-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Q7c/pQ1BkympiF4blhu9fjqPrqhvZbbdDrd86+a+f0u1rd27698UyIgvHCz3wvs9 SBEV23Lh6ROGEE5ACqqw3g== 0000950123-10-079639.txt : 20100820 0000950123-10-079639.hdr.sgml : 20100820 20100820170947 ACCESSION NUMBER: 0000950123-10-079639 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20100820 DATE AS OF CHANGE: 20100820 GROUP MEMBERS: ALEXA TOPPER GROUP MEMBERS: DAVID R. TOPPER GROUP MEMBERS: DR. JEEREDDI A. PRASAD GROUP MEMBERS: MIKE HEATHER FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: LEE SAMUEL SANG-BUM CENTRAL INDEX KEY: 0001410209 FILING VALUES: FORM TYPE: SC 13D MAIL ADDRESS: STREET 1: 11500 W OLYMPIC BLVD STREET 2: SUITE 502 CITY: LOS ANGELES STATE: CA ZIP: 90064 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: PROSPECT MEDICAL HOLDINGS INC CENTRAL INDEX KEY: 0001063561 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-OFFICES & CLINICS OF DOCTORS OF MEDICINE [8011] IRS NUMBER: 330604264 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-81215 FILM NUMBER: 101030749 BUSINESS ADDRESS: STREET 1: 10780 SANTA MONICA BLVD STREET 2: SUITE 400 CITY: LOS ANGELES STATE: CA ZIP: 90025 BUSINESS PHONE: 310.943.4500 MAIL ADDRESS: STREET 1: 10780 SANTA MONICA BLVD STREET 2: SUITE 400 CITY: LOS ANGELES STATE: CA ZIP: 90025 SC 13D 1 v57129sc13d.htm SC 13D sc13d
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. __)*
PROSPECT MEDICAL HOLDINGS, INC.
 
(Name of Issuer)
Common Stock, par value $0.01 per share
 
(Title of Class of Securities)
743494106
 
(CUSIP Number)
Samuel S. Lee
Prospect Medical Holdings, Inc.
10780 Santa Monica Boulevard, Suite 400
Los Angeles, California 90025
(310) 770-7462
 
(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)
August 16, 2010
 
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box: o
The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
 
*   This Statement is Amendment No. 6 to the Schedule 13D previously filed by Samuel S. Lee on August 20, 2007, as amended to date, and Amendment No. 3 to the Schedule 13D previously filed by David R. Topper and Alexa Topper on August 20, 2007, as amended to date.
 
 

 

                     
CUSIP No.
  
743494106 
 13D Page  
2 
   of   
11 Pages 

 

           
1   NAME OF REPORTING PERSON
Samuel S. Lee
     
     
2   CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
  (a)   þ 
  (b)   o 
     
3   SEC USE ONLY
   
   
     
4   SOURCE OF FUNDS
   
  OO
     
5   CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
   
  o
     
6   CITIZENSHIP OR PLACE OF ORGANIZATION
   
  USA
       
  7   SOLE VOTING POWER
     
NUMBER OF   7,152,290
       
SHARES 8   SHARED VOTING POWER
BENEFICIALLY    
OWNED BY   0
       
EACH 9   SOLE DISPOSITIVE POWER
REPORTING    
PERSON   7,152,290
       
WITH 10   SHARED DISPOSITIVE POWER
     
    0
     
11   AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
   
  7,152,290
     
12   CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
   
  þ
     
13   PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
   
  30.6%
     
14   TYPE OF REPORTING PERSON
   
  IN

 

                     
CUSIP No.
  
743494106 
 13D Page  
3 
   of   
11 Pages 

 

           
1   NAME OF REPORTING PERSON
David R. Topper
     
     
2   CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
  (a)   þ 
  (b)   o 
     
3   SEC USE ONLY
   
   
     
4   SOURCE OF FUNDS
   
  OO
     
5   CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
   
  o
     
6   CITIZENSHIP OR PLACE OF ORGANIZATION
   
  USA
       
  7   SOLE VOTING POWER
     
NUMBER OF   0
       
SHARES 8   SHARED VOTING POWER
BENEFICIALLY    
OWNED BY   4,967,922
       
EACH 9   SOLE DISPOSITIVE POWER
REPORTING    
PERSON   0
       
WITH 10   SHARED DISPOSITIVE POWER
     
    4,967,922
     
11   AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
   
  4,967,922
     
12   CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
   
  þ
     
13   PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
   
  23.2%
     
14   TYPE OF REPORTING PERSON
   
  IN

 

                     
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   of   
11 Pages 

 

           
1   NAME OF REPORTING PERSON
Alexa Topper
     
     
2   CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
  (a)   þ 
  (b)   o 
     
3   SEC USE ONLY
   
   
     
4   SOURCE OF FUNDS
   
  OO
     
5   CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
   
  o
     
6   CITIZENSHIP OR PLACE OF ORGANIZATION
   
  USA
       
  7   SOLE VOTING POWER
     
NUMBER OF   0
       
SHARES 8   SHARED VOTING POWER
BENEFICIALLY    
OWNED BY   4,967,922
       
EACH 9   SOLE DISPOSITIVE POWER
REPORTING    
PERSON   0
       
WITH 10   SHARED DISPOSITIVE POWER
     
    4,967,922
     
11   AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
   
  4,967,922
     
12   CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
   
  þ
     
13   PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
   
  23.2%
     
14   TYPE OF REPORTING PERSON
   
  IN

 

                     
CUSIP No.
  
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 13D Page  
5 
   of   
11 Pages 

 

           
1   NAME OF REPORTING PERSON
Mike Heather
     
     
2   CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
  (a)   þ 
  (b)   o 
     
3   SEC USE ONLY
   
   
     
4   SOURCE OF FUNDS
   
  OO
     
5   CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
   
  o
     
6   CITIZENSHIP OR PLACE OF ORGANIZATION
   
  USA
       
  7   SOLE VOTING POWER
     
NUMBER OF   742,833
       
SHARES 8   SHARED VOTING POWER
BENEFICIALLY    
OWNED BY   0
       
EACH 9   SOLE DISPOSITIVE POWER
REPORTING    
PERSON   742,833
       
WITH 10   SHARED DISPOSITIVE POWER
     
    0
     
11   AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
   
  742,833
     
12   CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
   
  þ
     
13   PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
   
  3.4%
     
14   TYPE OF REPORTING PERSON
   
  IN

 

                     
CUSIP No.
  
743494106 
 13D Page  
6 
   of   
11 Pages 

 

           
1   NAME OF REPORTING PERSON
Dr. Jeereddi A. Prasad
     
     
2   CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
  (a)   þ 
  (b)   o 
     
3   SEC USE ONLY
   
   
     
4   SOURCE OF FUNDS
   
  OO
     
5   CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
   
  o
     
6   CITIZENSHIP OR PLACE OF ORGANIZATION
   
  USA
       
  7   SOLE VOTING POWER
     
NUMBER OF   395,434
       
SHARES 8   SHARED VOTING POWER
BENEFICIALLY    
OWNED BY   0
       
EACH 9   SOLE DISPOSITIVE POWER
REPORTING    
PERSON   395,434
       
WITH 10   SHARED DISPOSITIVE POWER
     
    0
     
11   AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
   
  395,434
     
12   CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
   
  þ
     
13   PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
   
  1.9%
     
14   TYPE OF REPORTING PERSON
   
  IN

 

                     
CUSIP No.
  
743494106 
 13D Page  
7 
   of   
11 Pages 
EXPLANATORY NOTE
     This statement on Schedule 13D (this “Statement”) reflects that, as of August 16, 2010, the Reporting Persons identified herein have formed a Section 13(d) “group” as described in Rule 13d-5 of the Securities Exchange Act of 1934, as amended, with respect to their beneficial ownership of Common Stock as described herein. Reference is made to the information provided in the respective statements on Schedule 13D previously filed on August 20, 2007 by Samuel S. Lee and David R. Topper and Alexa Topper, as amended to date. To the extent the information contained herein represents a material change in the facts set forth in such previous filings, such previous filings shall be amended and supplemented by the information provided herein.
Item 1. Security and Issuer.
     This report on Schedule 13D (the “Report”) pertains to the common stock, par value $0.01 per share (“Common Stock”), of Prospect Medical Holdings, Inc., a Delaware corporation (the “Issuer”). The Issuer’s principal executive offices are located at 10780 Santa Monica Boulevard, Suite 400, Los Angeles, California 90025.
Item 2. Identity and Background.
     (a)-(c)— The names of persons filing this Statement (collectively, the “Reporting Persons”) are: (1) Samuel S. Lee, (2) David R. Topper and his wife, Alexa Topper, as co-trustees and co-settlors under the David & Alexa Topper Family Trust, U/D/T September 29, 1997 (collectively, the “Topper Parties”), (3) Mike Heather, and (4) Dr. Jeereddi Prasad.
     Mr. Lee is the Chairman of the Board of Directors and Chief Executive Officer of the Issuer.
     Mr. Topper is President of Alta Hospital System, LLC, a wholly owned subsidiary of the Issuer. Ms. Topper is not employed. The business address of Alta Hospitals System, LLC is the same as for the Issuer.
     Mr. Heather is the Chief Financial Officer of the Issuer.
     Dr. Prasad is the President of ProMed Health Services Company, a wholly owned subsidiary of the Issuer. Dr. Prasad is also a director of the Issuer. The business address of ProMed Health Services Company is the same as for the Issuer.
     The principal business address for each of the Reporting Persons is c/o Prospect Medical Holdings, Inc., 10780 Santa Monica Boulevard, Suite 400, Los Angeles, California 90025.
     (d)-(e) During the last five years, none of the Reporting Persons has been (i) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities, subject to, federal or state securities laws or finding any violation with respect to such laws.
     (f) Each Reporting Person is a citizen of the United States of America.
Item 3. Source and Amount of Funds or Other Consideration.
     The description of the acquisition by Mr. Lee of his shares of Common Stock is included in the Schedule 13D filed by Mr. Lee on August 20, 2007, as amended by Amendments 1 through 5 thereto, and is hereby incorporated herein by reference.

 

 

                     
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743494106 
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   of   
11 Pages 
     The description of the acquisition by the Topper Parties of their shares of Common Stock is included in the Schedule 13D filed by the Topper Parties on August 20, 2007, as amended by Amendments 1 and 2 thereto, and is hereby incorporated herein by reference.
     The shares of Common Stock beneficially owned by Mr. Heather consist of shares of Common Stock and stock options to purchase Common Stock granted to him by the Issuer as compensation for his services as Chief Financial Officer, as described in greater detail in the Issuer’s Proxy Statement on Schedule 14A filed on January 28, 2010.
     The shares of Common Stock beneficially owned by Dr. Prasad consist of shares of Common Stock issued to him in connection with the Issuer’s acquisition on June 1, 2007 of ProMed Health Services Company, as described in greater detail in the Issuer’s Current Report on Form 8-K filed on June 7, 2007.
Item 4. Purpose of Transaction.
     The Issuer has entered into an Agreement and Plan of Merger, dated as of August 16, 2010 (the “Merger Agreement”), with Ivy Holdings Inc., a Delaware corporation (“Parent”), and Ivy Merger Sub Corp., a Delaware corporation and indirect, wholly-owned subsidiary of Parent (“Merger Sub”). The Merger Agreement provides that Merger Sub will be merged with and into the Issuer, with the Issuer continuing as the surviving corporation in such merger as an indirect, wholly-owned subsidiary of Parent (the “Merger”), and that each issued and outstanding share of Common Stock of immediately prior to the effective time of the Merger (other than shares owned by Parent, Merger Sub or any other subsidiary of Parent or the Issuer and shares owned by stockholders who have perfected and not withdrawn a demand for appraisal rights under Delaware law) will automatically be canceled and converted in the Merger into the right to receive $8.50 per share in cash, without interest. Each option and warrant to purchase Common Stock having an exercise price of less than $8.50 per share that is issued and outstanding immediately prior to the effective time of the Merger will be canceled and converted into the right to receive a cash payment equal to the product of the number of shares of Common Stock subject to such option or warrant, to the extent vested and exercisable, and the excess of $8.50 over the exercise price per share of such option or warrant, less any applicable withholding taxes. The Merger Agreement and the Merger are described in greater detail in the Current Report on Form 8-K filed by the Issuer on August 16, 2010.
     In connection with the Merger Agreement, the Reporting Persons have entered into a contribution and subscription agreement (the “Contribution Agreement”) with Parent pursuant to which they have agreed to contribute, in the aggregate, approximately 6,155,106 shares of the Issuer’s Common Stock owned by them in exchange for equity interests in Parent in lieu of receiving the cash merger consideration for such shares. The Contribution Agreement automatically terminates upon the termination of the Merger Agreement or the occurrence of certain other events. The Reporting Persons have also entered into a company stockholder voting agreement (the “Voting Agreement”) pursuant to which they have agreed to vote all of the shares of Common Stock that they now own or will own prior to the effective time of the Merger in favor of the adoption of the Merger Agreement. The Voting Agreement automatically terminates upon the termination of the Merger Agreement or the occurrence of certain other events. Accordingly, the Reporting Persons are deemed to be a “group” within the meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended.
     After the completion of the Merger, the Issuer will cease to be a publicly held company.
     The foregoing descriptions of the Merger Agreement, the Contribution Agreement and the Voting Agreement are summaries only and are qualified in their entirety by reference to the full text of such agreements, which are filed as Exhibits 2, 3 and 4, respectively, to this Statement and hereby incorporated herein by reference.
     The Issuer, the Reporting Persons and the Issuer’s other directors, executive officers and other members of its management and employees may be deemed to be participants in the solicitation of proxies from the stockholders of Prospect in connection with the

 

 

                     
CUSIP No.
  
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   of   
11 Pages 
proposed Merger. Information concerning the interests of these directors, executive officers and other members of the Issuer’s management and employees in the proposed merger will be included in the Issuer’s proxy statement it expects to file with the SEC in connection with the proposed Merger. INVESTORS AND STOCKHOLDERS ARE ADVISED TO READ THE PROXY STATEMENT WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION ABOUT THE ISSUER AND THE PROPOSED MERGER. Information regarding the Issuer’s directors and executive officers is also available in its Annual Report on Form 10-K for the year ended September 30, 2009 and in its proxy statement for its 2010 Annual Meeting of Stockholders, which documents are on file with the SEC. Once filed with the SEC, the proxy statement and such other documents will be available without charge at www.sec.gov and on the Issuer’s website at www.prospectmedicalholdings.com under “SEC Filings,” or by directing a request for such documents to Linda Hodges at (714) 796-4271.
Item 5. Interest in Securities of the Issuer.
     (a) Collectively, the Reporting Persons beneficially own 13,258,479 shares of Common Stock representing 55.2% of the outstanding shares of Common Stock (based on 24,008,496 shares of Common Stock outstanding, comprised of the aggregate of (i) 21,189,413 shares of Common Stock outstanding as of August 12, 2010, as reported by the Issuer in its Quarterly Report on Form 10-Q filed on August 16, 2010, and (ii) 2,819,083 shares of Common Stock subject to options held by the Reporting Persons), as follows:
  (i)   Mr. Lee directly owns 7,152,290 shares of Common Stock representing 30.6% of the outstanding shares of Common Stock (based on 23,365,663 shares of Common Stock outstanding, comprised of the aggregate of (i) 21,189,413 shares of Common Stock outstanding as of August 12, 2010, as reported by the Issuer in its Quarterly Report on Form 10-Q filed on August 16, 2010, and (ii) 2,176,250 shares of Common Stock subject to options held by Mr. Lee).
 
  (ii)   David R. Topper and Alexa Topper indirectly own, and share voting and dispositive power over, 4,967,922 shares of Common Stock through the David & Alexa Topper Family Trust, U/D/T September 29, 1997, representing 23.2% of the outstanding shares of Common Stock (based on 21,389,413 shares of Common Stock outstanding, comprised of the aggregate of (i) 21,189,413 shares of Common Stock outstanding as of August 12, 2010, as reported by the Issuer in its Quarterly Report on Form 10-Q filed on August 16, 2010, and (ii) 200,000 shares of Common Stock subject to options held by the Topper Parties).
 
  (iii)   Mr. Heather directly owns 742,833 shares of Common Stock, representing 3.4% of the outstanding shares of Common Stock (based on 21,632,246 shares of Common Stock outstanding, comprised of the aggregate of (i) 21,189,413 shares of Common Stock outstanding as of August 12, 2010, as reported by the Issuer in its Quarterly Report on Form 10-Q filed on August 16, 2010, and (ii) 442,833 shares of Common Stock subject to options held by Mr. Heather).
 
  (iv)   Dr. Prasad directly owns 395,434 shares of Common Stock, representing 1.9% of the outstanding shares of Common Stock (based on 21,189,413 shares of Common Stock outstanding as of August 12, 2010, as reported by the Issuer in its Quarterly Report on Form 10-Q filed on August 16, 2010).
     The Reporting Persons, to the extent they are deemed to be a “group,” may be deemed to beneficially own all of the shares of Common Stock beneficially owned by the other Reporting Persons. Each of the Reporting Persons disclaims beneficial ownership of any shares of Common Stock not owned directly by such Reporting Person (other than each of the Topper Parties with respect to the shares owned by such Topper Parties).

 

 

                     
CUSIP No.
  
743494106 
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   of   
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     No Reporting Person has effected any transactions in Common Stock in the last sixty (60) days.
Item 6.   Contracts, Arrangements, Understandings or Relationships with respect to Securities of the Issuer.
     The descriptions of the Merger Agreement, the Contribution Agreement and the Voting Agreement contained in Item 4, above, are hereby incorporated by reference.
Item 7. Materials to be Filed as Exhibits.
     The following documents are included or incorporated as exhibits to this Statement:
  1.   Joint Filing Agreement among the Reporting Persons.
 
  2.   Agreement and Plan of Merger, dated August 16, 2010, among Ivy Holdings Inc., Ivy Merger Sub Corp., and Prospect Medical Holdings, Inc. (incorporated by reference to Exhibit 2.1 to the Issuer’s Current Report on Form 8-K filed on August 16, 2010).
 
  3.   Contribution and Subscription Agreement, dated August 16, 2010, by and among Ivy Holdings Inc., Samuel S. Lee, The David & Alexa Topper Family Trust, Mike Heather and Dr. Jeereddi A. Prasad.
 
  4.   Company Stockholder Voting Agreement, dated August 16, 2010, by and between Ivy Holdings Inc., Samuel S. Lee, The David & Alexa Topper Family Trust, Mike Heather and Dr. Jeereddi A. Prasad.

 

 

                     
CUSIP No.
  
743494106 
 13D Page  
11 
   of   
11 Pages 
Signatures
     After reasonable inquiry and to the best of their knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.
Dated: August 20, 2010
     
  /s/ Samuel S. Lee    
  Samuel S. Lee   
  In his individual capacity   
 
     
  /s/ David R. Topper    
  David R. Topper   
  In his individual capacity   
 
     
  /s/ Alexa Topper    
  Alexa Topper   
  In her individual capacity   
 
     
  /s/ Mike Heather    
  Mike Heather   
  In his individual capacity   
 
     
  /s/ Dr. Jeereddi A. Prasad    
  Dr. Jeereddi A. Prasad   
  In his individual capacity   

 

 

         
EXHIBIT INDEX
     
Exhibit 1
  Joint Filing Agreement among the Reporting Persons.
 
    
Exhibit 2
  Agreement and Plan of Merger, dated August 16, 2010, among Ivy Holdings Inc., Ivy Merger Sub Corp., and Prospect Medical Holdings, Inc. (incorporated by reference to Exhibit 2.1 to the Issuer’s Current Report on Form 8-K filed on August 16, 2010).
 
    
Exhibit 3
  Contribution and Subscription Agreement, dated August 16, 2010, by and among Ivy Holdings Inc., Samuel S. Lee, The David & Alexa Topper Family Trust, Mike Heather and Dr. Jeereddi A. Prasad.
 
    
Exhibit 4
  Company Stockholder Voting Agreement, dated August 16, 2010, by and between Ivy Holdings Inc., Samuel S. Lee, The David & Alexa Topper Family Trust, Mike Heather and Dr. Jeereddi A. Prasad.

 

EX-99.1 2 v57129exv99w1.htm EX-99.1 exv99w1
EXHIBIT 1
Joint Filing Agreement
     This joint filing agreement is made and entered into as of this 20th day of August, 2010 by and among Samuel S. Lee, David R. Topper, Alexa Topper, Mike Heather and Jeereddi Prasad (collectively, the “Reporting Persons”).
     Reference is made to Rule 13d-1(k). The Reporting Persons hereby agree that the statement on Schedule 13D dated of even date herewith pertaining to Prospect Medical Holdings, Inc., and to which this agreement is attached as an exhibit, is filed on behalf of each of them.
Dated: August 20, 2010
     
  /s/ Samuel S. Lee    
  Samuel S. Lee   
  In his individual capacity   
 
     
  /s/ David R. Topper    
  David R. Topper   
  In his individual capacity   
 
     
  /s/ Alexa Topper    
  Alexa Topper   
  In her individual capacity   
 
     
  /s/ Mike Heather    
  Mike Heather   
  In his individual capacity   
 
     
  /s/ Jeereddi A. Prasad    
  Dr. Jeereddi A. Prasad   
  In his individual capacity   
 

 

EX-99.3 3 v57129exv99w3.htm EX-99.3 exv99w3
Exhibit 3
EXECUTION VERSION
CONTRIBUTION AND SUBSCRIPTION AGREEMENT
          This CONTRIBUTION AND SUBSCRIPTION AGREEMENT (this “Agreement”), dated as of August 16, 2010, by and among Ivy Holdings Inc., a Delaware corporation (“Parent”), and the investors listed on Schedule I hereto, as amended from time to time (each an “Investor”, and collectively together with any additional Investor that becomes a party hereto in accordance with this Agreement, the “Investors”), and shall be effective as of the Effective Time (as defined below). Parent and the Investors are sometimes individually referred to herein as a “Party” and collectively as the “Parties”.
RECITALS
          WHEREAS, concurrently with the execution of this Agreement, the Company, Ivy Merger Sub Corp., an indirect, wholly-owned subsidiary of the Parent (the “Buyer”), and Prospect Medical Holdings, Inc., a Delaware corporation (the “Company”), are entering into an Agreement and Plan of Merger (the “Merger Agreement”), dated as of the date hereof, pursuant to which Buyer will merge with and into the Company and the Company will survive such merger as a wholly owned subsidiary of Parent on the terms and conditions set forth in the Merger Agreement (the “Transaction”);
          WHEREAS, concurrently with the execution of this Agreement, each of the Investors has entered into a Company Stockholder Voting Agreement (the “Voting Agreement”), pursuant to which the Investors have agreed to vote their Shares (as defined therein) in favor of the Transaction on the terms and conditions set forth in the Voting Agreement;
          WHEREAS, each of the Investors desires to (i) contribute such number of shares of common stock of the Company, par value $.01 per share (the “Contributed Shares”), owned by such Investor and/or (ii) contribute such amount of cash (the “Contributed Amount” and together with the Contributed Shares, the “Rollover Common Value”), in a tax free exchange pursuant to Section 351 of the Internal Revenue Code for shares of Parent Common Stock (as defined hereafter), each as set forth in Schedule I hereto;
          WHEREAS, each of the Investors shall be issued in exchange for its Rollover Common Value that number of shares in Parent, par value $0.01 (the “Parent Common Stock”), as is set forth on Schedule I hereto (the “Exchange Equity”), pursuant to the terms and subject to the conditions of this Agreement;
          WHEREAS, Green Equity Investors V, L.P., a Delaware limited partnership and Green Equity Investors Side V, L.P., a Delaware limited partnership (collectively, “LGP”) concurrently with and as an express condition to the contributions by the Investors contemplated hereby shall make an equity contribution to Parent in exchange for shares of Parent Common Stock and shares of Cumulative Preferred Stock, par value $0.01, of Parent (the “Preferred Stock”), which Preferred Stock shall have the terms substantially, in all material respects, as set forth on Exhibit A attached hereto; and
          WHEREAS, in connection with the consummation of the transactions contemplated by this Agreement and the Merger Agreement, Parent, each Investor and certain

 

 

other persons will enter into a stockholders agreement substantially in the form of Exhibit B attached hereto (the “Stockholders Agreement”).
AGREEMENT
          NOW, THEREFORE, as a material inducement of the Parent to consummate (and to cause Merger Sub to consummate) the Transaction in accordance with the terms and conditions of the Merger Agreement and in consideration of the mutual agreements contained herein and in reliance on the representations and warranties herein and for other good and valuable consideration the receipt of which is hereby acknowledged, and intending to be legally bound hereby, the Parties agree as follows:
I.   ROLLOVER.
          1.1 Definitions. Capitalized terms used but not herein defined shall have the meanings ascribed to them in the Merger Agreement.
          1.2 Effective Time. The consummation of the transactions contemplated by this Agreement, shall be deemed to occur immediately prior to the Effective Time. Each of the Parties hereby irrevocably agrees to consummate the exchange of the Rollover Common Value for the Exchange Equity pursuant to Section 1.3 immediately prior to the Effective Time and concurrently with LGP’s contribution of equity to Parent in exchange for Parent Common Stock and Preferred Stock.
          1.3 Contribution; Exchange of Securities. Subject to the terms and conditions of this Agreement, immediately prior to the Effective Time, each Investor shall contribute to Parent, free and clear of all liens and encumbrances (other than any liens or encumbrances created or expressly permitted by Parent), the Contributed Shares and/or the Contributed Amount, as applicable, and shall deliver to Parent any documents and instruments as reasonably may be necessary or appropriate to vest in Parent good and marketable title in and to such Contributed Shares. In exchange for (and conditioned upon) (i) such Investor’s contribution of its Contributed Shares and/or Contributed Amount to Parent, as applicable, and (ii) the execution and delivery by such Investor of a counterpart to the Stockholders Agreement, Parent shall issue to such Investor, free and clear of all liens and encumbrances (other than liens or encumbrances created by such Investor or pursuant to an agreement between such Investor and Parent (including, without limitation, the Stockholders Agreement)), that number of shares of Parent Common Stock as set forth in Schedule I hereto. For purposes hereof, the foregoing contribution and exchange transactions are collectively referred to herein as the “Rollover.”
          1.4 Legends, etc. All certificates (if any) representing Exchange Equity issued pursuant to any Person in connection with the Transaction and the Parent Common Stock and Preferred Stock issued by Parent to LGP at the Effective Time shall be endorsed with the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR STATE SECURITIES LAWS AND CANNOT BE OFFERED,

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SOLD, OR TRANSFERRED IN THE ABSENCE OF REGISTRATION OR EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS AND REGULATIONS PROMULGATED THEREUNDER. THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED BY THE REGISTERED OWNER HEREOF FOR INVESTMENT AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION THEREOF IN VIOLATION OF THE SECURITIES ACT. THE SHARES MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR ASSIGNED EXCEPT IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN A TRANSACTION OTHERWISE IN COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES LAWS.
THESE SHARES SHALL NOT BE TRANSFERRED EXCEPT IN ACCORDANCE WITH THAT CERTAIN STOCKHOLDERS AGREEMENT AMONG THE CORPORATION AND ITS STOCKHOLDERS.
          1.5 Termination. This Agreement shall be void and of no force and effect and all rights and obligations of the Parties hereunder shall terminate without any further liability on the part of any Party in respect thereof upon the earliest to occur of (i) such date and time as the Merger Agreement shall be terminated pursuant to Article VIII thereof or otherwise, (ii) upon the mutual written agreement of each of the Parties hereto to terminate this Agreement, (iii) upon the occurrence of a Company Adverse Recommendation Change in response to a Superior Proposal or (iv) upon the occurrence of a Change of Recommendation in response to an Intervening Event; provided, that nothing herein will relieve any Party from liability for any willful breach hereof prior to the time of termination, and each Party will be entitled to any remedies at law or in equity to recover Losses arising from such breach.
II.   PARENT REPRESENTATIONS, WARRANTIES AND AGREEMENTS
          2.1 Representations and Warranties. In connection with Parent’s issuance of the Exchange Equity in connection with the Rollover pursuant to the terms and conditions of Section 1.3 above, Parent represents and warrants to each Investor as of the Effective Time as follows:
     (a) Organization; Good Standing. Parent (i) has been duly organized, is validly existing and is in good standing under the laws of the jurisdiction of its incorporation; (ii) has the requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted (or otherwise contemplated); and (iii) is duly qualified to transact business and is in

3

 

good standing as a foreign corporation in all jurisdictions where it is required to be so qualified, except where the lack of such qualification, individually or in the aggregate, would not be material.
     (b) Authorization, etc. Parent has the full power and authority to execute, deliver and perform this Agreement and to issue the Exchange Equity hereunder, and the issuance of the Exchange Equity and Parent’s execution, delivery and performance of this Agreement has been authorized by all necessary action on its behalf, and this Agreement is its legal, valid and binding obligation, enforceable against it in accordance with this Agreement’s terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights in general and subject to general principles of equity.
     (c) Authorization of Shares. The Exchange Equity, when issued pursuant to the terms of this Agreement, will be duly authorized, validly issued and outstanding, fully paid, nonassessable and free and clear of all pledges, liens, encumbrances and restrictions, other than as applicable to the Exchange Equity or the holders thereof under the Stockholders Agreement.
     (d) Consideration per Share. The Investors will acquire shares of Parent Common Stock pursuant to this Agreement for the same price per share as the funds advised by or affiliated with LGP are acquiring their shares of Parent Common Stock in connection with the Transaction.
III.   INVESTORS’ REPRESENTATIONS, WARRANTIES, AGREEMENTS, ACKNOWLEDGEMENTS AND COVENANTS
          3.1 Representations and Warranties. In connection with the contribution by each Investor of its Rollover Common Value, the receipt by such Investor of Exchange Equity in accordance with the terms and conditions of this Agreement, and the other transactions related to the Rollover contemplated hereby, each Investor severally as to itself only represents and warrants to Parent as of the Effective Time as follows:
     (a) Investment Intention; Securities Laws. Such Investor agrees that it will not, directly or indirectly, offer, transfer, sell, pledge, hypothecate or otherwise dispose of any of the Exchange Equity, except in compliance with the terms of the legend set forth in Section 1.4 herein and the Stockholders Agreement. Such Investor (a) understands and has taken cognizance of all the risk factors related to the investment in Parent, (b) has been granted the opportunity to ask questions of, and receive satisfactory answers from, representatives of Parent concerning the terms and conditions of the investment in Parent and has had the opportunity to obtain and has obtained any additional information that it deems necessary regarding the investment in Parent, and (c) has relied solely upon (i) the representations set forth in this Agreement and (ii) its own independent investigations or investigations conducted by its own independent advisers in connection with the accuracy or sufficiency of such

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information or its investment decision. Such Investor acknowledges that the investment in Parent is intended to be exempt from registration by virtue of Section 4(2) of the Securities Act. Such Investor has the financial ability to bear the economic risk of this investment. Such Investor is acquiring the Exchange Equity solely for its own account, for investment and not with a view toward resale or other distribution in violation of the Act, and such Investor understands that such Exchange Equity may not be disposed of by such Investor in contravention of Parent’s Certificate of Incorporation, Bylaws, the Stockholders Agreement, the Securities Act, or any applicable state securities laws.
     (b) Accredited Investor. Such Investor represents and warrants that it is an “accredited investor,” as that term is defined in Regulation D under the Act, with such knowledge and experience in financial and business matters as are necessary in order to evaluate the merits and risks of an investment in the Exchange Equity.
     (c) Authorization of Acquisition, etc. Such Investor represents and warrants that it has the full power and authority to execute, deliver and perform this Agreement and to acquire the Exchange Equity issued to it hereunder. Such Investor further represents and warrants that the acquisition of the Exchange Equity and such Investor’s execution, delivery and performance of this Agreement have been authorized by all necessary action on such Investor’s behalf, and this Agreement is such Investor’s legal, valid and binding obligation, enforceable against it in accordance with this Agreement’s terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights in general and subject to general principles of equity.
     (d) Compliance with Laws and Other Instruments. Such Investor represents and warrants that the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby and the performance of each obligation of such Investor hereunder will not conflict with, or result in any violation of or default under, any provision of any governing instrument applicable to such Investor, or any agreement or other instrument to which such Investor is a party or by which such Investor or any of its properties are bound, or any permit, franchise, judgment, decree, statute, order, rule or regulation applicable to such Investor or its business.
     (e) Contributed Shares. Such Investor represents and warrants that (i) it is the sole record and beneficial owner of the Contributed Shares held by such Investor, free and clear of any encumbrances and (ii) it is not a party to, or bound by, any agreement, arrangement, contract, instrument or order (other than the Voting Agreement and this Agreement) relating to (w) the grant of pre-emptive rights to purchase or obtain any equity interests in the Company, (x) the sale, repurchase, assignment or other transfer of any capital stock or equity securities of the Company, (y) the receipt of dividends, proxy rights or voting rights of any capital stock or other equity securities of the Company or (z) rights

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to registration under the Securities Act or the Securities Exchange Act of 1934, as amended, or any capital stock or equity securities of the Company. Upon the consummation of the contribution transactions contemplated by this Agreement and subject to the consummation of the Transaction, Parent will acquire such Investor’s Contributed Shares free and clear of any restrictions on transfer (other than such restrictions under the Stockholders Agreement, under applicable federal and state securities laws and state community property laws), taxes, liens, encumbrances, claims or demands, other than liens or encumbrances created or expressly permitted by Parent.
     (f) Litigation. As of the date hereof, there is no civil, criminal or administrative suit, action, proceeding, arbitration, investigation, review or inquiry pending or, to such Investor’s knowledge, threatened against or affecting the Investor or any of its properties or rights that reasonably could prevent such Investor from performing its obligations under this Agreement or under the Voting Agreement, nor is there any judgment, decree, injunction, rule or order of any Governmental Authority or arbitrator outstanding against or affecting the Investor or any of its respective properties or rights that reasonably could prevent such Investor from performing its obligations under this Agreement or under the Voting Agreement.
          3.2 Acknowledgements and Covenants. In connection with the contribution by each respective Investor to Parent of the Rollover Common Value, the receipt by such Investor of Exchange Equity in accordance with the terms and conditions of this Agreement, and the other transactions related to the Rollover contemplated hereby, each Investor severally acknowledges, covenants and agrees as to itself only as follows:
     (a) None of this Agreement (or any term or provision hereof), the issuance of the Exchange Equity, or any other transaction comprising the Rollover creates any employee/employer relationship or other similar relationship between Parent, the Company or any of their respective Subsidiaries or any of Parent’s or Parent’s Affiliates, on the one hand, and such Investor, on the other hand.
     (b) The rights and obligations of such Investor with respect to its Exchange Equity received pursuant to this Agreement, including in respect of voting and transfer rights, shall be as provided under applicable law and as set forth in Parent’s Certificate of Incorporation (which is attached hereto as Exhibit C), Parent’s Bylaws (which are attached hereto as Exhibit D) and the Stockholders Agreement, as each such document may be amended from time to time in accordance with its terms. It is hereby acknowledged and agreed that Parent’s Certificate of Incorporation shall be amended on or prior to the Effective Time to add a certificate of designation for the Preferred Stock substantially, in all material respects, as attached hereto as Exhibit A.
     (c) Other than as contemplated by the Rollover, such Investor agrees not to sell or otherwise transfer any of its Contributed Shares or sell any other equity interests, options, warrants, calls, subscriptions or other rights in any of its

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Contributed Shares from the time the Investor executes this Agreement until the earlier of (i) the Effective Time or (ii) the date this Agreement terminates in accordance with its terms; provided, however, that each such Investor may transfer Contributed Shares to a Family Member or trust for the benefit of such Investor or his Family Members (and in the case of a Investor that is a trust, the Contributed Shares held in such trust may be transferred to any beneficiary thereof, any Family Member of any such beneficiary, or to any trust for the benefit of any such beneficiary or any such Family Member) for estate or tax planning purposes; provided, that, as a condition to any such transfer, the transferee agrees in writing to be bound by the terms of this Agreement applicable to such Investor and to hold such Contributed Shares subject to all the terms and provisions of this Agreement to the same extent as such terms and provisions bound the Investor from whom the Contributed Shares were transferred. For purposes of this Agreement a “Family Member” of an individual shall include any member of the class consisting of that individual’s spouse, descendants (whether by blood, marriage or adoption, and their respective descendants by blood, marriage or adoption), parents (including adoptive parents or in-laws), siblings (whether by blood, marriage or adoption), or the spouse of any such descendant, parent or sibling.
     (d) Such Investor understands and agrees that all Company Stock Options (as defined in the Merger Agreement) held by such Investor shall be treated in the Transaction as set forth in Section 2.1(d)of the Merger Agreement, and such Investor consents to such treatment.
          3.3 Spousal Consent. Each respective Investor’s spouse shall be required to execute the form of spousal consent set forth in Exhibit E to evidence such spouse’s agreement and consent to be bound by the terms and conditions of this Agreement and the Stockholders Agreement as to such spouse’s interest, whether as community property or otherwise, if any, in such Investor’s Contributed Shares, the Contributed Amount, if any, and the Exchange Equity issued to such Investor.
IV.   EFFORTS
          4.1 Each Party hereby agrees to take, or cause to be taken, all actions, and do, or cause to be done, and to assist and cooperate with the other Party in doing all things necessary, proper or advisable under applicable Laws, to consummate and make effective, the Rollover and the other transactions contemplated hereunder (including, without limitation, Section 3.2(d)).
V.   MISCELLANEOUS
          5.1 Notices. All notices and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been given if delivered personally or sent by facsimile, overnight courier, or certified mail, return receipt requested, postage prepaid, to the Parties to this Agreement at the following addresses or to such other address as either Party to this Agreement shall specify by notice to the other:

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If to Parent:
  Ivy Holdings Inc.
c/o Leonard Green & Partners, L.P.
11111 Santa Monica Blvd., #2000
Los Angeles, CA 90025
Attention: John Baumer
Facsimile: (310) 954-0404
 
    
with a copy to:
  Latham & Watkins LLP
885 Third Avenue
New York, New York 10022
Attention: Howard Sobel
John Giouroukakis
Facsimile: (212) 751-4864
 
    
If to an Investor:
  At the addresses set forth on the attached signature pages
All such notices and communications shall be deemed to have been received on the earlier of (i) the date of delivery and (ii) the third business day after the mailing thereof.
          5.2 Binding Effect; Benefits. This Agreement shall be binding upon and inure to the benefit of the Parties to this Agreement and their respective successors and permitted assigns. Nothing in this Agreement, express or implied, is intended or shall be construed to give any person other than the Parties to this Agreement or their respective spouses, successors or assigns any legal or equitable right, remedy or claim under or in respect of any agreement or any provision contained herein.
          5.3 Waiver. Each Party hereto may by written notice to any another Party (a) extend the time for the performance of any of the obligations or other actions of the other Party under this Agreement; (b) waive compliance with any of the representations, warranties, acknowledgements or covenants of the other Party contained in this Agreement; and (c) waive or modify performance of any of the obligations of the other Party under this Agreement; provided that any such extensions, waivers or modifications shall only be effective against the Party giving the same. For the avoidance of doubt, representations and warranties herein are made as of the Effective Time unless otherwise stated herein. Except as provided in the first sentence of this Section 5.3, no action taken pursuant to this Agreement, including, without limitation, any investigation by or on behalf of any Party, shall be deemed to constitute a waiver by the Party taking such action of compliance with any representations, warranties, covenants or agreements contained herein. Except as provided in the first sentence of this Section 5.3, the waiver by any Party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver by such waiving Party of any preceding or succeeding breach and no failure by any Party to exercise any right or privilege hereunder shall be deemed a waiver of such Party’s rights or privileges hereunder or shall be deemed a waiver of such Party’s rights to exercise the same rights at any subsequent time or times in any other context.
          5.4 Amendment. This Agreement may be amended, modified or supplemented only by a written instrument executed by each of the Investors and Parent.

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          5.5 Assignability. Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by any Investor except (a) by will or by the laws of descent or distribution or (b) with the prior written consent of Parent; provided, however, that, in addition to the amounts of Exchange Equity committed to be acquired by the Investors pursuant to this Agreement as of the date hereof, the Parties agree that Samuel Lee and David Topper may in their discretion, prior to the Effective Time, offer to other employees of the Company or its subsidiaries selected by Messrs. Lee and Topper and reasonably acceptable to Parent and LGP the opportunity to subscribe for additional Exchange Equity in an aggregate amount of up to $4,501,000; provided, that as a condition to such subscription each such employee must execute a counterpart signature page to this Agreement in the form attached as Exhibit F hereto and agree to be bound by the terms hereof for all purposes hereunder; provided, further, if Messrs. Lee and Topper elect in their discretion not to extend such other Exchange Equity subscription opportunities, or if any such employees are offered such an opportunity but do not elect to (or qualify to) subscribe for some or all of the available amount of Exchange Equity, the obligations and Exchange Equity subscription obligations of the other Investors signatory hereto shall be unaffected. The Company shall update Schedule I from time to time prior to the Effective Time to accurately reflect any subscription elections from time to time extended to and accepted from such other employees.
          5.6 Applicable Law; Consent to Jurisdiction. This Agreement and all disputes, claims or controversies arising out of or relating to this agreement, or the negotiation, validity or performance of this agreement, or the transactions contemplated by this agreement, shall be governed by and construed in accordance with the laws of the State of Delaware without regard to its rules of conflict of laws. Each of the Parties hereto hereby irrevocably and unconditionally (i) consents to submit to the sole and exclusive jurisdiction of the Court of Chancery of the State of Delaware or, if under applicable law exclusive jurisdiction over the matter is vested in the federal courts, any court of the United States located in the State of Delaware, for any litigation arising out of or relating to this Agreement, or the negotiation, validity or performance of this Agreement, or the transactions contemplated hereby, (ii) agrees not to commence any litigation relating thereto except in such courts, (iii) waives any objection to the laying of venue of any such litigation in such courts and (iv) agrees not to plead or claim in such courts that such litigation brought therein has been brought in any inconvenient forum. Each of the parties hereto agrees, (x) to the extent such party is not otherwise subject to service of process in the State of Delaware, to appoint and maintain an agent in the State of Delaware as such party’s agent for acceptance of legal process, and (y) that service of process may also be made on such party by prepaid certified mail with a proof of mailing receipt validated by the United States Postal Service constituting evidence of valid service. Service made pursuant to (x) or (y) above shall have the same legal force and effect as if served upon such party personally within the State of Delaware. For purposes of implementing the parties’ agreement to appoint and maintain an agent for service of process in the State of Delaware, Parent does hereby appoint The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, DE 19081 as such agent.
          5.7 Severability. If any provision of this Agreement, or the application thereof to any Party or circumstance is held invalid or unenforceable, the remainder of this Agreement, and the application of such provision to other Parties or circumstances, shall not be affected thereby, and to such end, the provisions of this Agreement are agreed to be severable.

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          5.8 Entire Agreement. This Agreement and the schedules and exhibits and other documents delivered by the Parties in connection herewith, the Merger Agreement, the Voting Agreement and the Stockholders Agreement, (i) contain the complete agreement between the Parties hereto with respect to the transactions contemplated hereby and thereby and supersede all prior agreements and understandings between the Parties hereto with respect thereto and (ii) shall be binding upon and inure to the benefit of the Parties hereto and their respective successor and permitted assigns.
          5.9 Section and Other Headings. The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.
          5.10 Counterparts. This Agreement may be executed by facsimile or PDF signature and in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument.
          5.11 No Other Representations or Warranties. Except for the representations and warranties contained in this Agreement, none of the Parties is making or have made any representations or warranties of any sort to or for the benefit of any other Party with respect to the Rollover, whether oral or written, express or implied, and the Parties expressly disclaim any other representations and warranties.
[Remainder of Page Intentionally Blank]

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          IN WITNESS WHEREOF, Parent and the Investors have executed this Agreement as of the day and year first above written.
         
  IVY HOLDINGS INC.
 		  
  By:   /s/ John M. Baumer  
    Name:   John Baumer   
    Title:   President   
 
[Signature Page to Contribution and Subscription Agreement]

 

 

INVESTORS:
Address:
         
     
  By:   /s/ Samuel Lee  
    SAMUEL LEE    
       
 
         
Address:  THE DAVID & ALEXA TOPPER FAMILY TRUST
 
  By:   /s/ David Topper  
    DAVID TOPPER, Trustee    
 
         
  By:   /s/ Alexa Topper  
    ALEXA TOPPER, Trustee    
Address:
         
  By:   /s/ Mike Heather  
    MIKE HEATHER    
Address:
         
  By:   /s/ Jeereddi A. Prasad  
    DR. JEEREDDI A. PRASAD    
       
 
[Signature Page to Contribution and Subscription Agreement]

 

 

Schedule I
                                 
                    Number of Shares of        
    Contributed     Contributed     Parent Common Stock        
Investor   Shares     Amount     to be Received     Total Amount  
Samuel Lee*
     3,241,412     $ —       275,520     $ 27,552,000  
The David & Alexa Topper Family Trust
     2,454,118     $ —       208,600     $ 20,860,000  
Mike Heather
     261,882     $ —       22,260     $ 2,226,000  
Dr. Jeereddi A. Prasad
     197,765     $ —       16,810     $ 1,681,000  
 
*   Mr. Lee’s Rollover Common Value shall be increased by a cash amount equal to fifty percent (50%) of any bonus granted to Mr. Lee by the Company pursuant to Section 5.1(j) of the Company Disclosure Schedule (the “Bonus Contribution”). Such increase in Rollover Common Value shall be in the form of an increase in the number of the Contributed Shares equal to the Bonus Contribution divided by the Per Share Merger Consideration.

 

EX-99.4 4 v57129exv99w4.htm EX-99.4 exv99w4
Exhibit 4
Execution Version
COMPANY STOCKHOLDER VOTING AGREEMENT
     THIS STOCKHOLDER VOTING AGREEMENT (hereinafter referred to as this “Agreement”) is made and entered into as of August 16, 2010 by and between Ivy Holdings Inc., a Delaware corporation (“Parent”), and the undersigned stockholders (each a “Stockholder” and collectively, the “Stockholders”) of Prospect Medical Holdings, Inc., a Delaware corporation (the “Company”).
     WHEREAS, Parent, the Company and Ivy Merger Sub Corp., a Delaware corporation and indirect, wholly-owned subsidiary of Parent (“Merger Sub”), are entering into an Agreement and Plan of Merger, dated as of the date hereof (the “Merger Agreement”), pursuant to which Merger Sub will be merged with and into the Company, on the terms and subject to the conditions set forth in the Merger Agreement, with the Company surviving as a wholly-owned subsidiary of Parent (the “Merger”);
     WHEREAS, each Stockholder (a) is the beneficial owner (as defined in Rule 13d-3 under the 1934 Act) of such number of shares of the outstanding common stock of the Company, par value $.01 per share (“Company Common Stock”), and (b) holds the stock options and other rights, if any, to acquire additional shares of Company Common Stock, in each case as is indicated opposite such Stockholder’s name on Schedule I attached hereto; and
     WHEREAS, in consideration of the execution and delivery of the Merger Agreement by Parent and Merger Sub, each of the Stockholders (in their capacity as such) is willing to agree to vote the Shares (as defined herein) over which such Stockholder has voting power so as to facilitate the consummation of the Transaction, on the terms and subject to the conditions set forth herein.
     NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements contained in this Agreement, and intending to be legally bound hereby, the parties hereto hereby agree as follows:
     SECTION 1. Certain Definitions. Capitalized terms used but not defined herein shall have the respective meanings ascribed to them in the Merger Agreement. For all purposes of and under this Agreement, the following terms shall have the following respective meanings:
          (a) “Constructive Sale” shall mean, with respect to any Shares, a short sale with respect to such Shares, entering into or acquiring an offsetting derivative contract with respect to such Shares, entering into or acquiring a future or forward contract to deliver such Shares, or entering into any other hedging or other derivative transaction that has the effect of either directly or indirectly materially changing the economic benefits or risks of ownership of such Shares.
          (b) “Expiration Date” shall mean the earliest to occur of (i) the Effective Time, (ii) such date and time as the Merger Agreement shall be terminated pursuant to Article VII thereof or otherwise, (iii) upon the mutual written agreement of each of the parties hereto to terminate this Agreement, (iv) the occurrence of a Company Adverse Recommendation Change in response to a Superior Proposal or (v) the occurrence of a Change of Recommendation in response to an Intervening Event.

 

          (c) “Shares” shall mean: (i) all shares of Company Common Stock beneficially owned by the Stockholders as of the date hereof, and (ii) all additional shares of Company Common Stock (including those acquired through the exercise of any stock options, warrants or any other securities or rights exercisable or exchangeable for or convertible into Shares) of which the Stockholders become the beneficial owner (the “Additional Shares”) during the period commencing on the date hereof and expiring on the Expiration Date.
          (d) “Transfer” shall mean, with respect to any Shares, the direct or indirect assignment, sale, transfer, tender, pledge, hypothecation, or the grant, creation or suffrage of a lien, security interest or encumbrance in or upon, or the gift, placement in trust, or the Constructive Sale or other disposition of such Shares (including transfers by testamentary or intestate succession or otherwise by operation of law) or any right, title or interest therein (including any right or power to vote to which the holder thereof may be entitled, whether such right or power is granted by proxy or otherwise), or any change in the record or beneficial ownership of such Shares (other than pursuant to the Contribution Agreement), and any agreement, arrangement or understanding, whether or not in writing, to effect any of the foregoing.
     SECTION 2. Transfer of Shares.
          (a) Transfer of Shares. Each Stockholder hereby agrees as to such Stockholder only that, except as set forth in, and pursuant to, the Contribution Agreement, at all times during the period commencing on the date hereof until the Expiration Date, such Stockholder shall not cause or permit any Transfer of any of such Stockholder’s Shares or discuss, negotiate or make an offer or enter into an agreement, commitment or other arrangement regarding any Transfer of any of the Shares; provided, however, that each Stockholder may Transfer Shares to a Family Member or trust for the benefit of such Stockholder or his Family Members (and in the case of a Stockholder that is a trust, the Shares held in such trust may be transferred to any beneficiary thereof, any Family Member of any such beneficiary, or to any trust for the benefit of any such beneficiary or any such Family Member) for estate or tax planning purposes; provided, that, as a condition to any such Transfer, the transferee agrees in writing to be bound by the terms of this Agreement applicable to such Stockholder and to hold such Shares subject to all the terms and provisions of this Agreement to the same extent as such terms and provisions bound the Stockholder from whom the Shares were Transferred. For purposes of this Agreement, a “Family Member” of an individual shall include any member of the class consisting of that individual’s spouse, descendants (whether by blood, marriage or adoption, and their respective descendants by blood, marriage or adoption), parents (including adoptive parents or in-laws), siblings (whether by blood, marriage or adoption), or the spouse of any such descendent, parent or sibling.
          (b) Transfer of Voting Rights. Except as otherwise permitted by this Agreement or pursuant to the Contribution Agreement, each Stockholder hereby agrees as to such Stockholder only that, at all times commencing on the date hereof until the Expiration Date, such Stockholder shall not deposit, or permit the deposit of, any of such Stockholder’s Shares in a voting trust, grant any proxy or power of attorney in respect of such Stockholder’s Shares, or enter into any voting agreement or similar arrangement, commitment or understanding with respect to such Stockholder’s Shares in violation of this Agreement.

2

 

     SECTION 3. Agreement to Vote Shares; Proxy.
          (a) Voting Agreement. Notwithstanding Section 3(b) below, until the Expiration Date, at every meeting of stockholders of the Company called with respect to any of the following, and at every adjournment or postponement thereof, and on every action or approval by written consent of stockholders of the Company with respect to any of the following, each Stockholder agrees (solely as to itself and solely in its capacity as a stockholder of the Company) that it shall, or shall cause its nominee holder of record on any applicable record date to, vote the Shares that such Stockholder is eligible to vote, and deliver a written consent in respect of such Stockholder’s Shares, at any applicable general or special meeting of the stockholders of the Company:
  (i)   in favor of (x) adoption of the Merger Agreement and approval of the Merger, (y) each of the actions contemplated by the Merger Agreement in respect of which approval of the Company’s stockholders is requested, and (z) any proposal or action in respect of which approval of the Company’s stockholders is requested that could reasonably be expected to facilitate the Merger and the other transactions contemplated by the Merger Agreement; and
 
  (ii)   against any proposal or action that would constitute, or could reasonably be expected to result in, a breach of any covenant, representation or warranty or any other obligation or agreement of the Company under the Merger Agreement or of such Stockholder under this Agreement or otherwise reasonably would be expected to impede, interfere with, delay, postpone, discourage or adversely affect the Merger or any of the other transactions contemplated by the Merger Agreement;
provided, that the foregoing voting covenants shall apply solely to actions taken by such Stockholder in its capacity as a stockholder of the Company, and solely with respect to such matters to the extent the approval of the Company’s stockholders is required or requested of the Company’s stockholders by the Company, and no Stockholder shall have any obligations or restrictions with respect to such matters in any other capacity or in any other context.
          Prior to the Expiration Date, each Stockholder covenants as to such Stockholder only not to enter into any understanding or agreement with any person to vote or give instructions with respect to such Stockholder’s Shares in any manner inconsistent with Section 3(a), Section 3(b) or Section 3(c).
          Until the Expiration Date, in the event that any meeting of the stockholders of the Company is held with respect to any of the matters specified in Section 3(a)(i) or (ii) above (and at every adjournment or postponement thereof), each Stockholder covenants that it shall, or shall cause the holder of record of such Stockholder’s Shares on each record date relevant to such a stockholder vote with respect to such specified matters to, appear at such meeting or otherwise cause such Stockholder’s Shares that are eligible to be voted at such stockholder meeting to be counted as present thereat for purposes of establishing a quorum.

3

 

  (b)   Grant of Proxy.
 
  (i)   Each Stockholder as to itself only (i) represents that it has revoked or terminated any proxies, voting agreements or similar arrangements previously given or entered into with respect to such Stockholder’s Shares and (ii) until the Expiration Date, hereby irrevocably appoints Parent as proxy for such Stockholder to vote such Stockholder’s Shares for such Stockholder and in such Stockholder’s name, place and stead, at any annual, special or other meeting or action of the stockholders of the Company, as applicable, or at any adjournment thereof or pursuant to any consent of the stockholders of the Company, in lieu of a meeting or otherwise, for the adoption of the Merger Agreement and approval of the Merger, to the extent such Stockholder does not cause its Shares to be voted pursuant to Section 3(a). Parent hereby acknowledges and agrees that the proxies granted hereby shall not be effective for any other purpose and each such proxy automatically shall terminate and be of no further force or effect upon and after the Expiration Date. The parties acknowledge and agree that neither Parent, nor Parent’s successors, assigns, subsidiaries, divisions, employees, officers, directors, stockholders, agents or affiliates shall owe any duty to, whether in law or otherwise, or incur any liability of any kind whatsoever, including without limitation, with respect to any and all claims, losses, demands, causes of action, costs, expenses (including reasonable attorney’s fees) and compensation of any kind or nature whatsoever to any Stockholder in connection with or as a result of any voting by Parent of the Shares subject to the irrevocable proxies hereby granted to Parent at any annual, special or other meeting or action or the execution of any consent of the stockholders of the Company for the purpose set forth herein, so long as Parent is not otherwise in breach of this Agreement.
 
  (ii)   No irrevocable proxy granted by any Stockholder shall be terminated by any act of any Stockholder or by operation of law, whether by the death or incapacity of any Stockholder or by the occurrence of any other event or events (including, without limiting the foregoing, the termination of any trust or estate for which such Stockholder is acting as a fiduciary or fiduciaries or the dissolution or liquidation of any corporation or partnership); provided, that in all cases all such proxies automatically shall terminate upon the Expiration Date. If between the execution hereof and the Expiration Date, any Stockholder should die or become incapacitated, or if any trust or estate holding any Shares should be terminated, or if any corporation or partnership holding any Shares should be dissolved or liquidated, or if any other such similar event or events shall occur before the Expiration Date, any actions taken by Parent with respect to such Shares that are taken by Parent pursuant to the terms of this Agreement shall be as valid as if such death, incapacity, termination, dissolution, liquidation or other similar event or events had not occurred, regardless of

4

 

      whether or not Parent has received notice of such death, incapacity, termination, dissolution, liquidation or other event.
 
  (iii)   If for any reason the proxies granted by a Stockholder herein are not irrevocable, such Stockholder agrees to vote such Stockholder’s Shares in accordance with Section 3(a) hereof.
     SECTION 4. No Ownership Interest. Nothing contained in this Agreement shall be deemed to vest in Parent any direct or indirect ownership or incidence of ownership of, or with respect to, any Shares. All rights, ownership and economic benefits of and relating to the Shares shall remain vested in and belong to the respective Stockholders, and this Agreement shall not confer any right, power or authority upon Parent or any other Person (a) to direct any Stockholder in the voting of any of the Shares, except as otherwise specifically provided herein, or (b) in the performance of any of the Stockholders’ duties or responsibilities as stockholders or officers or directors, as the case may be, of the Company.
     SECTION 5. Solicitation. Each Stockholder hereby represents and warrants that such Stockholder has read Section 6.4 of the Merger Agreement. In addition, each Stockholder, solely as to itself only and solely in such Stockholder’s capacity as a stockholder of the Company, agrees not to, directly or indirectly, take any action, or permit any of its Affiliates to take any action, that would violate Section 6.4 of the Merger Agreement if such Stockholder and its Affiliates were deemed a “Representative” of the Company for purposes of such Section 6.4 of the Merger Agreement, provided, the foregoing shall not serve to limit or restrict any actions taken by any Stockholder in any capacity other than as Stockholder, to the extent such actions are permitted or required under such Section 6.4 of the Merger Agreement.
     SECTION 6. Representations, Warranties and Other Agreements of Stockholder. Each Stockholder hereby represents and warrants to Parent as to itself only that, as of the date hereof:
          (a) such Stockholder is (and, except to the extent a Transfer is made pursuant to the proviso in Section 2(a), will be until the Expiration Date) the beneficial owner of the Shares and the options to acquire Additional Shares, set forth opposite such Stockholder’s name on Schedule I attached hereto, with full power to vote or direct the voting of such Shares, or grant a consent or other written approval in respect of such Shares, in each case for and on behalf of all beneficial owners of those Shares set forth opposite such Stockholder’s name that are eligible to be voted at any general or special meeting of the stockholders of the Company;
          (b) the Shares and the options to acquire Additional Shares, set forth opposite such Stockholder’s name on Schedule I attached hereto are free and clear of any Encumbrances, options, rights of first refusal, co-sale rights or other encumbrances of any kind or nature (other than restrictions on transfer imposed by applicable securities Laws and other than the obligations set forth herein or in the Contribution Agreement);
          (c) such Stockholder does not beneficially own any securities of the Company other than the Shares and options to acquire shares of Company Common Stock, set forth on Schedule I attached hereto;

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          (d) such Stockholder has full power and authority to make, enter into and carry out the terms of this Agreement applicable to such Stockholder;
          (e) such Stockholder agrees not to bring, commence, institute, maintain, prosecute, participate in or voluntarily aid any action, claim, suit or cause of action, in law or in equity, in any court or before any Governmental Entity, which alleges that (i) the execution and delivery of this Agreement by such Stockholder and the granting of any proxies to be delivered in connection with the execution of the Merger Agreement, or (ii) the approval of the Merger Agreement by the Company Board, breaches any fiduciary duty of the Company Board or any member thereof;
          (f) the execution and delivery of this Agreement by such Stockholder does not, and the performance of this Agreement by such Stockholder will not, result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation, modification or acceleration) (whether after the giving of notice of or the passage of time or both) under any applicable Law or any contract to which such Stockholder is a party or which is binding on such Stockholder or such Stockholder’s Shares, and will not result in the creation of any Encumbrance on any of such Stockholder’s Shares;
          (g) this Agreement has been duly executed by such Stockholder and constitutes the valid and legally binding obligation of such Stockholder, enforceable against such Stockholder in accordance with its terms, except that such enforceability (i) may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws of general application affecting or relating to the enforcement of creditors’ rights generally and (ii) is subject to general principles of equity, whether considered in a proceeding at law or in equity;
          (h) the execution and delivery of this Agreement by such Stockholder does not, and the performance of this Agreement by such Stockholder will not, require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Entity by such Stockholder, (i) except for any applicable requirements, if any, of the Exchange Act, and (ii) except where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not prevent or delay the performance by such Stockholder of such Stockholder’s obligations under this Agreement in any material respect; and
          (i) such Stockholder understands and acknowledges that Parent is entering into the Merger Agreement in reliance upon such Stockholder’s execution and delivery of this Agreement and the representations and warranties of such Stockholder contained herein.
     SECTION 7. Consent. Each Stockholder on behalf of itself only consents to and authorizes the Company, Parent and their respective Affiliates (and Parent authorizes the Company and its Affiliates) to (a) publish and disclose in the Proxy Statement, the Schedule 13E-3, any current report of the Company on Form 8-K and any other documents required to be filed with the SEC or any regulatory authority in connection with the Merger Agreement, such Stockholder’s identity and ownership of Shares and the nature of such Stockholder’s commitments, arrangements and understandings under this Agreement and (b) file this

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Agreement as an exhibit to the extent required to be filed with the SEC or any regulatory authority relating to the Merger.
     SECTION 8. Stockholder Capacity. To the extent that any of the Stockholders are officers or directors of the Company or any of its Subsidiaries, nothing in this Agreement shall be construed as preventing or otherwise affecting any actions taken or not taken by any such Stockholders in their respective capacities as officers or directors of the Company or any of its Subsidiaries or from fulfilling the duties and obligations of such office (including the performance of obligations required by the fiduciary duties of any of the Stockholders acting in their capacity as an officer or director), and none of such actions (or determinations not to take any action) in such other capacities shall be deemed to constitute a breach of this Agreement.
     SECTION 9. Legending of Shares. Until the Expiration Date, each Stockholder hereby authorizes Parent and the Company to cause each certificate evidencing the Shares to bear the following legend on the face thereof (which legend shall be removed promptly upon the Expiration Date to the extent the Merger is not consummated):
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON VOTING, TRANSFER AND CERTAIN OTHER LIMITATIONS SET FORTH IN THAT CERTAIN STOCKHOLDER VOTING AGREEMENT, DATED AS OF AUGUST 16, 2010, AMONG THE HOLDER OF THE CERTIFICATE, IVY HOLDINGS INC. AND THE OTHER STOCKHOLDERS PARTY THERETO, AS AMENDED FROM TIME TO TIME, COPIES OF WHICH STOCKHOLDER VOTING AGREEMENT ARE ON FILE AT THE PRINCIPAL OFFICE OF PROSPECT MEDICAL HOLDINGS, INC.”
     SECTION 10. Termination. Notwithstanding anything to the contrary provided herein, this Agreement and any undertaking, power of attorney, proxy or waiver granted by any Stockholder hereunder (including those proxies granted herein that are irrevocable) automatically shall terminate and be of no further force or effect as of the Expiration Date; provided, that upon termination of this Agreement, Parent shall take such actions as are reasonably requested by any Stockholder to remove any legend placed upon any Shares pursuant to Section 9 (and to cause the return of any certificates evidencing Shares to the extent provided by the beneficial owner thereof to Parent or any of its Affiliates); provided, further, however, (a) Section 13 shall survive any termination or expiration of this Agreement, (b) any such termination shall not relieve any party from liability for any willful breach of its obligations hereunder prior to such termination, and (c) each party will be entitled to any remedies at law or in equity to recover its losses arising from any such pre-termination breach.
     SECTION 11. Appraisal Rights. Each Stockholder (i) irrevocably waives and agrees not to exercise any rights (including, without limitation, under Section 262 of the DGCL) to demand appraisal of any of the Shares or rights to dissent from the Merger that such Stockholder may have and (ii) agrees not to commence or participate in, and will take all actions necessary to opt out of, any class in any class action with respect to, any claim, derivative or otherwise, against Parent, Merger Sub, the Company or any of their respective successors relating to the negotiation, execution or delivery of this Agreement or the Merger Agreement or the

7

 

consummation of the Merger, including any claim (x) challenging the validity of, seeking to enjoin the operation of, any provision of this Agreement or (y) alleging a breach of any fiduciary duty of the Company Board in connection with the Merger Agreement or the transactions contemplated thereby; provided, that the foregoing covenants shall not be deemed a consent to or waiver of any rights of any Stockholder for any breach of this Agreement or the Contribution Agreement by Parent or its Affiliates.
     SECTION 12. Further Assurances.
          (a) Each of the parties hereto shall execute and deliver any additional certificate, instruments and other documents, and take any additional actions, as any other party reasonably may deem necessary or appropriate to carry out and effectuate the purpose and intent of this Agreement.
          (b) Each Stockholder agrees as to such Stockholder only, while this Agreement is in effect, to notify Parent promptly in writing of the number and description of any Additional Shares acquired by such Stockholder.
          (c) Each Stockholder’s spouse shall be required to execute the form of spousal consent set forth in Exhibit A to evidence his or her agreement and consent to be bound by the terms and conditions of this Agreement as to his or her interest, whether as community property or otherwise, if any, in (i) the Shares, and the options and other rights to acquire Additional Shares, set forth opposite such Stockholder’s name on Schedule I attached hereto, and (ii) any Additional Shares acquired by such Stockholder.
     SECTION 13. Miscellaneous.
          (a) Expenses. All costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense; provided, that the parties acknowledge that the legal fees and expenses of the Stockholders shall be paid by the Company.
          (b) Waiver. Except as provided in this Agreement, no action taken pursuant to this Agreement, including, without limitation, any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of any other party’s obligations to comply with its representations, warranties, covenants and agreements contained in this Agreement. The waiver by any party hereto of a breach of any provision hereunder (or any delay in asserting any such breach) shall not operate or be construed as a waiver of any prior or subsequent breach of the same or any other provision hereunder or in any other context.
          (c) Severability. If any provision of this Agreement, or the application thereof to any Person or circumstance is to be held invalid or unenforceable, the remainder of this Agreement, and the application of such provision to other Persons or circumstances, shall not be affected thereby, and to such end, the provisions of this Agreement are agreed to be severable.
          (d) Assignment; Benefit. Except as expressly permitted by the terms hereof, no party may assign this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of each other party hereto, and any attempted assignment

8

 

without such prior written approval shall be void; provided, that the foregoing prohibition on assignment shall not apply to transferee in any Transfer effected pursuant to, and in accordance with, the proviso in Section 2(a). Subject to the preceding sentence, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. This Agreement is not intended to, and shall not be deemed to, confer on any Person other than the parties hereto or their respective heirs, successors, executors, administrators and permitted assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, or to create any agreement of employment with any person or otherwise create any third party beneficiary hereto.
          (e) Amendments. This Agreement may not be modified, amended, altered or supplemented, except upon the execution and delivery of a written agreement executed by each of the parties hereto.
          (f) Specific Performance; Injunctive Relief. The parties agree that irreparable damage would occur to Parent in the event that any provision of this Agreement were not performed by each Stockholder in accordance with the specific terms hereof, and that Parent shall be entitled to an injunction, specific performance and other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, this being in addition to any other remedy to which Parent is entitled at law or in equity. Each of the Stockholders agrees as to itself that it will not oppose the granting of an injunction, specific performance and other equitable relief to enforce the covenants and obligations contained herein on the basis that Parent has an adequate remedy at law or an award of specific performance is not an appropriate remedy for any reason at law or equity and Parent shall not be required to post a bond or other security in connection with any such order or injunction.
          (g) Governing Law. This Agreement and all disputes, claims or controversies arising out of or relating to this Agreement, or the negotiation, validity or performance of this Agreement or the transactions contemplated hereby, shall be governed by, and construed in accordance with, the laws of the State of Delaware without regard to its rules of conflicts of law.
          (h) Jurisdiction and Venue. Each of the Stockholders and Parent hereby irrevocably and unconditionally (i) consents to submit to the sole and exclusive jurisdiction of the Court of Chancery of the State of Delaware or, if under applicable law exclusive jurisdiction over the matter is vested in the federal courts, any court of the United States located in the State of Delaware, for any litigation arising out of or relating to this Agreement, or the negotiation, validity or performance of this Agreement, or the transactions contemplated hereby, (ii) agrees not to commence any litigation relating thereto except in such courts, (iii) waives any objection to the laying of venue of any such litigation in such courts and (iv) agrees not to plead or claim in such courts that such litigation brought therein has been brought in any inconvenient forum. Each of the parties hereto agrees, (A) to the extent such party is not otherwise subject to service of process in the State of Delaware, to appoint and maintain an agent in the State of Delaware as such party’s agent for acceptance of legal process, and (B) that service of process may also be made on such party by prepaid certified mail with a proof of mailing receipt validated by the United States Postal Service constituting evidence of valid service. Service made pursuant to (A) or (B) above shall have the same legal force and effect as if served upon such party personally within the State of Delaware. For purposes of implementing the parties’ agreement to

9

 

appoint and maintain an agent for service of process in the State of Delaware, Parent does hereby appoint The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, DE 19081 as such agent
          (i) No Agreement Until Transaction Documents Executed. Irrespective of negotiations among the parties or the exchanging of drafts of this Agreement, this Agreement shall not constitute, or be deemed to evidence, a contract, agreement, arrangement or understanding between the parties hereto unless (i) the Merger Agreement is executed and delivered by all parties thereto and (ii) this Agreement is executed and delivered by all parties hereto.
          (j) No Third Party Beneficiaries. This Agreement is not intended, and shall not be deemed, to confer any rights or remedies upon any person other than the parties hereto and their respective successors and permitted assigns, to create any agreement of employment with any person or to otherwise create any third-party beneficiary hereto.
          (k) Notices. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been duly given or made as of the date delivered or sent if delivered personally or sent by facsimile (providing confirmation of transmission) or sent by prepaid overnight carrier (providing proof of delivery) to the parties at the following addresses or facsimile numbers (or at such other addresses or facsimile numbers as from time to time may be specified by the parties by like notice):
          if to Parent, to:
          c/o Leonard Green & Partners, L.P.
          11111 Santa Monica Blvd., #2000
          Los Angeles, CA 90025
          Attention: John Baumer
          Facsimile: (310) 954-0404
          with a copy (which shall not constitute notice) to:
          Latham & Watkins LLP
          885 Third Avenue
          New York, New York 10022
          Attention: Howard Sobel
          John Giouroukakis
          Facsimile: (212) 751-4864

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          If to a Stockholder: to such Stockholder’s address for notice set forth on Schedule I attached hereto:
          with a copy (which shall not constitute notice) to:
          Bingham McCutchen LLP
          355 So Grand Avenue, Suite 4400
          Los Angeles, California 90071
          Attention: John L. Filippone
          Facsimile: (213) 830-8626
          and:
               Richard J. Welch
          Facsimile: (213) 830-8610
          (l) Counterparts. This Agreement may be executed in counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party. Facsimile or other electronic transmission of any signed original document shall be deemed the same as the delivery of an original. At the request of any party, the parties will confirm signatures executed by facsimile or other electronic transmission by signing a duplicate original document.
          (m) Interpretation. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”. The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. All terms defined in this Agreement shall have the defined meanings when used in any document made or delivered pursuant hereto unless otherwise defined therein. The definitions contained or incorporated by reference into this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term. Any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented in accordance with its terms, including (in the case of agreements or instruments) by valid waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein. References to a Person are also to its permitted assigns and successors.
[Remainder of page intentionally left blank]

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     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above.
         
  IVY HOLDINGS INC.
 		  
  By:   /s/ John M. Baumer   
    Name:   John Baumer   
    Title:   President  
[Signature Page to Voting Agreement]

 

 

         
  STOCKHOLDER
 		  
  /s/ Samuel S. Lee    
  Samuel S. Lee   
     
[Signature Page to Voting Agreement]

 

 

         
  STOCKHOLDER

THE DAVID & ALEXA TOPPER FAMILY TRUST
 		  
  By:   /s/ David Topper  
    David Topper, Trustee   
       
     
  By:   /s/ Alexa Topper    
    Alexa Topper, Trustee   
       
[Signature Page to Voting Agreement]

 

 

         
  STOCKHOLDER
 		  
  /s/ Mike Heather    
  Mike Heather   
     
[Signature Page to Voting Agreement]

 

 

         
  STOCKHOLDER
 		  
  /s/ Jeereddi A. Prasad    
  Dr. Jeereddi A. Prasad   
     
 
[Signature Page to Voting Agreement]

 

 

Schedule I
             
        Shares Issuable Upon    
        Exercise of Stock    
Name   Shares   Options   Address
Samuel Lee
           c/o Prospect Medical Holdings, Inc.
 
           10780 Santa Monica Blvd., Suite 400
  4,976,040   2,176,250   Los Angeles, CA 90025
Mike Heather
           240 South Feldner Road
 
   300,000   509,500   Orange, CA 92868
The David & Alexa Topper Family Trust
           c/o Prospect Medical Holdings, Inc.
 
           10780 Santa Monica Blvd., Suite 400
 
   4,767,922   200,000   Los Angeles, CA 90025
Dr. Jeereddi A. Prasad
           766 Brigham Young Drive
 
   395,434   None   Claremont, CA 91711
TOTAL
   10,439,396   2,885,750    

 

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