Exhibit 10.1

APOLLO MEDICAL HOLDINGS, INC.

 

LOAN AGREEMENT

 

THIS LOAN AGREEMENT (this “Agreement”) is made and entered into as of May 10,
2019 by and between Apollo Medical Holdings, Inc., a Delaware corporation
(“Lender”), and AP-AMH Medical Corporation, a California professional medical
corporation (“Borrower”), with reference to the following facts:

 

A.            Borrower was incorporated in California in 2019 for the purpose of
purchasing shares of the Series A Preferred Stock (the “Preferred Shares”) of
Allied Physicians of California, a Professional Medical Corporation, a
California corporation doing business as Allied Pacific Corporation (“APC”), for
Five Hundred Forty Five Million Dollars ($545,000,000).

 

B.           The rights and preferences of the Preferred Shares are governed by
a Certificate of Determination of Preferences of Series A Preferred Stock in
substantially the form attached as Exhibit B hereto (the “Certificate of
Determination”), to be filed on or before the Funding Date (as defined below)
with the Secretary of State of the State of California.

 

C.            Lender is willing to loan Five Hundred Forty Five Million Dollars
($545,000,000) to Borrower to purchase the Preferred Shares.

 

D.            Certain defined terms used in this Agreement are set forth on
Exhibit A hereto.

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
premises and covenants contained herein and other valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereto agree
as follows:

 

1.            Loan.

 

1.1           Loan Amount. Lender hereby agrees to make a loan (the “Loan”) to
Borrower in the amount of Five Hundred Forty Five Million Dollars ($545,000,000)
in cash or equivalent consideration on the Funding Date (as defined below), on
the terms and subject to the conditions set forth in this Agreement. The Loan
will be evidenced by the secured promissory note dated as of the Funding Date
(the “Note”) of Borrower in substantially the form attached to this Agreement as
Exhibit C.

 

1.2           Maturity Date. The maturity date of the Loan is the date that is
ten (10) years after the Funding Date (the “Maturity Date”).

 

1.3           Interest. The outstanding principal amount of the Loan shall bear
simple interest at rate of ten percent (10%) per annum; provided, however, that
the portion of outstanding principal that is the result of any increase in
outstanding principal pursuant to Section 1.4 shall bear simple interest at the
rate of ten and 75/100 percent (10.75%) per annum.

 

 

 

 

1.4           Payments. Interest shall be payable quarterly in arrears within
three (3) business days after each Series A Dividend Payment Date (as defined in
the Certificate of Determination) (each, an “Interest Payment Date”), solely out
of Series A Dividends (as defined in the Certificate of Determination) received
by Borrower. To the extent that Borrower is unable to make any interest payment
due hereunder on the Interest Payment Date corresponding to any Series A
Dividend Payment Date because it has received Series A Dividends with respect to
such Series A Dividend Payment Date in an amount insufficient (or because it has
not received any Series A Dividends on the Series A Dividend Payment Date) to
pay in full such interest payment, the then outstanding principal amount of the
Loan shall be increased by the amount of any such accrued but unpaid interest.
Borrower may not prepay any principal amount of the Loan prior to the Maturity
Date without the written consent of Lender; provided, however, that Borrower
shall apply any Series A Dividends that are received after any Interest Payment
Date corresponding to the immediately preceding Series A Dividend Payment Date
to prepay the principal amount of the Loan in the amount equal to the portion of
any such scheduled interest payment that was not paid as scheduled and was added
to the principal amount of the Loan.

 

1.5           Security Interest. On Funding Date, Lender and Borrower shall
enter into the Security Agreement in substantially the form attached to this
Agreement as Exhibit D, pursuant to which Borrower has granted a first priority
security interest in all of its assets (including the Preferred Shares) to
secure payment of its obligations under the Loan Documents.

 

1.6           Funding; Termination. Lender’s obligation to fund the Loan is
subject to the fulfillment, to the satisfaction of Lender, of each of the
conditions precedent set forth on Exhibit E. If for any reason the Funding Date
has not occurred on or before the Termination Date, or if the Series A Preferred
Shares Purchase Agreement or the Apollo Stock Purchase Agreement is terminated,
Lender may terminate this Agreement upon written notice to Borrower.

 

2.           Representations and Warranties of the Borrower.

 

Borrower represents and warrants to Lender that:

 

2.1           Due Organization. Borrower: (a) has been duly organized and is
validly existing as a corporation in good standing under the laws of California
with full power and authority (corporate and other) to own, lease and operate
its properties and conduct its business as currently conducted; and (b) is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which the ownership or leasing of its respective properties
or the conduct of its respective business requires such qualification.

 

2.2           Professional Corporation. Borrower is a professional corporation
as defined in Section 13401 of the California GCL and the ownership and
operation of Borrower are in compliance with the requirements of the California
PC Law. Borrower has entered a Physician Shareholder Agreement with its sole
shareholder and Lender (the “Shareholder Agreement”) pursuant to which, among
other things, such shareholder has agreed not to Transfer any shares of
Borrower’s stock to any Person whose ownership of the shares would violate the
California PC Law. The Shareholder Agreement is valid and binding on the sole
shareholder and is enforceable by Borrower against the sole shareholder. Lender
is a third-party beneficiary of the Shareholder Agreement for so long as the
Loan is outstanding.

 

2.3           Subsidiaries. Borrower does not have any Subsidiaries and it does
not own of record or beneficially any Equity Securities of any Person other than
the Preferred Shares.

 

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2.4           Authorization. Borrower has full legal right, power and authority
to enter into this Agreement, the Note and the Security Agreement and to perform
the transactions contemplated hereby and thereby. All corporate action on the
part of Borrower and its directors and shareholders for the authorization,
execution and delivery of, and the performance of all obligations of Borrower
under the Loan Documents has been duly taken. Each of this Agreement, the Note
and the Security Agreement has been duly authorized, executed and delivered by
Borrower and is a valid and binding agreement on the part of Borrower,
enforceable in accordance with its terms. The performance of each Loan Document
and the consummation of the transactions contemplated by each Loan Document will
not result in a breach or violation of any of the terms and provisions of, or
constitute a default under, (a) any Borrower Contract, (b) the Organizational
Documents of Borrower, or (c) any Law. No consent, approval, authorization or
order of, or qualification with, any Governmental Authority having jurisdiction
over Borrower or over its properties or assets is required for the execution and
delivery of this Agreement and the consummation by Borrower of the transactions
herein contemplated.

 

2.5           Actions and Orders. Neither Borrower nor any of its assets is
subject to any pending Action and there is no threatened Action against Borrower
or any of its assets. Borrower is not subject to any outstanding Order.

 

2.6           Capitalization. Borrower has outstanding one thousand (1,000)
shares of Common Stock, and no other shares of capital stock. All of the
outstanding shares of Borrower are owned of record by Thomas Lam, M.D. There are
no Stock Equivalents of Borrower outstanding.

 

2.7           Assets and Liabilities. Prior to the date hereof, Borrower had no
assets, operations or liabilities.

 

2.8           Contracts. Borrower is not a party to any Contract except for the
Loan Documents, the Contracts related to its purchase of the Preferred Shares,
and the Permitted Agreements.

 

2.9           Permits. Borrower has all Permits necessary for the conduct of its
business.

 

2.10         Compliance with Laws. Borrower is in compliance with all Laws and
is not in violation of any Law.

 

3.           Representations, Warranties and Agreements of Lender.

 

Lender represents and warrants to, and agrees with, Borrower as follows:

 

3.1           Lender is acquiring the Note for Lender’s own account, for
investment purposes only.

 

3.2           Lender understands that an investment in the Note involves a high
degree of risk, and Lender represents that it has the financial ability to bear
the economic risk of this investment in the Note, including a complete loss of
such investment.

 

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3.3           Lender is an “accredited investor” as that term is defined in
Rule 501(a) under Regulation D promulgated pursuant to the Securities Act.

 

3.4           Lender understands that the issuance and sale of the Note has not
been registered under the Securities Act or under any state securities laws.

 

3.5           Lender has received all the information Lender considers necessary
or appropriate for deciding whether to invest in the Note, and Lender has had an
opportunity to ask questions and receive answers from Borrower and its members
regarding the business, prospects and financial condition of Borrower.

 

4.           Covenants.

 

For so long as the Note is outstanding, Borrower agrees that, unless Lender
waives compliance therewith in writing, it shall comply with the following
covenants and agreements:

 

4.1           Borrower shall preserve, renew and maintain in full force and
effect its corporate or organizational existence and take all reasonable action
to maintain all rights, privileges and franchises necessary or desirable in the
normal conduct of its business;

 

4.2           Borrower shall use the proceeds of the Loan solely to purchase the
Preferred Shares and for no other purpose;

 

4.3           Borrower shall provide to Lender as soon as practicable, but in
any event within 20 days after the end of each month, a balance sheet of
Borrower as at the end of such month and an income statement of Borrower for
such month and the year-to-date, which financial statements shall be prepared
from the books and records of Borrower maintained in the ordinary course of
business, and shall fairly present the financial condition and results of
operations of Borrower as of the date thereof and for the periods then ended;

 

4.4           Borrower shall provide prompt notice to Lender of: (a) any
Material Adverse Change; and (b) any Action filed or threatened to be filed
against Borrower and any Action proposed to be filed by Borrower;

 

4.5           Borrower shall not borrow any funds or incur any debts or
liabilities except for: (a) the Note, (b) income taxes payable on its income;
and (c) operating expenses incurred in the ordinary course of business;

 

4.6           Borrower shall not grant or permit a Lien on any of its assets or
properties;

 

4.7           Borrower shall not issue any Equity Securities;

 

4.8           Borrower shall not Transfer any Preferred Shares;

 

4.9           Borrower shall not merge or consolidate with or into any other
Person;

 

4.10         Borrower shall not declare or pay and dividends or distributions on
its capital stock or redeem any capital stock;

 

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4.11         Borrower shall not make any payments of any type to the shareholder
of Borrower, other than reimbursement of costs and expenses in the ordinary
course of business;

 

4.12         Borrower shall comply with applicable Laws;

 

4.13         Borrower shall not violate the California PC Law or take, or permit
to be taken, any action that would cause Borrower not to be in compliance with
the California PC Law;

 

4.14         Borrower shall file all returns for, and shall pay, all Taxes on or
before the date due;

 

4.15         Borrower shall not agree to any amendment of the Shareholder
Agreement or waive any of its rights under the Shareholder Agreement;

 

4.16         Borrower shall keep proper books of records and accounts, in which
full, true and correct entries in all material respects and in any event in
conformity with GAAP and all applicable Laws shall be made of all dealings and
transactions and assets in relation to its business and activities;

 

4.17         Borrower shall permit Lender to visit and inspect any of its
properties and examine and make abstracts from any of its books and records at
any reasonable time and as often as may be desired and to discuss its business
operations, properties and financial and other condition with its officers,
employees, consultants, and representatives; and

 

4.18         Promptly upon the request of Lender, Borrower shall do, execute,
acknowledge, deliver, record, re-record, file, re-file, register and re-register
any and all such further acts, deeds, conveyances, pledge agreements, mortgages,
deeds of trust, trust deeds, assignments, financing statements and continuations
thereof, termination statements, notices of assignments, transfers,
certificates, assurances and other instruments as the Lender, may require from
time to time in order to:

 

(a)       carry out more effectively the purposes of the Loan Documents;

 

(b)       to the fullest extent permitted by applicable law, subject the
Borrower’s properties, assets, rights or interests to the Liens now or hereafter
intended to be covered by the Security Agreement and the other Loan Documents;

 

(c)       perfect and maintain the validity, effectiveness and priority of the
Liens intended to be created under the Security Agreement and the other Loan
Documents; and

 

(d)       assure, convey, grant, assign, transfer, preserve, protect and confirm
more effectively to the Lender, the rights granted or now or hereafter intended
to be granted to the Lender under any Loan Document or under any other
instruments executed in connection with any Loan Document to which the Borrower
is or is to be a party.

 

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5.            Default and Remedies.

 

5.1          Events of Default. Any of the following shall constitute an “Event
of Default” under this Agreement:

 

(a)       Borrower fails to make any payment on the Loan when due;

 

(b)       Any representation or warranty by Borrower made in any Loan Document,
or which is contained in any certificate, document or financial or other
statement by Borrower, furnished at any time under this Agreement, or in or
under any other Loan Document, shall prove to have incorrect in any material
respect on or as of the date made or on the Funding Date;

 

(c)       Borrower breaches any covenant or agreement under any Loan Document;

 

(d)       Any shareholder of Borrower Transfers any shares of capital stock of
Borrower unless the Transfer was approved in writing by Lender;

 

(e)       Borrower makes a general assignment for the benefit of creditors, or
consents to the appointment of a trustee of a receiver, or admits in writing its
inability to pay its debts as they mature; or

 

(f)       A proceeding of bankruptcy, reorganization, insolvency or liquidation
is initiated by or against Borrower.

 

5.2          Rights and Remedies. Upon the occurrence of an Event of Default and
during the continuance of an Event of Default, Lender shall have, in addition to
all other rights and remedies that Lender may have under applicable law or in
equity or under this Agreement and the Security Agreement, the following rights
and remedies, all of which may be exercised with or without notice to Borrower
and without affecting the obligations of Borrower hereunder or under any other
Loan Document, declare all obligations, whether evidenced by this Agreement or
the Note or by any of the other Loan Documents, immediately due and payable.

 

5.3          Default Interest. Upon the occurrence of an Event of Default and
during the continuance of an Event of Default, the interest rate on the Loan
shall be the then-current rate of interest plus five percent (5%).

 

6.            Notices. All notices, requests, demands and other communications
(collectively, “Notices”) given pursuant to this Agreement shall be in writing,
and shall be delivered by personal service, courier, email or by United States
first class, registered or certified mail, postage prepaid, addressed to the
party at the address set forth on the signature page of this Agreement to the
attention of the CEO of the recipient or another designee identified on the
signature page (or if by email, to the latest email address the sender has for
the recipient or, if the recipient is an entity, for the officer or other person
designated to receive notices). Any Notice, other than a Notice sent by
registered or certified mail, shall be effective when received; a Notice sent by
registered or certified mail, postage prepaid return receipt requested, shall be
effective on the earlier of when received or the third day following deposit in
the United States mails. Any party may from time to time change its address for
further Notices hereunder by giving notice to the other party in the manner
prescribed in this Section.

 

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7.            Entire Agreement. This Agreement contains the sole and entire
agreement and understanding of the parties with respect to the entire subject
matter of this Agreement, and any and all prior discussions, negotiations,
commitments and understandings, whether oral or otherwise, related to the
subject matter of this Agreement are hereby merged herein.

 

8.            Successors. This Agreement shall be binding upon and inure to the
benefit of the parties to this Agreement and their respective successors, heirs
and personal representatives.

 

9.            Assignment. Borrower may not assign or transfer any of its rights
or obligations under this Agreement without the prior written consent of Lender.
Lender may assign its rights hereunder without the consent of Borrower.

 

10.          Waiver. No failure of any party to exercise any right or remedy
given to such party under this Agreement or any other Loan Document or otherwise
available to such party or to insist upon strict compliance by any other party
with its obligations hereunder or thereunder, and no custom or practice of the
parties in variance with the terms hereof or thereof, shall constitute a waiver
of any party’s right to demand exact compliance with the terms hereof or
thereof, unless such waiver is set forth in writing and executed by such party.
Any such written waiver shall be limited to those items specifically waived
therein and shall not be deemed to waive any future breaches or violations or
other non-specified breaches or violations unless, and to the extent, expressly
set forth therein.

 

11.          Amendments. This Agreement may be amended only by a written
agreement executed by the parties to this Agreement.

 

12.          Governing Law. The validity and interpretation of this Agreement,
and the terms and conditions set forth herein, shall be construed and
interpreted in accordance with and governed by the laws of the State of
California, without giving effect to any provisions relating to conflict of
laws.

 

13.          Execution. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. If any signature is
delivered by facsimile transmission or by email delivery of a “pdf” format data
file, such signature shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) with the same force
and effect as if such facsimile or “pdf” signature page were an original
thereof.

 

14.          Headings; References. The headings of the several sections of this
Agreement are inserted for convenience only and shall not in any way affect the
meaning or construction of any provision of this Agreement.

 

15.          Attorneys’ Fees. In any action to enforce any of the terms in this
Agreement, the party who is determined to be the prevailing party shall be
entitled to its reasonable attorneys’ fees incurred in connection with same.

 

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16.         Usury. This Agreement and the Note are exempt from California usury
laws pursuant to Section 25118(b) of the California Corporations Code. Lender
and Borrower , or any of their respective officers, directors, or controlling
persons, have a preexisting personal or business relationship (as defined in
Section 25118(g) of the California Corporations Code), or Lender and Borrower,
by reason of their own business and financial experience could reasonably be
assumed to have the capacity to protect their own interests in connection with
the transaction contemplated by this Agreement and the Note (as defined in
Section 25118(g) of the California Corporations Code). Notwithstanding the
foregoing, in the event the interest provisions hereof or any exactions provided
for herein or in the other Loan Documents or any other instrument securing the
Note shall result, because of any reduction of principal, or for any reason at
any time during the life of the Note, in any effective rate of interest which,
for any month, transcends the limit of any usury law applicable to the Note, all
sums in excess of those lawfully collectible as interest for the period in
question shall, without further agreement or notice between or by any party
hereto, be applied upon principal immediately upon receipt of such moneys by
Lender, with the same force and effect as though the payor had specifically
designated such extra sums to be so applied to principal and Lender had agreed
to accept such extra payment as a premium-free prepayment, so that in no event
shall Lender receive or be entitled to receive interest (or any amount treated
as interest under applicable Law) in excess of the maximum amount permitted
under applicable Law.

 

17.         Rules of Construction. Except as otherwise expressly provided in
this Agreement, the following rules shall apply hereto:

 

17.1         the singular includes the plural and the plural includes the
singular;

 

17.2         any pronoun shall include the corresponding masculine, feminine and
neuter forms;

 

17.3         “or” is not exclusive and “include” and “including” are not
limiting;

 

17.4         a reference to any Contract includes permitted supplements,
amendments and other modifications;

 

17.5         a reference to a Law includes any amendment or modification of such
Law and the rules or regulations issued thereunder;

 

17.6         a reference to a Person includes its permitted successors and
assigns in the applicable capacity;

 

17.7         a reference in this Agreement to a Section, clause, recital or
Exhibit is to the Section, clause, recital or Exhibit of this Agreement unless
otherwise expressly provided;

 

17.8         words such as “hereunder,” “hereto,” “hereof,” and “herein” and
other words of like import shall, unless the context clearly indicates to the
contrary, refer to the whole of this Agreement and not to any particular Section
or clause hereof;

 

17.9         all obligations under this Agreement are continuing obligations
throughout the term of this Agreement;

 

17.10      any right in this Agreement may be exercised at any time and from
time to time;

 

17.11       the headings of the Articles and Sections are for convenience and
shall not affect the meaning of this Agreement;

 

17.12       time is of the essence in performing all obligations.

 

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IN WITNESS WHEREOF, Borrower and Lender have caused this Agreement to be
executed as of the date first above written.

 

Borrower: Lender:     AP-AMH MEDICAL CORPORATION APOLLO MEDICAL HOLDINGS, INC.

     

By: /s/ Thomas S. Lam, M.D.   By: /s/ Mitchell Kitayama Thomas S. Lam, M.D.,  
Name:  Mitchell Kitayama Chief Executive Officer   Title:  Independent Committee
Director

 

Address: By: /s/ Eric Chin 1668 S. Garfield Ave., 2nd Floor Name:  Eric Chin
Alhambra, CA 91801 Title:  Chief Financial Officer

 

  Address:   1668 S. Garfield Avenue, 2nd Floor   Alhambra, CA 91801

 

[Signature Page to Apollo Loan Agreement]

 

 S-1 

 

 

EXHIBIT A

To

Loan Agreement

 

Definitions

 

“Action” shall mean any lawsuit, litigation, action, demand, mediation,
arbitration, investigation, suit, proceeding, arbitration or claim before any
court, Governmental Authority or quasi-judicial body (such as an arbitrator or
alternative dispute resolution body or agency), whether formal or informal,
civil, criminal, administrative or investigative.

 

“California GCL” shall mean the General Corporation Law of the State of
California.

 

“California PC Law” shall mean Sections 13400-13410 of the California GCL.

 

“Certificate of Determination” shall have the meaning set forth in the recitals.

 

“Collateral” shall have the meaning ascribed to such term in the Security
Agreement.

 

“Contract” shall mean any written or oral note, bond, debenture, mortgage,
license, agreement, commitment, contract or understanding.

 

“Default” shall mean the occurrence of any one or more of the Events of Default
and the determination by Lender that Lender will exercise the remedies available
to Lender by reason thereof.

 

“Equity Securities” of any Person shall mean the capital stock, membership
interests or other equity securities of such Person and/or any Stock Equivalents
of such Person.

 

“Event(s) of Default” shall mean the occurrence of an event specified in
Section 5.1.

 

“Funding Date” means the date on which the Loan is funded by Lender.

 

“Governmental Approval” means any (a) Permit, concession, approval, consent,
ratification, permission, clearance, confirmation, exemption, waiver, franchise,
certification, designation, rating, registration, variance, qualification,
accreditation or authorization issued, granted, given or otherwise made
available by or under the authority of any Governmental Authority or pursuant to
any Law; or (b) right under any Contract with any Governmental Authority.

 

“Governmental Authority” shall mean any nation or government, any state or other
political subdivision thereof, a public body or authority, and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, whether domestic or foreign, or
national, regional, state or local.

 

 

 

 

“Law” shall mean any foreign, federal, state or local statute, law, rule,
regulation, ordinance, order, code, policy or rule of common law, now or
hereafter in effect, and in each case as amended, and any judicial or
administrative interpretation thereof by a Governmental Authority or otherwise,
including any order, consent, decree or judgment of any Governmental Authority.

 

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment,
charge, deposit arrangement, encumbrance, easement, lien (statutory or other),
security interest, or other security arrangement and any other preference,
priority, or preferential arrangement of any kind or nature whatsoever.

 

“Loan” shall mean the loan made by Lender to Borrower pursuant to this
Agreement.

 

“Loan Documents” shall mean this Agreement, the Note, the Security Agreement and
all and certificates delivered by or on behalf of Borrower pursuant to this
Agreement, instruments issued pursuant thereto, all other instruments delivered
by Borrower to Lender in connection with the Loan and all extensions, renewals
and modifications thereof.

 

“Material Adverse Change” means (a) a material adverse change in the business,
prospects, operations, results of operations, assets, liabilities or condition
(financial or otherwise) of Borrower, (b) a material impairment of the ability
of Borrower to perform its obligations under the Loan Documents to which it is a
party or of Lender’s ability to enforce the Obligations or realize upon the
Collateral, or (c) a material impairment of the enforceability or priority of
Lender’s Liens with respect to the Collateral as a result of an action or
failure to act on the part of Borrower.

 

“Note” shall mean the Note dated the date hereof executed and delivered by
Borrower in connection with this Agreement.

 

“Obligations” shall have the meaning ascribed to such term in the Security
Agreement.

 

“Order” shall mean any order, ruling, decision, verdict, decree, writ, subpoena,
mandate, precept, command, directive, consent, approval, award, judgment,
injunction, or other similar determination or finding by, before, or under the
supervision of any Governmental Authority, arbitrator, or mediator.

 

“Organizational Documents” shall mean the articles or certificate of
incorporation and bylaws of a corporation, as amended.

 

“Permit” shall mean any permit, license, certificate, approval, consent, notice,
waiver, franchise, registration, filing, accreditation, or other similar
authorization required by any Law, Governmental Authority or Contract.

 

“Permitted Agreements” means the Tradename Licensing Agreement between Lender
and Borrower, that certain Administrative Services Agreement between Network
Medical Management, Inc. and Borrower, and that certain Special Purpose
Shareholder Agreement between Borrower and APC.

 

“Person” shall mean any individual, corporation, partnership, joint venture,
limited liability company, estate, trust, unincorporated association, any
federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing, or other entity.

 

 

 

 

“Pledged Shares” shall have the meaning ascribed to such term in the Security
Agreement.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Security Agreement” means the Security Agreement made by Borrower in favor of
Lender, dated as of the date hereof, as the same may be amended, amended and
restated, supplemented or otherwise modified from time to time to the extent
permitted under this Agreement.

 

"Stock Equivalents” of any Person shall mean options, warrants, calls, rights,
commitments, convertible securities and other securities pursuant to which the
holder, directly or indirectly, has the right to acquire (with or without
additional consideration) capital stock or equity of such Person.

 

“Taxes” shall mean all taxes, charges, fees, levies or other governmental
assessments, including, without limitation, all net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, unemployment, social security (including any
social security charge or premium) excise, estimated, alternative minimum,
severance, stamp, occupation, property or other taxes, customs, dues, fees,
assessments or charges of any kind whatsoever, together with any interest and
any penalties, additions to tax or additional amounts imposed by any taxing
authority (federal, state, local or foreign).

 

“Termination Date” shall mean September 30, 2019.

 

“Transfer” shall mean sell, assign, pledge, assign or otherwise transfer, with
or without consideration.

 

 

 

 

EXHIBIT E

To

Loan Agreement

 

Conditions Precedent

 

The obligation of Lender to fund the Loan as provided for in this Agreement is
subject to the fulfillment, to the satisfaction of Lender, of each of the
following conditions precedent:

 

(a)          the Funding Date shall occur on or before the Termination Date;

 

(b)          the representations and warranties of Borrower set forth in this
Agreement, or any of the other Loan Documents, shall be true and correct in all
respects on and as of the date made and as of the Funding Date as if made on the
date thereof (except to the extent such representation or warranty specifies an
earlier date);

 

(c)          Borrower shall have performed in all respects all obligations and
covenants required to be performed by it under this Agreement and any other Loan
Document prior to the Funding Date;

 

(d)       no Law shall be in effect which prohibits or materially restricts the
consummation of the transactions contemplated by this Agreement and the other
Loan Documents at the Funding Date, and no Action is pending or threatened in
writing by a Governmental Authority which is likely to result in a Law having
such an effect;

 

(e)           Borrower shall have obtained all consents of Governmental
Authorities required to consummate the transactions contemplated by this
Agreement and the other Loan Documents, in form and substance satisfactory to
Lender;

 

(f)           unless waived as provided in the Apollo Stock Purchase Agreement,
Lender shall have received proceeds of its loan from a financial institution in
an amount sufficient to fund the Loan on the Funding Date;

 

(g)          Borrower and APC shall have executed and delivered a stock purchase
agreement, dated on or about the date of this Agreement (the “Series A Preferred
Shares Purchase Agreement”), pursuant to which APC shall issue and sell to
Borrower the Preferred Shares, and the only remaining condition to the closing
under the Series A Preferred Shares Purchase Agreement shall be the funding of
the Loan by Lender and Borrower and APC must be ready to close under the Series
A Preferred Shares Purchase Agreement concurrently with the funding of the Loan
on the Funding Date;

 

(h)          APC and Lender shall have executed and delivered a stock purchase
agreement, dated on or about the date of this Agreement (the “Apollo Stock
Purchase Agreement”), pursuant to which Lender shall issue and sell to APC
shares of its Common Stock, and the only remaining condition to the closing
under the Apollo Stock Purchase Agreement shall be the funding of the Loan by
Lender and APC and Lender must be ready to close under the Apollo Stock Purchase
Agreement concurrently with the funding of the Loan on the Funding Date;

 

 

 

 

(i)            Borrower, Lender and APC shall have each obtained the requisite
consent of its shareholders to consummate the transactions contemplated by the
Series A Preferred Stock Purchase Agreement, the Apollo Stock Purchase
Agreement, this Agreement and the other Loan Documents;

 

(j)            Borrower shall have filed Certificate of Determination with the
California Secretary of State;

 

(k)           Lender shall have received evidence that appropriate financing
statements have been duly filed in such office or offices as may be necessary
or, in the opinion of Lender, desirable to perfect the Lender’s Liens in and to
the Collateral, and Lender shall have received searches reflecting the filing of
all such financing statements;

 

(l)           Lender shall be in possession of the certificate(s) evidencing the
Pledged Shares, together with an assignment separate from stock certificated,
duly endorsed in blank by Borrower;

 

(m)          Lender shall have received each of the following documents, in form
and substance satisfactory to Lender, duly executed, and each such document
shall be in full force and effect:

 

(i)        this Agreement and the other Loan Documents, and

 

(ii)       a disbursement letter executed and delivered by Borrower to Lender
regarding the Loan funding to be made on the Funding Date;

 

(n)          Lender shall have received a certificate from the Secretary of
Borrower (i) attesting to the resolutions of Borrower’s Board of Directors
authorizing its execution, delivery, and performance of this Agreement and the
other Loan Documents, (ii) authorizing specific officers of Borrower to execute
the same, (iii) attesting to the incumbency and signatures of such specific
officers of Borrower, (iv) attaching a good standing certificate of recent date
prior to the Funding Date from the California Secretary of State and
(v) certifying as to the matters described in paragraphs (a), (b), (c), (d),
(e), (i) and (p) of this Exhibit E;

 

(o)          unless waived as provided in the Apollo Stock Purchase Agreement,
Lender shall have completed its business, legal, and collateral due diligence,
including a collateral examination and review of Borrower and verification of
Borrower’s representations and warranties to Lender, the results of which must
be satisfactory to Lender in its sole discretion;

 

(p)          since December 31, 2018, there shall not have occurred any Material
Adverse Change;

 

 

 

 

(q)       Lender shall have received an opinion from its regulatory counsel as
to certain regulatory matters relating to the transactions contemplated by the
Apollo Stock Purchase Agreement and related matters, and an opinion from its tax
and investment company counsel as to certain tax matters and the Investment
Company Act of 1940, in each case satisfactory to Lender in its sole discretion;

 

(r)       unless waived as provided in the Apollo Stock Purchase Agreement,
Lender shall have received an opinion from its financial advisor satisfactory to
Lender in its sole discretion that the transactions contemplated by the Apollo
Stock Purchase Agreement and related transactions are fair to the stockholders
of Lender from a financial point of view;

 

(s)       unless waived as provided in the Apollo Stock Purchase Agreement,
Lender and its advisors shall have completed an analysis of the tax consequences
of the transactions contemplated by this Agreement, the Apollo Stock Purchase
Agreement and related transactions the results of which are satisfactory to
Apollo in its sole discretion; and

 

(t)       all other documents and legal matters in connection with the
transactions contemplated by this Agreement or as otherwise reasonably requested
by Lender shall have been delivered, executed, or recorded and shall be in form
and substance satisfactory to Lender.