AMENDED AND RESTATED CREDIT SUCCESSION AGREEMENT
This AMENDED AND RESTATED CREDIT SUCCESSION AGREEMENT (this "AGREEMENT"),
dated as of July 14, 1997, is entered into by and among ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, M.D.
("▇▇▇▇▇▇▇▇"), Prospect Medical Holdings, Inc., a Delaware corporation
("HOLDINGS"), Prospect Medical Systems, Inc., a Delaware corporation
("SYSTEMS"), Prospect Medical Group, a California professional corporation
("GROUP"), Santa ▇▇▇/Tustin Physicians Group, Inc., a California professional
corporation ("SANTA ▇▇▇/TUSTIN"), such other entities as may hereafter become
parties hereto by executing a joinder agreement, in form and substance
satisfactory to Imperial Bank, a California banking corporation ("BANK"), making
them a party to this Agreement, and Bank, with reference to the following facts.
A. Group, Santa ▇▇▇/Tustin and each other California professional medical
corporation which hereafter becomes a party to this Agreement (collectively,
with Group and Santa ▇▇▇/Tustin, the "PROFESSIONAL CORPORATIONS") is a
professional service corporation within the meaning of the ▇▇▇▇▇▇▇-▇▇▇▇
Professional Corporation Act of the State of California ("PROFESSIONAL
CORPORATION ACT").
B. Systems and each other subsidiary of Holdings which hereafter becomes
a party to this Agreement (collectively, with Systems, 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").
C. All of the issued and outstanding shares of the Professional
Corporations are owned by either ▇▇▇▇▇▇▇▇, Group 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 has entered into that certain Revolving Credit Agreement (the
"CREDIT AGREEMENT"), dated as of July 3, 1997, with Bank pursuant to which Bank
shall extend credit to Holdings. All initially capitalized terms used but not
defined herein shall have the meanings given to them in the Credit Agreement.
E. Each of the Management Companies has entered into a Continuing
Guaranty (each, a "GUARANTY" and collectively, the "GUARANTIES") in favor of
Bank pursuant to which such Management Company has guaranteed the obligations of
the Holdings under the Credit Agreement.
F. The PC Shareholders, the Management Companies and the Professional
Corporations are parties to those certain Assignable Option Agreements, all as
more fully set forth on SCHEDULE C, attached hereto and incorporated herein by
this reference (each such agreement an "OPTION AGREEMENT"). As used herein the
term "SUCCESSOR PHYSICIAN"
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shall have the same meaning as in the Option Agreements or, if such term is
undefined in any 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.
G. 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 Credit Agreement will be used, in part, to
enable Holdings and the Management Companies to make transfers amongst
themselves, the Subsidiaries, the PC Shareholders and the Professional
Corporations in connection with the operation of their respective businesses.
H. The PC Shareholders and the Professional Corporations will derive
direct and substantial benefit from the execution of and performance under the
Credit Agreement by Holdings and from the Loans to be advanced thereunder.
I. 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 Credit Agreement.
J. The parties hereto (other than Santa ▇▇▇/Tustin) have previously
entered into that certain Credit Succession Agreement, dated as of July 3, 1997
(the "PRIOR AGREEMENT"), and the parties hereto desire to amend and restate the
Prior Agreement in accordance with the terms of this 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 Bank certain rights to secure the performance and payment of sums due
under the Credit Agreement, the Guaranties 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 covenants
and agrees that, notwithstanding the occurrence of a Succession Event:
(a) EXISTENCE. Each Professional Corporation shall maintain its
existence as a professional service corporation (a "MEDICAL CORPORATION") under
the laws of its state of formation.
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(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 Credit 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 Bank's satisfaction within ten
(10) Business Days after such Person shall become aware thereof, whether by
written notice from Bank or otherwise; or
(d) DEATH OR DISQUALIFICATION. Any PC Shareholder dies or 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, so long as any of the
Revolving Credit Commitment shall be available and until the full and infeasible
payment and performance of the Obligations and of all obligations arising under
the Guaranties (the "GUARANTY OBLIGATIONS"), 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 three (3) members who shall be
persons (i) duly licensed to practice in the medical industry in the applicable
jurisdiction and that each such person shall be 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;
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(c) NO TRANSFER. Notwithstanding the terms of any Option Agreement,
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) through 2(c) of this Agreement and the exercise by Bank under the
Credit Agreement, the Guaranties 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 Bank of the occurrence of a Succession Event and upon
receipt of Bank's written demand therefor, the PC Shareholders, or their estate,
as the case may be, shall sell the Shares to such person(s) as Bank 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.
5. TERM; AMENDMENT TO CHARTER OR BYLAWS. This Agreement shall be in full
force and effect for so long as the Credit Agreement has not been terminated and
until the full and indefeasible payment and performance of the Obligations and
the Guaranty Obligations. 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. ▇▇▇▇▇▇▇▇ and each other the PC
Shareholder who is an individual shall cause his 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 ▇▇▇▇▇▇▇▇ 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.
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7. GRANT OF SECURITY INTEREST. In order to secure the timely performance
of the obligations of the PC Shareholders owing to Bank hereunder, each PC
Shareholder hereby grants a security interest in the Shares it owns to Bank.
Such security interest shall attach to all now existing and hereafter acquired
Shares without further action required on the part of Bank or any PC
Shareholder.
8. DELIVERY OF SHARES; STOCK ASSIGNMENTS. Upon the purchase of any
Shares of any of the Professional Corporations hereunder or under any Option
Agreement, the relevant PC Shareholders, New Shareholder, Successor Shareholder
or Professional Corporation, as the case may be, shall deliver to Bank, as
collateral for the Obligations and the Guaranty Obligations, all stock
certificate(s) evidencing the Shares of the Professional Corporation(s)
purchased, together with all necessary or appropriate stock assignments separate
from such certificate(s) in accordance with the terms of this Agreement.
9. REPRESENTATIONS AND WARRANTIES. The PC Shareholders and the
Professional Corporations, hereby represent and warrant to Bank as follows:
(a) SHAREHOLDERS OF RECORDS. The PC Shareholders are the sole holder
of record and the sole beneficial owner of the Shares of each of the
Professional Corporations as indicated on SCHEDULE B, free and clear of any Lien
thereon or affecting title thereto, except for (i) the Lien created by this
Agreement, and (ii) Permitted Liens.
(b) CONSENTS AND APPROVALS. The Shares, the pledge of the Shares
hereunder and the agreements, covenants and restrictions hereby entered into are
not subject to and do not require the consent, approval or authorization under
any agreement to which any of the Professional Corporations are subject,
including, without limitation, under formation documents of any of the
Professional Corporations, any management or professional services agreements,
any loan agreements or similar documents, or of any third party, including,
without limitation, any lender to any of any Professional Corporation.
(c) RESTRICTIVE COVENANTS. Except as otherwise provided in any
Option Agreement, the Shares are not subject to any restrictive covenants,
negative pledges or any similar types of covenants or agreements that would
restrict transferability.
(d) DELIVERY OF CERTIFICATES. All certificates or other instruments
representing or evidencing the Shares, accompanied by appropriate duly executed
instruments of transfer or assignment in blank, have been delivered to Bank
pursuant to the terms of this Agreement and all certificates, cash, instruments
and other property or proceeds from time to time received, receivable or
otherwise distributed in respect of, or in exchange for, any such Shares shall,
immediately upon receipt, be delivered to Bank in accordance with the terms of
this Agreement, together with any necessary endorsements.
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10. INDEMNIFICATION.
(a) BANK INDEMNIFICATION. The PC Shareholders (other than ▇▇▇▇▇▇▇▇),
Holdings, the Management Companies and the Professional Corporations, jointly
and severally, shall indemnify and defend Bank against any and all claims,
expenses, liabilities and losses, including reasonable attorneys' fees, incurred
or suffered by Bank by reason of the exercise or failure to exercise any rights
of Bank under this Agreement, excluding only such claims, expenses, liabilities
and losses arising solely from the gross negligence or willful misconduct of
Bank. ▇▇▇▇▇▇▇▇ shall indemnify and defend Bank against any and all claims,
expenses, liabilities and losses, including reasonable attorneys' fees, incurred
or suffered by Bank by reason of the exercise or failure to exercise any rights
of Bank under this Agreement caused by any act or omission of ▇▇▇▇▇▇▇▇,
excluding only such claims, expenses, liabilities and losses arising solely from
the gross negligence or willful misconduct of Bank.
(b) SURVIVAL. The obligations of the parties under this Section 10
will survive the termination of this Agreement.
11. FURTHER AGREEMENTS.
(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 Bank 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 Bank. Such shares of stock
shall be marked with a restrictive legend with respect thereto.
(c) COMPLIANCE. Each New Shareholder and Successor Shareholder
agrees to, and shall cause all directors of the Professional Corporations to
take all steps necessary to, ensure that each Professional Corporation comply
with all provisions of the Professional Corporation Act and remain in good
standing as a professional medical corporation in the State of California.
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12. 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.
13. PRIMACY OF AGREEMENT. Upon the occurrence of a Succession Event, this
Agreement and the provisions hereof shall supersede any 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
any Option Agreement, this Agreement shall control.
14. 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 Bank, that Bank 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.
15. 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:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, M.D.
Prospect Medical Holdings, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Professional Corporations:
c/o Prospect Medical Group
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, M.D.
Bank:
Imperial Bank
at its address for notice under the Credit Agreement
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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.
16. 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.
17. 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 Bank 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.
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(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 Bank'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 or the Guaranty
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 or the Guaranty Obligations;
(ii) Any limitation, discharge, or cessation of the liability
of any of them or any other guarantor for the Obligations or the Guaranty
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 the Guaranty 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 the
Guaranty 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 or the Guaranty Obligations;
(iv) Any assignment or other transfer, in whole or in part, of
Bank's interests in and rights under this Agreement, the Credit Agreement or any
of the other Loan Documents, including, without limitation, Bank's right to
receive payment of the Obligations or the Guaranty Obligations or any assignment
or other transfer, in whole or in part, of Bank's interests in and to the
Collateral or any other collateral securing the Obligations or the Guaranty
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 or the Guaranty 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 or the Guaranty Obligations,
the Collateral, or any other collateral securing the Obligations or the Guaranty
Obligations;
(vi) Bank's amendment, modification, renewal, extension,
cancellation or surrender, of any agreement, document or instrument relating to
the Credit Agreement, this Agreement, the Obligations, the Guaranty Obligations,
the Collateral or any
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other collateral securing the Obligations or the Guaranty Obligations, or Bank's
exchange, release, or waiver of any Collateral or of any other collateral
securing the Obligations or the Guaranty Obligations;
(vii) Bank's exercise or nonexercise of any power, right or
remedy with respect to the Obligations, the Guaranty Obligations, the Collateral
or any other collateral securing the Obligations or the Guaranty Obligations,
including, but not limited to, Bank'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) Bank's vote, claim, distribution, election, acceptance,
action or inaction in any bankruptcy case related to the Obligations, the
Guaranty Obligations, the Collateral or any other collateral securing the
Obligations or the Guaranty Obligations; and
(ix) Any impairment or invalidity of the Collateral or any
other collateral securing the Obligations or the Guaranty Obligations or any
failure to perfect any of Bank'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 Bank. 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 Bank and
accepted by Bank in the State of California. THIS AGREEMENT SHALL BE
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GOVERNED BY, CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE INTERNAL LAWS OF
THE STATE OF CALIFORNIA WITHOUT GIVING EFFECT TO ANY PRINCIPLES OF CONFLICT OF
LAWS.
(m) AMENDED AND RESTATED AGREEMENT. This Agreement shall amend and
restate in its entirety, supersede, and continue the obligations incurred under,
the Prior Agreement.
(n) JUDICIAL REFERENCE. Other than (i) nonjudicial foreclosure and
all matters in connection therewith regarding security interests in real or
personal property; or (ii) the appointment of a receiver, or the exercise of
other provisional remedies (any and all of which may be initiated pursuant to
applicable law), each controversy, dispute or claim between the parties arising
out of or relating to this Agreement, which controversy, dispute or claim is not
settled in writing within thirty (30) days after the "CLAIM DATE" (defined as
the date on which a party subject to the Agreement gives written notice to all
other parties that a controversy, dispute or claim exists), will be settled by a
reference proceeding in California in accordance with the provisions of Section
638 ET SEQ. of the California Code of Civil Procedure, or their successor
section ("CCP"), which shall constitute the exclusive remedy for the settlement
of any controversy, dispute or claim concerning this Agreement, including
whether such controversy, dispute or claim is subject to the reference
proceeding and except as set forth above, the parties waive their rights to
initiate any legal proceedings against each other in any court or jurisdiction
other than the Superior Court in the County where the Real Property, if any, is
located or Los Angeles County if none (the "Court"). The referee shall be a
retired Judge of the Court selected by mutual agreement of the parties, and if
they cannot so agree within forty-five (45) days after the Claim Date, the
referee shall be promptly selected by the Presiding Judge of the Court (or his
representative). The referee shall be appointed to sit as a temporary judge,
with all of the powers for a temporary judge, as authorized by law, and upon
selection should take and subscribe to the oath of office as provided for in
Rule 244 of the California Rules of Court (or any subsequently enacted Rule).
Each party shall have one peremptory challenge pursuant to CCP Section 170.6.
The referee shall (a) be requested to set the matter for hearing within sixty
(60) days after the Claim Date and (b) try any and all issues of law or fact and
report a statement of decision upon them, if possible, within ninety (90) days
of the Claim Date. Any decision rendered by the referee will be final, binding
and conclusive and judgment shall be entered pursuant to CCP Section 644 in any
court in the State of California having jurisdiction. Any party may apply for a
reference proceeding at any time after thirty (30) days following notice to any
other party of the nature of the controversy, dispute or claim, by filing a
petition for a hearing and/or trial. All discovery permitted by this Agreement
shall be completed no later than fifteen (15) days before the first hearing date
established by the referee. The referee may extend such period in the event of
a party's refusal to provide requested discovery for any reason whatsoever,
including, without limitation, legal objections raised to such discovery or
unavailability of a witness due to absence or illness. No party shall be
entitled to "priority" in conducting discovery. Depositions may be taken by
either party upon seven (7) days written notice, and request for production or
inspection of documents shall be responded to within ten (10) days after
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service. All disputes relating to discovery which cannot be resolved by the
parties shall be submitted to the referee whose decision shall be final and
binding upon the parties. Pending appointment of the referee as provided
herein, the Superior Court is empowered to issue temporary and/or provisional
remedies, as appropriate.
Except as expressly set forth in this Agreement, the referee shall
determine the manner in which the reference proceeding is conducted including
the time and place of all hearings, the order of presentation of evidence, and
all other questions that arise with respect to the course of the reference
proceeding. All proceedings and hearings conducted before the referee, except
for trial, shall be conducted without a court reporter except that when any
party so requests, a court reporter will be used at any hearing conducted before
the referee. The party making such a request shall have the obligation to
arrange for and pay for the court reporter. The costs of the court reporter at
the trial shall be borne equally by the parties.
The referee shall be required to determine all issues in accordance
with existing case law and the statutory laws of the State of California. The
rules of evidence applicable to proceedings at law in the State of California
will be applicable to the reference proceeding. The referee shall be empowered
to enter equitable as well as legal relief, to provide all temporary and/or
provisional remedies and to enter equitable orders that will be binding upon the
parties. The referee shall issue a single judgment at the close of the
reference proceeding which shall dispose of all of the claims of the parties
that are the subject of the reference. The parties hereto expressly reserve the
right to contest or appeal from the final judgment or any appealable order or
appealable judgment entered by the referee. The parties hereto expressly
reserve the right to findings of fact, conclusions of laws, a written statement
of decision, and the right to move for a new trial or a different judgment,
which new trial, if granted, is also to be a reference proceeding under this
provision.
In the event that the enabling legislation which provides for
appointment of a referee is repealed (and no successor statute is enacted), any
dispute between the parties that would otherwise be determined by the reference
procedure herein described will be resolved and determined by arbitration. The
arbitration will be conducted by a retired judge of the Court, in accordance
with the California Arbitration Act, Section 1280 through Section 1294.2 of the
CCP as amended from time to time. The limitations with respect to discovery as
set forth hereinabove shall apply to any such arbitration proceeding.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
SANTA ▇▇▇/TUSTIN PHYSICIANS GROUP, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Title: Secretary
---------------------------------
PROSPECT MEDICAL HOLDINGS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D.
------------------------------------
Title: CEO
---------------------------------
PROSPECT MEDICAL SYSTEMS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D.
------------------------------------
Title: CEO
---------------------------------
PROSPECT MEDICAL GROUP, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Title: President
---------------------------------
IMPERIAL BANK
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Title: SVP
---------------------------------
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SPOUSAL JOINDER AND CONSENT
I am the spouse of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, M.D., a shareholder (the
"SHAREHOLDER") of Prospect Medical Group, Inc., a California professional
medical corporation ("PROFESSIONAL CORPORATION"). To the extent that I have any
interest in any of the Shares (as that term is defined in the Amended and
Restated Credit Succession Agreement (the "CREDIT SUCCESSION AGREEMENT"),
entered into as of July 14, 1997, by and among Imperial Bank, Prospect Medical
Holdings, Inc., Prospect Medical Systems, Inc., the Shareholder and Prospect
Medical Group, Inc.), 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 Imperial Bank is significantly
relaying on the validity and accuracy of this Spousal Joinder and Consent in
entering into the Credit Succession Agreement.
Executed this 14 day of July, 1997.
Signature: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------------
Printed or Typed Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
14