Proposal 4: Approval, in accordance with Nasdaq Listing Rule 5635(d), of the issuance of up to 3,341,130 shares of Class A common stock upon the exercise of outstanding Class A common stock warrants held by VBC Growth SPV 5, LLC
The Company is asking stockholders to approve the issuance of up to 3,341,130 shares of Class A common stock upon the exercise of outstanding Class A common stock warrants held by VBC Growth SPV 5, LLC (“VBC 5”), for purposes of Nasdaq Listing Rule 5635(d), as described in more detail below.
General Background of the May 2025 Financing
On May 29, 2025, P3 Health Group, LLC (“P3 LLC”), our subsidiary, entered into a financing transaction with VBC 5, consisting of an unsecured promissory note (the “Promissory Note”) and the VBC 5 Warrants (as defined below) to purchase up to 3,341,130 shares of Class A Common Stock (the “May 2025 Financing”). VBC 5 is a Delaware limited liability company managed by Chicago Pacific Founders GP III, L.P. (“CPF GP III”), an affiliate of the principal stockholder of the Company. The entry into the Promissory Note and the issuance of the VBC 5 Warrants was approved by a committee of independent, disinterested directors of the Company.
VBC 5 Promissory Note
The Promissory Note was issued by P3 LLC to VBC 5 on May 29, 2025, and provided for funding of up to $70.0 million, available for draw by P3 LLC in three tranches, as follows: (i) a first tranche of $15.0 million available to P3 LLC that was drawn on May 29, 2025, (ii) a second tranche of up to $15.0 million available at the Company’s sole option in a single draw, on or prior to June 22, 2025, and (iii) a third tranche of $40.0 million available upon mutual agreement of P3 LLC and VGS 5 in one or more draws no later than December 31, 2025. The maturity date of the Promissory Note is August 13, 2028. Interest is payable at 19.5% per annum on a quarterly cycle (in arrears) beginning June 30, 2025. P3 LLC may elect to pay interest 11.5% in kind and 8.0% in cash, but if the terms of the Subordination Agreement (as defined below) do not permit P3 LLC to pay interest in cash, interest will be paid entirely in-kind.
On June 21, 2025, we delivered a request to VBC 5 for $15.0 million in funding related to the second tranche, and VBC 5 funded $8.5 million in July 2025 and the additional $6.5 million was funded on August 12, 2025. On October 3, 2025, we delivered a request to VBC 5 for $13.0 million in funding related to the third tranche, which was funded on October 7, 2025. On December 30, 2025, we delivered a request to VBC 5 for $8.0 million in funding related to the third tranche, which was funded on January 8, 2026.
On February 11, 2026, P3 LLC entered into an Amendment to the Promissory Note with VBC 5 (the “Amendment”), which extended the availability period for the third tranche of funding. Under the Amendment, the remaining $19.0 million of the third tranche was available for one or more draws through June 30, 2026. An additional $10.0 million in funding related to the third tranche was funded on February 11, 2026, and the remaining $9.0 million in funding related to the third tranche was funded on March 27, 2026.
The Promissory Note may be prepaid, at our option, either in whole or in part, without penalty or premium, at any time and from time to time, subject to the payment of the back-end fee described below; provided that prepayments must be in increments of at least 5.0% of $70.0 million, the maximum draw amount. The Promissory Note provides for mandatory prepayments with the proceeds of certain asset sales, and VBC 5 has the right to demand payment in full upon (i) a “Change of Control” of the Company and (ii) certain “Qualified Financings” (each, as defined in the Promissory Note).
The Promissory Note restricts P3 LLC’s ability and the ability of its subsidiaries to, among other things, incur indebtedness and liens, and make investments and restricted payments. The maturity date may be accelerated as a remedy under certain default provisions in the Promissory Note, or in the event a mandatory prepayment event occurs.
Pursuant to the Promissory Note, P3 LLC paid VBC 5 on February 13, 2025 an up-front fee of 1.5% of $70.0 million, the maximum draw amount. In addition, P3 LLC will pay VBC 5 a back-end fee at the time the loans issued under the Promissory Note are repaid as follows: (i) if repaid prior to June 30, 2025, 2.25% of the aggregate principal amount of the loans advanced to P3 LLC on or prior to such date; (ii) if repaid from July 1, 2025 through September 30, 2025, 4.5% of the aggregate principal amount of the loans advanced to P3 LLC on or prior to such date; (iii) if repaid from October 1, 2025 through December 31, 2025, 6.75% of the aggregate
