Exhibit
10.17


 


FIRST AMENDMENT

TO

AMENDED AND RESTATED REVOLING CREDIT AGREEMENT


 


This First Amendment to Amended and Restated
Revolving Credit Agreement (“Amendment”) is entered into as of October 25,
2000, between Imperial Bank (the “Bank”) and Prospect Medical Holdings,
Inc.  (the “Borrower”).


 


RECITALS


 


This Amendment is being entered into in reference to the following
facts:


 


The Borrower and the Bank entered into an Amended and Restated
Revolving Credit Agreement, dated as of July 3, 1999 (as modified,
amended, and supplemented to the date hereof, the “Credit Agreement”).  Capitalized terms used, but not defined
herein, shall have the meanings ascribed thereto in the Credit Agreement.  The Bank and the Borrower desire to amend
the Credit Agreement in certain respects subject to the terms and conditions
hereof.


 


NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto hereby agree as follows.


 


ARTICLE 1 - AMENDMENTS


 


1.1                                 Amendment of “Applicable Margin.” 
The definition of “Applicable Margin,” contained in Section 1.1 of
the Credit Agreement is hereby amended and restated to read in its entirety as
follows:


 


‘“Applicable Margin’
means three percent (3%).”


 


1.2                                 Amendment of “Loans.” 
The definition of “Loans,” contained in Section 1.1 of the Credit
Agreement, is hereby amended and restated to read in its entirety as follows:


 


“‘Loans’ means the
Revolving Loans and the Term Loan.”


 


1.3                                 Amendment of “Loan Documents.” 
The definition of “Loan Documents,” contained in Section 1.1 of the
Credit Agreement, is hereby amended by the addition of a new clause, numbered
“(xii),” which shall read in its entirety as follows:


 


“(xii) the Term Note.”


 


1.4                                 Amendment of “Maturity Date.” 
The definition of “Maturity Date, contained in Section 1.1 of the
Credit Agreement, is hereby amended and restated to read in its entirety as
follows:


 


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‘“Maturity Date’
means November 3, 2001.”


 


1.5                                 Amendment of “Note.”  The
term “Note,” contained in Section 1.1 of the Credit Agreement, is hereby
amended and restated to read in its entirety as follows:


 


“‘Note’ means the
Amended and Restated Secured Revolving Note, dated as of July 3, 1999,
executed by Borrower to the order of Bank, as amended by the First Amendment to
Amended and Restated Secured Revolving Note, dated as of October 25, 2000,
executed by Borrower and Bank.”


 


1.6                                 Amendment of “Revolving Credit Commitment.” 
The term “Revolving Credit Commitment,” contained in Section 1.1 of
the Credit Agreement, is hereby amended and restated to read in its entirety as
follows:


 


‘“Revolving Credit
Commitment’ means $4,000,000.”


 


1.7                                 Deletion of “Working Capital Sublimit” 
Section 1.1 of the Credit Agreement is hereby amended by the
deletion therefrom of the definition of “Working Capital Sublimit.”


 


1.8                                 Amendment of Section 1.1. 
Section 1.1 of the Credit Agreement is hereby amended by the
addition of six new definitions, which shall read in their entirety as follows:


 


“ ‘Account Debtor’
means each Person obligated in any way on or in connection with an Account.


 


‘Accounts’ means all
of Borrower’s now owned or hereafter acquired or arising accounts, and any
other rights to payment for the sale or lease of goods or rendition of
services, whether or not they have been earned by performance.


 


‘Collection Account’
means Borrower’s account, number 07-111-770, with Bank.


 


‘Unused Letter of Credit
Sublimit” means $ 145,000 minus the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit, plus (b) the aggregate
amount of unpaid reimbursement obligations with respect to all Letters of
Credit.


 


‘Term Loan’ has the
meaning ascribed thereto in Section 2.1 hereof.


 


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‘Term Note’ means the
Term Loan Note, dated as of October 25, 2000, in the original principal
sum of $5,000,000, executed by Borrower to the order of Bank.”


 


1.9                                 Amendment of Section 2.1. 
Section 2.1 of the Credit Agreement is hereby amended and restated
to read in its entirety as follows:


 


“2.1                           Term Loan.


 


(a)                                  Bank will make a term loan to Borrower in an
aggregate principal amount of $5,000,000 (the ‘Term Loan’).  Borrower acknowledges that the Term Loan has
been fully funded.  The Term Loan shall
be repayable in accordance with the terms of the Term Loan Note.


 


(b)                                 The Borrower shall prepay the Term Loan by
the amount equal to one-half (1/2) of the sums arising
from the 2000 calendar year shared bonus pools actually paid to Borrower by
health plans on or before September 1, 2001, as and when such sums are
received by Borrower.  Such prepayment
shall be due and payable in full by no later than September 1, 2001.


 


1.10                           Deletion of Section 2.2(d). 
Section 2.2(d) of the Credit Agreement is hereby deleted therefrom
in its entirety and shall be of no further force or effect.


 


1.11                           Amendment of Section 2.3(a)(ii). 
Section 2.3(a)(ii) of the Credit Agreement is hereby amended and
restated to read in its entirety as follows:


 


“(ii)                            The face amount of the Letter of Credit
requested shall not exceed the Unused Letter of Credit Sublimit at such time.”


 


1.12                             Deletion of Section 2.5(f).   Section 2.5(f) of the
Credit Agreement is hereby deleted therefrom and shall be of no further force
or effect.


 


1.13                             Amendment of Article 2.  Article 2 of the Credit
Agreement is hereby amended by the addition of a new section, numbered 2.12,
which shall read in its entirety as follows:


 


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“2.12 Collection of
Accounts.


 


(a)                                  Until Bank notifies Borrower to the contrary,
Borrower shall collect all Accounts for Bank, shall receive all payments
thereon, including all capitation payments, as Bank’s trustee, and shall
immediately deliver to Bank such payments in the form received, duly indorsed
in blank, for deposit into the Collection Account, or deposit them in the
Collection Account, or, to the extent practicable, instruct and cause all
Account Debtors to transfer to directly to Bank all Account payments by means
of wire transfer or otherwise, for deposit to the Collection Account.  Bank or Bank’s designee may, at any time,
notify Account Debtors that the Accounts have been assigned to Bank and of
Bank’s security interest therein, and may collect them directly and charge the
collection costs and expenses to Borrower’s loan account as a Revolving
Loan.  Notwithstanding the termination
of this Agreement, until all Obligations shall have been fully paid and
satisfied, Borrower shall continue to deposit, or cause to be deposited, into
the Collection Account all collections of the Accounts.


 


(b)                                 All collections received in the Collection
Account or directly by Borrower, Bank, and all funds in the Collection Account
or other account to which such Account collections are deposited, shall be the
sole property of Bank and subject to Bank’s sole control.  Borrower authorizes Bank to deduct all funds
deposited into the Collection Account without further action or consent by
Borrower.  Bank shall credit to
Borrower’s loan account (conditional upon final collection) all funds deducted
therefrom by Bank in such order and in such amounts as Bank shall determine in
its sole discretion, except as expressly provided otherwise in the Loan
Documents.”


 


ARTICLE 2 - CONDITIONS
PRECEDENT


 


2.1                                 Conditions Precedent. 
This Amendment shall be effective upon satisfaction of all of the
following conditions precedent, as determined by the Bank in its sole
discretion:


 


(a)                                  the Bank shall have received a signed copy of
the following documents, all in form and content acceptable to the Bank in it
sole discretion, duly executed and delivered by an authorized representative of
the Borrower: (i) this Amendment; (ii) the First Amendment to Amended and
Restated Secured Revolving Note, dated as of October 25, 2000; and (iii)
the Term Loan Note;


 


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(b)                                 the Borrower shall have paid to the Bank, is
cash, a loan extension fee of $47,500; and


 


(c)                                  the Borrower shall have taken such other
actions as may be requested by the Bank to more fully document the transaction
evidenced hereby.


 


ARTICLE 3 –
REPRESENTATIONS AND WARRANTIES


 


3.1                                 Borrower’s Representations and Warranties.  In
order to induce the Bank to enter into this Amendment, the Borrower represents
and warrants to the Bank that:


 


(a)                                  The Borrower has the power and authority and
has taken all action necessary to execute, deliver and perform this Amendment
and all other agreements and instruments executed or delivered to be executed
or delivered in connection herewith and therewith and this Amendment and such
other agreements and instruments constitute the valid, binding and enforceable
obligations of the Borrower.


 


(b)                                 The Borrower’s representations and warranties
contained in the Credit Agreement are true and correct in all respects on and
as of the date hereof as though made on and as of the date hereof and no Event
of Default or Unmatured Event of Default has occurred and is continuing as of
the date hereof.


 


3.2                                 Acknowledgment of Borrower.  The
Borrower expressly acknowledges and agrees that as of the date of this
Amendment, it has no offsets, claims or defenses whatsoever against any of the
Obligations owing to the Bank.


 


ARTICLE 4 – GENERAL
PROVISIONS


 


4.1                                 Full Force and Effect. 
Except as expressly amended hereby, the Credit Agreement and all other
documents, agreements and instruments relating to thereto are and shall remain
unmodified and in full force and effect.


 


4.2.                                  Counterparts. 
This Amendment may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed to be an original and that
all of which taken together shall constitute one and the same instrument,
respectively.  Delivery of an executed
counterpart of this Amendment by facsimile shall be equally effective as
delivery of a manually executed counterpart of this Amendment.  Any party delivering an executed counterpart
by facsimile shall also deliver a manually executed counterpart of this
Amendment, but failure to do so shall not effect the validity, enforceability,
of binding effect of this Amendment.


 


4.3                                      Final Agreement. 
This Amendment is intended by the Borrower and the Bank to be the final,
complete, and exclusive expression of the agreement between them with respect


 


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to
the subject matter hereof.  This
Amendment supersedes any and all prior oral or written agreements relating to
the subject matter hereof.


 


IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their duly authorized officers as of the date first above
written.


 


	
  “BANK”

  	
  “BORROWER”

  
	
  Imperial
  Bank

  	
  Prospect
  Medical Holdings, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Thomas Turner

  	
   

  	
  By:

  	
  /s/ R. Stewart Kahn

  	
   

  
	
   

  	
  Thomas
  Turner,

  	
   

  	
  R.
  Stewart Kahn,

  
	
   

  	
  Vice
  President

  	
   

  	
  Executive
  Vice President

  
						



 


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