THIS INSTRUMENT IS SUBJECT TO THE TERMS OF THE AGREEMENT FOR THE PURCHASE AND
SALE OF STOCK ("STOCK PURCHASE AGREEMENT"), DATED AS OF SEPTEMBER 23, 1997, BY
AND AMONG PROSPECT MEDICAL GROUP, INC., A CALIFORNIA PROFESSIONAL CORPORATION
("PURCHASER"), AS BUYER, SINNADURAI X. XXXXXXX, M.D., KARUNYAN XXXXXXXXXXXX,
M.D. AND KARUNYAN XXXXXXXXXXXX, M.D. AS TRUSTEE OF THE XXXXXXXXXXXX CHARITABLE
REMAINDER TRUST, AND SIERRA PRIMARY CARE MEDICAL GROUP, INC., A CALIFORNIA
PROFESSIONAL CORPORATION ("COMPANY"). TERMS USED HEREIN AND NOT OTHERWISE
DEFINED SHALL HAVE THE MEANINGS ASSIGNED TO THEM IN THE STOCK PURCHASE
AGREEMENT.
THIS INSTRUMENT AND THE OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATED, IN THE
MANNER AND TO THE EXTENT SET FORTH IN A SUBORDINATION AND NOTE CANCELLATION
AGREEMENT (THE "SUBORDINATION AND NOTE CANCELLATION AGREEMENT") DATED SEPTEMBER
25, 1997, BY AND AMONG PURCHASER, IMPERIAL BANK, A CALIFORNIA BANKING
CORPORATION("BANK"), PROSPECT MEDICAL HOLDINGS, INC., A DELAWARE CORPORATION
("PROSPECT MEDICAL HOLDINGS"), PROSPECT MEDICAL SYSTEMS, INC., A DELAWARE
CORPORATION ("MANAGER"), KARUNYAN XXXXXXXXXXXX, M.D. AND THE HOLDER OF THIS
INSTRUMENT, AND THE HOLDER OF THIS INSTRUMENT, BY ITS ACCEPTANCE HEREOF, AGREES
(i) TO BE BOUND BY THE TERMS OF THE SUBORDINATION AND NOTE CANCELLATION
AGREEMENT AND (ii) IN THE EVENT THAT ANY CONFLICT EXISTS BETWEEN THE TERMS OF
THIS INSTRUMENT, ANY DOCUMENT EXECUTED IN CONNECTION WITH THE DELIVERY OF THIS
INSTRUMENT AND THE TERMS OF THE SUBORDINATION AND NOTE CANCELLATION AGREEMENT,
THE TERMS OF THE SUBORDINATION AND NOTE CANCELLATION AGREEMENT SHALL GOVERN AND
BE CONTROLLING
SUBORDINATE GUARANTY
This SUBORDINATE GUARANTY (this "GUARANTY"), dated as of September 25,
1997, is executed and delivered by Prospect Medical Holdings, Inc., a Delaware
corporation ("Guarantor"), in favor of Sinnadurai X. Xxxxxxx, M.D. ("Guarantied
Party") with reference to the following facts:
R E C I T A L S
A. Prospect Medical Group, Inc., a California professional corporation
("Purchaser"), Guarantied Party, and certain others have entered into the Stock
Purchase Agreement in which certain financial accommodations were granted to
Purchaser by Guarantied Party.
B. Guarantor is materially interested in the financial success of
Purchaser, agrees that the Stock Purchase Agreement is in Purchaser's best
interests, and acknowledges that the execution and delivery of this Guaranty
formed a material part of the consideration to Guarantied Party to induce
Guarantied Party to enter into the Stock Purchase Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing, Guarantor hereby agrees,
in favor of Guarantied Party, as follows:
1. DEFINITIONS AND CONSTRUCTION.
(a) DEFINITIONS. The following terms, as used in this Guaranty,
shall have the following meanings:
"Bankruptcy Code" shall mean The Bankruptcy Reform Act of 1978
(11 U.S.C. Sections 101-1330), as amended or supplemented from time to time, and
any successor statute, and any and all rules issued or promulgated in connection
therewith.
"Guarantied Obligations" shall mean the due and punctual payment
of the principal of, and interest (including, any and all interest which, but
for the application of the provisions of the Bankruptcy Code, would have accrued
on such amounts) on, and premium, if any, on the Subordinated Note.
"Guarantied Party" shall have the meaning set forth in the
preamble of this Guaranty.
"Guarantor" shall have the meaning set forth in the preamble to
this Guaranty.
"Guaranty" shall have the meaning set forth in the preamble to
this document.
"Subordinated Note" shall mean the Contingent Promissory Note of
even date herewith, in the amount of $1,125,000, issued by Purchaser to
Guarantied Party pursuant to the terms of the Stock Purchase Agreement.
(b) CONSTRUCTION. Unless the context of this Guaranty clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, the part includes the whole, the terms
"include" and "including" are not limiting, and the term "or" has the inclusive
meaning represented by the phrase "and/or." The words "hereof," "herein,"
"hereby," "hereunder," and other similar terms refer to this Guaranty as a whole
and not to any particular provision of this Guaranty. Any reference in this
Guaranty to any of the following documents includes any and all alterations,
amendments, extensions, modifications,
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renewals, or supplements thereto or thereof, as applicable: this Guaranty and
the Subordinated Note. Neither this Guaranty nor any uncertainty or ambiguity
herein shall be construed or resolved against the Guarantied Party or Guarantor,
whether under any rule of construction or otherwise. On the contrary, this
Guaranty has been reviewed by Guarantor, Guarantied Party, and their respective
counsel, and shall be construed and interpreted according to the ordinary
meaning of the words used so as to fairly accomplish the purposes and intentions
of Guarantied Party and Guarantor.
2. GUARANTEED OBLIGATIONS. Guarantor hereby irrevocably and
unconditionally guarantees to Guarantied Party, as and for Guarantor's own debt,
until final and indefeasible payment thereof has been made, (a) payment of the
Guaranteed Obligations, in each case when and as the same shall become due and
payable, whether at maturity, pursuant to a mandatory prepayment requirement, by
acceleration, or otherwise; it being the intent of Guarantor that the guaranty
set forth herein shall be a guaranty of payment and not a guaranty of
collection, and (b) the punctual and faithful performance, keeping, observance,
and fulfillment by Purchaser of all of the agreements, conditions, covenants,
and obligations of Purchaser contained in the Subordinated Note and the Security
Agreement referred to in Section 20.
3. PERFORMANCE UNDER THIS GUARANTY. In the event that Purchaser fails to
make any payment of any Guaranteed Obligations on or before the due date
thereof, or if Purchaser shall fail to perform, keep, observe, or fulfill any
other obligation referred to in clause (b) of Section 2 hereof in the manner
provided in the Subordinated Note, Guarantor immediately shall cause such
payment to be made or each of such obligations to be performed, kept, observed,
or fulfilled.
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4. PRIMARY OBLIGATIONS. This Guaranty is a primary and original
obligation of Guarantor, is not merely the creation of a surety relationship,
and is an absolute, unconditional, and continuing guaranty of payment and
performance which shall remain in full force and effect without respect to
future changes in conditions, including any change of law or any invalidity or
irregularity with respect to the Subordinated Note. Guarantor agrees that
Guarantor is directly, jointly and severally liable, with any other guarantor of
the Guaranteed Obligations, to Guarantied Party, to the extent set forth in
Section 2 hereof, that the obligations of Guarantor hereunder are independent of
the obligations of Purchaser or any other guarantor, and that a separate action
may be brought against Guarantor whether such action is brought against
Purchaser or any other guarantor or whether Purchaser or any such other
guarantor is joined in such action. Guarantor agrees that Guarantor's liability
hereunder shall be immediate and shall not be contingent upon the exercise or
enforcement by Guarantied Party of whatever remedies it may have against
Purchaser or any other guarantor, or the enforcement of any lien or realization
upon any security Guarantied Party may at any time possess. Guarantor agrees
that any release which may be given by Guarantied Party to Purchaser or any
other guarantor shall not release Guarantor. Guarantor consents and agrees that
Guarantied Party shall be under no obligation to marshal any assets of Purchaser
or any other guarantor in favor of Guarantor, or against or in payment of any or
all of the Guaranteed Obligations.
5. WAIVERS.
(a) Guarantor absolutely, unconditionally, knowingly, and expressly
waives:
(i) (A) notice of acceptance hereof; (B) notice of the
creation or existence of any Guaranteed Obligations; (C) notice of the amount of
the Guaranteed Obligations, subject, however, to Guarantor's right to make
inquiry of Guarantied Party to ascertain the amount of the Guaranteed
Obligations at any reasonable time; (D) notice of any adverse change in the
financial condition of Purchaser or of any other fact that might increase
Guarantor's risk hereunder; (E) notice of presentment for payment, demand,
protest, and notice thereof as to the subordinated Note or any other
instruments; (F) notice of any unmatured event of default or Event of Default
under the Subordinated Note; and (G) all other notices (except if such notice is
specifically required to be given to Guarantor hereunder or under this Guaranty)
and demands to which Guarantor might otherwise be entitled.
(ii) its right, under Sections 2845 or 2850 of the
California Civil Code, or otherwise, to require Guarantied Party to institute
suit against, or to exhaust any rights and remedies which Guarantied Party has
or may have against, Purchaser or any third party, or against any collateral for
the Guaranteed Obligations provided by Purchaser or any third party. In this
regard, Guarantor agrees that Guarantor is bound to the payment of all
Guaranteed Obligations, whether now existing or hereafter accruing, as fully as
if such Guaranteed Obligations were directly owing to Guarantied Party by
Guarantor. Guarantor further waives any defense arising by reason of any
disability or other defense (other than the defense that the Guaranteed
Obligations shall have been fully and finally performed and indefeasibly paid)
of Purchaser or by reason of the cessation from any cause whatsoever of the
liability of Purchaser in respect thereof.
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(iii) (A) any rights to assert against Guarantied Party any
defense (legal or equitable), set-off, counterclaim, or claim which Guarantor
may now or at any time hereafter have against Purchaser or any other party
liable to Guarantied Party; (B) any defense, set-off, counterclaim, or claim, of
any kind or nature, arising directly or indirectly from the present or future
lack of perfection, sufficiency, validity, or enforceability of the Guaranteed
Obligations or any security therefor; (C) any defense Guarantor has to
performance hereunder, and any right Guarantor has to be exonerated, provided by
Sections 2819, 2822, or 2825 of the California Civil Code, or otherwise, arising
by reason of: the impairment or suspension of Guarantied Party's rights or
remedies against Purchaser; the alteration by Guarantied Party of the Guaranteed
Obligations; any discharge of Purchaser's obligations to Guarantied Party by
operation of law as a result of Guarantied Party's intervention or omission; or
the acceptance by Guarantied Party of anything in partial satisfaction of the
Guaranteed Obligations; (D) the benefit of any statute of limitations affecting
Guarantor's liability hereunder or the enforcement thereof, and any act which
shall defer or delay the operation of any statute of limitations applicable to
the Guaranteed Obligations shall similarly operate to defer or delay the
operation of such statute of limitations applicable to Guarantor's liability
hereunder.
(b) Guarantor absolutely, unconditionally, knowingly, and expressly
waives any defense arising by reason of or deriving from (i) any claim or
defense based upon an election of remedies by Guarantied Party including any
defense based upon an election of remedies by Guarantied Party under the
provisions of Sections 580a, 580b, 580d, and 726 of the California Code of Civil
Procedure or any similar law of California or any other jurisdiction; or (ii)
any election by Guarantied Party under Bankruptcy Code Section 1111(b) to limit
the amount of, or any collateral securing, its claim against Purchaser.
Pursuant to Section 2856 of the California Civil Code:
Guarantor waives all rights and defenses arising out of an
election of remedies by the creditor, even though that election of remedies,
such as a nonjudicial foreclosure with respect to security for a guaranteed
obligation, has destroyed Guarantor's rights of subrogation and reimbursement
against Purchaser by the operation of Section 580(d) of the California Code of
Civil Procedure or otherwise.
Guarantor waives all rights and defenses that Guarantor may have
because Purchaser's obligations are secured by real property. This means, among
other things:
(i) Guarantied Party may collect from Guarantor without
first foreclosing on any real or personal property collateral pledged by
Purchaser.
(ii) If Guarantied Party forecloses on any real property
collateral pledged by Purchaser:
(A) The amount of the Guaranteed Obligations may be reduced
only by the price for which that collateral is sold at the foreclosure sale,
even if the collateral is worth more than the sale price.
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(B) Guarantied Party may collect from Guarantor even if
Guarantied Party, by foreclosing on the real property collateral, has destroyed
any right Guarantor may have to collect from Purchaser.
This is an unconditional and irrevocable waiver of any rights and
defenses Guarantor may have because Purchaser's Obligations are secured by real
property. These rights and defenses include, but are not limited to, any rights
or defenses based upon Section 580a, 580b, 580d, or 726 of the California Code
of Civil Procedure.
If any of the Guaranteed Obligations at any time are secured by a mortgage or
deed of trust upon real property, Guarantied Party may elect, in its sole
discretion, upon a default with respect to the Guaranteed Obligations, to
foreclose such mortgage or deed of trust judicially or nonjudicially in any
manner permitted by law, before or after enforcing the Subordinated Note,
without diminishing or affecting the liability of Guarantor hereunder except to
the extent the Guaranteed Obligations are repaid with the proceeds of such
foreclosure. Guarantor understands that (a) by virtue of the operation of
California's antideficiency law applicable to nonjudicial foreclosures, an
election by Guarantied Party nonjudicially to foreclose such a mortgage or deed
of trust probably would have the effect of impairing or destroying rights of
subrogation, reimbursement, contribution, or indemnity of Guarantor against
Purchaser or other guarantors or sureties, and (b) absent the waiver given by
Guarantor, such an election would prevent Guarantied Party from enforcing the
Subordinated Note against Guarantor. Understanding the foregoing, and
understanding that Guarantor is hereby relinquishing a defense to the
enforceability of the Subordinated Note, Guarantor hereby waives any right to
assert against Guarantied Party any defense to the enforcement of the
Subordinated Note, whether denominated "estoppel" or otherwise, based on or
arising from an election by Guarantied Party nonjudicially to foreclose any such
mortgage or deed of trust. Guarantor understands that the effect of the
foregoing waiver may be that Guarantor may have liability hereunder for amounts
with respect to which Guarantor may be left without rights of subrogation,
reimbursement, contribution, or indemnity against Purchaser or other guarantors
or sureties. Guarantor also agrees that the "fair market value" provisions of
Section 580a of the California Code of Civil Procedure shall have no
applicability with respect to the determination of Guarantor's liability under
the Subordinated Note.
(c) Guarantor hereby absolutely, unconditionally, knowingly, and
expressly waives: (i) any right of subrogation Guarantor has or may have as
against Purchaser with respect to the Guaranteed Obligations; (ii) any right to
proceed against Purchaser or any other person or entity, now, or hereafter, for
contribution, indemnity, reimbursement, or any other suretyship rights and
claims, whether direct or indirect, liquidated or contingent, whether arising
under express or implied contract or by operation of law, which Guarantor may
now have or hereafter have as against Purchaser with respect to the Guaranteed
Obligations; and (iii) any right to proceed or seek recourse against or with
respect to any property or asset of Purchaser. Guarantor hereby agrees that, in
light of the waivers contained in this section, Guarantor shall not be deemed to
be a "creditor" (as that term is defined in the Bankruptcy Code or otherwise) of
Purchaser, whether for purposes of the application of Sections 547 or 550 of the
Bankruptcy Code or otherwise.
6
(d) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER
PROVISION SET FORTH IN THIS GUARANTY, GUARANTOR HEREBY ABSOLUTELY, KNOWINGLY,
UNCONDITIONALLY, AND EXPRESSLY WAIVES AND AGREES NOT TO ASSERT ANY AND ALL
BENEFITS OR DEFENSES ARISING DIRECTLY OR INDIRECTLY UNDER ANY ONE OR MORE OF
CALIFORNIA CIVIL CODE SECTIONS 2799, 2808, 2809, 2810, 2815, 2819, 2820, 2821,
2822, 2825, 2839, 2845, 2848, 2849, AND 2850, CALIFORNIA CODE OF CIVIL PROCEDURE
SECTIONS 580a, 580b, 580c, 580d, AND 726, AND CHAPTER 2 OF TITLE 14 OF PART 4 OF
DIVISION 3 OF THE CALIFORNIA CIVIL CODE.
6. RELEASES. Guarantor consents and agrees that, without notice to or by
Guarantor, and without affecting or impairing the obligations of Guarantor
hereunder, Guarantied Party may, by action or inaction:
(a) compromise, settle, extend the duration or the time for the
payment of, or discharge the performance of, or may refuse to or otherwise not
enforce this Guaranty, the Subordinated Note, or any part thereof, with respect
to Purchaser or any other Person;
(b) release Purchaser or any other person or grant other indulgences
to Purchaser or any other Person in respect thereof;
(c) amend or modify in any manner and at any time (or from time to
time) the Subordinated Note; or
(d) release or substitute any other guarantor, if any, of the
Guaranteed Obligations, or enforce, exchange, release, or waive any security for
the Guaranteed Obligations or any other guaranty of the Guaranteed Obligations,
or any portion thereof.
7. NO ELECTION. Guarantied Party shall have all of the rights to seek
recourse against Guarantor to the fullest extent provided for herein, and no
election by Guarantied Party to proceed in one form of action or proceeding, or
against any party, or on any obligation, shall constitute a waiver of Guarantied
Party's right to proceed in any other form of action or proceeding or against
other parties unless Guarantied Party has expressly waived such right in
writing. Specifically, but without limiting the generality of the foregoing, no
action or proceeding by Guarantied Party under any document or instrument
evidencing the Guaranteed Obligations shall serve to diminish the liability of
Guarantor under this Guaranty except to the extent that Guarantied Party finally
and unconditionally shall have realized indefeasible payment by such action or
proceeding.
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8. INDEFEASIBLE PAYMENT. The Guaranteed Obligations shall not be
considered indefeasibly paid for purposes of this Guaranty unless and until all
payments to Guarantied Party are no longer subject to any right on the part of
any person, including Purchaser, Purchaser as a debtor in possession, or any
trustee (whether appointed under the Bankruptcy Code or otherwise) of any of
Purchaser's assets, to invalidate or set aside such payments or to seek to
recoup the amount of such payments or any portion thereof, or to declare same to
be fraudulent or preferential. Upon such full and final performance and
indefeasible payment of the Guaranteed Obligations, whether by Purchaser
pursuant to the Subordinated Note or by any other person, Guarantied Party shall
have no obligation whatsoever to transfer or assign its interests in the
Subordinated Note to Guarantor. In the event that, for any reason, any portion
of such payments to Guarantied Party is set aside or restored, whether
voluntarily or involuntarily, after the making thereof, then the obligation
intended to be satisfied thereby shall be revived and continued in full force
and effect as if said payment or payments had not been made, and Guarantor shall
be liable for the full amount Guarantied Party is required to repay plus any and
all costs and expenses (including attorneys' fees and expenses and attorneys'
fees and expenses incurred pursuant to proceedings arising under the Bankruptcy
Code) paid by Guarantied Party in connection therewith.
9. FINANCIAL CONDITION OF PURCHASER. Guarantor represents and warrants
to Guarantied Party that Guarantor is currently informed of the financial
condition of Purchaser and of all other circumstances which a diligent inquiry
would reveal and which bear upon the risk of nonpayment of the Guaranteed
Obligations. Guarantor further represents and warrants to Guarantied Party that
Guarantor has read and understands the terms and conditions of the Subordinated
Note. Guarantor hereby covenants that Guarantor will continue to keep informed
of Purchaser's financial condition, the financial condition of other guarantors,
if any, and of all other circumstances which bear upon the risk of nonpayment or
nonperformance of the Guaranteed Obligations.
10. SUBORDINATION. Guarantor and Guarantied Party agree that,
notwithstanding the terms of this Guaranty, the payment of the Guaranteed
Obligations and all other obligations of Guarantor hereunder is subordinated, to
the extent and in the manner set forth in the Subordination and Note
Cancellation Agreement, to the prior payment of all indebtedness and obligations
of Guarantor owing to Bank, as more particularly set forth in the Subordination
and Note Cancellation Agreement. In the event that any conflict exists between
the terms of this Guaranty, any document executed in connection with the
delivery of this Guaranty and the terms of the Subordination and Note
Cancellation Agreement, the terms of the Subordination and Note Cancellation
Agreement shall govern and be controlling.
11. PAYMENTS; APPLICATION. All payments to be made hereunder by Guarantor
shall be made in lawful money of the United States of America at the time of
payment, shall be made in immediately available funds, and shall be made without
deduction (whether for taxes or otherwise) or offset. All payments made by
Guarantor hereunder shall be applied as follows: first, to all costs and
expenses (including attorneys' fees and expenses and attorneys' fees and
expenses incurred pursuant to proceedings arising under the Bankruptcy Code)
incurred by Guarantied Party in enforcing this Guaranty or in collecting the
Guaranteed Obligations; second,
8
to all accrued and unpaid interest, premium, if any, and fees owing to
Guarantied Party constituting Guaranteed Obligations; and third, to the balance
of the Guaranteed Obligations.
12. REPRESENTATIONS AND WARRANTIES. Guarantor hereby represents and
warrants to Guarantied Party that:
(a) Guarantor is a corporation duly organized and existing under the
laws of Delaware and has the power and authority to own its own properties and
assets, and to transact the business in which it is engaged, and is properly
licensed, qualified to do business and in good standing in every jurisdiction
where the conduct of its business requires it to be so qualified.
(b) The execution, delivery and performance of this Guaranty are
within Guarantor's powers, are not in conflict with the terms of any charter,
bylaw, certificate of incorporation or other organization papers of Guarantor,
and do not result in a breach of or constitute a default under any contract,
obligation, indenture or other instrument to which Guarantor is a party or by
which Guarantor is bound or affected. There is no law, rule or regulation, nor
is there any judgment, decree or order of any court or governmental authority
binding on Guarantor which would be contravened by the execution, delivery,
performance or enforcement of this Guaranty.
(c) Guarantor has taken all corporate action necessary to authorize
the execution and delivery of this Guaranty, and the consummation of the
transactions contemplated hereby and thereby. Upon their execution and delivery
in accordance with their respective terms, this Guaranty will constitute legal,
valid and binding agreements and obligations of Guarantor enforceable against
Guarantor in accordance with its terms, except as enforceability may be limited
by Bankruptcy, insolvency, fraudulent conveyance, and similar laws and equitable
principles affecting the enforcement of creditors' rights generally.
(d) No approval, consent, exemption or other action by, or notice to
or filing with, any governmental authority is necessary in connection with the
execution, delivery, performance or enforcement of this Guaranty except as may
have been obtained by Guarantor and certified copies of which have been
delivered to Guarantied Party.
13. ATTORNEYS' FEES AND COSTS. Guarantor agrees to pay, on demand, all
attorneys' fees (including attorneys' fees incurred pursuant to proceedings
arising under the Bankruptcy Code) and all other costs and expenses which may be
incurred by Guarantied Party in the enforcement of this Guaranty or in any way
arising out of, or consequential to the protection, assertion, or enforcement of
the Guaranteed Obligations (or any security therefor), whether or not suit is
brought.
14. NOTICES. Unless otherwise specifically provided herein, any notice or
other communication herein required or permitted to be given shall be in writing
and may be personally served, sent by telefacsimile, telexed, or sent by courier
service or United States mail and shall be deemed to have been given when
delivered in person or by courier service, on the next business day after
receipt of a telefacsimile or telex, or four business days after deposit in
9
the United States mail (registered or certified, with postage prepaid and
properly addressed). For the purposes hereof, the addresses of the parties
hereto (until notice of a change thereof is delivered as provided in this
Section 15) shall be set forth below, or, as to each party, at such other
address as may be designated by such party in a written notice to all of the
other parties:
If to Guarantor: Prospect Medical Holdings, Inc.
00000 Xxxxx Xxxxx Xxxxxxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: President
Telecopier No.:
-------------
If to Guarantied Party: Sinnadurai X. Xxxxxxx, M.D
44725 00xx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
Telecopier No.:
-------------
With a copy to: Xxxx Xxxxxxx, Esq.
Xxxxx & Xxxxxx
000 Xxxxx Xxxxxx Xxxxxx
Xxxxx 0000x
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier No.: 000-000-0000
15. CUMULATIVE REMEDIES. No remedy under this Guaranty or the
Subordinated Note is intended to be exclusive of any other remedy, but each and
every remedy shall be cumulative and in addition to any and every other remedy
given hereunder or under the Subordinated Note, and those provided by law or in
equity. No delay or omission by Guarantied Party to exercise any right under
this Guaranty shall impair any such right nor be construed to be a waiver
thereof. No failure on the part of Guarantied Party to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right.
16. BOOKS AND RECORDS. Guarantor agrees Guarantied Party's books and
records showing the account between Guarantied Party and Purchaser shall be
admissible in any action or proceeding and shall be binding upon Guarantor for
the purpose of establishing the items therein set forth and shall constitute
prima facie proof thereof.
17. SEVERABILITY OF PROVISIONS. If any provision of this Guaranty is for
any reason held to be invalid, illegal or unenforceable in any respect, that
provision shall not affect the validity, legality or enforceability of any other
provision of this Guaranty.
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18. ENTIRE AGREEMENT, AMENDMENTS AND WAIVERS. This Guaranty constitutes
the entire agreement between Guarantor and Guarantied Party pertaining to the
subject matter contained herein. Any provision of this Guaranty may be amended
or waived if, but only if, such amendment or waiver is in writing and is signed
by the party asserted to be bound thereby, and then such amendment or waiver
shall be effective only in the specific instance and specific purpose for which
given.
19. SECURITY. This Guaranty is secured by that certain Security
Agreement, as of even date herewith, between Guarantor and Guarantied Party, as
the same may be amended from time to time.
20. SUCCESSORS AND ASSIGNS. This Guaranty shall bind the successors and
assigns of Guarantor, and shall inure to the benefit of the respective
successors and assigns of Guarantied Party; PROVIDED, HOWEVER, Guarantor may not
assign this Guaranty or delegate any of his duties hereunder without Guarantied
Party's prior written consent and any such prohibited assignment shall be
absolutely null and void. In the event of any assignment or other transfer of
rights by a Guarantied Party, the rights and benefits herein conferred upon such
Guarantied Party shall automatically extend to and be vested in such assignee or
other transferee.
21. GOVERNING LAW. This Guaranty shall be deemed to have been made in the
State of California and the validity, construction, interpretation, and
enforcement hereof, and the rights of the parties hereto, shall be determined
under, governed by, and construed in accordance with the internal laws of the
State of California, without regard to principles of conflicts of law.
22. ARBITRATION. The parties firmly desire to resolve all disputes
arising hereunder without resort to litigation in order to protect their
respective business reputations and the confidential nature of certain aspects
of their relationship. Accordingly, any controversy or claim arising out of or
relating to this Guaranty, or the breach thereof, shall be settled by
arbitration as set forth below.
(a) All disputes which in any manner arise out of or relate to this
Guaranty or the subject matter thereof, shall be resolved exclusively by
arbitration in accordance with the provisions of this Section 23. Either party
may commence arbitration by sending a written demand for arbitration to the
other party, setting forth the nature of the controversy, the dollar amount
involved, if any, and the remedies sought, and attaching a copy of this Section
to the demand.
(b) The parties stipulate to arbitration before a single, mutually
agreed upon arbitrator sitting on the Los Angeles, California Judicial
Arbitration Mediation Services (JAMS) panel. In the event that the parties are
unable to agree upon the person chosen as arbitrator within 30 days of the
demand for arbitration, the arbitrator shall be selected in the sole discretion
of the JAMS administrator. The arbitrator shall be a member of the California
bar.
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(c) The parties shall share all costs of arbitration. The prevailing
party shall be entitled to reimbursement by the other party of such party's
attorneys' fees and costs and any arbitration fees and expenses incurred in
connection with the arbitration hereunder.
(d) The substantive law of the State of California shall be applied
by the arbitrator. All proceedings in arbitration shall be in accordance with
the California Code of Civil Procedure, as amended, and the parties shall have
the right to legal discovery in any matter submitted to arbitration in
satisfaction of California Code of Civil Procedure Section 1283.05, as permitted
by California Code of Civil Procedure Section 1283.1(b).
(e) Arbitration shall take place in Los Angeles, California unless
the parties otherwise agree. As soon as reasonably practicable, a hearing with
respect to the dispute or matter to be resolved shall be conducted by the
arbitrator. As soon as reasonably practicable thereunder, the arbitrator shall
arrive at a final decision, which shall be reduced to writing, signed by the
arbitrator and mailed to each of the parties and their legal counsel.
(f) All decisions of the arbitrator shall be final, binding and
conclusive on the parties and shall constitute the only method of resolving
disputes or matters subject to arbitration pursuant to this Guaranty. The
arbitrator or a court of appropriate jurisdiction may issue a write of execution
to enforce the arbitrator's judgment. Judgment may be entered upon such a
decision in accordance with applicable law in any court having jurisdiction
thereof.
(g) Notwithstanding the foregoing, because time is of the essence of
this Guaranty, the parties specifically reserve the right to a judicial
temporary restraining order, preliminary injunction, or other similar equitable
relief.
(h) The decision and award of the arbitrator shall be kept
confidential by the parties to the greatest extent possible. No disclosure of
such decision or award shall be made by the parties except as required by law or
as necessary or appropriate to effect the enforcement thereof.
(i) Should either party institute any action or procedure to enforce
this Guaranty or any provision hereof, or for damages by reason of any alleged
breach of this Guaranty or of any provision hereof, or for a declaration of
rights hereunder (including, without limitation, arbitration), the prevailing
party in any such action or proceeding shall be entitled to
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receive from the other party all costs and expenses, including, without
limitation, reasonable attorneys' fees, incurred by the prevailing party in
connection with such action or proceeding.
IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty as
of the date set forth in the first paragraph hereof.
PROSPECT MEDICAL HOLDINGS, INC.
By /s/ Xxxxx X. Xxxxxx, M.D.
---------------------------------
Title: CEO
-------------------------
ACCEPTED AND AGREED:
/s/ Sinnadurai X. Xxxxxxx M.D.
---------------------------------------------
Print Name SINNADURAI X. XXXXXXX M.D.
-----------------------------------
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