Document:

Exhibit 10.7

 

SECURITY AGREEMENT

 

This SECURITY AGREEMENT
(“Agreement”) dated and effective as of September 11, 2019, is entered into by AP-AMH Medical Corporation,
a California professional medical corporation (“Debtor”), in favor of Apollo Medical Holdings, Inc., a Delaware
corporation (“Secured Party”), with reference to the following facts:

 

A.           Debtor
and Secured Party have entered into that certain Loan Agreement dated as of May 10, 2019 (the “Loan Agreement”),
pursuant to which Secured Party has made a loan to Borrower in the original principal amount of Five Hundred Forty Five Million
Dollars ($545,000,000), which loan is evidenced by that certain Secured Promissory Note, dated May 10, 2019, in the original
principal amount of the Loan (the “Note”).

 

B.           As
security for payment and performance of the obligations of Debtor to Secured Party under the Loan Agreement, the Note and this
Agreement, it is the intent of Debtor to grant to Secured Party and to create a security interest in Collateral (as defined below),
as hereinafter provided.

 

In consideration of
the above recitals, which are hereby incorporated into this Agreement, and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, Debtor hereby agrees as follows:

 

1.          Grant
of Security Interest. Debtor hereby creates and grants to Secured Party a security interest in the Collateral, as that term
is defined in Section 2, to secure payment and performance by Debtor of the Obligations, as that term is defined in Section
3.

 

2.          Collateral.
The “Collateral” shall consist, collectively and severally, of all of Debtor’s right, title and interest
in and to the assets of Debtor, whether now owned or hereafter acquired, including without limitation, all of Debtor’s right,
title and interest in and to (i) all shares of Series A Preferred Stock (and any other securities) of Allied Physicians of California,
a Professional Medical Corporation, a California corporation doing business as Allied Pacific Corporation (“APC”),
now or hereafter owned by Debtor, together in each case with all certificates representing the same, (ii) all shares, securities,
moneys or other property representing a dividend on or a distribution or return of capital on or in respect of the Pledged Shares,
or resulting from a split-up, revision, reclassification or other like change of the Pledged Shares or otherwise received in exchange
therefor, and any warrants, rights or options issued to the holders of, or otherwise in respect of, the Pledged Shares, (iii) all
shares of any successor entity of any such merger or consolidation (collectively, the “Pledged Shares”), and
(iv) (a) all Accounts, (b) all Equipment, Goods, Inventory and Fixtures, (c) all Documents, Instruments and Chattel Paper, (d)
all Letters of Credit and Letter-of-Credit Rights, (e) all Securities Collateral, (f) all Investment Property, (g) all Intellectual
Property Collateral, (h) all Commercial Tort Claims, (i) all General Intangibles, (j) all Money and Deposit Accounts, (k) all Supporting
Obligations, (l) all books and records, customer lists, credit files, computer files, programs, printouts and other computer materials
and records relating to the Collateral and any General Intangibles at any time evidencing or relating to any of the foregoing and
(m) to the extent not covered by clauses (a) through (l) of this sentence all Proceeds and products of each of the foregoing and
all accessions to, substitutions and replacements for, and rents, profits and products of, each of the foregoing, and any and all
Proceeds of any insurance, indemnity, warranty or guaranty payable to such Debtor from time to time with respect to any of the
foregoing (in each case as the foregoing capitalized terms in this clause (iv) are defined in the California Uniform Commercial
Code).

 

     

     

    

 

3.     
     Obligations. The “Obligations” shall consist, collectively and
severally, of any and all debts, obligations and liabilities of Debtor to Secured Party arising from, connected with or
related to the Loan Agreement, the Note and this Agreement and all amendments, modifications, extensions or renewals of the
Loan Agreement, the Note and this Agreement, whether now existing or hereafter arising, voluntary or involuntary, whether or
not jointly owed with others, direct or indirect, absolute or contingent, liquidated or unliquidated, and whether or not from
time to time decreased or extinguished and later increased, created or incurred.

 

4.    
      Additional Representations and Warranties. In addition to any representations and
warranties of Debtor or its affiliates in Loan Agreement and the Note, which are incorporated herein by this reference,
Debtor hereby represents and warrants that: (a) except as heretofore disclosed to Secured Party in writing, Debtor is the
sole owner of the Collateral (or, in the case of after-acquired Collateral, at the time Debtor acquires rights in the
Collateral, will be the owner thereof) and no other person has (or, in the case of after-acquired Collateral, at the time
Debtor acquires rights therein, will have) any right, title, claim or interest (by way of security interest or other lien or
charge or otherwise) in, against or to the Collateral; and (b) all information heretofore, herein or hereafter supplied to
Secured Party by or on behalf of Debtor with respect to the Collateral is, or will be when so supplied, true and correct.

 

5.      
    Covenants of Debtor. Debtor hereby agrees:

 

a.           to
do all acts that may be necessary to maintain, preserve and protect the Collateral;

 

b.           not
to use any Collateral or permit any Collateral to be used unlawfully or in violation of any provision of the Loan Agreement, this
Agreement or any applicable statute, regulation or ordinance or any policy of insurance covering Collateral;

 

c.           to
pay promptly when due all taxes, assessments, charges, encumbrances and liens now or hereafter imposed on or affecting any Collateral;

 

d.           to
notify Secured Party promptly of any change in Debtor’s name or place of business, or, if Debtor has more than one (1) place
of business, Debtor’s primary place of business;

 

e.           to
procure, execute and deliver from time to time any financing statements and other writings reasonably deemed necessary or appropriate
by Secured Party to perfect, maintain and protect its security interest hereunder and the priority thereof and, following an Event
of Default (as defined below), to deliver promptly to Secured Party all originals of Collateral or proceeds consisting of chattel
paper or instruments;

 

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f.            to
appear in and defend any action or proceeding which may affect its title to or Secured Party’s interest in the Collateral;

 

g.           if
Secured Party gives value to enable Debtor to acquire rights in or the use of any Collateral, to use such value for such purpose;

 

h.           to
keep separate, accurate and complete records of the Collateral and to provide Secured Party with such records and such other reports
and information relating to the Collateral as Secured Party may reasonably request from time to time;

 

i.            not
to surrender or lose possession of (other than to Secured Party), sell, encumber, lease, rent, or otherwise dispose of or transfer
any Collateral or right or interest therein, except to keep the Collateral free of all levies and security interests or other liens
or charges except those created hereby and those approved in writing by Secured Party;

 

j.            following
an Event of Default, to account fully for and promptly deliver to Secured Party, in the form received, all proceeds of the Collateral
received, endorsed to Secured Party as appropriate, and until so delivered all proceeds shall be held by Debtor in trust for Secured
Party, separate from all other property of Debtor and identified as the property of Secured Party;

 

k.          to
keep the Collateral in good condition and repair;

 

l.            not
to cause or permit any waste or unusual or unreasonable depreciation of the Collateral;

 

m.           at
any reasonable time, on demand by Secured Party, to exhibit to and allow inspection by Secured Party (or persons designated by
Secured Party) of the Collateral;

 

n.           to
keep the Collateral at the location(s) set forth in Section 16 and not to remove the Collateral from such location(s) without
the prior written consent of Secured Party;

 

o.           to
comply with all laws, regulations and ordinances relating to the possession, operation, maintenance and control of the Collateral;

 

p.           if
any of the Pledged Shares are received by Debtor, to forthwith (i) deliver to Secured Party the certificates or instruments
representing or evidencing the same, duly endorsed in blank or accompanied by such instruments of assignment and transfer in such
form and substance as Secured Party may reasonably request, all of which thereafter shall be held by Secured Party, pursuant to
the terms of this Agreement, as part of the Collateral and (ii) take such other action as Secured Party may reasonably deem
necessary or appropriate to duly record or otherwise perfect the security interest created hereunder in such Collateral; and

 

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q.           to
insure the Collateral, with Secured Party named as loss payee, in form and amounts, with companies, and against risks and liabilities,
reasonably required by Secured Party to protect the value of its security interest hereunder, and following an Event of Default:
(a) to assign the policies to Secured Party, (b) to deliver them to Secured Party at its request, and (c) to cooperate with and
assist Secured Party in making any claim thereunder, or in canceling the insurance, or in collecting and receiving payment of,
and endorse any instrument in payment of loss or return premium or other refund or return, and apply such amounts received, at
Secured Party’s election, to replacement of Collateral or to the Obligations; provided that in no event shall Secured Party
be deemed to have a security interest in insurance proceeds except to the extent solely arising from the Collateral, and if Secured
Party receives any other insurance proceeds, it will deliver such proceeds to the Debtor.

 

6.      
    Authorized Action by Secured Party. Debtor hereby irrevocably appoints Secured Party,
effective on the occurrence and continuance of an Event of Default (as defined below), as its attorney-in-fact to do (but
Secured Party shall not be obligated to do and shall incur no liability to Debtor or any third party for failure to do) any
act which Debtor is obligated by this Agreement to do, and to (a) exercise such rights and powers as Debtor might exercise
with respect to the Collateral, including, without limitation, the right to collect by legal proceedings or otherwise and
endorse, receive and receipt for all dividends, interest, payments, proceeds and other sums and property now or hereafter
payable on or on account of Collateral; (b) privileges or options pertaining to, or deposit, surrender, accept, hold or apply
other property in exchange for, Collateral; (c) insure, process and preserve the Collateral; (d) transfer the Collateral to
Secured Party’s own name or the name of a nominee of Secured Party; and (e) make any compromise or settlement, and
take any action it deems advisable, with respect to Collateral. Debtor agrees to reimburse Secured Party on demand for any
costs and expenses, including, without limitation, attorneys’ fees, Secured Party may incur while acting as
Debtor’s attorney-in-fact hereunder, all of which costs and expenses are included in the Obligations. It is
further agreed that such care as Secured Party gives to the safekeeping of its own property of like kind shall constitute
reasonable care of the Collateral when in Secured Party’s possession; provided, however, that Secured
Party shall not be required to make any presentment, demand or protest, or give any notice and need not take any action to
preserve any rights against any prior party or any other person in connection with the Obligations or with respect to the
Collateral.

 

7.    
      Pledged Shares.

 

a.           All
Pledged Shares in which Debtor shall hereafter grant a security interest pursuant to this Agreement will be, duly authorized, validly
existing, fully paid and non assessable, and none of such Pledged Shares are or will be subject to any contractual restriction,
or any restriction under the charter, by laws, shareholders agreement or other organizational instrument of APC or any other issuer
thereof, upon the transfer of such Pledged Shares (except for any such restriction contained herein or under such organizational
instruments).

 

b.           All
certificates, agreements or instruments representing or evidencing the Pledged Shares in existence on the date hereof will have
been delivered to Secured Party in a suitable form for transfer by delivery or accompanied by duly executed instruments of transfer
or assignment in blank and (assuming continuing possession by Secured Party of all such Pledged Shares) Secured Party has a perfected
first priority security interest therein.

 

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c.           So
long as no Event of Default shall have occurred and be continuing, Debtor shall have the right to exercise all voting, consensual
and other powers of ownership pertaining to the Pledged Shares for all purposes not inconsistent with the terms of the Loan Agreement,
the Note, this Agreement, or any other instrument or agreement referred to herein or therein, provided that Debtor agrees that
it will not vote the Pledged Shares in any manner that is inconsistent with the terms of the Loan Agreement, the Note, this Agreement
or any such other instrument or agreement; and Secured Party shall execute and deliver to Debtor or cause to be executed and delivered
to Debtor all such proxies, powers of attorney, dividend and other orders, and all such instruments, without recourse, as Debtor
may reasonably request for the purpose of enabling Debtor to exercise the rights and powers that they are entitled to exercise
pursuant to this Section 7(c).

 

d.           Unless
and until an Event of Default shall have occurred and be continuing, Debtor shall be entitled to receive and retain any dividends,
distributions or proceeds on the Pledged Shares paid in cash out of earned surplus.

 

e.           If
an Event of Default shall have occurred and be continuing, whether or not Secured Party exercises any available right to declare
any Obligations due and payable or seek or pursue any other relief or remedy available to them under applicable law or under the
Loan Agreement, the Note, this Agreement or any other agreement relating to such Obligation, all dividends and other distributions
on the Pledged Shares shall be paid directly to Secured Party and retained by it as part of the Collateral, subject to the terms
of this Agreement, and, if Secured Party shall so request in writing, Debtor agrees to execute and deliver to Secured Party appropriate
additional dividend, distribution and other orders and documents to that end, provided that if such Event of Default is cured,
any such dividend or distribution theretofore paid to Secured Party shall, upon request of Debtor (except to the extent theretofore
applied to the Obligations), be returned by Secured Party to Debtor.

 

f.            Debtor
hereby expressly authorizes and instructs each issuer of any Pledged Shares pledged hereunder to (i) comply with any instruction
received by it from Secured Party in writing that (A) states that an Event of Default has occurred and is continuing and (B) is
otherwise in accordance with the terms of this Agreement, without any other or further instructions from Debtor, and Debtor agrees
that such issuer shall be fully protected in so complying and (ii) unless otherwise expressly permitted hereby, pay any dividend
or other payment with respect to the Pledged Shares directly to Secured Party for the benefit of Secured Party.

 

g.           Notwithstanding
anything to the contrary in this Agreement, Lender shall take no action with respect to the Pledged Shares that would result in
Debtor having an ineligible shareholder under the laws relating to the corporate practice of medicine in the State of California.

 

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8.     
     Default and Remedies.

 

a.           Debtor
shall be deemed in default under this Agreement if Debtor fails to comply with any of the provisions of Sections 5
or 7, or fails to comply with any provision required of Debtor or its affiliates under the Loan Agreement, the Note or this
Agreement or commits an Event of Default thereunder, for ten (10) days after Debtor’s receipt of written notice of any monetary
default or fifteen (15) days after Debtor’s receipt of written notice of any non-monetary default (an “Event of
Default”); provided, however, that, if such failure is of such nature as to not be curable within said
fifteen (15) day period, an Event of Default shall occur if the breaching or failing party shall have failed to commence curative
action within the prescribed fifteen (15) day period and prosecuted the same with due diligence to completion thereafter but in
no event beyond thirty (30) days after Debtor’s receipt of the default notice. On the occurrence of any Event of Default,
Secured Party may, at its option, after providing notice to Debtor, and in addition to all rights and remedies available to Secured
Party and its affiliates under the Loan Agreement, the Note or this Agreement, do any one (1) or more of the following: (i) foreclose
or otherwise enforce Secured Party’s security interest in any manner permitted by law or provided in this Agreement, subject
to the rights of senior lienholders; (ii) sell, lease or otherwise dispose of any Collateral at one (1) or more public or private
sales, whether or not such Collateral is present at the place of sale, for cash or credit or future delivery, on such terms and
in such manner as Secured Party may determine; (iii) recover from Debtor all costs and expenses, including, without limitation,
reasonable attorneys’ fees, incurred or paid by Secured Party in exercising any right, power or remedy provided by this Agreement
or by law; (iv) require Debtor to assemble the Collateral and make it available to Secured Party at a place to be designated
by Secured Party; (v) enter onto property where any Collateral is located and take possession thereof with or without judicial
process; (vi) require Debtor to cause the Pledged Shares to be transferred of record into the name of Secured Party or its
nominee; and (vii) prior to the disposition of the Collateral, store, process, repair or recondition it or otherwise prepare it
for disposition in any manner and to the extent Secured Party deems appropriate and in connection with such preparation and disposition,
without charge, use any trademark, service mark, trade name, copyright, patent or technical process used by Debtor.

 

b.           Debtor
recognizes that Secured Party may be compelled, at any time after the occurrence and during the continuance of an Event of Default,
to conduct any sale of all or any part of the Pledged Shares without registering or qualifying such Pledged Shares under the Securities
Act of 1933, as amended (the “Securities Act”), and/or any applicable state securities laws in effect at such
time. Debtor acknowledges that any such private sales may, to the extent permitted by applicable law, be made in such manner and
under such circumstances as Secured Party may deem necessary or advisable in its sole and absolute discretion, including at prices
and on terms that might be less favorable than those obtainable through a public sale without such restrictions (including, without
limitation, a public offering made pursuant to a registration statement under the Securities Act), and, notwithstanding such circumstances,
agrees that any such sale shall not be deemed not to have been made in a commercially reasonable manner solely because it was conducted
as a private sale, and agrees that Secured Party shall have no obligation to conduct any public sales and no obligation to delay
the sale of any Pledged Shares for the period of time necessary to permit its registration for public sale under the Securities
Act and applicable state securities laws, and shall not have any responsibility or liability as a result of its election so not
to conduct any such public sales or delay the sale of any Pledged Shares, notwithstanding the possibility that a substantially
higher price might be realized if the sale were deferred until after such registration. To the extent permitted by applicable law,
Debtor hereby waives any claims against Secured Party arising by reason of the fact that the price at which any Pledged Shares
may have been sold at any private sale was less than the price that might have been obtained at a public sale or was less than
the aggregate amount of the Obligations, even if Secured Party accepts the first offer received and does not offer such Pledged
Shares to more than one offeree. Debtor agrees that a breach of any of the covenants contained in this Section 8 will
cause irreparable injury to Secured Party, that Secured Party has no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this Section 8 shall be specifically enforceable against Debtor.

 

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9.     
     Cumulative Rights. The rights, powers and remedies of Secured Party and its affiliates
under this Agreement shall be in addition to all rights, powers and remedies given to Secured Party by virtue of any statute
or rule of law, the Loan Agreement, the Note or this Agreement or any other agreement, all of which rights, powers and
remedies shall be cumulative and may be exercised successively or concurrently without impairing Secured Party’s
security interest in the Collateral.

 

10.         Waiver.
Any forbearance or failure to act or delay by Secured Party in exercising any right, power or remedy shall not preclude the further
exercise thereof, and every right, power or remedy of Secured Party shall continue in full force and effect until such right, power
or remedy is specifically waived in a writing executed by Secured Party. Debtor waives any right to require Secured Party to proceed
against any person or to exhaust any Collateral or to pursue any remedy in Secured Party’s power.

 

11.         Further
Actions. Debtor shall deliver promptly to Secured Party all certificates or instruments representing or evidencing any Collateral
to be held as Collateral shall be in form suitable for transfer by delivery and shall be delivered together with undated appropriate
endorsements or other necessary instruments of registration, transfer or assignment, duly executed and in form and substance satisfactory
to Secured Party, and in each case together with such other instruments or documents as Secured Party may reasonably request.

 

12.         Binding
on Successors. All rights of Secured Party under this Agreement shall inure to the benefit of its successors and assigns, and
all obligations of Debtor shall bind its heirs, executors, administrators, successors and assigns.

 

13.         Entire
Agreement; Severability; Amendments. This Agreement, together with the Loan Agreement and the Note, contains the entire agreement
between Secured Party and Debtor relating to the matters described herein. If any of the provisions of this Agreement shall be
held invalid or unenforceable, this Agreement shall be construed as if not containing those provisions and the rights and obligations
of the parties hereto shall be construed and enforced accordingly. This Agreement may not be altered, amended, or modified, nor
may any provision hereof be waived or noncompliance therewith consented to, except by means of a writing executed by Debtor and
Secured Party. Any such alteration, amendment, modification, waiver, or consent shall be effective only to the extent specified
therein and for the specific purpose for which given. No course of dealing and no delay or waiver of any right or default under
this Agreement shall be deemed a waiver of any other, similar or dissimilar, right or default or otherwise prejudice the rights
and remedies hereunder.

 

14.         References.
The singular includes the plural. If more than one executes this Agreement, the term Debtor shall be deemed to refer to each of
the undersigned as well as to all of them, and their obligations and agreements hereunder shall be joint and several. If any of
the undersigned is a married person, recourse may be had against his or her separate property for the Obligations.

 

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15.         Choice
of Law. This Agreement shall be construed in accordance with and governed by the laws of the State of California, without regard
to its choice of law provisions, and, where applicable and except as otherwise defined herein, terms used herein shall have the
meanings given them in the California Uniform Commercial Code.

 

16.         Collateral
Location; Records. Debtor represents that the Collateral described in Section 2(a) is located at Secured Party’s
offices at 1668 S. Garfield Ave, 2nd Floor, Alhambra, CA 91801, and that Debtor’s records regarding the Collateral are kept
at 1668 S. Garfield Ave, 2nd Floor, Alhambra, CA 91801.

 

17.         Notices.
Any notice required or permitted to be give hereunder shall be given in accordance with the applicable provisions of the Loan Agreement.

 

[Signatures appear on the following
page.]

 

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IN WITNESS WHEREOF,
this Security Agreement has been duly executed by Debtor and Secured Party on and as of the date first above written.

 

	 	DEBTOR:
	 	 
	 	AP-AMH MEDICAL CORPORATION,
	 	a California professional medical corporation
	 	 	 
	 	By: 	/s/ Thomas Lam
	 	 	Thomas S. Lam, M.D.
	 	 	Chief Executive Officer
	 	 	 
	 	SECURED PARTY:
	 	 
	 	APOLLO MEDICAL Holdings, Inc.,
	 	a Delaware corporation
	 	 	 
	 	By:	/s/ Eric Chin
	 	 	Eric Chin
	 	 	Chief Financial Officer

 

    S-1Exhibit 10.8

 

CERTIFICATE OF DETERMINATION

OF PREFERENCES OF

SERIES A PREFERRED STOCK

OF

ALLIED PHYSICIANS OF CALIFORNIA,

A PROFESSIONAL MEDICAL CORPORATION

  

 

 

Pursuant to Section 401 of the

General Corporation Law of the State of
California

 

 

 

The undersigned, Thomas
Lam, M.D., and Paul Liu, M.D., hereby certify that:

 

A.           They
are the duly elected and acting Chief Executive Officer and the duly elected and acting Secretary, respectively, of Allied Physicians
of California, a Professional Medical Corporation, a California corporation (the “Company”).

 

B.           The
authorized number of shares of the Preferred Stock of the Company is 1,000,000, none of which shares have been issued. The authorized
number of shares of the Series A Preferred Stock is 1,000,000, none of which shares have been issued.

 

C.           Pursuant
to the authority given by the Company’s Articles of Incorporation, the Board of Directors of the Company (the “Board”)
has duly adopted the following recitals and resolutions:

 

WHEREAS, the
Amended and Restated Articles of Incorporation of the Company authorize a class of Preferred Stock comprising 1,000,000 shares
issuable from time to time in one or more series;

 

WHEREAS, the
Board is authorized to fix or alter the rights, preferences, privileges and restrictions granted to or imposed upon any wholly
unissued series of Preferred Stock, including but not limited to the dividend rights, dividend rates, conversion rights, voting
rights, liquidation preferences and the number of shares constituting any such series and the designation thereof, or any of them;
and

 

WHEREAS, the
Company heretofore has not issued or designated any series of Preferred Stock, and it is the desire of the Board, pursuant to its
authority as aforesaid, to fix the rights, preferences, privileges, restrictions and other matters relating to the Series A
Preferred Stock and the number of shares constituting such series.

 

NOW, THEREFORE,
BE IT RESOLVED, that the Board hereby provides for the issue of the first series of Preferred Stock consisting of 1,000,000
shares designated as “Series A Preferred Stock”; and

 

     

     

    

 

RESOLVED FURTHER,
that the Board hereby fixes the rights, privileges, preferences and restrictions and other matters relating to the Series A
Preferred Stock (the “Series A Preferred”) as follows:

 

		1.	Certain Definitions.

 

“Affiliate”
means, with respect to any Person, any other Person that directly, or indirectly, through one or more intermediaries, Controls,
is Controlled by or is under common Control with such specified Person. For the avoidance of doubt, APC-LSMA Designated Shareholder
Medical Corporation is an Affiliate of the Company.

 

“Baseline Amount”
means, as of the Effective Date, an amount equal to $54,000,000, which amount shall pro-rated (as reasonably determined by the
Board) in connection with the calculation of the Series A Dividend with respect to less than a full fiscal year of the Company,
subject to adjustment as follows: Commencing on the first anniversary of the Effective Date, and on each succeeding anniversary
of the Effective Date thereafter (each, an “Adjustment Date”), the Baseline Amount shall be increased, if applicable,
by the same percentage increase (the “Percentage Increase”) as the change in the CPI for the period of January 1 through
December 31 of the immediately preceding calendar year, which percentage increase shall be determined by subtracting the CPI
effective as of January 1 of the preceding calendar year (the “Base CPI”) from the CPI effective as of December 31
of the preceding calendar year (the “Target CPI”) to calculate the CPI point change (the “CPI Point Change”),
and then dividing the CPI Point Change by the Base CPI and multiplying the result by 100. For the avoidance of doubt, if the Target
CPI is the same or less than the Base CPI, then, the Baseline Amount will remain the same for the ensuing one (1) year period.
As an illustration only, and not by way of limitation, assume that the Base CPI is 103 and the Target CPI is 106, and that the
Baseline Amount prior to the Adjustment Date is $54,000,000, then, the adjusted Baseline Amount is calculated as follows:

 

		·	CPI Point Change = 106 [Target CPI] minus 103 [Base CPI] = 3

 

		·	3 [CPI Point Change] / 103 [Base CPI] = 0.029

 

		·	0.029 x 100 = 2.9%

 

		·	Adjusted Baseline Amount = $54,000,000 x 1.029 = $55,566,000

 

“Business Day”
means any day other than a Saturday, a Sunday or any other day on which commercial banks in Los Angeles, California are required
or authorized to close.

 

“Common Stock”
means the shares of common stock, without par value, of the Company.

 

“Control”
means, as to any Person, the power to direct or cause the direction of the management and policies of such Person, whether through
the ownership of voting securities, by contract or otherwise (the terms “Controlled by,” “Controlling”
and “under common Control with” shall have correlative meanings).

 

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“Cost of Healthcare
Services” means the Company’s actual costs incurred on an accrual basis of providing Healthcare Services pursuant
to the terms and conditions of the Payor Contracts, including the costs of primary care and specialty care providers, ancillary
medical services, including setting aside a reasonable reserve for IBNR, management fees paid to management services organizations,
professional liability and other insurance costs, professional liability claims (to the extent not covered by insurance), the repayment
of indebtedness incurred to fund operating losses with respect to the provision of Healthcare Services, and general and administrative
costs and expenses (including legal and accounting fees) allocated to the provision of such services in accordance with industry
practice, but expressly excluding (i) discretionary bonuses paid by the Company to providers, (ii) non-cash items (e.g., non-cash
allocations from equity method investments, depreciation and amortization expenses), and (iii) costs and expenses relating to or
arising from the Excluded Assets.

 

“CPI”
means the Consumer Price Index - All Urban Consumers (Los Angeles-Long Beach-Anaheim, CA area, Medical Care Services only: Base
1982-84 = 100) as published by the United States Department of Labor, Bureau of Labor Statistics or the successor index that most
closely approximates such index. If such index is no longer published, the Company and the holders of the Series A Preferred shall
attempt to agree upon a substitute index or formula, but if they are unable to so agree, then an arbitrator shall determine what
substitute index or formula shall be used. The arbitration shall be conducted in accordance with the rules of the American Arbitration
Association then prevailing by a single arbitrator in Los Angeles, California. Any decision or award resulting from such arbitration
shall be final and binding upon the Company and the holders of the Series A Preferred and judgment thereon may be entered in any
court of competent jurisdiction.

 

“Designated
Entities” means any entity in which the Company presently or hereafter holds an equity interest, directly or beneficially,
and that provides Healthcare Services or that supports the provision of Healthcare Services by the Company, including, without
limitation, (i) APC-LSMA Designated Shareholder Medical Corporation, (ii) Accountable Health Care IPA, (iii) AHMC International
Cancer Center, A Medical Corporation, (iv) Concourse Diagnostic Surgery Center, LLC, (v) David C. P. Chen M.D., Inc., (vi) La Salle
Medical Associates, (vii) Maverick Medical Group, Inc., (viii) MediPortal LLC, (ix) Pacific Medical Imaging & Oncology Center,
Inc., and (x) Pacific Ambulatory Surgery Center, LLC, but excluding any entity the interests of which constitute Excluded Assets.

 

“Dividend Receivables”
means dividends, distributions and similar amounts paid by the Designated Entities to the Company and/or its Affiliates, in the
Company’s capacity as a direct or beneficial equityholder of the Designated Entities.

 

“Effective Date”
means the date on which any shares of Series A Preferred are first issued by the Company.

 

“Excluded Assets”
means (i) assets received from the sale of shares of the Series A Preferred equal to the Series A Purchase Price, (ii) the
assets of the Company that are not Healthcare Services Assets, including the Company’s equity interests in Universal Care,
Inc., Apollo Medical Holdings, Inc., and any entity that is primarily engaged in the business of owning, leasing, developing or
otherwise operating real estate, (iii) any assets acquired with the proceeds of the sale, assignment or other disposition
of any of the assets described in clauses (i) or (ii), and (iv) any proceeds of the assets described in clauses (i), (ii)
and (iii).

 

    3

     

    

 

“Healthcare
Services” means any medical or other healthcare-related services that the Company delivers or is responsible for delivering
to patients through physicians, professional medical corporations, ancillary service providers, and other contracted providers
engaged by the Company to provide such services, including any medical or other healthcare-related services with respect to which
the Company is entitled to receive capitation payments, fee-for-service payments, risk pool settlements, incentive payments or
other fees.

 

“Healthcare
Services Assets” means (i) the assets of the Company that consist of or are dedicated exclusively to activities that
generate Net Income from Healthcare Services or Dividend Receivables and (ii) other assets of the Company, to the extent such assets
consist of or are dedicated in part to activities that generate Net Income from Healthcare Services or Dividend Receivables, in
each case as reasonably determined by the Board.

 

“IBNR”
means estimated claims for Healthcare Services provided by the Company, which claims have been incurred but not reported.

 

“IBNR Base Amount”
means the Company’s estimated IBNR, as reported on the Company’s most recent financial survey report preceding the
Effective Date filed by the Company with the California Department of Managed Health Care.

 

“IBNR Reconciliation
Amount” means an amount equal to the IBNR Base Amount, less the actual amount paid after the Effective Date with respect
to IBNR liabilities incurred by the Company on or prior to the Effective Date (based on actual claims paid after the Effective
Date for Healthcare Services provided on or prior to the Effective Date), as reasonably determined by the Company as of the 12-month
anniversary of the Effective Date.

 

“Incentive Agreements”
means agreements and other arrangements between the Company and Payors providing for incentive, bonus or other payments to the
Company based on, among other things, the quality of care or other performance criteria, HEDIS adjustments, enrollment incentives
or kick payments.

 

“Liquidation
Event” means any of the following: (i) a liquidation, dissolution or winding up of the affairs of the Company, either
voluntary or involuntary, (ii) a Sale of the Company or (iii) the bankruptcy or insolvency of the Company.

 

“Net Income
from Healthcare Services” means, with respect to any period of determination, and subject to Section 2(b), the
Payor Contract Receivables for such period, less the corresponding Cost of Healthcare Services incurred, which amount shall be
determined net of any taxes applicable to or based on the Payor Contract Receivables, and without the application of any tax benefits
generated by or in connection with the Excluded Assets.

 

“Non-Affiliate”
means any Person other than an Affiliate of the Company or of any holder of the Series A Preferred that owns, individually or together
with its Affiliates, more than 25% of the issued and outstanding shares of the Series A Preferred.

 

    4

     

    

 

“Payor Contracts”
means agreements, including (i) capitation agreements, (ii) risk pool agreements, risk pool settlements and other shared risk arrangements,
(iii) Incentive Agreements and (iv) other agreements and arrangements entered into between the Company and Payors, in each case
pursuant to which the Company receives payments in exchange for or in connection with providing or arranging the delivery of Healthcare
Services to patients, as specified in such agreements or arrangements.

 

“Payor Contract
Receivables” means the net payments and other amounts received on an accrual basis by the Company for Healthcare Services
provided after the Effective Date pursuant to the terms and conditions of the Payor Contracts.

 

“Payors”
means health maintenance organizations, insurance companies, health plan sponsors, governmental programs, licensed health care
service plans, hospitals and other providers, entities and organizations that provide payments and/or reimbursements to healthcare
providers in connection with the provision of healthcare services to patients.

 

“Person”
means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust,
a joint venture, an unincorporated organization and a government or any branch, department, agency, political subdivision or official
thereof.

 

“Retained Amounts”
means, with respect to the calculation of the amount of the Series A Dividend payable in connection with any fiscal year of the
Company, fifty percent (50%) of the aggregate amount of Net Income from Healthcare Services (but excluding Dividend Receivables)
that exceeds the then-current Baseline Amount.

 

“Sale of the
Company” means (a) the sale of all, or substantially all, of the Company’s consolidated assets to a Non-Affiliate
in any single transaction or series of related transactions; (b) the sale of at least a majority of the outstanding Common Stock
to a Non-Affiliate in any single transaction or series of related transactions; (c) any merger or consolidation of the Company
with or into a Non-Affiliate, or (d) any reorganization, recapitalization or other similar transaction (including a stock sale)
involving the Company, on the one hand, and a Non-Affiliate, on the other hand, unless, immediately after the completion of such
transaction described in clause (c) or (d), Control of the Company is substantially unaffected or remains, directly or indirectly,
in the same shareholders (or their Affiliates) that Controlled the Company immediately prior to such transaction.

 

“Series A Dividend
Payment Date” means the last day of the Company’s first full fiscal quarter after the Effective Date, and the last
day of each subsequent fiscal quarter in which any shares of the Series A Preferred are outstanding (unless such day is not a Business
Day, in which event such dividends shall be payable on the next succeeding Business Day).

 

“Series A Purchase
Price” means an amount equal to $545,000,000.

 

“Series A Shareholders
Agreement” means any agreement entered into at any time or from time to time between the Company and any of the holders
of the shares of Series A Preferred in connection with the shares of Series A Preferred and the respective rights of the parties
thereunder.

 

    5

     

    

 

		2.	Dividend Rights.

 

(a)          Cumulative
Dividend Calculation. Holders of Series A Preferred shall be entitled to receive preferential, cumulative dividends, which
dividends shall accumulate and accrue on a daily basis from and after the date of issuance of any particular share of Series A
Preferred, in an amount equal to, with respect to any period of determination, (i) the sum of (A) Net Income from Healthcare
Services and (B) Dividend Receivables, less (ii) the sum of any Retained Amounts (the “Series A Dividend”). For the
avoidance of doubt, the amount of Net Income from Healthcare Services and the amount of Dividend Receivables, as each shall have
been determined as provided herein with respect to any specified fiscal year of the Company, shall be payable in full to the holders
of the Series A Preferred until such time as such holders have received an aggregate amount equal to the Baseline Amount, and for
the balance of such fiscal year, the Series A Dividend amount determined pursuant to clause (i) of this Section 2(a) shall
be reduced by the Retained Amount. Notwithstanding anything to the contrary set forth herein, all calculations hereunder relating
to the Series A Preferred shall be made on an accrual basis in accordance with U.S. generally accepted accounting principles (GAAP),
including, without limitation, the calculation of the Cost of Healthcare Services, Dividend Receivables, IBNR, IBNR Reconciliation
Amount, Net Income from Healthcare Services, Payor Contract Receivables, Retained Amounts, and the Series A Dividend.

 

(b)          Adjustments
to Net Income from Healthcare Services. Notwithstanding anything to the contrary herein, Net Income from Healthcare Services
shall be subject to the following adjustments:

 

(i)          If
a capitation payment under a Payor Contract is adjusted after the Effective Date with respect to Healthcare Services provided before
the Effective Date, (A) any additional amounts received by the Company with respect to such adjustment shall be excluded from the
calculation of Net Income from Healthcare Services for the period in which amount was received, and (B) any payment the Company
is required to make with respect to such adjustment shall not be deemed to constitute a Cost of Healthcare Services or otherwise
reduce the amount of Net Income from Healthcare Services for the period in which such amount was paid.

 

(ii)         If,
after the Effective Date, the Company receives a payment under an Incentive Agreement, which payment has been calculated in whole
or in part with respect to Healthcare Services provided before the Effective Date, such payment, to the extent based on Healthcare
Services provided before the Effective Date, shall be excluded from the calculation of Net Income from Healthcare Services.

 

(iii)        If
the IBNR Reconciliation Amount is a positive number, such amount shall be excluded from the calculation of Net Income from Healthcare
Services for the period in which such amount was determined, and if the IBNR Reconciliation Amount is a negative number, such amount
shall not be deemed to constitute a Cost of Healthcare Services or otherwise reduce the amount of Net Income from Healthcare Services
for the period in which such amount was determined.

 

(c)          Dividend
Payment Dates. The accrued and unpaid portion of the Series A Dividend shall be payable in cash, out of funds legally available
for the payment of dividends and whether or not declared by the Board, quarterly in arrears on each Series A Dividend Payment Date.
If the full amount of the dividend for a particular period, as computed pursuant to Section 2(a), is not paid on the applicable
payment date, then any such unpaid amount shall accrue and be paid as promptly as is legally permissible.

 

    6

     

    

 

(d)          Restriction
on Other Dividends. The Company shall not declare, pay or set aside any dividends on shares of any other class or series of
capital stock of the Company (other than dividends on shares of common stock payable in shares of common stock) unless the holders
of Series A Preferred shall have received, immediately prior to or simultaneously with the payment of such other dividend, an amount
equal to the aggregate Series A Dividend then accrued and unpaid.

 

		3.	Voting Rights.

 

(a)          General
Limitation. Except to the extent otherwise provided by law and/or in any Series A Shareholders Agreement, the shares of Series
A Preferred shall have the right to vote only with respect to the matters expressly set forth herein. The shares of Series A Preferred
shall not be entitled to vote for the election of directors.

 

(b)          Manner
of Voting. Solely in connection with the matters upon which the shares of Series A Preferred are entitled to vote, the holders
thereof shall be entitled to one vote per each share held immediately after the close of business on the record date fixed for
a meeting or the effective date of a written consent, and such holders shall have voting rights and powers equal to the voting
rights and powers of the Common Stock and shall be entitled to notice of any shareholders’ meeting in accordance with the
Bylaws of the Company. Except as otherwise provided herein or in any Series A Shareholders Agreement or as required by law, the
Series A Preferred shall vote together with the Common Stock at any annual or special meeting of the shareholders and not as a
separate class, and may act by written consent together with and in the same manner as the Common Stock.

 

(c)          Separate
Vote of Series A Preferred. For so long as any shares of Series A Preferred remain outstanding, in addition to any other vote
or consent required herein or in any Series A Shareholders Agreement or by law, the vote or written consent of the holders of at
least a majority of the outstanding shares of Series A Preferred, voting as a separate class, shall be necessary for effecting
or validating the following actions:

 

(i)          Any
action that alters or changes the voting powers or other special rights, preferences, privileges, qualifications, limitations or
restrictions of the Series A Preferred;

 

(ii)         Any
increase or decrease (other than by conversion) in the authorized number of shares of the Series A Preferred;

 

(iii)        Any
Liquidation Event; and

 

(iv)        Any
authorization or any designation, whether by reclassification or otherwise, of any new class or series of capital stock or any
other securities convertible into equity securities of the Company ranking on a parity with or senior to the Series A Preferred
in rights of redemption, liquidation preference, voting or dividends, or any increase in the authorized or designated number of
any such new class or series.

 

    7

     

    

 

		4.	Liquidation
Rights.

 

(a)          Series
A Liquidation Preference. Upon any Liquidation Event, whether voluntary or involuntary, before any other distribution or payment
shall be made to the holders of any shares of capital stock of the Company, the holders of the Series A Preferred shall be entitled
to be paid, out of the assets or surplus funds of the Company legally available for distribution, their pro rata share of an amount
equal to (i) all accrued and unpaid amounts of the Series A Dividend and (ii) the Series A Purchase Price (the “Series A
Liquidation Preference”).

 

(b)          Additional
Series A Preference Distributions. After the payment in full of the Series A Liquidation Preference, the remaining assets or
surplus funds of the Company legally available for distribution, if any, in amount equal to the positive difference between the
then-current fair value of the Healthcare Services Assets, as reasonably determined by the Board, and the Series A Liquidation
Preference, shall be distributed ratably 90% to the holders of the Series A Preferred and 10% to the holders of the Common Stock
(the “Additional Series A Preference Distribution”).

 

(c)          Common
Preference Distributions. After the payment in full of the Additional Series A Preference Distribution, the remaining assets
or surplus funds of the Company legally available for distribution, if any, shall be distributed ratably 90% to the holders of
the Common Stock and 10% to the holders of the Series A Preferred, until the holders of the Series A Preferred shall have received
under this Section 4(c) an aggregate amount equal to the amount received by the holders of the Common Stock under Section
4(b) (the “Common Preference Distribution”).

 

(d)          Residual
Distributions. After the payment in full of the Series A Liquidation Preference, the Additional Series A Preference Distribution
and the Common Preference Distribution, the remaining assets or surplus funds of the Company legally available for distribution,
if any, shall be distributed ratably to the holders of the Common Stock.

 

(e)          Pro
Rata Distributions. If, upon any Liquidation Event, the assets or surplus funds of the Company shall be insufficient to make
payment in full of any of the liquidation preferences set forth in Sections 4(a)-4(d) above, then such assets or surplus
funds as are available shall be distributed ratably, in partial satisfaction of the applicable liquidation preference, among the
holders of the shares of Series A Preferred and/or the shares of Common Stock, as the case may be, then outstanding, in proportion
to the full amounts to which they would be otherwise respectively entitled.

 

		5.	Miscellaneous.

 

(a)          Notices
of Record Date. Upon (i) any taking by the Company of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend or other distribution, or (ii) any Liquidation Event or
other capital reorganization of the Company or any reclassification or recapitalization of the capital stock of the Company, the
Company shall mail to each holder of Series A Preferred at least ten days prior to the record date specified therein (or such shorter
period approved by a the holders of a majority of the outstanding Series A Preferred) a notice specifying (A) the date on which
any such record is to be taken for the purpose of such dividend or distribution and a description of such dividend or distribution,
(B) the date on which any such Liquidation Event or other capital reorganization of the Company or any reclassification or recapitalization
of the capital stock of the Company is expected to become effective, and (C) the date, if any, that is to be fixed as to when the
holders of record of Common Stock (or other securities) shall be entitled to exchange their shares of Common Stock (or other securities)
for securities or other property deliverable upon such Liquidation Event or other capital reorganization of the Company or any
reclassification or recapitalization of the capital stock of the Company.

 

    8

     

    

 

(b)          Delivery
of Notices. Any notice required by the provisions of this Certificate of Determination shall be in writing and shall be deemed
effectively given: (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed electronic mail, (iii) when
sent by facsimile during normal business hours of the recipient (and on the next business day if sent by facsimile outside of such
normal business hours), (iv) seven days after having been sent by registered or certified mail, return receipt requested, postage
prepaid, or (v) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written
verification of receipt. All notices shall be addressed to each holder of record at the address of such holder appearing on the
books of the Company.

 

(c)          No
Dilution or Impairment. The Company will not, by amendment of its Articles of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek
to avoid the observance or performance of any of the terms of the Series A Preferred set forth herein, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate
in order to protect the rights of the holders of the Series A Preferred against dilution or other impairment.

 

(d)          No
Reissuance of Series A Preferred. No share or shares of Series A Preferred acquired by the Company by reason of redemption,
purchase or otherwise shall be reissued.

 

RESOLVED FURTHER,
that the President and Chief Executive Officer and the Secretary of the Company are hereby authorized and directed to execute,
acknowledge, file and record a Certificate of Determination of Preferences of Series A Preferred Stock in accordance with
the foregoing resolutions and provisions of the General Corporation Law of California.

 

*     *     *

 

    9

     

    

 

IN WITNESS WHEREOF,
the undersigned President and Chief Executive Officer of the Company and Secretary of the Company each declares under penalty of
perjury under the laws of the State of California that the matters set out in the foregoing Certificate are true and correct of
his own knowledge.

 

Dated: September 11,
2019.

 

	 	/s/ Thomas Lam
	 	Thomas Lam, M.D.,
	 	Chief Executive Officer
	 	 
	 	/s/ Paul Liu, M.D.
	 	Paul Liu, M.D.,
	 	Secretary

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