AMENDMENT TO DIRECTOR AGREEMENT
AMENDMENT
TO DIRECTOR AGREEMENT
THIS
AMENDMENT, dated as of July 16, 2010 (the “Amendment”), is being
made to that certain Board of Directors Agreement (the “Director Agreement”),
dated October 27, 2008, by and between Apollo Medical Holdings, Inc., a Delaware
corporation (the “Corporation”) and
Xxxxxx Xxxxxxxx (“Xx.
Xxxxxxxx”). Capitalized terms used herein and not otherwise
defined shall have the meanings given such terms in the Director
Agreement.
WHEREAS,
pursuant to the Director Agreement, Xx. Xxxxxxxx was to receive in exchange for
his services as a director 400,000 shares of common stock (“Common Stock”) of the
Corporation, which was to be held in escrow until released by the Corporation in
36 equal monthly installments.
WHEREAS,
in lieu of such arrangement, the Corporation has been issuing shares of Common
Stock to Xx. Xxxxxxxx in an amount equal to 1/36 of 400,000 on a monthly basis,
and Xx. Xxxxxxxx has agreed to such arrangement.
WHEREAS,
to date, Xx. Xxxxxxxx has been issued 188,887 shares of Common Stock pursuant to
these issuances.
WHEREAS,
the Corporation and Xx. Xxxxxxxx wish to modify the manner in which Xx. Xxxxxxxx
will be receiving shares on a going forward basis.
NOW,
THEREFORE, in consideration of the premises and mutual covenants and obligations
hereinafter set forth, Apollo and Xx. Xxxxxxxx hereby agree as
follows:
1. Amendment
to Restricted Stock Award. “Section B. Equity Compensation”
shall be amended and restated as follows:
Issued
Shares. Xx. Xxxxxxxx and the Corporation hereby acknowledge
and agree that as of the date hereof, 188,887 shares of Common Stock have been
issued to Xx. Xxxxxxxx pursuant to the Director Agreement.
Purchase of
Shares. Xx. Xxxxxxxx hereby purchases, and the Corporation
hereby sells to Xx. Xxxxxxxx, 211,113 shares of Common Stock (the “Purchased Shares”) at
a purchase price of $0.001 per share (the “Purchase
Price”). Concurrently with the execution of this Agreement,
Xx. Xxxxxxxx shall pay the Purchase Price for the Purchased Shares in
cash.
Restricted
Securities. Xx. Xxxxxxxx hereby confirms that he has been
informed that the Purchased Shares are restricted securities under the
Securities Act of 1933 (the “1933 Act”) and may
not be resold or transferred unless the Purchased Shares are first registered
under the federal securities laws or unless an exemption from such registration
is available. Accordingly, Xx. Xxxxxxxx hereby acknowledges that he
is prepared to hold the Purchased Shares for an indefinite period and that Xx.
Xxxxxxxx is aware that Rule 144 of the Securities and Exchange Commission
issued under the 1933 Act is not presently available to exempt the sale of the
Purchased Shares from the registration requirements of the 1933
Act. Prior to his acquisition of the Purchased Shares, Xx. Xxxxxxxx
acquired sufficient information about the Corporation to reach an informed
knowledgeable decision to acquire the Purchased Shares. Xx. Xxxxxxxx
has such knowledge and experience in financial and business matters as to make
Xx. Xxxxxxxx capable of utilizing said information to evaluate the risks of the
prospective investment and to make an informed investment
decision. Xx. Xxxxxxxx is able to bear the economic risk of Xx.
Xxxxxxxx’x investment in the Purchased Stock.
Disposition of
Shares. Xx. Xxxxxxxx hereby agrees that he shall make no
disposition of the Purchased Shares (other than a permitted transfer as
described below) unless and until he shall have notified the Corporation of the
proposed disposition and, if requested by the Corporation, Xx. Xxxxxxxx shall
have provided the Corporation an opinion of counsel in form and substance
satisfactory to the Corporation, that (i) the proposed disposition does not
require registration of the Purchased Shares under the 1933 Act or (ii) all
appropriate action necessary for compliance with the registration requirements
of the 1933 Act or of any exemption from registration available under the 1933
Act (including Rule 144) has been taken.
The
Corporation shall not be required (i) to transfer on its books any
Purchased Shares that have been sold or transferred in violation of the
provisions of this section or (ii) to treat as the owner of the Purchased
Shares, or otherwise to accord voting or dividend rights to, any transferee to
whom the Purchased Shares have been transferred in contravention of the
Directors Agreement, including this Amendment.
Restrictive
Legends. In order to reflect the restrictions on disposition
of the Purchased Shares, the stock certificates for the Purchased Shares will be
endorsed with restrictive legends, including one or both of the following
legends:
“THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). THE SHARES MAY NOT BE
SOLD OR OFFERED FOR SALE IN THE ABSENCE OF (I) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SHARES UNDER SUCH ACT, OR (II) AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION THAT REGISTRATION UNDER SUCH ACT IS NOT REQUIRED
WITH RESPECT TO SUCH SALE OR OFFER.
THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS
OF A CERTAIN BOARD OF DIRECTORS AGREEMENT, AS AMENDED, INCLUDING A REPURCHASE
RIGHT, AND SUCH AGREEMENT IS ON FILE AT THE CORPORTATION’S PRINCIPAL OFFICE AND
MAY BE INSPECTED DURING NORMAL BUSINESS HOURS.”
If
required by the authorities of any state in connection with the issuance of the
Purchased Shares, the legend or legends required by such state authorities shall
also be endorsed on all such certificates.
Xx. Xxxxxxxx
Rights. Until such time as the Corporation actually exercises
its Repurchase Rights under this Amendment, Xx. Xxxxxxxx (or any successor in
interest) shall have all the rights of a shareholder (including voting and
dividend rights) with respect to the Purchased Shares, subject, however, to the
transfer restrictions set forth below.
Section 83(b)
Election. Xx. Xxxxxxxx understands that under Section 83
of the Internal Revenue Code of 1986, as amended (the “Code”), the
difference between the Purchase Price paid for the Purchased Shares and their
fair market value on the date any forfeiture restrictions applicable to such
shares lapse will be reportable as ordinary income at that time. For
this purpose, the term “forfeiture restrictions” includes the right of the
Corporation to repurchase the Purchased Shares pursuant to its Repurchase Right
under this Amendment. Xx. Xxxxxxxx understands that he may elect to
be taxed at the time the Purchased Shares are acquired hereunder to the extent
the fair market value of the Purchased Shares exceeds the Purchase Price rather
than when and as such Purchased Shares cease to be subject to such forfeiture
restrictions, by filing an election under Section 83(b) of the Code with
the I.R.S. within thirty (30) days after the date of purchase
hereunder. If the fair market value of the Purchased Shares at the
date of purchase equals (or is less than) the Purchase Price paid (and thus no
tax is payable), the election must be made to avoid adverse tax consequences in
the future. The form for making this election is attached as
Exhibit A hereto. Xx. Xxxxxxxx understands that failure to make
this filing within the thirty (30) day period will result in the recognition of
ordinary income by Xx. Xxxxxxxx (in the event the fair market value of the
Purchased Shares increases after the date of purchase) as the forfeiture
restrictions lapse. XX. XXXXXXXX IS URGED TO SEEK ADVICE FROM HIS TAX
ADVISOR AS TO WHETHER OR NOT TO MAKE A SECTION 83(b) ELECTION AND THE
RAMIFICATIONS OF MAKING SUCH AN ELECTION. IN PROVIDING THE FORM
ATTACHED AS EXHIBIT A, THE COMPANY MAKES NO REPRESENTATIONS AS TO WHETHER THE
SECTION 83(b) ELECTION SHOULD BE MADE BY EMPLOYEE. XX. XXXXXXXX
ACKNOWLEDGES THAT IT IS HIS SOLE RESPONSIBILITY, AND NOT THE CORPORATION’S, TO
FILE A TIMELY ELECTION UNDER SECTION 83(b), EVEN IF HE REQUESTS THE
CORPORATION OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS
BEHALF.
Transfer
Restrictions. Xx. Xxxxxxxx shall not transfer, assign,
encumber, or otherwise dispose of any of the Purchased Shares that are subject
to the Corporation’s Repurchase Right. Such restrictions on transfer,
however, shall not be applicable to a transfer of title to the Purchased Shares
effected pursuant to Xx. Xxxxxxxx’x will or the laws of intestate succession
provided that the transferee, as a condition precedent to the validity of such
transfer, acknowledges in writing to the Corporation that such transferee is
bound by the provisions of this Amendment and that the transferred shares are
subject to the Corporation’s Repurchase Right granted hereunder, to the same
extent such shares would be so subject if retained by Xx. Xxxxxxxx.
Grant of Repurchase
Right. The Corporation is hereby granted the right (the “Repurchase Right”), at any time
during the sixty (60) day period following the first date that Xx. Xxxxxxxx is
no longer a director of the Corporation (the “Repurchase Date”), to
elect to repurchase all or (at the discretion of the Corporation) any portion of
the Purchased Shares in which Xx. Xxxxxxxx has not acquired a vested interest in
accordance with the vesting provisions set forth below (such shares to be
hereinafter called the “Unvested Shares”) at
a purchase price of $.001 per share.
Exercise of the Repurchase
Right. The Repurchase Right shall be exercisable by written
notice delivered to Xx. Xxxxxxxx prior to the expiration of the sixty (60) day
period following the Repurchase Date. The notice shall indicate the
number of Unvested Shares to be repurchased and the date on which the repurchase
is to be effected, such date to be not more than thirty (30) days after the date
of notice. The Corporation shall, concurrently with the receipt of
such stock certificates from Xx. Xxxxxxxx, pay to Xx. Xxxxxxxx in cash or cash
equivalents, an amount equal to the Purchase Price with respect to the Unvested
Shares that are to be repurchased.
Vesting of Purchased Shares;
Termination of the Repurchase Right. Notwithstanding any other
provision in this Agreement to the contrary, the Corporation’s Repurchase Right
shall terminate, and the Purchased Shares shall become fully vested, with
respect to 400,000/36 of the Purchased Shares on the last day of each month
(each, a “Vesting Date”), starting on
July 31, 2010 and ending on November 30, 2011, provided that Xx. Xxxxxxxx
continuously serves as director through that Vesting Date. If any
installment includes a fraction of a share, the fraction shall be carried
forward and added to subsequent installments. The Repurchase Right shall
terminate with respect to any Unvested Shares for which it is not exercised
within 60 days of the Repurchase Date.
Additional Shares or
Substituted Securities. In the event of any stock dividend,
stock split, recapitalization or other change affecting the Corporation’s
outstanding common stock as a class effected without receipt of consideration,
then any new, substituted or additional securities or other property (including
money paid other than as a regular cash dividend) which is by reason of any such
transaction distributed with respect to the Purchased Shares shall be
immediately subject to the Repurchase Right, but only to the extent the
Purchased Shares are at the time covered by such right. Appropriate
adjustments to reflect the distribution of such securities or property shall be
made to the number of Purchased Shares subject to the Repurchase Right hereunder
and to the price per share to be paid upon the exercise of the Repurchase Right
in order to reflect the effect of any such transaction upon the Corporation’s
capital structure; provided, however, that the aggregate purchase price to be
paid by the Corporation pursuant to the Repurchase Right shall remain the
same.
Cancellation of
Shares. If the Corporation (or its assignees) shall make
available, at the time and place and in the amount and form provided in this
Amendment, the consideration for the Purchased Shares to be repurchased in
accordance with the provisions of this Agreement, then from and after such time,
the person from whom such shares are to be repurchased shall no longer have any
rights as a holder of such shares (other than the right to receive payment of
such consideration in accordance with this Amendment), and such shares shall be
deemed purchased in accordance with the applicable provisions hereof and the
Corporation (or its assignees) shall be deemed the owner and holder of such
shares, whether or not the certificates therefor have been delivered as required
by this Amendment.
2. Amendment
to Indemnification Agreement. Exhibit B to the
Director Agreement, the Indemnification Agreement, shall be amended and restated
as set forth in Exhibit B hereto.
3. Merger
Agreement in Full Force and Effect. Except as set forth
herein, the Merger Agreement shall remain in full force and effect.
4. Counterparts. This
Amendment may be executed in any number of counterparts, and each such
counterpart hereof shall be deemed to be an original agreement, but all such
counterparts together shall constitute but one agreement. Facsimile
or PDF counterpart signatures to this Amendment shall be
acceptable.
5. Governing
Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of California applicable to contracts made
and to be performed wholly therein.
6. Severability. Should any
provision of this Amendment be held invalid or illegal, such provision shall not
give rise to invalidate the Amendment but shall be construed as if to omit any
invalid or illegal part, and all remaining rights and obligations of the parties
shall be construed and enforced accordingly.
7. California
Securities Law. THE SALE OF THE
SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH
THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, AND THE ISSUANCE OF
SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION
THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES
IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE
CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS
AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED,
UNLESS THE SALE IS SO EXEMPT.
(Signature Page
Follows)
IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment
as of the date first above written.
| APOLLO MEDICAL HOLDINGS, INC. | |
| A Delaware Corporation | |
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By:
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/S/ Xxxxxx Xxxxxxxxxx,
M.D.
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Title: Chief
Executive Officer
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By:
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/S/ Xxxxxx Xxxxxxxx
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Title: Director
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