AMENDMENT NUMBER ONE TO INTER-COMPANY SECURITY AGREEMENT
(PROSPECT MEDICAL SYSTEMS, INC.)
This AMENDMENT NUMBER ONE TO INTER-COMPANY SECURITY AGREEMENT, dated
as of September 25, 1997 (this "AMENDMENT"), is entered into between PROSPECT
MEDICAL SYSTEMS, INC., a Delaware corporation ("DEBTOR"), and PROSPECT MEDICAL
HOLDINGS, INC., a Delaware corporation ("SECURED PARTY"), with reference to the
following facts:
R E C I T A L S
A. Debtor and Secured Party have previously entered into that
certain Security Agreement, dated as of July 14, 1997 (the "SECURITY
AGREEMENT"), in order to secure obligations owing by Debtor to Secured Party
under a Secured Promissory Note, dated as of even date with the Security
Agreement;
B. Debtor is issuing to Secured Party a second Secured Promissory
Note in the principal amount of Five Million Dollars ($5,000,000), dated as of
even date herewith (the "NOTE TWO)"; and
B. Debtor and Secured Party are entering into this Amendment in
order to secure the payment of Note Two and all other obligations of Debtor
owing to Secured Party by the Security Agreement.
A G R E E M E N T
1. AMENDMENT TO SECTION 1.1. The definition of "SECURED
OBLIGATIONS" set forth in Section 1.1 of the Security Agreement is hereby
amended in its entirety as follows:
"SECURED OBLIGATIONS" shall mean any and all debts,
liabilities, obligations, or undertakings owing by Debtor to Secured
Party, whether direct or indirect, absolute or contingent, matured or
unmatured, due or to become due, voluntary or involuntary, whether now
existing or hereafter arising, and including all interest not paid
when due and all Secured Party Expenses which Debtor is required to
pay or reimburse pursuant to this Security Agreement, the other Loan
Documents or by law. Without limiting the generality of the
foregoing, the Secured Obligations include, without limitation, all
obligations evidenced by the Note and the Note Two.
2. AMENDMENT TO SECTION 5. Section 5 of the Security Agreement is
hereby amended in its entirety as follows:
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"5. EVENT OF DEFAULT. Failure by Debtor to make any
payment required under any Secured Obligation when due, whether
for principal, interest, or otherwise, shall constitute an Event
of Default under this Security Agreement.
3. EFFECTIVENESS. The effectiveness of this Amendment is subject to
and contingent upon the execution and delivery of this Amendment by Debtor and
Secured Party.
4. COUNTERPARTS. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
5. AFFIRMATION. The Security Agreement as amended hereby, and all
other agreements, instruments and documents executed between Debtor and Secured
Party, or by Debtor in favor of Secured Party, remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first set forth above.
PROSPECT MEDICAL SYSTEMS, INC.,
a Delaware corporation
By /s/ Xxxxxx X. Xxxxxx
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Title CFO
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PROSPECT MEDICAL HOLDINGS, INC.
a Delaware corporation
By /s/ Xxxxxx X. Xxxxxx
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Title CFO
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