Bank ofAmerica, N.A. WA1-501-17-32 800 FifthAvenue, Floor 17 Seattle,WA 98104

EX-10.9 10 a09-9341_1ex10d9.htm EX-10.9

Exhibit 10.9

 


*                 Confidential Information identified below was omitted and filed separately with the Securities and Exchange Commission.

 

Bank of America, N.A.

WA1-501-17-32

800 Fifth Avenue, Floor 17

Seattle, WA  98104

 

February 27, 2009

 

Prospect Medical Group, Inc.

1920 East 17th Street, Suite 200

Santa Ana, CA 92705

 

Re:                               Fourth 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.             Fourth 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 February 27, 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 6, 2009 (the “Extension Deadline”).  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 6, 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 February 27, 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

 

[Signature Pages Continue]

 

Fourth 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

 

[Signature Pages Continue]

 

Fourth Amendment to First Lien Divestiture Letter Agreement and Consent

 



 

[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY

WITH THE SECURITIES AND EXCHANGE COMMISSION]

 

Fourth 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]

 

Fourth 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

 

PROSPECT ADVANTAGE NETWORK, INC.

PROMED HEALTH SERVICES COMPANY

 

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.

 

ARTHUR E. LIPPER,  solely in his capacity as Pledgor

UPLAND MEDICAL GROUP, A PROFESSIONAL MEDICAL CORPORATION

 

 

 

 

 

 

 

 

By:

/s/ Samuel S. Lee

 

 

Name:

Samuel S. Lee

 

/s/ Arthur E. Lipper

Title:

Vice President

 

 

 

[Signature Pages Continue]

 

Fourth Amendment to First Lien Divestiture Letter Agreement and Consent

 



 

ALTA LOS ANGELES HOSPITALS, INC.

 

PROSPECT MEDICAL SYSTEMS, INC.

ALTA HOLLYWOOD HOSPITALS, 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

 

 

 

Fourth Amendment to First Lien Divestiture Letter Agreement and Consent