APOLLO MEDICAL HOLDINGS, INC. FORM OF INVESTOR WARRANT
EXHIBIT
C
APOLLO MEDICAL HOLDINGS, INC.
FORM
OF INVESTOR WARRANT
THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED, SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO
(i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE
LAWS, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE
UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF
COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE
ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE
LAW IS AVAILABLE.
STOCK
PURCHASE WARRANT
To
Purchase _________ Shares of Common Stock
(
__________ thousand shares)
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No.
2009-
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Issue
Date: ______________, 2009
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THIS
CERTIFIES that, for value received, __________________ (the "Holder"), is
entitled, upon the terms and subject to the conditions hereinafter set forth, at
any time on or after the date hereof, to subscribe for and purchase, from APOLLO
MEDICAL HOLDINGS, INC., a Delaware corporation (the "Company"), of the fully
paid non-assessable shares of the Company's common stock, $0.001 par value per
share ("Common Stock") at a purchase price of $0.125 per share or a lesser price
as described in Section 11c, provided that such right will terminate, if not
terminated earlier in accordance with the provisions hereof, at 5:00 p.m.
(California time) on October 31, 2014 (the "Expiration
Date").
The
purchase price and the number of shares for which this warrant (the "Warrant")
is exercisable are subject to adjustment, as provided herein and specifically in
Section 11.
This Warrant was issued in connection
with the Company's private offering (the "Offering") of units of the Company's
securities (the "Units"), each Unit consisting of $25,000 par value 10%
Senior Subordinated Callable Convertible Promissory Notes maturing January 31,
2013 and 25,000 warrants to
purchase one share of the Company's Common Stock until October 31, 2014 (a
"Warrant Share"), pursuant to a Private Placement Memorandum dated September
____, 2009 (the "Memorandum") and is subject to the terms of a Subscription
Agreement (the "Subscription Agreement") dated the date hereof to which the
initial Holder is a party. Capitalized terms used and not otherwise defined
herein will have the respective meanings ascribed to such terms in the
Memorandum.
As used
herein the following terms, unless the context otherwise requires, have the
following respective meanings:
(a) The
term "Company" shall include Apollo Medical Holdings, Inc., f/k/a Silicone
Inc. and any corporation which shall succeed or assume the obligations of Apollo
Medical Holdings, Inc. hereunder.
(b) The
term "Warrant Shares" includes (i) the Company's common stock and (ii) any other
securities into which or for which any of the Common Stock may be converted or
exchanged pursuant to a plan of recapitalization, reorganization, merger, sale
of assets or otherwise.
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(c) The
term "Other Securities" refers to any stock (other than Common Stock) and other
securities of the Company or any other person (corporate or otherwise) which the
holder of the Warrant at any time shall be entitled to receive, or shall have
received, on the exercise of the Warrant, in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities.
(d) The
term "Exercise Price" shall be $0.125 per share or a lesser price per share as
described in Section 11c, subject to adjustment pursuant to the terms
hereof.
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1.
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Number of Shares
Issuable upon Exercise.
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Unless
sooner terminated in accordance herewith, from and after the date hereof through
and including the Expiration Date, the Holder shall be entitled to receive, upon
exercise of this Warrant in whole or in part, the number of shares of Common
Stock of the Company set forth on the first page of this Warrant, subject to
adjustment pursuant hereto, by delivery of an original or fax copy of the
exercise notice attached hereto as Exhibit A (the "Notice of Exercise") along
with payment to the Company of the Exercise Price.
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2.
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Exercise of
Warrant.
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(a) The
purchase rights represented by this Warrant are exercisable by the registered
Holder hereof, in whole at any time or in part from time to time by delivery of
the Notice of Exercise duly completed and executed at the office of the Company
in California (or such other office or agency of the Company as it may designate
by notice in writing to the registered Holder hereof at the address of such
Holder appearing on the books of the Company), and upon payment of the Exercise
Price of the shares thereby purchased (cash, bank wire transfer, or by certified
or official bank check payable to the order of the Company in an amount equal to
the Exercise Price of the shares thereby purchased); whereupon the Holder of
this Warrant shall be entitled to receive a certificate for the number of
Warrant Shares so purchased; provided that the Company will place on each
certificate a legend substantially the same as that appearing on this Warrant,
in addition to any legend required by any applicable state or federal law. If
this Warrant is exercised in part, the Company will issue to the Holder hereof a
new Warrant upon the same terms as this Warrant but for the balance of Warrant
Shares for which this Warrant remains exercisable. The Company agrees that upon
exercise of this Warrant the Holder shall be deemed to be the record owner of
the shares issued upon exercise as of the close of business on the date on which
this Warrant shall have been exercised as aforesaid. This Warrant will be
surrendered at the time of exercise or if lost, stolen, misplaced or destroyed,
the Holder will comply with Section 7 below (b) Certificates for shares
purchased hereunder shall be delivered to the Holder hereof within a reasonable
time after the date on which this Warrant shall have been exercised as
aforesaid.
(c) The
Company covenants that all Warrant Shares which may be issued upon the exercise
of rights represented by this Warrant will, upon exercise of the rights
represented by this Warrant, be fully paid and non-assessable and free from all
preemptive rights, taxes, liens and charges in respect of the issue thereof
(other than taxes in respect of any transfer occurring contemporaneously with
such issue which shall be paid by the Company in accordance with Section 4
below).
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3.
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No Fractional
Shares.
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The
Company shall not be required to issue fractional Warrant Shares upon the
exercise of this Warrant or to deliver Warrant Certificates which evidence
fractional Warrant Shares. In the event that a fraction of a Warrant Share
would, except for the provisions of this Section 3, be issuable upon the
exercise of this Warrant, the Company shall pay to the Holder exercising the
Warrant an amount in cash equal to such fraction multiplied by the Per Share
Market Value of the Warrant Share.
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For
purposes of this Warrant, the Per Share Market Value shall be determined as
follows: As used herein, "Per Share Market Value" means on any particular date
(a) the closing bid price per share of Common Stock on such date on the national
securities exchange on which the shares of Common Stock are then listed or
quoted, or if there is no such price on such date, then the average of the
closing bid and asked prices on the national securities exchange on the date
nearest preceding such date, (b) if the shares of Common Stock are not then
listed or quoted on a national securities exchange, the average of the closing
bid and asked prices for a share of Common Stock in the over-the-counter market,
as reported by the National Quotation Bureau, Inc., or an equivalent generally
accepted reporting service, at the close of business on such date, or (c) if the
shares of Common Stock are not then publicly traded, the fair market value of a
share of Common Stock as determined by an appraiser selected in good faith by
the Holders of a majority in interest of the Warrants then
outstanding.
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4.
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Charges, Taxes and
Expenses.
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Issuance
of certificates for Warrant Shares upon the exercise of this Warrant shall be
made without charge to the Holder hereof for any issue or transfer tax or other
incidental expense in respect of the issuance of such certificate, all of which
taxes and expenses shall be paid by the Company, and such certificates shall be
issued in the name of the Holder of this Warrant, or in such name or names as
may be directed by the Holder of this Warrant; provided, however, that in the
event certificates for Warrant Shares are to be issued in a name other than the
name of the Holder of this Warrant, this Warrant, when exercised, shall be
accompanied by the Assignment Form attached hereto as Exhibit B (the "Assignment
Form") duly executed by the Holder hereof; and provided further, that upon any
transfer involved in the issuance or delivery of any certificates for Warrant
Shares, the Company may require, as a condition thereto, that the transferee
execute an appropriate investment representation as may be reasonably required
by the Company.
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5.
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No Rights as
Shareholders.
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This
Warrant does not entitle the Holder hereof to any voting rights or other rights
as a Shareholder of the Company prior to the exercise hereof.
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6.
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Exchange and Registry
of Warrant.
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This
Warrant is exchangeable, upon the surrender hereof by the registered Holder at
the above-mentioned office or agency of the Company, for a new Warrant or
Warrants aggregating the total Warrant Shares of the surrendered Warrant of like
tenor and dated as of such exchange. The Company shall maintain at the
above-mentioned office or agency a registry showing the name and address of the
registered Holder of this Warrant. This Warrant may be surrendered for exchange,
transfer or exercise, in accordance with its terms, at such office or agency of
the Company, and the Company shall be entitled to rely in all respects, prior to
written notice to the contrary, upon such registry.
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7.
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Loss, Theft,
Destruction or Mutilation of
Warrant.
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Upon
receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity reasonably satisfactory to it, and upon reimbursement
to the Company of all reasonable expenses incidental thereto, and upon surrender
and cancellation of this Warrant, if mutilated, the Company will make and
deliver a new Warrant of like tenor (but with no additional rights or
obligations) and dated as of such cancellation, in lieu of this
Warrant.
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8.
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Saturdays, Sundays,
Holidays, etc.
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If the
last or appointed day for the taking of any action or the expiration of any
right required or granted herein shall be a Saturday or a Sunday or shall be a
legal holiday, then such action may be taken or such right may be exercised on
the next succeeding day not a Saturday, Sunday or legal holiday.
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9.
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Cash
Distributions.
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No
adjustment on account of cash dividends or interest on the Company's Common
Stock or Other Securities that may become purchasable hereunder will be made to
the Exercise Price under this Warrant.
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10.
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Consolidation, Merger
or Sale of the Company.
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If the
Company is a party to a consolidation, merger or transfer of assets which
reclassifies or changes its outstanding Common Stock, the successor corporation
(or corporation controlling the successor corporation or the Company, as the
case may be) shall by operation of law assume the Company's obligations under
this Warrant. Upon consummation of such transaction the Warrants shall
automatically become exercisable for the kind and amount of securities, cash or
other assets which the holder of a Warrant would have owned immediately after
the consolidation, merger or transfer if the holder had exercised the Warrant
immediately before the effective date of such transaction. As a condition to the
consummation of such transaction, the Company shall arrange for the person or
entity obligated to issue securities or deliver cash or other assets upon
exercise of the Warrant to, concurrently with the consummation of such
transaction, assume the Company's obligations hereunder by executing an
instrument so providing and further providing for adjustments which shall be as
nearly equivalent as may be practical to the adjustments provided for in this
Section 10.
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11.
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Adjustments in the
Exercise Price
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The
number of shares and class of capital stock purchasable under this Warrant are
subject to adjustment from time to time as set forth in this Section
11.
(a)
Adjustment for change in capital stock. If the Company:
(i) pays
a dividend or makes a distribution on its Common Stock, in each case, in shares
of its Common Stock;
(ii)
subdivides its outstanding shares of Common Stock into a greater number of
shares;
(iii)
combines its outstanding shares of Common Stock into a smaller number of
shares;
(iv)
makes a distribution on its Common Stock in shares of its capital stock other
than Common Stock; or
(v)
issues by reclassification of its shares of Common Stock any shares of its
capital stock;
then the
number and classes of shares purchasable upon exercise of each Warrant in effect
immediately prior to such action shall be adjusted so that the holder of any
Warrant thereafter exercised may receive the number and classes of shares of
capital stock of the Company which such holder would have owned immediately
following such action if such holder had exercised the Warrant immediately prior
to such action.
For a
dividend or distribution the adjustment shall become effective immediately after
the record date for the dividend or distribution. For a subdivision, combination
or reclassification, the adjustment shall become effective immediately after the
effective date of the subdivision, combination or reclassification.
If after
an adjustment the Holder, upon exercise of a Warrant, may receive shares of two
or more classes of capital stock of the Company, the Board of Directors of the
Company shall in good faith determine the allocation of the adjusted Exercise
Price between or among the classes of capital stock. After such allocation, that
portion of the Exercise Price applicable to each share of each such class of
capital stock shall thereafter be subject to adjustment on terms comparable to
those applicable to Common Stock in this Warrant. Notwithstanding the allocation
of the Exercise Price between or among shares of capital stock as provided by
this Section 11(a), a Warrant may only be exercised in full by payment of the
entire Exercise Price currently in effect.
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(b) The
Company will not, by amendment of its Articles of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 11 and in the taking of all
such action as may be necessary or appropriate in order to protect the exercise
rights of the Holders of this Warrant against impairment.
(c.) At the end of each month
during which the principal of the Note is unpaid; the exercise price (EP),
subject to being no less than the Floor Price, shall be adjusted to the lesser
of:
the
existing conversion price, or
an
adjusted conversion price calculated using the following formula: CP = SP x
110%
Where: SP
is the average of the monthly high stock price and low stock price as reported
by Bloomberg
Where
Floor Price is:
$0.125
during the period August 1, 2009 through July 31, 2011 and,
After
July 31, 2011, the lesser of $0.125 or the greater of either $0.05 per share or
8 times Cash EPS. Cash EPS is defined as Net Cash Provided by or used in
Operating Activities minus Depreciation and Amortization divided by fully
diluted share shares outstanding as reported on the most recently filed forms
10-Q or 10-K for the previous twelve months. The Note will be considered to
outstanding for the purposes of calculating Cash EPS.
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12.
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Certificate as to
Adjustments.
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In each
case of any adjustment or readjustment in the shares of Common Stock (or Other
Securities) issuable on the exercise of the Warrant, the Company at its expense
will promptly cause its Chief Financial Officer or other appropriate designee to
compute such adjustment or readjustment in accordance with the terms of the
Warrant and prepare a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment is
based, including a statement of (a) the consideration received or receivable by
the Company for any additional shares of Common Stock (or Other Securities)
issued or sold or deemed to have been issued or sold, (b) the number of shares
of Common Stock (or Other Securities) outstanding or deemed to be outstanding,
and (c) the Exercise Price and the number of shares of Common Stock to be
received upon exercise of this Warrant, in effect immediately prior to such
adjustment or readjustment and as adjusted or readjusted as provided in this
Warrant. The Company will forthwith mail a copy of each such certificate to the
Holder of the Warrant and any Warrant agent of the Company (appointed pursuant
to Section 16 hereof).
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13.
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Reservation of Stock
Issuable on Exercise of
Warrant.
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The
Company will at all times reserve and keep available, solely for issuance and
delivery on the exercise of the Warrant, shares of Common Stock (or Other
Securities) from time to time issuable on the exercise of the
Warrant.
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14.
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Assignment; Exchange
of Warrant.
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Subject
to compliance with applicable securities laws, this Warrant, and the rights
evidenced hereby, may be transferred by any registered Holder hereof (a
"Transferor") with respect to any or all of the shares underlying this Warrant.
On the surrender for exchange of this Warrant, with the Transferor's duly
executed Assignment Form and together with evidence reasonably satisfactory to
the Company demonstrating compliance with applicable securities laws, which
shall include, without limitation, a legal opinion from the Transferor's counsel
that such transfer is exempt from the registration requirements of applicable
securities laws, the Company at its expense (but with payment by the Transferor
of any applicable transfer taxes) will issue and deliver to or on the order of
the Transferor thereof a new Warrant of like tenor, in the name of the
Transferor and/or the transferee(s) specified in such Assignment Form (each a
"Transferee"), calling in the aggregate on the face or faces thereof for the
number of Warrant Shares called for on the face or faces of the Warrant so
surrendered by the Transferor; and provided further, that upon any such
transfer, the Company may require, as a condition thereto, that the Transferee
execute an appropriate investment representation as may be reasonably required
by the Company.
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15.
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Registration
Rights.
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The
Company has agreed to register the Warrant Shares in any subsequent registration
statement filed by the Company with the SEC, so that Holders shall be entitled
to sell the same simultaneously with and upon the terms and conditions as the
securities sold for the Company's account are being sold pursuant to any such
registration statement, subject to such lock-up provisions as may be proposed by
the underwriter of said registration statement (the "Piggyback Registration
Right"). There is no guarantee as to a time frame for the filing of such a
registration statement.
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16.
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Warrant
Agent.
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The
Company may, by written notice to each Holder of a Warrant, appoint an agent for
the purpose of issuing Common Stock (or Other Securities) on the exercise of
this Warrant pursuant to Section 2, exchanging this Warrant pursuant to Section
14, and replacing this Warrant pursuant to Section 7, or any of the foregoing,
and thereafter any such issuance, exchange or replacement, as the case may be,
shall be made at such office by such agent.
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17.
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Notices,
etc.
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All
notices shall be in writing signed by the party giving such notice, and
delivered personally or sent by overnight courier or messenger or sent by
registered or certified mail (air mail if overseas), return receipt requested,
or by telex, facsimile transmission, telegram or similar means of communication.
Notices shall be deemed to have been received on the date of personal, telex,
facsimile transmission, telegram or similar means of communication, or if sent
by overnight courier or messenger, shall be deemed to have been received on the
next delivery day after deposit with the courier or messenger, or if sent by
certified or registered mail, return receipt requested, shall be deemed to have
been received on the third business day after the date of mailing. Notices shall
be sent to the addresses set forth below each party's signature on the
Subscription Agreement.
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18.
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Notices of Record
Date.
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In
case,
(a) The
Company takes a record of the holders of its Common Stock for the purpose of
entitling them to subscribe for or purchase any shares of stock of any class or
to receive a dividend, distribution or any other rights; or
(b) There
is any capital reorganization of the Company, reclassification of the capital
stock of the Company (other than a subdivision or combination of its outstanding
shares of Common Stock), or consolidation or merger of the Company with or into
another corporation which does not constitute a sale of the Company;
or
(c) There
is a voluntary or involuntary dissolution, liquidation or winding up of the
Company;
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then, and
in any such case, the Company shall cause to be mailed to the Holder, at least
20 business days prior to the date hereinafter specified, a notice stating the
date on which (i)
a record is to be taken for the purpose of such dividend, distribution or
rights, or (ii) such reclassification, reorganization, consolidation, merger,
dissolution, liquidation or winding up is to take place and the date, if any is
to be fixed, as of which holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities or other property
deliverable upon such reclassification, reorganization, consolidation,
merger, dissolution, liquidation or winding up.
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19.
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Amendments and
Supplements.
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(a) The
Company may from time to time supplement or amend this Warrant without the
approval of any Holders in order to cure any ambiguity or to be correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provision, or to make any other provisions in regard to matters
or questions herein arising hereunder which the Company may deem necessary or
desirable and which shall not materially adversely affect the interest of the
Holder. All other supplements or amendments to this Warrant must be signed by
the party against whom such supplement or amendment is to be
enforced.
(b)
Notwithstanding Section 19(a), the Company may at any time during the term of
this Warrant reduce the then current Exercise Price to any amount and for any
period of time deemed appropriate by the Board of Directors of the
Company.
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20.
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Investment
Intent.
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Holder
represents and warrants to the Company that Holder is acquiring the Warrants for
investment and with no present intention of distributing or reselling any of the
Warrants.
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21.
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Certificates to Bear
Language.
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The
Warrants and the Warrant Shares issuable upon exercise thereof shall bear the
following legend by which Holder shall be bound:
"THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT AN EXEMPTION FROM REGISTRATION UNDER
SUCH ACT IS AVAILABLE."
Certificates
for Warrants or Warrant Shares without such legend shall be issued if such
Warrants or Warrant Shares are sold pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the "Act"), or if the
Company has received an opinion from counsel reasonably satisfactory to counsel
for the Company, that such legend is no longer required under the
Act.
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22.
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Miscellaneous.
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(a) This
Warrant shall be governed by and construed in accordance with the laws of the
State of California without regard to principles of conflicts of laws. The
parties submit to the jurisdiction of the Courts of the County of Los Angeles,
State of California or a Federal Court empanelled in the State of California for
the resolution of all legal disputes arising under the terms of this Warrant,
including, but not limited to, enforcement of any arbitration award. The Company
and the Holder agree to submit to the jurisdiction of such courts and waive
trial by jury.
(b) If
any action or proceeding is brought by the Company on the one hand or by the
Holder on the other hand to enforce or continue any provision of this Warrant,
the prevailing party's costs and expenses, including its reasonable attorney's
fees, in connection with such action or proceeding shall be paid by the other
party.
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(c) In
the event that any provision of this Warrant is invalid or unenforceable under
any applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such provision which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of this Warrant.
(d) The
headings in this Warrant are for purposes of reference only, and shall not limit
or otherwise affect any of the terms hereof.
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officers thereunto duly authorized as of the date first written
above.
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APOLLO MEDICAL
HOLDINGS, INC.,
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a
Delaware corporation
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By:
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Xxxxxx
Xxxxxxxxxx, M.D
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Chief
Executive Officer
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HOLDER
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