Exhibit 10.40


 


AMENDMENT NUMBER ONE TO SECURITY AGREEMENT


 


This AMENDMENT NUMBER ONE TO SECURITY AGREEMENT (this “Amendment”),
dated as of July 6, 1999, is entered into by and between Santa Ana/Tustin
Physicians Group, Inc., a California professional medical corporation (“Physician
Group”), and Prospect Medical Systems, Inc., a Delaware corporation (“Manager”),
with reference to the following facts:


 


A.                                   Physician
Group and Manager have previously entered into that certain Security Agreement
(“Physician Group”), dated as of July 14, 1997 (as amended from time to
time, the “Agreement”);


 


B.                                     Physician
Group and Manager desire to amend the Agreement in accordance with the terms
and conditions hereof.


 


NOW, THEREFORE, the parties hereto hereby agree as follows:


 


1.                                       Defined
Terms.  All initially capitalized
terms used but not defined herein shall have the meanings assigned to such
terms in the Agreement.


 


2.                                       Amendments
to Section 1.


 


(a)                                  Section 1
of the Agreement is hereby amended to add the following definition:


 


“ ‘Deposit Account’ means any demand,
time, savings, passbook or like account now or hereafter maintained by or for
the benefit of Physician Group with a bank, savings & loan association, a
credit union or like organization, and all funds and amounts therein, whether
or not restricted or designated for a particular purpose.”


 


(b)                                 The
definition of “Collateral” set forth in Section 1 of the Agreement
is hereby amended in its entirety as follows:


 


“ ‘Collateral’ means any and all of
the Accounts, Deposit Accounts, and Physicians Group’s Books, in each case
whether now existing or hereafter acquired or created, and any proceeds or
products of any of the foregoing, or any portion thereof, and any and all
Accounts, money, or other tangible or intangible property, resulting from the
sale or disposition of the Accounts or Deposit Accounts, or any portion thereof
or interest therein and the


 


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substitutions, replacements, additions, accessions, products and Proceeds
thereof.”


 


3.                                       Reaffirmation
of the Agreement.  The Agreement as
amended hereby and the Management Agreement shall continue to be in full force
and effect.


 


IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the date first hereinabove written.


 


	
   

  	
  PROSPECT
  MEDICAL SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ R.
  Stewart Kahn

  	
   

  
	
   

  	
  Name:

  	
   

  	
  R. STEWART
  KAHN

  	
   

  
	
   

  	
  Title:

  	
   

  	
  Executive
  Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SANTA.ANA/TUSTIN
  PHYSICIANS

  
	
   

  	
  GROUP,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ R.
  Stewart Kahn

  	
   

  
	
   

  	
  Name:

  	
   

  	
  R. STEWART
  KAHN

  	
   

  
	
   

  	
  Title:

  	
   

  	
  Asst Vice
  Pres.

  	
   

  
								



 


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