Exhibit 10.11


 


AMENDMENT TO FIFTH AMENDED AND RESTATED


ASSIGNABLE OPTION AGREEMENT


 


THIS AMENDMENT TO FIFTH
AMENDED AND RESTATED ASSIGNABLE OPTION AGREEMENT (this “Amendment”), is made
and entered into as of July 29, 2009, by and among Prospect Medical Systems, Inc.,
a Delaware corporation (“PMS”), 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 into
that certain Fifth Amended and Restated Assignable Option Agreement, dated as
of November 26, 2008 (the “Option Agreement”).


 


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


 


C.                                     The parties
desire to amend the Option Agreement to account for the Credit Facility
Refinancing.


 


D.                                    The parties also
desire to amend the Option Agreement to eliminate the option to purchase the
assets of PMG and to leave only the option to purchase the stock of PMG.


 


NOW
THEREFORE, the parties to this Amendment hereby agree as follows:


 


AGREEMENT


 


1.                                       References to
Credit Facility.


 


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


 


“Except as set forth in the
First Lien Pledge Agreement, dated as of July 29, 2009 (the “Pledge
Agreement”), 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 compliance
with the terms of this Agreement.”


 


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


 


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


 

















 


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


 


2.                                       Elimination of
Assets Option.


 


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


 


“1.1                           [Intentionally
omitted.]”


 


b.                                      All references
to the “Assets Option” are hereby deleted from the Option Agreement and all
references 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 deleted
from the Option Agreement, so that the Option Agreement shall henceforth only
contain references to the assignment or sale of “Stock.”


 


3.                                       Full Force and
Effect.  Except as provided above, the
Option Agreement shall remain in full force and effect.


 


[signature
page follows]


 


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


 


	
   

  	
  “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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