Exhibit
10.4


 


AGREEMENT FOR THE PURCHASE AND SALE OF STOCK


 


THIS AGREEMENT FOR THE PURCHASE AND SALE OF STOCK (“Stock Purchase
Agreement”) is made and entered into as of the 13th day of January, 2000, by
and among Jacob Y. Terner, M.D. (“Purchaser”), as buyer and Gregg DeNicola,
M.D. (“Seller”), as seller of his stock in Prospect Medical Group, Inc.
(“Company”).


 


RECITALS


 


This Stock Purchase Agreement is made with reference to the following
facts and circumstances:


 


A.                                   Company is a professional medical corporation
that operates a independent physician associations and medical groups (the
“IPA”).


 


B.                                     Purchaser is the Successor Physician as
defined in that certain Assignable Option Agreement (“Option Agreement”)
between Seller, Company and Prospect Medical Systems, Inc.


 


C.                                     Seller, who is the sole shareholder of
Company, desires to sell all of his shares of Common Stock of Company
(“Seller’s Stock”) to Purchaser, and Purchaser desires to purchase from Seller
all of Seller’s Stock pursuant to the exercise of the option under the Option
Agreement and on the terms and conditions set forth in this Stock Purchase
Agreement.


 


D.                                    As a result of the purchase of Seller’s
Stock, Purchaser will hold all the issued and outstanding shares of Company.


 


NOW, THEREFORE, in consideration of the covenants and
conditions contained herein and for other valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:


 


1.                                      PURCHASE AND SALE OF STOCK


 


1.1                                 Seller’s Stock. 
Seller shall sell, convey, transfer, and deliver to Purchaser all of his
right, title, and interest in and to the Common Stock of Company as set forth
in Exhibit A.


 


2.                                      PURCHASE PRICE


 


2.1                                 Consideration 
Subject to the terms and conditions of this Stock Purchase Agreement, in
reliance on the representations, warranties and covenants of the parties hereto
and in full consideration of the sale, assignment and delivery of the Stock,
Purchaser shall pay Seller the total amount of One Thousand Dollars ($1,000)
(the “Purchase Price”).


 


2.2                                 Payment of the Purchase Price.  The
Purchase Price shall be paid by certified check upon the execution of this
Agreement.


 

















 


2.3                                 Fair Market Value.  The
parties agree that the Purchase Price reflects the fair market value of the Stock.  The parties agree no consideration is or
will be paid for the value of any referrals (direct or indirect) to or from
Purchaser, Seller, Company, or any of their respective affiliates.


 


3.                                      REPRESENTATIONS AND
WARRANTIES OF SELLER


 


Seller hereby represents
and warrants to Purchaser that:


 


3.1                                 Organization, Qualification and Corporate
Power.  Company is a California professional
corporation duly organized, validly existing and in good standing under the
laws of the State of California. 
Company is duly qualified to transact its business in the State of
California and does not conduct business in any other state.  Company has full power and authority and all
authorizations, licenses and permits necessary to carry on the business in
which it is engaged and to own and use the properties owned and used by it.


 


3.2                                 Authorization. 
Seller has good title to the Stock, and full right, power, authority and
legal capacity, to sell the Stock, to execute and deliver this Stock Purchase
Agreement, and to carry out the transactions contemplated hereby without the
consent of any other person.  All action
on the part of Seller and Company necessary for the authorization, execution,
delivery and performance of this Stock Purchase Agreement and the consummation
of the transactions contemplated hereby has been or will be taken prior to the
Closing Date, and this Stock Purchase Agreement (including exhibits, schedules
and the ancillary agreements) constitutes the legal, valid and binding
obligation of Seller, enforceable in accordance with its terms, except as
enforceability may be restricted, limited or delayed by applicable bankruptcy,
insolvency, fraudulent conveyance or other laws affecting creditor’s rights
generally and except as enforceability is subject to general principles of
equity.  Seller is the only shareholder
of Company.  The authorized number of
shares of Company is one hundred thousand (100,000), all of one class, of which
only four thousand (4,000) shares are issued and outstanding, fully paid and
nonassessable and held of record by Seller. 
The Stock was issued in compliance with all applicable federal and state
securities laws.  Seller has full voting
power over the Stock, subject to no outstanding subscriptions, options, rights,
convertible securities, preemptive rights, buy-sell agreements, or any
agreements or commitments of any kind that obligate Company or the Seller to
(a) purchase or otherwise receive or be issued any shares of Stock or any
security or liability of any kind convertible into or exchangeable for any such
Stock, (b) receive any benefits or rights similar to any rights enjoyed by or
accruing to the holder of shares of capital stock of Company, (c) convert or
exchange any securities for shares of Stock, (d) participate in the equity,
income or election of directors or officers of Company, or (e) take or refrain
from taking any actions as shareholders of the Company.  Other than this Agreement and the
transactions contemplated hereby, there is no contract, commitment or agreement
between Seller and any other person with respect to the disposition of any
shares of the Stock.  At the Closing,
the Stock will represent all right, title and interest in the Company.


 


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4.                                      REPRESENTATIONS AND
WARRANTIES OF PURCHASER:


 


Purchaser hereby represents and warrants to each of Company and Seller
that:


 


4.1                                 Organization.  Purchaser is a physician duly licensed by
the State of California.


 


4.2                                 Authority.  Purchaser has the power and
authority to enter into this Stock Purchase Agreement and to consummate the
transactions contemplated hereby.  All
action on the part of Purchaser necessary for the authorization, execution,
delivery and performance of this Stock Purchase Agreement and the consummation
of the transactions contemplated hereby has been taken, and this Stock Purchase
Agreement (including exhibits, schedules and the ancillary agreements)
constitutes the legal, valid and binding obligation of Purchaser, enforceable
in accordance with its terms, except as enforceability may be restricted,
limited or delayed by applicable bankruptcy, insolvency, fraudulent conveyance,
or other laws affecting creditor’s rights generally and except as
enforceability is subject to general principles of equity.


 


5.                                      CLOSING; CONDITIONS TO
OBLIGATIONS TO CLOSE


 


5.1                               Closing.  The transactions contemplated
by this Stock Purchase Agreement shall be consummated at the “Closing.” The
Closing shall take place at 1920 E. 17th Street, Suite 200, Santa
Ana, Ca, or at such other place as may be designated by Company and Purchaser,
on February 28, 2000 (“Closing Date”), or at such other time as is
mutually agreed upon by the parties.


 


5.2                               Deliveries by Company.  At
the Closing, Company shall execute (as to documents calling for execution) and
deliver to Purchaser the following:


 


(a)                                  Stock certificates representing all of the
issued and outstanding shares of the Company, duly executed for transfer to
Purchaser.


 


(b)                                 A resignation letter by Seller resigning as a
director and the President, Chief Financial Officer, and Secretary of the
Company.


 


(c)                                  Such other customary instruments, documents
and certificates in forms reasonably satisfactory to Purchaser and Seller as
shall be necessary to carry out the intent and effectuate the purposes of this
Stock Purchase Agreement and sufficient to vest in Purchaser good title to the
Stock, free and clear of all Liens.


 


5.3                                 Deliveries by Purchaser.  At
the Closing, Purchaser shall deliver to Company the following:


 


(a)                                  Payment of such portions of the Purchase Price
due and payable as of the Closing Date in accordance with the terms of this
Agreement.


 


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(b)                                 All other instruments and documents as
Company may reasonably request as necessary to carry out the intent and
effectuate the purposes of this Stock Purchase Agreement.


 


6.                                      INDEMNIFICATION


 


6.1                                 Seller’s Indemnity. 
Seller shall indemnify, defend and hold Purchaser, its affiliates and
their respective directors, officers, employees, attorneys, and agents harmless
from and against any and all liabilities, losses, damages, claims, causes of
action, costs and expenses (including, without limitation, reasonable
attorneys’ fees and expenses and court costs) (collectively, referred to
hereinafter as “Damages”), whether known or unknown, whether suit is instituted
or not, and, if instituted, whether at any trial or appellate level, that arise
out of, relate to or result from: (i) any breach by Company or Seller of any
representation or warranty set forth in Section 3 of this Stock Purchase
Agreement (including the schedules and exhibits attached hereto) or any
ancillary agreement, document, instrument, or certificate to be delivered in
connection with this Stock Purchase Agreement; or (ii) failure of Company or
Seller to perform any material covenant, agreement or obligation made by it in
this Stock Purchase Agreement (including the schedules and exhibits attached
hereto) or any ancillary agreement, document, instrument or certificate to be
delivered in connection with this Stock Purchase Agreement.


 


6.2                                 Purchaser’s Indemnity. 
Purchaser shall indemnify, defend and hold each of Company and Seller
harmless from and against any and all Damages, whether known or unknown,
whether suit is instituted or not, and, if instituted, whether at any trial or
appellate level, that arise out of or relate to or result from: (i) any breach
by Purchaser of any representation or warranty set forth in Section 4 of
this Stock Purchase Agreement (including the schedules and exhibits attached
hereto) or any ancillary agreement, document, instrument, or certificate to be
delivered in connection with this Stock Purchase Agreement; or (ii) failure of
Purchaser to perform any material covenant, agreement or obligation made by it
in this Stock Purchase Agreement (including the schedules and exhibits attached
hereto) or any ancillary agreement, document, instrument, or certificate to be
delivered in connection with this Stock Purchase Agreement.


 


7.                                    PURCHASER’S CANCELLATION OF STOCK PURCHASE AGREEMENT


 


7.1                                 Jeopardy.  In the event the performance
by Purchaser, Seller or Company of any term, covenant, condition or provision
of this Agreement should be in violation of any statute, ordinance, or be
otherwise deemed illegal, by a state or federal court or governmental agency
(collectively, “Jeopardy Event”), then the parties shall use their best efforts
to meet forthwith and attempt to negotiate an amendment to this Stock Purchase
Agreement to remove or negate the effect of the Jeopardy Event.  In the event the parties are unable to
negotiate such an amendment within thirty (30) days following written notice by
either party of the Jeopardy Event, then Purchaser or Company may cancel this
Agreement immediately upon written notice (“Cancellation Option”).


 


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7.2                                 Exercise of Cancellation Option.  In
the event either party exercises the Cancellation Option described above, it
shall so notify the other party in writing and each party shall return
forthwith all originals and copies of any financial or other records,
instruments, or other documents it has received from the other party and,
except as provided in this Agreement, all of the parties’ respective rights and
obligations hereunder shall terminate immediately.


 


8.                                      MISCELLANEOUS


 


8.1                                 Entire Agreement. 
This Stock Purchase Agreement, together with all exhibits and schedules
hereto, and all documents referred to herein (including without limitation any
ancillary agreements), constitutes the entire agreement between the parties
with respect to the subject matter hereof, supersedes all other and prior
agreements on the same subject, whether written or oral, and contains all of
the covenants and agreements between the parties with respect to the subject
matter hereof.  Each party to this Stock
Purchase Agreement acknowledges that no representations, inducements, promises,
or agreements, orally or otherwise, have been made by the other party(ies), or
by anyone acting on behalf of any party, that are not embodied herein, and that
no other agreement, statement, or promise not contained in this Stock Purchase
Agreement shall be valid or binding.


 


8.2                                 Successors and Assigns. 
This Stock Purchase Agreement shall be binding upon and shall inure to
the benefit of the parties and their respective heirs (as applicable), legal
representatives, and permitted successors and assigns.  No party may assign this Stock Purchase
Agreement or the rights, interests or obligations hereunder.  Any assignment or delegation in
contravention of this Section 8.2 shall be null and void.


 


8.3                                 Counterparts. 
This Stock Purchase Agreement, and any amendments thereto, may be
executed in counterparts, each of which shall constitute an original document,
but which together shall constitute one and the same instrument.


 


8.4                                 Headings.  The section headings
contained in this Stock Purchase Agreement are inserted for convenience only
and shall not affect in any way the meaning or interpretation of this Stock
Purchase Agreement.


 


8.5                                 Notices.  Any notices required or permitted
to be given hereunder by any party to the other shall be in writing and shall
be deemed delivered upon personal delivery on a business day or otherwise on
the next succeeding business day; twenty-four (24) hours following deposit with
a courier for overnight delivery on a business day or otherwise on the next
succeeding business day; or five (5) days following deposit in the U.S. Mail,
registered or certified mail, postage prepaid, return-receipt requested,
addressed to the parties at the following addresses or to such other addresses
as the parties may specify in writing:


 


	
  If
  to Seller:

  	
   

  	
  Gregg
  De Nicola, M.D.

  
	
   

  	
   

  	
  18300
  Yorba Linda Blvd., Suite 201

  
	
   

  	
   

  	
  Yorba
  Linda, CA 92886

  



 


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  If
  to Purchaser:

  	
   

  	
  Jacob
  Y. Terner, M.D.

  
	
   

  	
   

  	
  Prospect
  Medical Group, Inc.

  
	
   

  	
   

  	
  1920
  East 17th Street, Suite 200

  
	
   

  	
   

  	
  Santa
  Ana, Ca 92705-8626

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  with
  copy to:

  	
   

  	
  Miller
  & Holguin

  
	
   

  	
   

  	
  1801
  Century Park East, 7th Floor

  
	
   

  	
   

  	
  Los
  Angeles, California 90067

  
	
   

  	
   

  	
  Attn:
  Dale S. Miller, Esq.

  
	
   

  	
   

  	
  (Phone)
  310-556-1990

  
	
   

  	
   

  	
  (Fax)
  310-557-2205

  



 


8.6                                 Governing Law. 
This Stock Purchase Agreement shall be governed by and construed in
accordance with the laws of the State of California without regard to the
conflict of law principles thereof.


 


8.7                                 Amendment.  This Stock Purchase Agreement
may be amended at any time by agreement of the parties, provided that any
amendment shall be in writing and executed by all parties.


 


8.8                                 Specific Performance. 
Company acknowledges and agrees with Purchaser that, in the event
Company terminates this Stock Purchase Agreement in violation hereof or
otherwise fails to close in breach hereof, Purchaser would be irreparably
damaged thereby and that monetary damages would not provide an adequate remedy.  Accordingly, it is agreed that, in such
situations, in addition to any other remedies that Purchaser may have at law or
in equity, Purchaser shall be entitled to specific performance and to seek
injunctive relief to prevent such a breach and specifically to enforce the
terms and provisions hereof in any action instituted in a court of competent
jurisdiction.


 


8.9                                 Severability.  If
any provision of this Stock Purchase Agreement is held by a court of competent
jurisdiction to be invalid or unenforceable, the remaining provisions will
nevertheless continue in full force and effect, unless such invalidity or
unenforceability would defeat an essential business purpose of this Stock
Purchase Agreement.


 


8.10                           Fees and Expenses.  Except as otherwise explicitly set forth
otherwise in writing signed by the parties, Company and Purchaser agree to bear
their own expenses including, without limitation, attorneys’ fees in connection
with the preparation of this Stock Purchase Agreement and the transactions
contemplated hereby.


 


8.11                           Exhibits and Schedules.  All exhibits and schedules attached to this
Stock Purchase Agreement are incorporated herein by this reference and all
references herein to “Stock Purchase Agreement” shall mean this Stock Purchase
Agreement together with all such exhibits and schedules, and all ancillary
agreements to be delivered at Closing.


 


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8.12                           Survival of Indemnification: Representations and Warranties. 
Except as expressly stated to the contrary herein, the indemnifications,
representations and warranties of the parties contained in this Stock Purchase
Agreement or in any certificate or document delivered at the Closing pursuant
to the provisions hereof shall survive the Closing Date for a period of three
(3) years; except for those representations and warranties contained in
Sections 3.1 and 3.2 which shall continue in full force and effect
forever.  The representations,
warranties and agreements of each of Company and Seller set forth in this
Agreement shall be effective regardless of any investigation that Purchaser has
undertaken or failed to undertake.


 


8.13                           Time of Essence.  Time is expressly made of the essence of
this Stock Purchase Agreement and each and every provision hereof of which time
of performance is a factor.


 


8.14                           Waivers.  No waiver by any party, whether express or
implied, of its rights under any provision of this Agreement shall constitute a
waiver of the party’s rights under such provisions at any other time or a
waiver of the party’s rights under any other provision of this Stock Purchase
Agreement.  No failure by any party to
take any action against any breach of this Stock Purchase Agreement or default
by another party shall constitute a waiver of the former party’s right to
enforce any provision of this Stock Purchase Agreement or to take action
against such breach or default or any subsequent breach or default by the other
party.  To be effective any waiver must
be in writing and signed by the waiving party.


 


8.15                           Attorneys’ Fees.  Subject to the rights and obligations of the
parties set forth in Article 7, should any party institute any action or
procedure to enforce this Stock Purchase Agreement or any provision hereof, or
for damages by reason of any alleged breach of this Stock Purchase Agreement or
of any provision hereof, or for a declaration of rights hereunder (including
without limitation arbitration), the prevailing party in any such action or
proceeding shall be entitled to receive from the other party all costs and
expenses, including without limitation reasonable attorneys’ fees, incurred by
the prevailing party in connection with such action or proceeding.


 


8.16                           Construction.  The parties have participated jointly in the
negotiation and drafting of this Stock Purchase Agreement and in the event of
any ambiguity or question of intent or interpretation, no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Stock Purchase Agreement.


 


8.17                           Further Assurances.  The parties shall take such actions and
execute and deliver such further documentation as may reasonably be required in
order to give effect to the transactions contemplated by this Stock Purchase
Agreement and the intentions of the parties hereto.


 


[The
remainder of the page is intentionally omitted.]


 


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


 


	
   

  	
  “PURCHASER”

  
	
   

  	
  JACOB
  Y. TERNER, M.D.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Jacob Y. Terner

  
	
   

  	
  Jacob
  Y. Terner, M.D.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “COMPANY”

  
	
   

  	
  PROSPECT MEDICAL GROUP, INC.,

  
	
   

  	
  a
  California professional medical corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
      /s/
  Gregg DeNicola

  
	
   

  	
   

  	
      Gregg
  DeNicola, M.D., President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “SELLER”

  
	
   

  	
  GREGG
  DENICOLA, M.D.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Gregg DeNicola

  
	
   

  	
  Gregg
  DeNicola, M.D.

  



 


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EXHIBIT A


 


STOCK


 


Four thousand (4,000)
shares of the Common Stock of Prospect Medical Group, Inc.