Exhibit 10.4
CONTINUING GUARANTY
FOR VALUE RECEIVED, the sufficiency
of which is hereby acknowledged, and in consideration of credit
and/or financial accommodations heretofore or hereafter from time
to time made or granted to PROSPECT MEDICAL HOLDINGS, INC., a
Delaware corporation (the “ Borrower ”),
pursuant to the Credit Agreement dated as of the date hereof by and
among the Borrower, ROYAL BANK OF CANADA as administrative agent
(the “ Administrative Agent ”) and the lenders
party thereto (as amended, restated, supplemented or otherwise
modified from time to time, the “ Credit Agreement
”; capitalized terms not otherwise defined in this Guaranty
shall have the respective meanings set forth in the Credit
Agreement), the undersigned Guarantor (whether one or more, the
“ Guarantor ”, and if more than one, jointly and
severally) hereby furnishes its guaranty of the Guaranteed
Obligations (as hereinafter defined) pursuant to this Continuing
Guaranty dated as of July 29, 2009 as follows:
1.
GUARANTY . The Guarantor hereby absolutely and
unconditionally guarantees, as a guaranty of payment and
performance and not merely as a guaranty of collection, prompt
payment when due, whether at stated maturity, by required
prepayment, upon acceleration, demand or otherwise, and at all
times thereafter, of all “Obligations” as defined in
the Credit Agreement, and any and all existing and future
indebtedness and liabilities of every kind, nature and character,
direct or indirect, absolute or contingent, liquidated or
unliquidated, voluntary or involuntary and whether for principal,
interest, premiums, fees, indemnities, damages, costs, expenses or
otherwise, of the Borrower to the Administrative Agent and any
other Secured Party arising under the Credit Agreement, any other
Loan Documents and any instruments, agreements or other documents
of any kind or nature now or hereafter executed in connection
therewith (including all renewals, extensions, amendments,
refinancings and other modifications thereof and all costs,
attorneys’ fees and expenses incurred by the Administrative
Agent and any other Secured Party in connection with the collection
or enforcement thereof), and whether recovery upon such
indebtedness and liabilities may be or hereafter become
unenforceable or shall be an allowed or disallowed claim under any
proceeding or case commenced by or against any Guarantor or the
Borrower under the Bankruptcy Code (Title 11, United States
Code), any successor statute or any other liquidation,
conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief laws of the United States
or other applicable jurisdictions from time to time in effect and
affecting the rights of creditors generally (collectively, “
Debtor Relief Laws ”), and including interest that
accrues after the commencement by or against the Borrower of any
proceeding under any Debtor Relief Laws (collectively, the “
Guaranteed Obligations ”). The books and records
of the Administrative Agent and the books and records of each
Secured Party showing the amount of the Guaranteed Obligations
shall be admissible in evidence in any action or proceeding, and
shall be binding upon the Guarantor and conclusive for the purpose
of establishing the amount of the Guaranteed Obligations.
This Guaranty shall not be affected by the genuineness, validity,
regularity or enforceability of the Guaranteed Obligations or any
instrument or agreement evidencing any Guaranteed Obligations, or
by the existence, validity, enforceability, perfection,
non-perfection or extent of any collateral therefor, or by any fact
or circumstance relating to the Guaranteed Obligations which might
otherwise constitute a defense to the obligations of the Guarantor
under this Guaranty, and the Guarantor hereby irrevocably waives
any defenses it may now have or hereafter acquire in any way
relating to any or all of the foregoing. Anything contained
herein to the contrary notwithstanding, the
obligations of the Guarantor hereunder at any
time shall be limited to an aggregate amount equal to the largest
amount that would not render its obligations hereunder subject to
avoidance as a fraudulent transfer or conveyance under
Section 548 of the Bankruptcy Code (Title 11, United
States Code) or any comparable provisions of any similar federal or
state law.
2.
NO SETOFF OR DEDUCTIONS; TAXES; PAYMENTS . The
Guarantor represents and warrants that it is organized and resident
in the United States of America. The Guarantor shall make all
payments hereunder without setoff or counterclaim and free and
clear of and without deduction for any taxes, levies, imposts,
duties, charges, fees, deductions, withholdings, compulsory loans,
restrictions or conditions of any nature now or hereafter imposed
or levied by any jurisdiction or any political subdivision thereof
or taxing or other authority therein unless the Guarantor is
compelled by law to make such deduction or withholding. If
any such obligation (other than one arising with respect to taxes
based on or measured by the income or profits of the Administrative
Agent or any other Secured Party) is imposed upon the Guarantor
with respect to any amount payable by it hereunder, the Guarantor
will pay to the Administrative Agent or such other Secured Party,
on the date on which such amount is due and payable hereunder, such
additional amount in Dollars as shall be necessary to enable the
Administrative Agent or such other Secured Party to receive the
same net amount which the Administrative Agent or such other
Secured Party would have received on such due date had no such
obligation been imposed upon the Guarantor. The Guarantor
will deliver promptly to the Administrative Agent or such other
Secured Party certificates or other valid vouchers for all taxes or
other charges deducted from or paid with respect to payments made
by the Guarantor hereunder. Payments by the Guarantor shall be made
to the Administrative Agent in accordance with Section 2.11 of
the Credit Agreement and shall be credited and applied in
accordance with Section 8.03 of the Credit Agreement.
The obligations of the Guarantor under this paragraph shall survive
the payment in full of the Guaranteed Obligations and termination
of this Guaranty.
3.
RIGHTS OF ADMINISTRATIVE AGENT AND THE OTHER SECURED PARTIES
. The Guarantor consents and agrees that the Administrative
Agent and the other Secured Parties may, at any time and from time
to time, without notice or demand, and without affecting the
enforceability or continuing effectiveness hereof: (a) amend,
extend, renew, compromise, discharge, accelerate or otherwise
change the time for payment or the terms of the Guaranteed
Obligations or any part thereof; (b) take, hold, exchange,
enforce, waive, release, fail to perfect, sell, or otherwise
dispose of any security for the payment of this Guaranty or any
Guaranteed Obligations; (c) apply such security and direct the
order or manner of sale thereof as the Administrative Agent and the
other Secured Parties in their sole discretion (subject to the
terms of the Loan Documents) may determine; and (d) release or
substitute one or more of any endorsers or other guarantors of any
of the Guaranteed Obligations. Without limiting the
generality of the foregoing, the Guarantor consents to the taking
of, or failure to take, any action which might in any manner or to
any extent vary the risks of the Guarantor under this Guaranty or
which, but for this provision, might operate as a discharge of the
Guarantor.
4.
CERTAIN WAIVERS . The Guarantor waives (a) any
defense arising by reason of any disability or other defense of the
Borrower or any other guarantor, or the cessation from any cause
whatsoever (including any act or omission of the Administrative
Agent or any other Secured Party) of the liability of the Borrower
other than payment in full of the Guaranteed
2
Obligations; (b) any defense based on any
claim that the Guarantor’s obligations exceed or are more
burdensome than those of the Borrower; (c) the benefit of any
statute of limitations affecting the Guarantor’s liability
hereunder; (d) any right to require the Administrative Agent
or any other Secured Party to proceed against the Borrower, proceed
against or exhaust any security for the Indebtedness, or pursue any
other remedy in the Administrative Agent’s or any other
Secured Party’s power whatsoever; (e) any benefit of and
any right to participate in any security now or hereafter held by
the Administrative Agent or any other Secured Party; and
(f) to the fullest extent permitted by law, any and all other
defenses or benefits that may be derived from or afforded by
applicable law limiting the liability of or exonerating guarantors
or sureties. The Guarantor expressly waives all setoffs and
counterclaims and all presentments, demands for payment or
performance, notices of nonpayment or nonperformance, protests,
notices of protest, notices of dishonor and all other notices or
demands of any kind or nature whatsoever with respect to the
Guaranteed Obligations, and all notices of acceptance of this
Guaranty or of the existence, creation or incurrence of new or
additional Guaranteed Obligations. In accordance with
Section 2856 of the California Civil Code the Guarantor waives
any and all rights and defenses available to it by reason of
Sections 2787 to 2855, inclusive, 2899 and 3433 of the California
Civil Code, including any and all rights or defenses the Guarantor
may have because the Obligations are secured by real property or by
reason of protection afforded to the Guarantor with respect to any
of the Obligations pursuant to the antideficiency or other laws of
the State of California limiting or discharging a principal’s
indebtedness or a guarantor’s obligations, including
Section 580a, 580b, 580d or 726 of the California Code of
Civil Procedure. Consequently, among other things:
(1) the Secured Parties may collect from the Guarantor without
first foreclosing on any real or personal property collateral
pledged by the Guarantor; and (2) if the Secured Parties
foreclose on any real property collateral pledged by the Guarantor:
(x) the amount of the Obligations may be reduced only by the
price for which the collateral is sold at the foreclosure sale,
even if the collateral is worth more than the sale price and
(y) the Secured Parties may collect from the Guarantor even if
the Secured Parties, by foreclosing on the real property
collateral, have destroyed any right the Guarantor may have to
collect from the Borrower. This is an unconditional and irrevocable
waiver of any rights and defenses the Guarantor may have because
the Obligations are secured by real property. The Guarantor also
waives all rights and defenses arising out of an election of
remedies by the Secured Parties, even though that election of
remedies, such as a nonjudicial foreclosure with respect to
security for an Obligation, has destroyed the Guarantor’s
rights of subrogation and reimbursement against the Borrower by the
operation of Section 580d of the California Code of Civil
Procedure or otherwise; and even though that election of remedies
by the Secured Parties, such as nonjudicial foreclosure with
respect to security for an obligation of the Guarantor, has
destroyed the Borrower’s rights of contribution against the
Guarantor. As provided below, this Guaranty shall be governed
by, and construed in accordance with, the laws of the State of New
York. The foregoing waivers and the provisions hereinafter
set forth in this Guaranty which pertain to California law are
included solely out of an abundance of caution, and shall not be
construed to mean that any of the above referenced provisions of
California law are in any way applicable to this Guaranty or the
Guaranteed Obligations.
5.
OBLIGATIONS INDEPENDENT . The obligations of the
Guarantor hereunder are those of primary obligor, and not merely as
surety, and are independent of the Guaranteed Obligations and the
obligations of any other guarantor, and a separate action may
be
3
brought against the Guarantor to enforce this
Guaranty whether or not the Borrower or any other person or entity
is joined as a party.
6.
SUBROGATION . The Guarantor shall not exercise any
right of subrogation, contribution, indemnity, reimbursement or
similar rights with respect to any payments it makes under this
Guaranty until all of the Guaranteed Obligations and any amounts
payable under this Guaranty have been indefeasibly paid and
performed in full and any commitments of the Administrative Agent
and each other Secured Party or facilities provided by the
Administrative Agent and each other Secured Party with respect to
the Guaranteed Obligations are terminated. If any amounts are
paid to the Guarantor in violation of the foregoing limitation,
then such amounts shall be held in trust for the benefit of the
Administrative Agent and the other Secured Parties and shall
forthwith be paid to the Administrative Agent (for the benefit of
itself and the other Secured Parties) to reduce the amount of the
Guaranteed Obligations, whether matured or unmatured.
7.
CONTRIBUTION . Subject to Paragraph 6 above, the
Guarantor hereby agrees with each other Guarantor that if any
Guarantor shall make an Excess Payment (as defined below), such
Guarantor shall have a right of contribution from each other
Guarantor in an amount equal to such other Guarantor’s
Contribution Share (as defined below) of such Excess Payment.
The payment obligations of any Guarantor under this
Paragraph 7 shall be subordinate and subject in right of
payment to the Guaranteed Obligations until such time as the
Guaranteed Obligations have been paid in full, and no Guarantor
shall exercise any right or remedy under this Paragraph 7
against any other Guarantor until such Guaranteed Obligations have
been paid in full.
For purposes of this
Paragraph 7:
(a)
“ Excess Payment ” shall mean the amount paid by
any Guarantor in excess of its Ratable Share of any Guaranteed
Obligations;
(b)
“ Ratable Share ” shall mean, for any Guarantor
in respect of any
