FPCG First Physicians Capital Group Inc (CE)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 5, 2014 (November 30, 2011)

 

 

FIRST PHYSICIANS CAPITAL GROUP, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		000-30326		77-0557617
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

433 North Camden Drive, #810

Beverly Hills, California 90210

(Address of Principal Executive Offices) (Zip Code)

(310) 860-2501

(Registrant’s telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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EXPLANATORY NOTE

On October 27, 2014, First Physicians Capital Group, Inc. (the “Company”) effected a 1-for-2,000 share reverse stock split (the “Reverse Stock Split”) of its common stock, par value $0.01 per share (the “Common Stock”). The Reverse Stock Split reduced the number of record holders of the Common Stock to fewer than 300. The Company intends to file a Form 15 with the Securities and Exchange Commission (“SEC”) to terminate the registration of the Common Stock under Section 12(g) of the Securities Exchange Act of 1934 (the “Exchange Act”) and to suspend its reporting obligations under Section 15(d) of the Exchange Act. In connection with the filing of the Form 15, this Current Report on Form 8-K (the “Report”) is being filed to disclose certain historical events occurring in the past three fiscal years that were previously reported in the Company’s Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K, but not on a Current Report on Form 8-K.

 

Item 1.01

Entry into a Material Definitive Agreement.

Settlement Agreement

In August 2011, Carol Schuster, then a holder of a $1.5 million note payable by Rural Hospital Acquisition, LLC (“RHA”) and 4.25 million of the Company’s then-outstanding Common Stock, filed a lawsuit for repayment of the loan. In December 2011, in full settlement of the lawsuit and satisfaction of the $1.5 million note payable, Ms. Schuster accepted $91,000 in cash and an assignment and receipt of notes with an aggregate principal amount of $2.15 million that the Company had received in July 2011 as consideration for the sale of the Southern Plains Medical Center medical records. Additionally, as part of the settlement, Ms. Schuster agreed to transfer the 4.25 million shares of Common Stock to the Company.

The foregoing description of the settlement is qualified in its entirety by reference to the Settlement and Release Agreement, effective as of November 30, 2011, among Ms. Schuster, Michael Schuster, the Company and RHA, as amended by the Modification of Settlement and Release Agreement, copies of which are filed as Exhibit 10.1 and 10.2, respectively, to this Report and are incorporated herein by reference.

2009 Bridge Note Extension and Related Warrants

During the fiscal year ended September 30, 2009, the Company entered into a bridge financing transaction (the “2009 Bridge Financing”) which was consummated in three separate closings with various lenders, including SMP Investments, LLC (“SMP”), Anthony J. Ciabattoni and William A. Houlihan. SMP, Mr. Ciabattoni and Mr. Houlihan each hold a 10% or greater voting interest in the Company and Mr. Houlihan is a member of the Company’s Board of Directors (the “Board”).

In January 2014, each lender in the 2009 Bridge Financing agreed to extend the maturity of their respective bridge notes (the “2009 Bridge Notes”) with the same terms and conditions contained in the originally executed bridge notes and related extensions until June 30, 2014. On April 7, 2014, the Company paid all outstanding principal and accrued interest on the 2009 Bridge Notes.

In addition, as consideration for the extension of the maturity date of the SMP promissory note associated with 2009 Bridge Financing, on January 17, 2014, the Company issued warrants to SMP for the purchase of up to 8,500,000 shares of Common Stock at an initial exercise price of $0.01 per share. The warrants were exercisable for a period of five years from the date of issuance. On March 27, 2014, SMP exercised this warrant to purchase 8,500,000 shares of Common Stock for an aggregate purchase price of $85,000.

The foregoing descriptions of the extension of the maturity of the 2009 Bridge Notes and the issuance of the warrants to SMP are qualified in their entirety by reference to the Form of Maturity Date Extension Agreement for the 2009 Bridge Notes and the Form of SMP Warrant, copies of which are filed as Exhibit 10.3 and 10.4, respectively, to this Report and are incorporated herein by reference.

 

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2011 Bridge Financing Warrants and Extension

During the fiscal year ended September 30, 2011, the Company entered into bridge financing transactions (the “2011 Bridge Financing”) pursuant to which the Company entered into ten promissory notes in the aggregate principal amount of $2,034,000 (the “2011 Bridge Notes”) with various lenders (the “2011 Bridge Lenders”), including SMP, Mr. Ciabattoni and Mr. Houlihan. In January 2014, each 2011 Bridge Lender agreed to waive any prior Event of Default (as that term is defined in the 2011 Bridge Notes) and the maturity of the 2011 Bridge Notes was extended until June 30, 2014.

The 2011 Bridge Notes were paid in full, less accumulated interest, in the second and third quarters of the fiscal year ended September 30, 2013, in installments of $420,000 and $1,614,000, respectively. On April 7, 2014, the Company paid the outstanding accrued interest related to the 2011 Bridge Notes.

Each note issued in the 2011 Bridge Financing included warrants to purchase an aggregate of 2,278,079 shares of Common Stock with an exercise price of $0.3125. The warrants are exercisable for a period of five years from date of issuance. These warrants were issued on January 1, 2014. SMP, Mr. Ciabattoni and Mr. Houlihan received warrants to purchase up to 850,080, 425,600 and 470,400 shares of Common Stock, respectively.

The foregoing descriptions of the waiver of prior Events of Default, the extension of the maturity of the 2011 Bridge Notes and the issuance of the 2011 Bridge Financing warrants are qualified in their entirety by reference to the Form of Waiver of Default, Form of 2011 Bridge Notes and the Form of Warrant, copies of which are filed as Exhibit 10.5, 10.6 and 10.7, respectively, to this Report and are incorporated herein by reference.

2012 Bridge Financing

Beginning in February 2012, the Company entered into a staggered bridge financing transaction (the “2012 Bridge Financing”) whereby it entered into three promissory notes, in the aggregate principal amount of $1,279,000 (the “2012 Bridge Notes”), with SMP, Mr. Ciabattoni and Mr. Houlihan (the “2012 Lenders”), with maturity dates of June 30, 2014. The 2012 Bridge Notes funded as follows; $340,000, $320,000, $390,000 and $229,000 in February, March, April, and May of 2012, respectively. The 2012 Bridge Financing was considered a related party transaction. The 2012 Bridge Notes were paid in full, less accumulated interest, in the second and third quarters of the fiscal year ended September 31, 2013, in installments of $225,000 and $1,054,000, respectively. On April 7, 2014, the Company paid the outstanding accrued interest related to the 2012 Bridge Notes.

Each note issued in the 2012 Bridge Financing included warrants to purchase an aggregate of 4,092,800 shares of Common Stock with an exercise price of $0.3125. The warrants are exercisable for a period of five years from date of issuance. These warrants were issued to the 2012 Lenders on January 1, 2014. SMP, Mr. Ciabattoni and Mr. Houlihan received warrants to purchase up to 1,984,400, 1,388,800 and 720,000 shares of Common Stock, respectively.

The foregoing descriptions of the 2012 Bridge Notes and the issuance of the 2012 Bridge Financing warrants are qualified in their entirety by reference to the Form of 2012 Promissory Note and the Form of Warrant, copies of which are filed as Exhibit 10.8 and 10.7, respectively, to this Report and are incorporated herein by reference.

2013 Bridge Financing

Beginning in November 2013, the Company entered into a staggered bridge financing transaction (the “2013 Bridge Financing”) whereby it entered into four promissory notes, with interest of 10% per annum, in the aggregate principal amount of $650,000 (the “2013 Bridge Notes”), with four investors, each note maturing June 30, 2014. The 2013 Bridge Notes funded as follows; $450,000 and $200,000 in November 2013 and January 2014, respectively. Three of the investors were SMP, Mr. Ciabattoni and Mr. Houlihan. The fourth investor, Blue Ridge Investments, LLC (“Blue Ridge”), is wholly owned by Richardson Sells, a member of the Board. SMP, Mr. Ciabattoni, Mr. Houlihan and Blue Ridge contributed $300,000, $125,000, $125,000, and $100,000, respectively. On April 7, 2014, the Company paid all outstanding principal and accrued interest related to the 2013 Bridge Notes.

 

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The foregoing description of the 2013 Bridge Notes is qualified in its entirety by reference to the Form of 2013 Promissory Note, a copy of which is filed as Exhibit 10.9 to this Report and is incorporated herein by reference.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information regarding the bridge financings contained above under Item 1.01 under the subheadings “2012 Bridge Financing” and “2013 Bridge Financing” is incorporated by reference herein.

 

Item 3.02

Unregistered Sales of Equity Securities.

The information regarding the issuance of warrants and exercise of warrants issued to SMP contained above under Item 1.01 under the subheadings “2009 Bridge Note Extension and Related Warrants,” “2011 Bridge Financing Warrants and Extension” and “2012 Bridge Financing” is incorporated by reference herein.

On April 6, 2014, the Company accepted two warrant exercises in the amount of 150,000 and 210,000 shares of Common Stock, at an exercise price of $0.625 and $0.50 per share, respectively, for an aggregate purchase price of $198,000 from two investors. The $198,000 proceeds had been received by the Company in fiscal year 2011, and were recorded as a liability until such time as the Company was able to accept the warrants.

 

Item 3.03

Material Modification to Rights of Security Holders.

In February 2014, holders of a majority of the shares of Series 5-A Convertible Preferred Stock (the “5-A Preferred”) and Series 6-A Convertible Preferred Stock (the “6-A Preferred”) irrevocably waived their rights (1) with respect to redemption upon a “Triggering Event” (as that term is defined in the Certificate of Designation of the Series 5-A Preferred or Series 6-A Preferred (each a “Certificate of Designation”), as applicable) and (2) to demand the filing by the Company or any other party of a “Registration Statement” (as that term is defined in the Certificate of Designation). As a result of the majority consent, demand registration rights for all of the holders of the two classes of preferred stock were waived.

The foregoing description of the waiver with respect to the Series 5-A Preferred and the Series 6-A Preferred is qualified in its entirety by reference to the Form of Waiver, a copy of which is filed as Exhibit 10.10 to this Report and is incorporated herein by reference.

 

Item 5.03

Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

The information regarding contained above under Item 3.03 is incorporated by reference herein.

 

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Item 9.01

Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit No.		Description
10.1		Settlement and Release Agreement, effective as of November 30, 2011
10.2		Modification of Settlement and Release Agreement
10.3		Form of 2009 Bridge Note Maturity Date Extension Agreement
10.4		Form of SMP Investments I, LLC Warrant
10.5		Form of 2011 Bridge Note Waiver of Default
10.6		Form of 2011 Promissory Note (filed as Exhibit 10.58 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2011, filed with the Securities and Exchange Commission on April 4, 2014)
10.7		Form of Warrant issued in connection with 2011 and 2012 Promissory Notes (filed as Exhibit 10.58 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2013, filed with the Securities and Exchange Commission on April 4, 2014)
10.8		Form of 2012 Promissory Note (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, filed with the Securities and Exchange Commission on April 4, 2014)
10.9		Form of 2013 Promissory Note (filed as Exhibit 10.57 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2013, filed with the Securities and Exchange Commission on April 4, 2014)
10.10		Form of Waiver Agreement (filed as Exhibit 10.59 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2013, filed with the Securities and Exchange Commission on April 4, 2014)

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

				FIRST PHYSICIANS CAPITAL GROUP, INC.
Date: December 5, 2014				By:		/s/ Sean Kirrane
						Sean Kirrane
						President and Chief Executive Officer

 

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Exhibit 10.1

Execution Version

CONFIDENTIAL SETTLEMENT AND RELEASE AGREEMENT

This Confidential Settlement and Release Agreement (this “Agreement”) is made and entered into on November 30, 2011 (the “Effective Date”) by and between Carol Schuster, an individual (“Schuster”), Michael Schuster, an individual (“Michael Schuster”), First Physicians Capital Group, Inc. (f/k/a Tri-Isthmus Group, Inc.), a Delaware corporation (“First Physicians”), and Rural Hospital Acquisition, LLC, an Oklahoma limited liability company (“RHA”). Schuster, Michael Schuster, First Physicians, and RHA are referred to herein individually as a “Party” and collectively as the “Parties.”

Recitals

A. Prior to October 30, 2007, Schuster was the sole owner of the membership units of RHA. On October 30, 2007 and December 11, 2008, First Physicians and Schuster entered into certain agreements by which First Physicians became the sole owner of the membership units of RHA, in exchange for which Schuster received an initial cash payment, certain shares of First Physician stock (the “Shares”), a Promissory Note made by RHA in favor of Schuster for the principal amount of $1,500,000 (the “RHA Note”) and a Guaranty to and for the benefit of Schuster that guaranteed all payments due on the RHA Note (individually, the “RHA Guaranty” collectively with the RHA Note, the “Debt”).

B. From October of 2007 to December 11, 2008, Michael Schuster, served as RHA’s Chief Executive Officer and was an authorized delegate with respect to transactions and filings with the Centers for Medicare & Medicaid Services (“CMS”). On December 11, 2008, Schuster and Michael Schuster resigned and relinquished any and all positions (whether as a manager, officer, director, or otherwise) held with RHA.

C. On August 15, 2011, Schuster filed in the District Court of Oklahoma County, State of Oklahoma (the “Court”) the state case styled Carol Schuster v. Rural Hospital Acquisitions, LLC and Tri-Isthmus Group, Inc., CJ-2011-5675 (the “Litigation”), claiming default and seeking to collect upon the Debt.

D. In an effort to resolve all disputes between the Parties, the Parties met on November 9, 2011 and executed a binding Confidential Settlement Agreement Memorandum (the “Memorandum”) that contemplated the drafting and execution of this Agreement and related Transaction Documents (as defined below).

E. The Parties now wish to completely and finally resolve all disputes and claims between the Parties arising from or relating to the 2007 Transaction, the 2008 Transaction, the Debt and the Litigation that have been made, or that could have been made on or before November 30, 2011, as more fully described below.

Agreement

NOW, THEREFORE, in consideration of the terms and agreements contained herein, the Recitals set forth above and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the Parties agree as follows:

1. Incorporation of Recitals. The Recitals set forth above are true and correct and are incorporated herein as if set forth herein in full.

 

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2. Definitions. In addition to terms defined elsewhere in this Agreement, the following capitalized terms have the following meanings assigned to them:

“Action” means any lawsuit, claim, demand, or action, whether or not such matter is by or before any court, tribunal, mediator or arbitrator.

“Law” means any foreign, federal, state, or local law (including common law), statute, code, ordinance, rule, regulation, or other requirement.

“Lien” means any lien, pledge, interest in property, charge, security interest, hypothecation or encumbrance of any nature whatsoever.

“Transaction Documents” shall mean those documents necessary to carry out the intent and purpose of this Agreement.

3. Closing. The consummation of the transactions contemplated by this Agreement and the Transaction Documents (the “Closing”) shall take place at the offices of GableGotwals located at One Leadership Square, 15^th Floor, 211 N. Robinson, Oklahoma City, OK 73102, or at such other place as the Parties may mutually agree, on before November 30, 2011 (the “Closing Date”), unless mutually extended by the Parties.

4. Representations and Warranties of First Physicians and RHA. First Physicians and RHA hereby represent and warrant to Schuster and Michael Schuster as follows:

a. Authority; Binding Effect.

(i) First Physicians has the requisite corporate right, power, authority, and capacity to execute and deliver this Agreement and the Transaction Documents, to perform its obligations hereunder and thereunder on its part to be performed, and to consummate the transactions contemplated hereby and thereby. The execution and delivery by First Physicians of this Agreement and the Transaction Documents and the performance of its obligations hereunder and thereunder have been duly approved by all necessary corporate action, and no further approvals are required by the officers, directors, or equity holders of First Physicians in connection therewith. This Agreement and each of the Transaction Documents contemplated hereby to be entered into by First Physicians constitute (or, when executed, will constitute) the legal, valid, and binding obligations of First Physicians.

(ii) RHA has the requisite limited liability company right, power, authority, and capacity to execute and deliver this Agreement and the Transaction Documents, to perform its obligations hereunder and thereunder on its part to be performed, and to consummate the transactions contemplated hereby and thereby. The execution and delivery by RHA of this Agreement and the Transaction Documents and the performance of its obligations hereunder and thereunder have

 

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been duly approved by all necessary limited liability company action, and no further approvals are required by the officers, directors, managers, members, or equity holders of RHA in connection therewith. This Agreement and each of the Transaction Documents contemplated hereby to be entered into by RHA constitute (or, when executed, will constitute) the legal, valid, and binding obligations of RHA.

b. Title to Assets.

(i) RHA is the lawful holder of that certain promissory note effective June 30, 2011 made by Southern Plains Associates II, LLC (“SPA II”) in favor of RHA for the principal amount of $1,855,000 and accruing interest at the rate of 5.00% per annum (the “SPMC Note 1”). RHA has not transferred the SPMC Note 1, and the SPMC Note 1 is not subject to any Liens.

(ii) RHA is the lawful holder of those certain guarantees effective June 30, 2011 one made by Medical Equity partners, LLC and TTMB, LLC in favor of RHA and the other made by Southern Plains Medical Center, Inc. (“SPMC”) in favor of RHA (collectively, the “Guarantees”). RHA has not transferred the Guarantees, and the Guarantees are not subject to any Liens.

(iii) RHA is the lawful holder of that certain promissory note effective June 30, 2011 made by SPA II in favor of SPMC for the principal amount of $295,000 and accruing interest at the rate of 5.00% per annum (the “SPMC Note 2”). RHA not transferred the SPMC Note 2, and the SPMC Note 2 is not subject to any Liens.

5. Representations and Warranties of Schuster. Schuster hereby represents and warrants to First Physicians, RHA, and Michael Schuster as follows:

a. Binding Effect. This Agreement and each of the Transaction Documents contemplated hereby to be entered into by Schuster constitute (or, when executed, will constitute) the legal, valid, and binding obligation of Schuster.

b. Title to Assets.

(i) Schuster is the lawful holder of the Shares. Schuster has not transferred the Shares, and the Shares are not subject to any Liens.

(ii) Schuster is the lawful holder of the RHA Note. Schuster has not transferred the RHA Note, and the RHA Note is not subject to any Lien.

(iii) Schuster is the lawful holder of the RHA Guaranty. Schuster has not transferred the RHA Guaranty, and the RHA Guaranty is not subject to any Lien.

6. Representations and Warranties of Michael Schuster. Michael Schuster hereby represents and warrants to First Physicians, RHA, and Schuster that this Agreement and each of the Transaction Documents contemplated hereby to be entered into by Michael Schuster constitute (or, when executed, will constitute) the legal, valid, and binding obligation of Michael Schuster.

 

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7. Obligations of First Physicians and RHA. Subject to the terms and conditions of this Agreement, at the Closing, First Physicians, RHA, or both shall perform the following:

a. First Physicians or RHA shall deliver to Schuster via check $20,000.

b. RHA shall transfer, assign, grant, deliver and convey to Schuster all without recourse the SPMC Note 1, the SPMC Note 2, the Guarantees and any and all other guarantees associated therewith, free and clear of all Liens and without any conditions or restrictions on transferability. The transactions contemplated by this Section 7(b) will be effected and evidenced by the endorsement and delivery by RHA to Schuster of the original SPMC Note 1, endorsed to the order of Schuster, the original SPMC Note 2, endorsed to the order of Schuster, the original Guarantees and all other documents as Schuster may reasonably request. RHA shall provide written notice to SPA II of the transactions contemplated by this Section 7(b ).

8. Obligations of Schuster. Subject to the terms and conditions of this Agreement, at the Closing, Schuster shall perform the following:

a. Schuster shall transfer, assign, grant, deliver and convey to First Physicians the Shares, along with any other shares of any class or type of First Physicians’ stock held by Schuster, free and clear of all Liens and without any conditions or restrictions on transferability. The transactions contemplated by this Section 8(a) will be effected and evidenced by the endorsement and delivery by Schuster to First Physicians of the original stock certificates representing the Shares or any other shares of any class or type of First Physicians’ stock and the execution of any other documents as First Physicians may reasonably request.

b. Schuster shall transfer, assign, grant, deliver and convey to First Physicians the RHA Note and RHA Guaranty, free and clear of all Liens and without any conditions or restrictions on transferability. The transactions contemplated by this Section 8(b) will be effected and evidenced by the endorsement and delivery by Schuster to First Physicians of the original RHA Note, the original RHA Guaranty, and all other documents as First Physicians may reasonably request.

c. In connection with the 2007 and the 2008 change of ownership and change of management transactions identified in the Recitals, certain change of ownership and change of management forms were required to be filed with the CMS. As of the Effective Date, CMS is still missing certain paperwork. First Physicians has been working with CMS and Trailblazer Health Enterprises, LLC (“Trailblazer”) to correct these problems. Schuster shall execute or re-execute and deliver all paperwork and forms necessary or appropriate to effectuate on CMS’s records, Trailblazer’s records, and the records of any other governmental entity the effects of the 2007 and 2008 transactions as if such paperwork and forms were executed and filed at the time of the respective events requiring them. Nothing in this Agreement alters the respective liability of the Parties or

 

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commits a Party to indemnify another Party (the “Second Party”) for any matter arising from or relating to events or transactions that occurred while the Second Party owned a majority interest in RHA or was an authorized delegate of RHA, as applicable.

d. Schuster shall execute all documents necessary to dismiss, with prejudice, the Litigation. Schuster shall file such documents within five days after Closing.

9. Obligations of Michael Schuster. Subject to the terms and conditions of this Agreement, at the Closing, Michael Schuster shall execute or re-execute and deliver all paperwork and forms necessary or appropriate to effectuate on CMS’s records, Trailblazer’s records, and the records of any other governmental entity the effects of the 2007 and 2008 transactions as if such paperwork and forms were executed and filed at the time of the respective events requiring them. Nothing in this Agreement alters the respective liability of the Parties or commits a Party to indemnify a Second Party for any matter arising from or relating to events or transactions that occurred while the Second Party owned a majority interest in RHA or was an authorized delegate of RHA, as applicable.

10. Scope of Releases.

a. Subject only to the deliveries and exchanges required at Closing and except for such claims as may arise from any non-performance or breach of this Agreement and as otherwise expressly provided in this Agreement, Schuster, for herself and her heirs, successors and assigns, hereby releases, discharges, and acquits First Physicians and RHA and their respective successors, assigns, subsidiaries, parent entities, directors, officers, owners, agents, and employees from and in regard to any and all claims, damages, causes of action, costs, attorneys’ fees or any other form of recovery whatsoever which have existed or which may hereafter arise, with regard to any and all disputes or claims arising from or relating to the 2007 transaction, the 2008 transactions, or both that have been made, or that could have been made on or before November 30, 2011, including, but not limited to, any claim regarding the RHA Note, the Shares, the RHA Guaranty, or the Litigation.

b. Subject only to the deliveries and exchanges required at Closing and except for such claims as may arise from any non-performance or breach of this Agreement and as otherwise expressly provided in this Agreement, Michael Schuster, for himself, and his heirs, successors and assigns, hereby releases, discharges, and acquits First Physicians and RHA and their respective successors, assigns, subsidiaries, parent entities, directors, officers, owners, agents, and employees from and in regard to any and all claims, damages, causes of action, costs, attorneys’ fees or any other form of recovery whatsoever which have existed or which may hereafter arise, with regard to any and all disputes or claims arising from or relating to the 2007 transaction, the 2008 transactions, or both that have been made, or that could have been made on or before November 30, 2011, including, but not limited to, any claim regarding the RHA Note, the Shares, the RHA Guaranty, or the Litigation.

c. Subject only to the deliveries and exchanges required at Closing and except for such claims as may arise from any non-performance or breach of this

 

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Agreement and as otherwise expressly provided in this Agreement, First Physicians and RHA, for themselves and their respective successors, assigns, subsidiaries, parent entities, hereby releases, discharges, and acquits Schuster and Michael Schuster and their respective successors, heirs and assigns from and in regard to any and all claims, damages, causes of action, costs, attorneys’ fees or any other form of recovery whatsoever which have existed or which may hereafter arise, with regard to any and all disputes or claims arising from or relating to the 2007 transaction, the 2008 transactions, or both that have been made, or that could have been made on or before November 30, 2011, including, but not limited to, any claim regarding the RHA Note, the Shares, the RHA Guaranty, or the Litigation.

d. The releases described in this Section 10 may be pled as a full and complete defense to, and may be used as the basis for an injunction against, any action, suit, or other proceeding that may be instituted, prosecuted, or attempted in breach of the releases contained herein.

11. Confidentiality and Non-Disparagement.

a. Until such time as they have first been disclosed publicly in circumstances not violating this Agreement, the substantive terms of the Memorandum and this Agreement shall be confidential and shall not be publicly disclosed without the written consent of all Parties to this Agreement. Nothing in this paragraph, however, shall preclude disclosure of non-public information: (1) as necessary to effect the terms of this Agreement, (2) to accountants, attorneys, auditors, or tax advisors to whom disclosure is necessary, provided such individuals are advised of the confidentiality provisions herein and agree to be bound thereby; or (3) to the extent required by applicable Law, duly issued subpoena or civil investigative demand, in which case, the Party receiving such subpoena, civil investigative demand or court order shall provide prompt notice to the Other Parties (unless affirmatively prohibited by Law) to enable such other Parties to object, seek a protective order, or both.

b. As of the Effective Date, each of the Parties shall have a continuing obligation to refrain from making disparaging or negative comments about another Party or their respective family members to any third party. Nothing in this Section ll(b) shall apply to any pleadings or documents filed in good faith in a later legal proceeding.

c. Notwithstanding the foregoing, First Physicians and RHA are permitted to disclose the substantive terms of the Memorandum and this Agreement to potential acquirers, outside investors, or other sources of financing, without reference to the details or merits of the underlying dispute or other aspects of the settlement, provided such acquirer, outside investor, or creditor signs an appropriate non-disclosure agreement, is subject to an obligation of confidentiality, or both.

d. Notwithstanding the foregoing, the Parties may disclose the terms and provisions of this Agreement in any action deemed necessary by one Party against another to enforce the terms of this Agreement.

e. Any Party aggrieved by a breach or threatened breach of this Section 11 shall be entitled to all remedies available at law and in equity, including, without limitation, preliminary and permanent injunctive relief against the breaching, or potentially breaching, Party. For the avoidance of doubt, nothing in this Agreement shall make a Party jointly and severally liable for another Party’s breach or threatened breach.

 

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12. Further Assurances. Each of the Parties hereby agrees to execute and deliver such other documents or agreements and take such other actions as may reasonably be necessary or desirable for consummation of the transactions contemplated by this Agreement or for the purposes of this Agreement.

13. Survival of Covenants, Warranties, and Representations. Notwithstanding any other provision in this Agreement, all representations, warranties, covenants, and agreements of each of the Parties contain in this Agreement will survive the consummation of the transactions contemplated in this Agreement, will not be deemed merged into any instruments or agreements delivered at Closing, and will not be affected by any investigation by or on behalf of the other party.

14. Costs and Expenses.

a. Except as provided in Section 14(b), each Party agrees to pay, without right of reimbursement from any other Party, the costs and expenses incurred by such party incident to the Litigation, including, but not limited to, the negotiation, preparation and execution of the Memorandum, the negotiation, preparation and execution of this Agreement, and the performance of each Party’s respective obligations hereunder. Such costs and expenses includes, but is not limited to, the fees and disbursements of legal counsel, accountants and consultants employed by the respective parties in connection with the Litigation.

b. If any Action is brought for the enforcement or interpretation of any of the rights or provisions of this Agreement, or because of an alleged dispute, breach, default or misrepresentation in connection with any of the provisions of this Agreement, the prevailing party will be entitled to recover reasonable attorneys’ fees and all other costs and expenses incurred in that Action, in addition to any other relief to which it may be entitled.

15. No Admission of Liability. In making this Agreement, no Party is admitting the truth of any claims, allegations, contentions or positions of another Party. The Parties hereto desire to resolve their disputes in an amicable fashion and have entered into this Agreement in good faith and with the desire to forever settle between them those matters described in this Agreement.

16. Acknowledgment. The Parties to this Agreement have entered into this Agreement based upon their own independent analysis of the facts and claims at issue and understand that the facts relied upon may hereafter prove to be other than or different from the facts now known or believed to be true. Each Party expressly accepts and assumes the risk of the facts proving to be different, and each party agrees that the terms and provisions of this Agreement shall be in all respects effective and not subject to termination or rescission by any such difference in facts.

 

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Execution Version

 

17. Predecessors, Successors, Heirs, and Assigns. This Agreement and all of its terms and provisions shall be binding upon and shall inure to the benefit of the Parties and their heirs, beneficiaries, predecessors, successors, assigns, agents, representatives, officers, directors, employees, members, shareholders, owners, parent entities, subsidiaries divisions, affiliates, and attorneys.

18. Choice of Law and Venue. This Agreement and all rights and obligations of the parties hereunder is governed by, and is to be construed and interpreted in accordance with, the laws of the State of Oklahoma applicable to agreements made and to be performed entirely within such State, including all matters of enforcement, validity and performance, and without giving effect to the principles of conflict of laws to the contrary. A Party may initiate in the courts of the State of Oklahoma, County of Oklahoma, or, if it has or can acquire jurisdiction, in the United States District Court for the Western District of Oklahoma, but only in one of those courts and not in any other court, a proceeding seeking to enforce any provision of this Agreement or seeking any remedy in connection with the transactions contemplated by this Agreement. Each of the parties consents to the exclusive jurisdiction of those courts (and of the appropriate appellate courts) in any such action or proceeding and waives any objection to venue laid therein.

19. Certain Interpretive Matters. In construing this Agreement, it is the intent of the Parties that:

a. no consideration may be given to the captions of the sections or subsections, all of which are inserted for convenience in locating the provisions of this Agreement and not as an aid in its construction;

b. examples are not to be construed to limit, expressly or by implication, the matter they illustrate;

c. the word “includes” and its derivatives means “includes, but is not limited to,” and corresponding derivative expressions;

d. a defined term has its defined meaning throughout this Agreement, regardless of whether it appears before or after the place where it is defined;

e. the meanings of the defined terms are applicable to both the singular and plural forms thereof;

f. all references to prices, values or monetary amounts refer to United States dollars;

g. all references to articles, sections, paragraphs, clauses, exhibits or schedules refer to articles, sections, paragraphs and clauses of this Agreement, and to exhibits or schedules attached to this Agreement, unless expressly provided otherwise;

 

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Execution Version

 

h. the words “this Agreement,” “herein,” “hereby,” “hereunder,” and words of similar import refer to this Agreement as a whole and not to any particular article, section or other subdivision, unless expressly so limited;

i. the word “or” is disjunctive but not necessarily exclusive; and

j. all references to agreements or laws are deemed to refer to such agreements or Laws as amended or as in effect at the applicable time.

20. Joint Preparation. The Parties acknowledge that this Agreement was jointly prepared by them, by and through their respective legal counsel, and any uncertainty or ambiguity existing herein shall not be interpreted against either of the Parties, but otherwise according to the application of the rules on the interpretation of contracts, with an overriding intent to fully finally and forever release any and all claims and end all disputes between and among them.

21. Entire Integrated Agreement. This Agreement constitutes the entire integrated agreement between the Parties which have executed it and supersedes any and all other agreements, understandings, negotiations, or discussions, either oral or in writing, express or implied, regarding the subject matters of this Agreement, including the Memorandum. The Parties each acknowledge that no representations, inducements, promises, agreements, or warranties, oral or otherwise, have been made by them, or anyone acting on their behalf, which are not embodied in this Agreement, that they have not executed this Agreement in reliance on any such representation, inducement, promise, agreement, or warranty, and that no representation, inducement, promise, agreement, or warranty not contained in this Agreement including, but not limited to, any purported supplements, modifications, waivers, or terminations of this Agreement shall be valid or binding, unless executed in writing by all Parties to this Agreement.

22. Execution in Multiple Originals. This Agreement may be executed in multiple originals, each of which will be deemed an original but all of which together will constitute but one and the same instrument. A signature of a party to this Agreement sent by facsimile or other electronic transmission will be deemed to constitute an original and fully effective signature of such Party.

[signature page follows]

 

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Execution Version

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement on the date first written above.

 

 

10

Exhibit 10.2

Execution Version

MODIFICATION OF SETTLEMENT AND RELEASE AGREEMENT

Upon mutual execution by the Parties hereto, this document shall amend and modify that certain Confidential Settlement and Release Agreement (the “Agreement”) made and entered into on November 30, 2011 by and between Carol Schuster, an individual (“Schuster”), Michael Schuster, an individual (“Michael Schuster”), First Physicians Capital Group, Inc. (f/k/a Tri-Isthmus Group, Inc.), a Delaware corporation ( “First Physicians”), and Rural Hospital Acquisition, LLC, an Oklahoma limited liability company (individually, “RHA” collectively with First Physicians, “Defendants”) (all of the foregoing, collectively, the “Parties”).

RECOGNIZING that certain material facts bearing on the Parties’ decision to enter into the Settlement may not have been fully or accurately understood or disclosed, the Parties have mutually agreed to modify and amend the Settlement as provided herein, subject to the conditions provided herein, and not to be construed as a new or separate agreement, and upon which the Parties therefore, for good and valuable consideration, agree as follows:

1. Definitions. Capitalized terms used in this Modification shall have the meanings provided in the Agreement unless otherwise stated herein. No provisions of the Agreement are modified, amended, waived or otherwise effected by this Modification except as expressly set forth in this Modification. All provisions of the Agreement not expressly modified herein shall apply equally to this Modification. The Agreement as modified by this Modification shall be construed together as a whole.

2. Modified Settlement Payment Provision. Paragraph 7 of the Agreement is hereby superseded and replaced in its entirety with the following:

Obligations of Defendants. Subject to the terms and conditions of the Agreement and this Modification, Defendants shall perform the following:

a. Defendants shall deliver to Schuster $20,000.00 at the Closing, via immediately available funds, receipt of which is hereby acknowledged.

b. RHA shall transfer, assign, grant, deliver and convey to Schuster without recourse the SPMC Note 1, the SPMC Note 2, and all Guarantees associated therewith, free and clear of all Liens and without any conditions or restrictions on transferability. The transactions contemplated by this Section 7(b) will be effected and evidenced by the endorsement and delivery by RHA to Schuster of the original SPMC Note 1, the original SPMC Note 2, the Guarantees and all other documents as Schuster may reasonably request. RHA shall provide written notice to SPA II of the transactions contemplated by this Section 7(b), receipt of which is hereby acknowledged.

c. Defendants shall pay to the order of Schuster $71,000.00 (the “Offset Recovery”), in the following installments:

 

i.

$5,000.00 to be received by March 15, 2012

 

ii.

$5,000.00 to be received by April 15, 2012

 

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iii.

$5,000.00 to be received by May 15, 2012

 

iv.

$13,000.00 to be received by June 15, 2012

 

v.

$13,000.00 to be received by July 15, 2012

 

vi.

$13,000.00 to be received by August 15, 2012

 

vii.

$8,500.00 to be received by September 15, 2012

 

viii.

The balance to be received by October 15, 2012.

d. In the event of a failure by Defendants to pay the minimum required installment upon the Offset Recovery balance, interest shall accrue and become payable by Defendants to Schuster upon then unpaid balance of the Offset Recovery at the annual rate of 5% until timely paid in full.

3. Integration. Agreement Paragraph 21 is amended by replacing “Agreement” with the phrase “Agreement, together with the subsequently executed Modification,” in each instance.

[signature page follows]

 

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Execution Version

 

ACCEPTED AND AGREED:

 

 

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Exhibit 10.3

Maturity Date Extension

January 17, 2014

For good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto agree to extend the maturity date of that certain Promissory Note, dated February 6, 2009 (the “Note”), granted by First Physicians Capital Group, Inc., a Delaware corporation (the “Company”), to the undersigned (the “Holder”), to June 30, 2014.

IN WITNESS WHEREOF, the parties hereto have caused this Waiver to be executed as of the date first set forth above.

 

Original Outstanding Principal of Holder’s Note:

If Holder is an individual:

If Holder is an entity:

Signature

Name of Entity

Printed Name:

By:

Signature

Date:

Name:

Title:

Date:

 

FIRST PHYSICIANS CAPITAL GROUP, INC.
By:
		Sean Kirrane
		Chief Executive Officer

Exhibit 10.4

WARRANT NO.     

FIRST PHYSICIANS CAPITAL GROUP, INC.

(A Delaware Corporation)

 

WARRANT TO PURCHASE

SHARES OF COMMON STOCK

 

Effective January 17, 2014

THE OFFER AND SALE OF THIS WARRANT (THIS “WARRANT”) AND THE SECURITIES ISSUABLE UPON THE EXERCISE THEREOF (THE “UNDERLYING SECURITIES”) HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE LAWS OF ANY STATE. THIS WARRANT AND THE UNDERLYING SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED, MORTGAGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT WITH RESPECT TO SUCH TRANSFER OR AN OPINION OF ISSUER’S LEGAL COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION UNDER THE SECURITIES ACT IS NOT REQUIRED BY VIRTUE OF AN AVAILABLE EXEMPTION THEREFROM.

THIS CERTIFIES THAT, for value received, SMP Investments I, LLC, a Michigan limited liability company, or its registered assigns (“Holder”), is entitled to purchase, subject to the conditions set forth below, at any time or from time to time during the Exercise Period (as defined in Section 1.2 below), eight million five hundred thousand (8,500,000) shares (“Shares”) of fully paid and non-assessable common stock, par value $0.01 per share (the “Common Stock”), of First Physicians Capital Group, Inc., a Delaware corporation (the “Company”), at the per share purchase price set forth in Section 1.1 below (the “Warrant Price”), subject to the further provisions of this Warrant.

 

1.	EXERCISE OF WARRANT

The terms and conditions upon which this Warrant may be exercised, and the Shares subject hereto may be purchased, are as follows:

1.1 Warrant Price. The Warrant Price shall be $0.01 per Share, subject to adjustment as provided in Section 4 below.

1.2 Method Of Exercise. Holder may at any time beginning on the effective date of this Warrant and for five (5) years from such date of effectiveness, or such later date as the Company may in its sole discretion determine (the “Exercise Period”), exercise in whole or in part the purchase rights evidenced by this Warrant. Such exercise shall be effected by:

(a) the surrender of this Warrant, together with a duly executed copy of the form of notice of exercise attached hereto as Exhibit A, to the Secretary of the Company at its principal offices;

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(b) the payment to the Company, by cash or wire transfer to the Company’s account, of an amount equal to the aggregate Warrant Price for the number of Shares for which the purchase rights hereunder are being exercised; and

(c) the delivery to the Company, if necessary in the discretion of counsel for the Company, to assure compliance with the Securities Act of 1933, as amended (the “Securities Act”), and applicable state securities laws, of an instrument executed by holder certifying that the Shares are being purchased solely for the account of Holder and not with a view to any resale or distribution in violation of the Securities Act or applicable state securities laws.

1.3 Issuance Of Shares and New Warrant. If the purchase rights evidenced by this Warrant are exercised in whole or in part, one or more certificates for the purchased Shares shall be issued as soon as practicable thereafter to Holder. If the purchase rights evidenced by this Warrant are exercised only in part, the Company shall also deliver to Holder at such time a new warrant evidencing the purchase rights regarding the number of Shares (if any) for which the purchase rights under this Warrant remain unexercised and continue in force and effect. All new warrants issued in connection with the provisions of this Section 1.3 shall bear the same date as this Warrant and shall be substantially identical in form and provisions to this Warrant except for the number of Shares purchasable thereunder. Each person in whose name any certificate for Shares is to be issued shall for all purposes be deemed to have become the holder of record of such Shares on the date on which this Warrant was surrendered and payment of the Warrant Price was made, irrespective of the date of delivery of such stock certificate, except that if the date of such surrender and payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such Shares at the close of business on the next succeeding date on which the stock transfer books are open.

 

2.

TRANSFERS

2.1 Transfers. This Warrant and all rights hereunder are transferable in whole or in part by the Holder subject to the provisions of Section 7 below. The transfer shall be recorded on the books of the Company upon (i) the surrender of this Warrant (together with a duly executed and endorsed copy of the form of transfer certificate attached hereto as Exhibit B) to the Secretary of the Company at its principal offices, and (ii) the payment to the Company of all transfer taxes and other governmental charges imposed on such transfer. In the event of a partial transfer, the Company shall issue to the several holders one or more appropriate new warrants.

2.2 Registered Holder. Each holder of this Warrant agrees that until such time as any transfer pursuant to Section 2.1 above is recorded on the books of the Company, the Company may treat the registered Holder of this Warrant as the absolute owner.

2.3 Form Of New Warrants. All new warrants issued in connection with transfers of this Warrant shall bear the same date as this Warrant and shall be substantially identical in form and provisions to this Warrant except for the number of Shares purchasable thereunder.

 

3.	NO FRACTIONAL SHARES

Notwithstanding any adjustment (as required hereby) to the number of Shares purchasable upon the exercise of this Warrant, the Company shall not be required to issue any fraction of a Share upon exercise of this Warrant. If, by reason of any change made pursuant to Section 4 below, the Holder would be entitled, upon the exercise of any rights evidenced hereby, to receive a fractional interest in a Share, the

 

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Company shall, upon such proper exercise of this Warrant, purchase such fractional interest for an amount in cash equal to the fair market value of such fractional interest, determined as of the date of such exercise of this Warrant.

 

4.	ANTIDILUTION PROVISIONS

4.1 Stock Splits And Combinations. If the Common Stock shall at any time be subdivided into a greater number of shares, then the number of Shares purchasable upon exercise of this Warrant shall be proportionately increased and the Warrant Price shall be proportionately decreased; and, conversely, if the Common Stock shall at any time be combined into a smaller number of shares, then the number of Shares purchasable upon exercise of this Warrant shall be proportionately reduced and the Warrant Price shall be proportionately increased. Any adjustments under this Section 4.1 shall become effective at the close of business on the date the subdivision or combination becomes effective.

4.2 Reclassification, Exchange and Substitution. If the Common Stock shall be changed into shares of any other class or classes of stock or other securities of the Company, whether by capital reorganization, reclassification, or otherwise, Holder shall, upon exercise of this Warrant, be entitled to purchase for the same aggregate consideration, in lieu of the Shares that Holder would have become entitled to purchase but for such change, such number, class and series of securities of the Company as would have been issuable in connection with such event to a holder of that number of shares of Common Stock purchasable upon exercise of this Warrant immediately prior to such reorganization, reclassification or other change. The Warrant Price shall be appropriately adjusted to reflect that reorganization, reclassification or other change. Any adjustments under this Section 4.2 shall become effective at the close of business on the date such change of the Common Stock into shares of any other class or classes of stock or other securities of the Company becomes effective.

4.3 Reorganizations, Mergers, Consolidations Or Sale Of Assets. If at any time there shall be a reorganization involving the Common Stock (other than a stock split, combination, reclassification, exchange, or subdivision of shares provided for in Sections 4.1 and 4.2 above) or a merger or consolidation of the Company with or into another corporation, or the sale of all or substantially all of the Company’s assets to any other person, then, as a part of such reorganization, merger, consolidation or sale, lawful provision shall be made so that Holder shall thereafter be entitled to receive upon exercise of this Warrant, in accordance with the terms hereof, in lieu of the Shares that Holder would have become entitled to purchase but for such event, such other securities or property of the Company, or of the successor corporation resulting from such event, to which Holder would have been entitled in such reorganization, merger, consolidation or sale if this Warrant had been exercised immediately before that reorganization, merger, consolidation or sale. In any such case, appropriate adjustment (as determined in good faith by the Company’s Board of Directors) shall be made in the application of the provisions of this Warrant with respect to the rights and interests of Holder after the reorganization, merger, consolidation, or sale to the end that the provisions of this Warrant (including adjustment of the Warrant Price then in effect and number of Shares purchasable upon exercise of this Warrant) shall be applicable after that event, as near as reasonably may be, in relation to any shares or other property deliverable after that event upon exercise of this Warrant. The Company shall provide Holder with at least twenty (20) days’ prior written notice of any of the events described in the first sentence of this Section 4.3.

4.4 Adjustments of Other Distributions. If the Company shall at any time declare and pay or deliver to the holders of Common Stock a distribution payable in securities of other persons, evidences of indebtedness issued by the Company or other persons, assets (excluding cash dividends) or options or rights, in any case of a kind not referred to above, then, upon exercise of this Warrant, Holder shall be entitled to receive a proportionate share of any such distribution as though Holder was the holder of the number of shares of Common Stock into which this Warrant may be exercised as of the record date fixed for the determination of the holders of Common Stock entitled to receive such distribution.

 

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4.5 Certificate as to Adjustments. In the case of an event requiring adjustment under this Section 4, the Company will, as soon as reasonably practicable following such event requiring the adjustment, compute such adjustment in accordance with the terms hereof and notify Holder of the event requiring adjustment and the calculations and results of such adjustment.

4.6 Reservation of Stock Issuable Upon Exercise. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock such number of shares of Common Stock as shall from time to time be sufficient to effect the exercise of this Warrant. If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the exercise of this Warrant, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose.

4.7 Method of Calculation. All calculations under this Section 4 shall be made to the nearest one hundredth of a share.

 

5.	RIGHTS PRIOR TO EXERCISE OF WARRANT

This Warrant does not entitle Holder to any of the rights of a stockholder of the Company, including (without limitation) the right to receive dividends or other distributions, to vote or consent, or to receive notice as a stockholder of the Company. If, however, at any time prior to the expiration of this Warrant and prior to its exercise,

(a) the Company shall declare any dividend payable in any securities upon outstanding shares of Common Stock or make any other distribution (other than a regular cash dividend) to the holders of shares of Common Stock;

(b) the Company shall offer to the holders of shares of Common Stock any additional shares of Common Stock or securities convertible into or exchangeable for shares of Common Stock or any right to subscribe for or purchase any thereof; or

(c) a dissolution, liquidation or winding-up of the Company (other than in connection with a reorganization, consolidation, merger, or sale of all or substantially all of its assets as an entirety) shall be approved by the Company’s Board of Directors,

then, in any one or more of such events the Company shall give notice in writing of such event to Holder, at its address as it shall then appear on the Company’s records, at least twenty (20) days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the stockholders entitled to such dividends, distribution, or subscription rights, or for the determination of stockholders entitled to vote on such proposed dissolution, liquidation or winding-up. Such notice shall specify such record date or the date of closing the transfer books, as the case may be.

Any failure to give such notice or any defect therein, however, shall not affect the validity of any action taken in connection with such dividend, distribution or subscription rights, or such proposed dissolution, liquidation or winding-up.

 

6.	SUCCESSORS AND ASSIGNS

The terms and provisions of this Warrant shall inure to the benefit of, and be binding upon, the Company and its successors and assigns and Holder and its successors and permitted assigns.

 

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7.	RESTRICTED SECURITIES

To enable the Company to comply with the Securities Act and applicable state securities laws, the Company may require Holder, as a condition of the transfer or exercise of this Warrant, to give written assurance satisfactory to the Company that this Warrant, or in the case of an exercise hereof the Shares, are being acquired for its own account, for investment only, with no view to the distribution of the same in violation of the Securities Act or applicable state securities laws. Any disposition of all or any portion of this Warrant or the Shares shall not be made unless and until:

(a) There is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such registration statement; or

(b) Holder has (i) notified the Company of the proposed disposition and furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and (ii) furnished the Company with an opinion of counsel, satisfactory to the Company, that such disposition will not require registration of such securities under the Securities Act and applicable state securities laws.

Holder acknowledges that this Warrant is, and each of the Shares issuable upon the exercise hereof will be, a restricted security, and that the certificate or certificates evidencing such Shares will bear a legend substantially similar to the following:

“THE OFFER AND SALE OF THE SHARES REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE. THEY MAY NOT BE OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED, MORTGAGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT COVERING THESE SECURITIES UNDER SUCH ACT OR LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT REGISTRATION IS NOT REQUIRED THEREUNDER.”

 

8.	LOSS OR MUTILATION

Upon receipt by the Company of satisfactory evidence of the ownership of and the loss, theft, destruction, or mutilation of this Warrant, and (i) in the case of loss, theft, or destruction, upon receipt by the Company of indemnity satisfactory to it, or (ii) in the case of mutilation, upon receipt of this Warrant and upon surrender and cancellation of this Warrant, the Company shall execute and deliver in lieu thereof a new Warrant representing the right to purchase an equal number of Shares.

 

9.

NOTICES

All notices, requests, demands and other communications under this Warrant shall be in writing and shall be deemed to have been duly given on the date of receipt (or refusal of receipt) if delivered personally or by courier by the party to whom notice is to be given, or on the earlier of the third business day after the date of mailing or receipt if mailed to the party to whom notice is to be given by first class mail, registered or certified, postage prepaid, and properly addressed as follows: if to Holder, at its address as shown in the Company’s records; and if to the Company, at its principal office. Either party may change its address for purposes of this Section 9 by giving the other party written notice of the new address in the manner set forth above.

 

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10.	GOVERNING LAW; JURISDICTION

This Warrant shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Warrant and all disputes arising hereunder shall be governed by, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Delaware. Any suit, action or proceeding seeking to enforce any provision of, or based on any dispute or matter arising out of or in connection with, this Warrant must be brought in the state and federal courts located in Los Angeles, County, California. The Company and the Holder each (a) consent to the exclusive jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding, (b) irrevocably waive, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum, (c) will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, and (d) will not bring any action relating to this Warrant in any other court.

 

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed on its behalf by one of its officers thereunto duly authorized as of January 17, 2013.

 

 

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EXHIBIT A

NOTICE OF EXERCISE

First Physicians Capital Group, Inc.

9663 Santa Monica Blvd., #959

Beverly Hills, CA 90210

Gentlemen:

The undersigned,                     , hereby elects to purchase, pursuant to the provisions to the foregoing Warrant held by the undersigned,                      shares of the Common Stock, par value $0.01 (the “Common Stock”), of First Physicians Capital Group, Inc.

The undersigned (check one and complete):

        herewith encloses the Warrant and cash or has made a wire transfer to the Company’s account in the amount of $         in payment of the Warrant Price.

The undersigned hereby represents and warrants as follows:

(a) the undersigned is acquiring such shares of the Common Stock for its own account for investment and not for resale or with a view to distribution thereof in violation of the Securities Act of 1933, as amended, and the regulations promulgated thereunder (the “Securities Act”); and

(b) the undersigned is an “accredited investor” as defined in Rule 501 of Regulation D promulgated under the Securities Act and, if an entity, was not organized for the purpose of acquiring the Warrant or such shares of the Common Stock. The undersigned’s financial condition is such that it is able to bear the risk of holding such securities for an indefinite period of time and the risk of loss of its entire investment. The undersigned has sufficient knowledge and experience in investing in companies similar to the Company so as to be able to evaluate the risks and merits of its investment in the Company.

Please issue a certificate or certificates for such shares of the Common Stock in the following name or names and denominations and deliver such certificate or certificates to the person or persons listed below at their respective address set forth below:

 

If said number of shares of Common Stock shall not be all the shares of the Common Stock issuable upon exercise of the attached Warrant, a new Warrant is to be issued in the name of the undersigned for the remaining balance of such shares of the Common Stock less any fraction of a share of the Common Stock paid in cash pursuant to Section 3 of the attached warrant.

DATED:                 ,         .

 

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EXHIBIT B

ASSIGNMENT FORM

FOR VALUE RECEIVED the undersigned registered owner of this Warrant hereby sells, assigns and transfers unto the Assignee named below all of the rights of the undersigned under this Warrant, with respect to the number of Shares of Common Stock set forth below:

 

		No. of Shares
Name and Address of Assignee		Common Stock

and does hereby irrevocably constitute and appoint as Attorney                                          to register such transfer on the books of                                          maintained for the purpose, with full power of substitution in the premises.

Dated:                  ,         .

 

NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within Warrant in every particular, without alternation or enlargement or any change whatsoever.

Exhibit 10.5

Waiver of Default

In accordance with the terms of that certain Promissory Note, dated August 1, 2011 (the “Note”), granted by First Physicians Capital Group, Inc., a Delaware corporation (the “Company”), to the undersigned (the “Holder”), the Holder hereby waives any and all claims or rights pursuant to the terms of the Note relating to the occurrence of an event prior to (and including) the date of this Waiver that would constitute an Event of Default (as that term is defined in the Note).

IN WITNESS WHEREOF, the Holder has caused this Waiver to be executed as of the date set forth below.

 

Original Outstanding Principal of Holder’s Note:

If Holder is an individual:

If Holder is an entity:

Signature

Name of Entity

Printed Name:

By:

Signature

Date:

Name:

Title:

Date: