Document:

Exhibit 10.2

 

Bank of
America, N.A.

WA1-501-32-37

800 Fifth
Avenue, Floor 32

Seattle,
WA  98104

 

Prospect Medical Group, Inc.

400 Corporate Pointe, Suite 525

Culver City, CA 90230

 

Re:  Letter agreement regarding certain further
conditions to Forbearance Agreement.

 

Ladies and gentlemen:

 

This letter is the side letter
referenced in Section 1.4(vi) of the Amended and Restated Second Lien
Forbearance Agreement (the “Forbearance Agreement”) dated April 10,
2008, entered into by and 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 “Second
Lien Administrative Agent”), and the lenders party hereto (collectively,
the “Second Lien Lenders”).  Terms
not otherwise defined herein shall have the meaning assigned thereto in the
Forbearance Agreement.

 

In connection with the
execution of the Forbearance Agreement, the Second Lien Administrative Agent
and the Second Lien Lenders require, and the Borrowers hereby agree to provide
no later than April 17, 2008, each of (a) a comprehensive business
plan regarding the Borrowers’ plan for divesting certain assets, which plan
shall include, among other things, projected milestones, timing for planned
sales, and identification of the assets targeted for sale (the “Divestiture
Plan”); and (b) projections, consistent with the projections required
pursuant to Section 1.4(a)(ix) of the Forbearance Agreement,
incorporating such Divestiture Plan on a pro forma basis.  Each of the foregoing documents shall be in
form and substance satisfactory to the Second Lien Administrative Agent and the
Second Lien Lenders.

 

The Borrowers, by their
execution hereof, hereby acknowledge and agree that the foregoing requirements
set forth above constitute further, supplemental conditions to the Forbearance
Period under Section 1.4 of the Forbearance Agreement, and that failure to
so provide such items within the time period specified shall result in an
immediate Event of Default and termination of the Forbearance Period in
accordance with Section 1.4(b) of the Forbearance Agreement.

 

This side letter shall
become effective concurrently with the effectiveness of the Forbearance
Agreement and shall constitute a Loan Document. 
Each provision set forth in Article IV of the Forbearance Agreement
shall be applicable hereto and incorporated by reference, mutatis
mutandis, as if set forth verbatim herein.

 

[Signature Page Follows]

 

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A.,
  as Second Lien Administrative Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tiffany Shin

  
	
   

  	
  Name:

  	
  Tiffany Shin

  
	
   

  	
  Title:

  	
  Assistant Vice
  President

  

 

[Prospect – Second Lien Side Letter]

 

 

	
  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/ Jacob Y. Terner

  	
   

  
	
  Name:

  	
  Jacob Y. Terner, M.D.

  	
   

  
	
  Title:

  	
  Chief Executive Officer

  	
   

  

 

[Prospect – Second Lien Side Letter]Exhibit 10.3

 

Bank of
America, N.A.

WA1-501-17-32

800 Fifth
Avenue, Floor 32

Seattle,
WA  98104

 

May 15, 2008

 

Prospect Medical Group, Inc.

1920 East 17th Street, Suite 200

Santa Ana, CA 92705

 

Re:  Letter agreement regarding Divestiture Plan

 

Ladies and gentlemen:

 

This letter is the side letter
referenced in Section 4(i) of that certain Second Amendment to First
Lien Credit Agreement, Waiver and Consent dated as of May 15, 2008 (the “Amendment”)
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”).  Terms not otherwise
defined herein shall have the meaning assigned thereto in the Amendment.

 

In connection with the
execution of the Amendment, the First Lien Administrative Agent and the First
Lien Lenders require, and the Borrowers hereby agree to provide, each in form
and substance satisfactory to the First Lien Administrative Agent and the First
Lien Lenders and otherwise agree that:

 

(a)           Within 30 days following the end of
each month (commencing with the month of June 2008  and
continuing until June 2009), the Borrowers shall deliver updates to the
Divesture Plan (as defined in that certain side letter executed on April 10,
2008 among the Borrowers and the First Lien Administrative Agent, as amended
from time to time), including, among other things, updates regarding progress
and status of the projected milestones, timing of planned sales, and identification
of assets targeted for sale and such other updates as the Required Lenders may
request from time to time.

 

(b)           Following each update delivered in
accordance with the above paragraph (a), and at such other times as the
Required Lenders may request, management of the Borrowers agrees to participate
in conference calls with the First Lien Lenders and discuss each such update.  Such
discussion may, at the request of the Required Lenders, include participation
by Cain Brothers and representations therefrom. 
In addition, the Borrowers agree that the Lenders, through the Administrative
Agent, may contact Cain Brothers directly for updates, status reports,
questions and any similar matters.

 

 

(c)           The Borrowers shall
complete the sale of (i) the Antelope Valley Entities (as defined in the
Divesture Plan) no later than June 30, 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 December 31, 2008 on terms and
conditions reasonably satisfactory to the First Lien Administrative Agent and
the Required Lenders.

 

To the extent that the
Borrowers sell the ProMed Entities prior to the month of December, 2008, for
purposes of the Minimum Consolidated EBITDA covenant calculation set forth in
the First Lien Credit Agreement, the applicable Minimum Consolidated EBITDA
amount required thereby shall be reduced by the Consolidated EBITDA
attributable to the ProMed Entities for the twelve-month period most recently
ended prior to such sale, and for which financial statements have been
delivered pursuant to Section 6.01(a), (b) or (c) of
the First Lien Credit Agreement.

 

The Borrowers, by their
execution hereof, hereby acknowledge and agree that the foregoing requirements
set forth above constitute further, supplemental covenants to Section 6.01
of the First Lien Credit Agreement, and that failure to so provide such items
within the time period specified above or failure to so complete the sale of
each of the Antelope Valley Entities and the ProMed Entities prior to the dates
specified above shall result in an Event of Default in accordance with Section 8.01(b) of
the First Lien Credit Agreement.

 

This side letter shall
become effective concurrently with the effectiveness of the Amendment and shall
constitute a Loan Document.  Each
provision set forth in Sections 5 through 17 of the Amendment shall be
applicable hereto and incorporated by reference, mutatis
mutandis, as if set forth verbatim herein.

 

[Signature Pages Follow]

 

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A.,
  as First Lien Administrative Agent on behalf of itself and the First Lien Lenders

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tiffany Shin

  
	
   

  	
  Name:

  	
  Tiffany Shin

  
	
   

  	
  Title:

  	
  Assistant Vice
  President

  

 

[Prospect – First Lien Side Letter]

 

 

	
  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/ Jacob Y. Terner

  	
   

  
	
  Name:

  	
  Jacob Y. Terner, M.D.

  	
   

  
	
  Title:

  	
  Chief Executive Officer

  	
   

  

 

[Prospect – First Lien Side Letter]Exhibit 10.4

 

Bank of
America, N.A.

WA1-501-17-32

800 Fifth
Avenue, Floor 32

Seattle,
WA  98104

 

May 15, 2008

 

Prospect Medical Group, Inc.

1920 East 17th Street, Suite 200

Santa Ana, CA 92705

 

Re:  Letter agreement regarding Divestiture Plan

 

Ladies and gentlemen:

 

This letter is the side letter
referenced in Section 4(i) of that certain Second Amendment to Second
Lien Credit Agreement, Waiver and Consent dated as of May 15, 2008 (the “Amendment”)
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 “Second Lien
Administrative Agent”), and the lenders party thereto (collectively, the “Second
Lien Lenders”).  Terms not otherwise
defined herein shall have the meaning assigned thereto in the Amendment.

 

In connection with the
execution of the Amendment, the Second Lien Administrative Agent and the Second
Lien Lenders require, and the Borrowers hereby agree to provide, each in form
and substance satisfactory to the Second Lien Administrative Agent and the Second
Lien Lenders and otherwise agree that:

 

(a)           Within 30 days following the end of
each month (commencing with the month of June 2008  and
continuing until June 2009), the Borrowers shall deliver updates to the
Divesture Plan (as defined in that certain side letter executed on April 10,
2008 among the Borrowers and the Second Lien Administrative Agent, as amended
from time to time), including, among other things, updates regarding progress
and status of the projected milestones, timing of planned sales, and identification
of assets targeted for sale and such other updates as the Required Lenders may
request from time to time.

 

(b)           Following each update delivered in
accordance with the above paragraph (a), and at such other times as the
Required Lenders may request, management of the Borrowers agrees to participate
in conference calls with the Second Lien Lenders and discuss each such update.  Such
discussion may, at the request of the Required Lenders, include participation
by Cain Brothers and representations therefrom. 
In addition, the Borrowers agree that the Lenders, through the Administrative
Agent, may contact Cain Brothers directly for updates, status reports,
questions and any similar matters.

 

 

(c)           The Borrowers shall
complete the sale of (i) the Antelope Valley Entities (as defined in the
Divesture Plan) no later than June 30, 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 December 31, 2008 on terms and
conditions reasonably satisfactory to the Second Lien Administrative Agent and
the Required Lenders.

 

To the extent that the
Borrowers sell the ProMed Entities prior to the month of December, 2008, for
purposes of the Minimum Consolidated EBITDA covenant calculation set forth in
the Second Lien Credit Agreement, the applicable Minimum Consolidated EBITDA
amount required thereby shall be reduced by the Consolidated EBITDA
attributable to the ProMed Entities for the twelve-month period most recently
ended prior to such sale, and for which financial statements have been
delivered pursuant to Section 6.01(a), (b) or (c) of
the Second Lien Credit Agreement.

 

The Borrowers, by their
execution hereof, hereby acknowledge and agree that the foregoing requirements
set forth above constitute further, supplemental covenants to Section 6.01
of the Second Lien Credit Agreement, and that failure to so provide such items
within the time period specified above or failure to so complete the sale of
each of the Antelope Valley Entities and the ProMed Entities prior to the dates
specified above shall result in an Event of Default in accordance with Section 8.01(b) of
the Second Lien Credit Agreement.

 

This side letter shall
become effective concurrently with the effectiveness of the Amendment and shall
constitute a Loan Document.  Each
provision set forth in Sections 5 through 17 of the Amendment shall be
applicable hereto and incorporated by reference, mutatis
mutandis, as if set forth verbatim herein.

 

[Signature Pages Follow]

 

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A.,
  as First Lien Administrative Agent on behalf of itself and the First Lien
  Lenders

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tiffany Shin

  
	
   

  	
  Name:

  	
  Tiffany Shin

  
	
   

  	
  Title:

  	
  Assistant Vice
  President

  

 

[Prospect – Second Lien Side Letter]

 

 

	
  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/ Jacob Y. Terner

  	
   

  
	
  Name:

  	
  Jacob Y. Terner, M.D.

  	
   

  
	
  Title:

  	
  Chief Executive Officer

  	
   

  

 

[Prospect – Second Lien Side Letter]

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