SECOND AMENDMENT TO SECOND LIEN CREDIT AGREEMENT, WAIVER AND CONSENT

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Exhibit 10.9

SECOND AMENDMENT TO SECOND LIEN CREDIT AGREEMENT, WAIVER AND CONSENT

        THIS SECOND AMENDMENT TO SECOND LIEN CREDIT AGREEMENT, WAIVER AND CONSENT (as the same may from time to time be amended, restated or otherwise modified, this " Agreement ") is made as of May 15, 2008 and entered into by and among PROSPECT MEDICAL HOLDINGS, INC. (" Holdings ") and PROSPECT MEDICAL GROUP, INC. (" Group " and, together 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 ").

RECITALS

        A.    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 by that certain Amended and Restated Forbearance Agreement dated as of April 10, 2008, as amended hereby and as further amended, restated, supplemented or otherwise modified, the " Second Lien Credit Agreement "), pursuant to which the Second Lien Lenders have agreed to make the Loans (such term, together with each other capitalized term used in this Agreement but not defined in this Agreement, 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.

        B.    The Borrowers acknowledge and agree that the Defaults and Events of Default set forth on Schedule A (the " Existing Events of Default ") have occurred under the Second Lien Credit Agreement; accordingly, the Borrowers have requested the Second Lien Lenders to waive such Defaults and Events of Default.

        C.    The Borrowers have also requested that the Second Lien Administrative Agent and the Second Lien Lenders consent to the Sale (as defined below).

        D.    The Borrowers have also requested that the Second Lien Administrative Agent and the Second Lien Lenders agree to certain amendments to the Second Lien Credit Agreement.

        E.    Subject, in each case, to the terms and conditions hereof, the Second Lien Lenders are willing to grant the Borrowers' requests.

        F.     In consideration of the agreements hereinafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

AGREEMENT

        1.      Defaults and Waiver .    Subject to the terms and conditions hereof, including, without limitation, the conditions to effectiveness set forth in Section 4 , the Second Lien Administrative Agent and the Second Lien Lenders hereby waive the Existing Events of Default.

        2.      Consent to Sale .    Notwithstanding anything to the contrary set forth in the Second Lien Credit Agreement, the Second Lien Lenders and the Second Lien Administrative Agent hereby consent to the sale (the " Sale ") of all of the issued and outstanding stock of Sierra Medical Management, Inc. (" SMM "), Sierra Primary Care Medical Group, A Medical Corporation (" Sierra "), Antelope Valley Medical Associates, Inc. (" Antelope Valley ") and Pegasus Medical Group, Inc. (" Pegasus ") to Greater Midwest (" Greater Midwest ") and Sierra Medical Group Holding Company, Inc. (" Heritage PC ", together with Greater Midwest, the " Buyers ") and waive any Event of Default (including, without

limitation, any Change of Control) that would otherwise be caused by the consummation of the Sale, subject to the satisfaction of each of the conditions precedent set forth below and in Section 4:

        (a)   The Second Lien Administrative Agent shall have received true, correct and complete copies of: (i) the executed Stock Purchase Agreement (including all exhibits and schedules thereto) dated as of April 23, 2008, by and among the Borrowers, the Buyers and Richard Merkin, M.D., in respect of the Sale; (ii) the Escrow Agreement dated as of April 23, 2008, by and among the Borrowers, the Buyers, and LaSalle Bank National Association, as escrow agent; and (iii) the letter agreement regarding early execution dated as of April 23, 2008, from Greater Midwest to Holdings (collectively, the " Sale Documents ").

        (b)   The terms and conditions of the Sale and the Sale Documents shall be in form and substance satisfactory to the Second Lien Lenders and the Second Lien Administrative Agent.

        (c)   The First Lien Lenders and the First Lien Administrative Agent shall have consented to the Sale and approved the Sale Documents.

        (d)   The Borrowers shall prepay the Term Loans under the First Lien Credit Agreement (which prepayment shall not be subject to any prepayment premium or other penalty) in an amount equal to one hundred percent (100%) of the Net Cash Proceeds (as defined in the First Lien Credit Agreement and including all severance and tail insurance premiums paid in connection with the sale) and equal to at least $7,000,000 by directing the Buyers to remit the Net Cash Proceeds payable to the Borrowers in connection with the Sale directly to the First Lien Administrative Agent in accordance with wire transfer instructions to be provided thereby.

        3.      Amendments to the Second Lien Credit Agreement .    The Second Lien Administrative Agent, the Second Lien Lenders and the Borrowers agree to amend, effective in accordance with Section 4 below, the Second Lien Credit Agreement as follows:

        (a)   The definition of "Applicable Rate" in Section 1.01 of the Second Lien Credit Agreement is hereby amended and restated in its entirety to read as follows:

        "' Applicable Rate ' means the applicable percentage per annum set forth below determined by reference to the Consolidated Leverage Ratio as set forth in the most recent Compliance Certificate received by the Administrative Agent pursuant to Section 6.02(b) :

        Any increase or decrease in the Applicable Rate resulting from a change in the Consolidated Leverage Ratio shall become effective as of the first Business Day immediately following the date a Compliance Certificate is delivered pursuant to Section 6.02(b) ; provided , however , that if a Compliance Certificate is not delivered when due in accordance with such Section, then Pricing Level 3 shall apply, in each case as of the first Business Day after the date on which such Compliance Certificate was required to have been delivered.

        Notwithstanding anything to the contrary contained in this definition, if, as a result of any restatement of or other adjustment to the financial statements of Holdings or for any other reason, either Borrower or the Lenders determine that (i) the Consolidated Leverage Ratio as calculated by the Borrowers as of any applicable date was inaccurate and (ii) a proper calculation of the Consolidated Leverage Ratio would have resulted in higher pricing for such period, the Borrowers shall immediately and retroactively be obligated to pay to the Administrative Agent for the account of the

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applicable Lenders, promptly on demand by the Administrative Agent (or, after the occurrence of an actual or deemed entry of an order for relief with respect to either Borrower under the Bankruptcy Code of the United States, automatically and without further action by the Administrative Agent or any Lender), an amount equal to the excess of the amount of interest and fees that should have been paid for such period over the amount of interest and fees actually paid for such period. This paragraph shall not limit the rights of the Administrative Agent or any Lender, as the case may be, under Section 2.08(b) or under Article VIII . The Borrowers' obligations under this paragraph shall survive the termination of the Term Commitments and the repayment of all other Obligations hereunder."

        (b)   The definition of "Consolidated EBITDA" in Section 1.01 of the Second Lien Credit Agreement is hereby amended by (i) amending and restating the following clauses: (A) in subsection (b)(iii), the clause "(iii) losses (or plus gains)" is hereby amended to read as follows "(iii) gains (or plus losses)" and (B) in subsection (b)(iv), the clause "plus (iv) extraordinary losses (or plus gains)" is hereby amended to read as follows "and (iv) extraordinary gains (or plus extraordinary losses)" and (ii) adding the following new sentence at the end of such definition:

        "For purposes of clarification, it is understood and agreed that the add-backs identified on Schedule 1.01 shall not apply to any compliance period ending after March 31, 2008."

        (c)   The definition of "Dr. Terner" in Section 1.01 of the Second Lien Credit Agreement is hereby amended by adding the following clause at the end of such definition: ", or such other licensed physician reasonably acceptable to the Administrative Agent; provided , that the Administrative Agent shall have received at least thirty (30) days prior written notice of any such replacement and all Loan Document amendments, agreements, certificates and other documents requested thereby in connection with any such replacement."

        (d)   The definition of "Fee Letter" in Section 1.01 of the Second Lien Credit Agreement is hereby amended and restated in its entirety to read as follows:

        "' Fee Letter ' means the letter agreement, dated May 23, 2007, among the Borrowers, the Administrative Agent and the Arranger, as amended, restated, supplemented or otherwise modified from time to time."

        (e)   The definition of "Indebtedness" in Section 1.01 of the Second Lien Credit Agreement is hereby amended in the following manner:

          (i)  By adding the following phrase immediately prior to the ";" at the end of item "(c)" within such definition: "(provided, however, that the net obligations of such Person under any Swap Contracts shall not be included as Indebtedness for purposes of calculating covenant compliance under Section 7.11(a) hereof)"; and

         (ii)  by amending and restating item "(i)" within such definition in its entirety to read as follows:

        "(i) all overpayment settlements or similar obligations owing in respect of Medicare/Medicaid evidenced by a letter agreement or other structured settlement."

        (f)    The definition of "Loan Document" in Section 1.01 of the Second Lien Credit Agreement is hereby amended and restated in its entirety to read as follows:

        "' Loan Documents ' means, collectively, (a) this Agreement, (b) the Notes, (c) the Guaranty, (d) the Collateral Documents, (e) the Fee Letter, (f) each Secured Hedge Agreement, (g) each Secured Cash Management Agreement, (h) the Terner Pledge and (i) each other document and agreement executed in connection herewith or related hereto that identifies itself as a "Loan Document"; provided that for purposes of the definition of

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"Material Adverse Effect" and Articles IV through IX , "Loan Documents" shall not include Secured Hedge Agreements or Secured Cash Management Agreements."

        (g)   The definition of "Measurement Period" in Section 1.01 of the Second Lien Credit Agreement is hereby amended and restated in its entirety as follows:

        "' Measurement Period ' means, at any date of determination, the most recently completed twelve months or four fiscal quarters, as applicable, of Holdings."

        (h)   The definition of "Term Loan" is hereby amended by adding the following phrase just prior to the period in such definition "and the Term PIK Fee Obligation".

        (i)    The following definitions are hereby added to Section 1.01 of the Second Lien Credit Agreement in alphabetical order:

        "' Second Amendment Effective Date ' means May 15, 2008."

        "' Term PIK Fee Obligation ' means the fee paid to the consenting Term Lenders pursuant to Section 4(f)(ii) of the Second Amendment to the Second Lien Credit Agreement, Waiver and Consent dated as of May 15, 2008. The Term PIK Fee Obligation shall be deemed to be a Term Loan for all purposes of this Agreement and the other Loan Documents. The Term PIK Fee Obligation shall be deemed to be fully earned as of the Second Amendment Effective Date."

        (j)    Section 2.05(a)(ii)(A) of the Second Lien Credit Agreement is hereby amended by deleting the phrase "prior to the second anniversary of the Closing Date" in the second sentence thereof and substituting in lieu thereof the following phrase "prior to December 8, 2009".

        (k)   Section 2.05(a)(ii)(B) of the Second Lien Credit Agreement is hereby amended by amending and restating such subsection in its entirety to read as follows:

        "(B) Notwithstanding anything herein to the contrary, all prepayments of the Term Loan that are made in accordance with this Section 2.05(a) prior to (1) May 15, 2010, but on or after December 8, 2009, shall be subject to an additional premium equal to the amount of such prepayment multiplied by 4.5%, with respect to each such prepayment made prior to May 15, 2010, (2) the third anniversary of the Closing Date, but on or after May 15, 2010, shall be subject to an additional premium equal to the amount of such prepayment multiplied by 3%, with respect to each such prepayment made prior to the third anniversary of the Closing Date, (3) the fourth anniversary of the Closing Date but on or after the third anniversary of the Closing Date shall be subject to an additional premium equal to the amount of such prepayment multiplied by 2%; and (4) the fifth anniversary of the Closing Date but on or after the fourth anniversary of the Closing Date shall be subject to an additional premium equal to the amount of such prepayment multiplied by 1%. On or after the fifth anniversary of the Closing Date, no premiums or penalties shall be payable pursuant to this Section 2.05(a)(ii) in connection with any prepayments of the Term Loan."

        (l)     Section 2.05(b) of the Second Lien Credit Agreement is amended by:

          (i)  Deleting each instance of the parenthetical "(such prepayments to be applied as set forth in clause (v) below)" therein.

         (ii)  Adding the following clause (v) after the first paragraph of Section 2.05(b)(iv) :

        "(v) Subject to the first two sentences of this subsection (b), upon any tax refund received by or paid to or for the account of either Borrower or any of their Subsidiaries for fiscal year 2007 and all prior years, the Borrowers shall prepay an aggregate principal amount of the Term Loans equal to 50% of such tax refund (net of reasonable and

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customary expenses associated therewith in an aggregate amount not to exceed $25,000) on (A) the later of October 1, 2008 or ten (10) days following the receipt thereof with respect to all such tax refunds received on or prior to October 1, 2008, (B) on the later of January 1, 2009 or ten (10) days following the receipt thereof with respect to all such tax refunds received after October 1, 2008 and on or prior to January 1, 2009, (C) on the later of April 1, 2009 or ten (10) days following the receipt thereof with respect to all such tax refunds received after January 1, 2009 and on or prior to April 1, 2009, and (D) within ten (10) days of receipt of any such tax refund received after April 1, 2009."

        (iii)  Renumbering original clause "(v)" to clause "(vi)".

        (m)   Section 5.05(e) of the Second Lien Credit Agreement is hereby amended by replacing the reference therein to " Section 6.01(d) " with " Sections 6.01(d) and (e) ".

        (n)    Section 6.01 of the Second Lien Credit Agreement is hereby amended by amending and restating Sections 6.01(b) , (c) and (d) in their entirety and adding a new Section 6.01(e) , each to read as follows:

        "(b) as soon as available, but in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal year of Holdings (commencing with the fiscal quarter ended June 30, 2007), a consolidated and consolidating balance sheet of Holdings and its Subsidiaries as of the end of such fiscal quarter, and the related consolidated and consolidating statements of income or operations, shareholders' equity and cash flows for such fiscal quarter and for the portion of Holdings' fiscal year then ended, setting forth in each case in comparative form the figures for (i) the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year and (ii) the corresponding fiscal quarter and corresponding portion of the fiscal year set forth in the annual business plan and budget delivered for such fiscal year, all in reasonable detail, such consolidated statements to be certified by the chief executive officer, chief financial officer, treasurer or controller of Holdings as fairly presenting the financial condition, results of operations, shareholders' equity and cash flows of Holdings and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes and explaining in writing any variances from the annual business plan and budget of 10% or more;"

        "(c) as soon as available, but in any event within 30 days after the end of each of the first 11 months of each fiscal year of Holdings (commencing with the fiscal month ended June 30, 2007), a consolidated and consolidating balance sheet of Holdings and its Subsidiaries as of the end of such month, and the related consolidated and consolidating statements of income or operations, shareholders' equity and cash flows for such month and for the portion of Holdings' fiscal year then ended setting forth in each case in comparative form the figures (i) for the corresponding month of the previous fiscal year and the corresponding portion of the previous fiscal year and (ii) the corresponding month and corresponding portion of the fiscal year set forth in the annual business plan and budget delivered for such fiscal year, all in reasonable detail, duly certified by the chief executive officer, chief financial officer, treasurer or controller of Holdings and with any variances from the annual business plan and budget of 10% or more explained in writing by management;"

        "(d) as soon as available, but in any event at least 15 days before the beginning of each fiscal year of Holdings, an assumption-driven annual business plan and budget of the Borrowers and their respective Subsidiaries on a consolidated and consolidating basis, including (i) a financial (cash flow) budget (i.e., a schedule of anticipated revenue and expenditures) prepared on a monthly basis for the immediately following fiscal year (including the fiscal year in which the Maturity Date for the Term Facility occurs), (ii) a projected EBITDA run rate and (iii) a written assessment by management of the run-rate revenue and

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run-rate EBITDA by business line, all in form satisfactory to the Administrative Agent and the Required Lenders; and"

        "(e) for the first twelve (12) months following the Second Amendment Effective Date (as such period may be reduced or extended by the Required Lenders), on a bi-weekly basis, a rolling thirteen-week financial (cash-flow) budget (schedule of anticipated revenue and expenditures) together with a schedule that shows a projected versus actual comparison of the items set forth in the budget over the course of (i) the preceding two weeks and (ii) the period beginning March 3, 2008."

        (o)    Sections 6.02(b) and (c) of the Second Lien Credit Agreement are hereby amended by (i) inserting the words "and (c) " following the clause "referred to in Sections 6.01(a) and (b) " in Section 6.02(b) and (ii) amending and restating Section 6.02(c) in its entirety as follows:

        "(c) within thirty (30) days following the end of each calendar month, a certificate, substantially in the form of Exhibit E , signed by the chief executive officer, the chief financial officer, treasurer or controller of Holdings certifying as to the Loan Parties' (i) current consolidated Membership for such month, (ii) setting forth the number of senior members separate from the number of commercial members for such month, (iii) comparing such Membership data to the Membership data provided for the immediately preceding month; and (iv) explaining any material variances noted within the comparison (i.e., a summary of any terminations of existing contracts in connection with the Membership during the period covered by such certificate and its effect on Membership)."

        (p)    Section 6.03(f) of the Second Lien Credit Agreement is amended by (i) replacing the "and" immediately prior to clause (iii) therein with a "," and (ii) adding the following clause (iv) to the end of such section: "and (iv) receipt of any tax refund for which either Borrower is required to make a mandatory prepayment pursuant to Section 2.05(b)(v) ".

        (q)    Sections 7.11 of the Second Lien Credit Agreement is hereby amended by amending and restating Sections 7.11(a) and (b) in their entirety, deleting the current Section 7.11(c) and substituting in lieu thereof a new Section 7.11(c) , each to read as follows:

        "(a) Consolidated Leverage Ratio .    From April 30, 2008 through and including June 30, 2009, permit the Consolidated Leverage Ratio as of any month end to be greater than the ratio set forth below opposite such period, and commencing July 1, 2009, permit the

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Consolidated Leverage Ratio as of any quarter end to be greater than the ratio set forth below opposite such period:

        "(b) Consolidated Fixed Charge Coverage Ratio .    From April 30, 2008 through and including June 30, 2009, permit the Consolidated Fixed Charge Coverage Ratio as of any month end to be less than the ratio set forth below opposite such period, and commencing July 1, 2009, permit the

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Consolidated Fixed Charge Coverage Ratio as of any quarter end to be less than the ratio set forth below opposite such period:

        "(c) Minimum Consolidated EBITDA .    From April 30, 2008 through and including June 30, 2009, permit Consolidated EBITDA as of any month end to be less than the amount set forth below opposite

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such period, and commencing July 1, 2009, permit Consolidated EBITDA as of any quarter end to be less than the amount set forth below opposite such period:

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        (r)    Exhibits C and E of the Second Lien Credit Agreement are hereby amended and restated in their entirety by replacing the existing Exhibits C and E with the new exhibits attached hereto as Exhibit A .

        4.      Effectiveness; Conditions Precedent .    This Agreement shall be effective when all of the conditions set forth in this Section shall have been satisfied in form and substance satisfactory to the Second Lien Administrative Agent.

        (a)   The Second Lien Administrative Agent shall have received duly executed counterparts of this Agreement from each of the Borrowers, the Guarantors, the Second Lien Administrative Agent and the Second Lien Lenders.