Exhibit 10.5
Execution
Copy
CONSENT UNDER SECOND LIEN
FORBEARANCE AGREEMENT
THIS CONSENT UNDER
SECOND LIEN FORBEARANCE AGREEMENT (this “ Consent
”) is made as of March 31, 2008 and entered into by and
among Prospect Medical Holdings, Inc. (“ Holdings
”) and 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 ”), on behalf of itself and the other lenders party
to the Credit Agreement defined below (collectively, the “
Second Lien Lenders ”).
RECITALS
WHEREAS, the
Borrowers, the Second Lien Lenders and the Second Lien
Administrative Agent have entered into that certain Second Lien
Credit Agreement dated as of August 8, 2007 (as amended,
restated, supplemented or otherwise modified, the “ Second
Lien Credit Agreement ”), pursuant to which the Second
Lien Lenders have agreed to make the Term Loan (such term, together
with each other capitalized term used in this Consent but not
defined in this Consent, shall be defined in accordance with the
Second Lien Credit Agreement) and other extensions of credit, all
upon the terms and conditions set forth in the Second Lien Credit
Agreement;
WHEREAS, the
Second Lien Administrative Agent, inter alia , is a party to
the Intercreditor Agreement;
WHEREAS, as of the
date hereof, certain Defaults and Events of Default exist under the
Second Lien Credit Agreement, which as a result of such Defaults
and Events of Default, gave rise to the Second Lien Lenders and the
Second Lien Administrative Agent having the right, among other
things and subject to the terms and conditions of the Intercreditor
Agreement, to exercise any and all remedies available to the Second
Lien Lenders under the Second Lien Credit Agreement;
WHEREAS, the
Borrowers, the Second Lien Administrative Agent and the Second Lien
Lenders entered into a Forbearance Agreement on February 13,
2008 (as may be amended, restated supplemented or otherwise
modified, the “ Forbearance Agreement ”)
pursuant to which the Second Lien Lenders and the Second Lien
Administrative Agent agreed to forbear from exercising such rights
for a limited period of time provided that Borrowers satisfied
certain conditions contained within such Forbearance
Agreement;
WHEREAS, the
Borrowers have advised the Second Administrative Agent that they
will be unable to deliver the Required Reporting Package (as such
term is defined in the Forbearance Agreement) by a time sufficient
to allow a borrowing under the First Lien Credit Facility in
accordance with the terms of the Forbearance Agreement, and
accordingly, the Borrowers have requested that they be permitted to
borrow under the First Lien Credit Facility in advance of their
delivery of the Required Reporting Package;
NOW, THEREFORE, in consideration of the
foregoing, the parties agree as follows: