Exhibit 10.12 EXECUTION COPY

 

REGISTRATION RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into
as of March 28, 2014, by and among Apollo Medical Holdings, Inc., a Delaware
corporation (the “Company”), and NNA of Nevada, Inc., a Nevada corporation
(“Purchaser”).

 

BACKGROUND STATEMENT

 

This Agreement is made pursuant to the Investment Agreement, dated as of the
date hereof between Company and Purchaser (the “Investment Agreement”).

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and in order to induce Purchaser to
enter into the Investment Agreement, the parties hereto hereby agree as follows:

 

1.          Defined Terms. Capitalized terms used and not otherwise defined
herein shall have the meanings given such terms in the Investment Agreement. As
used in this Agreement, the following terms shall have the following respective
meanings:

 

“Advice” shall have the meaning set forth in Section 6(d).

 

“Affiliate” means, as to any Person, (i) any other Person which directly, or
indirectly through one or more intermediaries, controls such Person or is
consolidated with such Person in accordance with GAAP, (ii) any other Person
which directly, or indirectly through one or more intermediaries, is controlled
by or is under common control with such Person, or (iii) any other Person of
which such Person owns, directly or indirectly, ten percent (10%) or more of the
common stock or equivalent equity interests. As used herein, the term “control”
means possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities or otherwise.

 

“Agreement” shall have the meaning set forth in the Preamble.

 

“Allowable Grace Period” shall have the meaning set forth in Section 2(e).

 

“Availability Date” shall have the meaning set forth in Section 3(m).

 

“Business Day” means any day of the year on which banks are open for business in
Waltham, Massachusetts.

 

“Commission” means the Securities and Exchange Commission.

 

“Company” shall have the meaning set forth in the Preamble.

 

“Effective Date” means the date that the Registration Statement filed pursuant
to Section 2(a) is first declared effective by the Commission.

 

 

 

 

“Effectiveness Target” means, with respect to the Initial Registration Statement
or the New Registration Statement, the earlier of (i) the 540th calendar day
following the Closing Date and (ii) the 5th Trading Day after the date the
Company is notified (orally or in writing, whichever is earlier) by the
Commission that such Registration Statement will not be “reviewed” or will not
be subject to further review; provided, that if the Effectiveness Target falls
on a Saturday, Sunday or other day that the Commission is closed for business,
the Effectiveness Target shall be extended to the next Business Day on which the
Commission is open for business.

 

“Effectiveness Period” shall have the meaning set forth in Section 2(b).

 

“Filing Deadline” means, with respect to the Initial Registration Statement
required to be filed pursuant to Section 2(a), the 365th calendar day following
the Closing Date, provided, that if the Filing Deadline falls on a Saturday,
Sunday or other day that the Commission is closed for business, the Filing
Deadline shall be extended to the next business day on which the Commission is
open for business.

 

“FINRA” shall have the meaning set forth in Section 3(i).

 

“Grace Period” shall have the meaning set forth in Section 2(e).

 

“Holder” or “Holders” means the holder or holders, as the case may be, from time
to time of Registrable Securities.

 

“Indemnified Party” shall have the meaning set forth in Section 5(c).

 

“Indemnifying Party” shall have the meaning set forth in Section 5(c).

 

“Initial Registration Statement” means the initial Registration Statement filed
pursuant to Section 2(a) of this Agreement.

 

“Investment Agreement” shall have the meaning set forth in the Recitals.

 

“Liquidated Damages” shall have the meaning set forth in Section 2(c).

 

“Losses” shall have the meaning set forth in Section 5(a).

 

“New Registration Statement” shall have the meaning set forth in Section 2(a).

 

“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

 

“Prospectus” means the prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by a
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.

 

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“Registrable Securities” means (1) any Conversion Shares issued by the Company
upon conversion of the Convertible Note, (2) any Purchase Shares, (3) any
Warrant Shares issued by the Company upon exercise of the Warrants, and (4) any
additional shares of Common Stock or other equity securities of the Company
issued by the Company in respect of Conversion Shares or Warrant Shares
described in subclause (1), (2) or (3) after the issuance of such Conversion
Shares, Purchase Shares or Warrant Shares, as applicable, in connection with a
stock dividend, stock split, combination, exchange, reorganization,
recapitalization or similar reclassification of the Company’s securities or
otherwise pursuant to the terms of the Transaction Documents; provided, that, as
to any particular Registrable Securities, such securities shall cease to
constitute Registrable Securities when: (x) a registration statement with
respect to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of thereunder;
(y) such securities shall have been sold in satisfaction of all applicable
conditions to the resale provisions of Rule 144 under the Securities Act (or any
similar provision then in force); or (z) such securities shall have ceased to be
issued and outstanding.

 

“Registration Statements” means any one or more registration statements of the
Company filed under the Securities Act that covers the resale of any of the
Registrable Securities pursuant to the provisions of this Agreement (including
without limitation the Initial Registration Statement, the New Registration
Statement and any Remainder Registration Statements), amendments and supplements
to such Registration Statements, including post-effective amendments, all
exhibits and all material incorporated by reference or deemed to be incorporated
by reference in such Registration Statements.

 

“Remainder Registration Statement” shall have the meaning set forth in Section
2(a).

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

 

“Rule 415” means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

 

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

 

“SEC Guidance” means (i) any publicly-available written or oral guidance,
comments, requirements or requests of the Commission staff and (ii) the
Securities Act.

 

“Selling Shareholder Questionnaire” means a questionnaire in the form attached
as Annex B hereto, or such other form of questionnaire as may reasonably be
adopted by the Company from time to time.

 

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“Trading Market” means whichever of the NASDAQ Global Select Market, the NASDAQ
Global Market, the NASDAQ Capital Market or OTCQB or other exchange, trading
market or quotation system on which the Common Stock is listed or quoted for
trading on the date in question.

 

2.           Registration.

 

(a)          On or prior to the Filing Deadline, the Company shall prepare and
file with the Commission a Registration Statement covering the resale of all of
the Registrable Securities not already covered by an existing and effective
Registration Statement for an offering to be made on a continuous basis pursuant
to Rule 415 or, if Rule 415 is not available for offers and sales of the
Registrable Securities, by such other means of distribution of Registrable
Securities as the Company may reasonably determine (the “Initial Registration
Statement”). The Initial Registration Statement shall be on Form S-3 (except if
the Company is then ineligible to register for resale of the Registrable
Securities on Form S-3, then the Initial Registration Statement shall be on Form
S-1) subject to the provisions of Section 2(f) and shall contain (unless
otherwise directed by at least 85% in interest of the Holders or unless
otherwise required pursuant to (i) written comments received from the Commission
upon a review of such Registration Statement or (ii) a change in SEC Guidance)
the “Plan of Distribution” section substantially in the form attached hereto as
Annex A. Subject to such other limitations as specified in this Agreement, the
Company shall have the right to include its equity securities that are not
Registrable Securities, including a primary offering of equity securities by the
Company for its own account or a secondary offering of equity securities owned
by the Company’s directors and officers, in any such Registration Statement.
Notwithstanding the registration obligations set forth in this Section 2, in the
event the Commission informs the Company that all of the Registrable Securities
cannot, as a result of the application of Rule 415, be registered for resale as
a secondary offering on a single registration statement, the Company agrees to
promptly (i) inform each of the Holders thereof and use its commercially
reasonable efforts to file amendments to the Initial Registration Statement as
required by the Commission, (ii) remove any and all securities that are not
Registrable Securities from such Initial Registration Statement and/or (iii)
withdraw the Initial Registration Statement and file a new registration
statement (a “New Registration Statement”), in either case covering the maximum
number of Registrable Securities permitted to be registered by the Commission,
on Form S-1 or such other form available to the Company to register for resale
the Registrable Securities as a secondary offering; provided, that prior to
filing such amendment or New Registration Statement, the Company shall be
obligated to use its commercially reasonable efforts to advocate with the
Commission for the registration of all of the Registrable Securities in
accordance with the SEC Guidance, including without limitation, Securities Act
Rules Compliance and Disclosure Interpretation 612.09. Notwithstanding any other
provision of this Agreement, if any SEC Guidance sets forth a limitation of the
number of Registrable Securities or other shares of Common Stock permitted to be
registered on a particular Registration Statement as a secondary offering (and
notwithstanding that the Company used commercial reasonable efforts to advocate
with the Commission for the registration of all or a greater number of
Registrable Securities), the number of Registrable Securities or other shares of
Common Stock to be registered on such Registration Statement will be reduced, if
applicable, first, by eliminating any securities other than Registrable
Securities included in such Registration Statement and thereafter, on a pro rata
basis between the Holders as follows: first, the Company shall reduce the
Registrable Securities represented by the Warrant Shares; second, the Company
shall reduce the Registrable Securities represented by the Conversion Shares;
and third, the Company shall reduce the Registrable Securities represented by
the Purchase Shares. In the event the Company amends the Initial Registration
Statement or files a New Registration Statement, as the case may be, under
clauses (i) or (ii) above, the Company will use its commercially reasonable
efforts to file with the Commission, as promptly as allowed by Commission or SEC
Guidance provided to the Company or to registrants of securities in general, one
or more registration statements on Form S-3 or such other form available to the
Company to register for resale those Registrable Securities that were not
registered for resale on the Initial Registration Statement, as amended, or the
New Registration Statement (the “Remainder Registration Statements”). No Holder
shall be named as an “underwriter” in any Registration Statement without such
Holder’s prior written consent.

 

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(b)          The Company shall use its commercially reasonable best efforts to
cause each Registration Statement to be declared effective by the Commission as
soon as practicable and, with respect to the Initial Registration Statement or
the New Registration Statement, as applicable, by the Effectiveness Target (and
will continue to use commercially reasonable best efforts thereafter if the
applicable Registration Statement is not effective by such date), and shall use
its commercially reasonable efforts to keep each Registration Statement
continuously effective under the Securities Act until the earlier of (i) such
time as all of the Registrable Securities covered by such Registration Statement
have been publicly sold by the Holders or (ii) the date that all Registrable
Securities covered by such Registration Statement may be sold by Holders as
non-affiliates of the Company without volume or manner of sale restrictions
under Rule 144, and without the requirement for the Company to be in compliance
with the current public information requirements under Rule 144(c)(1) (or Rule
144(i)(2), if applicable), as determined by counsel to the Company pursuant to a
written opinion letter to such effect, addressed and reasonably acceptable to
the Company’s transfer agent and the affected Holders (the “Effectiveness
Period”). The Company shall request effectiveness of a Registration Statement as
of 5:00 p.m., New York City time, on a Trading Day. The Company shall promptly
notify the Holders via facsimile or electronic mail of a “.pdf” format data file
of the effectiveness of a Registration Statement within one (1) Business Day of
the Effective Date. The Company shall, by 9:30 a.m., New York City time, on the
first Trading Day after the Effective Date, file a final Prospectus with the
Commission, as required by Rule 424(b).

 

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(c)          If the Initial Registration Statement is not filed with the
Commission on or prior to the Filing Deadline, then in addition to any other
rights the Holders may have hereunder or under applicable law, on the date that
is the Filing Deadline and on each monthly anniversary of the Filing Deadline
until the Initial Registration Statement is filed with the Commission, the
Company shall pay to each Holder an amount in Common Stock based upon its then
Fair Market Value, as liquidated damages and not as a penalty (“Liquidated
Damages”), equal to 1.50% of the aggregate purchase price paid or to be paid by
such Holder for the Registrable Securities, which purchase price shall include
amounts paid or to be paid by Holder under the Investment Agreement, the
Conversion Price (as defined in the Convertible Note) for any such Registrable
Securities and the Warrant Exercise Price (as defined in the Warrants) for any
such Registrable Securities, in each case held by such Holder on the Filing
Deadline. The parties agree that notwithstanding anything to the contrary herein
or in the Investment Agreement, no Liquidated Damages shall be payable (i) if as
of the Filing Deadline, the Registrable Securities may be sold by Holders as
non-affiliates of the Company without volume or manner of sale restrictions
under Rule 144 and the Company is in compliance with the current public
information requirements under Rule 144(c)(1) (or Rule 144(i)(2), if
applicable), as determined by counsel to the Company pursuant to a written
opinion letter to such effect, addressed and reasonably acceptable to the
Company’s transfer agent, (ii) to a Holder causing the Company to miss the
Filing Deadline, or (iii) with respect to any period after the expiration of the
Effectiveness Period (it being understood that this clause shall not relieve the
Company of any Liquidated Damages accruing prior to the expiration of the
Effectiveness Period). If the Company fails to issue any Common Stock in order
to pay any Liquidated Damages pursuant to this Section 2(c) in full within ten
(10) Business Days after the date payable, the Company will pay interest by
issuing any Common Stock thereon at a rate of 1.0% per month (or such lesser
maximum amount that is permitted to be paid by applicable law) to the Holder,
accruing daily from the date such Liquidated Damages are due until such amounts,
plus all such interest thereon, are paid in full. The Liquidated Damages
pursuant to the terms hereof shall apply on a daily pro-rata basis for any
portion of a month prior to the cure of the Company’s filing of the Initial
Registration Statement, except in the case of the Filing Deadline. With respect
to a Purchaser, the Effectiveness Target for a Registration Statement shall be
extended without default or Liquidated Damages hereunder in the event that the
Company’s failure to obtain the effectiveness of the Registration Statement on a
timely basis results from the failure of such Purchaser to timely provide the
Company with information requested by the Company and necessary to complete the
Registration Statement in accordance with the requirements of the Securities Act
(in which case the Effectiveness Target would be extended with respect to
Registrable Securities held by such Purchaser).

 

(d)          Each Holder agrees to furnish to the Company a completed Selling
Shareholder Questionnaire not more than ten (10) Trading Days following the date
of the Company’s written request therefor. At least five (5) Trading Days prior
to the first anticipated filing date of a Registration Statement for any
registration under this Agreement, the Company will notify each Holder of the
information the Company requires from that Holder other than the information
contained in the Selling Shareholder Questionnaire, if any, which shall be
completed and delivered to the Company promptly upon request and, in any event,
within two (2) Trading Days prior to the applicable anticipated filing date.
Each Holder further agrees that it shall not be entitled to be named as a
selling security holder in the Registration Statement or use the Prospectus for
offers and resales of Registrable Securities at any time, unless such Holder has
returned to the Company a completed and signed Selling Shareholder Questionnaire
and a response to any requests for further information as described in the
previous sentence. If a Holder of Registrable Securities returns a Selling
Shareholder Questionnaire or a request for further information, in either case,
after its respective deadline, the Company shall use its commercially reasonable
efforts at the expense of the Holder who failed to return the Selling
Shareholder Questionnaire or to respond for further information to take such
actions as are required to name such Holder as a selling security holder in the
Registration Statement or any pre-effective or post-effective amendment thereto
and to include (to the extent not theretofore included) in the Registration
Statement the Registrable Securities identified in such late Selling Shareholder
Questionnaire or request for further information. Each Holder acknowledges and
agrees that the information in the Selling Shareholder Questionnaire or request
for further information as described in this Section 2(d) will be used by the
Company in the preparation of the Registration Statement and hereby consents to
the inclusion of such information in the Registration Statement.

 

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(e)          Notwithstanding anything to the contrary herein, at any time after
the Registration Statement has been declared effective by the Commission, the
Company may delay the disclosure of material non-public information concerning
the Company if the disclosure of such information at the time is not, in the
good faith judgment of the Company, in the best interests of the Company (such
delay, a “Grace Period”); provided, the Company shall promptly (i) notify the
Holders in writing of the existence of material non-public information giving
rise to a Grace Period (provided that the Company shall not disclose the content
of such material non-public information to the Holders) or the need to file a
post-effective amendment, as applicable, and the date on which such Grace Period
will begin, (ii) use commercially reasonable best efforts to terminate a Grace
Period as promptly as reasonably practicable, unless doing so would reasonably
be expected to have a material adverse effect on the Company with respect to any
proposal or plan of the Company to effect a merger, acquisition, disposition,
financing, reorganization, recapitalization or similar transaction or any
negotiations, discussions or pending proposals with respect thereto, and (iii)
notify the Holders in writing of the date on which the Grace Period ends;
provided, further, that no single Grace Period shall exceed seventy five (75)
consecutive days, and during any three hundred sixty-five (365) day period, the
aggregate of all Grace Periods shall not exceed an aggregate of one hundred
fifty (150) days (each Grace Period complying with this provision being an
“Allowable Grace Period”). For purposes of determining the length of a Grace
Period, the Grace Period shall be deemed to begin on and include the date the
Holders receive the notice referred to in clause (i) above and shall end on and
include the later of the date the Holders receive the notice referred to in
clause (iii) above and the date referred to in such notice; provided, that no
Grace Period shall be longer than an Allowable Grace Period. Notwithstanding
anything to the contrary, the Company shall cause its transfer agent to deliver
unlegended Common Stock to a transferee of a Holder in accordance with the terms
of the Investment Agreement in connection with any sale of Registrable
Securities with respect to which a Holder has entered into an irrevocable
contract for sale prior to the Holder’s receipt of the notice of a Grace Period
and for which the Holder has not yet settled.

 

(f)          The Company shall (i) use commercially reasonable efforts to
register the resale of the Registrable Securities on an appropriate form and
(ii) undertake to use commercially reasonable efforts to register the
Registrable Securities on Form S-3 promptly after such form is available,
provided that the Company shall use commercially reasonable efforts to maintain
the effectiveness of the Registration Statement then in effect until such time
as a Registration Statement on Form S-3 covering the Registrable Securities has
been declared effective by the Commission.

 

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3.           Registration Procedures

 

In connection with the Company’s registration obligations hereunder:

 

(a)          the Company shall not less than three (3) Trading Days prior to the
filing of a Registration Statement and not less than two (2) Trading Days prior
to the filing of any related Prospectus or any amendment or supplement thereto
(except for Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K and any similar or successor reports), furnish to
the Holder copies of such Registration Statement, Prospectus or amendment or
supplement thereto, as proposed to be filed, which documents will be subject to
the reasonable review of such Holder (it being acknowledged and agreed that if a
Holder does not object to or comment on the aforementioned documents within such
three (3) Trading Day or two (2) Trading Day period, as the case may be, then
the Holder shall be deemed to have consented to and approved the use of such
documents). The Company shall not file any Registration Statement or amendment
or supplement thereto (except for Annual Reports on Form 10-K, Quarterly reports
on Form 10-Q and Current Reports on form 8-K and any similar or successor
reports) in a form to which a Holder reasonably objects in good faith, provided
that, the Company is notified of such objection in writing within the three (3)
Trading Day or two (2) Trading Day period described above, as applicable.

 

(b)          (i) the Company shall prepare and file with the Commission such
amendments, including post-effective amendments and supplements, to each
Registration Statement and the Prospectus used in connection therewith as may be
necessary to keep such Registration Statement continuously effective as to the
applicable Registrable Securities for its Effectiveness Period (except during an
Allowable Grace Period); (ii) the Company shall cause the related Prospectus to
be amended or supplemented by any required Prospectus supplement (subject to the
terms of this Agreement), and, as so supplemented or amended, to be filed
pursuant to Rule 424 (except during an Allowable Grace Period); (iii) the
Company shall respond as promptly as reasonably practicable to any comments
received from the Commission with respect to each Registration Statement or any
amendment thereto and, as promptly as reasonably possible, provide the Holders
true and complete copies of all correspondence from and to the Commission
relating to such Registration Statement that pertains to the Holders as “Selling
securityholders” but not any comments that would result in the disclosure to the
Holders of material and non-public information concerning the Company; and (iv)
the Company shall comply with the provisions of the Securities Act and the
Exchange Act with respect to the disposition of all Registrable Securities
covered by a Registration Statement until such time as all of such Registrable
Securities shall have been disposed of (subject to the terms of this Agreement)
in accordance with the intended methods of disposition by the Holders thereof as
set forth in such Registration Statement as so amended or in such Prospectus as
so supplemented; provided, that Purchaser shall be responsible for the delivery
of the Prospectus to the Persons to whom such Purchaser sells any of the
Registrable Securities (including in accordance with Rule 172 under the
Securities Act), and Purchaser agrees to dispose of Registrable Securities in
compliance with the plan of distribution described in the Registration Statement
and otherwise in compliance with applicable federal and state securities laws.
In the case of amendments and supplements to a Registration Statement which are
required to be filed pursuant to this Agreement (including pursuant to this
Section 3(b)) by reason of the Company filing a report on Form 10-K, Form 10-Q
or Form 8-K or any analogous report under the Exchange Act, the Company shall
have incorporated such report by reference into such Registration Statement, if
applicable, or shall file such amendments or supplements with the Commission as
soon as reasonably practicable after the Exchange Act report which created the
requirement for the Company to amend or supplement such Registration Statement
was filed.

 

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(c)          subject to Section 2(d), the Company shall notify the Holders
(which notice shall, pursuant to clauses (iii) through (v) hereof, be
accompanied by an instruction to suspend the use of the Prospectus until the
requisite changes have been made, but which notice shall not contain any
material non-public information regarding the Company other than to the extent
such notice itself and instructions the Company is required to provide under
this Section 3(c) may constitute material non-public information) as promptly as
reasonably practicable (and, in the case of (i)(A) below, not less than two (2)
Trading Days prior to such filing, in the case of (iii) and (iv) below, not more
than one (1) Trading Day after such issuance or receipt, and in the case of (v)
below, not more than one (1) Trading Day after the occurrence or discovery of
such development) and (if requested by any such Holder) confirm such notice in
writing no later than one (1) Trading Day following the day (i)(A) when a
Prospectus or any Prospectus supplement or post-effective amendment to a
Registration Statement is proposed to be filed (other than any amendments and
supplements to a Registration Statement which are required to be filed pursuant
to this Agreement by reason of the Company filing a report on Form 10-K, Form
10-Q or Form 8-K or any analogous report under the Exchange Act); (B) when the
Commission notifies the Company whether there will be a “review” of any
Registration Statement and whenever the Commission comments in writing on any
Registration Statement (in which case the Company shall provide to each of the
Holders true and complete copies of all comments that pertain to the Holders as
a “Selling Shareholder” or to the “Plan of Distribution” and all written
responses thereto, but not information that the Company believes would
constitute material and non-public information); and (C) with respect to each
Registration Statement or any post-effective amendment (other than any
amendments and supplements to a Registration Statement which are required to be
filed pursuant to this Agreement by reason of the Company filing a report on
Form 10-K, Form 10-Q or Form 8-K or any analogous report under the Exchange
Act), when the same has become effective; (ii) of any written request by the
Commission or any other Federal or state governmental authority for amendments
or supplements to a Registration Statement or Prospectus or for additional
information that pertains to the Holders as “Selling securityholders” or the
“Plan of Distribution”; (iii) of the issuance by the Commission or any other
federal or state governmental authority of any stop order suspending the
effectiveness of a Registration Statement covering any or all of the Registrable
Securities or the initiation of any Proceedings for that purpose; (iv) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of any
Proceeding for such purpose; and (v) of the occurrence of any event that makes
the financial statements included in a Registration Statement ineligible for
inclusion therein or any statement made in such Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to such
Registration Statement, Prospectus or other documents so that, in the case of
such Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
(in the case of any Prospectus, form of prospectus or supplement thereto, in
light of the circumstances under which they were made), not misleading.

 

(d)          the Company shall use commercially reasonable best efforts to avoid
the issuance of, or, if issued, obtain the withdrawal of (i) any order
suspending the effectiveness of a Registration Statement, or (ii) any suspension
of the qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, as soon as practicable.

 

(e)          the Company shall, if requested by a Holder, furnish to such
Holder, without charge, at least one conformed copy of each Registration
Statement and each amendment thereto and all exhibits to the extent requested by
such Holder (including those previously furnished or incorporated by reference)
promptly after the filing of such documents with the Commission; provided, that
the Company may provide a link to, and shall have no obligation to provide a
physical copy of, any such document that is available on the Commission’s EDGAR
or successor system.

 

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(f)          the Company shall, prior to any resale of Registrable Securities by
a Holder, use its commercially reasonable efforts to register or qualify or
cooperate with the selling Holders in connection with the registration or
qualification (or exemption from the registration or qualification) of such
Registrable Securities for the resale by the Holder under the securities or Blue
Sky laws of such jurisdictions within the United States as any Holder reasonably
requests in writing, to keep each registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all other
acts or things reasonably necessary to enable the disposition in such
jurisdictions of the Registrable Securities covered by each Registration
Statement; provided, that the Company shall not be required to qualify generally
to do business in any jurisdiction where it is not then so qualified, subject
the Company to any material tax in any such jurisdiction where it is not then so
subject or file a general consent to service of process in any such
jurisdiction.

 

(g)          the Company shall, reasonably cooperate with the Holders to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be delivered to a transferee pursuant to the
Registration Statement, which certificates shall be free, to the extent
permitted by the Investment Agreement and under law, of all restrictive legends,
and to enable such Registrable Securities to be in such denominations and
registered in such names as any such Holders may reasonably request.
Certificates for Registrable Securities free from all restrictive legends may be
transmitted by the transfer agent to a Holder by crediting the account of such
Holder’s prime broker with DTC as directed by such Holder.

 

(h)          subject to Section 2(d), the Company shall following the occurrence
of any event contemplated by Section 3(c)(iii)-(v), as promptly as reasonably
practicable (taking into account the Company’s good faith assessment of any
adverse consequences to the Company and its shareholders of the premature
disclosure of such event), prepare and file a supplement or amendment, including
a post-effective amendment, to the affected Registration Statements or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, no Registration Statement nor any Prospectus will
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein (in
the case of any Prospectus, form of prospectus or supplement thereto, in light
of the circumstances under which they were made), not misleading.

 

(i)          the Company may require each selling Holder to furnish to the
Company a certified statement as to (i) the number of Securities beneficially
owned by such Holder and any Affiliate thereof, (ii) any Financial Industry
Regulatory Authority (“FINRA”) affiliations, (iii) any natural persons who have
the power to vote or dispose of the Common Stock and (iv) any other information
as may be requested by the Commission, FINRA, any state securities commission or
any other government or regulatory body with jurisdiction over the Company or
its activities.

 

(j)          the Company shall cooperate with any registered broker through
which a Holder proposes to resell its Registrable Securities in effecting a
filing with FINRA pursuant to FINRA Rule 5110 as requested by any such Holder
and the Company shall pay the filing fee required for the first such filing (but
not additional filings) within two (2) Business Days of the request therefore.

 

10

 

 

(k)          as and when Form S-3 is available to the Company, the Company shall
use its commercially reasonable efforts to maintain or achieve eligibility for
use of Form S-3 (or any successor form thereto) for the registration of the
resale of Registrable Securities.

 

(l)          if requested by a Holder, the Company shall (i) promptly
incorporate in a Prospectus supplement or post-effective amendment to the
Registration Statement such information as the Company reasonably agrees (upon
advice of counsel) should be included therein and (ii) make all required filings
of such Prospectus supplement or such post-effective amendment as soon as
reasonably practicable after the Company has received notification of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment.

 

(m)          the Company shall otherwise use commercially reasonable efforts to
comply with all applicable rules and regulations of the Commission under the
Securities Act and the Exchange Act, including Rule 172, notify the Holders
promptly if the Company no longer satisfies the conditions of Rule 172 and take
such other actions as may be reasonably necessary to facilitate the registration
of the Registrable Securities hereunder; and make available to its security
holders, as soon as reasonably practicable, but not later than the Availability
Date (as defined below), an earnings statement covering a period of at least
twelve (12) months, beginning after the effective date of each Registration
Statement, which earning statement shall satisfy the provisions of Section 11(a)
of the Securities Act, including Rule 158 promulgated thereunder (for the
purpose of this Section 3, “Availability Date” means the 45th day following the
end of the fourth fiscal quarter that includes the effective date of such
Registration Statement, except that, if such fourth fiscal quarter is the last
quarter of the Company’s fiscal year, “Availability Date” means the 90th day
after the end of such fourth fiscal quarter), in each case subject to extensions
permissible under applicable law.

 

(n)          if at least 85% in interest of the Holders so request by notice to
the Company to sell Registrable Securities pursuant to an underwritten offering,
the Company shall enter into a written underwriting agreement in customary form
and substance with the managing underwriter(s) selected by such requesting
Holders, provided that such managing underwriter(s), shall be reasonably
acceptable to the Company, and shall take any and all such actions and furnish
and provide all such information, documents and undertakings to such managing
underwriter(s) in connection with such underwritten offering as is customary in
connection with such underwritten offerings, and provided further, that the
Company and Holders agree to be bound by such agreements and provisions as are
customary in underwriting agreements of the type to be entered in connection
with the sale of Registrable Securities contemplated by such underwritten
offering.

 

(o)          if the managing underwriter(s) of a proposed underwritten offering
of Registrable Securities effected pursuant to Section 2 advise the Holders
requesting to sell Registrable Securities in such underwritten offering in
writing that, in their opinion, the number of securities requested to be
included in such offering exceeds the number which can be sold in such offering
without being likely to have a significant adverse effect on the price, timing
or distribution of the securities offered or the market for the securities
offered, the securities to be included in such Registration Statement (i) first,
shall be allocated, pro rata if necessary, among the Holders that have requested
to sell Registrable Securities in such underwritten offering, (ii) second, and
only if all the securities referred to in clause (i) have been included in such
Registration Statement, shall be allocated to any shares that the Company has
requested to sell in such underwritten offering; and (iii) third, and only if
all the securities referred to in clauses (i) and (ii) have been included in
such Registration Statement, shall be allocated pro rata among the officers and
directors of the Company that have requested to sell in such underwritten
offering;

 

11

 

 

(p)          if the managing underwriter(s) of a proposed underwritten offering
of securities effected pursuant to Section 6(e) advise the Company in writing
that, in their opinion, the number of securities requested to be included in
such offering exceeds the number which can be sold in such offering without
being likely to have a significant adverse effect on the price, timing or
distribution of the securities offered or the market for the securities offered,
the securities to be included in such Registration Statement (i) first, shall be
allocated to any shares that the Company has requested to sell in such
underwritten offering, (ii) second, and only if all the securities referred to
in clause (i) have been included in such Registration Statement, shall be
allocated, pro rata if necessary, among Holders of Registrable Securities that
have requested to sell in such underwritten offering, and (iii) third, and only
if all the securities referred to in clauses (i) and (ii) have been included in
such Registration Statement, shall be allocated pro rata among the holders of
all other securities that have requested to sell in such underwritten offering.

 

4.          Registration Expenses. All fees and expenses incident to the
Company’s performance of or compliance with its obligations under this Agreement
shall be borne by the Company whether or not any Registrable Securities are sold
pursuant to a Registration Statement. The fees and expenses referred to in the
foregoing sentence shall include, without limitation, (i) all registration and
filing fees (including, without limitation, fees and expenses (A) with respect
to filings required to be made with the Commission and any Trading Market on
which the Common Stock is then listed for trading, (B) with respect to
compliance with applicable state securities or Blue Sky laws (including, without
limitation, fees and disbursements of counsel for the Company in connection with
Blue Sky qualifications or exemptions of the Registrable Securities and
determination of the eligibility of the Registrable Securities for investment
under the laws of such jurisdictions as requested by the Holders) and (C) if not
previously paid by the Company in connection with an issuer filing, with respect
to any filing that may be required to be made by any broker through which a
Holder intends to make sales of Registrable Securities with FINRA pursuant to
FINRA Rule 5110, so long as the broker is receiving no more than a customary
brokerage commission in connection with such sale, (ii) printing expenses
(including, without limitation, expenses of printing certificates for
Registrable Securities and of printing prospectuses if the printing of
prospectuses is reasonably requested by the Holders of a majority of the
Registrable Securities included in the Registration Statement), (iii) messenger,
telephone and delivery expenses of the Company, (iv) fees and disbursements of
counsel for the Company, (v) Securities Act liability insurance, if the Company
so desires such insurance, and (vi) fees and expenses of all other Persons
retained by the Company in connection with the consummation of the transactions
contemplated by this Agreement. In addition, the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation of
the transactions contemplated by this Agreement (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. In no event shall the Company be
responsible for any underwriting, broker or similar fees, discounts or
commissions or stock transfer taxes applicable to any Registered Securities
registered by any Holder or, except to the extent provided for in the
Transaction Documents, any legal fees or other costs of the Holders. Within ten
(10) Trading Days of written notice from the Company, the Holders shall
reimburse the Company for all fees and expenses it incurs hereunder that are
otherwise the responsibility of the Holders.

 

12

 

 

5.           Indemnification.

 

(a)          Indemnification by the Company. The Company shall, notwithstanding
any termination of this Agreement, indemnify, defend and hold harmless each
Holder, the officers, directors, agents, brokers, general partners, managing
members, managers, Affiliates, employees and investment advisers of each of
them, each Person who controls any such Holder (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, general partners, managing members, managers, agents, employees and
investment advisers of each such controlling Person, to the fullest extent
permitted by applicable law, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation, reasonable costs of
preparation and investigation and reasonable and documented attorneys’ fees) and
expenses (collectively, “Losses”), as incurred, that arise out of or are based
upon (i) any untrue or alleged untrue statement of a material fact contained in
any Registration Statement, any Prospectus or any form of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out
of or relating to any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein (in
the case of any Prospectus or form of prospectus or supplement thereto, in light
of the circumstances under which they were made) not misleading, or (ii) any
violation or alleged violation by the Company of the Securities Act, the
Exchange Act or any state securities law, or any rule or regulation thereunder,
in connection with the performance of its obligations under this Agreement,
except to the extent, but only to the extent, that (A) such untrue statements,
alleged untrue statements, omissions or alleged omissions are based solely upon
information regarding such Holder or its Purchaser Director furnished in writing
to the Company by such Holder or its Purchaser Director expressly for use
therein, or to the extent that such information relates to such Holder or its
Purchaser Director or such Holder’s proposed method of distribution of
Registrable Securities and was reviewed and approved by such Holder expressly
for use in the Registration Statement, such Prospectus or such form of
Prospectus or in any amendment or supplement thereto (it being understood that
each Holder has approved Annex A hereto for this purpose), or (B) in the case of
an occurrence of an event of the type specified in Section 3(c)(iii)-(v),
related to the use by a Holder of an outdated or defective Prospectus after the
Company has notified such Holder in writing or electronic mail that the
Prospectus is outdated or defective and prior to the receipt by such Holder of
the Advice contemplated and defined in Section 6(d) below, but only if and to
the extent that following the receipt of the Advice the misstatement or omission
giving rise to such Loss would have been corrected. The Company shall notify the
Holders promptly of the institution, threat or assertion of any Proceeding
arising from or in connection with the transactions contemplated by this
Agreement of which the Company is aware. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of an
Indemnified Party (as defined in Section 5(c)) and shall survive the transfer of
the Registrable Securities by the Holders.

 

13

 

 

(b)          Indemnification by Holders. Each Holder shall, severally and not
jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents or employees of such controlling Persons, to the
fullest extent permitted by applicable law, from and against all Losses, as
incurred, arising out of or are based upon any untrue or alleged untrue
statement of a material fact contained in any Registration Statement, any
Prospectus, or any form of prospectus, or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus, or any
form of prospectus or supplement thereto, in light of the circumstances under
which they were made) not misleading (i) to the extent, but only to the extent,
that such untrue statements or omissions are based solely upon information
regarding such Holder or its Purchaser Director furnished in writing to the
Company by such Holder or its Purchaser Director expressly for use therein or
(ii) to the extent, but only to the extent, that such information relates to
such Holder or its Purchaser Director or such Holder’s proposed method of
distribution of Registrable Securities and was reviewed and approved by such
Holder expressly for use in a Registration Statement (it being understood that
the Holder has approved Annex A hereto for this purpose), such Prospectus or
such form of Prospectus or in any amendment or supplement thereto or (iii) in
the case of an occurrence of an event of the type specified in Section
3(c)(iii)-(v), to the extent, but only to the extent, related to the use by such
Holder of an outdated or defective Prospectus after the Company has notified
such Holder in writing that the Prospectus is outdated or defective and prior to
the receipt by such Holder of the Advice contemplated in Section 6(d), but only
if and to the extent that following the receipt of the Advice the misstatement
or omission giving rise to such Loss would have been corrected. In no event
shall the liability of any selling Holder hereunder be greater in amount than
the dollar amount of the net proceeds received by such Holder upon the sale of
the Registrable Securities giving rise to such indemnification obligation.

 

(c)          Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
“Indemnified Party”), such Indemnified Party shall promptly notify the Person
from whom indemnity is sought (the “Indemnifying Party”) in writing, and the
Indemnifying Party shall have the right to assume the defense thereof, including
the employment of one counsel reasonably satisfactory to the Indemnified Party
and the payment of all reasonable and documented fees and expenses incurred in
connection with defense thereof; provided, that the failure of any Indemnified
Party to give such written notice within a reasonable time of commencement of
any such Proceeding shall not relieve the Indemnifying Party of its obligations
or liabilities pursuant to this Agreement, except (and only) to the extent that
it shall be finally determined by a court of competent jurisdiction (which
determination is not subject to appeal or further review) that such failure
shall have materially and adversely prejudiced the Indemnifying Party in its
ability to defend such Proceeding.

 

An Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that a conflict of interest exists if the same counsel were to
represent such Indemnified Party and the Indemnifying Party; provided, that the
Indemnifying Party shall not be liable for the fees and expenses of more than
one separate firm of attorneys at any time for all Indemnified Parties. The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld, delayed or unreasonably conditioned. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending Proceeding in respect of which any Indemnified Party
is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such Proceeding.

 

14

 

 

Subject to the terms of this Agreement, all documented fees and expenses of the
Indemnified Party (including reasonable fees and expenses to the extent incurred
in connection with investigating or preparing to defend such Proceeding in a
manner not inconsistent with this Section 5(c)) shall be paid to the Indemnified
Party, as incurred, within twenty (20) Trading Days of written notice thereof to
the Indemnifying Party; provided, that the Indemnified Party shall promptly
reimburse the Indemnifying Party for that portion of such fees and expenses
applicable to such actions for which such Indemnified Party is finally
judicially determined to not be entitled to indemnification hereunder.

 

(d)          Contribution. If a claim for indemnification under Section 5(a) or
5(b) is unavailable to an Indemnified Party or insufficient to hold an
Indemnified Party harmless for any Losses, then each Indemnifying Party, in lieu
of indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, in such proportion
as is appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in this Agreement, any reasonable attorneys’ or
other reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section 5(d) was available
to such party in accordance with its terms.

 

The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), no Holder shall be required
to contribute, in the aggregate, any amount in excess of the amount by which the
net proceeds actually received by such Holder from the sale of the Registrable
Securities subject to the Proceeding exceeds the amount of any damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.

 

15

 

 

The indemnity and contribution agreements contained in this Section 5 are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties and are not in diminution or limitation of the
indemnification provisions under the Investment Agreement.

 

6.           Miscellaneous.

 

(a)          Remedies. In the event of a breach by the Company or by a Holder of
any of their obligations under this Agreement, each Holder or the Company, as
the case may be, in addition to being entitled to exercise all rights granted by
law and under this Agreement, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company and each
Holder agree that monetary damages would not provide adequate compensation for
any losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.

 

(b)          Prohibition on Filing Other Registration Statements. The Company
shall not, from the date hereof until the date that is the later of (x) 60 days
after the Effective Date of any Registration Statement filed pursuant to this
Agreement or (y) in the case of any Registration Statement through which the
Holders propose to conduct an underwritten offering of Registrable Securities,
the expiration of any applicable lock-up or restricted period imposed by the
managing underwriter(s) for such proposed underwritten offering, prepare and
file with the Commission a registration statement relating to an offering for
its own account or for the account of its stockholders (other than the Holders
pursuant hereto) under the Securities Act of any of its equity securities, other
than (i) a registration statement on Form S-8, (ii) in connection with an
acquisition or similar transaction, on Form S-4, or (iii) a registration
statement to register for resale securities issued by the Company pursuant to
acquisitions or similar transaction or strategic transactions approved by a
majority of the disinterested directors of the Company, provided that any such
issuance shall only be to a Person which is, itself or through its subsidiaries,
an operating company in a business synergistic with the business of the Company
and in which the Company receives benefits in addition to the investment of
funds, but shall not include a transaction in which the Company is issuing
securities primarily for the purpose of raising capital or to an entity whose
primary business is investing in securities.

 

(c)          Compliance. Each Holder covenants and agrees that it will comply
with the prospectus delivery requirements of the Securities Act as applicable to
it (unless an exemption therefrom is available) in connection with sales of
Registrable Securities pursuant to the Registration Statement and shall sell the
Registrable Securities only in accordance with a method of distribution
described in the Registration Statement.

 

(d)          Discontinued Disposition. By its acquisition of Registrable
Securities, each Holder agrees that, during any Grace Period and upon receipt of
a notice from the Company of the occurrence of any event of the kind described
in Section 3(c) (iii)-(v), such Holder will forthwith discontinue disposition of
such Registrable Securities under a Registration Statement until it is advised
in writing (the “Advice”) by the Company that the use of the applicable
Prospectus (as it may have been supplemented or amended) may be resumed. The
Company may provide appropriate stop orders to enforce the provisions of this
paragraph.

 

16

 

 

(e)          Holder Piggyback Rights. If, at any time during the Effectiveness
Period, there is not an effective Registration Statement covering all of the
Registrable Securities and the Company shall determine to prepare and file with
the Commission a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with the Company’s stock option or
other employee benefit plans, then the Company shall deliver to each Holder a
written notice of such determination and, if within fifteen (15) days after the
date of the delivery of such notice, at least 85% in interest of the Holders so
request in writing, the Company shall include in such registration statement all
or any part of such Registrable Securities such Holders request to be
registered; provided, however, that the Company shall not be required to
register any Registrable Securities pursuant to this Section 6(e) that are
eligible for resale pursuant to Rule 144 (without volume restrictions or current
public information requirements) promulgated by the Commission pursuant to the
Securities Act or that are the subject of a then effective Registration
Statement.

 

(f)          No Inconsistent Agreements. Neither the Company nor any of its
Subsidiaries has entered, as of the date hereof, nor shall the Company or any of
its Subsidiaries, on or after the date hereof, enter into any agreement with
respect to its securities, that would have the effect of impairing the rights
granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof.

 

(g)          Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
or waived unless the same shall be in writing and signed by the Company and
Holders holding at least two-thirds of the then outstanding Registrable
Securities, provided that any party may give a waiver as to itself.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of
Holders and that does not directly or indirectly affect the rights of other
Holders may be given by Holders of all of the Registrable Securities to which
such waiver or consent relates; provided, that the provisions of this sentence
may not be amended, modified, or supplemented except in accordance with the
provisions of the immediately preceding sentence. Notwithstanding the foregoing,
if any such amendment, modification or waiver would adversely affect in any
material respect any Holder or group of Holders who have comparable rights under
this Agreement disproportionately to the other Holders having such comparable
rights, such amendment, modification, or waiver shall also require the written
consent of the Holder(s) so adversely affected.

 

(h)          Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be delivered as set forth
in the Investment Agreement; provided that the Company may deliver to each
Holder the documents required to be delivered to such Holder under Section 3(a)
of this Agreement by e-mail to the e-mail addresses provided by such Holder to
the Company solely for such specific purpose.

 

17

 

 

(i)          Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of each of the
parties and shall inure to the benefit of each Holder. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement. The Company may not assign its
rights (except by merger or in connection with another entity acquiring all or
substantially all of the Company’s assets) or obligations hereunder without the
prior written consent of all the Holders of the then outstanding Registrable
Securities. Each Holder may assign its respective rights hereunder with respect
to all, but not less than all, of the Registrable Securities then owned by such
Holder in the manner and to the Persons as permitted under the Investment
Agreement.

 

(j)          Execution and Counterparts. This Agreement may be executed in two
or more counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the same
Agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party, it being understood that both parties
need not sign the same counterpart. In the event that any signature is delivered
by facsimile transmission or by e-mail 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 were the original thereof.

 

(k)          Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be determined in
accordance with the provisions of the Investment Agreement.

 

(l)          Cumulative Remedies. Except as provided in Section 2(c) with
respect to Liquidated Damages, the remedies provided herein are cumulative and
not exclusive of any other remedies provided by law.

 

(m)          Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their good faith reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.

 

(n)          Headings. The headings in this Agreement are for convenience only
and shall not limit or otherwise affect the meaning hereof.

 

18

 

 

(o)          Independent Nature of Holders’ Obligations and Rights. If and to
the extent there is more than one Holder under this Agreement, the obligations
of each Holder hereunder shall be several and not joint with the obligations of
any other Holder hereunder, and no Holder shall be responsible in any way for
the performance of the obligations of any other Holder hereunder. Nothing
contained herein or in any other agreement or document delivered at any closing,
and no action taken by any Holder pursuant hereto or thereto, shall be deemed to
constitute the Holders as a partnership, an association, a joint venture or any
other kind of group or entity, or create a presumption that the Holders are in
any way acting in concert or as a group or entity with respect to such
obligations or the transactions contemplated by this Agreement or any other
matters, and the Company acknowledges that the Holders are not acting in concert
or as a group, and the Company shall not asset any such claim, with respect to
such obligations or transactions. Each Holder shall be entitled to protect and
enforce its rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Holder to be joined as an
additional party in any proceeding for such purpose. It is expressly understood
and agreed that each provision contained in this Agreement is between the
Company and a Holder, solely, and not between the Company and the Holders
collectively and not between and among Holders.

 

19

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective duly authorized officers as of the
date first above written.

 

  APOLLO MEDICAL HOLDINGS, INC.         By: /s/ Kyle Francis     Name: Kyle
Francis     Title: CFO

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE PAGES OF NNA OF NEVADA, INC. TO FOLLOW]

 

 

Registration Rights Agreement Signature Page (1 of 2)

 

 

 

 

  NNA OF NEVADA, INC.       AUTHORIZED SIGNATORY         By: /s/ Mark Fawcett  
  Name: Mark Fawcett     Title: Vice President and Treasurer

 

  ADDRESS FOR NOTICE       920 Winter Street   Waltham, Massachusetts 02451

  Attention: Mark Fawcett/Christine Smith       Tel: (781) 699-2668/(781)
699-9165   Fax: (781) 699-9756   E-mail:

mark.fawcett@fmc-na.com/

christine.smith@fmcna.com

 

Registration Rights Agreement Signature Page (2 of 2)

 

 

 

 

Annex A

 

PLAN OF DISTRIBUTION

 

We are registering the Securities issued to the selling securityholders to
permit the resale of these Securities by the holders of the Securities from time
to time after the date of this prospectus. We will not receive any of the
proceeds from the sale by the selling securityholders of the Securities. We will
bear all fees and expenses incident to our obligation to register the
Securities.

 

The selling securityholders and any of their pledges, assignees or successors in
interest may sell all or a portion of the Securities beneficially owned by them
and offered hereby from time to time directly or through one or more
underwriters, broker-dealers or agents. If the Securities are sold through
underwriters or broker-dealers, the selling securityholders will be responsible
for underwriting discounts or commissions or agent’s commissions. The Securities
may be sold on the OTCQB marketplace, any other over-the-counter market, any
national securities exchange or quotation service on which the securities may be
listed or quoted at the time of sale, or in transactions otherwise than on these
markets, exchanges or systems and in one or more transactions at fixed prices,
at prevailing market prices at the time of the sale, at varying prices
determined at the time of sale, or at negotiated prices. These sales may be
effected in transactions, which may involve crosses or block transactions. The
selling securityholders may use any one or more of the following methods when
selling Securities:

 

¨ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchaser;

 

  ¨ block trades in which the broker-dealer will attempt to sell the shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction;

 

  ¨ purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;

 

  ¨ an exchange distribution in accordance with the rules of the applicable
exchange;

 

  ¨ privately negotiated transactions;

 

  ¨ settlement of short sales entered into after the effective date of the
registration statement of which this prospectus is a part;

 

  ¨ broker-dealers may agree with the selling securityholders to sell a
specified number of such securities at a stipulated price per share;

 

  ¨ through the writing or settlement of options or other hedging transactions,
whether through an options exchange or otherwise;

 

  ¨ a combination of any such methods of sale;

 

  ¨ any other method permitted pursuant to applicable law.

 

A-1

 

 

The selling securityholders also may resell all or a portion of the Securities
in open market transactions in reliance upon Rule 144 under the Securities Act,
as permitted by that rule, or Section 4(a)(1) under the Securities Act, if
available, rather than under this prospectus, provided that they meet the
criteria and conform to the requirements of those provisions.

 

Broker-dealers engaged by the selling securityholders may arrange for other
broker-dealers to participate in sales. If the selling securityholders effect
such transactions by selling Securities to or through underwriters,
broker-dealers or agents, such underwriters, broker-dealers or agents may
receive commissions in the form of discounts, concessions or commissions from
the selling securityholders or commissions from purchasers of the Securities for
whom they may act as agent or to whom they may sell as principal. Such
commissions will be in amounts to be negotiated, but, except as set forth in a
supplement to this prospectus, in the case of an agency transaction will not be
in excess of a customary brokerage commission in compliance with NASD Rule 2440;
and in the case of a principal transaction a markup or markdown in compliance
with NASD Rule IM-2440.

 

In connection with sales of the Securities or otherwise, the selling
securityholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the
Securities in the course of hedging in positions they assume. The selling
securityholders may also sell Securities short and if such short sale shall take
place after the date that this Registration Statement is declared effective by
the Commission, the selling securityholders may deliver Securities covered by
this prospectus to close out short positions and to return borrowed shares in
connection with such short sales. The selling securityholders may also loan or
pledge Securities to broker-dealers that in turn may sell such shares, to the
extent permitted by applicable law. The selling securityholders may also enter
into option or other transactions with broker-dealers or other financial
institutions or the creation of one or more derivative securities which require
the delivery to such broker-dealer or other financial institution of shares
offered by this prospectus, which shares such broker-dealer or other financial
institution may resell pursuant to this prospectus (as supplemented or amended
to reflect such transaction).

 

The selling securityholders may, from time to time, pledge or grant a security
interest in some or all of the Securities owned by them and, if they default in
the performance of their secured obligations, the pledgees or secured parties
may offer and sell the Securities from time to time pursuant to this prospectus
or any amendment to this prospectus under Rule 424(b)(3) or other applicable
provision of the Securities Act of 1933, as amended, amending, if necessary, the
list of selling securityholders to include the pledgee, transferee or other
successors in interest as selling securityholders under this prospectus. The
selling securityholders also may transfer and donate the Securities in other
circumstances in which case the transferees, donees, pledgees or other
successors in interest will be the selling beneficial owners for purposes of
this prospectus.

 

Any underwriters, broker-dealer or agents participating in the distribution of
the Securities may be deemed to be “underwriters” within the meaning of Section
2(11) of the Securities Act in connection with such sales. In such event, any
commissions paid, or any discounts or concessions allowed to, any such
broker-dealer or agent and any profit on the resale of the shares purchased by
them may be deemed to be underwriting commissions or discounts under the
Securities Act. To the extent that any of the selling securityholders are deemed
to be “underwriters” within the meaning of Section 2(11) of the Securities Act,
such selling securityholders will be subject to the applicable prospectus
delivery requirements of the Securities Act and may be subject to certain
statutory liabilities of, including but not limited to, Sections 11, 12 and 17
of the Securities Act and Rule 10b-5 under the Securities Exchange Act of 1934,
as amended, or the Exchange Act.

 

A-2

 

 

Each selling securityholder has informed the Company that it is not a registered
broker-dealer and does not have any written or oral agreement or understanding,
directly or indirectly, with any person to distribute the Securities. Upon the
Company being notified in writing by a selling shareholder that any material
arrangement has been entered into with a broker-dealer for the sale of
Securities through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, a supplement to this
prospectus will be filed by the Company, if required, pursuant to Rule 424(b)
under the Securities Act, disclosing (i) the name of each such selling
shareholder and of the participating broker-dealer(s), (ii) the number of shares
involved, (iii) the price at which such Securities were sold, (iv) the
commissions paid or discounts or concessions allowed to such broker-dealer(s),
where applicable, (v) that such broker-dealer(s) did not conduct any
investigation to verify the information set out or incorporated by reference in
this prospectus, and (vi) other facts material to the transaction. In no event
shall any broker-dealer receive fees, commissions and markups, which, in the
aggregate, would exceed eight percent (8%).

 

Under the securities laws of some states, the Securities may be sold in such
states only through registered or licensed brokers or dealers. In addition, in
some states the Securities may not be sold unless such shares have been
registered or qualified for sale in such state or an exemption from registration
or qualification is available and is complied with.

 

There can be no assurance that any selling securityholder will sell any or all
of the Securities registered pursuant to the shelf registration statement, of
which this prospectus forms a part.

 

Each selling securityholder and any other person participating in such
distribution will be subject to applicable provisions of the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder, including,
without limitation, to the extent applicable, Regulation M of the Exchange Act,
which may limit the timing of purchases and sales of any of the Securities by
the selling securityholder and any other participating person. To the extent
applicable, Regulation M may also restrict the ability of any person engaged in
the distribution of the Securities to engage in market-making activities with
respect to the Securities. All of the foregoing may affect the marketability of
the Securities and the ability of any person or entity to engage in
market-making activities with respect to the Securities.

 

We will pay all expenses of the registration of the Securities pursuant to the
registration rights agreement, including, without limitation, Securities and
Exchange Commission filing fees and expenses of compliance with state securities
or “blue sky” laws; provided, that each selling securityholder will pay all
underwriting fees and discounts and selling commissions, if any and any related
legal expenses incurred by it. We have agreed to indemnify or provide
contribution to the selling securityholders against certain liabilities,
including some liabilities under the Securities Act, in accordance with the
registration rights agreement. The selling securityholders have agreed to
indemnify us or provide contribution against civil liabilities, including
liabilities under the Securities Act, that may arise from any written
information furnished to us by the selling securityholders or certain of their
affiliates specifically for use in this prospectus, in accordance with the
registration rights agreement.

 

A-3

 

 

Annex B

 

APOLLO MEDICAL HOLDINGS, INC.

 

SELLING SHAREHOLDER NOTICE AND QUESTIONNAIRE

 

The undersigned holder of securities of Apollo Medical Holdings, Inc., a
Delaware corporation (the “Company”), issued pursuant to a certain Investment
Agreement by and among the Company and the Purchaser named therein, dated as of
March 28, 2014, understands that the Company intends to file with the Securities
and Exchange Commission a registration statement on Form S-__ (the “Resale
Registration Statement”) for the registration and the resale under Rule 415 of
the Securities Act of 1933, as amended (the “Securities Act”), of the
Registrable Securities in accordance with the terms of a certain Registration
Rights Agreement by and among the Company and NNA of Nevada, Inc., dated as of
March 28, 2014 (the “Agreement”). All capitalized terms not otherwise defined
herein shall have the meanings ascribed thereto in the Agreement.

 

In order to sell or otherwise dispose of any Registrable Securities pursuant to
the Resale Registration Statement, a holder of Registrable Securities generally
will be required to be named as a selling shareholder in the related prospectus
or a supplement thereto (as so supplemented, the “Prospectus”), deliver the
Prospectus to purchasers of Registrable Securities (including pursuant to Rule
172 under the Securities Act) and be bound by the provisions of the Agreement
(including certain indemnification provisions, as described below). Holders must
complete and deliver this Notice and Questionnaire in order to be named as
selling securityholders in the Prospectus. Holders of Registrable Securities who
do not complete, execute and return this Notice and Questionnaire within ten
(10) Trading Days following the date of the Agreement (1) will not be named as
selling securityholders in the Resale Registration Statement or the Prospectus
and (2) may not use the Prospectus for resales of Registrable Securities.

 

Certain legal consequences arise from being named as a selling shareholder in
the Resale Registration Statement and the Prospectus. Holders of Registrable
Securities are advised to consult their own securities law counsel regarding the
consequences of being named or not named as a selling shareholder in the Resale
Registration Statement and the Prospectus.

 

NOTICE

 

The undersigned holder (the “Selling Shareholder”) of Registrable Securities
hereby gives notice to the Company of its intention to sell or otherwise dispose
of Registrable Securities owned by it and listed below in Item (3), unless
otherwise specified in Item (3), pursuant to the Resale Registration Statement.
The undersigned, by signing and returning this Notice and Questionnaire,
understands and agrees that it will be bound by the terms and conditions of this
Notice and Questionnaire and the Agreement.

 

The undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate and complete:

 

B-1

 

 

QUESTIONNAIRE

 

1.Name.

 

  (a) Full Legal Name of Selling Shareholder:                     (b) Full Legal
Name of Registered Holder (if not the same as (a) above) through which
Registrable Securities Listed in Item 3 below are held:                     (c)
Full Legal Name of Natural Control Person (which means a natural person who
directly or indirectly alone or with others has power to vote or dispose of the
securities covered by the questionnaire):            

 

2.Address for Notices to Selling Shareholder:

 

     

 

Telephone:  

 

Fax:  

 

Contact Person:  

 

E-mail address of Contact
Person:________________________________________________

 

3.          Beneficial Ownership of Registrable Securities Issuable Pursuant to
the Investment Agreement:

 

(a)Type and Number of Registrable Securities beneficially owned and issued
pursuant to the Agreement:

 

                 

 

(b)Number of shares of Securities to be registered pursuant to this Notice for
resale:

 

                 

 

B-2

 

 

4.Broker-Dealer Status:

  

(a)Are you a broker-dealer?

 

Yes ¨          No ¨

 

(b)If “yes” to Section 0(a), did you receive your Registrable Securities as
compensation for investment banking services to the Company?

 

Yes ¨          No ¨

 

Note:If no, the Commission’s staff has indicated that you should be identified
as an underwriter in the Registration Statement.

 

(c)          Are you an affiliate of a broker-dealer?

 

Yes ¨          No ¨

 

Note:If yes, provide a narrative explanation below:

 

           

 

(c)          If you are an affiliate of a broker-dealer, do you certify that you
bought the Registrable Securities in the ordinary course of business, and at the
time of the purchase of the Registrable Securities to be resold, you had no
agreements or understandings, directly or indirectly, with any person to
distribute the Registrable Securities?

 

Yes ¨         No ¨

 

Note:If no, the Commission’s staff has indicated that you should be identified
as an underwriter in the Registration Statement.

 

5.          Beneficial Ownership of Other Securities of the Company Owned by the
Selling Shareholder.

 

Except as set forth below in this Item 5, the undersigned is not the beneficial
or registered owner of any securities of the Company other than the Registrable
Securities listed above in Item 3.

 

Type and amount of other securities beneficially owned:

  

           

 

B-3

 

 

6.          Relationships with the Company:

 

Except as set forth below, neither the undersigned nor any of its affiliates,
officers, directors or principal equity holders (owners of 5% of more of the
equity securities of the undersigned) has held any position or office or has had
any other material relationship with the Company (or its predecessors or
affiliates) during the past three years.

 

State any exceptions here:

 

       

 

7.          Plan of Distribution:

 

The undersigned has reviewed the form of Plan of Distribution attached as Annex
A to the Registration Rights Agreement, and hereby confirms that, except as set
forth below, the information contained therein regarding the undersigned and its
plan of distribution is correct and complete.

 

State any exceptions here:

 

       

 

***********

 

By signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items (1) through (7) above and the inclusion
of such information in the Resale Registration Statement and the Prospectus. The
undersigned understands that such information will be relied upon by the Company
in connection with the preparation or amendment of any such Registration
Statement and the Prospectus.

 

B-4

 

 

 

I confirm that, to the best of my knowledge and belief, the foregoing statements
(including without limitation the answers to this Questionnaire) are correct.

 

IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this
Questionnaire to be executed and delivered either in person or by its duly
authorized agent.

 

Dated:     Beneficial Owner:  

 

  By:       Name:     Title:

 

B-5