▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
PERSONAL GUARANTY
OF
PAYMENT AND PERFORMANCE
THIS GUARANTY OF REPAYMENT AND PERFORMANCE (the "Guaranty") is made and
entered into and effective this 23rd day of June, 1997 by and between ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, M.D. and Santa ▇▇▇/Tustin Physicians Group, Inc., a California
Professional Corporation ("Company") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, D.O. ("▇▇▇▇▇").
Capitalized terms not used herein and not otherwise defined herein shall have
the meanings assigned to them in that certain Agreement For the Purchase and
Sale of Stock of Santa ▇▇▇/Tustin Physicians Group, Inc. ("Stock Purchase
Agreement") of even date herewith by and among Purchaser, Company, and ▇▇▇▇▇.
RECITALS
A. WHEREAS, pursuant to the terms of the Stock Purchase Agreement,
Purchaser is purchasing from ▇▇▇▇▇, all the issued and outstanding shares of the
Company for the aggregate consideration of Five Million Dollars ($5,000,000).
B. WHEREAS, Section 8.5(j) of the Stock Purchase Agreement provides that
in the event Purchaser does not timely make any payment when due, Terner shall
personally fund up to One Million Dollars ($1,000,000) of the Purchase Price.
C. WHEREAS, as additional security for the payment of the Purchase Price
and as a condition to the sale of the outstanding shares of the Company,
Purchaser is required by the Stock Purchase Agreement to have Terner execute and
deliver to ▇▇▇▇▇ this Guaranty.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, and of the mutual
covenants, conditions, agreements, representations and warranties hereinafter
contained and such other good and valuable consideration, the legal sufficiency
of which is acknowledged by Terner, the parties hereto agree as follows:
1. GUARANTY OF REPAYMENT AND PERFORMANCE. Terner hereby acknowledges
receipt of good, adequate, legal and valuable consideration including but not
limited to the fact that (i) Terner owns directly a cash equity interest in
Prospect Medical Holdings which will receive revenue from the Company based upon
a management agreement between the Company and Prospect Medical Holdings and
(ii) Terner not having to be the buyer for this acquisition. In the event
Purchaser does not timely pay any portion of the Purchase Price when due, as set
forth in the Stock Purchase Agreement, upon five (5) days prior written notice
from ▇▇▇▇▇, ▇▇▇▇▇▇ hereby
agrees to personally pay up to $1,000,000 of such amount (the "Guarantee
Amount") to ▇▇▇▇▇, on behalf of Purchaser. ▇▇▇▇▇ agrees and acknowledges that
Terner's obligation to pay up to the Guarantee Amount shall not arise until such
time as Prospect does not timely make any payment required under the Stock
Purchase Agreement. Notwithstanding the foregoing, Terner's obligations
hereunder shall only arise if Purchaser has already deposited $1,900,000 into
the Escrow Account at the time the Escrow Account is opened and shall not arise
until forty two (42) days from the date of execution of the Stock Purchase
Agreement unless Purchaser elects to close earlier than forty two (42) days from
the execution date of this Stock Purchase Agreement in which event Terner's
obligations under this Guaranty shall commence the Closing Date. Terner's
liability hereunder shall be in an amount up to the Guarantee Amount plus
interest, costs, and fees including reasonable attorney fees incurred in the
enforcement of the Guarantee including those that would have accrued under the
Stock Purchase Agreement but for the commencement of a case under Title 11 of
the United States Bankruptcy Code (the "Bankruptcy Code") or any other law
governing insolvency, bankruptcy, reorganization, liquidation or like
proceeding. Terner's liability under this Guaranty is a guaranty of performance
and payment of the Guarantee Amount and not of collectability. In the event of
any breach of any of the terms and conditions of the Stock Purchase Agreement by
▇▇▇▇▇, ▇▇▇▇▇▇'▇ performance under this Guaranty shall be suspended until such
breach is cured.
2. CHANGES DO NOT AFFECT LIABILITY. ▇▇▇▇▇ may without notice to Terner
and in his absolute discretion and without prejudice to him or in any way
limiting Terner's liability under this Guaranty, (a) grant extensions of time,
renewals or other indulgences and modifications to Terner or Prospect or any
other party under the Stock Purchase Agreement and all documents related thereto
or evidencing the transactions set forth in the Stock Purchase Agreement
(collectively, the "Stock Purchase Documents"), (b) change, amend or modify the
Stock Purchase Documents, (c) discharge or release any party or parties liable
under the Stock Purchase Documents, (d) accept or make compositions or other
arrangements or file or refrain from filing a claim in any bankruptcy proceeding
of Purchaser or any other guarantor or pledgor, (e) credit payments in such a
manner and order of priority to principal, interest or other obligations as
▇▇▇▇▇ may determine in his discretion, and (g) otherwise deal with Purchaser or
any party related to the transactions set forth in the Stock Purchase Documents.
Without limiting the generality of the foregoing, Terner hereby waives the
rights and benefits under CC Section 2819 and agrees that by doing so Terner's
liability shall continue even if ▇▇▇▇▇ alters any obligations under the Stock
Purchase Documents in any respect or ▇▇▇▇▇'▇ remedies or rights against
Purchaser are in any way impaired or suspended without Terner's consent.
3. WAIVERS OF CERTAIN RIGHTS AND DEFENSES. Except as provided in the
next paragraph, Terner hereby waives any and all benefits and defenses under CC
Section 2845, 2849 and 2850, including, without limitation, the right to require
▇▇▇▇▇ to (a) proceed against Purchaser or any other guarantor or pledgor and
without proceeding against or exhausting any security or collateral ▇▇▇▇▇ holds.
Terner agrees that ▇▇▇▇▇ may unqualifiedly exercise in its sole
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discretion any or all rights and remedies in enforcing this Guaranty, under
which Terner's liabilities shall remain independent and unconditional. Terner
agrees that ▇▇▇▇▇'▇ exercise of certain of such rights or remedies may affect or
eliminate Terner's right of subrogation or recovery against Purchaser and that
Terner may incur a partially or totally nonreimbursable liability under this
Guaranty.
4. ADDITIONAL WAIVERS. Terner hereby waives diligence and all demands,
protests, presentments and notices of every kind or nature, including notices of
protest, dishonor, nonpayment, acceptance of this Guaranty and the creation,
renewal, extension, modification or accrual of any of the obligations Terner has
hereby guarantied. No failure or delay on ▇▇▇▇▇'▇ part in exercising any power,
right or privilege hereunder shall impair any such power, right or privilege or
be construed as a waiver of or an acquiescence therein. Terner hereby waives
any defense to the enforcement of this Guaranty based upon the lack of
consideration in whole or in part.
5. GUARANTY MADE WITH FULL KNOWLEDGE. Terner has had the opportunity to
review matters discussed and contemplated by the Stock Purchase Documents,
including the remedies ▇▇▇▇▇ may pursue against Purchaser in the event of a
default under the Stock Purchase Documents and Purchaser's financial condition
and ability to perform under the Stock Purchase Documents. Terner further
agrees to keep himself fully informed on all aspects of Purchaser's financial
condition and the performance of Purchaser's obligations to ▇▇▇▇▇ and that ▇▇▇▇▇
has no duty to disclose to Terner any information pertaining to Purchaser or any
security of collateral.
6. GUARANTY CONTINUES IF PAYMENTS ARE AVOIDED OR RECOVERED FROM
PURCHASER. If all or any portion of the obligations guarantied hereunder are
paid or performed, Terner's obligations hereunder shall continue and remain in
full force and effect in the event that all or any part of such payment or
performance is avoided or recovered directly or indirectly from ▇▇▇▇▇ as a
preference, fraudulent transfer or otherwise, irrespective of (a) any notice of
revocation given by Terner prior to such avoidance or recovery, and (b) payment
in full of the Purchase Price.
7. CHANGES, WAIVER, REVOCATIONS AND AMENDMENTS IN WRITING. No terms or
provisions of this Guaranty may be changed, waived, revoked, or amended without
▇▇▇▇▇'▇ prior written consent. Should any provision of this Guaranty to be
determined by a court of competent jurisdiction to be enforceable, all of the
other provisions shall remain effective.
This Guaranty embodies the entire agreement among the parties hereto with
respect to the matters set forth herein, and supersedes all prior agreements
among the parties with respect to the matters set forth herein. No course of
prior dealing among the parties, no usage of trade, and no parole or extrinsic
evidence of any nature shall be used to supplement, modify or vary any of the
terms hereof. There are no conditions to the full effectiveness of this
Guaranty other than set forth herein.
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8. LIMITATION OF LIABILITY. Company and ▇▇▇▇▇ agree and acknowledge
that, except as specifically set forth herein, Terner shall have no personal or
individual liability under the Stock Purchase Documents or the transactions
contemplated under the Stock Purchase Documents or the transactions contemplated
thereto. Company and ▇▇▇▇▇ further agree that Terner's liability herein is
limited solely the Guarantee Amount plus interest costs and fees including
reasonable attorney fees, and that ▇▇▇▇▇'▇ damages in the event of a breach by
Terner of this Agreement shall be limited to $1,000,000 plus interest, cost, and
fees, including reasonable attorney fees as more specifically set forth in
Section 1 of this Guaranty.
9. 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 agreement or the breach thereof, shall be settled by
arbitration as set forth below.
9.1 All disputes in any manner arise out of or relate to this
Agreement or the subject matter thereof, shall be resolved exclusively by
arbitration in accordance with the provisions of this Section 10. 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.
9.2 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.
9.3 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.
9.4 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).
9.5 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
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thereafter, 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.
9.6 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 Agreement. The
arbitrator or a court of appropriate jurisdiction may issue a writ of execution
to enforce the arbitrator's judgement. Judgement may be entered upon such a
decision in accordance with applicable law in any court having jurisdiction
thereof.
9.7 Notwithstanding the foregoing, because time is of the essence of
this Agreement, the parties specifically reserve the right to seek a judicial
temporary restraining order, preliminary injunction, or other similar short term
equitable relief, and grant the arbitrator the right to make a final
determination of the parties' rights, including whether to make permanent or
dissolve such court order.
9.8 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.
9.9 In the event of any dispute concerning this guaranty, the
prevailing party in any such action or proceeding shall be entitled to 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.
10. MISCELLANEOUS.
10.1 NOTICES. Any notice, demand, or communication required,
permitted or desired to be given hereunder shall be deemed effectively given
when personally delivered or mailed by prepaid certified mail, return receipt
requested, addressed as follows:
If to Company or ▇▇▇▇▇: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, D.O.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇▇▇▇, Esq.
Palmieri, Tyler, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, #▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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If to Purchaser: Prospect Medical Group, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ #▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, M.D.
If to Terner: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
10.2 GOVERNING LAW. This Agreement has been executed and delivered
and shall be interpreted, construed, and enforced in accordance with the laws of
the State of California.
10.3 ENFORCEMENT. In the event that any party shall be required to
enforce the terms of this Agreement, whether with or without arbitration, the
prevailing party shall be entitled to recover the costs of such action,
including reasonable attorneys' fees.
10.4 ENTIRE AGREEMENT. This Agreement shall constitute the entire
agreement of the parties with respect to the subject matter hereof and may not
be amended except in writing signed by both of the parties hereto. No oral
statements or prior written materials not specifically incorporated herein shall
be of any force or effect.
10.5 SEVERABILITY. In the event any provision of this Agreement is
held to be unenforceable or void for any reason, the remainder of the Agreement
shall be unaffected and shall remain in full force and effect in accordance with
its terms, unless such unenforceability or voidness defeats an essential
business term hereof.
10.6 ASSIGNMENT. This Agreement and any of the rights of obligations
of the parties hereunder shall be assignable only by ▇▇▇▇▇. Any other attempted
assignment, transfer, pledge or hypothecation or other disposition of this
Agreement or of any such rights, interests and benefits shall be null and void
and without effect.
10.7 BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, legal
representatives, executors, administrators, successors and permitted assigns.
10.8 HEADINGS. The headings used herein are for convenience only and
do not limit the contents of this Agreement.
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10.9 COMPLIANCE WITH LAW. The parties recognize that this Agreement
at all times is to be subject to applicable state, local and federal law.
10.10 WAIVERS. The waiver of any of the provisions hereof shall
not be effective unless in writing and signed by the party intending to be bound
thereby. The waiver by any party or any act to be performed hereunder will not
constitute a waiver of any other act or identical act required to be performed
at a later time.
IN WITNESS WHEREOF, this Guaranty has been executed by the parties as of
the day and year first above written.
GUARANTOR
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M. D.
-----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M. D.
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