**Exhibit 10.11**

 

**AMENDMENT TO FIFTH AMENDED AND RESTATED**

**ASSIGNABLE OPTION AGREEMENT**

 

THIS AMENDMENT TO FIFTHAMENDED AND RESTATED ASSIGNABLE OPTION AGREEMENT (this “Amendment”), is madeand entered into as of July 29, 2009, by and among Prospect Medical Systems, Inc.,a Delaware corporation (“PMS”), Prospect Medical Group, Inc., a Californiaprofessional corporation (“PMG”), and Arthur Lipper, M.D. (“Shareholder”), withreference to the following facts:

 

RECITALS

 

A.**                                  **The parties hereto****entered intothat certain Fifth Amended and Restated Assignable Option Agreement, dated asof November 26, 2008 (the “Option Agreement”).

 

B.                                     Effective as ofthe date hereof, Prospect Medical Holdings, Inc., the parent company ofPMS and an affiliate of PMG, refinanced its former senior credit facilitieswith a new senior secured notes facility and a revolving credit facility (the “CreditFacility Refinancing”).

 

C.                                     The partiesdesire to amend the Option Agreement to account for the Credit FacilityRefinancing.

 

D.                                    The parties alsodesire to amend the Option Agreement to eliminate the option to purchase theassets of PMG and to leave only the option to purchase the stock of PMG.

 

NOWTHEREFORE, the parties to this Amendment hereby agree as follows:

 

AGREEMENT

 

1.                                       References toCredit Facility.

 

a.                                       The firstsentence of Section 1.4 of the Option Agreement is hereby amended to read,in its entirety, as follows:

 

“Except as set forth in theFirst Lien Pledge Agreement, dated as of July 29, 2009 (the “PledgeAgreement”), by and among Shareholder, PMG, PMS, Prospect Medical Holdings, Inc.(“Borrower”), and U.S. Bank National Association, as collateral agent,PMG shall not recognize any share transfer or other action not in compliancewith the terms of this Agreement.”

 

b.                                      The first paragraphof Section 7.2 of the Option Agreement is hereby amended to read, in itsentirety, as follows:

 

“Except as required under: (a) thePledge Agreement; (b) the Indenture, dated as of July 29, 2009 (asamended and restated, supplemented or otherwise modified from time to time, the“Indenture”), among (i) Borrower, (ii) certain of itssubsidiaries and affiliates, as guarantors (the “Guarantors”), and (iii) U.S.Bank National Association, as trustee; (c) the Credit Agreement, dated asof July 29, 2009 (as amended and restated, supplemented or otherwisemodified from time to time, the “Credit Agreement” and together with theIndenture, the “Credit Agreements”), among Borrower, the Guarantors, thelenders from time to time party 

 

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thereto, and Royal Bank ofCanada, as administrative agent; and (d) the other loan documents executedin connection with the Credit Agreements; without the prior written consent ofPMS or the Applicable Management Companies, PMG and Shareholder shall not (andshall not permit any other Professional Corporation or Successor Physician to):”

 

2.                                       Elimination ofAssets Option.

 

a.                                       Section 1.1of the Option Agreement is hereby amended to read, in its entirety, as follows:

 

“1.1                           [Intentionallyomitted.]”

 

b.                                      All referencesto the “Assets Option” are hereby deleted from the Option Agreement and allreferences to the “Option” shall henceforth refer only to the “Stock Option.”  All references to the “Assets Exercise Notice”are hereby deleted from the Option Agreement. All references to the assignment or sale of “Assets” are hereby deletedfrom the Option Agreement, so that the Option Agreement shall henceforth onlycontain references to the assignment or sale of “Stock.”

 

3.                                       Full Force andEffect.  Except as provided above, theOption Agreement shall remain in full force and effect.

 

*[signaturepage follows]*

 

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IN WITNESS WHEREOF, theparties hereto have executed this Amendment as of the day and year first abovewritten.

 
|   | “PMS”                 |
|--------|---------------------------------|
|   |                            |
|   | PROSPECT MEDICAL SYSTEMS,  INC. |
|   |                            |
|   |                            |
|   | By:                             | /s/ Samuel S. Lee |
|   | Name: Samuel S. Lee             |
|   | Title: Chairman                 |
|   |                            |
|   |                            |
|   | “PMG”                 |
|   |                            |
|   | PROSPECT MEDICAL GROUP,  INC.   |
|   |                            |
|   |                            |
|   | By:                             | /s/ Samuel S. Lee |
|   | Name: Samuel S. Lee             |
|   | Title: Senior Vice  President   |
|   |                            |
|   |                            |
|   | “SHAREHOLDER”         |
|   |                            |
|   |                            |
|   | /s/ Arthur Lipper, M.D.         |
|   | Arthur Lipper, M.D.             |

 

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