Document:

Exhibit
10.1

 

EXECUTION
COPY

 

AMENDMENT NO.
5 TO AMENDED AND

RESTATED RECEIVABLES PURCHASE AGREEMENT

 

This AMENDMENT NO. 5 TO
AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT, dated as of September 28,
2009 (this “Amendment”), is by and among MANITOWOC FUNDING, LLC, as
Seller, THE MANITOWOC COMPANY, INC., as Servicer, HANNOVER FUNDING COMPANY LLC,
as Purchaser, and NORDDEUTSCHE LANDESBANK GIROZENTRALE, as Agent.

 

WHEREAS, the parties hereto
are parties to that certain Amended and Restated Receivables Purchase
Agreement, dated as of December 21, 2006 (as amended, supplemented or
otherwise modified from time to time, the “Agreement”);

 

WHEREAS, concurrently
herewith and pursuant to that certain Joinder Agreement, dated as of the date
hereof, Frymaster L.L.C. (“Frymaster”), a Louisiana limited liability
company, is becoming party to the Purchase and Sale Agreement, as an Originator
thereunder (the “Frymaster Joinder”);

 

WHEREAS, concurrently
herewith and pursuant to that certain Joinder Agreement, dated as of the date
hereof, Welbilt Walk-Ins, LP (“Welbilt”), a Delaware limited
partnership, is becoming party to the Purchase and Sale Agreement, as an
Originator thereunder (the “Welbilt Joinder” and together with the
Frymaster Joinder, collectively, the “Joinder Agreements”);

 

WHEREAS, concurrently
herewith the Seller, the Servicer, the Agent, the Purchaser and Wachovia Bank,
National Association are entering into a Deposit Account Control Agreement (the
“Wachovia Agreement”); and

 

WHEREAS, the parties hereto
desire to amend the Agreement as set forth herein;

 

NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:

 

SECTION 1. Definitions.  Capitalized terms defined in the Agreement
and used but not otherwise defined herein shall have the meanings assigned
thereto in the Agreement.

 

SECTION 2. Amendments.  The Agreement is hereby amended as follows:

 

(a)           The definition of “Intercreditor
Agreement” set forth in Exhibit I to the Agreement is replaced in its
entirety with the following:

 

“Intercreditor Agreement” means the
Third Amended and Restated Intercreditor Agreement, dated as of September 28,
2009, among Manitowoc, the Originators, the Seller, the Agent and JPMorgan Chase
Bank, N.A., as the same may be amended, supplemented or otherwise modified from
time to time.

 

 

(b)           Clause (i) of the
definition of “Purchase Limit” set forth in Exhibit I to the
Agreement is amended by replacing the amount “one hundred five million dollars
($105,000,000)” with “one hundred twenty-five million dollars ($125,000,000)”.

 

(c)           Schedule II to the Agreement
is replaced in its entirety with new Schedule II attached hereto.

 

SECTION 3. Representations
and Warranties.  On the date hereof,
each of the Seller and Manitowoc hereby represents and warrants (as to itself)
to the Purchaser and the Agent as follows:

 

(a)           after giving effect to this
Amendment, no event or condition has occurred and is continuing which
constitutes a Termination Event or Unmatured Termination Event;

 

(b)           after giving effect to this
Amendment, the representations and warranties of such Person set forth in the
Agreement and each other Transaction Document are true and correct as of the
date hereof, as though made on and as of such date (except to the extent such
representations and warranties relate solely to an earlier date and then as of
such earlier date); and

 

(c)           this Amendment constitutes the valid
and binding obligation of such Person, enforceable against such Person in
accordance with its terms.

 

SECTION 4. Effectiveness.  This Amendment shall be effective, as of the
date hereof, upon receipt by the Agent of the following (in each case, in form
and substance reasonably satisfactory to the Agent):

 

(a)           counterparts of this Amendment duly
executed by each of the parties hereto;

 

(b)           counterparts of the Frymaster
Joinder, the Welbilt Joinder, the Intercreditor Agreement (as defined in Section 2(a) above),
and the Wachovia Agreement, in each case, duly executed by each of the parties
thereto;

 

(c)           an executed copy of a letter from
JPMorgan Chase Bank, N.A. to Manitowoc confirming that the transactions
contemplated by the Transaction Documents constitute a “Permitted
Securitization” under the Credit Agreement; and

 

(d)           opinions of counsel to the Seller and
each Originator regarding certain corporate, enforceability, security interests
and bankruptcy matters in form and substance acceptable to the Agent and
customary for transactions similar to those contemplated by the Transaction
Documents.

 

SECTION 5. Wachovia
Agreement.  The parties hereto
acknowledge and agree that no provision of the Wachovia Agreement (including,
without limitation, Sections 3(c), 5(b), 5(c), 9(a) or
9(b) thereof) shall limit any obligations or liabilities of the
Seller, the Servicer or any Originator to the Purchaser or the Agent under any
Transaction Document or under applicable law (including, without limitation,
any obligation of the Seller, the Servicer or any Originator to indemnify the
Purchaser or the Agent for payments made by them under the Wachovia Agreement).
For the avoidance of doubt, the Purchaser hereby appoints and authorizes the
Agent 

 

2

 

as
its agent under the Wachovia Agreement with full power and authority to
exercise all rights of the Purchaser thereunder on the Purchaser’s behalf.

 

SECTION 6. Miscellaneous.  The Agreement, as amended hereby, remains in
full force and effect. Any reference to the Agreement from and after the date
hereof shall be deemed to refer to the Agreement as amended hereby, unless
otherwise expressly stated. This Amendment may be executed in any number of
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
then taken together shall constitute one and the same Amendment. This Amendment
may be executed by facsimile or delivery of a “.pdf’ copy of an executed
counterpart hereof. This Amendment shall be governed by, and construed in
accordance with, the internal laws of the State of New York (including Sections
5-1401 and 5-1402 of the General Obligations Law of the State of New York, but
without regard to any other conflict of laws provisions thereof) and the obligations,
rights and remedies of the parties under this Amendment shall be determined in
accordance with such laws.

 

[Signature
pages follow]

 

3

 

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

 

	
   

  	
  MANITOWOC
  FUNDING, LLC,

  
	
   

  	
  as
  Seller

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Maurice D. Jones

  
	
   

  	
  Name:

  	
  Maurice
  D. Jones

  
	
   

  	
  Title:

  	
  Director

  

 

Amendment
No. 5 to Amended and Restated

Receivables
Purchase Agreement

 

S-1

 

	
   

  	
  THE
  MANITOWOC COMPANY, INC.,

  
	
   

  	
  as
  Servicer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Maurice D. Jones

  
	
   

  	
  Name:

  	
  Maurice
  D. Jones

  
	
   

  	
  Title:

  	
  Senior
  Vice President, General Counsel & Secretary

  

 

Amendment
No. 5 to Amended and Restated

Receivables
Purchase Agreement

 

S-2

 

	
   

  	
  NORDDEUTSCHE
  LANDESBANK GIROZENTRALE, as Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Edward
  M. Weber

  
	
   

  	
  Name:

  	
  Edward
  M. Weber

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Heruy Dawit

  
	
   

  	
  Name:

  	
  Heruy
  Dawit

  
	
   

  	
  Title:

  	
  Director

  

 

Amendment
No. 5 to Amended and Restated

Receivables
Purchase Agreement

 

S-3

 

	
   

  	
  HANNOVER
  FUNDING COMPANY LLC, as Purchaser

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Damian Perez

  
	
   

  	
  Name:

  	
  Damian
  Perez

  
	
   

  	
  Title:

  	
  Vice-President

  

 

Amendment
No. 5 to Amended and Restated

Receivables
Purchase Agreement

 

S-4Exhibit 4.2

 

 [FORM OF
FACE OF SERIES B NOTE]

 

[Depository Legend, if applicable]

 

	
  No. [
  ]

  	
  Principal
  Amount $[ ]

  
	
   

  	
  CUSIP NO.

  

 

PROSPECT MEDICAL HOLDINGS, INC.

 

123⁄4% Senior Secured Note, Series B, due 2014

 

Prospect Medical Holdings Inc., a Delaware corporation,
promises to pay to [Cede & Co.],* or its registered assigns, the
principal sum of [  ] Dollars on July 15,
2014.

 

Interest Payment Dates: 
January 15 and July 15

 

Record Dates:  January 1
and July 1

 

Additional provisions of this Security are set forth on
the other side of this Security.

 

	
   

  	
  PROSPECT
  MEDICAL HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

1

 

TRUSTEE’S CERTIFICATE OF

AUTHENTICATION

 

U.S. BANK NATIONAL ASSOCIATION

as Trustee, certifies

that this is one of

the Securities referred

to in the Indenture.

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Officer

  	
           Date:
                      ,
  2009

  
	
   

  	
   

  

 

2

 

[FORM OF REVERSE SIDE OF SERIES B NOTE]

PROSPECT MEDICAL HOLDINGS, INC.

 

123⁄4% Senior Secured Note, Series B, due 2014

 

1.             Interest

 

Prospect Medical Holdings Inc., a Delaware corporation
(such corporation, and its successors and assigns under the Indenture
hereinafter referred to, being herein called the “Company”), promises to
pay interest on the principal amount of this Security at the rate per annum
shown above.

 

The Company will pay interest semiannually on January 15
and July 15 of each year commencing January 15, 2010.  Interest on the Securities will accrue from
the most recent date to which interest has been paid on the Securities or, if
no interest has been paid, from July 29, 2009.  The Company shall pay interest on overdue
principal, and on overdue premium, if any (plus interest on such interest to
the extent lawful), at the rate borne by the Securities to the extent
lawful.  Interest will be computed on the
basis of a 360-day year of twelve 30-day months.  In addition, the Company will pay any
Additional Interest specified in the Registration Rights Agreement.  The Holder of this Security is entitled to
the benefits of such Registration Rights Agreement.  Additional Interest shall be paid to the same
Persons, in the same manner and at the same times as regular interest.

 

2.             Method of
Payment

 

By no later than 10:00 a.m. (New York City time) on
the date on which any principal of, premium, if any, or interest on any
Security is due and payable, the Company shall irrevocably deposit with the
Trustee or the Paying Agent money sufficient to pay such principal, premium, if
any, and/or interest (including Additional Interest).  The Company will pay interest (except
Defaulted Interest) to the Persons who are registered Holders at the close of
business on the January 1 or July 1 next preceding the interest
payment date even if Securities are cancelled, repurchased or redeemed after
the record date and on or before the interest payment date.  Holders must surrender Securities to a Paying
Agent to collect principal payments.  The
Company will pay principal, premium, if any, and interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts.  Payments in respect
of Securities represented by a Global Security (including principal, premium,
if any, and interest) will be made by the transfer of immediately available
funds to the accounts specified by The Depository Trust Company or any
successor depository.  The Company will
make all payments in respect of a Definitive Security (including principal,
premium, if any, and interest) by mailing a check to the registered address of
each Holder thereof; provided, however,
that payments on the Securities may also be made, in the case of a Holder of at
least $1,000,000 aggregate principal amount of Securities, by wire transfer to
a U.S. dollar account maintained by the payee with a bank in the United States
if such Holder elects payment by wire transfer by giving written notice to the
Trustee or the Paying Agent to such effect designating such account no later
than 15 days immediately preceding the relevant due date for payment (or such
other date as the Trustee may accept in its discretion).

 

3

 

3.             Paying Agent and
Registrar

 

Initially, U.S. Bank National Association (the “Trustee”)
will act as Trustee, Paying Agent and Registrar.  The Company may appoint and change any Paying
Agent, Registrar or co-registrar without notice to any Securityholder.  The Company or any of its domestically
organized, wholly owned Subsidiaries may act as Paying Agent, Registrar or
co-registrar.

 

4.             Indenture

 

The Company issued the Securities under an Indenture
dated as of July 29, 2009 (as it may be amended or supplemented from time
to time in accordance with the terms thereof, the “Indenture”), among
the Company, the Subsidiary Guarantors and the Trustee.  The terms of the Securities include those
stated in the Indenture and those made part of the Indenture by reference to
the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in effect
on the date of the Indenture (the “Act”).  Capitalized terms used herein and not defined
herein have the meanings ascribed thereto in the Indenture.  The Securities are subject to all terms and
provisions of the Indenture, and Securityholders are referred to the Indenture
and the Act for a statement of those terms.

 

The Securities are secured senior obligations of the
Company.  The aggregate principal amount
of Securities that may be authenticated and delivered under the Indenture is
unlimited, provided that at least
the Net Cash Proceeds from any issuance of Additional Securities are invested
in Additional Assets in accordance with the Indenture.  This Security is one of the 123⁄4% Senior
Secured Notes, Series B, due 2014 referred to in the Indenture.  The Securities include (i) $160,000,000
aggregate principal amount of the Company’s 123⁄4% Senior Secured Notes, Series A,
due 2014 issued under the Indenture on July 29, 2009 (herein called “Initial
Securities”), (ii) if and when issued, additional 123⁄4% Senior Secured
Notes, Series A, due 2014 or 123⁄4% Senior Secured Notes, Series B, due
2014 of the Company that may be issued from time to time under the Indenture
subsequent to July 29, 2009 (herein called “Additional Securities”)
as provided in Section 2.1(a) of the Indenture and (iii) if and
when issued, the Company’s 123⁄4% Senior Secured Notes, Series B, due 2014
that may be issued from time to time under the Indenture in exchange for
Initial Securities or Additional Securities in an offer registered under the
Securities Act as provided in the Registration Rights Agreement (herein called “Exchange
Securities”).  The Initial
Securities, Additional Securities and Exchange Securities are treated as a
single class of securities under the Indenture and shall be secured by first
and second priority Liens and security interests, subject to Permitted Liens,
in the Collateral.  The Indenture imposes
certain limitations on the incurrence of indebtedness, the making of restricted
payments, the sale of assets and subsidiary stock, the incurrence of certain
liens, sale-leaseback transactions, the sale of capital stock of restricted
subsidiaries, the making of payments for consents, the entering into of
agreements that restrict distribution from restricted subsidiaries and the
consummation of mergers and consolidations. 
The Indenture also imposes requirements with respect to the provision of
financial information and the provision of guarantees of the Securities by
certain subsidiaries.

 

To guarantee the due and punctual payment of the
principal, premium, if any, and interest (including post-filing or
post-petition interest) on the Securities and all other amounts 

 

4

 

payable by the Company under the
Indenture, the Securities, the Registration Rights Agreement and the Collateral
Documents when and as the same shall be due and payable, whether at maturity,
by acceleration or otherwise, according to the terms of the Securities and the
Indenture, the Subsidiary Guarantors have unconditionally guaranteed (and
future guarantors, together with the Subsidiary Guarantors, will
unconditionally guarantee), jointly and severally, such obligations on a
senior, secured basis pursuant to the terms of the Indenture.

 

5.             Redemption

 

Except as set forth below, the Securities will not be
redeemable at the option of the Company prior to July 15, 2012.  On and after such date, the Securities will
be redeemable, at the Company’s option, in whole or in part, at any time upon
not less than 30 nor more than 60 days prior notice mailed by first-class
mail to each Holder’s registered address, at the following redemption prices
(expressed in percentages of principal amount), plus accrued and unpaid
interest (including Additional Interest) on the Securities to the applicable
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date):

 

If redeemed during the 12-month period commencing on July 15
of the year set forth below:

 

	
  Period

  	
   

  	
  Redemption

  Price

  	
   

  
	
  2012

  	
   

  	
  106.375

  	
  %

  
	
  2013 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

In addition, at any time and from time to time prior to July 15,
2012, the Company may redeem in the aggregate up to 35% of the original
principal amount of the Securities with the Net Cash Proceeds of one or more
Equity Offerings by the Company at a redemption price (expressed as a
percentage of principal amount) of 112.750% of the principal amount thereof,
plus accrued and unpaid interest (including Additional Interest) to the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date); provided that:

 

(1)           at least 65% of the
original principal amount of the Securities (calculated after giving effect to
any issuance of Additional Securities) must remain outstanding after each such
redemption; and

 

(2)           each such redemption
occurs within 60 days of the date of closing of such Equity Offering.

 

If the optional redemption date is on or after an
interest record date and on or before the related interest payment date, the
accrued and unpaid interest (including Additional Interest), if any, will be
paid on the optional redemption date to the Person in whose name the Security
is registered at the close of business on such record date, and no additional
interest will be payable to Holders whose Securities will be subject to
redemption by the Company.

 

5

 

In the case of any partial redemption, selection of the
Securities for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which
the Securities are listed or, if the Securities are not listed, then on a pro
rata basis, by lot or by such other method as the Trustee in its sole
discretion shall deem to be fair and appropriate, although no Security of
$2,000 in original principal amount or less will be redeemed in part.  If any Security is to be redeemed in part
only, the notice of redemption relating to such Security shall state the
portion of the principal amount thereof to be redeemed.  A new Security in principal amount equal to
the unredeemed portion thereof will be issued in the name of the Holder thereof
upon cancellation of the original Security. 
On and after the redemption date, interest will cease to accrue on
Securities or portions thereof called for redemption as long as the Company has
deposited with the Paying Agent funds in satisfaction of the applicable
redemption price pursuant to the Indenture.

 

In addition, at any time prior to July 15, 2012,
upon not less than 30 nor more than 60 days’ notice mailed by first-class
mail to each Holder’s registered address, the Company may redeem the
Securities, in whole but not in part, at a redemption price equal to 100% of
the principal amount thereof plus the Applicable Premium plus accrued and
unpaid interest, if any, to the redemption date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date).

 

“Applicable Premium” means, with respect to a
Security at any Redemption Date, the greater of (i) 1.0% of the principal
amount of such Security and (ii) the excess, if any, of (A) the
present value as of such date of redemption of (1) the redemption price of
such Security on July 15, 2012 (such redemption price being described in
this Section 5) plus (2) all required interest payments due on such
Security through July 15, 2012, computed using a discount rate equal to
the Treasury Rate plus 50 basis points, over (B) the then-outstanding
principal amount of such Security.

 

“Treasury Rate” means the yield to maturity at
the time of computation of United States Treasury securities with a constant
maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least two
Business Days prior to the redemption date (or, if such Statistical Release is
no longer published, any publicly available source or similar market data))
most nearly equal to the period from the redemption date to July 15, 2012;
provided, however,
that if the period from the redemption date to July 15, 2012 is not equal
to the constant maturity of a United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the period from the redemption date to July 15, 2012
is less than one year, the weekly average yield on actually traded United
States Treasury securities adjusted to a constant maturity of one year shall be
used.

 

Prior to the mailing of any notice of redemption of the
Securities, the Company shall deliver to the Trustee an Officers’ Certificate
stating that the Company is entitled to effect such redemption, accompanied by
an opinion of counsel satisfactory to the Trustee, acting reasonably, that the
conditions precedent to the right of redemption have occurred.  Any such notice to the Trustee may be
cancelled at any time prior to notice of such redemption being 

 

6

 

mailed to any Holder and shall
thereby be void and of no effect.  The
Company will be bound to redeem the Securities on the date fixed for
redemption.

 

The Company is not required to make any mandatory
redemption payments or sinking fund payments with respect to the Securities.

 

The Company may acquire Securities by means other than a
redemption, whether by tender offer, open market purchases, negotiated
transactions or otherwise, in accordance with applicable securities laws, so
long as such acquisition does not otherwise violate the terms of the Indenture.

 

6.             Repurchase
Provisions

 

If a Change of Control occurs, unless the Company has
exercised its right to redeem all of the Securities as described under
paragraph 5 of the Securities, each Holder will have the right to require
the Company to repurchase from each Holder all or any part (equal to $2,000 or
an integral multiple of $1,000 in excess thereof) of such Holder’s Securities
at a purchase price in cash equal to 101% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the date of purchase (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date) as provided in, and subject to the terms
of, the Indenture.

 

7.             Denominations;
Transfer; Exchange

 

The Securities are in registered form without coupons in
denominations of principal amount of $2,000 and whole multiples of $1,000 in
excess thereof.  A Holder may transfer or
exchange Securities in accordance with the Indenture.  The Registrar may require a Holder, among
other things, to furnish appropriate endorsements or transfer documents and to
pay a sum sufficient to cover any taxes and fees required by law or permitted
by the Indenture.  The Registrar need not
register the transfer of or exchange of any Security (A) for a period
beginning (1) 15 days before the mailing of a notice of an offer to
repurchase or redeem Securities and ending at the close of business on the day
of such mailing or (2) 15 days before an interest payment date and ending
on such interest payment date or (B) called for redemption, except the
unredeemed portion of any Security being redeemed in part.

 

8.             Persons Deemed
Owners

 

The registered Holder of this Security may be treated as
the owner of it for all purposes.

 

9.             Unclaimed Money

 

If money for the payment of principal, premium, if any,
or interest remains unclaimed for two years, the Trustee or Paying Agent shall
pay the money back to the Company at its request unless an abandoned property
law designates another Person.  After any
such payment, Holders entitled to the money must look only to the Company for
payment as general creditors unless an abandoned property law designates
another person and not to the Trustee for payment.

 

7

 

10.           Defeasance

 

Subject to certain exceptions and conditions set forth
in the Indenture, the Company at any time may terminate some or all of its
obligations under the Securities, the Indenture and the Collateral Documents if
the Company deposits with the Trustee money or U.S. Government Obligations for
the payment of principal, premium, if any, and interest on the Securities to
redemption or maturity, as the case may be.

 

11.           Amendment,
Supplement, Waiver

 

Subject to certain exceptions set forth in the Indenture,
(i) the Indenture, the Securities, the Subsidiary Guarantees or the
Collateral Documents may be amended or supplemented by the Company, Subsidiary
Guarantors and Trustee with the written consent of the Holders of at least a
majority in principal amount of the then outstanding Securities and (ii) any
default (other than with respect to nonpayment or in respect of a provision
that cannot be amended without the written consent of each Securityholder
affected) or noncompliance with any provision may be waived with the written
consent of the Holders of a majority in principal amount of the then
outstanding Securities.  Subject to
certain exceptions set forth in the Indenture, without the consent of any
Securityholder, the Company, Subsidiary Guarantors and the Trustee may amend or
supplement the Indenture, the Securities, the Subsidiary Guarantees or the
Collateral Documents to cure any ambiguity, omission, defect or inconsistency,
to comply with Article IV or Article X of the Indenture, to provide
for uncertificated Securities in addition to, or in place of, certificated
Securities, to add Guarantees with respect to the Securities, to release
Subsidiary Guarantors upon their designation as Unrestricted Subsidiaries or
otherwise in accordance with the Indenture, to secure the Securities, to
release Liens in favor of the Collateral Agent in the Collateral as provided
under the collateral release provisions, to add additional covenants of the
Company, to surrender rights and powers conferred on the Company, to comply
with any requirement of the SEC in connection with qualifying the Indenture
under the Act, to make any change that does not adversely affect the rights of
any Securityholder or, in the case of the Intercreditor Agreement, that does
not adversely affect the rights of any Securityholder in any material respect,
to provide for the issuance of Exchange Securities, to provide for the
appointment of a successor trustee or to conform the text of the Indenture, the
Securities, the Subsidiary Guarantees or the Collateral Documents to any
provision under the heading “Description of the Notes” in the Offering
Memorandum to the extent that such provision in the Offering Memorandum is
intended to be a verbatim recitation of a provision of the Indenture, the Securities,
the Subsidiary Guarantees or the Collateral Documents.

 

12.           Defaults and
Remedies

 

Under the Indenture, Events of Default include (each of
which is described in greater detail in the Indenture) (i) default for
30 days in payment of interest or Additional Interest when due on the
Securities; (ii) default in payment of principal or premium, if any, on
the Securities at Stated Maturity, upon required repurchase or upon optional
redemption pursuant to paragraph 5 of the Securities, upon declaration or otherwise;
(iii) the failure by the Company or any Subsidiary Guarantor to comply
with its obligations under Article IV or Section 10.2 of the
Indenture; (iv) failure by the Company to comply for 30 days after
written notice with any of its obligations under the covenants described under Section 3.10
of the Indenture (other than a 

 

8

 

failure to purchase Securities
when required under the Indenture, which failure shall constitute an Event of
Default under clause (ii) above) or failure by the Company or any
Subsidiary Guarantor to comply for 30 days after written notice with any
of its obligations under the Collateral Documents; (v) the failure by the
Company to comply for 60 days after written notice with its other
agreements contained in the Indenture or under the Securities (other than those
referred to in clause (i), (ii), (iii) or (iv) above); (vi) default
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money borrowed
by the Company or any Subsidiary Guarantor (or the payment of which is
guaranteed by the Company or any Subsidiary Guarantor), other than Indebtedness
owed to the Company or a Restricted Subsidiary, whether such Indebtedness or
guarantee now exists, or is created after the date of the Indenture, which
default (a) is caused by a failure to pay principal of, or interest or
premium, if any, on such Indebtedness prior to the expiration of the grace
period provided in such Indebtedness (“payment default”) or (b) results
in the acceleration of such Indebtedness prior to its maturity and, in each
case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
payment default or the maturity of which has been so accelerated, aggregates
$10.0 million or more; (vii) certain events of bankruptcy, insolvency or
reorganization of the Company or a Subsidiary Guarantor that is a Significant
Subsidiary or group of Subsidiary Guarantors that, taken together (as of the
latest audited consolidated financial statements for the Company), would
constitute a Significant Subsidiary; (viii) failure by the Company or any
Subsidiary Guarantor to pay final judgments aggregating in excess of $10.0
million (net of any amounts that a reputable and creditworthy insurance company
has acknowledged liability for in writing), which judgments are not paid,
discharged, waived or stayed for a period of 60 days; (ix) any
Subsidiary Guarantee or any Collateral Document ceases to be in full force and
effect (except as contemplated by the terms of the Indenture) or is declared
null and void in a judicial proceeding or the Company or any Subsidiary
Guarantor denies or disaffirms its obligations under the Indenture, any
Subsidiary Guarantee or any Collateral Document to which it is a party; or (x) with
respect to any Collateral having a fair market value in excess of $10.0
million, individually or in the aggregate, (A) the security interest under
the Collateral Documents, at any time, ceases to be in full force and effect
for any reason other than in accordance with their terms and the terms of the
Indenture and other than the satisfaction in full of all obligations under the
Indenture and discharge of the Indenture, (B) any security interest
created thereunder or under the Indenture is declared invalid or unenforceable
or (C) the Company or any Subsidiary Guarantor asserts, in any pleading in
any court of competent jurisdiction, that any such security interest is invalid
or unenforceable.  However, a default
under clause (iv) or (v) will not constitute an Event of Default
until the Trustee or the Holders of at least 25% in principal amount of the
outstanding Securities notify the Company of the Default and the Company does
not cure such Default within the time specified in clause (iv) or (v) hereof
after receipt of such notice.

 

If an Event of Default (other than an Event of Default
described in clause (vii) hereof) occurs and is continuing, the Trustee by
notice to the Company, or the Holders of at least 25% in principal amount of
the outstanding Securities by notice to the Company and the Trustee, may, and
the Trustee at the request of such Holders shall, declare all the Securities to
be due and payable immediately.  If an
Event of Default described in clause (vii) hereof occurs and is
continuing, the principal of, premium, if any, and accrued and unpaid interest
(including 

 

9

 

Additional Interest) on all the
Securities will become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holders.

 

Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. 
The Trustee may refuse to enforce the Indenture or the Securities unless
it receives reasonable indemnity or security. 
Subject to certain limitations, Holders of a majority in principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power.  The Trustee may withhold from
Securityholders notice of any continuing Default or Event of Default (except a
Default or Event of Default in payment of principal or interest) if it
determines that withholding notice is in their interest.

 

13.           Trustee Dealings
with the Company

 

Subject to certain limitations set forth in the
Indenture, the Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal
with and collect obligations owed to it by the Company or its Affiliates and
may otherwise deal with the Company or its Affiliates with the same rights it
would have if it were not Trustee.

 

14.           No Recourse
Against Others

 

An incorporator, director, officer, employee or
stockholder of each of the Company or any Subsidiary Guarantor, solely by
reason of this status, shall not have any liability for any obligations of the
Company or any Subsidiary Guarantor under the Securities, the Indenture, the Collateral
Documents or the Subsidiary Guarantees or for any claim based on, in respect of
or by reason of such obligations or their creation.  By accepting a Security, each Securityholder
waives and releases all such liability. 
The waiver and release are a part of the consideration for the issuance
of the Securities.

 

15.           Authentication

 

This Security shall not be valid until an authorized
officer of the Trustee (or an authenticating agent acting on its behalf)
manually signs the certificate of authentication on the other side of this
Security.

 

16.           Abbreviations

 

Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (= tenants in common), TEN ENT
(= tenants by the entirety), JT TEN (= joint tenants with rights of survivorship
and not as tenants in common), CUST (= custodian) and U/G/M/A (= Uniform Gift
to Minors Act).

 

17.           CUSIP, Common
Code and ISIN Numbers

 

The Company has caused CUSIP, Common Code and ISIN
numbers, if applicable, to be printed on the Securities and has directed the
Trustee to use CUSIP, Common Code and ISIN numbers, if applicable, in notices
of redemption or purchase as a convenience to Securityholders.  No representation is made as to the accuracy
of such numbers either as printed 

 

10

 

on the Securities or as
contained in any notice of redemption or purchase and reliance may be placed
only on the other identification numbers placed thereon.

 

18.           Governing Law

 

This Security shall be governed by, and construed in
accordance with, the laws of the State of New York.

 

The Company will furnish to any Securityholder upon
written request and without charge to the Securityholder a copy of the
Indenture, which has in it the text of this Security in larger type.  Requests may be made to:

 

Prospect Medical Holdings
Inc.

10780 Santa Monica Blvd., Suite 400

Los Angeles, CA 90025

Attention:  General Counsel

 

11

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