Item 1.01. Entry into a Material Definitive Agreement.
Securities Purchase Agreement.
As previously disclosed, P3
Health Partners Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Purchase Agreement”) with
the purchasers named therein (the “Purchasers”) on March 30, 2023.
Pursuant to the Purchase
Agreement, on April 6, 2023, the Company issued 79,912,635 units at a price of $1.1180 per unit for institutional investors, and a
purchase price of $1.1938 per unit for employees and consultants. Each unit consists of one share of Class A Common Stock, par value
$0.0001 per share (the “Common Stock”), and 0.75 of a warrant to purchase one share of Common Stock at an exercise price
of $1.13. Certain institutional investors elected to receive pre-funded warrants to purchase Common Stock in lieu of a portion of
their Common Stock. In total, the Company sold (i) an aggregate of 69,157,145 shares of its Common Stock (the “Shares”), (ii) warrants to purchase an aggregate of 59,934,479 shares of Common Stock (the “Common Warrants”), and (iii)
pre-funded warrants to purchase an aggregate of 10,755,490 shares of Common Stock (the “Pre-Funded Warrants” and,
together with the Common Warrants, the “Warrants”), to the Purchasers for aggregate gross proceeds of approximately
$89.5 million (collectively, the “Private Placement”).
Each Common Warrant has an
exercise price per share of Common Stock equal to $1.13 per share. Each Pre-Funded Warrant has an exercise price per share of Common
Stock equal to $0.0001 per share. The exercise price and the number of shares of Common Stock issuable upon exercise of each Warrant
are subject to appropriate adjustments in the event of certain stock dividends and distributions, stock splits, stock combinations,
reclassifications or similar events affecting the Common Stock.
Entities affiliated with
Chicago Pacific Partners (“CPF”) purchased 52,751,725 shares of Common Stock, 10,755,490 Pre-Funded Warrants and
47,630,413 Warrants for aggregate gross proceeds of approximately $71 million. CPF may not exercise any portion of any Warrant,
which, upon giving effect to such exercise, would cause the aggregate number of shares of Common Stock beneficially owned by CPF
(together with its affiliates) to exceed 49.99% of the number of shares of Common Stock and Class V Common Stock issued and
outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms
of the Warrants. As a result, CPF’s ownership of shares does not represent more than 49.99% of the aggregate voting power of
the Company’s Common Stock and Class V Common Stock.
The purchasers include Amir Bacchus, M.D., the Company's Chief Medical Officer and a director of the Company. Two members of the Company’s board
of directors, Mary Tolan and Lawrence B. Leisure, serve as Managing Partners of Chicago Pacific Founders, and one member of the Company’s board
of directors, Greg Kazarian, serves as an Operating Partner of Chicago Pacific Founders. The entry into the Purchase Agreement was approved
by a committee of independent, disinterested directors of the Company.
The Private Placement was
exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as a transaction by an issuer not involving a public
offering. The Purchasers acquired the securities for investment only and not with a view to or for sale in connection with any
distribution thereof, and appropriate legends have been affixed to the securities issued in this transaction.
Registration Rights Agreement
On April 6, 2023, in connection with the Purchase
Agreement the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with the Purchasers.
Pursuant to the Registration Rights Agreement, the Company agreed to prepare and file a registration statement with the Securities and
Exchange Commission (the “SEC”) within 30 days after the closing of the Private Placement for purposes of registering the
resale of the Shares and shares of Common Stock issuable upon exercise of the Warrants. The Company agreed to use its reasonable best
efforts to cause this registration statement to be declared effective by the SEC within 120 days after the date thereof. The Registration
Rights Agreement also contains certain shelf takedown and piggyback rights.
The Company has also agreed, among other things,
to indemnify the Purchasers, their officers, directors, members, employees and agents, successors and assigns under the registration statement
from certain liabilities and to pay all fees and expenses incident to the Company’s obligations under the Registration Rights Agreement.
Letter Agreement with CPF
On April 6, 2023, in
connection with the Purchase Agreement, the Company entered into a letter agreement (the “Letter Agreement”) with
Chicago Pacific Founders GP, L.P., a Delaware limited partnership (“CPF GP I”), Chicago Pacific Founders GP III, L.P., a
Delaware limited partnership (“CPF GP III”) (on behalf of the funds of which CPF GP I is the general partner, certain
funds of which CPF GP III is the general partner) and/or certain of their affiliated entities and funds (collectively, the “CPF
Parties”). Pursuant to the Letter Agreement, (i) for as long as the CPF Parties own 40% of the Company’s outstanding
Common Stock, CPF will be entitled to designate one additional independent member of the Company’s board of directors, who
must be independent and satisfy all applicable requirements regarding service as a director of the Company under applicable law and
SEC and stock exchange rules, (ii) for as long as the CPF Parties own 40% of the Company’s outstanding Common Stock, CPF will
be entitled to certain information rights and protective provisions, and (iii) subject to the terms of the Letter Agreement, the CPF
Parties agreed to a standstill restriction from the date of the closing of the Private Placement to June 30, 2024 that limits the
ownership of the CPF Parties to 49.99% of the Company’s Common Stock and Class V Common Stock.
The foregoing summaries of the Purchase Agreement,
Registration Rights Agreement, Warrants and Letter Agreement do not purport to be complete and are qualified in their entirety by reference
to the Form of Common Stock Purchase Warrant, Form of Pre-Funded Common Stock Purchase Warrant, Purchase Agreement, Registration Rights
Agreement and Letter Agreement, which are filed as Exhibits 4.1, 4.2, 10.1, 10.2 and 10.3, respectively, to this Current Report on Form
8-K.
