Exhibit 10.82


 


CONTINUING GUARANTY


 


This Continuing Guaranty
(“Guaranty”) is effective as of May 30, 2003 by JACOB Y. TERNER, M.D.
(“Guarantor”), in favor of PROSPECT MEDICAL GROUP, INC., a California
professional corporation (“PMG”).


 


RECITALS


 


A.                                   PMH
is indebteded to PMG for all amounts reflected as an inter-company receivable
on the records of Secured Party and an inter-company payable on the records of
PMH (“Inter-Company Debt”).


 


B.                                     Effective, September 30, 2001, PMG
demanded a continuing guaranty of that amount of the Inter-Company Debt which
is required to provide PMG with a positive net tangible equity (the “TNE
Guaranteed Amount”).  The TNE Guaranteed
Amount is derived by deducting the then net worth of PMG from the Inter-Company
Debt.  For the fiscal year ended
September 30, 2001, the Inter-Company Debt was $10,086,609 and the TNE
Guaranteed Amount was $4,250,000.  For
the fiscal year ended September 30, 2002, the TNE Guaranteed Amount had been
reduced to $3,616,400.


 


C.                                     A
continuing guaranty (“Original Continuing Guaranty”), and a pledge of
collateral satisfactory to PMG to secure performance of the Original Continuing
Guaranty, was provided by Foothill City Center, Ltd., a California limited
partnership (the “Partnership”), effective, September 30, 2001, an entity in
which Guarantor had, and continues to have, a substantial ownership interest,
consisting of a .10% general partnership interest and a 60.517% limited
partnership interest.


 


D.                                    In
exchange for the Original Continuing Guaranty and the pledge of security from
the Partnership, PMG agreed to forbear declaring due and payable and collecting
the Inter-Company Debt.


 


D.                                    Guarantor
is President, Chief Executive Officer and sole shareholder of Secured Party,
and the Chief Executive Officer of Prospect Medical Holdings, Inc. and has
executed this Guaranty whereby Guarantor becomes the guarantor of the TNE
Guaranteed Amount in replacement of the Partnership effective May 30, 2003.


 


E.                                      PMG
has agreed to forbear declaring due and payable and collecting the
Inter-Company Debt in exchange for this Guaranty and the pledge of collateral
described in that Pledge Agreement dated simultaneously herewith (the “Pledge
Agreement”), as further provided in that Forbearance Agreement executed
simultaneously herewith (the “Forbearance Agreement”).


 

















 


F.                                      In
consideration of PMG’s and PMH’s covenants contained in a Collateral
Substitution Agreement executed simultaneously herewith (the “Collateral
Substitution Agreement”), Guarantor has agreed to execute this Continuing
Guaranty and the Pledge Agreement.


 


NOW,
THEREFORE, in
order to induce PMG to enter into the Forbearance Agreement, and in
consideration of the other covenants and agreements described in the foregoing
recitals, Guarantor hereby agrees as follows:


 


1.                                       Guaranty.  Guarantor absolutely and
unconditionally guarantees the punctual payment when due, whether at stated
maturity, by acceleration, or otherwise, of up to, but not exceeding, the TNE
Guaranteed Amount (hereafter referred
to as the “Obligations”).


 


2.                                       Guaranty Absolute.


 


a.                                       Guarantor guarantees that the Obligations
will be paid and performed by PMH in accordance with the terms of the Debt
Documents (as defined below), regardless of any law, regulation, or order now
or later in effect in any jurisdiction affecting any of the terms or the rights
of PMG with respect to that. The liability of Guarantor under this Guaranty
will be absolute and unconditional irrespective of:


 


i.                                          any lack of validity or enforceability of any
document or instrument now existing or hereafter drafted evidencing or relating
to the Obligations (collectively, the “Debt Documents”);


 


ii.                                       any change in the time, manner, or place of
payment of, or in any other term of, any of the Obligations, or any other
amendment or waiver of or any consent to departure from any of the Debt
Documents, including, without limitation, modifications, extensions (including
extensions beyond and after the original term), or renewals of payment dates,
changes in interest rate, or the advancement of additional funds by PMG in its
discretion;


 


iii.                                    any exchange, release, or nonperfection of
any collateral, or any release or amendment or waiver of or consent to
departure from any other guaranty, for any of the Obligations; or


 


iv.                                   any other circumstance that might otherwise
constitute a defense available to, or a discharge of, PMH in respect of the
obligations of Guarantor under this Guaranty.


 


b.                                      Regardless of any termination of this
Guaranty or the cancellation of any of the Debt Documents or any other
agreement evidencing the Obligations, if at any time any payment of any of the
Obligations (from any source) is rescinded, repaid, or must otherwise be
returned by PMG due to the insolvency, bankruptcy, or reorganization of PMH or
Guarantor, or for any other circumstance, this Guaranty will continue to be
effective or be reinstated, as the case may be, as though that payment had not
been made.


 


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3.                                       Guaranty Independent; Waivers.


 


a.                                       Guarantor agrees that:


 


i.                                          the obligations under this Guaranty are joint
and several and are independent of and in addition to the undertakings of PMH
pursuant to the Debt Documents,  any
evidence of indebtedness issued in connection with the Debt, any deed of trust
or security agreement given to secure the Obligations, any other guaranties
given in connection with the Obligations, and any other obligations of
Guarantor to PMG;


 


ii.                                       a separate action may be brought to enforce
the provisions of this Guaranty whether PMH is a party in any action or not;


 


iii.                                    PMG may at any time, or from time to time, in
its sole discretion:


 


(1)                                  extend or change the time of payment or
performance or the manner, place, or terms of payment or performance of any of
the Obligations;


 


(2)                                  subject to the terms of the Collateral
Substitution Agreement, exchange, release, or surrender any of the collateral
security, or any part of it, by whomever deposited, which is now or may later
be held by PMG in connection with any of the Obligations;


 


(3)                                  sell or purchase any of the collateral at
public or private sale, or at any broker’s board, in the manner permitted by
law, and after all costs and expenses of every kind for collection, sale, or
delivery, the net proceeds of any sale may be applied by PMG on any of the Obligations;
and


 


(4)                                  settle or compromise any of the Obligations,
or subordinate the payment of any of the Obligations to the payment of any
other debts or claims, that may at any time be due or owing to PMG or any other
person or corporation; and


 


(5)                                  PMG will be under no obligation to marshal
any assets in favor of Guarantor or in payment of any of the Obligations.


 


b.                                      Guarantor waives:


 


i.                                          presentment, demand, protest, notice of
acceptance, notice of dishonor, notice of nonperformance, and any other notice
with respect to any of the Obligations and this Guaranty, and promptness in
commencing suit against any party, or in giving any notice to or making any
claim or demand on Guarantor;


 


ii.                                       any right to require PMG to proceed against
PMH, proceed against or exhaust any security held from PMH, or pursue any
remedy in PMG’s power;


 


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iii.                                    any defense based on any legal disability or
other defense of PMH, any other guarantor, or other person or by reason of the
cessation or limitation of the liability of PMH from any cause other than full
payment of the Obligations;


 


iv.                                   any defense based on any lack of authority of
the officers, directors, partners, or agents purporting to act on behalf of PMH
or any principal of PMH or any defect in the formation of PMH or any principal
of PMH;


 


v.                                      to the fullest extent permitted by law, all
rights and benefits under Civil Code § 2809 purporting to reduce a guarantor’s
obligations in proportion to the principal obligation;


 


vi                                      any defense based on the application by PMH
of the proceeds of the Obligations for purposes other than the purposes
represented by PMH to PMG or intended or understood by PMG or Guarantor;


 


vii.                                any defense it may acquire by reason of PMG’s
election of any remedy against it or PMH or both, including, without
limitation, election by PMG to exercise its rights under the power of sale in
the Deed of Trust and the consequent loss by Guarantor of the right to recover
any deficiency from PMH;


 


viii.                             any defense based on PMG’s failure to
disclose to Guarantor any information concerning PMH’s financial condition or
any other circumstances bearing on PMH’s ability to pay the Obligations;


 


ix.                                     any defense based on any statute or rule of
law that provides that the obligation of a surety must be neither larger in
amount nor in any other respects more burdensome than that of a principal;


 


x.                                        any defense based on PMG’s election, in any
proceeding instituted under the Federal Bankruptcy Code, of the application of
Section 1111(b)(2) of the Federal Bankruptcy Code or any successor statute;


 


xi.                                     any defense based on any borrowing or any
grant of a security interest under § 364 of the Federal Bankruptcy Code;


 


xii.                                  any right of subrogation, contribution, or
reimbursement against PMH, any right to enforce any remedy that PMG has or may
in the future have against PMH, any other right that PMG may now or later
acquire against PMH that arises from the existence or performance of
Guarantor’s obligations under this Guaranty or would arise with respect to the
Obligations, and any benefit of, and any right to participate in, any security
for the Obligations now or in the future held by PMG;


 


xiii.                               the benefit of any statute of limitations
affecting the liability of Guarantor or the enforcement of the Guaranty,
including, without limitation, any rights arising under Code of Civil Procedure
§ 359.5; and


 


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xiv.                              to the fullest extent permitted by law, all
rights and benefits under Code of Civil Procedure § 580a, purporting to limit
the amount of any deficiency judgment that might be recoverable following the
occurrence of a trustee’s sale under a deed of trust; Code of Civil Procedure §
580b, stating that no deficiency may be recovered on a real property purchase
money obligation; and Code of Civil Procedure § 580d, stating that no
deficiency may be recovered on a note secured by a deed of trust on real
property in case the real property is sold under the power of sale contained in
the deed of trust, if those statutory sections have any application.


 


Guarantor
agrees that the payment of all sums payable under any of the Obligations or any
other act that tolls any statute of limitations applicable to the Obligations
will similarly operate to toll the statute of limitations applicable to
Guarantor’s liability. Without limiting the generality of the foregoing or any
other provision of this Guaranty, Guarantor expressly waives all benefits that
might otherwise be available to Guarantor under Civil Code §§ 2809, 2810, 2819,
2839, 2845, 2849, 2850, 2899, and 3433 and Code of Civil Procedure §§ 580a,
580b, 580d, and 726, or similar sections.


 


c.                                       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 the guarantor’s rights of subrogation and
reimbursement against the principal by the operation of Section 580d of the
Code of Civil Procedure or otherwise. Furthermore, Guarantor understands and
acknowledges that if Bank forecloses judicially or nonjudicially against any
real property security for the Obligations, that foreclosure could impair or
destroy any ability that Guarantor may have to seek reimbursement,
contribution, or indemnification from PMH or others based on any right
Guarantor may have of subrogation, reimbursement, contribution, or
indemnification for any amounts paid by Guarantor under this Guaranty.
Guarantor further understands and acknowledges that in the absence of this
provision, the potential impairment or destruction of Guarantor’s rights, if
any, may entitle Guarantor to assert a defense to this Guaranty based on Code
of Civil Procedure § 580d, as interpreted in Union
Bank v Gradsky (1968, 2nd Dist) 265 Cal App 2d 40, 71 Cal Rptr 64.
By executing this Guaranty, Guarantor freely, irrevocably, and unconditionally:


 


i.                                          waives and relinquishes that defense, and
agrees that Guarantor will be fully liable under this Guaranty even though PMG
may foreclose judicially or nonjudicially against any real property security
for the Obligations;


 


ii.                                       agrees that Guarantor will not assert that
defense in any action or proceeding that PMG may commence to enforce this
Guaranty;


 


iii.                                    acknowledges and agrees that the rights and
defenses waived by Guarantor under this Guaranty include any right or defense
the Guarantor may have or be entitled to assert based upon or arising out of
any one or more of Code of Civil Procedure §§ 580a, 580b, 580d, or 726, or
Civil Code § 2848; and


 


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iv.                                   acknowledges and agrees that PMG is relying
on this waiver in entering into the Forbearance Agreement, and that this waiver
is a material part of the consideration that PMG is entering into the
Forbearance Agreement.


 


4.                                       Does Not Supersede Other Guaranties.  The
obligations of Guarantor will be in addition to any obligations of Guarantor
under any other guaranties of the Obligations or any obligations of PMH or any
other persons or entities previously given or later to be given to PMG, and
this Guaranty will not affect or invalidate any other guaranties. The liability
of Guarantor to PMG will at all times be deemed to be the aggregate liability
of Guarantor under the terms of this Guaranty and of any other guaranties
previously or later given by Guarantor to PMG.


 


5.                                       Representations and Warranties. 
Guarantor represents and warrants as follows:


 


a.                                       Power and Authority. 
Guarantor has the requisite power and authority to execute and deliver
this Guaranty, and thus, even if the guaranty is not enforceable as a contract,
it may be enforceable on a theory of equitable estoppel.


 


b.                                      Validity of Guaranty.


 


i.                                          The execution, delivery, and performance by
Guarantor of this Guaranty, the Deed of Trust and the Debt Documents are within
the power of Guarantor, have been duly authorized by all requisite action, have
received all necessary governmental approval, and will not violate any
provision of law, any order of any court or agency of government, or any
indenture, agreement, or any other instrument to which Guarantor is a party or
by which Guarantor or its property is bound, or be in conflict with, result in
a breach of, or constitute (with due notice and lapse of time) a default under
any indenture, agreement, or other instrument, or result in the creation or
imposition of any lien, charge, or encumbrance of any nature on any of its
property or assets, except as contemplated by the provisions of the Deed of
Trust.


 


ii.                                       This Guaranty, the Deed of Trust and the Debt
Documents when delivered to PMG, will constitute a legal, valid, and binding
obligation enforceable against Guarantor in accordance with its terms.


 


c.                                       Other Arrangements. 
Guarantor is not a party to any agreement or instrument materially and
adversely affecting Guarantor’s present or proposed business, properties, or
assets, or operations or conditions (whether financial or otherwise); and
Guarantor is not in default in the performance, observance, or fulfillment of
any of the material obligations, covenants, or conditions in any agreement or
instrument to which Guarantor is a party.


 


d.                                      Other Information.  All
other reports, papers, and written data and information given to PMG by
Guarantor with respect to Guarantor are accurate and correct in all material
respects and complete insofar as completeness may be necessary to give PMG a
true and accurate knowledge of the subject matter.


 


e.                                       Litigation.  There is not now pending
against or affecting Guarantor, nor to the knowledge of Guarantor is there
threatened, any action, suit, or proceeding at law or in


 


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equity
or by or before any administrative agency that, if adversely determined, would
materially impair or affect the financial condition or operations of Guarantor.


 


f.                                         Taxes.  Guarantor has filed all
federal, state, provincial, county, municipal, and other income tax returns
required to have been filed by Guarantor and has paid all taxes that have
become due pursuant to the returns or pursuant to any assessments received by
Guarantor, and Guarantor does not know of any basis for any material additional
assessment against it in respect of those taxes.


 


6.                                       Affirmative Covenants. 
Guarantor covenants and agrees that, so long as any part of the
Obligations remains unpaid, Guarantor will do the following, unless PMG
otherwise consents in writing:


 


a.                                       Taxes Affecting Guarantor. 
File all federal, state, provincial, county, municipal, and other income
tax returns required to be filed by it and pay, before they become delinquent,
all taxes that become due pursuant to those returns or pursuant to any
assessments received by it.


 


b.                                      Compliance with Law. 
Promptly and faithfully comply with all laws, ordinances, rules,
regulations, and requirements, both present and future, of every governmental
authority or agency having jurisdiction that may be applicable to it.


 


c.                                       Books and Records. 
Maintain complete books of accounts and other records reflecting the
results of its operations, in a form reasonably satisfactory to PMG, and
furnish to PMG any information about the financial condition of Guarantor that
PMG reasonably requests.


 


PMG
will have the right, at all reasonable times and on reasonable notice, to audit
(at Guarantor’s sole cost and expense) Guarantor’s books of account and
records, all of which will be made available to PMG or PMG’s representatives
for that purpose, from time to time, on PMG’s request.


 


7.                                       Amendments or Waiver.  No
amendment or waiver of any provision of this Guaranty or consent to any
departure from any provision by Guarantor will be effective unless it is in
writing and signed by PMG, and then the waiver or consent will be effective
only in the specific instance and for the specific purpose for which it is
given. No notice to or demand on Guarantor will in any case entitle it to any
other or further notice or demand in similar or other circumstances.


 


8.                                       Notices.  All notices that may be
required or otherwise provided for or contemplated under the terms of this
Guaranty for any party to serve on or give to any other, will, whether so
stated, be in writing, and if not in writing, will not be deemed to have been
given, and be either personally served or sent with return receipt requested by
registered or certified mail with postage prepaid (including registration or
certification charges) in a securely enclosed and sealed envelope, sent to the
following addresses:


 


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  a.

  	
   

  	
  If to Guarantor, addressed
  to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Jacob Y. Terner, M.D.

  
	
   

  	
   

  	
   

  	
  205
  Chautaugua Boulevard

  
	
   

  	
   

  	
   

  	
  Pacific
  Palisades, CA 90272

  
	
   

  	
   

  	
   

  
	
  b.

  	
   

  	
  If to PMG, addressed to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Prospect Medical Group,
  Inc.

  
	
   

  	
   

  	
   

  	
  6083 Bristol Parkway,
  Suite 100

  
	
   

  	
   

  	
   

  	
  Culver City, CA 90230

  
	
   

  	
   

  	
   

  	
  Attention:  Mr. R. Stewart Kahn

  
					



 


These
addresses may be changed from time to time by written notice to the other
parties given in the same manner. Any matter served on or sent to Guarantor or
PMG in this manner will be deemed sufficiently given for all purposes on the
date three (3) days following the date it was deposited in a United States Post
Office, except that notices of changes of address will not be effective until
actual receipt.


 


9.                                       No Waiver; Remedies.  No
failure on the part of PMG to exercise and no delay in exercising any right or
remedy will operate as a waiver; nor will PMG be estopped to exercise any right
or remedy at any future time because of any failure or delay; nor will any
single or partial exercise of any right or remedy preclude any other or further
exercise or the exercise of any other right or remedy. The remedies provided
are cumulative and not exclusive of any remedies provided by law.


 


10.                                 Continuing Guaranty; Transfer of Note. 
This Guaranty is a continuing guaranty and will:


 


a.                                       subject to the provisions of section 2(b),
remain in full force and effect until payment in full of the indebtedness and
the Obligations and all other amounts payable under this Guaranty;


 


b.                                      be binding on Guarantor; and


 


c.                                       inure to the benefit of and be enforceable by
PMG and its successors, transferees, and assigns.


 


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Without
limiting the generality of subsection 10(c), PMG may assign or otherwise
transfer the Debt Documents, this Guaranty and the Deed of Trust to any other
person, and that other person will become vested with all the rights granted to
PMG.


 


11.                                 Subordination.  Any
indebtedness of PMH now or later held by Guarantor is subordinated to the
indebtedness of PMH to PMG, and any indebtedness of PMH to Guarantor will, if
PMG requests, be collected, enforced, and received by Guarantor as trustee for
PMG and be paid over to PMG, but without reducing or limiting in any manner the
liability of Guarantor under the other provisions of this Guaranty.


 


12.                                 No Duty.  Guarantor assumes the
responsibility for keeping informed of the financial condition of PMH and of
all other circumstances bearing on the risk of nonpayment of the Obligations,
and agrees that PMG will have no duty to advise Guarantor of any information
known to PMG regarding any financial condition or circumstances.


 


13.                                 Waiver of Right to Trial by Jury. 
Guarantor waives any right to trial by jury with respect to any action
or proceeding:


 


a.                                       brought by Guarantor, PMH, PMG, or any other
person relating to:


 


i.                                          the Obligations or any understandings or
prior dealings between the parties;


 


ii.                                       this Guaranty or the Deed of Trust;


 


iii.                                    the Debt Documents; or


 


b.                                      to which PMG is a party.


 


Guarantor
agrees that this Guaranty constitutes a written consent to waiver of trial by
jury pursuant to the provisions of Code of Civil Procedure § 631, and Guarantor
appoints PMG its attorney-in-fact, which appointment is coupled with an
interest, and Guarantor authorizes PMG in the name, place, and stead of
Guarantor to file this Guaranty with the clerk or judge of any court of
competent jurisdiction as a statutory written consent to waiver of trial by
jury.


 


              
[Initials of guarantor]


 


14.                                 Bankruptcy of PMH. 
Regardless of any modification, discharge, or extension of the Obligations
or any amendment, modification, stay, or cure of PMG’s rights that may occur in
any bankruptcy or reorganization case or proceeding concerning PMH, whether
permanent or temporary and whether assented to by PMG, Guarantor agrees that it
will be obligated to pay and perform the Obligations and discharge its other
obligations in accordance with the terms of the Obligations and the terms of
this Guaranty in effect on the date of this Guaranty. Guarantor understands and
acknowledges that by virtue of this Guaranty, it has specifically assumed all
risks of a bankruptcy or reorganization case or proceeding with respect to PMH.
As an example,


 


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and
not in any way of limitation, a subsequent modification of the Obligations in
any reorganization case concerning PMH will not affect the obligation of
Guarantor to perform the Obligations in accordance with their original terms.


 


15.                                 Entire Agreement. 
This Guaranty is intended as a final expression of this agreement of
guaranty and is intended also as a complete and exclusive statement of the
terms of this agreement. No course of prior dealings between Guarantor and PMG,
no usage of the trade, and no parol or extrinsic evidence of any nature will be
used or will be relevant to supplement, explain, contradict, or modify the
terms or provisions of this Guaranty.


 


16.                                 Governing Law. 
This Guaranty will be governed by and construed in accordance with the
laws of California.


 


17.                                 Miscellaneous.


 


a.                                       Time is of the essence.


 


b.                                      The obligations and promises will be joint
and several undertakings of each of the persons executing this Guaranty, and
PMG may proceed against any one or more of those persons without waiving its
right to proceed against any of the others.


 


c.                                       Any married person who signs this instrument
expressly agrees that recourse may be had against his or her separate property
for all of her or his obligations under this Guaranty.


 


d.                                      If any term, provision, covenant, or
condition or any application is held by a court of competent jurisdiction to be
invalid, void, or unenforceable, all provisions, covenants, and conditions and
all applications not held invalid, void, or unenforceable will continue in full
force and will in no way be affected.


 


e.                                       This Guaranty may be executed in any number
of counterparts and by different parties in separate counterparts, each of
which when executed and delivered will be deemed to be an original, and all
counterparts taken together will constitute one and the same instrument.


 


f.                                         Section headings in this Guaranty are
included for convenience of reference only and do not constitute a part of this
Guaranty for any other purpose.


 


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BY AFFIXING HIS SIGNATURE HERETO, GUARANTOR
REPRESENTS THAT HE HAS HAD AN OPPORTUNITY TO CONSULT WITH HIS OWN LEGAL COUNSEL
REGARDING THE TERMS OF THIS CONTINUING GUARANTY, THE PLEDGE AGREEMENT AND THE
FORBEARANCE AGREEMENT AND IS NOT RELYING ON MILLER & HOLGUIN, LEGAL COUNSEL
TO PMG, FOR LEGAL ADVICE IN CONNECTION WITH HIS EXECUTION, DELIVERY AND
PERFORMANCE OF SUCH AGREEMENTS.


 


IN WITNESS WHEREOF, the undersigned has
executed and delivered this Guaranty as of the date first above written.


 


	
   

  	
  Guarantor:

  
	
   

  	
   

  
	
   

  	
  /s/ Jacob Y. Terner, M.D

  	
   

  
	
   

  	
  Jacob Y. Terner, M.D.

  



 


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