Item
8.01 Other Events.
Amendments to APC Transaction Agreements
As described in the Proxy Statement and
the Report on Form 8-K filed by the Company with the SEC on May 13, 2019 (the “May 13, 2019 Form 8-K”), the Company
entered into a series of agreements on May 10, 2019 (collectively, the “Transaction Agreements,” and the transactions
contemplated by such Transaction Agreements, the “Transactions”) with AP-AMH and APC (the Company, AP-AMH and APC collectively,
the “Parties”). The May 13, 2019 Form 8-K describes the material relationships among the Parties.
The Proxy Statement describes, under the
heading “Amendments to APC Transaction Agreements” on page 60, certain amendments that the Parties anticipated making
prior to the closing of the Transactions (the “Closing”) (the “Proposed Amendments”).
On August 26, 2019, the Company entered
into certain amendments to the Transaction Agreements, implementing the Proposed Amendments, including the following:
(1) Stock Purchase Agreement.
The First Amendment to the Stock Purchase Agreement dated August 26, 2019 by and between APC and the Company (the “Stock
Purchase Amendment,” which is attached as Exhibit 10.1) amends that certain Stock Purchase Agreement dated May 10, 2019 by
and between APC and the Company (the “Stock Purchase Agreement”). Among other things, the Stock Purchase Amendment
provides that, rather than an outright prohibition from voting at the Special Meeting, APC and its officers and directors who are
also officers or directors of the Company (i.e., the holders of Related Party Votes, as defined in the Stock Purchase Agreement),
will instruct the Company proxy holders to vote their shares of the Company common stock in the same proportions as all other votes
cast on each proposal at the Special Meeting. The Stock Purchase Amendment further provides that the Company’s officers or
directors who are also officers or directors of APC will instruct the APC proxy holders to vote their shares of APC common stock
in the same proportions as all other votes cast on each proposal that will be brought before the APC special meeting of shareholders
that will be called to approve some aspects of the Transactions. Finally, the Stock Purchase Amendment revises the form of the
Voting and Registration Rights Agreement, which is attached as an exhibit to the Stock Purchase Agreement, to provide that APC
votes in excess of 9.99% will be voted by proxy given to the Company’s management, and that those proxy holders will cast
the excess votes in the same proportion as all other votes cast on any specific proposal coming before the Company’s stockholders.
(2) Preferred Stock Purchase Agreement.
The First Amendment to the Series A Preferred Stock Purchase Agreement dated August 26, 2019 by and between APC and AP-AMH (the
“Preferred Stock Purchase Amendment,” which is attached as Exhibit 10.2) amends that certain Series A Preferred Stock
Purchase Agreement dated May 10, 2019 by and between APC and AP-AMH (the “Preferred Stock Purchase Agreement”). Among
other things, the Preferred Stock Purchase Amendment provides that APC agrees to retain a sufficient amount of the assets it receives
in the Transactions to enable it to fund losses or deficits in that proportion of its business that is not considered its Healthcare
Services Business (as defined in the Preferred Stock Purchase Agreement), such that it is not prohibited from paying dividends
on the Series A stock it receives through the Preferred Stock Purchase Agreement, as described in the same, pursuant to California
Corporations Code sections 500 et seq. on the basis of insolvency. Further, the Preferred Stock Purchase Amendment attaches an
updated form of the Certificate of Determination (the “Updated Certificate of Determination”) to clarify, in order
to avoid any uncertainty or doubt, that the assets received by APC in the Transactions are encompassed under “Excluded Assets”
as it is defined in such document, and that any proceeds of Excluded Assets are also deemed Excluded Assets.
In addition, in each instance where the
Transaction Agreements indicated that a condition precedent needed to be satisfied by July 9, 2019, the respective agreement was
updated to condition Closing upon the satisfaction or waiver of such conditions, along with all other conditions that must be satisfied
or waived at the time of Closing. Consequently, there were conforming amendments to certain Transaction Agreements, which amendments
include the First Amendment to the Loan Agreement dated August 26, 2019 by and between the Company and AP-AMH, attached as Exhibit
10.3, amending the Loan Agreement dated May 10, 2019 by and between the Company and AP-AMH.
APC Stockholders Meeting
A special meeting of the stockholders of
APC was held on August 28, 2019 (the “APC Special Meeting”) to consider and vote upon portions of the APC Transactions
pertaining directly to APC. Specifically, the APC stockholders were asked to approve two proposals: (i) the issuance of 1,000,000
shares of Series A Preferred Stock to AP-AMH at a price of $545 per share for total consideration of $545,000,000 pursuant to the
Preferred Stock Purchase Agreement (the “AP-AMH Stock Issuance Proposal”); and (ii) the purchase of 15,015,015 shares
of the Company’s common stock at a purchase price of $19.98 per share for total consideration of $300,000,000 pursuant to
the Stock Purchase Agreement (the “ApolloMed Stock Purchase Proposal”). At the APC Special Meeting, the holders of
a majority of the outstanding voting shares were present in person or by proxy, and upon declaration that a quorum was present,
the stockholders affirmatively voted to adopt and approve the AP-AMH Stock Issuance Proposal and the ApolloMed Stock Purchase Proposal.
As a result of the approvals received at
the Company’s Special Meeting on August 27, 2019 and the APC Special Meeting on August 28, 2019, all of the stockholder approvals
required to close the APC Transactions have been secured. The Company and the other parties to the APC Transactions currently expect
to concurrently close the APC Transactions in September 2019, upon satisfaction or waiver of various conditions, including, without
limitation, the closing of the pending senior secured credit facilities sufficient to enable the Company to draw down a minimum
of $245,000,000 in partial satisfaction of its obligation to loan AP-AMH an aggregate of $545,000,000 (Proposal No. 1 approved
at the Company’s Special Meeting). Further disclosures pertaining to the closing of the APC Transactions and the senior secured
credit facility will be made in one or more Current Reports on Form 8-K that will be filed by the Company upon completion of these
anticipated transactions.