeles County, Californiaunder the rules then in effect of the American Arbitration Association.  The decision shall be written and shall besupported by, as agreed by the parties, either a reasoned award or findings offact and conclusions which shall set forth the award, judgment, decree or orderawarded by the arbitrator.  Theprevailing party to an arbitration shall be entitled to recovery from thenon-prevailing party of the fees of the arbitrator, the administrative costs ofthe arbitration, and the expenses, including, without limitation, reasonableattorneys’ fees and costs, reasonably incurred by it in connection with thearbitration.  Judgment upon any awardrendered by the arbitrator may be entered in any court havingjurisdiction.  Notwithstanding theforegoing, the parties shall have the rights to discovery in accordance withCalifornia Code of Civil Procedure Section 1283.05.

9.3           Successors and Assigns.  This Agreement and all documents andagreements referred to herein shall be binding upon and shall inure to thebenefit of the parties and their respective heirs (as applicable), legalrepresentatives, and permitted successors and assigns.  No party may assign this Agreement or therights, interests or obligations hereunder except by mutual written consent ofthe parties thereto.

9.4           No Waiver. No waiver of any term, provision or condition of this Agreement, whetherby conduct or otherwise, in any one or more instances, shall be deemed to be orbe construed as a further or continuing waiver of any such term, provision orcondition or as a waiver of any other term, provision or condition of this Agreement.

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

9.6           Headings. The section headings contained in this Agreement areinserted for convenience only and shall not affect in any way the meaning orinterpretation of this Agreement.

9.7           Notices. Any notices required or permitted to be given hereunder byany party to the other shall be in writing and shall be deemed delivered uponpersonal delivery; twenty-four 

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(24) hours followingdeposit with a courier for overnight delivery; or five (5) business daysfollowing 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 addressesas the parties may specify in writing:
| If to ProMed Upland:               |   | Upland Medical Group, A Professional Medical  Corporation.  4150 E. Concours St., Suite 100  Ontario, CA 91764  Attn: Jeereddi Prasad, M.D. |
|------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|
|                               |   |                                                                                                                                        |
| If to ProMed  Upland  Shareholder: |   |                                                                                                                                        |
|                               |   |                                                                                                                                        |
| In each case,  with a  copy to:    |   | Stradling Yocca Carlson & Rauth  660 Newport Center Drive, 16th floor  Newport Beach, CA 92660  Attn: Shivbir S. Grewal, Esq.      |
|                               |   |                                                                                                                                        |
| If to Group:                       |   | Prospect Medical Group, Inc.1920 East 17th Street Suite 200  Santa Ana, California 92705Attn: Jacob Y. Terner, M.D.                    |
|                               |   |                                                                                                                                        |
| If to Holdings:                    |   | Prospect Medical Group, Inc.  400 Corporate Pointe, Suite 525Culver City, CA  90230Attn: Jacob Y.  Terner, M.D.                             |
|                               |   |                                                                                                                                        |
| In each case,  with a  copy to:    |   | Theodora Oringher Miller & Richman  2029 Century  Park East, 6th FloorLos Angeles, CA  90067Attn: Dale S.  Miller, Esq.                 |

 

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

9.9           Amendment.  This Agreementmay be amended at any time by agreement of the parties, provided that anyamendment shall be in writing and executed by all parties.

9.10         Severability.  If anyprovision of this Agreement is held by a court of competent jurisdiction to beinvalid or unenforceable, the remaining provisions will nevertheless continuein full force and effect, unless such invalidity or unenforceability woulddefeat an essential business purpose of this Agreement.

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9.11         Fees and Expenses.  Except asotherwise explicitly set forth herein, each party shall bear its own expensesincluding, without limitation, attorneys’ and accountants’ fees in connection with thepreparation of this Agreement and the transactions contemplated hereby.

9.12         Exhibits and Schedules.  All exhibits and schedules attached to thisAgreement are incorporated herein by this reference and all references herein to *“Agreement”*shall mean this Agreement together with all such exhibits and schedules to bedelivered at the execution of this Agreement or upon the Closing Date.

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

9.14         Attorneys’ Fees. Should any party institute any action or procedure to enforce thisAgreement or any provision hereof, or for damages by a declaration of rightshereunder including without limitation arbitration, the prevailing party in anysuch action or proceeding shall be entitled to receive from the other party allcosts and expenses, including without limitation reasonable attorneys’ fees,incurred by the prevailing party in connection with such action or proceeding.

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

9.16         References to Dollars.  All references to *“dollars”*and *“$”* shall mean United States dollars.

9.17         Construction.  Whenever in this Agreement the context sorequires, references to the masculine shall be deemed to include the feminineand the neuter, reference to the neuter shall be deemed to include themasculine and feminine, references to the plural shall be deemed to include thesingular and the singular to include the plural and references to the words *“and”* and *“or”* shall bedeemed to include the inclusive usage *“and/or.”*

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IN WITNESS WHEREOF, the undersigned have executed thisAgreement as of the date first written above.
|          | *“Group”*                      |
|----------|------------------------------------------|
| * * | * *                                 |
|     | PROSPECT  MEDICAL GROUP, INC.            |
|     |                                     |
|     |                                     |
|     | By:                                      |   |   |
|     |                                     | Jacob Y. Terner,  M.D. |
|     |                                     | Chief Executive  Officer |
|     |                                     |   |
|     |                                     |   |
| * * | *“Holdings”*                   |
| * * | * *                                 |
|     | PROSPECT  MEDICAL HOLDINGS, INC.         |
|     |                                     |
|     |                                     |
|     | By:                                      |   |   |
|     |                                     | Jacob Y. Terner,  M.D. |
|     |                                     | Chief Executive  Officer |
| * * | * *                                 |
| * * | * *                                 |
| * * | *“ProMed  Upland”*             |
| * * | * *                                 |
|     | UPLAND  MEDICAL GROUP, A PROFESSIONAL    |
|     | MEDICAL  CORPORATION                     |
|     |                                     |
|     |                                     |
|     | By:                                      |   |   |
|     |                                     | Jeereddi Prasad,  M.D. |
|     |                                     | President |
|     |                                     |   |
|     |                                     |   |
| * * | *“ProMed  Upland Shareholder”* |
|     |                                     |
|     |                                     |   |
|     | Jeereddi Prasad,  M.D.                   |

** **

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