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Exhibit 10.74
THIRD AMENDED AND RESTATED OPTION
AGREEMENT
THIS THIRD AMENDED AND RESTATED OPTION AGREEMENT ("Agreement")
is dated as of November 26, 2008, by and between Prospect
Medical Group, Inc., a California professional corporation
("PMG") and Arthur Lipper, M.D. ("Physician"), with reference to
the following facts:
RECITALS
A.
Physician acquired record title to PMG’s shares ("Shares") in
Nuestra Familia Medical Group, Inc. ("Nuestra") pursuant to a
Stock Purchase Agreement with the previous record holder, Osmundo
R. Saguil, M.D. ("Prior Physician").
B.
PMG and the Prior Physician were parties to a Second Amended and
Restated Option Agreement effective August 8, 2008 (the "Prior
Option Agreement") wherein the Prior Physician granted PMG an
assignable option to acquire the Shares.
C.
A condition of Physician’s acquisition of record title to the
Shares, was Physician’s agreement to grant PMG an assignable
option to acquire the Shares, as more fully set forth herein.
D.
PMG and Physician desire to amend and restate the Prior Option
Agreement in its entirety.
NOW, THEREFORE, in consideration of the foregoing promises and
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by the parties, PMG and Physician
agree as follows:
1.
GRANT OF OPTION. Physician hereby grants to PMG the
assignable right to designate a successor purchaser ("Successor
Purchaser") of the Shares (the "Option").
2.
TERM OF AGREEMENT. The term of this Agreement commences as of
the day and year first above written and continues for thirty (30)
years ("Term").
3.
OPTION PRICE. The purchase price for the Option (the "Option
Price") is One Dollar ($1.00) and Physician acknowledges
receipt of such payment.
4.
EXERCISE OF OPTION. Subject to applicable law:
4.1
During the Term of this Agreement, PMG may elect to exercise the
Option at any time.
4.2
To the extent that the Option is exercised by PMG, PMG will send
Physician a written notice (the "Stock Exercise Notice") specifying
the Stock to be purchased and the name of the Successor Purchaser
who will exercise the Option.
4.3
PMG may cancel any Stock Exercise Notice at any time.
4.4
Physician shall cooperate with PMG or any Successor Purchaser in
any due diligence.
5.
ASSIGNMENT OF THE OPTION. PMG may elect to assign the Option
to any person, by a written assignment, signed by both PMG and the
assignee. The assignee shall agree as a condition of the
assignment to be bound by the terms of this Agreement.
6.
PURCHASE PRICE OF THE SHARES.
6.1
PURCHASE PRICE. The purchase price for the Shares to be
purchased pursuant to the exercise of the Option shall be $1.00
("Stock Purchase Price"). PMG shall cause the Successor
Purchaser to pay Physician the Stock Purchase Price.
6.2
CLOSING. The transactions contemplated by this Agreement are
to close fifteen (15) days after the date of the Stock Exercise
Notice ("Closing"), unless extended by PMG.
7.
ADDITIONAL OBLIGATIONS OF PHYSICIAN.
7.1
AFFIRMATIVE COVENANTS. Physician shall:
(a)
ACCESS. Permit PMG, its representatives, and its agents
access to inspect the Shares certificate at any time, and to make
copies of records pertaining to the Shares, at reasonable times at
PMG’s request;
(b)
REPORTS. Furnish PMG any reports relating to the Shares at
PMG’s request;
(c)
DELIVERY OF CERTIFICATES. Deliver to PMG all certificates
heretofore issued representing all of the Shares held by Physician,
and each certificate hereafter issued representing any Share, with
each certificate endorsed in blank for transfer.
7.2
NEGATIVE COVENANTS. Without the prior written consent of PMG,
Physician shall not:
(a)
TRANSFER. Other than as contemplated by the First Lien Pledge
Agreement by and among Physician, PMG, Prospect Medical
Holdings, Inc. ("Holdings"), Prospect Medical
Systems, Inc. ("PMS"), Bank of America, N.A., as
administrative agent and the Second Lien Pledge Agreement by and
among Physician, PMG, Holdings, PMS, Bank of America, N.A., as
administrative agent (the "Pledge Agreement"), sell, lease,
transfer, or otherwise dispose of the Shares;
(b)
DEBT. Incur, guarantee, assume or otherwise become liable for
any borrowing or increase any existing indebtedness; or discharge
or cancel any debt owed to Physician;
(c)
NO FURTHER HYPOTHECATION. Other than as contemplated by the
Pledge Agreements, pledge, hypothecate, encumber, redeem or dispose
of the Shares or
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any interest therein until all of Physician’s obligations
under this Agreement have been fully satisfied or the Stock has
been released;
8.
CONFIDENTIALITY; SUBORDINATION.
8.1
The parties shall use all good faith efforts to keep the contents
of this Agreement and all other aspects of the negotiations
preceding execution of this Agreement confidential. Unless
required by law, neither Physician nor PMG shall disclose the
contents of this Agreement or the negotiations leading to this
Agreement to third parties without the prior written consent of the
other party. PMG shall ensure that all of the assignees
likewise comply with the obligations of confidentiality imposed by
this Section, except that PMG and the assignees may disclose the
contents of such to their respective agents, representatives,
contractors, and employees to the extent necessary to exercise
their respective rights or perform their respective obligations
hereunder.
8.2
Notwithstanding anything herein to the contrary, each of PMG, PMS
and Holdings hereby subordinates all of its rights under this
Agreement to the rights of the First Lien Administrative Agen
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