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CONSENT UNDER SECOND LIEN FORBEARANCE AGREEMENT

Default Notice Forbearance Agreement

CONSENT UNDER SECOND LIEN FORBEARANCE AGREEMENT | Document Parties: Bank of America, N.A. | Prospect Medical Group, Inc | Prospect Medical Holdings, Inc You are currently viewing:
This Default Notice Forbearance Agreement involves

Bank of America, N.A. | Prospect Medical Group, Inc | Prospect Medical Holdings, Inc

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Title: CONSENT UNDER SECOND LIEN FORBEARANCE AGREEMENT
Governing Law: New York     Date: 6/16/2008
Industry: Healthcare Facilities     Sector: Healthcare

CONSENT UNDER SECOND LIEN FORBEARANCE AGREEMENT, Parties: bank of america  n.a. , prospect medical group  inc , prospect medical holdings  inc
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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:

 



 

ARTICLE I

 

CONSENT

 

Section 1.1                          Definitions .  All capitalized terms used and not defined herein shall have the meanings assigned thereto in the Second Lien Credit Agreement and/or the Forbearance Agreement, as applicable.

 

Section 1.2                          Consent .  The Second Lien Administrative Agent and the Second Lien Lenders hereby consent and agree that (i) to the amendment of the first lien forbearance agreement to permit the Borrowers’ to borrow under the first lien revolving credit facility and (ii) acknowledge and agree that all provisions of the Forbearance Agreement remain in full force and effect.

 

ARTICLE II

 

CONDITIONS TO EFFECTIVENESS

 

Section 2.1.                    Conditions Precedent .  This Amendment shall become effective as of the date first written above upon receipt by the Second Lien Administrative Agent of duly executed counterparts of this Amendment from each of the Borrowers, the Guarantors and written confirmation of agreement to the terms hereof by the Required Lenders.

 

ARTICLE III

 

MISCELLANEOUS

 

Section 3.1.                    Representations and Warranties .  Each Loan Party hereby represents and warrants to the Second Lien Administrative Agent and the Second Lien Lenders that (a) each Loan Party has the legal power and authority to execute and deliver this Consent; (b) the officers of each Loan Party executing this Consent have been duly authorized to execute and deliver the same and bind each Loan Party with respect to the provisions hereof; (c) the execution and delivery hereof by each Loan Party and the performance and observance by each Loan Party of the provisions hereof do not violate or conflict with any organizational document of any Loan Party or any law applicable to any Loan Party or result in a breach of any provision of or constitute a default under any other agreement, instrument or document binding upon or enforceable against any Loan Party; (d) except with respect to the Existing Events of Default, no Default or Event of Default exists under the Second Lien Credit Agreement, nor will any occur immediately after the execution and delivery of this Consent or by the performance or observance of any provision hereof; (e) no Loan Party is aware of any claim or offset against, or defense or counterclaim to, any Loan Party’s obligations or liabilities under the Second Lien Credit Agreement or any other Loan Document; (f) this Consent and each document executed by each Loan Party in connection herewith constitute valid and binding obligations of the applicable Loan Party in every respect, enforceable in accordance with their terms; and (g) no Loan Party has received a notice of default of any kind from any material account debtor or any counterparty to a Material Contract and no material account debtor or counterparty to a Material Contract has

 

2



 

asserted any right of set-off, deduction or counterclaim with respect to any account or such Material Contract, respectively.

 

Section 3.2.                    Release .  Each Loan Party hereby waives and releases the Second Lien Administrative Agent and the Second Lien Lenders and their respective directors, officers, employees, agents, attorneys, affiliates and subsidiaries (each a “ Releasee ”) from any and all claims, offsets, defenses and counterclaims, known and unknown, that any Loan Party may have as of the date of this Consent based upon, relating to, or arising out of the Obligations and related transactions in any way.  Each Loan Party intends the foregoing release to cover, encompass, release and extinguish, among other things, all claims and matters that might otherwise be reserved by California Civil Code Section 1542, which provides as follows:

 

“A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the



 
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