**EXHIBIT 2.11**

 

**STOCKPURCHASE AGREEMENT**

 

**Among**

 

**PROSPECTMEDICAL GROUP, INC.,**

**ACALIFORNIA PROFESSIONAL CORPORATION**

**Purchaser**

 

**And**

 

**GENESISHEALTHCARE OF SOUTHERN**

**CALIFORNIA,INC., A MEDICAL GROUP, A**

**CALIFORNIAPROFESSIONAL CORPORATION**

**Company**

 

**And**

 

**MITCHELL W.LEW, M.D.**

**Seller**

 

November 1, 2005

 

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**STOCK PURCHASE AGREEMENT**

 

                ThisStock Purchase Agreement (the “Agreement”) is entered into this 1st day ofNovember, 2005 by and among Prospect Medical Group, Inc., a Californiaprofessional corporation (“*Purchaser*”),Mitchell W. Lew, M.D. (*“Seller”*),and Genesis Healthcare of Southern California, Inc., a Medical Group, aCalifornia professional corporation (*“Company”*).

 

# **RECITALS**

 

A.            Company is a licensed Californiaprofessional corporation that operates as an independent practice associationand, as such, contracts with physicians (*“CompanyProvider Contracts*”) and providers of ancillary services (*“Company Ancillary Service Contracts”*) toprovide professional medical services to patients (*“Company Enrollees”*) through capitated contracts with healthmaintenance organizations (*“Company HealthPlans”*).

 

B.            Company is authorized to issue (i)Five Hundred Thousand (500,000) shares of its no par value Class A commonstock, of which 10,000 may be designated as Class A — Series One common stockand 490,000 may be designated as Class A — Series Two common stock, of which6,000 shares of Class A — Series One, and 262,500 shares of Class A — SeriesTwo, are presently issued and outstanding; and (ii) Five Hundred Thousand (500,000)shares of its no par value Class B common stock, of which no shares arepresently issued and outstanding (such issued and outstanding common stock ofthe Company is hereinafter referred to as the *“Stock”*).

 

C.            Seller owns of record and beneficially all of the issuedand outstanding Stock.

 

D.            Purchaser is a licensed Californiaprofessional corporation that operates as an independent practice associationand as such provides professional medical services to patients primarilythrough capitated contracts with health maintenance organizations.

 

E.             Prospect Medical Holdings, Inc., aDelaware corporation, through its wholly owned subsidiary Prospect MedicalSystems, Inc., a Delaware corporation, provides management and administrativeservices to Purchaser pursuant to a long-term management services agreement.

 

F.             Seller desires to sell andPurchaser desires to purchase all of the Stock of Seller, on the terms andconditions set forth in this Purchase Agreement, making Company a wholly ownedsubsidiary of Purchaser.

 

                **NOW**, **THEREFORE**,in consideration of the covenants and condi­tions contained herein and forother valuable consideration, the receipt and sufficiency of which are herebyacknowledged, the parties hereby agree as follows:

 

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**AGREEMENT**

 

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

 

**ARTICLE 1**

 

**PURCHASE AND SALE OF STOCK**

 

1.1           Closing Date.The consummation of the sale of the Stock to Purchaser and the othertransactions contemplated by this Agreement (collectively, the *“Transaction”*), shall take placesimultaneous with the execution of this Agreement (the *“Closing”)*on November 1, 2005 (the *“Closing Date”*).

1.2           Transfer of Stock.At the Closing, the Seller will deliver to Purchaser one or more certificatesrepresenting all of the Stock, as set forth in Schedule 1.2. Such stockcertificates will be duly endorsed in blank for transfer or shall be presentedwith stock powers duly endorsed in blank, with such other documents as may bereasonably required by Purchaser to effect a valid transfer of such the Stockby the Seller, 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.  Subject to the terms and conditions of thisAgreement, in reliance on the representations, warranties and covenants of theparties hereto and in consideration of the sale and transfer of the Stock,Purchaser shall pay to Seller, a total purchase price of EightMillion Dollars ($8,000,000) on the Closing Date (the *“Purchase Price”*). ThePurchase Price shall be paid by way of a wire transferof immediately available funds into a deposit account designated in writing bySeller prior to the Closing Date.

 

1.4           Non-Competition Agreement. As additionalconsideration for the execution of this Agreement and the Transaction, Sellershall enter into a non-competition agreement in the form set forth in *Exhibit**A* attached hereto, which, among otherthings, will contain a restriction on competition with Purchaser and Purchaser’saffiliates for a period of 3 years following the Closing Date (the *“Non-Competition Agreement”*).

 

1.6           Purchase Price Allocation.  The parties agree that they shall allocate thePurchase Price as shown in Schedule 1.6, and agree that they shall usesuch allocation for purposes of federal and state tax reporting, including Form8594.

 

1.7           Fair Market Value.  The parties agree that the Purchase Pricereflects the aggregate fair market value of the Stock and the Non-CompetitionAgreement.

 

1.8           Sales and Transfer Taxes on the Sale ofthe Stock. Any sales and transfer taxes, if any,related to the sale of the Stock shall be borne by Seller.

 

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**ARTICLE 2**

 

**REPRESENTATIONS AND WARRANTIES**

**OF THE COMPANY**

 

In order to induce Purchaser to enter into this Agreement and toconsummate the Transaction, Company and Seller, jointly and severally, make therepresentations and warranties set forth in this Article 2.

 

2.1           Organization; Subsidiaries. Companyis a California professional corporation duly organized, validly existing andin good standing under the laws of the State of California. Company has allrequisite corporate power and authority to own, lease, and operate its businessand to carry on its business as currently being conducted. Company is duly qualifiedto transact its business in the State of California and does not conductbusiness in any other state. Company has no partially-owned or wholly-ownedsubsidiaries.

 

2.2           Minute Book and Stock Records.The minute books and stock records of Company are complete and accurate in allmaterial respects and all signatures included therein are the genuinesignatures of the persons indicated as signing. True, correct and completecopies of Company’s minute books and stock records, including Company’sArticles of Incorporation and By-laws and all amendments to both, havepreviously been delivered to Purchaser. Company is not in default under or inviolation of any provision of its Articles of Incorporation or its By-laws.

 

2.3           Authorization. Company has thecorporate power and authority to enter into this Agreement and to consummatethe Transaction. All actions on the part of Seller and Company necessary forthe authorization, execution, delivery and performance of this Agreement andthe consummation of the Transaction has been or will be taken prior to theClosing Date, and this Agreement (including exhibits, schedules and theancillary agreements) constitutes the legal, valid and binding obligation ofCompany and Seller, enforceable in accordance with its terms, 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

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2.4           No Consent Required. Neitherthe execution and delivery of this Agreement nor the performance by it of itsobligations under this Agreement requires the consent, approval, order orauthorization of, or registration, declaration or filing with any governmentalentity or any third party that has not been obtained and delivered toPurchaser.

 

2.5           No Violation of Other Agreements;No Conflicts.

 

(a)           Neither this Agreement nor any of the transactionscontemplated hereunder violates, conflicts with or results in a breach of, orshall violate, conflict with or result in a breach of any lease, contract,document or agreement to which Company or Seller is a party or by which Companyor Seller may be bound.

 

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(b)           Neither the execution and delivery of this Agreement northe consummation or performance of the transactions contemplated herein, will,directly or indirectly (with or without the giving of notice, or lapse of time,or both):

 

(i)            contravene,conflict with, or result in a violation of any provision of the organizationaldocuments of Company;

 

(ii)           contravene,conflict with, or result in a violation of any order, judgment or decree towhich Company or Seller may be subject; or

 

(iii)          contravene,conflict with or result in a violation of any of the terms or requirements, orgive any governmental body the right to revoke, withdraw, suspend, cancel,terminate or modify, any governmental authorization that is held by Company.

 

2.6           Capital Structure.The authorized capital stock of Company consists of One Million (1,000,000)shares of common stock, of which Five Hundred Thousand (500,000) sharesconstitute Class A common stock, no par value, and FiveHundred Thousand (500,000) constitute Class B common stock.  Of the 500,000 shares of ClassA common stock authorized, 10,000 may be designated as Class A — Series Onecommon stock and 490,000 may be designated as Class B — Series Two commonstock. There are currently 6,000 shares of Class A — Series One, and 262,500shares of Class A — Series Two, presently issued and outstanding Noshares of Class B common stock are issued and outstanding. All outstandingshares are validly issued, fully paid and nonassessable and are owned bySeller. There are no shares of Company’s capital stock held in Company’streasury. There are no options, warrants, rights, shareholder agreements orother instruments or agreements outstanding giving any person the right toacquire any shares of capital stock of Company, nor are there any commitmentsto issue or execute any such options, warrants, rights, shareholder agreementsor other instruments or agreements. There are no outstanding stock appreciationrights or similar rights outstanding with respect to any of the capital stockof Company nor are there any instruments, or agreements giving anyone the rightto acquire any such rights.

 

2.7           Financial Statements. Seller has previouslydelivered to Purchaser all financial statements, books, and records related tothe operations of Company, including but not limited to, (i) the balance sheetsand income statements of Company (the *“YearEnd Financial Statements”*), for the years ended December 31, 2002,December 31, 2003 and December 31, 2004 (the latter being the *“December 2004 Year End Financial Statements”*)and (ii) the interim balance sheets and income statements of Company for thesubsequent monthly periods (the *“InterimFinancial Statement”*) through and including September 2005 (the *“September 2005 Interim Financial Statement”*)and all supporting documents and schedules for the Interim FinancialStatements. The Year End Financial Statements (including the December 2004 YearEnd Financial Statements) and the Interim Financial Statements (including theSeptember 2005 Interim Financial Statements) be collectively referred to hereinfrom time to time as the *“FinancialStatements”*.  The FinancialStatements fairly and accurately represent the financial condition and resultsof operation of Company as of the date and for the periods set forth thereinand the Financial Statements do not contain any statement that is false ormisleading with respect to any material fact or omit to state any material factrequired to be stated therein or necessary to make the statements therein notmisleading. The Financial Statements have been prepared in accordance with GAAPapplied on a consistent basis throughout the periods covered thereby. As

 

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used herein, “GAAP” meansU.S. generally accepted accounting principles consistently applied. Since thedate of the December 2004 Year End Financial Statements there has not been anymaterial adverse change to the financial condition of Company as shown on theDecember 2004 Year End Financial Statements.

 

2.8           No Undisclosed Liabilities. Companydoes not have any liabilities or obligations of any nature (whether absolute,accrued, contingent, or otherwise) except for those shown on the September 2005Interim Financial Statement.

 

2.9           Tax Matters. From the date of incorporation untilDecember 31, 2001, Company was a C corporation.                CommencingJanuary 1, 2002, Company has been a validly elected S corporation within themeaning of Internal Revenue Code Sections 1361 and 1362 for federal and statepurposes and will continue to be a S corporation up through the Closing Date. Sinceits date of incorporation, Company has timely filed all income and franchisetax returns required to be filed by it and has timely paid in full all Taxes(defined below) owed by it for the periods ending on December 31, 2004 and hasproperly accrued, in accordance with generally accepted accounting principles,on the Financial Statements all Taxes for all periods thereafter up to andincluding September 2005. Company has accrued all Taxes owing for the periodcommencing January 1, 2005 through the Closing Date.  All tax returns filed by or on behalf of Company are true, accurateand complete in all material respects. Except as provided in Schedule 2.9,(i) no action or proceeding for the assessment or collection of any Taxes ispending against Company, (ii) no deficiency, assessment or other formal claimfor any Taxes has been asserted or made against Company that has not been fullypaid or finally settled; and (iii) no issue has been formally raised by anytaxing authority in connection with an audit or examination of any return ofTaxes. No federal or state income tax returns of Company have been audited orexamined, and there are no outstanding agreements or waivers extending theapplicable statutory periods of limitation for such Taxes for any period.          All Taxes that Company has beenrequired to collect or withhold have been duly withheld or collected and, tothe extent required, have been paid to the proper taxing authority. “Taxes”means taxes, charges, fees, levies, or assessments including, withoutlimitation, income, excise, property, withholding, payroll, sales and franchisetaxes, imposed by federal, state, county, local or foreign government orsubdivision or agency thereof, and including any interest, penalties or additions.

 

2.10         Title to the Stock. Seller is the owner, beneficiallyand of record, of one hundred percent (100%) of the outstanding capital stockof Company. Seller owns the Stock free and clear of all Liens. At the Closing,Purchaser will acquire good title to the Stock free and clear of all Liens.

 

2.11         Real Property.

 

                (a)           Company does not own any realproperty, nor has it ever owned any real property.

 

                (b)           Schedule 2.11(b) contains atrue, correct and complete list and summary of all leases, subleases and otheragreements under which Company uses or has the right to occupy any realproperty.

 

2.12         Tangible Personal Property.

 

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                (a)           Company has good, marketable andvalid title to all tangible personal property owned by it free and clear of allLiens.

 

                (b)           Each item of furniture, equipment andother tangible personal property with an original cost of $500 or more that isowned by Company and used in the conduct of its business is listed in Schedule2.12(b) (the *“Tangible Personal Property”*).

 

                (c)           All items constituting the TangiblePersonal Property have been retained by Company and considered part of theTransaction. None of the Tangible Personal Property is being be sold nor is itencumbered by a Lien except as specifically contemplated by this Agreement. Allof the Tangible Personal Property are in working condition and operating in theordinary course of business of Company.

 

2.13         Intellectual Property. Schedule 2.13 lists allintellectual property owned by Company. Except for the name Edward MedicalGroup II, Inc., Company has not operated during the past five (5) years underany name other than the name as set forth in the preamble located on the firstpage of this Agreement. Company has applied for and received a fictitious namepermit from the California Medical Board to use the name Genesis Healthcare ofSouthern California, a Medical Group, which permit is outstanding and active asof the Closing Date. Company does not, nor does it know of any reason it wouldbe obligated to pay, any royalties, license fees or other amounts to any personor entity as a result of the use of its name. To the knowledge of Company, itsuse of such name does not infringe on the rights of any third party.

 

2.14         Contracts. Schedule 2.14 sets forth a list ofall contracts, agreements, leases, documents, instruments, loan agreements,security agreements, arrangements, and commitments (whether oral or written) towhich Company is bound (the *“Contracts”*),which Contracts shall specifically include all Contracts with the CompanyHealth Plans, all Company Provider Contracts and the Company Ancillary ServiceContracts. Company has delivered to Purchaser a correct and complete copy ofeach Contract; except in the case of the Company Provider Contracts and theCompany Ancillary Service Contracts where Company has provided Purchaser theform of each such contract. Company represents that the Company ProviderContracts are identical, except for the name of the physician and such physician’srates, to one of the following forms provided to Purchaser (i) (PCP(Individual) — Capitated, (ii) PCP (Group) — Capitated, (iii) SpecialistPhysician Agreement — Fee for Service and (iv) Specialist Agreement —Capitated. Company represents that each Company Ancillary Service Contract isidentical to the Ancillary Services Agreement — Fee for Service form providedto Purchaser, except for the name of the ancillary provider, the description ofthe particular ancillary services to be provided thereunder, and such provider’srates. Each of the Contracts is a legal, valid, binding, enforceable agreementof Company, in full force and effect, and have been entered into in theordinary course of business or otherwise, consistent with past practice, exceptas enforceability may be restricted, limited or delayed by applicablebankruptcy, insolvency, fraudulent conveyance, or other laws affecting creditor’srights generally, and except as enforceability is subject to general principlesof equity. There is not now and, to the knowledge of Company, there has notbeen claimed or alleged by any person or entity, that a default exists, or anevent that with notice or lapse of time or both would constitute a default orevent of default, on the part of Company, or to the knowledge of Company, anyother party. Except for the consent of the Company Health Plans to theTransaction, no consent from, or notice to any third person or governmentalentity is required

 

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in order to maintain in full force and effectany of the Contracts, other than consents that have been obtained and areunconditional and in full force and effect, except as enforceability may berestricted, limited or delayed by applicable bankruptcy, insolvency, fraudulentconveyance, or other laws affecting creditor’s rights generally, and except asenforceability is subject to general principles of equity, or consents thatwill be obtained which will be unconditional and in full force and effect,except as enforceability may be restricted, limited or delayed by applicablebankruptcy, insolvency, fraudulent conveyance, or other laws affecting creditor’srights generally, and except as enforceability is subject to general principlesof equity.               To the knowledgeof the Company, there are (i) no material disputes, facts or circumstances thatwould jeopardize Company’s right to payment under any Contract with the CompanyHealth Plans, and (ii) no revocations, suspensions or threatened revocations orsuspensions of any Contract with Company Health Plans. To the knowledge ofCompany, the transaction contemplated herein shall not result in thetermination, revocation, suspension, alteration or otherwise of any of theContracts with Company Health Plans.     Attachedas *Exhibit B*is a true,correct and complete copy of the management agreement between American MedicalManagement, Inc. (*“Management Company”*)and Company (the *“Management Agreement”*),as amended effective November 1, 2005.

 

2.15         Legal Proceedings. Except as set forth on Schedule 2.15(*“Existing/Threatened Claims”*),there is no pending claim, suit, action, legal or administrativeproceeding (*“Proceeding”*), and,to the knowledge of Company, no person, entity or authority (including, but notlimited to, any employee, agent, contractor or provider of Company) hasthreatened to commence any Proceeding or any investigation that could lead to aProceeding: (i) against or relating to Company (including, without limitation,any workers’ compensation, Equal Employment Opportunity Commission or AmericansWith Disability Act claims) or Company’s shareholders or employees ; or (ii)that challenges, or that may have the effect of preventing, delaying, makingillegal, or otherwise interfering with, any part of the Transaction. To the knowledgeof Company, no person, entity or authority (including, but not limited to, anyemployee, agent, contractor or provider of Company) has threatened to commenceany Proceeding or any investigation that could lead to a Proceeding against anyemployee, agent, contractor or provider of any of Company for conduct whichwould give rise to a potential indemnification obligation of Company. There isno outstanding order, judgment, writ, injunction or decree of any court or anyfederal, state, local or other governmental department, commission, board,bureau, agency or instrumentality, to which Company or any of the other assetsowned or used by Company, is subject that has not been fully complied with tothe satisfaction of such governmental entity. The insurance coverage of Companyas of the date hereof is sufficient to fully cover all fees, expenses andcosts, including attorney fees relating to the defense of theExisting/Threatened Claims and all settlement and judgment amounts pertainingto such actions, subject to the policy deductibles and policy limits. Theparties acknowledge the indemnification obligation of Seller for theExisting/Threatened Claims as set forth in Article 7 of this Agreement. Irrespectiveof Seller’s indemnification obligations, the parties agree that on and afterthe Closing Date, Purchaser and Company shall be entitled to, and Seller shallreasonably cooperate in providing, status reports of such Existing/ThreatenedClaims from the insurance carrier and/or defense counsel, as applicable.

 

                2.16         Compliance with Laws. TheCompany is not is in violation of any law, rule, regulation or administrativeor judicial order pertaining to the assets or the business of Company(including, without limitation, licensing, health care, federal, state or locallaws relating to

 

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kickbacks, illegal referrals, illegalbillings or the like, drug enforcement, securities, zoning, building,environmental, immigration, civil rights and occupational health and safetylaws, regulations, ordinances and codes) and there is no law, rule, regulationor administrative or judicial order applicable to any of Company (as opposed toa law, rule, regulation or administrative or judicial order only applicable tothe Purchaser) that any part of the Transaction would violate, which would havean adverse effect on the assets or the business of the Company or would havethe effect of delaying, making illegal or otherwise interfering with, any partof the Transaction. To the best of its knowledge, Company has no reason toanticipate that existing circumstances are likely to result in violations ofany of the foregoing.

 

2.17         Employees. Set forth on Schedule 2.17 are thefollowing:

 

                (a)           A complete and accurate list of thenames, titles, dates of hire and rates of pay of all employees of Company as ofthe date hereof. Except as set forth separately on Schedule 2.17, (1)all employees are “at will” employees and no written or oral employment,consultant or independent contractor agreement exists with respect to Companyto which Company may be bound, (2) no employees are members of a labor union inconnection with their employment with Company or subject to a collectivebargaining agreement with Company, and (3) to the knowledge of Company, 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 employeebenefit or compensation plan, including without limitation, pension, retirement,deferred compensation, profit sharing, bonus or incentive, medical, dental,health insurance and life insurance or other employee benefit plans,arrangements or undertakings of Company applicable to its employees; and

 

                (c)           A complete and accurate list of allholiday and vacation pay accrued as of September 30, 2005 for all employees ofCompany.

 

                Exceptas set forth in Schedule 2.17, the Company is not a party to, bound by,nor does it maintain or make any contribution to, nor has it incurred any expensewith respect to any employment agreement, pension, retirement, deferredcompensation, profit sharing, bonus or incentive plan, medical, dental or otherhealth insurance plan, life insurance plan, or other employee benefit plan,program, arrangement or undertaking, whether or not legally binding (including,without limitation, any “employee benefit plan” as defined in Section 3(3) ofthe federal Employee Retirement Income Security Act (*“ERISA”*)), under which employees of Company are eligible toparticipate or derive a benefit (collectively *“EmployeePlans” and individually “Employee Plan”*).

 

                (d)           There is no liability of Companywhich has not been properly accrued on the Financial Statements for anyEmployee Plan or unpaid compensation, tax withholdings, wrongful termination,Federal Insurance Contribution Act and disability payments of any kind withrespect to any employee or independent contractor providing services toCompany, including without limitation, vacation pay, sick leave pay, personalday pay, severance pay and bonus pay.

 

2.18         Insurance. Schedule 2.18contains a list of all insurance policies maintained by or for the benefit ofCompany through the Closing Date, including errors and omission, stop-loss

 

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(reinsurance), directors and officers,general liability, worker’s compensation and malpractice insurance policies(the *“Insurance Policies”*). AllInsurance Policies are in full force and effect on the date hereof as evidencedby certificates of insurance for each Insurance Policy, of which true andcorrect copies of such have been delivered to Purchaser. Neither the Companynor the Seller has received any notification from any insurance carrierregarding the possible cancellation or material limitation of any suchInsurance Policies, all of which will be in effect at the Closing Date unlessprovision has been made for the cancellation thereof as of the Closing Datewith the consent of Purchaser.

 

2.19         Management; Powers of Attorney. Schedule 2.19 setsforth all current appointed and acting officers and directors of Company (orother applicable managers or governing board members) and lists all general andspecial powers of attorney granted by Company, including the names of theattorneys-in-fact appointed under those powers of attorney and the respectivedates in which those powers were granted.

 

2.20         No Bankruptcy Proceedings. The Company has not (i)made a general assignment for the benefit of creditors, (ii) filed anyvoluntary petition in bankruptcy or suffered the filing of an involuntarypetition by its creditors, (iii) suffered the appointment of a receiver to takepossession of all or substantially all of its assets, property or business,(iv) suffered the attachment or other judicial seizure of all or substantiallyall of its assets, property or business, (v) admitted in writing its inabilityto pay its debts as they come due, or (vi) made an offer of settlement, extensionor compromise to its creditors generally.

 

2.21         Licensure. As of the date hereof, each of theemployees or independent contractors of Company who is required to be licensedin connection with the delivery of health care services is duly licensed in theState of California without restriction.

 

2.22         Environmental. Company has complied with all federal,state and local environmental laws, rules and regulations as in effect on thedate hereof applicable to its business and its assets.            To the knowledge of Company, no hazardous or toxic waste,substance, material or pollutant (as those or similar terms are defined underthe 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 notlimited to, any asbestos or asbestos related products, oils orpetroleum-derived compounds, CFCs or PCBs, have been released, emitted ordischarged or are currently located in, on, under, or about the real propertyon which the assets or the business of the Company are located. The assets ofCompany and its use thereof, and the Company’s operation of its business, arenot in violation of any Environmental Laws nor any occupational, safety andhealth law now in effect.

 

2.23         Business Relations. To the knowledge of the Company,no Company Health Plan will cease to do business with the Company or willmaterially decrease the volume of business with the Company, after, or as aresult of, the consummation of the Transaction by Purchaser.

 

2.24         Confidentiality and Non-Compete Arrangements. Exceptas set forth in Schedule 2.24, the Company is not a party to, or boundor affected by, any confidentiality or non-compete

 

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agreements or arrangements, or anyacquisition or sale or other agreements that contain any confidentiality ornon-compete agreements or arrangements, that are currently in effect, or arecontained in agreements or arrangements that have lapsed but which containcontinuing confidentiality or non-compete obligations, agreements orarrangements.

 

2.25         Inspections. Schedule 2.25 sets forthaccurately and fully describes (i) all inspections of the Company by anygovernmental agency or any consultant at any time during the previous five (5)years; (ii) all matters that were noted by any and all such governmental agencyor consultant as requiring correction or modifications that were requested orrecommended; and (iii) the present status of each such noted matter.

 

2.26         Reimbursement. As of the date hereof, all billingpractices by Company or by Management Company on its behalf, to all third partypayors, have been true, fair and correct and in compliance with all applicablelaws, regulations and policies of all such third party payors, and Company hasnot billed for or received any payment or reimbursement in excess of amountspermitted by the Company Health Plans or the law.

 

2.27         Absence of Certain Business Practices. NeitherCompany nor any of its agents has directly or indirectly (i) offered to pay orsolicited any remuneration, in cash or in kind, to, any past or presentcustomers, past or present suppliers, contractors, third parties, or thirdparty payors of Company in order to obtain business or payments from suchpersons; other than entertainment activities in the ordinary and lawful courseof business; (ii) given or received, or agreed to give or receive, or is awarethat there has been made or that there is any agreement to make or receive, anygift or gratuitous payment of any kind, nature or description (whether inmoney, property or services) to any customer or potential customer, supplier orpotential supplier, contractors, 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.

 

2.28         Permits. Schedule 2.28 sets forth a list ofall permits, licenses and approvals from federal, state, local and foreigngovernmental and regulatory bodies (collectively *“Permits”*) held by Company. Such Permits constitute all ofthe Permits necessary to conduct the business of Company in the manner nowconducted by Company. No breach of any such Permit currently exists, nor hasany event occurred which through the passage of time or the giving of notice orboth, would constitute a breach thereunder. There is no proceeding pending orthreatened that disputes the validity of any Permit or, to the knowledge ofCompany, may result in the revocation, cancellation or suspension or anymaterial adverse modification of any Permit.

 

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2.29        No Referrals.   Neither Company, its directors, officers,employees or agents, nor Seller are, or during the past twenty-four months havebeen, a party to any contract, lease, agreement or arrangement, including butnot limited to any joint venture or consulting agreement with any physician,hospital, nursing facility, home health agency or other person who is in aposition to make and did make, receive or influence referrals to or fromCompany, provide services, lease space, lease equipment or engage in any otherventure or activity in any manner which was not in compliance with applicablelaw.

 

2.30        Bank Accounts.** **A correct andcomplete list of all bank accounts of Company (*“BankAccounts”*) and the persons authorized to access such accounts and toincur indebtedness on behalf of Company, is set forth in Schedule 2.30(a)of this Agreement.  Except for cashsecuring letters of credit or certificates of deposits pledged as security forthe Company Health Plans as set forth on Schedule 2.30(b), all monies inthe Bank Accounts constitute “good funds” and are in cash (and not invested insecurities of any nature) and subject to immediate withdrawal by Purchaser onor after the Closing Date.  The Companyhas provided Merrill Lynch, which is the bank where all of the Bank Accountsare located (*“Bank”*) with alldocumentation required to be provided by Company to allow the Purchaser accessto the funds in the Bank Accounts upon the Closing Date.

 

2.31        Enrollment Information andEligibility Reports.   The enrollmentinformation of the Company set forth in the Financial Statements and/orpreviously provided to Purchaser was prepared from the eligibility reports ofthe Company Health Plans and are, to the best knowledge of Company, true,accurate and complete.

 

2.32        Conduct of Business Since September2005 Interim Financial Statements. From the date of the September 2005 Interim Financial Statements throughthe Closing Date, the Company has conducted the business of Company in theordinary course of business consistent with past practice.  Without limiting the generality of theforegoing, subsequent to September 30, 2005, the Company has not:

 

                (a)           institutedany new method of purchase, sale, lease, management, accounting or operation orengaged in any transaction or activity, entered into any agreement or made anycommitment or amended any existing material agreement other than ascontemplated by this Agreement, except in the ordinary course of its businessconducted in a manner consistent with past practice (including those activitiesor transactions which occurred as a result of Company’s obligations under theManagement Agreement);

 

                                (b)           changedor amended its Articles of Incorporation or By-Laws or proposed any such changeor amendment;

 

                                (c)           offered, issued, authorized or soldany shares of the capital stock or other securities (such term as used in thissubsection shall include, without limitation, debt securities) of Company ofany kind whatsoever, or acquired directly or indirectly, by redemption orotherwise, any such capital stock, reclassified or split-up any such capitalstock, declared or paid any dividends thereon in cash, securities or otherproperty, or made any other distribution with respect thereto, or granted orentered into any stock options, warrants, or other rights to acquire securitiesof Company or entered into any other contracts or commitments of anykind with respect to the issuance of additional shares of capital stock orother securities of Company;

 

 

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                                (d)           (i)borrowed or agreed to borrow any funds, whether directly or by way of guarantyor otherwise,or(ii) except in the ordinary course of business conducted in a manner  consistent with past practice (includingthose activities or transactions which occurred as a result of Company’sobligations under the Management Agreement), incurred, or assumed or become subject to any obligation or liability(absolute or contingent);

 

                                (e)           paid,discharged, waived, satisfied, compromised or adjusted any claim, liability orobligation (absolute, accrued, contingent or otherwise) of an amount in excessof $500, other than as contemplated by this Agreement or which occurred in theordinary course of business conducted in a manner consistent with pastpractices (including those activities or transactions which occurred asa result of Company’s obligations under the Management Agreement);

 

                                (f)            prepaidany obligation having a fixed maturity of more than 90 days from the date suchobligation was incurred other than as contemplated by this Agreement or whichoccurred in the ordinary course of business conducted in a manner consistentwith past practice (including those activities or transactions whichoccurred as a result of Company’s obligations under the Management Agreement);

 

                                (g)           permittedor allowed any of its property or assets (real, personal or mixed, tangible orintangible) to be subjected to any mortgage, pledge, lien or other encumbranceexcept in the ordinary course of business conducted in a manner consistent withpast practice (including those activities or transactions which occurredas a result of Company’s obligations under the Management Agreement);

 

                                (h)           cancelledany debts or waived any claims or rights of substantial value or sold,transferred, or otherwise disposed of any of its properties or assets, exceptin the ordinary course of business conducted in a manner consistent with pastpractice (including those activities or transactions which occurred as aresult of Company’s obligations under the Management Agreement);

 

                                (i)            disposedof any rights to the use of any patent, trademark, service mark, trade name orcopyright, or dispose of or disclosed to any person any trade secret, formula,process or know-how not theretofore a matter of public knowledge;

 

                                (j)            grantedany general increase in the compensation of officers or employees (includingany such increase pursuant to any pension, profit sharing or other plan orcommitment) or any increase in the compensation payable or to become payable toany officer except (A) in the ordinary course of business conducted in a mannerconsistent with past practice (including those activities ortransactions which occurred as a result of Company’s obligations under theManagement Agreement) and (B) bonuses to certain or all of Company’s employees,including Seller;

 

                                (k)           appointedor removed from office any officers of Company other than as contemplated bythis Agreement;

 

 

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                                (l)            madeany payment to or sold, transferred or leased any properties or assets to, orentered into any agreement or arrangement with, any of the officers ordirectors of Company or any other affiliate thereof;

 

                                (m)          enteredinto any contract, commitment or transaction not in the usual and ordinarycourse of its business, other than transactions contemplated by, or referred toin, this Agreement;

 

                                (n)           changed,or initiated a change of, any of the banking, safe deposit or power of attorneyarrangements other than as contemplated by this Agreement;

 

                                (o)           wrotedown the value of any inventory (including write-downs by reason of shrinkageor mark-down) or wrote off as uncollectible any notes or accounts receivable,except for immaterial write-downs of inventory or accounts receivable in theordinary course of business conducted in a manner consistent with past practice(including those activities or transactions which occurred as a resultof Company’s obligations under the Management Agreement);

 

                                (p)           merged,consolidated, reorganized or liquidated Company;

 

                                (q)           fileda voluntary petition on behalf of Company under the U.S. Bankruptcy Code or anyother bankruptcy or insolvency law or any other law for relief of debtors;

 

                (r)            changed,amended or terminated any Company Provider Contract CompanyAncillary Service Contract and/or Company Health Plan, except in the ordinarycourse of its business conducted in a manner consistent with past practice(including those activities or transactions which occurred as a result ofCompany’s obligations under the Management Agreement);

 

                                (s)            changed,amended or terminated any employment agreement or entered into any newemployment agreements;

 

                                (t)            madeany distribution of cash or other assets to the Seller except as contemplatedby this Agreement;

 

                                (u)           used, reduced or otherwise appliedcash of Company to any purpose other than such use, reduction or application(i) as is necessary to operateCompany in the ordinary course of business consistent with pastpractice, (ii) applied to pay bonusesto employees, including Seller, in an amount which will not cause the Companyto violate the Required Minimum Cash described in Section 4.9, and/or (iii)which corresponds dollar for dollar with liabilities that have been accrued onthe Financial Statements of Company and have been applied to correspondinglyreduce such accrued liabilities;

 

                                (v)           agreed or committed, whether inwriting or otherwise, to do any of the foregoing.

 

 

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2.33        Records of the Company.  The Management Company has confirmed that itis in possession of: (A) the eligibility tapes for each Company Health Plan (B)the physician credentialing records of all the physicians who are a party tothe Company 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 Management Company’s management of Company.

 

2.34        Eligibility Reports.  The Management Company has confirmed that itis in possession of all eligibility reports provided by the HMOs through themost recent month end. Company represents that such eligibility reports aretrue, accurate and complete to the best of its knowledge.

 

2.35        Minimum Enrollment Numbers on theClosing Date.  As of the ClosingDate, the aggregate number of Company Enrollees is not less than 16,000.

 

2.36        Payables Incurred On or Before theClosing Date.  All payables incurredon or before the Closing Date, including but not limited to, payroll, payrolltaxes and other accrued expenses of Company have been properly accrued on theFinancial Statements by Company in the ordinary course of business inaccordance with GAAP.

 

2.37        Employees and Employee Obligations.  Company properly accrued on the FinancialStatements all obligations to employees of Company arising out of or inconnection with their employment through the Closing Date.

 

                2.38        Cashon Hand.  On the Closing Date,Company has cash in an amount equal or exceeding the sum of the total dollaramount of liabilities (liabilities include but, are not limited to, IBNRclaims payable, accounts payable, taxes payable, etc.) incurred, accruedor otherwise existing as of the Closing Date, and which amount shall includecash sufficient to pay the 338Taxes defined in Section 5.5(d) (the *“RequiredMinimum Cash”*).

 

2.39        Brokers’ and Finders’ Fees.  None of Company or the Seller has incurredany liability to any broker, finder or agent for any brokerage fees, finder’sfees or commissions with respect to the transactions contemplated by thisAgreement, and if Company or the Seller has incurred any such liability, suchliability shall be and remain the sole responsibility of Company, and Companyshall indemnify, defend and hold the Purchaser harmless from and against anyand all liabilities, losses, damages, claims, causes of action, costs andexpenses (including without limitation, reasonable attorneys’ fees), arisingout of or relating to such liability.

 

2.40        Disclosure.  No representation orwarranty by the Company or the Seller contained in this Agreement or in respectof the exhibits, schedules, lists or other documents delivered to the Purchaserby Company or the Seller and referred to herein or therein, and no statementcontained in any certificate furnished or to be furnished by or on behalf ofCompany or the Seller pursuant hereto or thereto, or in connection with theTransaction, contains, or will contain as of the date such representation orwarranty 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 necessary to make the statements contained hereinor therein, in light of the circumstances under which they were made, notmisleading.

 

 

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**ARTICLE3**

 

**REPRESENTATIONSAND WARRANTIES OF THE PURCHASER**

 

                In order to induce Company and the Seller toenter into this Agreement and to consummate the Transaction, Purchaser makesthe representations and warranties set forth in this Article 3.

 

3.1          Organization.  Purchaser is a professional corporation dulyorganized, validly existing and in good standing under the laws of the State ofCalifornia.   Purchaser has all requisitecorporate power and authority to own, lease, and operate its business and tocarry on its business as currently being conducted.  Purchaser is duly qualified to transact itsbusiness in the State of California and does not conduct business in any otherstate.

 

3.2          Authorization.  Purchaser has the corporate power andauthority to enter into this Agreement and to consummate the Transaction.  All actions on the part of the Purchasernecessary 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, andthis Agreement (including exhibits, schedules and the ancillary agreements)constitutes the legal, valid and binding obligation of Purchaser, enforceableagainst them in accordance with its terms, except as enforceability may berestricted, limited or delayed by applicable bankruptcy, insolvency, fraudulentconveyance, or other laws affecting creditor’s rights generally, and except asenforceability is subject to general principles of equity.

 

3.3          No ConsentRequired.  Neither the execution anddelivery of this Agreement by Purchaser nor the performance by it of itsobligations under this Agreement requires the consent, approval, order orauthorization of, or registration, declaration or filing with any governmentalentity or any third party that has not been obtained and delivered to Company.

 

3.4          No Violation of Other Agreements;No Conflicts.

 

                                (a)           Neitherthis Agreement nor any part of the Transaction violates, conflicts with orresults in a breach of, or shall violate, conflict with or result in a breachof any lease, contract, document or agreement to which Purchaser is a party orby which Purchaser may be bound.

 

                                (b)           Neither the execution and delivery ofthis Agreement nor the consummation or performance of the Transaction will,directly or indirectly (with or without the giving of notice, or lapse of time,or both):

 

                                                (i)            contravene,conflict with, or result in a violation of any provision of the organizationaldocuments of Purchaser or Systems;

 

                                                (ii)           contravene,conflict with, or result in a violation of, any legal requirement or any order,judgment or decree to which either of the Purchaser may be subject; or

 

 

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                                                (iii)          contravene,conflict with, or result in a violation of any of the terms or requirements of,or give any governmental body the right to revoke, withdraw, suspend, cancel,terminate, or modify, any governmental authorization that is held by either ofthe Purchaser.

 

3.5          Legal Proceedings.  Thereis no pending Proceeding, and, to the knowledge of Purchaser, no person hasthreatened 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.

 

3.6          Compliance withLaws.   Purchaser is not in violationof any rule, regulation or administrative or judicial order pertaining to the assetsor the business of Purchaser (including, without limitation, licensing, healthcare, federal, state or local laws relating to kickbacks, illegal referrals,illegal billings or the like, drug enforcement, securities, zoning, building,environmental, immigration, civil rights and occupational health and safetylaws, regulations, ordinances and codes) and there is no law, rule, regulationor administrative or judicial order that any part of the Transaction wouldviolate which would have the effect of preventing, delaying, making illegal, orotherwise interfering with, any part of the Transaction.  To the best of its knowledge, Purchaser hasno reason to anticipate that existing circumstances are likely to result in violationsof any of the foregoing.

 

3.7          Brokers’ andFinders’ Fees.  Purchaser has notincurred any liability to any broker, finder or agent for any brokerage fees,finder’s fees or commissions with respect to the transactions contemplated bythis Agreement, and if Purchaser has incurred any such liability, suchliability shall be and remain the sole responsibility of the Purchaser, and thePurchaser shall indemnify, defend and hold Company harmless from and againstany and all liabilities, losses, damages, claims, causes of action, costs and expenses(including without limitation, reasonable attorneys’ fees), arising out of orrelating to such liability.

 

3.8          Disclosure.             Norepresentation or warranty by Purchaser contained in this Agreement or inrespect of the exhibits, schedules, lists or other documents delivered toCompany by Purchaser and referred to herein or therein, and no statementcontained in any certificate furnished or to be furnished by or on behalf ofPurchaser pursuant hereto or thereto, or in connection with the transactions contemplatedhereby, contains, or will contain as of the date such representation orwarranty 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.

 

###  

### **ARTICLE 4**

 

[Intentionally omitted]

 

 

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**ARTICLE 5**

 

**ADDITIONAL AGREEMENTS OF THE PARTIES******

 

                In order to induce the other party to enterinto this Agreement and to consummate the Transaction, Company, and the Seller,joint and severally on the one hand, and Purchaser on the other hand, enterinto the agreements set forth in this Article 5.

 

5.1          Non-Competition Agreement.  As additionalconsideration for the Transaction, the Seller is simultaneously herewithexecuting the Non-Competition Agreement. The portion of the Purchase Price allocated to such Non-CompetitionAgreement is shown on Schedule 1.6 hereto (*“Covenant Allocation”*). The Covenant Allocation shall not be deemed an estimate or measurementof damages incurred or suffered by the Purchaser, the Company in the event of abreach of such Non-Competition Agreement by the Seller.

 

5.2          Employees.  The parties agree that the Purchaser andSeller are simultaneously herewith executing the employment agreement in theform attached hereto as *Exhibit C*and that  Purchaser is simultaneouslyherewith offering employment, on an at-will basis to two employees listed on Schedule5.2.

 

5.3          Good Faith.  TheCompany and the Purchaser agreethat they will perform their obligations under this Agreement in good faith.

 

5.4          Preservation of Relationship With Company Providers. Seller agrees to use reasonable commercial efforts to assist Purchaserin preserving the Company’s relationship with the Company Providers after theClosing Date.

 

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

 

(a)           Adequate Provision for Taxes.The Financial Statements, including but not limited to the September 2005Interim Financial Statements, reflect that Company has made adequate provisionfor accrued but unpaid Taxes owing as of the date of such Financial Statementand the amount of the 338 Taxes referred to in Section 5.5(d).

 

(b)           Liability for Taxes.  Company has properly accrued on the December2004 Year End Financial Statements all Taxes imposed on Company (*which is a “S” corporation”*) or for whichCompany may otherwise be liable, for all periods up to and including December31, 2004 and has properly accrued on its books and records, all Taxes imposedon Company or for which Company may otherwise by liable, for the period fromJanuary 1, 2005 through the Closing Date (*“Company/SellerTax Period”*) and has accrued the amount of the 338 Taxes.    Additionally, Seller shall be liable forany Taxes arising as a result of any breach of the representation contained inSection 2.9 and the covenants contained in this Section 5.5.

 

(c)           Tax Returns.  The Purchaser will be responsible for causingthe preparation and filing of all tax returns that are required to be filed byor with respect to Company for the periods commencing the Closing Date andwhich continue thereafter, and the Seller is responsible for causing thepreparation and filing of all tax returns that are required to be filed by orwith respect to Company for all periods prior to the Closing Date.    The Seller shall be responsible for and

 

 

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liable for anyTaxes due, with respect to Company, for the Company/Seller Tax Period for theperiod ending on the Closing Date, including the 338 Taxes.  No later than 30 days before the due date forfiling any tax return described in this subsection (c) which is required to beprepared by the Purchaser after Closing involving any Company/Seller TaxPeriod, the Purchaser will deliver such tax return to Seller for Seller’sreview. The Purchaser and Seller will attempt to resolve in good faith anydisagreement arising out of any tax return. If any such disagreement cannot be resolved, the Purchaser and Seller willjointly select an independent accounting firm to act as an arbitrator toresolve such disagreement in accordance with the terms of this Agreement.  The independent accounting firm’sdetermination with respect to any such tax return will be final and bindingupon the parties and all parties will file (or amend, if applicable) theirrespective tax returns in accordance with such determination.  Any fees and expenses related to theengagement of the independent accounting firm will be shared equally by thePurchaser, on the one hand, and Seller, on the other hand.

 

(d)           338 Election and338 Taxes.  Purchaser intends to makean election under Section 338(h)(10) of the Internal Revenue Code of 1986, asamended (the “Code”) to treat the sale of the Stock (each, a “338 Corporation”)as a sale of assets by each such 338 Corporation for income and franchise taxpurposes.  Purchaser and the Seller shallduly and timely file, or cause to be duly and timely filed, any documentnecessary to effectuate such election including without limitation, federalForm 8023 (and any similar forms required under state or local laws relating totaxes) in accordance with the requirements of Section 338 of the Code (or stateor local laws relating to the taxes, as the case may be). The parties shallreport the deemed sale consistent with such allocation for all financial, taxor other purposes, shall not take any position inconsistent therewith and shallcooperate with each other to take all actions necessary and appropriate as maybe required to effect and preserve such election.  Anything contained in this Agreement to thecontrary notwithstanding, the Seller makes no representation or warrantyconcerning the effectiveness under the Code (or other comparable provision oflaw) of any election made pursuant to this Section 5.5(d); and, except wheresuch failure is due to a breach by such party of its obligations under thisSection 5.5(d), in no event shall the Seller be liable to Purchaser for thefailure of any such election to be effective under the Code (or othercomparable provision of law).  As betweenPurchaser on the one hand and Seller on the other hand, Seller shall beresponsible for all Taxes payable by Company that are attributable to theSection **338(**h)(10)election, including any federal, state, local or foreign **Tax**attributable to an electionunder federal, state, local or foreign law similar to the **election** available under Section **338(**h)(10) of the Code (*“338 Taxes”*).  Seller has caused Company to accrue on itsFinancial Statements, a dollar amount sufficient to cover all 338 Taxes.  The parties acknowledge that Seller andSeller’s accountant have completed a preliminary allocation of the PurchasePrice to the assets of Company to calculate an estimate of the 338 Taxes andderived an estimate of Three Hundred Ninety Thousand Dollars ($390,000) (the *“Estimated 338 Tax Amount”*).  The parties acknowledge that Company’saccrual of the 338 Taxes will be an amount equal to the Estimated 338 TaxAmount.  However, if it is determined thatthe actual amount of the 338 Taxes is greater than the Estimated 338 TaxAmount, Purchaser shall notify Seller and within thirty (30) days of suchnotice, Seller shall pay Purchaser that amount by which such 338 Taxes actuallyowed exceeded the Estimated 338 Tax Amount. If it is determined that the actual amount of the 338 Taxes is less thanthe Estimated 338 Tax Amount, Purchaser shall notify Seller and within thirty(30) days of such notice, Purchaser shall pay Seller the amount by which suchEstimated 338 Tax Amount exceeded the amount of 338 Taxes actually owing.

 

 

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(e)           ContestProvisions.  Promptly after receiptby the Purchaser or Seller of written notice of the assertion or commencementof any claim, audit, examination or other proposed change or adjustment by theInternal Revenue Service or any state, local or foreign taxing authority havingjurisdiction over Company or any of its assets (*“Tax Authority”*) relating to Taxes of Company with respectto a Company/Seller Tax Period (a *“Tax Claim”*),the recipient will promptly notify the Purchaser or Seller, as applicable.  Such notice will contain factual information(to the extent known) describing the asserted Tax Claim in reasonable detailand will include copies of any notice or other document received from anyTaxing Authority in respect of any such asserted Tax Claim.  The Seller will have the right to representthe Company’s interests in any Tax audit or administrative or court proceedingrelating to any Company/Seller Tax Period as to any issues that couldmaterially affect the Seller’s liability for Taxes or indemnificationobligations, and to employ counsel (reasonably acceptable to the Purchaser) ofthe Seller’s choice at its expense; provided, however, that the Purchaser andtheir representatives will be permitted, at their expense, to be present at anysuch audit or proceeding. Notwithstanding the foregoing, Seller will not be able to settle, eitheradministratively or after the commencement of litigation, any claim for Taxesthat would adversely affect the liability for Taxes of any of the Purchaser,the Company without the written consent of the Purchaser, which consent shallnot be unreasonably withheld, unless the Seller makes adequate provision to thesatisfaction of the Purchaser to indemnify the Purchaser against the effects ofany such settlement.  In order to allowthe Seller to respond to a Tax Claim involving any Company/Seller Tax Period,the Purchaser agrees to allow Seller reasonable access to the books and recordsof the Company for periods on or before the Closing Date.

 

(f)            Assistance andCooperation.  After the Closing Date,Seller and the Purchaser will:

 

(i) timely sign and deliver such certificates or forms as may be necessaryor appropriate to establish an exemption from (or otherwise reduce), or filetax returns or other reports with respect to sales, transfer and similar Taxes;

 

(ii) assist the other party in preparing any tax return which suchother party is responsible for preparing and filing in accordance with thisSection 5.5 (including providing the other party with reasonable access tofinancial records for such purposes);

 

(iii) cooperate fully in preparing for any audits of, or disputes withtaxing authorities regarding, any tax returns of Company; and

 

(iv) make available to the other party and to any taxing authority asreasonably requested all information, records, and documents relating to Taxesof Company.

 

5.6          IBNR Closing Date Reserve Amount. For purpose of determiningthe accrued IBNR of Company for the Closing Date, Purchaser and Seller havecompleted an IBNR calculation as of October 31, 2005, based upon the formulaset forth on Schedule 5.6 (*“RequiredClosing Date IBNR Reserve”*). Seller represents that the IBNR Reserve of Company on the Closing Dateis not less than the Required Closing Date IBNR Reserve.

 

5.7          Post-Closing IBNR Reconciliation.  Purchaser, as owner of Company after theClosing Date, shall, for the period commencing on the Closing Date and endingtwelve (12)

 

 

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months thereafter, keep an account of claimsreceived on or after the Closing Date for dates of service prior to the ClosingDate that are paid from the IBNR funds (*“IBNRRelated Claims”*).  On or priorto the date that is one hundred fifty (150) days after the first anniversary ofthe Closing Date or the first business day thereafter if such date falls on aSaturday, Sunday or state or federal holiday (the *“Reconciliation Date”*), Purchaser and Seller shall effect areconciliation of the IBNR funds, such that any IBNR Reserve that existed onthe Closing Date which was not used to pay IBNR Related Claims shall be paid toSeller, and any shortfall in amount of the IBNR Reserve (any amount insufficientto cover all IBNR Related Claims), notwithstanding that on the Closing Date theIBNR Reserve satisfied the amount of the Required Closing Date IBNR Reserve,shall be paid to Purchaser.  Any and allpayments owing to the other party under this Section 5.7 shall be paid withinfifteen (15) days of the Reconciliation Date.  Amounts owing to either party as a result of the Reconciliation shallhave no effect on the Indemnification Cap described in Article 7 hereunder.

 

5.8          Hospital Incentive Pool Amounts.

 

(a) Cash Risk PoolAmounts (Calendar Year 2005): Purchaser and Seller agree that Company shallreceive a minimum of one hundred fifty thousand dollars ($150,000) of Cash InHand from risk pools for the calendar year ending December 31, 2005.  For purposes of this subsection (b), “Cash InHand” is defined as the surplus in a particular pool that exceeds any deficitin that pool, resulting in a cash payment to Company (and therefore indirectlyto Purchaser).   If the total Cash InHand received by the Company from the Company Health Plans for the calendaryear ending December 31, 2005 is in an amount less than one hundred fiftythousand dollars ($150,000), Seller agrees to repay Purchaser five hundredthousand dollars ($500,000) of the Purchase Price (“*Deficit Cash Risk Pool Refund Credit*”).    Purchaser and Seller agree, that withinthirty (30) days of the date that the Company, or Purchaser on behalf of theCompany, knows the amount of Cash In Hand for the calendar year ending December31, 2005, Purchaser on behalf of the Company shall provide notice to Seller ofthe amount of the Cash In Hand received by Company for the calendar year endedDecember 31, 2005 and the parties shall meet within thirty (30) days of suchnotice to complete a reconciliation (“*CashRisk Pool Reconciliation Date*”).   If on the Cash Risk Pool Reconciliation Date the amount of the Cash InHand received by the Company for the calendar year ended December 31, 2005 isless than one hundred fifty thousand dollars ($150,000), Seller shall payPurchaser five hundred thousand dollars ($500,000), constituting the DeficitCash Risk Pool Refund Credit, within ten (10) calendar days of such Cash RiskPool Reconciliation Date.  Those riskpools that are in deficit for the calendar year ending December 31, 2005 shallbe the sole responsibility of Purchaser. Purchaser and Seller agree that calendar year 2005 Cash In Hand throughthe Closing Date is zero.  Amounts owingby Seller to Purchaser as a result of the Cash Risk Pool Reconciliation shallhave no effect on the Indemnification Cap described in Article 7 hereunder.

 

(b) Risk Pool Accounting:As part of its due diligence review of Company, Purchaser has expressed itsbelief to Seller that the Company’s risk pool accounting practices, as reflectedon the Final Statements of Company, should be revised.  Seller has therefore agreed to revise itsrisk pool accounting practices and, accordingly, has revised its FinancialStatements (the “Risk Pool Accounting Revisions”).    Company has agreed that in the event theRisk Pool Accounting Revisions are challenged by any taxing authority, thatPurchaser shall indemnify, pursuant to the terms of Section 7.3 hereof, theamount of any interest or penalties incurred by Seller (given the

 

 

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Company’s Sub S status) to a taxingauthority, as a result of the Risk Pool Accounting Revisions made pursuant tothis Section 5.8(b).

 

                5.9          Attorney Fees of Christensen &Auer. The legal fees incurred by Company or Seller in negotiating anddrafting documentation in connection with the Transaction shall be paid  (i) with respect to fees incurred prior tothe Closing, by the Company in a manner so as not to violate the Required MinimumCash requirements set forth in Section 4.9, or (ii) with respect to feesincurred on or after the Closing, by Seller out of Seller’s funds.

 

                5.10        Further Assurances.  The Company and the Purchaser agree that at any time and from time to timeafter the Closing Date they will execute and deliver to any other party suchfurther instruments or documents as may reasonably be required to give effectto the Transaction.

 

 

**ARTICLE 6**

 

**DELIVERIES AND CONDITIONS******

 

 

                6.1          Deliveriesby Company and the Seller.  Companyand the Seller have delivered the following to the Purchaser:

 

                                (a)           Acopy of the Articles of Incorporation of Company, with all amendments thereto,and certificate of good standing from the State of California, both of whichshall be certified as of a date within twenty days prior to the Closing Date bythe Secretary of State of California.

 

                                (b)           Acertificate of tax good standing of Company from the Franchise Tax Board issuedas of a date within twenty days of the Closing Date.

 

                                (c)           Acertificate of the Secretary of Company dated the Closing Dateand accompanying resolutions reflecting that the necessary corporateaction by the Board of Directors of Company has been taken to authorize theconsummation by Company of the Transaction.

 

                                (d)           Thestock books and records, corporate minute books (containing, in all materialrespects, the originals of all minutes and resolutions ever adopted orconsented to or agreed to by the Sellers, directors or any committee ofdirectors of Company) and the corporate seal, if any, of Company.

 

                                (e)           Spousal Consent of Seller for thisAgreement.

 

                                (f)            Letters of resignation of allofficers and directors of Company dated the Closing Date, excepting only theresignation of Seller from his officer position as President/CEO of Companygiven that Seller shall remain President/CEO of Company after the Closingsubject to the terms and conditions of the Employment Agreement.

 

 

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(g)           Original stock certificatesrepresenting the Stock duly endorsed in blank for transfer and presented withstock powers duly endorsed in blank.

 

(h)                                 The Non-Competition Agreement.

 

(i)            TheEmployment Agreement.

 

(j)            a legal opinion from counsel to Company asto the matters set forth in *Exhibit D*.

 

(k)    documentation for filing with theCalifornia Medical Board to cancel the fictitious name permit in the name ofSeller for the trade name of Company.

 

 

                6.2           Deliveriesby Purchaser on the Closing Date.  Purchaser has delivered the following toCompany.

 

(a)           Certificateof the secretary of Purchaser dated the Closing Date, andaccompanying resolutions reflecting that the necessary corporate action by theBoard of Directors of Purchaser to authorize the consummation by Purchaser ofthe Transaction.

 

(b)           The Non-Competition Agreement.

 

(c)           TheEmployment Agreement.

 

(d)           ThePurchase Price described in Section 1.5 hereof.

 

 

**ARTICLE 7**

 

## **INDEMNIFICATION;REMEDIES**

 

                7.1           Indemnification Period. ** **Asused in this Article 7, the *“IndemnificationPeriod”* shall be that period of time commencing onthe Closing Date and continuing for 2 years thereafter.

 

                7.2           Indemnification of Company andPurchaser. Seller shall indemnify, defend and hold harmless Company andPurchaser and their directors, officers, employees, agents and affiliates fromand against any and all damage, loss, liability and expense (including withoutlimitation (A) reasonable expenses of investigation and reasonable attorneys’fees and reasonable expenses in connection with any action, suit or proceeding,(B) any fees 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 orsuffered by Company or Purchaser arising out of (i) any breach of therepresentations, warranties, covenants or agreements of Company and/or Seller setforth herein; (ii) any failure by Company or the Seller to perform or complywith any covenant or agreement contained in this Agreement that is required tobe performed or complied with by Company or the Seller as

 

 

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set forth herein; (iii) theExisting/Threatened Cases**and/or(iv) any action against Company arising from or based upon allegations ofintentional tortious conduct by Seller, or any officer, employee or agent(including independent contractors) of Company (including, but not limited to,any claims of wrongful termination, sexual harassment, racial or sexualdiscrimination) (*collectively, the “PurchaserIndemnifiable Damages”*). Notwithstanding the foregoing, Seller shall not be obligated toindemnify Company or Purchaser for any Purchaser Indemnifiable Damages thatexceed singly or in the aggregate, $1,500,000, with such $1,500,000 amountdecreasing at the rate of 1/24 per month for each month after the Closing Date(the *“Indemnification Cap”*).  Company and Purchaser may obtainindemnification for any Purchaser Indemnifiable Damages to which this Section7.2 relates only if it makes a claim for indemnification within theIndemnification Period defined in Section 7.1, except as otherwise provided inSection 7.4.  Notwithstanding theforegoing, claims subject to the Indemnification Cap shall toll both theIndemnification Period and the dollar amount of the Indemnification Cap at thetime each such claim is made (i.e., the Indemnification Period will not expireif the covered claim was made prior to the end of the 2 year period but theclaim is still in existence at the end of such 2 year period due to the need toinvestigate the claim, litigation regarding the claim, etc.) and the amount ofthe Indemnification Cap will not be reduced (i.e., if a covered claim is madein month 1 when the Indemnification Cap is $1,500,000 but due to the need toinvestigate, litigation, etc., the claim is still in existence in month 24, theamount of the Indemnification Cap is tolled at $1,500,000 and is not reduced to1/24 of such amount).   Such tollingshall occur with respect to each covered claim separately, when made.  Thus, the first claim made shall not toll theIndemnification Period or the dollar limit of the Indemnification Cap for anysubsequent covered claims.  As such, thedollar amount covered under the Indemnification Cap will differ depending uponthe time when each covered claim is made.

 

                7.3           Indemnification of the Seller.  Company and Purchaser, joint and severally,agree to hold harmless, defend and indemnify Seller from and against any andall 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 orsuffered by Seller arising out of (i) any breach of the representations,warranties, covenants or agreements of Purchaser set forth herein (ii) anyfailure by Purchaser and Systems to perform or comply with any covenantcontained in this Agreement that is required to be performed or complied withby Purchaser as set forth herein (the *“SellerIndemnifiable Damages”*). Notwithstanding the foregoing, neither Company nor Purchaser shall beobligated to indemnify Seller for Seller Indemnifiable Damages that exceed theIndemnification Cap.  The Seller mayobtain indemnification for any Seller Indemnificable Damages to which thisSection 7.3 relates only if it makes a claim for indemnification within theIndemnification Period defined in Section 7.1.

** **

7.4           Exclusion of Purchaser Indemnifiable Damages fromIndemnification Period and Indemnification Cap. Notwithstanding anything inthis Agreement to the contrary, neither the Indemnification Period nor theIndemnification Cap shall apply to limit Purchaser Indemnifiable Damages withrespect to claims of the Company or Purchaser:

 

(i)                                     under Section7.2(iii);

 

 

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(ii)                                  under Section7.2(iv);

(iii)                               arising out ofor related to a breach of the representations, warranties, covenants oragreements set forth in Sections  2.9,2.10, 2.38, 5.5(b), 5.5(d) and fraud.

 

7.5           Indemnification Procedures.  A party seeking indemnification (the “Indemnitee”)shall use its best efforts to minimize any liabilities, damages, deficiencies,claims, judgments, assessments, costs and expenses in respect of whichindemnity may be sought under this Agreement. The Indemnitee shall give prompt written notice to the party from whomindemnification 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 satisfy the requirements of this Section 7.5 unless it describes inreasonable detail and in good faith the facts and circumstances, to the extentknown by Indemnitee, upon which the asserted claim for indemnification isbased.  If any action or proceeding shallbe brought in connection with any liability or claim to be indemnifiedhereunder, the Indemnitee shall provide the Indemnitor twenty (20) calendardays 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 keepthe Indemnitee fully apprised at all times of the status of the defense andshall consult 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.

 

**ARTICLE 8**

 

**MISCELLANEOUS**

 

                8.1           EntireAgreement.  This Agreement, togetherwith all exhibits and schedules hereto, and all documents referred to herein,constitutes the entire agreement between the parties with respect to thesubject matter hereof, supersedes all other and prior agreements on the samesubject, whether written or oral, and containsall of the covenants and agreements between the parties with respect to thesubject 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.

 

 

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                8.2           Arbitration. In the event of adispute under this Agreement which is not resolved  after good faith negotiation, either thePurchaser or Company may demand arbitration of the matter and the matter shallbe settled by arbitration conducted by a single neutral arbitrator.  Any such arbitration shall be held in LosAngeles County, California under the rules then in effect of the JudicialArbitration and Mediation Association (JAMS). The decision shall be written andshall be supported by, as agreed by the parties, either a reasoned award orfindings of fact and conclusions which shall set forth the award, judgment,decree or order awarded by the arbitrator. The prevailing party to an arbitration shall be entitled to recovery fromthe non-prevailing party of its expenses, the fees of the arbitrator, theadministrative costs of the arbitration, and the expenses, including, withoutlimitation, reasonable attorneys’ fees and costs, reasonably incurred by it inconnection with the arbitration. Judgment upon any award rendered by the arbitrator may be entered in anycourt having jurisdiction. Notwithstanding the foregoing, the parties shall have the rights todiscovery in accordance with California Code of Civil Procedure Section 1283.05.

 

                8.3           Successorsand Assigns.  This Agreement and alldocuments and agreements referred to herein shall be binding upon and shallinure to the benefit of the parties and their respective heirs (as applicable),legal representatives, and permitted successors and assigns.  No party may assign this Agreement or therights, interests or obligations hereunder; provided, however, that to theextent permitted by applicable law, the Purchaser may (i) assign any or all ofits rights and interests hereunder to one or more of its affiliates or anaffiliate of Jacob Y. Terner, M.D., the sole shareholder of Purchaser;provided, however, that the Purchaser shall remain liable under this Agreement,(ii) designate one or more of its affiliates to perform its obligationshereunder, and (iii) collaterally assign its rights under this Agreement to itslender(s) for collateral purposes.  Anyassignment or delegation in contravention of this Section shall be null andvoid.

 

                8.4           No Waiver.  No waiver ofany term, provision or condition of this Agreement, whether by conduct orotherwise, in any one or more instances, shall be deemed to be or be construedas a further or continuing waiver of any such term, provision or condition oras a waiver of any other term, provision or condition of this Agreement.

 

                8.5           Counterparts.  This Agreement, and any amendments hereto,may be executed in counterparts, each of which shallconstitute an original document, but which together shall constitute one andthe same instrument.

 

                8.6           Headings.  The section headingscontained in this Agreement are inserted for convenience only and shall notaffect in any way the meaning or interpretation of this Agreement.

 

                8.7           Notices.  Any notices requiredor permitted to be given hereunder by any party to the other shall be inwriting and shall be deemed delivered upon personal delivery; twenty-four (24)hours following deposit with a courier for overnight delivery; or five (5)business days hours following deposit in the U.S. Mail, registered or certifiedmail, postage prepaid, return- receipt requested, addressed to the parties atthe following addresses or to such other addresses as the parties may specifyin writing:

 

 

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|     |     | If to Seller:    |   | Mitchell Lew, M.D.                |
|----------|----------|------------------|--------|-----------------------------------|
|     |     |             |   | 500 Peralta Hills Dr.             |
|     |     |             |   | Anaheim, CA 92807                 |
|     |     |             |   |                              |
|     |     | With  a copy to: |   | Stephen  G. Auer, Esq.            |
|     |     |             |   | Christensen  & Auer           |
|     |     |             |   | 225 South Lake Avenue, 9th Floor  |
|     |     |             |   | Pasadena, California 91101        |
|     |     |             |   |                              |
|     |     | If to Purchaser: |   | Prospect Medical Group, Inc.      |
|     |     |             |   | 1920  East 17th Street Suite 200  |
|     |     |             |   | Santa  Ana, California 92705      |
|     |     |             |   | Attn: Jacob Y. Terner, M.D.       |
|     |     |             |   |                              |
|     |     | With a copy to:  |   | Prospect Medical Holdings, Inc.   |
|     |     |             |   | 400 Corporate Pointe,  #525       |
|     |     |             |   | Culver City, CA 90230             |
|     |     |             |   | Attn: Jacob Y. Terner, M.D.       |
|     |     |             |   |                              |
| * * | * * | *and*            |   | Miller & Holguin              |
|     |     |             |   | 1801 Century Park East, 7th Floor |
|     |     |             |   | Los Angeles, CA 90067             |
|     |     |             |   | Attn: Dale S. Miller, Esq.        |

 

                8.8           Governing Law.  This Agreement shall be governed by andconstrued in accordance with the laws of the State of California.

 

                8.9           Amendment.  This Agreement may be amended at any time byagreement of the parties, provided that any amendment shall be in writing andexecuted by all parties.

 

                8.10         Severability.  If any provision of this Agreement is held bya court of competent jurisdiction to be invalid or unenforceable, the remainingprovisions will nevertheless continue in full force and effect, unless suchinvalidity or unenforceability would defeat an essential business purpose ofthis Agreement.

 

                8.11         Fees and Expenses.  Except as otherwise explicitly set forthherein, each party shall bear its own expenses including, without limitation, attorneys’and accountants’ fees in connection with the preparation of this Agreement andthe transactions contemplated hereby.

 

                8.12         Exhibits and Schedules.  All exhibits and schedules attached to thisAgreement are incorporated herein by this referenceand all references herein to “Agreement” shall mean this Agreement togetherwith all such exhibits and schedules to be delivered at the execution of thisAgreement or upon the Closing Date.

 

 

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                8.13         Time of Essence.  Time is expressly made of the essence of thisAgreement and each and every provision hereof of which time of performance is afactor.

 

                8.14         Attorneys’ Fees.  Should any party institute any action orprocedure to enforce this Agreement or any provision hereof, or for damages bya declaration of rights hereunder including without limitation arbitration, theprevailing party in any such action or proceeding shall be entitled to receivefrom the other party all costs and expenses, including without limitationreasonable attorneys’ fees, incurred by the prevailing party in connection withsuch action or proceeding.

 

                8.15         Further Assurances.  The parties shall take such actions andexecute and deliver such further documentation as may reasonably be required inorder to give effect to the transaction contemplated by this Agreement and theintentions of the parties hereto.

 

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

 

                8.17         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 be deemed to include the inclusive usage “and/or.”

 

[SIGNATUREPAGE IMMEDIATELY FOLLOWS]

 

 

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

 
|   | “Purchaser”                                              |
|--------|--------------------------------------------------------------------|
|   |                                                               |   |
|   | PROSPECT MEDICAL GROUP,  INC.                                      |
|   |                                                               |   |
|   | By:                                                                |   |
|   |                                                               | Jacob Y. Terner, M.D., |
|   |                                                               | Chief Executive Officer |
|   |                                                               |   |
|   | “Company”                                                |
|   |                                                               |   |
|   | GENESIS HEALTHCARE OF  SOUTHERN  CALIFORNIA, INC., A MEDICAL GROUP |
|   |                                                               |   |
|   | By:                                                                |   |
|   |                                                               | Mitchell W. Lew, M.D., |
|   |                                                               | Chief Executive Officer |
|   |                                                               |   |
|   | “Seller”                                                 |
|   |                                                               |   |
|   |                                                               |
|   | Mitchell W. Lew, M.D.                                              |

 

 

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SPOUSAL JOINDER AND CONSENT TO STOCK PURCHASE AGREEMENT

 

I am the spouse of MitchellW. Lew, M.D., Seller.  To the extent thatI have any interest in any of the Stock (as that term is defined in the StockPurchase Agreement dated November 1, 2005 between my spouse as Seller, GenesisHealthcare of Southern California, a Medical Group, and Prospect Medical Group,Inc., as Purchaser (the “Agreement”)), I hereby join in the Agreement and agreeto be bound by its terms and conditions to the same extent as my spouse. I haveread the Agreement, understand its terms and conditions, and to the extent thatI have felt it necessary, I have retained independent legal counsel to adviseme concerning the legal effect of this Agreement and this Spousal Joinder andConsent.

 

I understand and acknowledgethat Purchaser is significantly relying on the validity and accuracy of thisSpousal Joinder and Consent in entering into this Agreement.

 

Executed this 1st  day of November, 2005

 
| Signature: |   |   |
|------------|--------|--------|

 
| Printed or Typed Name: |   |   |
|---------------------------------------|--------|--------|

 

 

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