EXHIBIT 10.9
 
FIRST AMENDMENT TO
STOCK PURCHASE AGREEMENT
 
This FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT (the “Amendment”) is made and
entered into as of July 8, 2011, by and among Apollo Medical Holdings, Inc., a
Delaware corporation (the “Buyer”), on the one hand, and Aligned Healthcare
Group LLC, a California limited liability company (“Aligned LLC”), Aligned
Healthcare Group – California, Inc., a California professional medical
corporation (“Aligned Corp.”), Raouf Khalil (“Khalil”), Jamie McReynolds, M.D.
(“McReynolds”), BJ Reese & Associates, LLC (“Reese LLC”) and BJ Reese (“Reese”),
on the other hand, and amends in certain respects that certain Stock Purchase
Agreement dated as of February 15, 2011 by and among the parties (the “Purchase
Agreement”).  Capitalized terms used but not defined in this Amendment shall
have the meanings given to such terms in the Purchase Agreement.
 
A.           The Buyer and the Aligned Parties have previously entered into the
Purchase Agreement and the Transaction Documents which provide, among other
things, that the Aligned Parties will not engage in the Call Center Business
anywhere in the United States outside of the Aligned Territory during the
Restricted Period.
 
B.           The Buyer and the Aligned Parties desire to amend the Purchase
Agreement to provide, among other things, that the Call Center Business includes
the “wrap around business,” and that Aligned LLC and Aligned Corp. may engage in
the Call Center Business within and outside of the Aligned Territory solely as
and to the extent expressly provided in this Amendment and in that certain
Services Agreement, dated the date hereof (the “Services Agreement”), among the
Aligned Healthcare, Inc. (the “Company”), Aligned LLC and Aligned Corp., the
form of which is attached hereto as Exhibit A.
 
NOW, THEREFORE, in consideration of the premises and of the mutual agreements,
representations, warranties, provisions and covenants herein contained, the
parties hereto, each intending to be bound hereby, agree as follows:
 
1.           Designated Contracts.  Notwithstanding anything to the contrary in
the Purchase Agreement or the Transaction Documents, subject to the terms and
conditions of this Amendment, the Purchase Agreement and the Services Agreement,
Aligned LLC and Aligned Corp. may enter into one or more contracts with Anthem
Blue Cross for the provision of services relating to the Call Center Business
solely within the State of California (each such contract is referred to
individually as a “Designated Contract” and, collectively, as the “Designated
Contracts”).  As provided in the Purchase Agreement, the Aligned Parties may
also enter into contracts with any other health plan for the provision of
services relating to the Call Center Business solely within the Aligned
Territory, and such contracts shall not be deemed to be Designated
Contracts.  During the term of the Services Agreement, the Company shall not
enter into any contract with (a) Anthem Blue Cross for the provision of services
relating to the Call Center Business within the State of California, or (b) any
other health plan for the provision of services relating to the Call Center
Business within the Aligned Territory, it being acknowledged and agreed that
nothing contained in this Amendment, the Purchase Agreement or the Services
Agreement shall in any way whatsoever prevent the Company or any of its
affiliates from engaging in the Call Center Business with Anthem Blue Cross
outside of the State of California or with any other health plan outside of the
Aligned Territory.  Each Designated Contract shall be deemed to be a written
agreement between the Company, on the one hand, and a health plan, an
Independent Physician Association or a hospital, on the other hand, for the
purpose of determining whether the Company has entered into a Qualified MSO
Contract under Section 1.2(d) of the Original Purchase Agreement, it being
expressly understood that no Designated Contract shall be a Qualified MSO
Contract unless it meets all of the conditions stated in Section 1.2(d) of the
Original Purchase Agreement.
 
 
 

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2.           Other Call Center Contracts.  The Company, Buyer or their
affiliates may, in their sole and exclusive discretion, enter into one or more
contracts with third parties for the provision of services relating to the Call
Center Business and which are not Designated Contracts (each such contract, an
“Other Call Center Contract”).  By way of example, the Company may enter into an
Other Call Center Contract with a third party other than Anthem Blue Cross for
the provision of services relating to the Call Center Business within the State
of California or with any third party for the provision of services relating to
the Call Center Business outside of the State of California.  In connection with
each such Other Call Center Contract, subject to the written consent of the
counterparty to such Other Call Center Contract, the Company, the Buyer or the
affiliate thereof that enters into such Other Call Center Contract shall enter
into a License Agreement with an Aligned Party in form and substance mutually
agreeable to the Company and the Aligned Parties (each, a “License
Agreement”).  Each License Agreement shall provide, among other things, that
(a) so long as no Aligned Party is in default under any Transaction Document,
the Aligned Party shall have exclusive operational authority relating to the
services to be provided under the applicable Other Call Center Contract, (b) the
Aligned Party shall be entitled to payment for its services under the License
Agreement in accordance with terms of that agreement, including an apportionment
of costs similar to that set forth in this Agreement, (c) the Aligned Parties
shall indemnify, defend and hold harmless the Company, the Buyer and their
respective affiliates for any claims or damages arising out of or related to the
Aligned Parties’ services under the License Agreement, (d) the Aligned Parties
shall make customary representations and warranties and be bound by customary
covenants relating to their performance of the License Agreement, including
those relating to HIPAA compliance, (e) the Company shall license to the
applicable Aligned Party the rights necessary to perform its services under the
License Agreement, and (f) the Company or its designee shall be the exclusive
owner of any and all work product or other intellectual property created by the
Aligned Parties in connection with their engagement under the License Agreement.
 
3.           Amendment to Aligned Parties’ Restrictive Covenants.
 
(a)           Clause (a) of Section 5.1(a)(i) of the Purchase Agreement is
hereby amended and restated in full as follows:
 
(a) the Buyer, as the purchaser of the Shares, following the Closing will be
engaged in the provision of services relating to (I) patient case management or
the management, administration and operation of 24-hour physician and nursing
call centers and related services (the “Call Center Services”) and
(II) post-discharge management services, including but not limited to
coordination of patient discharge from acute care facilities to skilled nursing
facilities, long term acute care facilities or home, repatriation to personal
care physicians, post-discharge outbound calls to members and providers,
telephonic transition management for high risk members to assure compliance,
access and early identification of complication, medication compliance, and
patient monitoring to limit readmission to acute care facilities (the “Wrap
Around Business” and, together with the Call Center Services, the “Call Center
Business”);
 
 
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(b)           Section 5.1(a)(iv) of the Purchase Agreement is hereby amended and
restated in full as follows:
 
(iv)           The term “Restricted Period” shall mean the period beginning on
the Closing Date and ending on the later of (A) the earliest to occur of (x) the
removal or failure to re-elect Khalil as president of the Company, (y) the
termination for any reason of Khalil’s engagement with the Company or any of its
affiliates as an employee or consultant, and (z) the exercise by the Buyer of
its right under Section 1.2(d) to repurchase all of the Buyer Stock then
outstanding, and (B) the latest termination date of (x) any of the Designated
Contracts entered into by Aligned Corp. or Aligned LLC under that certain
Services Agreement dated as of July 8, 2011 among the Company, Aligned LLC and
Aligned Corp. and (y) any Other Call Center Agreement.  The Restricted Period
shall be extended by the number of days in any period in which any Aligned Party
or an affiliate of any Aligned Party is determined by a court of competent
jurisdiction to be in default or breach of this Section 5.1(a).
 
4.           Services Agreement; License Agreements.  As a condition to the
Company’s execution and delivery of this Amendment, Aligned LLC and Aligned
Corp. shall concurrently enter into the Services Agreement and the HIPAA
Business Associate Agreement attached thereto, and the Services Agreement and
such HIPAA Business Associate Agreement shall each be deemed to be a Transaction
Document under the Purchase Agreement.  Each License Agreement, if any, shall be
deemed to be a Transaction Document under the Purchase Agreement.
 
5.           Consulting Arrangements.  Khalil and Reese shall continue to
provide consulting services to the Company pursuant to their Consulting
Agreements in accordance with the terms thereof.
 
6.           Consent of Anthem Blue Cross.  The Aligned Parties represent and
warrant that they have obtained the consent of Anthem Blue Cross to the terms of
this Amendment and the Services Agreement.
 
7.           Restatement of Schedule 2.2.  Schedule 2.2 to the Purchase
Agreement is hereby amended and restated in its entirety as attached hereto.
 
8.           Effect of Amendment.  Except as expressly amended by this
Amendment, all of the terms of the Purchase Agreement and the Transaction
Documents shall remain unchanged and in full force and effect, including without
limitation (a) Buyer’s and the Company’s rights to and ownership of revenues and
profits associated with the Designated Contracts outside of the Aligned
Territories and (b) the terms of Section 5.1 of the Purchase Agreement,
including as they relate to the Hospitalist Business.  In the event of any
inconsistency or conflict between the provisions of the Purchase Agreement and
this Amendment, the provisions of this Amendment will prevail and govern.
 
9.           Counterparts.  The parties may execute this Amendment in any number
of counterparts and, as so executed, the counterparts shall constitute one and
the same agreement.  The parties agree that each such counterpart is an original
and shall be binding upon all of the parties, even though all of the parties are
not signatories to the same counterpart.
 
 
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IN WITNESS WHEREOF, this Amendment has been executed as of the day and year
first above written.
 
APOLLO MEDICAL HOLDINGS, INC.,
a Delaware corporation
 
By:   /s/ Warren Hosseinion
Name: Warren Hosseinion
Title: Chief Executive Officer and Director
 
ALIGNED HEALTHCARE GROUP – CALIFORNIA, INC.,
a California professional medical corporation
 
By: /s/ Hany Khalil
Name: Hany Khalil
Title: President
 
ALIGNED HEALTHCARE GROUP LLC,
a California limited liability company
 
By:  /s/ Marcelle Khalil
Name: Marcelle Khalil
Title: Managing Member
 
 
By: /s/ Raouf Khalil
  RAOUF KHALIL
 
 
By: /s/ Jamie McReynolds
  JAMIE MCREYNOLDS, M.D.
 
 
By: /s/ BJ Reese
  BJ REESE
 
BJ REESE & ASSOCIATES, LLC
 
By:  /s/ BJ Reese
Name: BJ Reese
Title: Managing Member
 
 
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