Document:

Exhibit 10.87

 

SPENCER TRASK
VENTURES, INC.

535 Madison Avenue,
18th Floor

New York, New York
10022

 

January 15, 2004

 

Prospect Medical Holdings, Inc.

6083 Bristol Parkway, Suite 100

Culver City, California 90230,

	
  Attn.:

  	
   

  	
  Jacob Y.
  Terner, M.D.

  
	
   

  	
   

  	
  Chief Executive
  Officer

  

 

Re:          Finder’s Fee Agreement

 

Dear Mr. Evans:

 

This will confirm our agreement, referred to in Section 3(g) of the
Placement Agency Agreement (the “Agency Agreement”), dated November 1, 2003,
between Spencer Trask Ventures Inc. (“Spencer Trask”) and Prospect Medical
Holdings, Inc. (the “Company”) to act as a non-exclusive finder for the
Company.

 

In the event that the Company shall, at any time after the Final
Closing (as defined in the Agency Agreement) and prior to the two (2) year
anniversary of the Final Closing, consummate a significant transaction,
including, without limitation, any sale or exchange of stock or assets, merger,
consolidation, acquisition, financing, joint venture, a material investment in
the securities of or loan to the Company, a purchase of a material portion of
the stock of the Company (collectively, a “Material Transaction”) with any
third party introduced by Spencer Trask to the Company, directly or indirectly,
during the twelve (12) months immediately following the Final Closing, as a (i)
potential candidate for such Material Transaction or (ii) strategic partner,
investor or customer during such period, the Company shall pay to Spencer Trask
a fee (the “Finder’s Fee”) equal to (i) five percent (5%) of the first $1,000,000
or a portion thereof; plus (ii) four percent (4%) of any transaction value in
excess of $1,000,000 but less than $2,000,000; plus (iii) three percent
(3%) of any transaction value in excess of $2,000,000 but less than $3,000,000;
plus (iv) two percent (2%) of any transaction value in excess of $3,000,000 but
less than $4,000,000; plus (v) one percent (1%) of any transaction value in
excess of $4,000,000.

 

The Company shall have the right, in its sole discretion, to reject any
third party’s offer or to abandon any Material Transaction undertaken by the
Company prior to the actual closing of such Material Transaction.  Any determination as to whether to
consummate a Material Transaction shall be made by the Company’s Board of
Directors, and no Finder’s Fee shall be due and owing unless a Material
Transaction is closed.

 

The Finder’s Fee due Spencer Trask shall be paid by the Company on the
date of closing of such Transaction, regardless of whether the consummated
Transaction involves payment on an installment basis.

 

 

For purposes of calculating any Finder’s Fee
to which Spencer Trask has demonstrated its entitlement, the transaction value
of each Material Transaction undertaken by the Company shall not be aggregated
with the transaction value of any other Material Transaction previously
undertaken by the Company except where the parties to each such transaction
were affiliated with one another prior to the completion of such
transactions.  Any such Finder’s Fee due
shall be paid at the closing of the Material Transaction for which the Finder’s
Fee is payable.

 

In the event
that, for any reason, the Company shall fail to pay to Spencer Trask all or any
portion of the Finder’s Fee payable hereunder when due, interest shall accrue
and be payable on the unpaid cash balance due hereunder from the date when
first due through and including the date when actually collected by Spencer
Trask,  at a rate equal to five
percent (5%), computed on a daily basis.

 

The Company
represents and warrants to Spencer Trask that Spencer Trask’s engagement
hereunder has been duly authorized and approved by the Board of Directors of
the Company.

 

This letter
agreement (i) shall be governed by, and construed in accordance with, the laws
of the State of New York, (ii) may not be assigned by either party without
prior written consent of the other party, (iii) may not by modified or amended
except in writing, (iv) constitutes the entire agreement of the parties with
respect to the subject matter hereof superseding all prior agreements and
understandings, written or oral and (v) may be executed in counterparts each of
which shall be deemed to be an original and all of which shall constitute one
agreement.

 

[REST OF PAGE INTENTIONALLY BLANK]

 

2

 

If the
foregoing accurately reflects our understanding, please so indicate by signing
in the space provided below.

 

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
   

  
	
  SPENCER
  TRASK VENTURES, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:
  William P. Dioguardi

  	
   

  
	
   

  	
  Title:
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Agreed and Accepted:

  	
   

  
	
   

  	
   

  
	
  This 15th
  day of January, 2004

  	
   

  
	
   

  	
   

  
	
  PROSPECT
  MEDICAL HOLDINGS, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name: Jacob
  Y. Terner, M.D.

  	
   

  
	
   

  	
  Title: Chief
  Executive Officer

  	
   

  
					

 

3Exhibit 10.89

 

PROSPECT
MEDICAL HOLDINGS, INC.

 

STOCKHOLDERS’ AGREEMENT

 

THIS STOCKHOLDERS’ AGREEMENT (this “Agreement”) is made by and among PROSPECT MEDICAL HOLDINGS, INC., a
Delaware corporation (the “Company”), each MANAGEMENT STOCKHOLDER (as defined below),
each PRINCIPAL STOCKHOLDER (as defined below), each INVESTOR signatory hereto
and SPENCER TRASK VENTURES, INC., a Delaware corporation (the “Placement
Agent”).  Each Management Stockholder,
each Principal Stockholder and each Investor are sometimes referred to herein
individually as a “Stockholder” and collectively, the “Stockholders.”

 

WHEREAS, the Company has
engaged the Placement Agent to conduct a private offering (the “Offering”) to
the Investors of up to 104 units (the “Units”), plus an additional 31 Units to
cover over-subscriptions, if any.  Each
Unit will consist of 20,000 shares of the Company’s Series A Convertible
Preferred Stock (the “Series A Preferred Stock”), as more fully described in
that certain Confidential Private Placement Memorandum, dated November 1,
2003 (the “Memorandum”), prepared by the Company in connection with the
Offering.  The first closing of the
Offering (the “First Closing”) shall occur at such time as a minimum of Seven Million
Five Hundred Ninety Thousand ($7,590,000) Dollars (the “Minimum Amount”) has
been raised from the Investors in such offering (subject to the requirement to
raise at least $8,580,000 in gross proceeds if the Company is unable to close
Acquisition Target One (as defined in the Memorandum)), and subsequent closings
are to occur as additional funds, up to an aggregate (excluding the exercise of
the over-subscription option, if any) of Eleven Million Four Hundred Forty
Thousand ($11,440,000) Dollars (the “Maximum Amount”) are raised from the Investors
(all such amounts being before commissions and expenses);

 

WHEREAS, pursuant to that
certain Placement Agency Agreement dated November 1, 2003 by and between
the Company and the Placement Agent (the “Placement Agency Agreement”), the
Company will issue to the Placement Agent certain warrants to purchase shares
of Series A Convertible Preferred Stock in an amount equal to twenty percent
(20%) of the shares contained in the Units sold in the Offering;

 

WHEREAS, if the Minimum Amount
is raised in the Offering, the Investors will beneficially own approximately
23% of the total issued and outstanding shares of Common Stock, and if the
Maximum Amount is raised, the Investors will beneficially own approximately 31%
of the total issued and outstanding shares of Common Stock, in each instance
assuming the conversion of all shares of Series A Preferred Stock held by the
Investors into Common Stock;

 

WHEREAS, the Stockholders desire to provide for the
conduct of the affairs of the Company, to regulate the transfer of the
securities held by such Stockholders and to define certain of their rights and
obligations with respect to the operation of the Company.

 

NOW, THEREFORE, the parties hereto hereby agree as
follows:

 

1

 

1.                                       Certain
Definitions.  As used in this
Agreement, the following terms shall have the following respective meanings:

 

“Affiliate” shall mean, with respect to any non-individual Stockholder,
any person or entity that, directly or indirectly, controls or is controlled by
or is under common control with such Stockholder.  As used in this definition “control” shall mean possession,
directly or indirectly, of power to direct or cause the direction of management
or policies (whether through ownership of securities or partnership or other
partnership interests, by contract or otherwise).

 

“Commission” shall mean the Securities and Exchange Commission, or any
other federal agency at the time administering the Securities Act of 1933, as
amended.

 

“Common Stock” shall mean the common stock, par value
$0.01 per share, of the Company, including, without limitation, the Common
Stock issuable upon the conversion of the Company’s Series A Preferred Stock.

 

“Conversion Event” shall mean the automatic conversion of the Series A
Preferred Stock into Common Stock as a result of the Company (i) achieving a
listing of the Common Stock on a national securities exchange, the NASDAQ
National Market or the NASDAQ Small Cap Market and (ii) having a registration
statement declared effective under the Securities Act covering the shares of
Common Stock underlying the Series A Preferred Stock.

 

“Equity Securities” shall mean shares of Common Stock, Series A
Preferred 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.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the applicable time.

 

“Extraordinary Event” shall mean (i) a consolidation or merger of the
Company with or into any other entity, or any other corporate reorganization,
in which the stockholders of the Company immediately prior to such
consolidation, merger or reorganization own capital stock of the entity
surviving such merger, consolidation or reorganization representing less than
fifty (50%) percent of the combined voting power of the outstanding securities
of such entity immediately after such consolidation, merger or reorganization,
or any other transaction or series of related transactions in which capital
stock representing in excess of fifty (50%) percent of the Company’s voting
power is transferred to any single entity or group of related entities; or (ii)
a sale, lease or other disposition of all or substantially all of the assets of
the Company.

 

“Family Group” shall mean, with respect to any Stockholder who is an
individual, (i) such Stockholder’s spouse, former spouse, descendants (whether
natural or adopted), parents and their descendants and any spouse of the
foregoing persons (collectively, “relatives”) or (ii) the trustee, fiduciary or
personal representative of such Stockholder or any trust established solely for
the benefit of the such Stockholder and/or such Stockholder’s relatives.

 

“Final Closing” shall mean the final closing of the purchase and sale
of Units in the Offering.

 

2

 

“PO” shall mean a public offering of the Company’s
equity securities.

 

“Investor” shall mean each individual or entity who executes the
Investor Signature Page to this Agreement.

 

“Management Stock” shall mean (i) any shares of Common Stock owned,
either beneficially or of record, by a Management Stockholder, (ii) any shares
of Common Stock issuable upon the exercise of a stock option granted or that
may be granted in the future to a Management Stockholder under the Company’s
1998 Stock Option Plan or any other stock option or stock purchase plan of the
Company that may be adopted in the future or (iii) any shares of Common Stock
that may be otherwise acquired in the future by a Management Stockholder.

 

“Management Stockholders” shall mean Jacob Y. Terner, M.D., Catherine
Dickson, Donna Vigil, R. Stewart Kahn and Linda Hodges.

 

“Permitted Transferee(s)” shall mean, (i) in the case of any individual
Stockholder, transferees who receive shares pursuant to applicable laws of
descent and distribution, members of such Stockholder’s Family Group and (ii)
in the case of a non-individual Stockholder, such Stockholder’s Affiliates,
provided, that in each case, such transferee has agreed to take all such
Transferred shares subject to and to be fully bound by the terms of this
Agreement applicable to such shares by executing and delivering a joinder to
this Agreement to the Secretary of the Company prior to the effectiveness of
such Transfer (unless such Transfer is pursuant to applicable laws of descent
and distribution, in which case, such executed joinder shall be delivered as
soon as reasonably possible after such Transfer thereunder).

 

“Principal Stockholder(s)” shall mean any person, entity or group that
beneficially owns, directly, five (5%) percent of the Company’s capital stock
immediately preceding the First Closing.

 

“Pro Rata Share” shall mean, in any particular instance, the proportion
by which the number of Equity Securities owned by an Investor bears to the
aggregate number of equity securities of the Company, calculated on a fully
diluted basis.

 

“Public Sale” shall mean any sale of Equity Securities to the public
pursuant to an offering registered under the Securities Act or pursuant to the
provisions of Rule 144 (or any similar rule or rules then in effect permitting
public sale without registration) under the Securities Act.

 

 “Registration Rights Agreement”
shall mean the Registration Rights Agreement of even date herewith among the
Company and the Investors.

 

“Securities Act” shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder, all as the same shall
be in effect at the time.

 

“Subscription Agreement” shall mean the Subscription Agreement of even
date herewith between the Company and each Investor.

 

3

 

“Transfer” shall mean any voluntary or involuntary, direct or indirect
sale, transfer, conveyance, assignment, gift, donation, assignment, pledge,
hypothecation, delivery or other disposition by a Stockholder of Equity
Securities, but shall not include any redemption or repurchase of Equity
Securities by the Company. 
“Transferred” shall mean any change in ownership by means of a Transfer.

 

2.                                       Restrictive
Legend Requirements.  Each
certificate representing any shares of Equity Securities shall, except as
otherwise provided in this Section 2 or in Section 3 hereof, bear a
legend substantially in the following form:

 

THE TRANSFER OR SALE OF THIS SECURITY IS SUBJECT TO THE TERMS OF A
STOCKHOLDERS’ AGREEMENT DATED AS OF
                 ,
200  , A COPY OF WHICH IS ON FILE AT THE OFFICE OF THE COMPANY.

 

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR ANY STATE SECURITIES OR BLUE SKY LAWS AND MAY NOT BE TRANSFERRED OR
OTHERWISE SOLD UNLESS IT HAS BEEN REGISTERED UNDER SUCH ACT AND ALL SUCH
APPLICABLE LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.

 

A certificate shall not bear the legend set forth in the second
paragraph above (or any portion thereof) if, in the opinion of counsel
reasonably satisfactory to the Company, the securities represented thereby may
be publicly sold without registration under the Securities Act and any
applicable state securities laws.

 

3.                                       General
Restrictions on Transfer.

 

(a)                                  A
Stockholder may Transfer shares thereof only (i) in a Public Sale, (ii)
pursuant to a valid exemption from registration under the Securities Act, provided, that such Stockholder complies
with Section 2 and Section 3(b) hereof or, (iii) subject to
Section 2, to Permitted Transferees.

 

(b)                                 Prior
to any proposed Transfer of any of the Equity Securities, the holder thereof
shall give written notice (a “Transfer Notice”) to the Company of his, her or
its intention to effect such Transfer, and the Company shall deliver a copy of
such Transfer Notice to the Placement Agent within ten (10) business days of its
receipt thereof.  Each such Transfer
Notice shall describe the manner of the proposed Transfer and, if requested by
the Company, shall be accompanied by an opinion of counsel reasonably
satisfactory to the Company to the effect that the proposed Transfer may be
effected without registration under the Securities Act and any applicable state
securities laws, whereupon the holder of such shares shall be entitled to
effect such Transfer in accordance with the terms of its Transfer Notice; provided, however, that the Company shall
have the right to refuse any purported Transfer that would cause the Company to
lose its exemption from registration under Section 12(g) of the Exchange
Act.  Each certificate representing any
of the Equity Securities transferred as above provided shall bear the legend
set forth in Section 2, except that such certificate shall not bear the
legend in the second paragraph

 

4

 

thereof (or any portion thereof) if: (a) such Transfer is being made
in accordance with the provisions of Rule 144(k) (or any other rule permitting
public sale without registration) under the Securities Act or (b) the
opinion of counsel referred to above is to the further effect that the
transferee and any subsequent transferee (other than an Affiliate of the
Company) would be entitled to Transfer such securities in a Public Sale without
registration under the Securities Act. 
The restrictions provided for in this Section 3(b) shall not apply
to securities that are not required to bear the legend prescribed by
Section 2 in accordance with the provisions of that Section.

 

(c)                                  If
any Transfer of Equity Securities is made or suffered by any Stockholder
without the giving of prior written notice as required by this Agreement, such
purported Transfer shall be void. 
Further, if any of the Equity Securities are the subject of a Transfer
that is made not in accordance with the terms and conditions of this Agreement,
such Transfer shall be void ab  initio.  In enforcing this provision, the Company may hold and refuse to
transfer any of the Equity Securities or any certificate therefor tendered to
it for transfer in addition to, and without prejudice to, any and all other
rights or remedies as may be available to the Company.

 

4.                                       Intentionally
Deleted.

 

5.                                       Preemptive
Rights.

 

(a)                                  If,
at any time prior to the consummation of an Extraordinary Event or a Conversion
Event, the Company desires to issue any equity securities to any third party or
parties other than in connection with such Extraordinary Event or PO, the
Company shall promptly deliver a written notice (the “Preemptive Right Notice”)
to each Investor setting forth a description and the number of equity
securities proposed to be issued, the proposed purchase price and the terms of
such issuance.  Upon receipt of the
Preemptive Right Notice, each Investor shall have the right to elect to
purchase, at the price and on the terms stated in the Preemptive Right Notice,
up to such Investor’s Pro-Rata Share of such securities.  Such election shall be made by written
notice to the Company within thirty (30)  calendar
days after receipt by such Investor of the Preemptive Right Notice (the
“Acceptance Period”), whereupon the Company shall promptly sell and such
Investor shall buy, upon the terms specified, the number of securities agreed
to be purchased by such Investor.  In
the event that less than all Investors choose to exercise such preemptive
right, no Investor shall have any right to subscribe to any additional
securities to be issued.

 

(b)                                 The
Company shall be free at any time during a period of ninety (90) days following
the expiration of the applicable Acceptance Period to offer and sell to any
third party or parties the number of such securities not purchased by the
Investors at a price and on payment terms no less favorable to the Company than
those specified in the Preemptive Right Notice; provided, however,
that if such third-party sale or sales are not consummated within such ninety
(90) day period, the Company shall not thereafter issue or sell such securities
without again complying with this Section 5.

 

(c)                                  The
preemptive rights contained in this Section 5 shall not apply to equity
securities issued or sold (i) as a stock dividend or upon any subdivision,
split or combination of the outstanding shares of capital stock,
(ii) pursuant to subscriptions, warrants, options, convertible securities,
convertible notes or other rights that are disclosed in the Memorandum as

 

5

 

being issued or outstanding on the date thereof, (iii) pursuant to
the grant of options, or the exercise of options, to purchase equity securities
granted to directors, officers, employees or consultants of the Company in
connection with their service to the Company, and pursuant to the Company’s 1998 Stock Option Plan,
subject to limitations imposed by the Company’s Board of Directors
(appropriately adjusted to reflect stock splits, stock dividends, combinations
of shares and the like), (iv) pursuant to the issuance and/or exercise of
the Placement Agent’s warrants issued in connection with the Offering, and the
issuance of such warrants, and any similar warrants issued in connection with
any future financing, (v) in connection with any merger, acquisition, business combination
or other reorganization, (vi) in connection with equity issuances to strategic
or institutional investors, as determined by the Placement Agent and the
Company’s Board of Directors, and (vii) in connection with the issuance of any
so-called “equity kickers” to banks or institutional investors.

 

(d)                                 Notwithstanding
anything contained herein to the contrary, the preemptive rights set forth in
this Section 5 may be waived by a written waiver duly executed by
Investors holding more than fifty (50%) percent of the total number of shares
of Series A Preferred Stock held by all Investors  at the time of such waiver.

 

6.                                       Lock-up.
Notwithstanding anything to the contrary contained in this Agreement,  until the later of 180 days following the
Final Closing or 180 days following the date that the Company becomes a fully
reporting company under the Exchange Act,  the
Management Stockholders and the Principal Stockholders hereby agree not to
Transfer any of the Company’s securities owned by, or issuable to, the Management
Stockholders or the Principal Stockholders without the prior written consent of
the Placement Agent, which consent shall not be unreasonably withheld, except
in case of sales, transfers or other dispositions to Permitted Transferees.  The Placement Agent may require that any
such Permitted Transferee be made subject to a voting agreement, pursuant to
which the transferring stockholder retains the right to vote all of the
transferred shares until the second (2nd) anniversary of the Final
Closing.  In addition, if, within two
(2) years of the Final Closing, the Company has registered any of its
securities under the Securities Act, which registration is effective, the terms
of the “lock-up” set forth in this Section 6 shall be extended for the Principal
Stockholders and any Permitted Transferees for a period of not less than 180
days from the effective date of such registration.

 

7.                                       Voting
for Designated Directors.  The
Principal Stockholders, the Management Stockholders and the Investors hereby
agree to vote, as stockholders and at any meeting of the Board of Directors at,
or by means of any written consent pursuant to, which directors are to be
elected, their shares of Equity Securities for the election of the person
designated by the Placement Agent pursuant to the Placement Agency Agreement
for election to the Company’s Board of Directors.

 

8.                                       Information.

 

(a)                                  For
a period of the earlier of two (2) years from the Final Closing or the date
that the Company becomes a fully reporting company under the Exchange Act, the
Company shall furnish each of the Stockholders with the following:

 

6

 

i.                                          within one hundred twenty (120) days
after the end of each fiscal year of the Company, audited financial statements
of the Company for such fiscal year, which shall include a statement of
operations for each such fiscal year, a balance sheet as at the last day
thereof and a statement of cash flows and stockholders’ equity (deficit)
prepared in accordance with United States generally accepted accounting
principles consistently applied and accompanied by the report of the Company’s
independent certified public accountants;

 

ii.                                       within forty-five (45) days after
the end of each fiscal quarter of the Company, a quarterly report, showing the
progress and status of the Company; and

 

iii.                                    within ninety (90) days after the
end of each fiscal year of the Company, an annual report setting forth the
financial position and outlook of the Company.

 

In addition to the foregoing, the Company shall furnish to the
Placement Agent, within forty-five (45) days after the end of each fiscal
quarter of the Company, unaudited financial statements for such quarter,
including both a balance sheet and a statement of operations as at the last day
thereof.

 

(b)                                 If,
for any period, the Company shall have any subsidiary or subsidiaries whose
accounts are consolidated with those of the Company, then in respect of such
period the financial statements delivered pursuant to the foregoing
Section 8(a) shall be the consolidated financial statements of the Company
and all such consolidated subsidiaries.

 

9.                                       Termination.  This Agreement shall automatically terminate
upon the occurrence of any of the following events:

 

(a)                                  a
bankruptcy, receivership or dissolution of the Company;

 

(b)                                 the
voluntary agreement by and among the Company, the Placement Agent and the
Stockholders holding on the termination date more than fifty (50%) percent of
the total number of Equity Securities; or

 

(c)                                  the
transfer or sale of all, or substantially all, of the capital stock or assets
of the Company to any other person or entity, or the merger or consolidation of
the Company with another entity where such other entity is the surviving entity
(other than a merger of consolidation relating to a change of state of
incorporation of the Company).

 

10.                                 Arbitration
of Disputes. This 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.  Each Stockholder agrees that any dispute arising out of or in
connection with this Agreement shall be resolved as follows.  Such Stockholder shall attempt in good faith
to resolve such dispute.  If,
notwithstanding such efforts, such dispute is not resolved within thirty (30)
days from the date written notice thereof is delivered by such Stockholder to
the Company, such dispute shall be settled by arbitration by, and in accordance
with, the then-existing Code of Arbitration of the National Association of
Securities Dealers, Inc. (“NASD”). 
Hearings with regard to such dispute shall be held at the offices of the
NASD in the City and County of New York and judgment upon any award rendered
pursuant to this Section 10 may be

 

7

 

entered in any court of competent jurisdiction.  Any award rendered pursuant to the terms and
conditions set forth herein shall be final and binding.  Any such arbitration shall be conducted
before a single arbitrator designated in accordance with the rules of the
NASD.  Any party to the arbitration
shall be entitled to costs and expenses and reasonable attorney’s fees in the
event it prevails in any claims, actions, awards or judgment under this
Agreement.

 

11.                                 Miscellaneous.

 

(a)                                  References.  All references to “Sections” contained
herein are, unless specifically indicated otherwise, references to sections of
this Agreement. Whenever herein the singular number is used, the same shall
include the plural where appropriate, and words of any gender shall include
each other gender where appropriate.

 

(b)                                 Captions.  The captions, headings and
arrangements used in this Agreement are for convenience only and do not in any
way affect, limit, amplify or modify the terms and provisions hereof.

 

(c)                                  Notices.  Any consent, approval, notice,
request or demand required or permitted by this Agreement must be in writing
and shall be deemed to have been given when actually received by the party to
whom notice is sent.

 

(d)                                 Successors
and Assigns.  This Agreement shall
be binding upon and inure to the benefit of the Stockholders and the Company
and their respective successors, heirs, personal representatives and assigns,
including, but not limited to, any Permitted Transferee of Equity Securities hereunder.

 

(e)                                  Invalid
Provisions.  If any provision of
this Agreement is held to be illegal, invalid or unenforceable under present or
future laws effective during the term of this Agreement, such provision shall
be fully severable; this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never been comprised in this
Agreement, and the remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance from this Agreement. Furthermore,
in lieu of each such illegal, invalid or unenforceable provision, there shall
be deemed added automatically as a part of this Agreement a provision as
similar in terms to such illegal, invalid or unenforceable provision as may be
possible and legal, valid and enforceable.

 

(f)                                    Amendments.  This Agreement may be amended at any time
and from time to time, in whole or in part, by an instrument in writing setting
forth the particulars of such amendment, which shall be duly executed by the
Company, the Stockholders holding at the time of such amendment more than fifty
(50%) percent of the total number of shares of Equity Securities held by all
Stockholders and the Placement Agent.

 

(g)                                 Multiple
Counterparts.  This Agreement may be
executed in a number of identical counterparts, each of which, for all
purposes, shall be deemed an original, and all of which shall collectively
constitute one agreement; provided,
however, that in making proof of
this Agreement, it shall not be necessary to produce or account for more than
one such counterpart.

 

8

 

It is not necessary that each Stockholder execute the same counterpart,
so long as identical counterparts are executed by the Company and each
Stockholder.

 

(h)                                 Enforcement.  It is specifically agreed and
understood that monetary damages will not adequately compensate the breach of
this Agreement and this Agreement shall therefore be specifically enforceable,
and any breach or threatened breach of this Agreement shall be the proper
subject of a temporary or permanent injunction or restraining order.  Further, each party hereto and their
successors, heirs, representatives and assigns waive any claim or defense that
there is an adequate remedy at law for such breach or threatened breach.

 

(i)                                     Omnibus
Signature Page.  This Agreement is intended to be read
and construed in conjunction with (a) the Subscription Agreement and (b) the
Registration Rights Agreement. 
Accordingly, pursuant to the terms and conditions of this Agreement and
such related agreements, it is hereby agreed that the execution by the
Investors of the Subscription Agreement, in the place set forth therein, shall
constitute their agreement to be bound by the terms and conditions hereof and
the terms and conditions of the Subscription Agreement, the Registration Rights
Agreement and this Agreement, with the same effect as if each of such separate
but related agreements were separately signed.

 

9

 

EXECUTED  on the date first written above and binding on each party
from and after the date such party executes this Agreement or a counterpart
hereof.

 

 

	
  PROSPECT MEDICAL HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name: Jacob Y. Terner, M.D.

  
	
   

  	
  Title: Chairman and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  SPENCER TRASK VENTURES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name: William P. Dioguardi

  
	
   

  	
  Title: President

  

 

10

 

	
  PRINCIPAL STOCKHOLDERS:

  
	
   

  	
   

  
	
  Spencer Trask Venture Investment Partners LLC

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
  Paul Amir

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
   

  
	
   

  	
   

  
	
  Herta and Paul Amir Family Trust

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Paul Amir

  
	
   

  	
  Title:

  	
  Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
  MANAGEMENT STOCKHOLDERS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Jacob Y. Terner, M.D.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Catherine Dickson

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Donna Vigil

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  R. Stewart Kahn

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Linda Hodges

  
				

 

11

 

[SEE
OMNIBUS SIGNATURE PAGE FOR INVESTOR SIGNATURES]

 

12

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00067-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00067-of-00352.parquet"}]]