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Exhibit 10.210    
    

 
 

CREDIT SUCCESSION AGREEMENT    
    

        This CREDIT SUCCESSION AGREEMENT (this "Agreement"), dated as of September 27, 2004, is entered into by and
among: 

          (i)  Jacob
Y. Terner, M.D. ("Terner"), 

         (ii)  Prospect
Medical Holdings, Inc., a Delaware corporation ("Holdings"), Prospect Medical Group, Inc., a
California professional corporation ("PMG"; and together with Holdings, each a "Borrower" and
collectively, the "Borrowers"), 

        (iii)  Prospect
Medical Systems, Inc., a Delaware corporation ("PMS"), Sierra Medical Management, Inc., a
Delaware corporation ("SMM"), Pinnacle Health Resources, a California corporation ("PHR"), 

        (iv)  the
following subsidiaries of PMG (each, a "PMG Subsidiary" and collectively, the "PMG
Subsidiaries"): Sierra Primary Care Medical Group, A Medical Corporation, a California professional corporation, Santa Ana/Tustin Physicians Group, Inc., a California
professional corporation, Pegasus Medical Group, Inc., a California professional corporation, Antelope Valley Medical Associates, Inc., a California professional corporation, Nuestra
Familia Medical Group, Inc., a California professional corporation, Prospect Health Source Medical Group, Inc., a California professional corporation, Prospect Professional Care Medical
Group, Inc., a California professional corporation, Prospect NWOC Medical Group, Inc., a California professional corporation, APAC Medical Group, Inc., a California professional
corporation, StarCare Medical Group, Inc., a California professional corporation, 

         (v)  such
other entities as may hereafter become parties hereto by executing a joinder agreement, in form and substance satisfactory to Lender referenced below, making them a
party to this Agreement, and 

        (vi)  Residential
Funding Corporation, a Delaware corporation ("Lender"), 

with
reference to the following facts: 

        A.    PMG,
PMG Subsidiaries and each other California professional medical corporation which hereafter becomes a party to this Agreement (collectively, with the PMG Credit
Parties, the "Professional Corporations") is a professional service corporation within the meaning of the Moscone-Knox Professional
Corporation Act of the State of California (the "Professional Corporation Act"). 

        B.    PMS,
SMM, PHR and each other subsidiary of Holdings which hereafter becomes a party to this Agreement (collectively, with PMS, SMM and PHR, the
"Management Companies") and the Professional Corporations have entered into those certain Management Services Agreements, all as more fully set forth on  Schedule A attached hereto and incorporated herein by this reference (each such agreement, a "Management
Agreement" and collectively, the "Management Agreements"). 

        C.    All
of the issued and outstanding shares of the Professional Corporations are owned by either Terner, PMG (except with respect to Nuestra Familia Medical where only
55.02% is owned by PMG) or such other person or entity as may hereafter become a party to this Agreement, as indicated on Schedule B attached
hereto and incorporated herein by this reference (each such Person, a "PC Shareholder") (all such shares collectively held by the PC Shareholders are
referred to herein as the "Shares"). 

        D.    Holdings,
Borrowers, PMS, SMM, PHR and the PMG Subsidiaries have entered into that certain Loan and Security Agreement (as amended, supplemented, restated or otherwise
modified from time to time, the "Loan Agreement"), dated as of September 27,    , 2004, with Lender pursuant to and in accordance with
which Lender shall extend credit to Borrowers. All initially capitalized terms used but not defined herein shall have the meanings given to them in the Loan Agreement. 

        E.    The
PC Shareholders, the Management Companies and the Professional Corporations are parties to that certain Amended and Restated Assignable Option Agreement, all as more
fully set forth on Schedule C, attached hereto and incorporated herein by this reference (the "Amended and Restated
Option Agreement"). As used herein the term "Successor Physician" shall have the same meaning as in the Amended and Restated
Option Agreement or, if such term is undefined in the Amended and Restated Option Agreement, shall mean the shareholder(s) designated to succeed to the ownership interest of any of the Shares upon the
occurrence of certain succession events. 

        F.     Each
Professional Corporation is a member of an affiliated group of companies that includes Holdings and the Management Companies and the proceeds of the Loans to be
advanced under the Loan Agreement will be used, in part, to enable Borrowers to make loans and/or transfers amongst themselves, the Management Companies and the Professional Corporations in connection
with the operation of their respective businesses. 

        G.    The
PC Shareholders and the Professional Corporations will derive direct and substantial benefit from the execution of and performance under the Loan Agreement by
Borrowers and from the Loans to be advanced thereunder. 

        H.    The
parties hereto desire to promote their mutual interest by imposing certain restrictions on the sale, transfer or other disposition of the Shares and by providing for
certain disposition of the Shares upon the occurrence of an Event of Default under the Loan Agreement. 

        NOW,
THEREFORE, in consideration of the foregoing recitals and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
each represents, warrants, covenants and agrees as follows: 

        1.     General Purpose; Construction. The purpose of this Agreement is to grant Lender certain rights to secure the performance
and payment of sums due under the Loan Agreement and the other Loan Documents upon the occurrence of a Succession Event, as defined below, and to provide for the orderly management of the Professional
Corporations in the event of a Succession Event. It is a further purpose of this Agreement to provide for the transfer of ownership of the Shares in accordance with the terms of this Agreement and the
laws of the relevant jurisdictions and to provide for the orderly transition in the composition of the boards of directors upon the occurrence of a Succession Event. In connection therewith, it is the
intent of the parties hereto, and each of the PC Shareholders and the Professional Corporations hereby covenant and agree that, notwithstanding the occurrence of a Succession Event: 

        (a)   Existence. Each Professional Corporation shall maintain its existence as a professional medical service corporation (a
"Medical Corporation") under the laws of its state of formation. 

        (b)   Management Agreements. Each Professional Corporation shall continue to honor the Management Agreement to which it is a
party; and 

        (c)   Board of Directors. The board of directors of each Professional Corporation shall consist of employees of such
Corporation or such other persons who are qualified hereunder and under the laws of the relevant jurisdictions to serve thereon. 

        2.     Succession Events. As used herein, the term "Succession Event" shall mean
the occurrence of any one or more of the following events: 

        (a)   Default. The occurrence of an Event of Default under or as defined in the Loan Agreement; or 

        (b)   Representations and Warranties. Any representation or warranty of any of the PC Shareholders or any Professional
Corporation made under this Agreement or any statement or certificate at any time given pursuant hereto or in connection herewith shall be false, misleading or incomplete in any material respect when
made; or 

        (c)   Covenants. Failure by any PC Shareholder or any Professional Corporation to perform, keep or observe any covenant or
provision of this Agreement and the same has not been cured to 

the
Lender's satisfaction within ten (10) days after such Person shall become aware thereof, whether by written notice from Lender or otherwise; or 

        (d)   Death, Dissolution or Disqualification. Any PC Shareholder which is a natural Person dies, or any PC Shareholder which is
a legal entity dissolves or suspends or discontinues doing business, or any PC Shareholder is disqualified under the Professional Corporation Act or is no longer a Qualified Medical Professional (as
hereinafter defined). 

        3.     General Obligations of Shareholder. Each PC Shareholder and each Professional Corporation covenant and agree that, until
the Termination Date, each PC Shareholder and each Professional Corporations, shall: 

        (a)   Qualified Directors. Maintain for each of the Professional Corporations a board of directors of at least one
(1) member (or such greater number as shall be required by the Professional Corporation Act of the applicable jurisdiction or other applicable laws) who shall be (i) duly licensed to
practice in the medical industry in the applicable jurisdiction and designated as a licensed professional in accordance with the Professional Corporation Act of such jurisdiction, (ii) who are
otherwise qualified hereunder and (iii) who are not legally disqualified (temporarily or permanently) under the Professional Corporation Act (a licensed person who is not legally disqualified
is hereinafter referred to as a "Qualified Medical Professional"); 

        (b)   Board Members. Vote the Shares only to elect Qualified Medical Professionals as members of the boards of directors; 

        (c)   No Transfer. Notwithstanding the terms of the Amended and Restated Assignable Option Agreement or any other assignable
option agreements, not sell, transfer, pledge or otherwise hypothecate the Shares except as set forth herein; 

        (d)   Compliance with Law. Cause all directors of each of the Professional Corporations to take all steps necessary to ensure
that each Professional Corporation complies with all provisions of the Professional Corporation Act and remains in good standing as a medical corporation in the state of California. 

        4.     Remedies. Upon the occurrence of a Succession Event, pursuant to Sections
2(a), 2(b)or 2(c) of this Agreement and the exercise by Lender under the Loan
Agreement or any of the other Loan Documents, of any of the remedies provided for therein, or upon the occurrence of a Succession Event pursuant to  Section 2(d) of this Agreement, the following
shall occur: 

        (a)   Shareholder Issues. As soon as reasonably practicable following written notice from Lender of the occurrence of a
Succession Event and upon receipt of Lender's written demand therefor, the PC Shareholders, or their estate, as the case may be, shall sell the Shares to such person(s) as Lender shall, in its sole
discretion, direct (the "New Shareholder(s)"). The total purchase price for the Shares for each Professional Corporation shall be $1,000. 

        (b)   Director Issues. As soon as reasonably practicable following the notice specified in  Section 4(a) and the sale and purchase of the Shares as set forth in
Section 4(a), the New
Shareholder(s) shall remove any existing members of the boards of directors, in accordance with the provisions of the by-laws of the Professional Corporations and any relevant laws, and
fill the vacancies on the boards of directors by electing the New Shareholder(s) as the only director(s) of each of the Professional Corporations to the extent permitted by applicable law. In
addition, as soon as reasonably practicable following the notice specified in Section 4(a) and the sale and purchase of the Shares as set forth
in Section 4(a), to the extent any PC Shareholder is a member of any of the boards of directors of any of the Professional Corporations, such PC
Shareholders shall resign. 

        5.     Term; Amendment to Charter or Bylaws. This Agreement shall be in full force and effect for so long as the Loan Agreement
has not been terminated until the Termination Date. Each PC Shareholder agrees that he or it will not authorize the issuance of any additional Shares or amend the 

charter
or bylaws of the Professional Corporations in any manner adverse to the purposes set forth herein so long as this Agreement is in effect. 

        6.     Community Property Interest. Terner and each other PC Shareholder who is an individual shall cause his/her spouse to
execute an Acknowledgement and Consent, substantially in the form of Exhibit A attached hereto, signifying such spouse's consent to this
Agreement and such spouse's agreement that any rights that such spouse may have, as a result of a community property or other interest in the Shares, shall be subject to the provisions of this
Agreement. It is intended by this Agreement that Terner and each other PC Shareholder who is an individual shall subject his or her entire interest in the Shares to the terms of this Agreement,
irrespective of any community property or other interest of his spouse. 

        7.     Reaffirmation of Security Interest. In order to further secure the timely performance of the obligations of the PC
Shareholders owing to Lender hereunder and under the Loan Documents to which such PC Shareholder is a party, each PC Shareholder hereby reaffirms the grant of a security interest in all of the Shares
it owns to Lender. Pursuant to the Pledge Agreement to which such PC Shareholders is a party, such security interest shall attach to all now existing and hereafter acquired Shares without further
action required on the part of Lender or any PC Shareholder. 

        8.     Indemnification. 

        (a)   Lender Indemnification. The PC Shareholders (other than Terner), Holdings, the Management Companies and the Professional
Corporations, jointly and severally, shall indemnify and defend Lender against any and all claims, expenses, liabilities and losses, including reasonable attorneys' fees, incurred or suffered by
Lender by reason of the exercise or failure to exercise any rights of Lender under this Agreement, excluding only such claims, expenses, liabilities and losses arising solely from the gross negligence
or willful misconduct of Lender. Terner shall indemnify and defend Lender against any and all claims, expenses, liabilities and losses, including reasonable attorneys' fees, incurred or suffered by
Lender by reason of the exercise or failure to exercise any rights of Lender under this Agreement caused by any act or omission of Terner, excluding only such claims, expenses, liabilities and losses
arising solely from the gross negligence or willful misconduct of Lender. 

        (b)   Survival. The obligations of the parties under this Section 13
will survive the termination of this Agreement. 

        9.     Further Agreements and Representations and Warranties. 

        (a)   Party to Agreement. The PC Shareholders, or their estate, as the case may be, Holdings, the Management Companies and each
of the Professional Corporations hereby agree that they shall cause any New Shareholder and any Successor Shareholder to become a party to this Agreement upon and as a condition to becoming a New
Shareholder or a Successor Shareholder and agree that each such New Shareholder or Successor Shareholder shall be, and the PC Shareholders, and each of the Professional Corporations shall cause them
to be, bound by the terms hereof with the same obligations and
liabilities as the PC Shareholders. The parties hereto agree that any shares of any of the Professional Corporations acquired by any party hereto, any New Shareholder, any Successor Shareholder shall
be or become Shares hereunder and the PC Shareholders, the Management Companies, Holdings and the Professional Corporations shall cause such Shares to be delivered to Lender in accordance with the
terms hereof. 

        (b)   Transfer of Shares. During the term of this Agreement no New Shareholder or Successor Shareholder shall sell, transfer,
pledge or otherwise hypothecate the shares of any Professional Corporation which such New Shareholder or Successor Shareholder owns except to Lender. Each PC Shareholder, New Shareholder, Successor
Shareholder and Professional Corporation shall ensure that all such shares of stock are marked with a restrictive legend with respect thereto. 

        (c)   Compliance. Each Professional Corporation shall, and each PC Shareholder, New Shareholder and Successor Shareholder
agrees to cause each Professional Corporations to, comply 

with
all provisions of the Professional Corporation Act and remain in good standing as a professional medical service corporation in the State of California. 

        (d)   Other Credit Succession Agreements. Each PC Shareholder, each Management Company and each Professional Company represent
and warrant that all credit succession agreements to which one or more of the foregoing Persons are parties with Comerica Bank (f/k/a Imperial Bank) have been terminated and are no longer in force or
effect. 

        (e)   Termination of Other Assignable Option Agreements. Each PC Shareholder, each Management Company and each Professional
Company hereby agree that all assignable option agreements other than the Amended and Restated Option Agreement to which one or more of the foregoing Persons are parties are hereby terminated and are
no longer in force or effect. 

        10.   Copy of Agreement. Each of the Professional Corporations shall keep a copy of this Agreement on file in the principal
business office of such Professional Corporation. 

        11.   Primacy of Agreement. Each of the parties hereto acknowledge and agree that upon the occurrence of a Succession Event,
this Agreement and the provisions hereof shall supersede the Amended and Restated Option Agreement and any other assignable option agreement with respect to the subject matter hereof. Upon the
occurrence of a Succession Event, in the case of any conflict or inconsistency between this Agreement and the Amended and Restated Option Agreement or any other assignable option agreement, this
Agreement shall control. 

        12.   Specific Performance. The PC Shareholders and the Professional Corporations agree that a breach of any covenants
contained in this Agreement will cause irreparable injury to Lender, that Lender has no adequate remedy at law in respect of such breach and, as a consequence, each agrees that each and every covenant
contained in this Agreement shall be specifically enforceable against each of them, and each hereby waives and agrees not to assert any defenses against an action for specific performance of such
covenants. 

        13.   Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be
deemed duly given on the date of service if personally served on the party to whom notice is to be given, which in the case of the Professional Corporations shall be the Professional Corporation
specified in this Section 15, or on the third day after mailing if deposited in the United 

States
mail to the party to whom notice is to be given, certified, postage prepaid, return receipt requested, and properly addressed as follows: 

	the PC Shareholders:
	

 	
 	

Jacob Y. Terner, M.D.

6083 Bristol Parkway, Suite 100

Culver City, CA 90230
	

Professional Corporations:
	

 	
 	

c/o Prospect Medical Group

6083 Bristol Parkway, Suite 100

Culver City, CA 90230

Attn: Jacob Y. Terner, M.D.
	

Lender:
	

 	
 	

GMAC-RFC Health Capital

4650 SW Macadam Avenue

Suite 240

Portland, OR 97239

Attn: Erin Fairbairn
	

with a copy to:
	

 	
 	

GMAC-RFC Health Capital

8400 Normandale Lake Blvd.

Suite 250

Minneapolis, MN 55437

Attn: Laura Mollet

        Any
party hereto may change its address for the purpose of receiving notices, requests, demands and other communications as herein provided by a written notice given in the manner set
forth above to the other parties hereto; provided, however, that only one Professional Corporation shall at any time be designated to receive notice for and on behalf of all the Professional
Corporations, and only one PC Shareholder shall at any time be designated to receive notice for and on behalf of all PC Shareholders. 

        14.   Attorneys' Fees. Should any parties hereto institute any action or proceeding at law, in equity or in arbitration to
enforce any provision of this Agreement, including an action for declaratory relief or for damages by reason of an alleged breach of any provision of this Agreement or otherwise in connection with
this Agreement or any provision hereof, the prevailing party shall be entitled to recover from the losing party such prevailing party's reasonable attorneys' fees and costs in such action or
proceeding. 

        15.   Miscellaneous. 

        (a)   Entire Agreement. This Agreement and the other Loan Documents constitute the entire understanding and agreement of the
parties with respect to the subject matter hereof and any and all prior agreements, understandings or representations with respect to such subject matter are hereby terminated and canceled in their
entirety and are of no further force or effect. 

        (b)   Severability. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and
whenever there is any conflict between any provision contained herein and any present or future constitution, statute, law, ordinance, rule or regulation, the latter shall prevail; provided, however,
that the provision of this Agreement which is affected shall be 

curtailed
and limited only to the extent necessary to bring it within the requirements of the law. In any event, all other provisions of this Agreement shall be deemed valid and enforceable to the
fullest extent possible. 

        (c)   Further Assurances. Each of the parties hereto shall execute and deliver any and all additional papers, documents, and
other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of its obligations hereunder to carry out the intent of the parties hereto. 

        (d)   Modifications or Amendments. No amendment, change or modification of this Agreement shall be valid, unless in writing and
signed by all of the parties hereto. 

        (e)   No Waiver; Amendments. No failure on the part of Lender to exercise, no delay in exercising and no course of dealing with
respect to, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder or under any of the other Loan Documents preclude any other or
further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. 

        (f)    Joint and Several Liability. The PC Shareholders, Holdings, the Management Companies and the Professional Corporations
each agree that the liability hereunder shall be the immediate, direct, and primary obligation of such Person and shall not be contingent upon Lender's exercise or enforcement of any remedy it may
have against any of them or against any other Person, or against the Collateral or any other security for the Obligations. Without limiting the generality of the foregoing, this Agreement shall remain
in full force and effect without regard to and shall not be impaired or affected by, nor shall the PC Shareholders, Holdings, the Management Companies, or the Professional Corporations be exonerated
or discharged by, any of the following events: 

          (i)  Insolvency,
bankruptcy, reorganization, arrangement, adjustment, composition, assignment for the benefit of creditors, death, liquidation, winding up or dissolution of
any of them or any other guarantor of the Obligations; 

         (ii)  Any
limitation, discharge, or cessation of the liability of any of them or any other guarantor for the Obligations due to any statute, regulation or rule of law, or any
invalidity or unenforceability in whole or in part of the documents evidencing the Obligations or any other guaranty thereof or any other security agreement or pledge agreement related thereto; 

        (iii)  Any
merger, acquisition, consolidation or change in structure of any of them or any other guarantor of the Obligations or any sale, lease, transfer or other
disposition of any or all of the assets or shares of any of them or any other guarantor of the Obligations; 

        (iv)  Any
assignment or other transfer, in whole or in part, of Lender's interests in and rights under this Agreement, the Loan Agreement or any of the other Loan Documents,
including, without limitation, Lender's right to receive payment of the Obligations or any assignment or other transfer, in whole or in part, of Lender's interests in and to the Collateral or any
other collateral securing the Obligations; 

         (v)  Any
claim, defense, counterclaim or setoff, other than that of prior performance, that the PC Shareholders, the Professional Corporations, Holdings, any of the
Management Companies or any guarantor of the Obligations may have or assert, including, but not limited to, any defense of incapacity
or lack of corporate or other authority to execute any documents relating to the Obligations, the Collateral, or any other collateral securing the Obligations; 

        (vi)  Lender's
amendment, modification, renewal, extension, cancellation or surrender, of any agreement, document or instrument relating to the Loan Agreement, this
Agreement, the Obligations the Collateral or any other collateral securing the Obligations, or Lender's exchange, release, or waiver of any Collateral or of any other collateral securing the
Obligations; 

       (vii)  Lender's
exercise or nonexercise of any power, right or remedy with respect to the Obligations, the Collateral or any other collateral securing the Obligations,
including, but not 

limited
to, Lender's compromise, release, settlement or waiver with any of the PC Shareholders, any of the Management Companies, the Professional Corporations, or of Holdings, any guarantor or any
other Person; 

      (viii)  Lender's
vote, claim, distribution, election, acceptance, action or inaction in any bankruptcy case related to the Obligations, the Collateral or any other collateral
securing the Obligations; or 

        (ix)  Any
impairment or invalidity of the Collateral or any other collateral securing the Obligations or any failure to perfect any of Lender's Liens thereon or therein. 

        (g)   Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and
all of which taken together shall constitute one and the same instrument. 

        (h)   Number and Gender. In this Agreement, the masculine, feminine or neuter gender, and the singular or plural number, shall
each be deemed to include the other, whenever the context so requires. 

        (i)    Captions. The section and other headings contained in this Agreement are for reference only and shall not in any way
limit or amplify the terms and provisions hereof, nor affect the meaning or interpretation of this Agreement. 

        (j)    Continued Tenure. The parties hereto acknowledge that nothing contained in this Agreement shall be deemed a guarantee of
any New Shareholder's or any Successor Shareholder's continued tenure on the board of directors of any of the Professional Corporations. 

        (k)   Assignment. This Agreement may not be assigned by any PC Shareholders, any of the Professional Corporations, any New
Shareholder, any Successor Shareholder, any of the Management Companies or Holdings without the prior written consent of Lender. Subject to the foregoing, this Agreement will inure to the benefit of
the parties and will be binding upon their respective successors, executors, administrators, heirs and assigns. 

        (l)    Governing Law. This Agreement has been delivered to Lender and accepted by Lender in the State of California. THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS. 

        EACH
PARTY HERETO WAIVES ALL RIGHTS TO A TRIAL BY JURY IN THE EVENT OF ANY LITIGATION WITH RESPECT TO ANY MATTER CONNECTED WITH THIS AGREEMENT, AND EACH PARTY HERETO HEREBY IRREVOCABLY
CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE COURTS OF THE STATE OF CALIFORNIA AND OF THE FEDERAL COURTS LOCATED IN LOS ANGELES COUNTY, CITY OF LOS ANGELES, CALIFORNIA IN
CONNECTION WITH ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. IN ANY SUCH LITIGATION, EACH PARTY HERETO WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS AND
AGREES THAT SERVICE THEREOF MAY BE MADE ON SUCH PARTY BY CERTIFIED U.S. FIRST CLASS MAIL, AND OTHERWISE IN ACCORDANCE WITH APPLICABLE LAWS, POSTAGE PREPAID, ADDRESSED TO THE PARTY AT THE ADDRESS
SPECIFIED IN SECTION 14.1 OF THE LOAN AGREEMENT. EACH PARTY HERETO ACKNOWLEDGES THAT IT HAS HAD THE OPPORTUNITY TO OBTAIN THE ADVICE OF EXPERIENCED COUNSEL OF ITS OWN CHOOSING IN CONNECTION
WITH THE NEGOTIATION AND EXECUTION OF THIS AGREEMENT AND TO OBTAIN ADVICE OF SUCH COUNSEL WITH RESPECT TO ALL MATTERS CONTAINED HEREIN, INCLUDING ANY PROVISIONS REGARDING WAIVER OF TRIAL BY JURY. 

        [Remainder
of this page intentionally left blank] 

        IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written. 

	 	 	JACOB Y. TERNER
	

 	
 	

/s/  JACOB Y. TERNER, M.D.      
 Jacob Y. Terner, individually
	

 	
 	
LENDER:
	

 	
 	
RESIDENTIAL FUNDING CORPORATION
	

 	
 	

By:	

/s/  ANGELA D. BROWN      

	 	 	Name:	Angela D. Brown

	 	 	Title:	Sr. Vice President

	

 	
 	
BORROWERS:
	

 	
 	
PROSPECT MEDICAL HOLDINGS, INC.,

a Delaware corporation
	

 	
 	

By:	

/s/  JACOB Y. TERNER, M.D.      

	 	 	Name:	Jacob Y. Terner, M.D.

	 	 	Title:	Chief Executive Officer

	

 	
 	
PROSPECT MEDICAL GROUP, INC.,

a California professional corporation
	

 	
 	

By:	

/s/  JACOB Y. TERNER, M.D.      

	 	 	Name:	Jacob Y. Terner, M.D.

	 	 	Title:	Chief Executive Officer

	 	 	PMS:
	

 	
 	

PROSPECT MEDICAL SYSTEMS, INC., a Delaware corporation
	

 	
 	

By:	

/s/  JACOB Y. TERNER, M.D.      

	 	 	Name:	Jacob Y. Terner, M.D.

	 	 	Title:	Chief Executive Officer

	

 	
 	
SMM:
	

 	
 	

SIERRA MEDICAL MANAGEMENT, INC., a Delaware corporation
	

 	
 	

By:	

/s/  JACOB Y. TERNER, M.D.      

	 	 	Name:	Jacob Y. Terner, M.D.

	 	 	Title:	Chief Executive Officer

	

 	
 	
PHR:	

 
	

 	
 	
PINNACLE HEALTH RESOURCES, a California corporation
	

 	
 	

By:	

/s/  JACOB Y. TERNER, M.D.      

	 	 	Name:	Jacob Y. Terner, M.D.

	 	 	Title:	Chief Executive Officer

	

 	
 	
PMG SUBSIDIARIES:
	

 	
 	
NUESTRA FAMILIA MEDICAL GROUP, INC., a California professional corporation
	

 	
 	

By:	

/s/  R. STEWART KAHN      

	 	 	Name:	R. Stewart Kahn

	 	 	Title:	Vice President

	 	 	 	 

	

 	
 	
SIERRA PRIMARY CARE MEDICAL GROUP, A MEDICAL CORPORATION, a California professional corporation
	

 	
 	

By:	

/s/  JACOB Y. TERNER, M.D.      

	 	 	Name:	Jacob Y. Terner, M.D.

	 	 	Title:	Chief Executive Officer

	

 	
 	
SANTA ANA/TUSTIN PHYSICIANS GROUP, INC., a California professional corporation
	

 	
 	
PEGASUS MEDICAL GROUP, INC., a California professional corporation
	

 	
 	
ANTELOPE VALLEY MEDICAL ASSOCIATES, INC., a California professional corporation
	

 	
 	
PROSPECT HEALTH SOURCE MEDICAL GROUP, INC., a California professional corporation
	

 	
 	
PROSPECT PROFESSIONAL CARE MEDICAL GROUP, INC., a California professional corporation
	

 	
 	
PROSPECT NWOC MEDICAL GROUP, INC., a California professional corporation
	

 	
 	
APAC MEDICAL GROUP, INC., a California professional corporation
	

 	
 	
STARCARE MEDICAL GROUP, INC., a California professional corporation
	

 	
 	

By:	

/s/  JACOB Y. TERNER, M.D.      

	 	 	Name:	Jacob Y. Terner, M.D.

	 	 	Title:	Chief Executive Officer

 
 

SPOUSAL JOINDER AND CONSENT    
    

        I am the spouse of Jacob Y. Terner, M.D., a shareholder (the "Shareholder") of Prospect Medical
Group, Inc., a California professional medical corporation ("PMG"). To the extent that I have any interest in any of the Shares (as that term is
defined in the Credit Succession Agreement (as amended, supplemented, restated or otherwise modified from time to time, the "Credit Succession
Agreement"), entered into as of September 27,    , 2004, by and among Shareholder, Prospect Medical Holdings, Inc., a Delaware corporation
("Holdings"), PMG (PMG and Holdings, collectively, the "Borrowers" and each a
"Borrower"), Prospect Medical Systems, Inc., a Delaware corporation ("PMS"), Sierra Medical
Management, Inc., a Delaware corporation ("SMM"), Pinnacle Health Resources, a California corporation
("PHR"), and the following subsidiaries of Professional Corporation (each, a "PMG Subsidiary" and
collectively, the "PMG Subsidiaries"): Sierra Primary Care Medical Group, A Medical Corporation, a California professional corporation, Santa Ana/Tustin
Physicians Group, Inc., a California professional corporation, Pegasus Medical Group, Inc., a California professional corporation, Antelope Valley Medical Associates, Inc., a
California professional corporation, Nuestra Familia Medical Group, Inc., a California professional corporation, Prospect Health Source Medical Group, Inc., a California professional
corporation, Prospect Professional Care Medical Group, Inc., a California professional corporation, Prospect NWOC Medical Group, Inc., a California professional corporation, APAC Medical
Group, Inc., a California professional corporation, StarCare Medical Group, Inc., a California professional corporation, I hereby join in the Credit Succession Agreement and agree to be
bound by its terms and conditions to the same extent as my spouse. I have read the Credit Succession Agreement, understand its terms and conditions, and to the extent that I have felt it necessary,
have
retained independent legal counsel to advise me concerning the legal effect of the Credit Succession Agreement and this Spousal Joinder and Consent. 

        I
understand and acknowledge that Lender is significantly relying on the validity and accuracy of this Spousal Joinder and Consent in entering into the Credit Succession Agreement. 

        Executed
this    day of September, 2004. 

	        Signature:	/s/  SANDRA W. TERNER      
	 

        Printed or Typed Name: Sandra W. Terner 

[Signature
Page to Spousal Joinder and Consent to Credit Succession Agreement] 

 
 

SCHEDULE A    
    

	1.
	Amended
and Restated Management Services Agreement, made as of September 15, 1998 and deemed to have been effective as of June 4, 1996, between Prospect Medical
Systems, Inc. and Prospect Medical Group, Inc.

	a.
	Amendment
to Management Services Agreement, made as of October 1, 1998, between Prospect Medical Systems, Inc. and Prospect Medical Group, Inc.

	2.
	Management
Agreement dated as of January 1, 2003 between Pinnacle Health Resources and StarCare Medical Group, Inc., dba Gateway Medical Group, Inc.

	a.
	Amendment
to Management Agreement effective February 1, 2004, between Pinnacle Health Resources and StarCare Medical Group, Inc., dba Gateway Medical Group, Inc.

	3.
	Management
Agreement dated as of January 1, 2003 between Pinnacle Health Resources and APAC Medical Group, Inc., dba Gateway Physicians Medical Associates, Inc.

	a.
	Amendment
to Management Agreement effective February 1, 2004, between Pinnacle Health Resources and APAC Medical Group, Inc., dba Gateway Physicians Medical
Associates, Inc.

	4.
	Management
Services Agreement, made as of August 1, 1999, between Prospect Medical Systems, Inc. and Nuestra Familia Medical Group

	5.
	Management
Services Agreement, made as of July 1, 1999, between Prospect Medical Systems, Inc. and AMVI/Prospect Medical Group

	6.
	Management
Services Agreement dated as of January 1, 2001 between Prospect Medical Systems, Inc. and Prospect Health Source Medical Group, Inc.

	a.
	Amendment
to Management Services Agreement dated as of November 1, 2002 between Prospect Medical Systems, Inc. and Prospect Health Source Medical Group, Inc.

	7.
	Management
Services Agreement dated as of October 1, 2003, by and between Prospect Medical Systems, Inc. and Prospect Professional Care Medical Group, Inc.

	8.
	Management
Services Agreement dated as of March 1, 2004 by and between Prospect Medical Systems, Inc. and Prospect NWOC Medical Group, Inc.

	9.
	Second
Amended and Restated Management Services Agreement, made as of September 15, 1998 and deemed to have been effective as of September 25, 1997, between Sierra
Medical Management, Inc. and Sierra Primary Care Medical Group, Inc.

	a.
	Amendment
to Management Services Agreement, made as of October 1, 1998, between Sierra Medical Management, Inc. and Sierra Primary Care Medical Group, Inc.

	10.
	Amended
and Restated Management Services Agreement, made as of September 15, 1998 and deemed to have been effective as of October 31, 1997, by and between Sierra Medical
Management, Inc. and Pegasus Medical Group, Inc.

	a.
	Amendment
to Management Services Agreement made as of October 1, 1998, by and between Sierra Medical Management, Inc. and Pegasus Medical Group, Inc.

	11.
	Management
Services Agreement effective as of May 19, 2003 between Sierra Medical Management, Inc., and Antelope Valley Medical Associates, Inc.

	12.
	Management
Services Agreement dated as of July 14, 1997 between Prospect Medical Systems, Inc., and Santa Ana/Tustin Physicians Group Inc. 

 
 

SCHEDULE B    
    

	Credit Party
	 	Name of Shareholder

	Prospect Medical Systems, Inc.	 	Prospect Medical Holdings, Inc.
	Sierra Medical Management, Inc.	 	Prospect Medical Holdings, Inc.
	Pinnacle Health Resources	 	Prospect Medical Systems, Inc.
	Prospect Medical Group, Inc.	 	Jacob Y. Terner, M.D.
	Sierra Primary Care Medical Group, A Medical Corporation	 	Prospect Medical Group, Inc.
	Santa Ana/Tustin Physicians Group, Inc.	 	Prospect Medical Group, Inc.
	Pegasus Medical Group, Inc.	 	Prospect Medical Group, Inc.
	Antelope Valley Medical Associates, Inc.	 	Prospect Medical Group, Inc.
	Prospect Health Source Medical Group, Inc.	 	Prospect Medical Group, Inc.
	Prospect Professional Care Medical Group, Inc.	 	Prospect Medical Group, Inc.
	Prospect NWOC Medical Group, Inc.	 	Prospect Medical Group, Inc.
	APAC Medical Group, Inc.	 	Prospect Medical Group, Inc.
	StarCare Medical Group, Inc.	 	Prospect Medical Group, Inc.
	Nuestra Familia Medical Group, Inc.	 	Prospect Medical Group, Inc. as to 55.02% and several individual physicians as to the remaining ownership*

 
 

SCHEDULE C    
    

        Amended and Restated Assignable Option Agreement dated as of September 27, 2004 by and among Prospect Medical Systems, Inc., Prospect Medical
Group, Inc., and Jacob Y. Terner, M.D. 

QuickLinks

Exhibit 10.210

CREDIT SUCCESSION AGREEMENT

SPOUSAL JOINDER AND CONSENT

SCHEDULE A

SCHEDULE B

SCHEDULE CQuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 10.211    
    

 
 

SUBORDINATION AGREEMENT    
    

        THIS SUBORDINATION AGREEMENT (this "Agreement") is entered into as
of this September 27, 2004, by and among Prospect Medical Systems, Inc., a Delaware corporation ("PMS"), Sierra Medical
Management, Inc., a Delaware corporation ("SMM"), Pinnacle Health Resources, a California corporation
("PHR"; and together with PMS and SMM, each a "Second Lien Creditor" and collectively, the
"Second Lien Creditors"), Prospect Medical Holdings, Inc., a Delaware corporation ("Holdings"),
Prospect Medical Group, Inc., a California professional corporation ("PMG"), each of the subsidiaries of PMG signatory hereto (each a
"PMG Subsidiary" and collectively, the "PMG Subsidiaries"; and together with PMG, each a
"Professional Corporation" and collectively the "Professional Corporations"), and Residential Funding
Corporation, a Delaware corporation (the "First Lien Lender"). 

 
 

R E C I T A L S    
    

        A.    The Professional Corporations, Holdings, the Second Lien Creditors and the First Lien Lender have entered into a Loan and
Security Agreement of even date herewith (as the same may be amended, supplemented or otherwise modified from time to time, the "First Lien Loan
Agreement") pursuant to which, among other things, the First Lien Lender has agreed, subject to the terms and conditions set forth in the First Lien Loan Agreement, to make
certain loans and financial accommodations to Holdings and PMG, which will inure to the benefit of the Professional Corporations and the Second Lien Creditors. All of the Holdings', the Professional
Corporations' and the Second Lien Creditors' obligations to the First Lien Lender under the First Lien Loan Agreement and the other First Lien Documents (as hereinafter defined) are secured by liens
on and security interests in substantially all of the now existing and hereafter acquired real and personal property of the Professional Corporations, Holdings and the Second Lien Creditors (the
"First Lien Collateral"). 

        B.    The Second Lien Creditors and the Professional Corporations have entered into those certain management services agreements
described on Exhibit A attached hereto (each a "Management Services Agreement" and collectively,
the "Management Services Agreements"). Each Professional Corporation's payments and performance
obligations under the Management Services Agreement to which it is a party and all intercompany loans and advances owing by such Professional Corporation to one or more Second Lien Creditor are
secured by liens on and security interests in certain now existing and hereafter acquired real and personal property of the Professional Corporations (the "Second Lien
Collateral") pursuant to the Security Agreements described on Exhibit B attached hereto (each a
"PC Security Agreement" and collectively, the "PC Security Agreements"). 

        C.    As an inducement to and as one of the conditions precedent to the agreement of the First Lien Lender to consummate the
transactions contemplated by the First Lien Loan Agreement, the First Lien Lender has required the execution and delivery of this Agreement by Second Lien Creditors, the Professional Corporations and
Holdings in order to set forth the relative rights and priorities of the First Lien Lender and the Second Lien Creditors under the First Lien Documents (as hereinafter defined) and the Second Lien
Documents (as hereinafter defined). 

        NOW, THEREFORE, in order to induce the First Lien Lender to consummate the transactions contemplated by the First Lien Loan Agreement, and
for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereto hereby agree as follows: 

        1.    Definitions.    The following terms shall have the following
meanings in this Agreement: 

        "Bankruptcy Code" shall mean Chapter 11 of Title 11 of the United States Code, as amended from time to time and
any successor statute and all rules and regulations promulgated thereunder. 

        "Collateral" shall mean, collectively, the First Lien Collateral and the Second Lien Collateral, and all other real and personal property
of any Professional Corporation, the Second Lien 

 

Creditor
or Holdings securing payment of the First Lien Debt or the Second Lien Debt, now existing and hereafter acquired. 

        "Distribution" means, with respect to any indebtedness, obligation or security,
(a) any payment or distribution by any Person of cash, securities or other property, by set-off or otherwise,
on account of such indebtedness, obligation or security, (b) any redemption, purchase or other acquisition of such indebtedness, obligation or security by any Person or (c) the granting
of any lien or security interest to or for the benefit of the holders of such indebtedness, obligation or security in or upon any property of any Person. 

        "Enforcement Action" shall mean (a) to take from or for the account of the
Professional Corporations or any guarantor of the Second Lien Debt, by set-off or in any other manner, the whole or any part of any monies which may now or hereafter be owing by any
Professional Corporation or any such guarantor with respect to the Second Lien Debt, (b) to sue for payment of, or to initiate or participate with others in any suit, action or proceeding
against any Professional Corporation or any such guarantor to (i) enforce payment of or to collect the whole or any part of the Second Lien Debt or (ii) commence judicial enforcement of
any of the rights and remedies under the Second Lien Documents or applicable law with respect to the Second Lien Debt, (c) to accelerate the Second Lien Debt, (d) to exercise any put
option or to cause any Professional Corporation or any such guarantor to honor any redemption or mandatory prepayment obligation under any Second Lien Document, (e) to notify account debtors or
directly collect accounts receivable or other payment rights of any Professional Corporation or any such guarantor or (f) to take any action under the provisions of any state or federal law,
including, without limitation, the Uniform Commercial Code, or under any contract or agreement, to enforce, foreclose upon, take possession of or sell any property or assets of any Professional
Corporation or any such guarantor including the Collateral. 

        "First Lien Debt" shall mean all obligations, liabilities and indebtedness of every nature
of the Professional Corporations, Holdings or the Second Lien Creditors from time to time owed to the First Lien Lender under the First Lien Documents, including, without limitation, the principal
amount of all debts, claims and indebtedness, accrued and unpaid interest and all fees, costs and expenses, whether primary, secondary, direct, contingent, fixed or otherwise, heretofore, now and from
time to time hereafter owing, due or payable, whether before or after the filing of a Proceeding under the Bankruptcy Code together with (a) any amendments, modifications, renewals or
extensions thereof to the extent not prohibited by the terms of this Agreement and (b) any interest accruing thereon after the commencement of a Proceeding, without regard to whether or not
such interest is an allowed claim. The First Lien Debt shall be considered to be outstanding whenever any loan commitment under the First Lien Document is outstanding. 

        "First Lien Documents" shall mean the RFC Loan Documents and, after any refinancing of the
First Lien Debt under the RFC Loan Documents, the Refinancing First Lien Documents. 

        "First Lien Lender" shall mean Residential Funding Corporation, a Delaware corporation, or any other Person that
becomes a holder of First Lien Debt. 

        "Person" means any natural person, corporation, general or limited partnership, limited
liability company, firm, trust, association, government, governmental agency or other entity, whether acting in an individual, fiduciary or other capacity. 

        "Proceeding" shall mean any voluntary or involuntary insolvency, bankruptcy, receivership,
custodianship, liquidation, dissolution, reorganization, assignment for the benefit of creditors, appointment of a custodian, receiver, trustee or other officer with similar powers or any other
proceeding for the liquidation, dissolution or other winding up of a Person. 

2

 

        "Refinancing First Lien Documents" shall mean any financing documentation which replaces
the RFC Loan Documents and pursuant to which the First Lien Debt under the RFC Loan Documents are refinanced, as such financing documentation may be amended, supplemented or otherwise modified from
time to time in compliance with this Agreement. 

        "RFC Loan Documents" shall mean the First Lien Loan Agreement and all other agreements,
documents and instruments executed from time to time in connection therewith, as the same may be amended, supplemented or otherwise modified from time to time. 

        "Second Lien Debt" shall mean all of the obligations of the Professional Corporations to the Second Lien Creditors
secured by liens and security interests granted pursuant to the Second Lien Documents. 

        "Second Lien Documents" shall mean the PC Security Documents, any guaranty with respect to
the Second Lien Debt, any other collateral document securing the Second Lien Debt and all other documents, agreements and instruments now existing or hereinafter entered into evidencing or pertaining
to all or any portion of the Second Lien Debt. 

        2.    Subordination.    

        2.1    Subordination of Liens and Security Interests; Agreement Not to Contest; Agreement to Release
Liens.    Until the First Lien Debt has been indefeasibly paid in full in cash and all lending commitments under the First Lien Documents have terminated, all liens
and security interests of Second Lien Creditors in the Second Lien Collateral shall be and hereby are subordinated for all purposes and in all respects to the liens and security interests of the First
Lien Lender in the First Lien Collateral, regardless of the time, manner or order of perfection of any such liens and security interests. Each Second Lien Creditor agrees that it will not at any time
contest the validity, perfection, priority or enforceability of the First Lien Debt, the First Lien Documents, or the liens and security interests of the First Lien Lender in the First Lien Collateral
securing the First Lien Debt. In the event that the First Lien Lender releases or agrees to release any of its liens or security interests in the First Lien Collateral in connection with the sale or
other disposition thereof or any of the First Lien Collateral is sold or retained pursuant to a foreclosure or similar action, each Second Lien Creditor shall (or shall cause its agent) to promptly
execute and deliver to the First Lien Lender such termination statements and releases as the First Lien Lender shall reasonably request to effect the release of the liens and security interests of
such Second Lien Creditor in such Collateral. In furtherance of the foregoing, each Second Lien Creditor hereby irrevocably appoints the First Lien Lender as its
attorney-in-fact, with full authority in the place and stead of such Second Lien Creditor and in the name of such Second Lien Creditor or otherwise, to execute and deliver any
document or instrument which such Second Lien Creditor may be required to deliver pursuant to this subsection 2.1. 

        2.2    Liquidation, Dissolution, Bankruptcy.    In the event of any
Proceeding involving the Company: 

        (a)   All
First Lien Debt shall first be indefeasibly paid in full in cash and all commitments to lend under the First Lien Documents shall be terminated before any
Distribution, whether in cash, securities or other property, shall be made to any Second Lien Creditor on account of any Second Lien Debt. 

        (b)   Any
Distribution, whether in cash, securities or other property which would otherwise, but for the terms hereof, be payable or deliverable in respect of the Second Lien
Debt shall be paid or delivered directly to the First Lien Lender (to be held and/or applied by the First Lien Lender in accordance with the terms of the First Lien Documents) until all First Lien
Debt is indefeasibly paid in full in cash and all commitments to lend under the First Lien Documents shall have been terminated. Each Second Lien Creditor irrevocably 

3

 

authorizes,
empowers and directs any debtor, debtor in possession, receiver, trustee, liquidator, custodian, conservator or other Person having authority, to pay or otherwise deliver all such
Distributions to the First Lien Lender. Each Second Lien Creditor also irrevocably authorizes and empowers the First Lien Lender, in the name of such Second Lien Creditor, to demand, sue for, collect
and receive any and all such Distributions. 

        (c)   Each
Second Lien Creditor agrees not to initiate, prosecute or participate in any claim, action or other proceeding challenging the enforceability, validity, perfection
or priority of the First Lien Debt or any liens and security interests securing the First Lien Debt. 

        (d)   Each
Second Lien Creditor agrees that the First Lien Lender may consent to the use of cash collateral or provide financing to any Professional Corporation on such terms
and conditions and in such amounts as the First Lien Lender, in its sole discretion, may decide and, in connection therewith, one or more Professional Corporations may grant to the First Lien Lender
liens and security interests upon all of the property of such Professional Corporations, which liens and security interests (i) shall secure payment of all First Lien Debt (whether such First
Lien Debt arose prior to the commencement of any Proceeding or at any time thereafter) and all other financing provided by the First Lien Lender during such Proceeding and (ii) shall be
superior in priority to the liens and security interests, if any, in favor of the Second Lien Creditors on the property of the Professional Corporations. Each Second Lien
Creditor agrees that it will not object to or oppose a sale or other disposition of any property securing all of any part of the First Lien Debt free and clear of security interests, liens or other
claims of such Second Lien Creditor under Section 363 of the Bankruptcy Code or any other provision of the Bankruptcy Code if the First Lien Lender has consented to such sale or disposition.
Each Second Lien Creditor agrees not to assert any right it may have to "adequate protection" of such Second Lien Creditor's interest in any Collateral in any Proceeding and agrees that it will not
seek to have the automatic stay lifted with respect to any Collateral without the prior written consent of the First Lien Lender. Each Second Lien Creditor waives any claim it may now or hereafter
have arising out of the First Lien Lender's election, in any Proceeding instituted under the Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy Code, and/or any
borrowing or grant of a security interest under Section 364 of the Bankruptcy Code by any Professional Corporation, as debtor in possession. Each Second Lien Creditor further agrees that it
will not participate or seek to participate on any creditor's committee without the First Lien Lender's prior written consent. 

        (e)   Each
Second Lien Creditor agrees to execute, verify, deliver and file any proofs of claim in respect of the Second Lien Debt requested by the First Lien Lender in
connection with any such Proceeding and hereby irrevocably authorizes, empowers and appoints the First Lien Lender as its agent and attorney-in-fact to (i) execute,
verify, deliver and file such proofs of claim upon the failure of such Second Lien Creditor promptly to do so prior to 30 days before the expiration of the time to file any such proof of claim
and (ii) vote such claim in any such Proceeding upon the failure of such Second Lien Creditor to do so prior to 15 days before the expiration of the time to vote any such claim;  provided that
the First Lien Lender shall have no obligation to execute, verify, deliver, file and/or vote any such proof of claim. In the event that
the First Lien Lender votes any claim in accordance with the authority granted hereby, such Second Lien Creditor shall not be entitled to change or withdraw such vote. 

        (f)    The
provisions of this Agreement shall continue to govern the relative rights and priorities of the First Lien Lender and the Second Lien Creditors even if all or part
of the First Lien Debt or the security interests securing the First Lien Debt are Second Lien, set aside, avoided, invalidated or disallowed in connection with any such Proceeding, and this Agreement
shall be reinstated if at any time any payment of any of the First Lien Debt is 

4

 

rescinded
or must otherwise be returned by any holder of First Lien Debt or any representative of such holder. 

        2.3    Second Lien Debt Payment Restrictions.    Notwithstanding the
terms of the Second Lien Debt Documents, except as permitted by the First Lien Loan Agreement, each Professional Corporation agrees that it may not make, and each Second Lien Creditor hereby agrees
that it will not accept, any Distribution with respect to the Second Lien Debt until the First Lien Debt is indefeasibly paid in full in cash and all commitments to lend under the First Lien Documents
have terminated. 

        2.4    Second Lien Debt Standstill Provisions.    Until the First Lien
Debt is indefeasibly paid in full in cash and all commitments to lend under the First Lien Documents shall be terminated, the Second Lien Creditors shall not, without the prior written consent of the
First Lien Lender, take any Enforcement Action with respect to the Second Lien Debt or the Second Lien Collateral. Notwithstanding the foregoing, the Second Lien Creditors may file proofs of claim
against any Professional Corporation in any Proceeding involving such Professional Corporation. Any Distributions or other proceeds of any Enforcement Action obtained by any Second Lien Creditor in
violation of the foregoing prohibition shall in any event be held in trust by it for the benefit of the First Lien Lender and promptly paid or delivered to the First Lien Lender in the form received
until all First Lien Debt is indefeasibly paid in full in cash and all commitments to lend under the First Lien Documents shall have been terminated. 

        2.5    Incorrect Payments.    If any Distribution not permitted to be
made by the Professional Corporations or accepted by the Second Lien Creditors under this Agreement is made and received by any Second Lien Creditor, such Distribution shall not be commingled with any
of the assets of such Second Lien Creditor, shall be held in trust by such Second Lien Creditor for the benefit of the First Lien Lender and shall be promptly paid over to the First Lien Lender for
application (in accordance with the First Lien Documents) to the payment of the First Lien Debt then remaining unpaid, until all of the First Lien Debt is paid in full. 

        2.6    Application of Proceeds from Sale or other Disposition of the
Collateral.    In the event of any sale, transfer or other disposition (including a casualty loss or taking through eminent domain) of the Collateral, the proceeds
resulting therefrom (including insurance proceeds) shall be applied in accordance with the terms of the First Lien Documents or as otherwise consented to by the First Lien Lender until such time as
the First Lien Debt is indefeasibly paid in full in cash and all commitments to lend under the First Lien Documents have been terminated. 

        2.7    Sale, Transfer or other Disposition of Second Lien Debt.    

        (a)   The
Second Lien Creditors shall not sell, assign, pledge, dispose of or otherwise transfer all or any portion of the Second Lien Debt or any Second Lien Document except
for the collateral assignment of the same to the First Lien Lender. 

        (b)   Notwithstanding
the foregoing, the subordination effected hereby shall survive any sale, assignment, pledge, disposition or other transfer of all or any portion of the
Second Lien Debt in violation of the foregoing prohibition, and the terms of this Agreement shall be binding upon the successors and assigns of the Second Lien Creditors, as provided in  Section 10
hereof. 

        2.8    Legends.    Until the termination of this Agreement in
accordance with Section 16 hereof, the Second Lien Creditors will cause to be clearly, conspicuously and prominently inserted in the Second Lien
Documents, as well as any renewals or replacements thereof, the following legend: 

"This
instrument and the rights and obligations evidenced hereby are subordinate in the manner and to the extent set forth in that certain Subordination Agreement (the "Subordination Agreement") dated
as of September 27, 2004 among Prospect Medical 

5

 

Systems, Inc.,
a Delaware corporation ("PMS"), Sierra Medical Management, Inc., a Delaware corporation ("SMM"), Pinnacle Health Resources, a California corporation ("PHR"; each a "Second
Lien Creditor" and collectively, the "Second Lien Creditors"), Prospect Medical Holdings, Inc., a Delaware corporation ("Holdings"), Prospect Medical Group, Inc., a California
professional corporation "PMG"), each of the subsidiaries of PGM signatory thereto (each a "PMG Subsidiary" and collectively, the "PMG Subsidiaries"; and together with PMG, each a "Professional
Corporation" and collectively the "Professional Corporations"), and Residential Funding Corporation, a Delaware corporation ("First Lien Lender"), to the indebtedness (including interest) owed by the
Professional Corporations pursuant to that certain Loan and Security Agreement dated as of September 27, 2004 among the Professional Corporations, Holdings, the Second Lien Creditors and the
First Lien Lender, as such Loan and Security Agreement has been and hereafter may be amended, supplemented or otherwise modified from time to time and to indebtedness refinancing the indebtedness
under that agreement as contemplated by the Subordination Agreement; and each holder of this instrument, by its acceptance hereof, irrevocably agrees to be bound by the provisions of the Subordination
Agreement." 

        3.    Modifications.    

        3.1    Modifications to First Lien Documents.    First Lien Lender may
at any time and from time to time without the consent of or notice to any Second Lien Creditor, without incurring liability to any Second Lien Creditor and without impairing or releasing the
obligations of any Second Lien Creditor under this Agreement, change the manner or place of payment or extend the time of payment of or renew or alter any of the terms of the First Lien Debt, or amend
in any manner any agreement, note, guaranty or other instrument evidencing or securing or otherwise relating to the First Lien Debt. 

        3.2    Modifications to Second Lien Debt Documents.    Until the First
Lien Debt has been indefeasibly paid in full in cash and all lending commitments under the First Lien Documents have terminated, and notwithstanding anything to the contrary contained in the Second
Lien Documents, the Second Lien Creditors shall not, without the prior written consent of the First Lien Lender, agree to any amendment, modification or supplement to the Second Lien Documents. 

        4.    Waiver of Certain Rights by Second Lien Creditor.    

        4.1    Marshaling.    Each Second Lien Creditor hereby waives any
rights it may have under applicable law to assert the doctrine of marshaling or to otherwise require the First Lien Lenders to marshal any property of any Professional Corporation or any guarantor of
the First Lien Debt for the benefit of such Second Lien Creditor. 

        4.2    Rights Relating to Agent's Actions with respect to the
Collateral.    Each Second Lien Creditor hereby waives, to the extent permitted by applicable law, any rights which it may have to enjoin or otherwise obtain a
judicial or administrative order preventing the First Lien Lender from taking, or refraining from taking, any action with respect to all or any part of the Collateral. Without limitation of the
foregoing, each Second Lien Creditor hereby agrees (a) that it has no right to direct or object to the manner in which the First Lien Lenders apply the proceeds of the Collateral resulting from
the exercise by the First Lien Lender of rights and remedies under the First Lien Documents to the First Lien Debt and (b) that the First Lien Lender has not assumed any obligation to act as
the agent for the Second Lien Creditors with respect to the Collateral. The First Lien Lender shall have the exclusive right to enforce rights and exercise remedies with respect to the Collateral
until the First Lien Debt is paid in full. In exercising rights and remedies with respect to the Collateral, the First Lien Lender may enforce the provisions of the First Lien Documents and exercise
remedies thereunder, all in such order and in such manner as it or they 

6

 

may
determine in the exercise of its or their sole business judgment. Such exercise and enforcement shall include, without limitation, the rights to sell or otherwise dispose of the Collateral, to
incur expenses in connection with such sale or disposition and to exercise all the rights and remedies of a secured lender under the Uniform Commercial Code of any applicable jurisdiction. In
conducting any public or private sale under the Uniform Commercial Code, the First Lien Lender shall give the Second Lien Creditors such notice of such sale as may be required by the applicable
Uniform Commercial Code; provided, however, that 10 days' notice shall be deemed to be
commercially reasonable notice. 

        5.    Subrogation.    Subject to the indefeasible payment in full in
cash of all First Lien Debt and the termination of all lending commitments under the First Lien Documents, each Second Lien Creditor shall be subrogated to the rights of First Lien Lender to receive
Distributions with respect to the First Lien Debt until the First Lien Debt is paid in full. Each Second Lien Creditor agrees that in the event that all or any part of a payment made with respect to
the First Lien Debt is recovered from the holders of the First Lien Debt in a Proceeding or otherwise, any Distribution received by such Second Lien Creditor with respect to the Second Lien Debt at
any time after the date of the payment that is so recovered, whether pursuant to the right of subrogation provided for in this Agreement or otherwise, shall be deemed to have been received by such
Second Lien Creditor in trust as property of the holders of the First Lien Debt and such Second Lien Creditor shall forthwith deliver the same to the First Lien Lender for application to the First
Lien Debt until the First Lien Debt is paid in full. A Distribution made pursuant to this Agreement to the First Lien Lender which otherwise would have been made to Second Lien Creditor is not, as
between the Professional Corporations and Second Lien Creditors, a payment by the Professional Corporations to or on account of the Second Lien Debt unless to the extent provided in the Guaranty
Inducement and Offset Agreement, dated as of the date hereof, by and among Holdings, the Professional Corporations and the Subordinated Creditors. 

        6.    Modification.    Any modification or waiver of any provision of
this Agreement, or any consent to any departure by any party from the terms hereof, shall not be effective in any event unless the same is in writing and signed by the First Lien Lender and the Second
Lien Creditors, and then such modification, waiver or consent shall be effective only in the specific instance and for the specific
purpose given. Any notice to or demand on any party hereto in any event not specifically required hereunder shall not entitle the party receiving such notice or demand to any other or further notice
or demand in the same, similar or other circumstances unless specifically required hereunder. 

        7.    Further Assurances.    Each party to this Agreement promptly
will execute and deliver such further instruments and agreements and do such further acts and things as may be reasonably requested in writing by any other party hereto that may be necessary or
desirable in order to effect fully the purposes of this Agreement. 

        8.    Notices.    Unless otherwise specifically provided herein, any
notice delivered under this Agreement shall be in writing addressed to the respective party as set forth below and may be personally served, telecopied or sent by overnight courier service or
certified or registered United States mail and shall be deemed to have been given (a) if delivered in person, when delivered; (b) if delivered by telecopy, on the date of transmission if
transmitted on a business day before 4:00 p.m. (Pacific time) or, if not, on the next succeeding business day; (c) if delivered by overnight courier, one business day after delivery to
such courier properly addressed; or (d) if by United States mail, four business days after deposit in the United States mail, postage prepaid and properly addressed. 

7

 

        Notices
shall be addressed as follows: 

If
to any Second Lien Creditor: 

c/o
Prospect Medical Holdings, Inc.

6083 Bristol Parkway, Suite 100

Culver City, California 90230

Attn: Stewart Kahn, Executive Vice President 

If
to any Professional Corporation: 

c/o
Prospect Medical Group

6083 Bristol Parkway, Suite 100

Culver City, CA 90230

Attn: Jacob Y. Terner, M.D. 

If
to the First Lien Lenders: 

GMAC-RFC
Health Capital

4650 SW Macadam Avenue

Suite 240

Portland, OR 97239

Attn: Erin Fairbairn 

With
a copy to: 

GMAC-RFC
Health Capital

8400 Normandale Lake Blvd.

Suite 250

Minneapolis, MN 55437

Attn: Laura Mollet 

or
in any case, to such other address as the party addressed shall have previously designated by written notice to the serving party, given in accordance with this Section 9. 

        9.    Successors and Assigns.    This Agreement shall inure to the
benefit of, and shall be binding upon, the respective successors and assigns of the First Lien Lender, the Second Lien Creditors and the Professional Corporations. To the extent permitted under the
First Lien Documents, the First Lien Lender may, from time to time, without notice to any Second Lien Creditor, assign or transfer any or all of the First Lien Debt or any interest therein to any
Person and, notwithstanding any such assignment or transfer, or any subsequent assignment or transfer, the First Lien Debt shall, subject to the terms hereof, be and remain First Lien Debt for
purposes of this Agreement, and every permitted assignee or transferee of any of the First Lien Debt or of any interest therein shall, to the extent of the interest of such permitted assignee or
transferee in the First Lien Debt, be entitled to rely upon and be the third party beneficiary of the subordination provided under this Agreement and shall be entitled to enforce the terms and
provisions hereof to the same extent as if such assignee or transferee were initially a party hereto. 

        10.    Relative Rights.    This Agreement shall define the relative
rights of the First Lien Lenders and Second Lien Creditors. Nothing in this Agreement shall (a) impair, as among the Professional Corporations and the First Lien Lender and as between the
Professional Corporations and the Second Lien Creditors, the obligation of the Professional Corporations with respect to the payment of the First Lien Debt and the Second Lien Debt in accordance with
their respective terms or (b) affect the relative rights of the First Lien Lender or Second Lien Creditors with respect to any other creditors of the Professional Corporations. 

8

 

        11.    Conflict.    In the event of any conflict between any term,
covenant or condition of this Agreement and any term, covenant or condition of any of the Second Lien Documents, the provisions of this Agreement shall control and govern. 

        12.    Headings.    The paragraph headings used in this Agreement are
for convenience only and shall not affect the interpretation of any of the provisions hereof. 

        13.    Counterparts.    This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 

        14.    Severability.    In the event that any provision of this
Agreement is deemed to be invalid, illegal or unenforceable by reason of the operation of any law or by reason of the interpretation placed thereon by any court or governmental authority, the
validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby, and the affected provision shall be modified to the minimum
extent permitted by law so as most fully to achieve the intention of this Agreement. 

        15.    Continuation of Subordination; Termination of
Agreement.    This Agreement shall remain in full force and effect until the indefeasible payment in full in cash of the First Lien Debt and the termination of all
lending commitments under the First Lien Documents after which this Agreement shall terminate without further action on the part of the parties hereto. 

        16.    Applicable Law.    This Agreement shall be governed by and
shall be construed and enforced in accordance with the internal laws of the State of California, without regard to conflicts of law principles. 

        17.    CONSENT TO JURISDICTION.    EACH SECOND
LIEN CREDITOR AND EACH PROFESSIONAL CORPORATION HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA AND IRREVOCABLY AGREES
THAT, SUBJECT TO THE FIRST LIEN LENDER'S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN SUCH COURTS. EACH SECOND LIEN CREDITOR AND EACH
PROFESSIONAL CORPORATION EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. EACH SECOND LIEN CREDITORS AND EACH PROFESSIONAL
CORPORATION HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED
TO THE SECOND LIEN CREDITORS AND THE PROFESSIONAL CORPORATIONS AT THEIR RESPECTIVE ADDRESSES SET FORTH IN THIS AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS
BEEN POSTED. IN ANY LITIGATION, TRIAL, ARBITRATION OR OTHER DISPUTE RESOLUTION PROCEEDING RELATING TO THIS AGREEMENT, ALL DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS OF THE SECOND LIEN CREDITORS, THE
PROFESSIONAL CORPORATIONS OR ANY OF THEIR RESPECTIVE AFFILIATES SHALL BE DEEMED TO BE EMPLOYEES OR MANAGING AGENTS OF THE SUBRODINATED CREDITORS OR THE PROFESSIONAL CORPORATIONS, AS APPLICABLE, FOR
PURPOSES OF ALL APPLICABLE LAW OR COURT RULES REGARDING THE PRODUCTION OF WITNESSES BY NOTICE FOR TESTIMONY (WHETHER IN A DEPOSITION, AT TRIAL OR OTHERWISE). EACH SECOND LIEN CREDITOR AND EACH
PROFESSIONAL CORPORATION AGREES THAT THE FIRST LIEN LENDER'S COUNSEL IN ANY SUCH DISPUTE RESOLUTION PROCEEDING MAY EXAMINE ANY OF THESE INDIVIDUALS AS IF UNDER CROSS-EXAMINATION AND THAT ANY DISCOVERY
DEPOSITION OF ANY OF THEM MAY BE USED IN THAT PROCEEDING AS IF IT WERE AN EVIDENCE DEPOSITION. EACH SECOND LIEN CREDITOR AND EACH PROFESSIONAL CORPORATION IN ANY EVENT WILL USE ALL COMMERCIALLY  

9

 

 REASONABLE EFFORTS TO PRODUCE IN ANY SUCH DISPUTE RESOLUTION PROCEEDING, AT THE TIME AND IN THE MANNER REQUESTED BY THE FIRST LIEN LENDER, ALL PERSONS, DOCUMENTS (WHETHER IN TANGIBLE, ELECTRONIC OR
OTHER FORM) OR OTHER THINGS UNDER ITS CONTROL AND RELATING TO THE DISPUTE.  

        18.    WAIVER OF JURY
TRIAL.    EACH SECOND LIEN CREDITOR, EACH PROFESSIONAL CORPORATION AND THE FIRST LIEN LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE SECOND LIEN DOCUMENTS OR ANY OF THE FIRST LIEN DOCUMENTS. EACH SECOND LIEN CREDITOR, EACH PROFESSIONAL
CORPORATION AND THE FIRST LIEN LENDER ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT
AND THE FIRST LIEN DOCUMENTS AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH SECOND LIEN CREDITOR, EACH PROFESSIONAL CORPORATION AND THE FIRST LIEN LENDER
WARRANTS AND REPRESENTS THAT EACH HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS.

(Signature page follows)

10

IN WITNESS WHEREOF, Second Lien Creditors, the Professional Corporations and the First Lien Lender have caused this Agreement to be executed as of the
date first above written. 

	 	 	"SECOND LIEN CREDITORS"
	

 	
 	
PROSPECT MEDICAL SYSTEMS, INC., a Delaware corporation
	

 	
 	
PINNACLE HEALTH RESOURCES, a California corporation
	

 	
 	

By:	

/s/  JACOB Y. TERNER, M.D.      

	 	 	Name:	Jacob Y. Terner, M.D.

	 	 	Title:	Chief Executive Officer

	

 	
 	
SIERRA MEDICAL MANAGEMENT, INC., A MEDICALCOROPRATION, a Delaware corporation
	

 	
 	

By:	

/s/  JACOB Y. TERNER, M.D.      

	 	 	Name:	Jacob Y. Terner, M.D.

	 	 	Title:	Chief Executive Officer

	

 	
 	
"FIRST LIEN LENDER"
	

 	
 	
RESIDENTIAL FUNDING CORPORATION, a Delaware corporation
	

 	
 	

By:	

/s/  ANGELA D. BROWN      

	 	 	Name:	Angela D. Brown

	 	 	Title:	Sr. Vice President

	"HOLDINGS"	 	"SUBSIDIARIES"
	
PROSPECT MEDICAL HOLDINGS, INC., a Delaware corporation	
 	
PROSPECT MEDICAL GROUP, INC., a California professional corporation
	

 	

 	
 	
SANTA ANA/TUSTIN PHYSICIANS GROUP, INC., a California professional corporation
	By:	/s/  JACOB Y. TERNER, M.D.      
	 	 	 
	Name:	Jacob Y. Terner, M.D.
	 	PEGASUS MEDICAL GROUP, INC., a California professional corporation
	Title:	Chief Executive Officer
	 	 	 
	 	 	 	ANTELOPE VALLEY MEDICAL ASSOCIATES, INC., a California professional corporation
	

 	

 	
 	
PROSPECT HEALTH SOURCE MEDICAL GROUP, INC., a California professional corporation
	

 	

 	
 	
PROSPECT PROFESSIONAL CARE MEDICAL GROUP, INC., a California professional corporation
	

 	

 	
 	
PROSPECT NWOC MEDICAL GROUP, INC., a California professional corporation
	

 	

 	
 	
APAC MEDICAL GROUP, INC., a California professional corporation
	

 	

 	
 	
STARCARE MEDICAL GROUP, INC., a California professional corporation
	

 	

 	
 	

By:	

/s/  JACOB Y. TERNER, M.D.      

	 	 	 	Name:	Jacob Y. Terner, M.D.

	 	 	 	Title:	Chief Executive Officer

	 	 	 	"SUBSIDIARIES"
	

 	

 	
 	
SIERRA PRIMARY CARE MEDICAL GROUP, A MEDICAL CORPORATION, a California professional corporation
	

 	

 	
 	

By:	

/s/  JACOB Y. TERNER, M.D.      

	 	 	 	Name:	Jacob Y. Terner, M.D.

	 	 	 	Title:	Chief Executive Officer

	

 	

 	
 	
NUESTRA FAMILIA MEDICAL GROUP, INC., a California professional corporation
	

 	

 	
 	

By:	

/s/  R. STEWART KAHN      

	 	 	 	Name:	R. Stewart Kahn

	 	 	 	Title:	Vice President

 
 

EXHIBIT A    
    
    MANAGEMENT SERVICES AGREEMENTS    
    

	1.
	Amended
and Restated Management Services Agreement, made as of September 15, 1998 and deemed to have been effective as of June 4, 1996, between Prospect Medical
Systems, Inc. and Prospect Medical Group, Inc.

	a.
	Amendment
to Management Services Agreement, made as of October 1, 1998, between Prospect Medical Systems, Inc. and Prospect Medical Group, Inc.

	2.
	Management
Agreement dated as of January 1, 2003 between Pinnacle Health Resources and StarCare Medical Group, Inc., dba Gateway Medical Group, Inc.

	a.
	Amendment
to Management Agreement effective February 1, 2004, between Pinnacle Health Resources and StarCare Medical Group, Inc., dba Gateway Medical Group, Inc.

	3.
	Management
Agreement dated as of January 1, 2003 between Pinnacle Health Resources and APAC Medical Group, Inc., dba Gateway Physicians Medical Associates, Inc.

	a.
	Amendment
to Management Agreement effective February 1, 2004, between Pinnacle Health Resources and APAC Medical Group, Inc., dba Gateway Physicians Medical
Associates, Inc.

	4.
	Management
Services Agreement, made as of August 1, 1999, between Prospect Medical Systems, Inc. and Nuestra Familia Medical Group

	5.
	Management
Services Agreement, made as of July 1, 1999, between Prospect Medical Systems, Inc. and AMVI/Prospect Medical Group

	6.
	Management
Services Agreement dated as of January 1, 2001 between Prospect Medical Systems, Inc. and Prospect Health Source Medical Group, Inc.

	a.
	Amendment
to Management Services Agreement dated as of November 1, 2002 between Prospect Medical Systems, Inc. and Prospect Health Source Medical Group, Inc.

	7.
	Management
Services Agreement dated as of October 1, 2003, by and between Prospect Medical Systems, Inc. and Prospect Professional Care Medical Group, Inc.

	8.
	Management
Services Agreement dated as of March 1, 2004 by and between Prospect Medical Systems, Inc. and Prospect NWOC Medical Group, Inc.

	9.
	Second
Amended and Restated Management Services Agreement, made as of September 15, 1998 and deemed to have been effective as of September 25, 1997, between Sierra
Medical Management, Inc. and Sierra Primary Care Medical Group, Inc.

	a.
	Amendment
to Management Services Agreement, made as of October 1, 1998, between Sierra Medical Management, Inc. and Sierra Primary Care Medical Group, Inc.

	10.
	Amended
and Restated Management Services Agreement, made as of September 15, 1998 and deemed to have been effective as of October 31, 1997, by and between Sierra Medical
Management, Inc. and Pegasus Medical Group, Inc.

	a.
	Amendment
to Management Services Agreement made as of October 1, 1998, by and between Sierra Medical Management, Inc. and Pegasus Medical Group, Inc.

	11.
	Management
Services Agreement effective as of May 19, 2003 between Sierra Medical Management, Inc., and Antelope Valley Medical Associates, Inc.

	12.
	Management
Services Agreement dated as of July 14, 1997 between Prospect Medical Systems, Inc., and Santa Ana/Tustin Physicians Group Inc. 

 
 

EXHIBIT B    
    
    PC SECURITY AGREEMENTS    
    

	(i)
	Security
Agreement, dated as of August 1, 1999, between Prospect Medical Systems, Inc. and Nuestra Familia Medical group, Inc.;

	(ii)
	Security
Agreement (Physician Group), dated as of July 3, 1997, between Prospect Medical Systems, Inc. and Prospect Medical Group, Inc. (Amendment
Number One to Security Agreement dated as of July 6, 1999 between Prospect Mecical Systems, Inc. and Prospect Medical Group, Inc.);

	(iii)
	Security
Agreement dated as of October 31, 1997, between Pegasus Medical Group, Inc. and Sierra Medical Management, Inc. (Amendment Number One to
Security Agreement dated as of September 6, 1999 between Sierra Primary Care Medical Group, Inc. and Sierra Medical Management, Inc.);

	(iv)
	Security
Agreement dated as of October 1, 2003, between Prospect Professional Care Medical Group, Inc. and Prospect Medical Systems, Inc.;

	(v)
	Security
Agreement, dated as of September 25, 1997, between Sierra Primary Care Medical Group, Inc. and Sierra Medical Management, Inc. (Amendment
Number One to Security Agreement dated as of September 6, 1999 between Sierra Primary Care Medical Group, Inc. and Sierra Medical Management, Inc.);

	(vi)
	Security
Agreement (Physician Group), dated as of October 31, 1997, between Pegasus Medical Group, Inc. and Sierra Medical Management, Inc.
(Amendment Number One to Security Agreement dated as of July 6, 1999 between Pegasus Medical Group, Inc. and Sierra Medical Management, Inc.);

	(vii)
	Security
Agreement (Group effective as of March 1, 2004, between Prospect NWOC Medical Group, Inc., dba Prospect Northwest Orange County Medical
Group, Inc., and Prospect Medical Systems, Inc.

	(viii)
	Security
Agreement (Group effective as of January 1, 2001, between Prospect Health Source Medical Group, Inc., and Prospect Medical Systems, Inc.

	(ix)
	Security
Agreement (Group effective as of February 1, 2004, between StarCare Medical Group, Inc., dba Gateway Medical Group, Inc., and Pinnacle
Health Resources.

	(x)
	Security
Agreement (Group effective as of February 1, 2004, between APAC Medical Group, Inc., dba Gateway Physicians Medical Associates, Inc., and
Pinnacle Health Resources.

	(xi)
	Security
Agreement (Group effective as of May 19, 2003, between Antelope Valley Medical Associates, Inc., and Sierra Medical management, Inc.

	(xii)
	Omnibus
Amendment to Security Agreements dated as of September 27, 2004, among Prospect Medical Systems, Inc., Sierra Medical Management, Inc.,
Pinnacle Health Resources, Prospect Medical Group, Inc., Santa/Ana Tustin Physicians Group, Inc., Sierra Primary Care Medical Group, A Medical Corporation, Pegasus Medical
Group, Inc., Antelope Valley Medical Associates, Inc., Prospect Health Source Medical Group, Inc., Prospect Professional Care Medical Group, Inc., Prospect NWOC Medical
Group, Inc., APAC Medical Group, Inc., StarCare Medical Group Inc., and Nuestra Familia Medical Group. 

QuickLinks

Exhibit 10.211

SUBORDINATION AGREEMENT

R E C I T A L S

EXHIBIT A MANAGEMENT SERVICES AGREEMENTS

EXHIBIT B PC SECURITY AGREEMENTS

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