Exhibit 10.11


 


Bank of
America, N.A.


WA1-501-17-32


800 Fifth
Avenue, Floor 17


Seattle,
WA  98104


 


March 6, 2009


 


Prospect Medical Group, Inc.


1920 East 17th Street, Suite 200


Santa Ana, CA 92705


 


Re:                           Fifth Amendment to Letter Agreement Regarding Divestiture
Plan and Consent (this “Agreement”)


 


Ladies and Gentlemen:


 


Reference is hereby made
to that certain side letter agreement dated as of May 15, 2008 (as
amended, restated, supplemented or otherwise modified from time to time, the “Divestiture
Letter Agreement”) among Prospect Medical Holdings, Inc. (“Holdings”),
Prospect Medical Group, Inc. (“Prospect” and, collectively with
Holdings, the “Borrowers” and each, individually, a “Borrower”),
Bank of America, N.A., as Administrative Agent (in such capacity, the “First
Lien Administrative Agent”), and the lenders party
thereto (collectively, the “First Lien Lenders”).  Reference is also hereby made to that certain First Lien Credit
Agreement dated as of August 8, 2007 (as amended, restated, supplemented
or otherwise modified, the “First Lien Credit Agreement”), pursuant to
which the First Lien Lenders have agreed to make the Loans and other extensions
of credit, all upon the terms and conditions set forth in the First Lien Credit
Agreement.  Terms not otherwise defined
in this Agreement shall have the meaning assigned thereto in the Divestiture
Letter Agreement and the First Lien Credit Agreement, as applicable.


 


1.                                       Fifth Amendment
to the Divestiture Letter Agreement:


 


Under
the terms of the Divestiture Letter Agreement, the Borrowers agreed to complete
the sale of the ProMed Entities (as defined in the Divestiture Plan) no later
than March 6, 2009 (the “Sale Deadline”).  The Borrowers have requested that the First
Lien Administrative Agent and the First Lien Lenders amend the Divestiture
Letter Agreement to extend the Sale Deadline to March 12, 2009 (the “Extension
Deadline”).  During this additional
extension period, in addition to working on the sale of the ProMed Entities, it
is expected that the parties will negotiate a term sheet setting forth the
salient terms for an amendment to the First Lien Credit Agreement.  The First Lien Administrative Agent and the
First Lien Lenders are willing to grant the Borrowers’ request subject to the
terms and conditions of this Agreement.


 


In
furtherance thereof, the First Lien Administrative Agent, the First Lien
Lenders and the Borrowers agree that paragraph (c) of the Divestiture
Letter Agreement is hereby amended and restated in its entirety to read as
follows:


 

















 


“(c)                            The
Borrowers shall complete the sale of (i) the Antelope Valley Entities (as
defined in the Divesture Plan) no later than October 1, 2008 and in
accordance with the terms set forth in the Amendment and (ii) the ProMed
Entities (as defined in the Divesture Plan) no later than March 12,
2009 on terms and conditions reasonably
satisfactory to the First Lien Administrative Agent and the Required Lenders.”


 


2.                                       Consent by the First Lien Lenders


 


Prospect Hospital Advisory Services, Inc., a
Prospect subsidiary, presently owns a minority interest in Brotman Medical
Center, Inc. (“Brotman”).  In
connection with Brotman’s exit from current bankruptcy proceedings and as part
of a plan of reorganization for Brotman, the Borrowers placed certain amounts
with the U.S. Bankruptcy Court for the Central District of California, Los
Angeles Division, in an attempt to purchase additional equity in Brotman.  Should the Borrowers prevail, the Borrowers’
resulting ownership interest could approach 70% or more.


 


Under the terms of the Credit Agreement, acquiring a
majority interest in Brotman would immediately qualify Brotman as a “Subsidiary”
of the Borrowers and would require joinder of Brotman to the Collateral
Agreement and the Subsidiary Guaranty Agreement within a short period of time
following such acquisition.


 


Accordingly, the Borrowers have requested that, in
the event that any Borrower (or any Subsidiary or Subsidiaries thereof)
acquires a majority interest in Brotman prior to the Extension Deadline, the
First Lien Administrative Agent and the First Lien Lenders exclude Brotman as a
“Subsidiary” under the First Lien Credit Agreement until the expiration of the
Extension Deadline.


 


Subject to the terms and conditions of this
Agreement, the First Lien Administrative Agent and the First Lien Lenders
hereby consent and agree that, should any Borrower (or any Subsidiary or
Subsidiaries thereof), acquire a majority ownership interest in Brotman prior
to the expiration of the Extension Deadline, Brotman shall not be deemed or
considered a “Subsidiary” under the terms of the First Lien Credit Agreement
for any purpose until the expiration of the Extension Deadline.


 


This
Agreement shall become effective as of March 6, 2009, upon (a) execution
and delivery of this Agreement by the Borrowers, the Guarantors, the First Lien
Administrative Agent and the Required Lenders under the First Lien Credit
Agreement, (b) execution and delivery by the Borrowers, the Guarantors,
the Second Lien Administrative Agent and the “Required” Lenders under the
Second Lien Credit Agreement of an agreement substantially similar to this
Agreement, and (c) payment of all professional fees and expenses of the
First Lien Administrative Agent and the First Lien Lenders in connection with
this Agreement and the transactions contemplated hereby and thereby (including
all fees and expenses of Winston & Strawn LLP, in its capacity as
counsel to the First Lien Administrative Agent), pursuant to wire transfer instructions to be
provided by the First Lien Administrative Agent.


 


Except
for the amendment and consent contained herein, all of the terms and provisions
of the Divestiture Letter Agreement, the First Lien Credit Agreement and the
other Loan Documents shall remain in full force and effect.  The Borrowers, by their acceptance hereof, hereby acknowledge and agree that
the failure to complete the sale of the ProMed Entities prior 


 

















 


to the date specified in
the Divestiture Letter Agreement, as amended hereby, shall result in an Event
of Default in accordance with Section 8.01(b) of the First
Lien Credit Agreement.  In addition, the
Borrowers acknowledge and agree that, should the Borrowers (or any Subsidiary
or Subsidiaries thereof) obtain majority ownership of Brotman and unless otherwise addressed
prior to such date in accordance with the terms of the First Lien Credit
Agreement, upon the expiration of the Extension Deadline, the Borrowers shall
be required to comply with, and Brotman shall be subject to, the terms of the
First Lien Credit Agreement and the other Loan Documents in all respects.


 


Each of the Guarantors,
by their acknowledgment hereto, agree and consent to this Agreement, to all
prior Loan Documents, and to the documents and agreements referred to herein
and therein, and to all future modifications and amendments thereto, and any
termination thereof, and to any and all other present and future documents and
agreements between or among the Borrowers, the First Lien Administrative
Agent.  The Guarantors agree to be bound
by all terms of the Loan Documents applicable to “Loan Parties”.  Nothing contained herein shall in any way
expand, limit or diminish any of the obligations of the Guarantors under their
respective guaranty, each such guaranty being hereby ratified and affirmed.  The signatures of each of the Guarantors
shall be fully effective even if any other Guarantor fails to sign this
Agreement.


 


[Signature Pages Follow]


 

















 


This Agreement shall
constitute a Loan Document and may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.  Delivery of executed counterparts of this Agreement by telecopy or pdf shall be
effective as an original.


 


Very truly yours,


 


	
   

  	
   

  	
  BANK
  OF AMERICA, N.A., in its capacity as First Lien Administrative Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Tiffany Shin

  
	
   

  	
   

  	
  Name:

  	
  Tiffany Shin

  
	
   

  	
   

  	
  Title:

  	
  Assistant Vice
  President

  



 


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Fifth Amendment to
First Lien Divestiture Letter Agreement and Consent


 

















 


	
   

  	
   

  	
  BANK
  OF AMERICA, N.A., as a First Lien Lender, L/C Issuer and Swing Line Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Thomas E. Brown

  
	
   

  	
   

  	
  Name:

  	
  Thomas E. Brown

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  



 


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Fifth Amendment to First Lien Divestiture Letter Agreement and Consent


 

















 


	
   

  	
   

  	
  BAMM
  FUNDING I LLC., as a First Lien Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Banc
  of America Middle Market Funding LLC, as Member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Bank
  of America, National Association, as Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Chris York

  
	
   

  	
   

  	
  Name:

  	
  Chris York

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
					



 


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Fifth Amendment to First Lien Divestiture Letter Agreement and Consent


 

















 


	
   

  	
   

  	
  FIELD
  POINT I, LTD., as a First Lien Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Richard Petrilli

  
	
   

  	
   

  	
  Name:

  	
  Richard Petrilli

  
	
   

  	
   

  	
  Title:

  	
  Authorized Signatory

  



 


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Fifth Amendment to First Lien Divestiture Letter Agreement and Consent


 

















 


	
   

  	
   

  	
  FIELD
  POINT II, LTD., as a First Lien Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Richard Petrilli

  
	
   

  	
   

  	
  Name:

  	
  Richard Petrilli

  
	
   

  	
   

  	
  Title:

  	
  Authorized Signatory

  



 


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Fifth Amendment to First Lien Divestiture Letter Agreement and Consent


 

















 


	
   

  	
   

  	
  FIELD
  POINT III, LTD., as a First Lien Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Richard Petrilli

  
	
   

  	
   

  	
  Name:

  	
  Richard Petrilli

  
	
   

  	
   

  	
  Title:

  	
  Authorized Signatory

  



 


[Signature Pages Continue]


 


Fifth Amendment to
First Lien Divestiture Letter Agreement and Consent


 

















 


	
   

  	
   

  	
  FIELD
  POINT IV, LTD., as a First Lien Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Richard Petrilli

  
	
   

  	
   

  	
  Name:

  	
  Richard Petrilli

  
	
   

  	
   

  	
  Title:

  	
  Authorized Signatory

  



 


[Signature Pages Continue]


 


Fifth Amendment to
First Lien Divestiture Letter Agreement and Consent


 

















 


	
   

  	
   

  	
  GI
  PARTNERS CREDIT OPPORTUNITIES SUB FUND A, LLC, as a First Lien Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Hoon Cho

  
	
   

  	
   

  	
  Name:

  	
  Hoon Cho

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  



 


[Signature Pages Continue]


 


Fifth Amendment to First Lien Divestiture Letter Agreement and Consent


 
















 


	
   

  	
  GRAND
  CENTRAL ASSET TRUST, SIL SERIES, as a First Lien Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian Schott

  
	
   

  	
  Name:

  	
  Brian Schott

  
	
   

  	
  Title:

  	
  Attorney-in-fact

  



 


[Signature Pages Continue]


 


Fifth Amendment to First Lien Divestiture Letter Agreement and Consent


 

















 


	
   

  	
  OPPENHEIMER
  SENIOR FLOATING RATE FUND, as a First Lien Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Susanna Evans

  
	
   

  	
  Name:

  	
  Susanna Evans

  
	
   

  	
  Title:

  	
  Manager

  



 


[Signature Pages Continue]


 


Fifth Amendment to First Lien Divestiture Letter Agreement and Consent


 

















 


	
   

  	
  PPM
  GRAYHAWK CLO, LTD., as a First Lien Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David C. Wagner

  
	
   

  	
   

  	
  PPM America, Inc.,
  as Collateral Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  David C. Wagner

  
	
   

  	
  Title:

  	
  Managing Director

  



 


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Fifth Amendment to First Lien Divestiture Letter Agreement and Consent


 

















 


	
   

  	
  PPM
  MONARCH BAY FUNDING LLC, as a First Lien Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tara E. Kenny

  
	
   

  	
  Name:

  	
  Tara E. Kenny

  
	
   

  	
  Title:

  	
  Assistant Vice
  President

  



 


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Fifth Amendment to First Lien Divestiture Letter Agreement and Consent


 

















 


	
   

  	
  SERVES
  2006-1, LTD., as a First Lien Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David C. Wagner

  
	
   

  	
   

  	
  PPM America, Inc.,
  as Collateral Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  David C. Wagner

  
	
   

  	
  Title:

  	
  Managing Director

  



 


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Fifth Amendment to First Lien Divestiture Letter Agreement and Consent


 

















 


	
  Accepted and Agreed:

  	
   

  
	
   

  	
   

  
	
  PROSPECT MEDICAL
  HOLDINGS, INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Samuel S. Lee

  	
   

  
	
  Name:

  	
  Samuel S. Lee

  	
   

  
	
  Title:

  	
  Chief Executive Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  PROSPECT MEDICAL GROUP,
  INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Samuel S. Lee

  	
   

  
	
  Name:

  	
  Samuel S. Lee

  	
   

  
	
  Title:

  	
  Senior
  Vice President

  	
   

  



 


[Guarantor
Signature Pages Follow]


 


Fifth Amendment to First Lien Divestiture Letter Agreement and Consent


 

















 




	
  ALTA
  HOSPITALS SYSTEM, LLC, formerly known as PROSPECT HOSPITALS SYSTEM, LLC

  	
   

  	
  NUESTRA
  FAMILIA MEDICAL GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Samuel S. Lee

  	
   

  	
  By:

  	
  /s/ Samuel S. Lee

  
	
  Name:

  	
  Samuel S. Lee

  	
   

  	
  Name:

  	
  Samuel S. Lee

  
	
  Title:

  	
  Chief Executive Officer

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PROMED
  HEALTH CARE ADMINISTRATORS

  PROMED HEALTH SERVICES COMPANY

  	
   

  	
  PROSPECT
  ADVANTAGE NETWORK, INC.

  PINNACLE HEALTH RESOURCES

  PROSPECT HOSPITAL ADVISORY SERVICES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Samuel S. Lee

  
	
  By:

  	
  /s/ Samuel S. Lee

  	
   

  	
  Name:

  	
  Samuel S. Lee

  
	
  Name:

  	
  Samuel S. Lee

  	
   

  	
  Title:

  	
  President and Chief
  Executive Officer

  
	
  Title:

  	
  Vice President

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  POMONA
  VALLEY MEDICAL GROUP, INC.

  UPLAND MEDICAL GROUP, A PROFESSIONAL MEDICAL CORPORATION  

  	
   

  	
  ARTHUR
  E. LIPPER, solely in his capacity as

  Pledgor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Samuel S. Lee

  	
   

  	
   

  
	
  Name:

  	
  Samuel S. Lee

  	
   

  	
   

  	
  /s/ Arthur E. Lipper

  
	
  Title:

  	
  Vice President

  	
   

  	
   

  






 


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Fifth Amendment to First Lien Divestiture Letter Agreement and Consent


 

















 




	
  ALTA
  LOS ANGELES HOSPITALS, INC.

  ALTA HOLLYWOOD HOSPITALS, INC.

  	
   

  	
  PROSPECT
  MEDICAL SYSTEMS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Samuel S. Lee

  
	
  By:

  	
  /s/ Ellen J. Shin

  	
   

  	
  Name:

  	
  Samuel S. Lee

  
	
  Name:

  	
  Ellen J. Shin

  	
   

  	
  Title:

  	
  Chairman of the Board

  
	
  Title:

  	
  Secretary

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SANTA
  ANA/TUSTIN PHYSICIANS GROUP, INC.

  PROSPECT HEALTH SOURCE MEDICAL GROUP, INC.

  PROSPECT PROFESSIONAL CARE MEDICAL GROUP, INC.

  PROSPECT NWOC MEDICAL GROUP, INC.

  APAC MEDICAL GROUPS, INC.

  STARCARE MEDICAL GROUP, INC.

  GENESIS HEALTHCARE OF SOUTHERN CALIFORNIA, INC., A MEDICAL GROUP

  PROSPECT PHYSICIANS ASSOCIATES, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Samuel S. Lee

  	
   

  	
   

  
	
  Name:

  	
  Samuel S. Lee

  	
   

  	
   

  
	
  Title: 

  	
  Senior Vice President

  	
   

  	
   

  






 


Fifth Amendment to First Lien Divestiture Letter Agreement and Consent