Restrictions on Transfers
To preserve valuable tax benefits, Article XIV of the Restated Certificate of Incorporation of P10 Holdings, Inc. (“P10”), as amended, contains substantial restrictions on the ability to transfer P10’s common stock. Subject to limited exceptions, any attempted transfer of common stock shall be prohibited and void to the extent that, as a result of such transfer (or any series of transfers of which such transfer is a part), either (i) any person or group of persons shall become a holder of 4.99% or more of P10’s common stock or (ii) the percentage stock ownership interest in P10 of any holder of 4.99% or more of P10’s common stock shall be increased (a “Prohibited Transfer”). These restrictions shall not apply to an attempted transfer if the transferor or the transferee obtains the written approval of P10’s Board of Directors.
A purported transferee of a Prohibited Transfer shall not be recognized as a stockholder of P10 for any purpose whatsoever in respect of the securities which are the subject of the Prohibited Transfer (the “Excess Securities”), including, without limitation, the right to vote such Excess Securities and to receive dividends or distributions, whether liquidating or otherwise, in respect thereof, if any. Once the Excess Securities have been acquired in a transfer that is not a Prohibited Transfer, the securities shall cease to be Excess Securities.
If P10’s Board determines that a transfer of securities constitutes a Prohibited Transfer then, upon written demand by P10, the purported transferee shall transfer or cause to be transferred any certificate or other evidence of ownership of the Excess Securities within the purported transferee’s possession or control, together with any distributions paid by P10 with respect to such Excess Securities, to an agent designated by P10. Such agent shall thereafter sell such Excess Securities and the proceeds of such sale shall be distributed as set forth in the Restated Certificate of Incorporation, as amended. If the purported transferee of a Prohibited Transfer has resold the Excess Securities before receiving such demand, such person shall be deemed to have sold the Excess Securities for P10’s agent and shall be required to transfer to such agent the proceeds of such sale, which shall be distributed as set forth in the Restated Certificate of Incorporation, as amended.
The foregoing summary does not purport to be complete. Stockholders and other interested persons should refer to Article XIV of P10’s Restated Certificate of Incorporation, as amended, for the full text of the restrictions described above.
P10 is also party to a Rights Agreement with American Stock Transfer & Trust Company, LLC, as rights agent, designed to preserve the value of P10’s significant U.S. net operating loss carryforwards (“NOLs”) and other tax benefits by deterring transfers of P10’s common stock that could result in an “ownership change” under Section 382 of the Internal Revenue Code. In connection with the Rights Agreement, the Board has declared a dividend to P10 stockholders of record as of the close of business on June 1, 2020 (the “Record Date”), for each outstanding share of P10’s common stock, of one right (a “Right”) to purchase one one-thousandth of a share of a new series of participating preferred stock of P10 at a specified exercise price.
Pursuant to the Rights Agreement, if any person or group becomes a 4.99% holder, then, subject to certain exceptions, there would be a triggering event under the Rights Agreement. The Rights would then become exercisable and entitle stockholders (other than the acquiring person or group) to purchase additional shares of P10 common stock at a significant discount and result in significant dilution in the economic interest and voting power of the acquiring person or group. In its discretion, the Board of Directors of P10 may exempt certain transactions from the provisions of the Rights Agreement, including if the Board determines that the transaction will not jeopardize P10’s tax benefits, or the transaction will otherwise serve P10’s best interests. Any stockholder desiring to become a 4.99% holder can request an exemption from the Board by submitting certain basic information to P10 and following the other instructions included in the Rights Agreement. The Rights Agreement and the rights issued under the Rights Agreement will expire on May 20, 2023, or on an earlier date if certain events occur, as described more fully in the Rights Agreement.