Document:

Exhibit 10.193

PROSPECT MEDICAL HOLDINGS, INC.

 

SUBSCRIPTION
AGREEMENT

 

Prospect Medical Holdings, Inc.

6083 Bristol Parkway, Suite 100

Culver City, CA 90230

 

Gentlemen:

 

1.             Subscription.  The undersigned (the “Purchaser”), intending
to be legally bound, hereby irrevocably agrees to purchase from Prospect
Medical Holdings, Inc. (the “Company”) the number of units (the “Units”) set
forth on the signature page hereof at a purchase price of $110,000 per
Unit.  Each Unit consists of 20,000
shares of Series A Convertible Preferred Stock, par value $0.01 per share, of
the Company (the “Preferred Stock”), convertible into shares of the Company’s
Common Stock, par value $0.01 per share (the “Common Stock”).  This subscription is submitted to you in
accordance with and subject to the terms and conditions described in this
Subscription Agreement and the Confidential Private Placement Memorandum of the
Company dated November 1, 2003, as amended or supplemented from time to time,
including all attachments, schedules and exhibits thereto (the “Memorandum”),
relating to the offering by the Company of a minimum of 69 Units (the “Minimum
Amount”) and a maximum of 104 Units, plus an additional 31 Units to cover
over-subscriptions, if any (the “Over-Subscription Units”) (the “Offering”).

 

                The terms of the
Offering are more completely described in the Memorandum and such terms are
incorporated herein in their entirety. 
Certain terms used but not otherwise defined herein shall have the
respective meanings provided in the Memorandum.

 

2.             Payment.  The Purchaser encloses herewith a check
payable to, or will immediately make a wire transfer payment to, “American
Stock Transfer & Trust Company, Escrow Agent for Prospect Medical Holdings,
Inc.,” in the full amount of the purchase price of the Units being subscribed
for.  To request wire transfer
instructions, please contact Ms. DiAnn Ellis, Associate, Spencer Trask
Ventures, Inc. (the “Placement Agent”), telephone no. (212) 326-9200,
ext. 672.  Such funds will be held for
the Purchaser’s benefit, and will be returned promptly, without interest,
penalty, expense or deduction if this Subscription Agreement is not accepted by
the Company, the Offering is terminated pursuant to its terms or by the
Company, or the Minimum Amount of Units is not sold.  Together with the check for, or wire transfer
of, the full purchase price, the Purchaser is delivering two completed and
executed Omnibus Signature Pages to the Subscription Agreement, the
Stockholders’ Agreement and the Registration Rights Agreement.

 

3.             Deposit
of Funds.  All payments made
as provided in Section 2 hereof shall be deposited by the Placement Agent as
soon as practicable with the Escrow Agent, in an escrow account (the “Escrow
Account”) until the earliest to occur of (a) the closing of the sale of the
Minimum Amount of Units (the “First Closing”), (b) the rejection of such
subscription, or (c) the termination of the Offering by the Company or the
Placement Agent.  The Company and the
Placement Agent may continue to offer and sell the Units and conduct additional
closings (each, a “Closing”) for the sale of additional Units after the First
Closing and until the termination of the Offering.

 

4.             Acceptance
of Subscription.  The
Purchaser understands and agrees that the Company in its sole discretion
reserves the right to accept or reject this or any other subscription for
Units, in whole or in part, notwithstanding prior receipt by the Purchaser of
notice of acceptance of this subscription. 
The Company shall have no obligation hereunder until the Company shall
execute and deliver to the Purchaser an executed copy of this Subscription
Agreement.  If this subscription is
rejected in whole, or the Offering is terminated or the Minimum Amount is not raised,
all funds received from the Purchaser will be returned without interest,
penalty, expense or deduction, and this Subscription Agreement shall thereafter
be of no further force or effect.  If
this subscription is rejected in part, the funds for the rejected portion of
this subscription

 

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will be returned without interest, penalty, expense or deduction, and
this Subscription Agreement will continue in full force and effect to the
extent this subscription was accepted.

 

5.             Representations
and Warranties.  The Purchaser
hereby acknowledges, represents, warrants, and agrees as follows:

 

(a)           None of the shares
of Preferred Stock contained in the Units or the shares of Common Stock
issuable upon conversion of the shares of Preferred Stock offered pursuant to
the Memorandum are registered under the Securities Act of 1933, as amended (the
“Securities Act”), or any state securities laws.  The Purchaser understands that the offering
and sale of the Units is intended to be exempt from registration under the
Securities Act, by virtue of Section 4(2) thereof and the provisions of
Regulation D promulgated thereunder, based, in part, upon the representations,
warranties and agreements of the Purchaser contained in this Subscription
Agreement;

 

(b)           The Purchaser and
the Purchaser’s attorney, accountant, purchaser representative and/or tax
adviser, if any (collectively, the “Advisers”), have received the Memorandum
and all other documents requested by the Purchaser, have carefully reviewed
them and understand the information contained therein, and the Purchaser and
the Advisers, if any, prior to the execution of this Subscription Agreement,
have had access to the same kind of information as would be available in a
registration statement filed by the Company under the Securities Act;

 

(c)           Neither the Securities
and Exchange Commission nor any state securities commission has approved the
Units or any of the shares of Preferred Stock or the shares of Common Stock
issuable upon conversion of the shares of Preferred Stock, or passed upon or
endorsed the merits of the Offering or confirmed the accuracy or determined the
adequacy of the Memorandum.  The
Memorandum has not been reviewed by any Federal, state or other regulatory
authority;

 

(d)           All documents,
records, and books pertaining to the investment in the Units (including,
without limitation, the Memorandum) have been made available for inspection by
such Purchaser and the Advisers, if any;

 

(e)           The Purchaser and
the Advisers, if any, have had a reasonable opportunity to ask questions of and
receive answers from a person or persons acting on behalf of the Company
concerning the offering of the Units and the business, financial condition,
results of operations and prospects of the Company, and all such questions have
been answered to the full satisfaction of the Purchaser and the Advisers, if
any;

 

(f)            In evaluating the
suitability of an investment in the Company, the Purchaser has not relied upon
any representation or other information (oral or written) other than as stated
in the Memorandum or as contained in documents or answers to questions so
furnished to the Purchaser or the Advisers by the Company;

 

(g)           The Purchaser is
unaware of, is in no way relying on, and did not become aware of the offering
of the Units through or as a result of, any form of general solicitation or
general advertising including, without limitation, any article, notice,
advertisement or other communication published in any newspaper, magazine or
similar media or broadcast over television or radio, in connection with the
offering and sale of the Units and is not subscribing for Units and did not
become aware of the offering of the Units through or as a result of any seminar
or meeting to which the Purchaser was invited by, or any solicitation of a
subscription by, a person not previously known to the Purchaser in connection
with investments in securities generally;

 

(h)           The Purchaser has
taken no action that would give rise to any claim by any person for brokerage
commissions, finders’ fees or the like relating to this Subscription Agreement
or the transactions contemplated hereby (other than commissions to be paid by
the Company to the Placement Agent or as otherwise described in the Memorandum)
and, in turn, to be paid to its selected dealers;

 

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(i)            The Purchaser or
its Advisers, as the case may be, together with the Advisers, have such
knowledge and experience in financial, tax, and business matters, and, in
particular, investments in securities, so as to enable them to utilize the
information made available to them in connection with the offering of the Units
to evaluate the merits and risks of an investment in the Units and the Company
and to make an informed investment decision with respect thereto.

 

(j)            The Purchaser is
not relying on the Company, the Placement Agent or any of their respective
employees or agents with respect to the legal, tax, economic and related
considerations of an investment in the Units, and the Purchaser has relied on
the advice of, or has consulted with, only his own Advisers;

 

(k)           The Purchaser is
acquiring the Units solely for such Purchaser’s own account for investment and
not with a view to resale or distribution thereof, in whole or in part.  The Purchaser has no agreement or
arrangement, formal or informal, with any person to sell or transfer all or any
part of the Units, the shares of Preferred Stock or the shares of Common Stock
issuable upon conversion of the Preferred Stock, and the Purchaser has no plans
to enter into any such agreement or arrangement;

 

(l)            The Purchaser must
bear the substantial economic risks of the investment in the Units indefinitely
because none of the securities included in the Units may be sold, hypothecated
or otherwise disposed of unless subsequently registered under the Securities
Act and applicable state securities laws or an exemption from such registration
is available.  Legends shall be placed on
the securities included in the Units to the effect that they have not been
registered under the Securities Act or applicable state securities laws and
appropriate notations thereof will be made in the Company’s stock books.  Stop transfer instructions will be placed
with the transfer agent of the securities constituting the Units.  The Company has agreed that purchasers of the
Units will have, with respect to the shares of Common Stock underlying the
Preferred Stock, the registration rights described in the Registration Rights
Agreement in the form of Annex C to the Memorandum.  Notwithstanding such registration rights,
there can be no assurance that there will be any market for resale of the
Units, the Preferred Stock, or the Common Stock, nor can there be any assurance
that such securities will be freely transferable at any time in the foreseeable
future;

 

(m)          The Purchaser has
adequate means of providing for such Purchaser’s current financial needs and
foreseeable contingencies and has no need for liquidity of the investment in
the Units for an indefinite period of time;

 

(n)           The Purchaser is
aware that an investment in the Units involves a number of very significant
risks and has carefully read and considered the matters set forth under the
caption “Risk Factors” in the Memorandum, and, in particular, acknowledges that
the Company has had a limited operating history and is engaged in a highly
competitive business;

 

(o)           The Purchaser meets
the requirements of at least one of the suitability standards for an
“accredited investor” as set forth on the Accredited Investor Certification
contained herein;

 

(p)           The Purchaser (i) if
a natural person, represents that the Purchaser has reached the age of 21 and
has full power and authority to execute and deliver this Subscription Agreement
and all other related agreements or certificates and to carry out the
provisions hereof and thereof; (ii) if a corporation, partnership, or limited liability
company or partnership, or association, joint stock company, trust,
unincorporated organization or other entity, represents that such entity was
not formed for the specific purpose of acquiring the Units, such entity is duly
organized, validly existing and in good standing under the laws of the state of
its organization, the consummation of the transactions contemplated hereby is
authorized by, and will not result in a violation of state law or its charter
or other organizational documents, such entity has full power and authority to
execute and deliver this Subscription Agreement and all other related
agreements or certificates and to carry out the provisions hereof and thereof
and to purchase and hold the securities constituting the Units, the execution
and delivery of this Subscription Agreement has been duly authorized by all
necessary action, this Subscription Agreement has been duly executed and
delivered on behalf of such entity and is a legal, valid and binding obligation
of such entity; or (iii) if executing this Subscription Agreement in a
representative or

 

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fiduciary capacity, represents that it has full power and authority to
execute and deliver this Subscription Agreement in such capacity and on behalf
of the subscribing individual, ward, partnership, trust, estate, corporation,
or limited liability company or partnership, or other entity for whom the
Purchaser is executing this Subscription Agreement, and such individual,
partnership, ward, trust, estate, corporation, or limited liability company or
partnership, or other entity has full right and power to perform pursuant to
this Subscription Agreement and make an investment in the Company, and
represents that this Subscription Agreement constitutes a legal, valid and
binding obligation of such entity.  The
execution and delivery of this Subscription Agreement will not violate or be in
conflict with any order, judgment, injunction, agreement or controlling
document to which the Purchaser is a party or by which it is bound;

 

(q)           The Purchaser and
the Advisers, if any, have had the opportunity to obtain any additional
information, to the extent the Company had such information in its possession
or could acquire it without unreasonable effort or expense, necessary to verify
the accuracy of the information contained in the Memorandum and all documents
received or reviewed in connection with the purchase of the Units and have had
the opportunity to have representatives of the Company provide them with such
additional information regarding the terms and conditions of this particular
investment and the financial condition, results of operations, business and
prospects of the Company deemed relevant by the Purchaser or the Advisers, if
any, and all such requested information, to the extent the Company had such
information in its possession or could acquire it without unreasonable effort
or expense, has been provided to the full satisfaction of the Purchaser and the
Advisers, if any;

 

(r)            The Purchaser
represents to the Company that any information which the undersigned has
heretofore furnished or is furnishing herewith the Company or the Placement
Agent is complete and accurate and may be relied upon by the Company in
determining the availability of an exemption from registration under Federal and
state securities laws in connection with the offering of securities as
described in the Memorandum.  The
Purchaser further represents and warrants that it will notify and supply
corrective information to the Company and the Placement Agent immediately upon
the occurrence of any change therein occurring prior to the Company’s issuance
of the securities contained in the Units;

 

(s)           The Purchaser has
significant prior investment experience, including investment in non-listed and
non-registered securities.  The Purchaser
is knowledgeable about investment considerations in development-stage
companies.  The Purchaser has a
sufficient net worth to sustain a loss of its entire investment in the Company
in the event such a loss should occur. 
The Purchaser’s overall commitment to investments which are not readily
marketable is not excessive in view of the Purchaser’s net worth and financial
circumstances and the purchase of the Units will not cause such commitment to
become excessive.  The investment is a
suitable one for the Purchaser;

 

(t)            The Purchaser is
satisfied that the Purchaser has received adequate information with respect to
all matters which it or the Advisers, if any, consider material to its decision
to make this investment;

 

(u)           The Purchaser
acknowledges that any estimates or forward-looking statements or projections
included in the Memorandum were prepared by the Company in good faith but that
the attainment of any such projections, estimates or forward-looking statements
cannot be guaranteed by the Company and should not be relied upon;

 

(v)           No oral or written
representations have been made, or oral or written information furnished, to
the Purchaser or the Advisers, if any, in connection with the offering of the
Units which are in any way inconsistent with the information contained in the
Memorandum;

 

(w)          Within five (5) days
after receipt of a request from the Company or the Placement Agent, the
Purchaser will provide such information and deliver such documents as may
reasonably be necessary to comply with any and all laws and ordinances to which
the Company or the Placement Agent is subject;

 

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(x)            The Purchaser’s
substantive relationship with the Placement Agent or subagent through which the
Purchaser is subscribing for Units predates the Placement Agent’s or such
subagent’s contact with the Purchaser regarding an investment in the Units;

 

(y)           THE SECURITIES
OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF CERTAIN STATES AND ARE BEING OFFERED AND
SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT
AND SUCH LAWS.  THE SECURITIES ARE
SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT
TO REGISTRATION OR EXEMPTION THEREFROM. 
THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER
REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR
ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE
MEMORANDUM.  ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL;

 

(z)            
The Purchaser acknowledges that neither the shares of Preferred Stock nor the
shares of Common Stock have been recommended by any Federal or state securities
commission or regulatory authority. In making an investment decision investors
must rely on their own examination of the Company and the terms of the
offering, including the merits and risks involved.  Furthermore, the foregoing authorities have
not confirmed the accuracy or determined the adequacy of this Subscription
Agreement.  Any representation to the
contrary is a criminal offense. The shares of Preferred Stock, and the shares
of Common Stock issuable upon the conversion of the Preferred Stock, are
subject to restrictions on transferability and resale and may not be
transferred or resold except as permitted under the Securities Act, and the
applicable state securities laws, pursuant to registration or exemption
therefrom.  Investors should be aware
that they will be required to bear the financial risks of this investment for
an indefinite period of time; and

 

(aa) (For ERISA plans only)    The fiduciary of the ERISA plan represents
that such fiduciary has been informed of and understands the Company’s
investment objectives, policies and strategies, and that the decision to invest
“plan assets” (as such term is defined in ERISA) in the Company is consistent
with the provisions of ERISA that require diversification of plan assets and
impose other fiduciary responsibilities. 
The Purchaser fiduciary or Plan (a) is responsible for the decision to
invest in the Company; (b) is independent of the Company or any of its
affiliates; (c) is qualified to make such investment decision; and (d) in
making such decision, the Purchaser fiduciary or Plan has not relied primarily
on any advice or recommendation of the Company or any of its affiliates.

 

6.             Indemnification.  The Purchaser agrees to indemnify and hold
harmless the Company, the Placement Agent and their respective officers,
directors, employees, agents, control persons and affiliates from and against
all losses, liabilities, claims, damages, costs, fees and expenses whatsoever
(including, but not limited to, any and all expenses incurred in investigating,
preparing or defending against any litigation commenced or threatened) based
upon or arising out of any actual or alleged false acknowledgment,
representation or warranty, or misrepresentation or omission to state a
material fact, or breach by the Purchaser of any covenant or agreement made by
the Purchaser herein or in any other document delivered in connection with this
Subscription Agreement.

 

7.             Irrevocability;
Binding Effect.  The Purchaser
hereby acknowledges and agrees that the subscription hereunder is irrevocable
by the Purchaser, except as required by applicable law, and that this
Subscription Agreement shall survive the death or disability of the Purchaser
and shall be binding upon and inure to the benefit of the parties and their
heirs, executors, administrators, successors, legal representatives, and
permitted assigns.  If the Purchaser is
more than one person, the obligations of the Purchaser hereunder shall be joint
and several and the agreements, representations, warranties, and
acknowledgments herein shall be deemed to be made by and be binding upon each
such person and such person’s heirs, executors, administrators, successors,
legal representatives, and permitted assigns.

 

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8.             Modification.  This Subscription Agreement shall not be
modified or waived except by an instrument in writing signed by the party
against whom any such modification or waiver is sought.

 

9.             Notices.  Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be mailed by
certified mail, return receipt requested, or delivered against receipt to the
party to whom it is to be given (a) if to the Company, at the address set forth
above, or (b) if to the Purchaser, at the address set forth on the signature
page hereof (or, in either case, to such other address as the party shall have
furnished in writing in accordance with the provisions of this Section 9).  Any notice or other communication given by
certified mail shall be deemed given at the time of certification thereof,
except for a notice changing a party’s address which shall be deemed given at
the time of receipt thereof.

 

10.           Assignability.  This Subscription Agreement and the rights,
interests and obligations hereunder are not transferable or assignable by the
Purchaser and the transfer or assignment of the Units, the shares of Preferred
Stock or the shares of Common Stock issuable upon conversion of the Preferred
Stock or otherwise contained in the Units shall be made only in accordance with
all applicable laws.

 

11.           Applicable
Law.  This Subscription
Agreement shall be governed by and construed in accordance with the laws of the
State of New York relating to contracts entered into and to be performed wholly
within such State. The Purchaser hereby irrevocably submits to the exclusive
jurisdiction of any New York State court or United States Federal court sitting
in New York County over any action or proceeding arising out of or relating to
this Subscription Agreement or any agreement contemplated hereby, and the
Purchaser hereby irrevocably agrees that all claims in respect of such action
or proceeding may be heard and determined in such New York State or Federal
court.  The Purchaser further waives any
objection to venue in such State and any objection to an action or proceeding
in such State on the basis of a non-convenient forum.  The Purchaser further agrees that any action
or proceeding brought against the Company or the Placement Agent shall be
brought only in New York State or United States Federal courts sitting in New
York County. THE PURCHASER AGREES TO WAIVE ITS RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS SUBSCRIPTION
AGREEMENT OR ANY DOCUMENT OR AGREEMENT CONTEMPLATED HEREBY.

 

12.           Blue
Sky Qualification.  The
purchase of Units under this Subscription Agreement is expressly conditioned
upon the exemption from qualification of the offer and sale of the Units from
applicable Federal and state securities laws. 
The Company shall not be required to qualify this transaction under the
securities laws of any jurisdiction and, should qualification be necessary, the
Company shall be released from any and all obligations to maintain its offer,
and may rescind any sale contracted, in the jurisdiction.

 

13.           Use
of Pronouns.  All pronouns and
any variations thereof used herein shall be deemed to refer to the masculine,
feminine, neuter, singular or plural as the identity of the person or persons
referred to may require.

 

14.           Confidentiality.  The Purchaser acknowledges and agrees that
any information or data the Purchaser has acquired from or about the Company,
not otherwise properly in the public domain, was received in confidence.  The Purchaser agrees not to divulge, communicate
or disclose, except as may be required by law or for the performance of this
Agreement, or use to the detriment of the Company or for the benefit of any
other person or persons, or misuse in any way, any confidential information of
the Company, including any scientific, technical, trade or business secrets of
the Company and any scientific, technical, trade or business materials that are
treated by the Company as confidential or proprietary, including, but not
limited to, ideas, discoveries, inventions, developments and improvements
belonging to the Company and confidential information obtained by or given to
the Company about or belonging to third parties.

 

15.           Power of Attorney.  The Purchaser hereby appoints William P.
Dioguardi, and any other duly authorized officer of the Placement Agent, as his
attorney-in-fact, with full power of substitution, to negotiate with the
Company, and any firm of investment bankers selected by the Company to serve as
its

 

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managing underwriter for a possible public offering, the period of
time, and other terms and conditions pursuant to which the Purchaser or any
transferee of the Purchaser, or any person claiming through the Purchaser,
would be restricted from selling, pledging or otherwise transferring any ownership
interest in shares of Common Stock of the Company beneficially owned by the
Purchaser (the “Lock-up Period”), any transferee of the Purchaser, or any
person claiming through the Purchaser, as it relates to a possible public
offering and, in each case, to execute and deliver on the Purchaser’s behalf
such amendments, documents, agreements and instruments as they shall deem
necessary or appropriate in order to effectuate the foregoing on such terms and
conditions as the Purchaser’s 
attorneys-in-fact shall approve in their sole judgment.

 

16.           Miscellaneous.

 

(a)           This Agreement,
together with the Stockholders’ Agreement and the Registration Rights
Agreement, constitute the entire agreement between the Purchaser and the
Company with respect to the subject matter hereof and supersede all prior oral
or written agreements and understandings, if any, relating to the subject
matter hereof.  The terms and provisions
of this Agreement may be waived, or consent for the departure therefrom
granted, only by a written document executed by the party entitled to the
benefits of such terms or provisions.

 

(b)           The Purchaser’s
representations and warranties made in this Agreement shall survive the
execution and delivery hereof and delivery of the shares of Preferred Stock
contained in the Units.

 

(c)           Each of the parties
hereto shall pay its own fees and expenses (including the fees of any
attorneys, accountants, appraisers or others engaged by such party) in
connection with this Agreement and the transactions contemplated hereby whether
or not the transactions contemplated hereby are consummated.

 

(d)           This
Agreement may be executed in one or more counterparts each of which shall be
deemed an original, but all of which shall together constitute one and the same
instrument.

 

(e)           Each provision of
this Subscription Agreement shall be considered separable and, if for any
reason any provision or provisions hereof are determined to be invalid or
contrary to applicable law, such invalidity or illegality shall not impair the
operation of or affect the remaining portions of this Subscription Agreement.

 

(f)            Paragraph titles
are for descriptive purposes only and shall not control or alter the meaning of
this Subscription Agreement as set forth in the text.

 

17.           Omnibus Signature Page.  This Subscription Agreement is intended to be
read and construed in conjunction with (a) the Stockholders’ Agreement and (b)
the Registration Rights Agreement pertaining to the issuance by the Company of
the shares of Preferred Stock to subscribers pursuant to the Memorandum.  Accordingly, pursuant to the terms and
conditions of this Subscription Agreement and such related agreements it is
hereby agreed that the execution by Purchaser of this Subscription Agreement,
in the place set forth herein, shall constitute agreement to be bound by the
terms and conditions hereof and the terms and conditions of the Stockholders’
Agreement and the Registration Rights Agreement, with the same effect as if
each of such separate but related agreement were separately signed.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

A-7

 

Accredited Investor Certification

(Initial the appropriate item(s))

 

The undersigned further represents and warrants as
indicated below by the undersigned’s initials:

 

A.                                   Individual
investors: (Please initial one
or more of the following four statements)

 

1._____              I certify that
I am an accredited investor because I have had individual income (exclusive of
any income earned by my spouse) in excess of $200,000 in each of the most
recent two years and I reasonably expect to have an individual income in excess
of $200,000 for the current year.

2._____              I certify that
I am an accredited investor because I have had joint income with my spouse in
excess of $300,000 in each of the most recent two years and I reasonably expect
to have joint income with my spouse in excess of $300,000 for the current year.

3._____              I
certify that I am an accredited investor because I have an individual net
worth, or my spouse and I have a joint net worth, in excess of $1,000,000.

4._____              I
am a director or executive officer of Prospect Medical Holdings, Inc.

B.                                               Partnerships,
corporations, trusts or other entities: (Please
initial one of the following seven statements). The undersigned hereby
certifies that it is an accredited investor because it is:

1._____              an employee
benefit plan whose total assets exceed $5,000,000;

2._____              an employee
benefit plan whose investments decisions are made by a plan fiduciary which is
either a bank, savings and loan association or an insurance company (as defined
in Section 3(a) of the Securities Act) or an investment adviser registered as
such under the Investment Advisers Act of 1940;

3._____              a self-directed
employee benefit plan, including an Individual Retirement Account, with
investment decisions made solely by persons that are accredited investors;

4._____              an organization
described in Section 501(c)(3) of the Internal Revenue Code of 1986, as
amended, not formed for the specific purpose of acquiring the Units, whose
total assets are in excess of $5,000,000;

5._____              a corporation,
partnership or Massachusetts or similar business trust, with total assets in
excess of $5,000,000, not formed for the specific purpose of acquiring the
Units and whose purchase is directed by a sophisticated person as described in
Rule 506(b)(ii) of Regulation D and who has such knowledge and experience in
financial and business matters that he is capable of evaluating the risks and
merits of an investment in the Units;

6._____              a trust, not
formed for the specific purpose of acquiring the Units, with total assets in
excess of $5,000,000, whose purchase is directed by a person who has such
knowledge and experience in financial and business matters that he is capable
of evaluating the merits and risks of an investment in the Units; or

7._____              an entity
(including a revocable grantor trust but other than a conventional trust) in
which each of the equity owners qualifies as an accredited investor under items
A(1), (2) or (3) or item B(1) above.

A-8

 

PROSPECT MEDICAL HOLDINGS, INC.

OMNIBUS SIGNATURE PAGE TO

SUBSCRIPTION AGREEMENT,
STOCKHOLDERS’ AGREEMENT

AND REGISTRATION RIGHTS
AGREEMENT

 

                Subscriber hereby elects to subscribe under the Subscription Agreement
for a total of                 Units
at a price of $110,000 per Unit (NOTE: to be completed by subscriber) and
executes the Subscription Agreement, the Stockholders’ Agreement and the
Registration Rights Agreement.

 

Date (NOTE: To be completed by subscriber):                                ,
200

If the purchaser is an INDIVIDUAL, and if purchased as JOINT TENANTS,
as JOINT TENANTS with RIGHTS OF SURVIVORSHIP, as TENANTS IN COMMON, or as
COMMUNITY PROPERTY:

 

 

	
   

  	
   

  	
   

  	
   

  
	
  Print Name(s)

  	
  Social Security Number (s)

  
	
   

  	
   

  	
   

  	
   

  
	
  Signature(s) of Investor(s)

  	
  Signature

  
	
   

  	
   

  	
   

  	
   

  
	
  Address

  	
  Date

  

 

If the purchaser is a PARTNERSHIP, CORPORATION, TRUST, LIMITED
LIABILITY COMPANY or LIMITED LIABILITY PARTNERSHIP:

 

	
   

  	
   

  	
   

  	
   

  
	
  Name of Partnership,

  	
  Federal Taxpayer

  
	
  Corporation, Trust, Limited

  	
  Identification Number

  
	
  Liability Company or Limited

  	
   

  
	
  Liability Partnership

  	
   

  

 

	
  By:

  	
   

  	
   

  	
  State of Organization:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
								

 

SUBSCRIPTION FOR          UNITS
AND STOCKHOLDERS’ AGREEMENT AND REGISTRATION RIGHTS AGREEMENT ACCEPTED AND
AGREED TO

this            
day of                 ,
200

 

Prospect Medical Holdings, Inc.

 

	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Authorized Officer

  	
  Spencer Trask Representative

  	 

							

 

	
  For Internal Use Only:

  	
  STVI

  	
   

  

 

 

A-9Exhibit
10.194

CASH MANAGEMENT AGREEMENT

THIS CASH MANAGEMENT
AGREEMENT (“Agreement”) is made and entered into this 19th day of July, 2004,
and deemed to have been effective as of June 4, 1996, by and between PROSPECT
MEDICAL SYSTEMS, Inc., a Delaware corporation 
(“Manager”), PROSPECT MEDICAL HOLDINGS, INC., a Delaware corporation
(“Parent”) and PROSPECT MEDICAL GROUP, INC., a California professional
corporation (“Group”), with reference to the following facts:

RECITALS

WHEREAS, Group is
a California professional corporation whose administrative and other
non-medical functions are managed by Manager pursuant to the terms of that
Amended and Restated Management Services Agreement between Manager and Group
effective June 4, 1996, as amended (“Management Services Agreement”);

WHEREAS, Manager
is a wholly-owned subsidiary of Parent;

WHEREAS, pursuant
to the terms of the Management Services Agreement, Group, Manager and Group’s
sole physician shareholder entered into an assignable option agreement wherein
Manager has the right to designate the successor shareholder of Group at any
time and for whatever reason during the term of the Management Services
Agreement (the “Assignable Option Agreement”);

WHEREAS, due to
the existence of the Assignable Option Agreement, Parent and Manager are deemed
to control the business and administrative functions of Group for financial
accounting purposes;

WHEREAS, as a
result of Parent and Manager’s control of Group, the financial statements of
Group are consolidated with those of Manager and Parent, and Group, Manager and
Parent are deemed part of a consolidated business for financial accounting
purposes;

                WHEREAS, because the parties are
all a part of a consolidated business, from time to time, Manager may loan
money (directly or may cause Parent to loan on its behalf) to Group, and
conversely, Group may loan money to Manager or Parent;

                WHEREAS, the Management Services
Agreement provides Manager the authority to loan monies to Group when Group’s
financial needs so dictate;

                WHEREAS, this Agreement is
intended to provide the authority for Group to loan funds to Manager or Parent
when Manager or Parent’s financial needs so dictate;

NOW, THEREFORE, IN
CONSIDERATION OF the foregoing and the mutual covenants and conditions
contained herein, the parties agree as follows:

1

 

1.             Advances from Group to Manager
or Parent.    As a result of the
consolidated business of Group, Manager and Parent, Group agrees that from time
to time, Manager and/or Parent may request that Group advance money to them for
purposes of business operations; provided, however, Manager and/or Parent agree
that they shall not request an advance from Group of any amount which would
prevent Group from performing its obligations to enrollees under Group’s payor
agreements.   The parties acknowledge
that any and all such advances by Group to Manager and/or Parent are loans by
Group to Manager or Parent, as applicable, and shall be entered on the books
and records of such entities as a receivable due to Group and a payable due
from Manager or Parent, as applicable.  
The loans are repayable upon demand.

2.             Effect of Consolidation of
Financial Statements.  The parties
acknowledge that due to the consolidation of the financial statements of Group,
Manager and Parent that the advances shall be eliminated on the consolidated
financial statements.  However, such
elimination shall not alter the character of the advance, which shall continue
to be deemed a loan until repaid.

3.             Term of Agreement.  This Agreement shall be effective as of June
4, 1996 and shall continue in force and effect until the Management Services
Agreement has been terminated.

4.             Applicable Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of California.

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

	
   

  	
  “Parent”

  Prospect Medical
  Holdings, Inc.

   

  
	
   

  	
   

  	
   

  
	
   

  	
  Jacob Y. Terner, M.D.,
  Chief Executive Officer

  
	
   

  	
  “Manager”

  Prospect Medical
  Systems, Inc.

   

  
	
   

  	
   

  	
   

  
	
   

  	
  Jacob Y. Terner, M.D.,
  Chief Executive Officer

   

  

 

 

2

 

	
   

  	
  “Group”

  Prospect Medical Group,
  Inc.

   

  
	
   

  	
   

  	
   

  
	
   

  	
  Jacob Y. Terner, M.D.,
  Chief Executive Officer 

  

 

3

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