**Exhibit 10.12**

 

**AMENDMENT TO THIRD AMENDED AND RESTATED**

**OPTION AGREEMENT**

 

THIS AMENDMENT TO THIRDAMENDED AND RESTATED OPTION AGREEMENT (this “Amendment”), is made and enteredinto as of July 29, 2009, by and between Prospect Medical Group, Inc.,a California professional corporation (“PMG”), and Arthur Lipper, M.D. (“Shareholder”),with reference to the following facts:

 

RECITALS

 

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

 

B.                                     Effective as ofthe date hereof, Prospect Medical Holdings, Inc., an affiliate of PMG,refinanced its former senior credit facilities with a new senior secured notesfacility and a revolving credit facility (the “Credit Facility Refinancing”).

 

C.                                     The partiesdesire to amend the Option Agreement to account for the Credit FacilityRefinancing by deleting all references to the replaced financing facilities.

 

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

 

AGREEMENT

 

1.                                       Amendments.

 

a.                                       Section 7.2(a) ofthe Option Agreement is hereby amended to read, in its entirety, as follows:

 

“(a)                            TRANSFER.  Sell, lease, transfer, or otherwise disposeof the Shares;”

 

b.                                      Section 7.2(c) ofthe Option Agreement is hereby amended to read, in its entirety, as follows:

 

“(c)                            NO FURTHERHYPOTHECATION.  Pledge, hypothecate,encumber, redeem or dispose of the Shares or any interest therein until all ofPhysician’s obligations under this Agreement have been fully satisfied or theStock has been released;”

 

c.                                       Section 8.2of the Option Agreement is hereby amended to read, in its entirety, as follows:

 

“8.2                           [Intentionallyomitted.]”

 

d.                                      Section 9.3of the Option Agreement is hereby amended to read, in its entirety, as follows:

 

“9.3                           ASSIGNMENT.  All of PMG’s rights and duties under thisAgreement may be assigned or delegated by PMG. Notwithstanding any other provision of this Agreement, neither thisAgreement nor the rights and duties of this Agreement may be assigned ordelegated by Physician.  

 

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ThisAgreement binds the successors, heirs, and authorized assignees of the parties.”

 

2.                                       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.

 

 
|   | “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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