Exhibit 10.86


 


AMENDMENT NO.
1 TO

PLACEMENT AGENCY AGREEMENT


 


This Amendment No 1. to the 
Placement Agency Agreement (the “Agreement”), dated December 30,
2003, entered into by and between Prospect Medical Holdings, Inc., a Delaware corporation (the “Company”),
and Spencer Trask Ventures, a
Delaware corporation (the “Placement Agent”), as follows (unless the context
otherwise requires, as used herein, the “Company” refers to Prospect Medical
Holdings, Inc., and its subsidiaries, and Prospect Medical Group and its
subsidiaries, and as finally constituted giving effect to the merger and
acquisition transactions contemplated by the Offering (as hereafter defined)):


 


W I T N E S S E T H:


 


WHEREAS, pursuant to that certain Placement Agency Agreement by and between the Company and the
Placement Agent dated November 1, 2003 (the “Placement Agency Agreement”),
the Company is offering (the “Offering”) for sale through the Placement Agent
and its selected dealers, as exclusive agent for the Company, a minimum of 69
units (the “Minimum Amount”) and a maximum of 104 units (the “Units”), plus up
to an additional 31 Units to cover over subscriptions, if any, in the sole
discretion of the Placement Agent, consisting of 20,000 shares (the “Shares”)
at $5.50 per share of the Company’s Series A Convertible Preferred Stock, $0.01
par value per share (the “Series A Preferred Stock”).


 


WHEREAS, the Company and the Placement Agent desire to amend the terms
of the Placement Agency Agreement as set forth herein;


 


NOW, THEREFORE, in consideration of the premises and agreements
hereinafter contained, it is agreed as follows:


 


1.                                       Amendments
to Placement Agency Agreement.


 


The Placement Agency Agreement is hereby amended as follows:


 


(a)                                  Section 6(i) of
the Placement Agency Agreement is hereby deleted in its entirety and replaced
with the following:


 


(i)                                     On
or prior to the First Closing, the Company, the Principal Stockholders and
those management stockholders listed on Schedule A
attached hereto (the “Stockholders”) shall have entered into a Stockholders’
Agreement substantially in the form of Annex
B to the Memorandum (the “Stockholders’ Agreement”), pursuant to
which the Principal Stockholders and the Stockholders shall agree not to sell,
transfer or otherwise dispose of any of the Company’s securities beneficially
owned by them or issuable to them pursuant to the exercise of options, warrants
or conversion of other securities without the Placement Agent’s prior written
consent, until 90 days following the effective date of the registration
statement on Form S-1 (or such other applicable registration statement)
covering the public sale of shares of common stock issued or issuable upon
conversion of the Series A Preferred Stock, except that such persons may make
transfers to (i) a


 

















 


parent,
spouse, sibling or descendent, or to a trust for the benefit of any of the
foregoing persons and (ii) in accordance with the provisions set forth in the
Stockholders Agreement, as of the date of the First Closing, among the Company,
the Placement Agent, the Principal Stockholders and the Stockholders, the
investors in the Offering; provided, however, that such transfers shall be
subject to this Section 6(i) and that the Placement Agent may require that
any such permitted transfer be made subject to a voting agreement pursuant to
which the transferring stockholder retains the right to vote all transferred
shares for up to two (2) years from the First Closing.


 


(b)                                 The
following covenant shall be added as Section 5(p) to the Placement Agency
Agreement:


 


(p)                                 The
Company shall use its best efforts to cause those certain stockholders, option
holders and warrant holders listed in Schedule B
attached hereto to execute that certain lock-up letter between each of them and
the Placement Agent in substantially the form attached hereto as Exhibit A.


 


2.                                       Full
Force and Effect.


 


Except as specifically amended hereby, all of the terms and provisions
of the Placement Agency Agreement shall remain in full force and effect.


 


3.                                       Counterparts.


 


This Amendment may be executed in any number of counterparts, each of
which shall be deemed an original and all of which together shall be deemed to
be one and the same instrument.


 


2

















 


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


 


 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  PROSPECT MEDICAL

  HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  R. Stewart Kahn

  
	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Accepted and agreed to as of this

  
	
   

  	
  30th day of December, 2003.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SPENCER TRASK VENTURES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  
	
   

  	
   

  	
   

  
	
   

  	
  Name: William P. Dioguardi

  
	
   

  	
  Title: President

  
				



 


3

















 


Schedule B


 


	
  Name

  	
   

  	
  Shares

  	
   

  	
  Warrant &

  Option Shares

  	
   

  	
  Totals

  
	
  Abrams, Emanuel

  	
   

  	
  56,057.0

  	
   

  	
  0.0

  	
   

  	
  56,057.0

  
	
  Amir, Paul & Michal

  	
   

  	
  561,394.0

  	
   

  	
  72,816.0

  	
   

  	
  634,210.0

  
	
  Arulanantham, Karunyan

  	
   

  	
  342,817.0

  	
   

  	
  126,285.0

  	
   

  	
  469,102.0

  
	
  Bell, Carol

  	
   

  	
  40,041.0

  	
   

  	
  0.0

  	
   

  	
  40,041.0

  
	
  Dickson, Catherine

  	
   

  	
  0.0

  	
   

  	
  65,500.0

  	
   

  	
  65,500.0

  
	
  Dutton, Theodore

  	
   

  	
  112,444.0

  	
   

  	
  29,127.0

  	
   

  	
  141,571.0

  
	
  Frisch, David

  	
   

  	
  27,380.0

  	
   

  	
  20,000.0

  	
   

  	
  47,380.0

  
	
  Goldenberg, Irwin

  	
   

  	
  96,263.0

  	
   

  	
  14,563.5

  	
   

  	
  110,826.5

  
	
  Goldstein, Robert

  	
   

  	
  220,344.0

  	
   

  	
  14,563.5

  	
   

  	
  234,907.5

  
	
  Hodges, Linda

  	
   

  	
  0.0

  	
   

  	
  100,000.0

  	
   

  	
  100,000.0

  
	
  Jayakumar, Jay

  	
   

  	
  68,092.0

  	
   

  	
  45,782.5

  	
   

  	
  113,874.5

  
	
  Kahn, Stewart

  	
   

  	
  25,000.0

  	
   

  	
  102,500.0

  	
   

  	
  127,500.0

  
	
  Levine, Howard

  	
   

  	
  5,000.0

  	
   

  	
  65,000.0

  	
   

  	
  70,000.0

  
	
  Levinsohn, David

  	
   

  	
  208,211.0

  	
   

  	
  110,000.0

  	
   

  	
  318,211.0

  
	
  Lipper, Arthur

  	
   

  	
  11,680.0

  	
   

  	
  20,000.0

  	
   

  	
  31,680.0

  
	
  Maloof, Thomas and John

  	
   

  	
  101,211.0

  	
   

  	
  7,282.5

  	
   

  	
  108,493.5

  
	
  Miller & Holguin

  	
   

  	
  277,350.0

  	
   

  	
  105,469.5

  	
   

  	
  382,819.5

  
	
  Miller, Marty

  	
   

  	
  0.0

  	
   

  	
  25,000.0

  	
   

  	
  25,000.0

  
	
  Moorthy, Sinnadurai & CSM Trust

  	
   

  	
  302,363.0

  	
   

  	
  87,377.0

  	
   

  	
  389,740.0

  
	
  Nishimoto, Jo Ann

  	
   

  	
  0.0

  	
   

  	
  20,000.0

  	
   

  	
  20,000.0

  
	
  Reich, Melvin

  	
   

  	
  0.0

  	
   

  	
  21,099.0

  	
   

  	
  21,099.0

  
	
  Schwartz, Kenneth

  	
   

  	
  20,000.0

  	
   

  	
  50,000.0

  	
   

  	
  70,000.0

  
	
  Sherman Oaks Health System

  	
   

  	
  30,360.0

  	
   

  	
  0.0

  	
   

  	
  30,360.0

  
	
  Simmons; Frederick

  	
   

  	
  192,525.0

  	
   

  	
  29,127.0

  	
   

  	
  221,652.0

  
	
  Spencer Trask Venture Investment Partners

  	
   

  	
  100,000.0

  	
   

  	
  559,409.0

  	
   

  	
  659,409.0

  
	
  Stephens, Roger

  	
   

  	
  4,855.0

  	
   

  	
  4,369.5

  	
   

  	
  9,224.5

  
	
  Tashjian, Larry & Tashjian Trust

  	
   

  	
  136,222.0

  	
   

  	
  7,282.5

  	
   

  	
  143,504.5

  
	
  Terner, Jacob Y.

  	
   

  	
  372,702.0

  	
   

  	
  1,137,816.0

  	
   

  	
  1,510,518.0

  
	
  Terner, Michael

  	
   

  	
  0.0

  	
   

  	
  30,000.0

  	
   

  	
  30,000.0

  
	
  Vigil, Donna

  	
   

  	
  0.0

  	
   

  	
  90,000.0

  	
   

  	
  90,000.0

  
	
  Vogel, Rachel Terner

  	
   

  	
  40,041.0

  	
   

  	
  0.0

  	
   

  	
  40,041.0

  
	
  TOTALS

  	
   

  	
  3,352,352.0

  	
   

  	
  2,960,369.5

  	
   

  	
  6,312,721.5

  



 

















 


Exhibit A


 


SPENCER TRASK
VENTURES, INC.


535 Madison Avenue


New York, New York 10022


 


[ADDRESS OF STOCKHOLDER]


 


Dear Sir or Madam:


 


This letter is being delivered to you in connection with that certain private offering (the
“Offering”) of up to 104 units (the “Units”), plus an additional 31 Units to
cover over-subscriptions, if any, consisting of 20,000 shares of Series A
Convertible Preferred Stock (the “Series A Preferred Stock”) of Prospect
Medical Holdings, Inc. (the “Company”), pursuant to that certain Confidential
Private Placement Memorandum, dated November 1, 2003 (the “Memorandum”),
for which Spencer Trask Ventures, Inc. is acting as the placement agent (the
“Placement Agent”).


 


In connection with the Offering, you hereby agree not to Transfer (as
hereafter defined) any shares of the Company’s common stock and/or any
securities (including, without limitation, options and warrants) of the Company
convertible into or exercisable or exchangeable for any shares of the Company’s
common stock without the prior written consent of the Placement Agent, which
consent shall not be unreasonably withheld, until ninety (90) days following
the effective date of that certain registration statement on Form S-1 (or such
other applicable registration statement) covering the public sale of shares of
common stock issued or issuable upon conversion of the Series A Preferred
Stock, as contemplated in that certain Registration Rights Agreement among the
Company and investors in the Offering contemplated by the Memorandum.


 


For purposes of this letter, “Transfer” shall
mean any voluntary or involuntary, direct or indirect sale, transfer,
conveyance, assignment, gift, donation, assignment, pledge, hypothecation,
delivery or other disposition of shares of the company’s common stock and any
other securities of the Company issued in exchange for, upon conversion or in
substitution of, or otherwise in respect of such shares (“Equity Securities”),
but shall not include any redemption or repurchase of Equity Securities by the
Company.


 


	
   

  	
   

  	
  Yours very truly,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SPENCER TRASK VENTURES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
  AGREED AND ACCEPTED:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [NAME OF STOCKHOLDER]

  	
   

  	
   

  
	
  Dated: December   , 2003