(3)
| Based solely on Amendment No. 2 to Schedule 13D filed on October 20, 2022 by Knighthead Capital Management, LLC (“Knighthead”), Knighthead Master Fund, L.P. (“KHMF”), Knighthead Fund, L.P. (“KHNY”), Knighthead Annuity & Life Assurance Company (“KHAL”), and Knighthead Distressed Opportunities Fund, L.P. (“KHDOF”) hold 17,753,345 shares of Advent, Advent GP Luxembourg, the Advent Luxembourg Funds, Advent GP Cayman, the Advent Cayman Funds, Advent Top GC, the Advent AP FundsClass A Common Stock, par value $0.0001 per share (“Class A Common Stock”), including (i) 12,486,380 shares of Class A Common Stock, (ii) 3,157,147 shares of Class A Common Stock issuable upon exercise of an equal number of warrants to acquire shares of Class A Common Stock upon payment of $0.01 per share (“Penny Warrants”) and Advent Co-Invest Fund is Prudential Tower, 800 Boylston Street, Suite 3300, Boston, MA 02199.(2)
| Based solely on Amendment Number 1 to the Schedule 13D filed on August 6, 2021 by Fortress Acquisition Sponsor II LLC (“Sponsor”), Hybrid GP Holdings (Cayman) LLC (“Cayman GP”), Hybrid GP Holdings LLC (“Hybrid GP”), FIG LLC (“FIG LLC”), Fortress Operating Entity I LP (“FOE I”), FIG Corp. (“FIG Corp.”), and Fortress Investment Group LLC (“Fortress”). Sponsor directly beneficially owns an aggregate of 16,025,000 shares of Common Stock and 2,966,666 shares of Common Stock issuable upon the exercise of the same number of private placement warrants. Cayman GP controls the general partners of certain investment funds that together, pursuant to a transfer agreement, acquired a majority equity interest in Sponsor. Hybrid GP is the sole owner of Cayman GP. FIG LLC indirectly controls certain investment funds (the “Funds”) managed or advised by controlled affiliates of FIG LLC, which Funds hold all of the outstanding equity interest in Sponsor. FOE I is the sole owner of FIG LLC and the managing member of, and holds the majority of equity interest in, Hybrid GP. FIG Corp. is the general partner of FOE I. Fortress is the sole owner of FIG Corp. Each of Cayman GP, Hybrid GP, FIG LLC, FOE I, FIG Corp. and Fortress may be deemed to indirectly beneficially own the securities held by Sponsor. As the Co-Chief Investment Officers of the fund that owns Sponsor (through advisory and general partner entities) each of Peter L. Briger, Jr., Dean Dakolias, Andrew McKnight and Joshua Pack participates in the voting and investment decisions with respect to the shares of Common Stock held by Sponsor, but each of them disclaims beneficial ownership thereof. The address of each of the entities and individuals named in this footnote is 1345 Avenue of the Americas, 46th Floor, New York, New York 10105.(iii) 2,109,818 shares of Class A Common Stock issuable upon exercise of an equal number of warrants to acquire shares of Class A Common Stock upon payment of $3.00 per share (“$3 Warrants”) of which KHMF holds 7,341,971 shares of Class A Common Stock, including (i) 5,103,894 shares of Class A Common Stock, (ii) 1,342,846 Penny Warrants and (iii) 895,231 $3 Warrants. KHNY holds 2,252,938 shares of Class A Common Stock, including (i) 1,592,511 shares of Class A Common Stock, (ii) 396,256 Penny Warrants and (iii) 264,171 $3 Warrants. KHAL holds 5,004,089 shares of Class A Common Stock, including (i) 3,975,853 shares of Class A Common Stock, (ii) 616,942 Penny Warrants and (iii) 411,294 $3 Warrants. KHDOF holds 3,154,347 shares of Class A Common Stock, including (i) 1,814,122 shares of Class A Common Stock, (ii) 801,103 Penny Warrants and (iii) 539,122 $3 Warrants. |
(3)
| Based solely on a Schedule 13D filed on March 4, 2022 by Knighthead Capital Management, LLC (“Knighthead”), Knighthead Master Fund, L.P. (“KHMF”), Knighthead Fund, L.P. (“KHNY”), Knighthead Annuity & Life Assurance Company (“KHAL”), and Knighthead Distressed Opportunities Fund, L.P. (“KHDOF”). Consists of (a) 3,411,571 shares of Class A Common Stock held by KHMF, 1,039,606 shares of Class A Common Stock held by KHNY, 2,607,082 shares of Class A Common Stock held by KHAL, and 1,181,383 shares of Class A Common Stock held by KHDOF, (b) 1,342,846 penny warrants to acquire shares of Class A Common Stock upon payment of $0.01 per share (“Penny Warrants”) held by KHMF, 396,256 Penny Warrants held by KHNY, 616,942 Penny Warrants held by KHAL, and 779,884 Penny Warrants held by KHDOF, and (c) 895,231 warrants to acquire shares of Class A Common Stock upon payment of $3.00 per share (“$3 Warrants”) held by KHMF, 264,171 $3 Warrants held by KHNY, 411,294 $3 Warrants held by KHAL, and 519,923 $3 Warrants held by KHDOF. Knighthead, pursuant to certain investment management agreements serves as the investment manager of KHMF and KHDOF and pursuant to certain investment advisory agreements serves as the investment advisor to KHNY and KHAL. Investment decision with respect to the Class A Common Stock held by the Knighthead Funds are made by Knighthead in its sole discretion. Knighthead beneficially owns an aggregate of 13,466,189 shares of Common Stock, including (i) 8,239,642 shares of Class A Common Stock, (ii) 3,135,928 Penny Warrants, and (iii) 2,090,619 $3 Warrants. The address of each of the entities named in this footnote is 280 Park Avenue, 22nd Floor, New York, New York 10017. (4)
| Includes options able to be exercised within 60 days of March 31, 2023. |
(4)
| Includes 404 for John Larsen’s restricted stock awards that will be settled into shares within 60 days of April 5, 2022. |
(5)
| Includes 1,211 for Diana Chafey’s restricted stock awards that will be settled into shares within 60 days of April 5, 2022. |
TABLE OF CONTENTS APPROVAL OF AN AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
TO IMPLEMENT A REVERSE STOCK SPLIT OF COMMON STOCK
IN A RATIO BETWEEN 1 FOR 20 AND 1 FOR 50 BY AUGUST 31, 2023 At the Annual Meeting, the stockholders will be asked to approve an amendment to the Company’s Charter to effect a reverse stock split (the “Reverse Stock Split”). Such approval will require the affirmative vote of majority of the votes cast by the stockholders present in person or represented by proxy at the meeting and entitled to vote thereon. On April __, 2023, our Board of Directors approved the amendment to our Certificate of Incorporation (the “Reverse Stock Split Amendment”), a copy of which is attached hereto as Appendix B. If the Transaction Proposal and the Declassification Proposal are approved and the Company files a Third Amended and Restated Certificate of Incorporation to implement the declassification, the Reverse Stock Split will be an amendment to the Third Amended and Restated Certificate of Incorporation. If Proposal 2 is not approved, the Reverse Stock Split Amendment will be an amendment to the Second Amended and Restated Certificate of Incorporation. If approved by our stockholders, the Reverse Stock Split Amendment would permit, but would not require, the Board to effect a Reverse Stock Split of our Common Stock issued and outstanding or held in treasury, as well as the number of shares issuable upon the exercise or vesting of all then-outstanding stock options, warrants and restricted stock units convertible into Common Stock by a ratio of not less than 1-for-20 and not more than 1-for-50, with the exact ratio to be set at a whole number within this range as determined by the Board (or a duly authorized committee thereof) in its sole discretion. The Reverse Stock Split, if effected, would affect all of our holders of Common Stock uniformly. If this Proposal is approved by our stockholders, we intend to file with the Secretary of State of the State of Delaware the Reverse Stock Split Amendment and implement the Reverse Stock Split as soon as practicable after the Annual Meeting, in order to enable the Company to have enough authorized shares of Common Stock available under its Charter to implement the Transaction (see the Transaction Proposal). The Board also may determine in its discretion not to effect the Reverse Stock Split and not to file the Reverse Stock Split Amendment. No further action on the part of stockholders will be required to either implement or abandon the Reverse Stock Split. The following description of the proposed amendment is a summary and is subject to the full text of the proposed Reverse Stock Split Amendment, a copy of which is attached hereto as Appendix B. Purpose and Background for the Reverse Stock Split The Board’s primary objective in proposing the Reverse Stock Split is to raise the per share trading price of the Company’s Common Stock. As noted above, the Reverse Stock Split would also enable the Company to have enough authorized shares of Common Stock available under its Charter to implement the Transaction (see the Transaction Proposal). NYSE Compliance. On November 18, 2022, the Company received a notice from the New York Stock Exchange (“NYSE”) that the Company was not in compliance with one of the NYSE’s continued listing standards, as the average closing price of the Company’s Common Stock was less than $1.00 per share over a consecutive 30- trading day period. Pursuant to the NYSE’s continued listing standards, the Company has six months following receipt of the notice to regain compliance with the minimum share price requirements, with the possibility of extension at the discretion of the NYSE. In order to regain compliance, on the last trading day in any calendar month during the cure period, the Company’s Common Stock must have: (i) a closing price of at least $1.00 per share; and (ii) an average closing price of at least $1.00 per share over the 30 trading day period ending on the last trading day of such month. The Company’s failure to regain compliance during this period could result in delisting. Continued Listing on NYSE. The Board believes that the continued listing of our Common Stock on the NYSE is beneficial for our stockholders and that the anticipated increased market price of the Company’s Common Stock that will result from the Reverse Stock Split may enhance the Company’s ability to regain compliance with the NYSE’s minimum share price requirements for continued listing. If the NYSE were to delist the Company’s Common Stock for any reason, it could negatively impact our reputation and, as a consequence, our business, and would likely decrease the liquidity and market price of our Common Stock; the number of investors willing to hold or acquire our TABLE OF CONTENTS Common Stock; our ability to access equity markets, issue additional securities and obtain additional financing in the future; and our ability to provide equity incentives to our employees. Investor Considerations. The Board also believes that the anticipated increased market price of the Company’s Common Stock that may result from the Reverse Stock Split may encourage investor interest and improve the marketability of the Common Stock to a broader range of investors. Because of the trading volatility often associated with low-priced stocks, many brokerage firms and institutional investors have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers. The closing sale price of our Common Stock on March 31, 2023, was $0.2542 per share. To decrease the risk of market manipulation of our common stock. The Board believes that the potential increase in stock price may reduce the risk of market manipulation of our common stock, which we believe is enhanced when our stock trades below $1.00 per share. By reducing market manipulation risk, we may also thereby potentially decrease the volatility of our stock price. Reverse Stock Split Ratio. The purpose of seeking stockholder approval of exchange ratios within the ratio range (rather than a fixed exchange ratio) is to provide the Company with the flexibility to achieve the desired results of the Reverse Stock Split. If the stockholders approve this proposal, then the Board or an authorized committee thereof, in its sole discretion, would affect the Reverse Stock Split only upon the determination by the Board or an authorized committee thereof that such action would be in the best interests of the Company and our stockholders at that time. If the Board, or an authorized committee thereof, were to effect the Reverse Stock Split, then the Board or such committee would set the effective date and select the final ratio. No further action on the part of stockholders would be required to either implement or abandon the Reverse Stock Split. If the stockholders approve the proposal, and the Board or an authorized committee thereof determines to effect the Reverse Stock Split, we would communicate to the public, prior to the effective date, additional details regarding the Reverse Stock Split, including the final ratio selected by the Board or an authorized committee thereof. The Reverse Stock Split Amendment is not being proposed in response to any effort of which we are aware to accumulate shares of our outstanding Common Stock or obtain control of the Company, nor is it a plan by management to recommend such actions to our Board or our stockholders. We anticipate that the Reverse Stock Split will, however, contribute to the Company being able to execute the Transaction if approved by stockholders, which, as described in the Transaction Proposal, will result in the Preferred Equityholders’ accumulation of securities convertible into approximately 71% of the Company’s outstanding Common Stock as of March 31, 2023. Effects of Reverse Stock Split The primary effects of the reverse stock split as of the effective date would be: each 20 to 50 shares of common stock outstanding (depending on the Reverse Stock Split ratio selected by the Board) will be combined, automatically and without any action on the part of the Company or its stockholders, into one new share of Common Stock; no fractional shares of Common Stock will be issued; any fractional share would be rounded up to the next whole share (as detailed below); proportionate adjustments will be made to the number of shares issuable upon the exercise or vesting of all then-outstanding stock options, warrants and restricted stock units, which will result in a proportional decrease in the number of shares of Common Stock reserved for issuance upon exercise or vesting of such stock options, warrants and restricted stock units, and, in the case of stock options, a proportional increase in the exercise price of all such stock options; the number of shares of Common Stock then reserved for issuance under our equity compensation plan will be reduced proportionately; The Board believes that the Reverse Stock Split will increase the price of the Company’s Common Stock in order to, among other things: Enable the Company to regain compliance with the minimum stock price requirements for listing on the NYSE: Maintain a share price to remain listed on the NYSE or another national exchange; and TABLE OF CONTENTS Generate interest in the Company among investors, and in particular institutional investors that have investment policies that prohibit investment in lower-priced securities. Risk related to Reverse Stock Split. The Board cannot predict, however, the effect of the Reverse Stock Split upon the market price for the Company’s Common Stock, and the history of similar reverse stock splits for companies in like circumstances is varied. The market price per share of the Company’s Common Stock after the Reverse Stock Split may not rise in proportion to the reduction in the number of shares of Common Stock outstanding resulting from the Reverse Stock Split; The Common Stock may not remain at an increased level for any period, which would reduce the market capitalization of the Company; There is no assurance that the market price per share of the Common Stock would not decline below the anticipated stock price following the Reverse Stock Split or that the trading price would remain above the threshold required for continued listing on the NYSE; The market price of the Company’s Common Stock is also based on our performance and other factors, many of which are unrelated to the number of shares outstanding, the effect of which the Board cannot predict; The fewer shares of Common Stock that will be available to trade will possibly cause the trading market of the Company’s Common Stock to become less liquid, which could have an adverse effect on the price of the Company’s Common Stock. Fractional Shares. The Reverse Stock Split will affect all stockholders of the Company uniformly and will not affect any stockholder’s percentage ownership interests or proportionate voting power, except to the extent that the Reverse Stock Split results in any stockholders owning a fractional share. If a stockholder would otherwise receive a fractional share post-split the share amount will be rounded to the next whole share. The principal effect of the Reverse Stock Split will be to reduce the 207,384,260 outstanding shares as of March 31, 2023 by the ratio range of 1-for-20 to 1-for-50 shares, depending on the final ratio chosen by the Board or an authorized committee thereof. Outstanding Equity Rights. In addition, all outstanding options, stock appreciation rights, warrants, restricted stock awards and restricted stock units (collectively, the “Outstanding Equity Rights”), entitling the holders thereof to acquire, through purchase, exchange or otherwise, shares of Common Stock will enable such holders to acquire upon exercise of their respective Outstanding Equity Rights that number of shares of Common Stock, as applicable, as adjusted based on the final ratio, which such holders would have been able to purchase upon exercise or conversion, as and to the extent applicable, of their respective Outstanding Equity Rights immediately preceding the Reverse Stock Split, at an exercise price or conversion rate, as and to the extent applicable, equal to the exercise price or conversion rate, as applicable, specified before the Reverse Stock Split, as adjusted by the final ratio, resulting in the same aggregate price being required to be paid upon exercise or conversion thereof immediately preceding the Reverse Stock Split. The Reverse Stock Split will reduce the number of outstanding shares of our Common Stock without a proportionate reduction in the number of shares of authorized but unissued Common Stock in our Certificate of Incorporation, which will give the Company a significantly larger number of authorized shares, as a percentage of total outstanding shares, available to be issued in the future without further stockholder action, except as may be required by applicable laws or the rules of any stock exchange on which our Common Stock is listed. The issuance of additional shares of our Common Stock may have a dilutive effect on the ownership of existing stockholders. The larger number of authorized but unissued shares will contribute to the Company being able to execute the Transaction, which, as described in the Transaction Proposal, will result in the Preferred Equityholders’ accumulation of securities convertible into approximately 71% of the Company’s outstanding Common Stock as of March 31, 2023. The Reverse Stock Split may result in some stockholders owning “odd lots” of less than 100 shares of Common Stock. Odd lot shares may be more difficult to sell, and brokerage commissions and other costs of transactions in odd lots may be higher than the costs of transactions in “round lots” of even multiples of 100 shares. Par Value. The Reverse Stock Split will not affect the par value of the Company’s Common Stock. As a result, on the effective date, the present value of the stated capital on the Company’s balance sheet attributable to the TABLE OF CONTENTS Common Stock will be reduced based on the final ratio, and the additional paid-in capital account will be increased with the amount by which the stated capital is reduced. The per share net loss and net book value of the Common Stock will be retroactively increased for each period because there will be fewer shares of Common Stock outstanding. Assuming Proposal 5 Is Approved by Stockholders and Implemented by the Board The table below illustrates the effect, as of one for twenty to one for fifty of a Reverse Stock Split at certain ratios on (i) the shares of Common Stock issued and outstanding; (ii) the shares of Common Stock reserved for future issuance under the Company’s 2021 Equity Incentive Plan, as amended, as well as any other securities underlying the Common Stock; and (iii) the resulting number of shares of Common Stock available for issuance: Pre-Split | | | 207 | | | 102 | | | 161 | One for Twenty | | | 10.35 | | | 5.1 | | | 454.55 | One for Thirty | | | 6.9 | | | 3.4 | | | 459.7 | One for Forty | | | 5.175 | | | 2.55 | | | 462.275 | One for Fifty | | | 4.14 | | | 2.04 | | | 463.82 |
Potential Anti-Takeover Effect As noted above, the Reverse Stock Split would result in an increased proportion of unissued authorized shares to issued shares, which could have possible anti-takeover effects and could be used by us to oppose a hostile takeover attempt or to delay or prevent changes in our control or management (for example, by permitting issuances that would dilute the stock ownership of a person seeking to effect a change in the composition of the board of directors or contemplating a tender offer or other transaction for the combination of us with another company). These authorized but unissued shares could (within the limits imposed by applicable law) be issued in one or more transactions that could make a change of control of the Company more difficult, and therefore more unlikely, or used to resist or frustrate a third-party transaction that is favored by a majority of the independent stockholders. For example, without further stockholder approval, our Board could (within the limits imposed by applicable law) strategically sell shares of Common Stock in a private transaction to purchasers who would oppose a takeover or favor our then current Board, or the shares could be available for potential issuance pursuant to a stockholder rights plan. The additional authorized shares could be used to discourage persons from attempting to gain control of the Company by diluting the voting power of shares then outstanding or increasing the voting power of persons that would support the Board in a potential takeover situation, including by preventing or delaying a proposed business combination that is opposed by the Board although perceived to be desirable by some stockholders. The issuance of additional shares to certain persons allied with our management could have the effect of making it more difficult to remove our current management by diluting the stock ownership or voting rights of persons seeking to cause such removal. Despite these possible anti-takeover effects, this Reverse Stock Split amendment has been prompted by business and financial considerations and not by the threat of any hostile takeover attempt or any effort of which we are aware to accumulate our stock or to obtain control of our company by means of a merger, tender offer, solicitation in opposition to management or otherwise (nor is our Board currently aware of any such attempts directed at us). Nevertheless, stockholders should be aware that approval of this Proposal could facilitate future efforts by us to deter or prevent changes in our control, including transactions in which the stockholders might otherwise receive a premium for their shares over then current market prices. Procedure for Effecting Reverse Stock Split If the Reverse Stock Split Amendment is approved by the Company’s stockholders, and the Board or an authorized committee thereof determines it is in the best interests of the Company and our stockholders to effect the TABLE OF CONTENTS Reverse Stock Split, then the Reverse Stock Split would become effective at such time as the Reverse Stock Split Amendment, the form of which is attached as Appendix B to this Proxy Statement, is filed with the Secretary of State of the State of Delaware. If, at any time prior to the filing of the Reverse Stock Split Amendment with the Delaware Secretary of State, notwithstanding stockholder approval, and without further action by the stockholders, the Board, in its sole discretion, determines that it is in the Company’s best interests and the best interests of the Company’s stockholders to delay the filing of the Reverse Stock Split Amendment or abandon the Reverse Stock Split, the Reverse Stock Split may be delayed or abandoned. The Company reserves the right to abandon a reverse stock split without further action by our stockholders at any time before the effectiveness of the filing with the Secretary of the State of Delaware of the Reverse Stock Split Amendment to our Certificate of Incorporation, even if the authority to effect the Reverse Stock Split has been approved by our stockholders at the Annual Meeting. By voting in favor of the Reverse Stock Split Amendment, you are expressly also authorizing the board of directors to delay, not to proceed with, and abandon, the Reverse Stock Split if it should so decide, in its sole discretion, that such action is in the best interests of the Company and its stockholders. As soon as practicable after the effective date, stockholders will be notified that the Reverse Stock Split has been effected. Continental Stock Transfer & Trust Company, the Company’s transfer agent, will act as exchange agent for purposes of implementing the exchange. Stockholders whose shares are held by a brokerage firm, bank or other similar organization do not need to take any action with respect to the exchange. These shares will automatically reflect the new quantity of shares based on the Reverse Stock Split. However, these brokerage firms, banks or other similar organizations may have different procedures for processing the Reverse Stock Split, and stockholders whose shares are held by a brokerage firm, bank or other similar organization are encouraged to contact their brokerage firm, bank or other similar organization. Certain registered holders of our Common Stock hold some or all of their respective shares electronically in book-entry form with the transfer agent. These stockholders do not have stock certificates evidencing their ownership of our Common Stock. Stockholders who hold shares electronically in book-entry form with the transfer agent will not need to take action to receive whole shares of post-Reverse Stock Split Common Stock because the exchange will be automatic. New CUSIP number. If a Reverse Stock Split is effected, then after the effective time, our Common Stock will have a new Committee on Uniform Securities Identification Procedures (“CUSIP”) number, which is a number used to identify our equity securities, and stock certificates with the older CUSIP number will need to be exchanged for stock certificates with the new CUSIP number by following the procedures described below. After the Reverse Stock Split, we will continue to be subject to the periodic reporting and other requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We currently expect that our Common Stock will continue to be listed on the NYSE under the symbol “ATIP” subject to any future change of listing of our securities, although it will be considered a new listing with a new CUSIP number. The Reverse Stock Split is not intended to be, and we do not believe that it will have the effect of, a “going private transaction” covered by Rule 13e-3 under the Exchange Act. Fractional Shares The Company will not issue fractional shares for post-Reverse Stock Split shares in connection with the Reverse Stock Split, each partial share will be rounded to the nearest whole share. Criteria to Be Used for Decision to Proceed with the Reverse Stock Split If the stockholders approve the Reverse Stock Split Amendment, then the Board or an authorized committee thereof will be authorized to proceed with the Reverse Stock Split. In determining whether to proceed with the Reverse Stock Split and setting the final ratio, if any, the Board or an authorized committee thereof will consider a number of factors, including NYSE listing requirements, market conditions, existing and expected trading prices of the Company’s Common Stock, and actual or forecasted results of operations. No Dissenter’s Rights Under the General Corporation Law of the State of Delaware, stockholders will not be entitled to dissenter’s rights or appraisal rights with respect to the Reverse Stock Split Amendment, and the Company does not intend to independently provide stockholders with any such right. TABLE OF CONTENTS Certain Material U.S. Federal Income Tax Considerations of the Reverse Stock Split The following discussion is a summary of certain material U.S. federal income tax consequences of the Reverse Stock Split to stockholders that hold their shares of Common Stock as capital assets for U.S. federal income tax purposes, but does not purport to be a complete analysis of all potential tax effects that may be relevant to stockholders. The effects of other U.S. federal tax laws, such as estate and gift tax laws, and any applicable state, local, or foreign tax laws are not discussed. This summary is based upon the provisions of the U.S. Internal Revenue Code (the “Code”) Treasury Regulations promulgated thereunder, administrative rulings and judicial decisions, all as in effect as of the date hereof, and all of which are subject to change and differing interpretations, possibly with retroactive effect. Changes in these authorities or their interpretation may result in the U.S. federal income tax consequences of the Reverse Stock Split differing substantially from the consequences summarized below. This summary is for general information purposes only and does not address all aspects of U.S. federal income taxation that may be relevant to stockholders in light of their particular circumstances, including the impact of the alternative minimum tax, the Medicare surtax on net investment income or the special tax accounting rules under Section 451(b) of the Code, or to stockholders that may be subject to special tax rules, including, without limitation: (i) banks, insurance companies, or other financial institutions; (ii) tax-exempt organizations; (iii) dealers in securities or commodities; (iv) regulated investment companies or real estate investment trusts; (v) partnerships (including entities or arrangements treated as partnerships for U.S. federal income tax purposes and their partners or members); (vi) traders in securities that elect to use the mark-to-market method of accounting; ( vii) persons whose “functional currency” is not the U.S. dollar; (viii) persons holding our Common Stock in a hedging transaction, “straddle,” “conversion transaction” or other risk reduction transaction; (ix) persons who acquired our Common Stock in connection with employment or the performance of services; (x) retirement plans; (xi) persons who are not U.S. Holders (as defined below); or (xii) certain former citizens or long-term residents of the United States. In addition, this summary of certain material U.S. federal income tax consequences does not address the tax consequences arising under the laws of any foreign, state or local jurisdiction or any U.S. federal tax consequences other than U.S. federal income taxation (such as U.S. federal estate and gift tax consequences). If a partnership (including any entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds shares of our Common Stock, the tax treatment of a partner in the partnership generally will depend upon the status of the partner, the activities of the partnership, and certain determinations made at the partner level. Partnerships holding our Common Stock and the partners in such partnerships should consult their tax advisors regarding the tax consequences to them of the Reverse Stock Split. We have not sought, and will not seek, an opinion of counsel or a ruling from the Internal Revenue Service (the “IRS”) regarding the U.S. federal income tax consequences of the Reverse Stock Split and there can be no assurance that the IRS will not challenge the statements and conclusions set forth below or that a court would not sustain any such challenge. INVESTORS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX LAWS OR UNDER THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION OR UNDER ANY APPLICABLE INCOME TAX TREATY. This summary addresses only stockholders that are U.S. Holders. For purposes of this discussion, a “U.S. Holder” is any beneficial owner of our Common Stock that, for U.S. federal income tax purposes, is or is treated as any of the following: an individual who is a citizen or resident of the United States; a corporation created or organized under the laws of the United States, any state thereof or the District of Columbia; an estate, the income of which is subject to U.S. federal income tax regardless of its source; or a trust that (i) is subject to the primary supervision of a U.S. court and all substantial decisions of which are subject to the control of one or more “United States persons” (within the meaning of Section 7701(a)(30) of the Code), or (ii) has a valid election in effect to be treated as a United States person for U.S. federal income tax purposes. TABLE OF CONTENTS The Reverse Stock Split should constitute a “recapitalization” for U.S. federal income tax purposes. Assuming the Reverse Stock Split qualifies as a “recapitalization” for U.S. federal income tax purposes, then, except as described below with respect to cash received in lieu of fractional shares, a stockholder should not recognize gain or loss as a result of the Reverse Stock Split. A stockholder’s aggregate tax basis in the shares of the Common Stock received pursuant to the Reverse Stock Split should equal the stockholder’s aggregate tax basis in the shares of the Common Stock surrendered (excluding any portion of such basis that is allocated to any fractional share of our Common Stock), and such stockholder’s holding period in the shares of the Common Stock received should include the holding period of the shares of the Common Stock surrendered. Treasury Regulations promulgated under the Code provide detailed rules for allocating the tax basis and holding period of shares of Common Stock surrendered pursuant to the Reverse Stock Split to shares of Common Stock received pursuant to the Reverse Stock Split. Stockholders holding shares of Common Stock that were acquired on different dates and at different prices should consult their tax advisors regarding the allocation of the tax basis and holding period of such shares. A stockholder who receives cash in lieu of a fractional share of Common Stock should be treated as first receiving such fractional share and then receiving cash in redemption of such fractional share. A stockholder who receives cash in lieu of a fractional share in the Reverse Stock Split should recognize capital gain or loss equal to the difference between the amount of the cash received in lieu of the fractional share and the portion of the stockholder’s adjusted tax basis allocable to the fractional share. Stockholders should consult their tax advisors regarding the tax effects to them of receiving cash in lieu of fractional shares based on their particular circumstances. A stockholder may be subject to information reporting with respect to any cash received in exchange for a fractional share interest in a new share in the Reverse Stock Split. Stockholders who are subject to information reporting and who do not provide a correct taxpayer identification number and other required information (such as by submitting a properly completed IRS Form W-9) may also be subject to backup withholding at the applicable rate. Any amount withheld under such rules is not an additional tax and may be refunded or credited against the stockholder’s U.S. federal income tax liability, provided that the required information is properly furnished in a timely manner to the IRS. Board Recommendation The Board of Directors seeks stockholder approval of the Reverse Stock Split Amendment to comply with applicable NYSE listing requirements and with the amendment provisions of the Certificate of Incorporation. The Reverse Stock Split Amendment will not become effective unless and until stockholder approval is obtained. If stockholders do not approve this Proposal 5, the Certificate of Incorporation will instead remain in effect in accordance with its pre-existing terms and without giving effect to the Reverse Stock Split Amendment. The Board of Directors believes that approval of the Reverse Stock Split Amendment is in the best interest of the Company and its stockholders. OUR BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE REVERSE STOCK SPLIT AMENDMENT. TABLE OF CONTENTS CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS The following is a summary of transactions (or series of transactions) and any currently proposed transactions, to which we have been or will be a participant and in which the amount involved exceeded or will exceed $120,000, and in which any of our directors, director nominees, executive officers or holders of more than 5% of any class of our equity interests at the time of such transaction, or any members of their immediate family, had or will have a direct or indirect material interest. The Transaction As described in the Transaction Proposal, if the Transaction Proposal is approved and the Transaction closes, we intend to issue to our Preferred Equityholders, including funds affiliated with Knighthead Capital Management, LLC (the “Investors”) up to an aggregate of $125.0 million of Notes, which, based on a fixed exchange price of $0.25 per share, would be exchangeable into approximately 500 million shares of Common Stock (or a range of 10 million to 25 million shares of Common Stock on a post-split basis if Proposal 5 for the Reverse Stock Split is approved by the stockholders at this Annual Meeting), or, as-converted, approximately 71% of the Company’s outstanding Common Stock as of March 31, 2023. As of March 31, 2023, Advent beneficially owned approximately 56% of our Common Stock. Pursuant to the A&R TSA, Advent has agreed to support the Transaction and vote in favor of this Transaction Proposal and the Reverse Stock Split Proposal, subject to certain conditions as outlined in the A&R TSA. Founder Shares On June 15, 2020, FAII issued founder shares (“Founders Shares”) in exchange for an aggregate capital contribution of $25,000. Fortress Acquisition Sponsor II LLC (“Sponsor”) had agreed to forfeit an aggregate of up to 1,125,000 Founder Shares to the extent that the over-allotment option was not exercised in full by the underwriters. On August 14, 2020, the underwriters exercised their over-allotment option in full. As a result, the 1,125,000 Founder Shares were no longer subject to forfeiture. In August 2020, Sponsor transferred a total of 100,000 Founder Shares to four independent directors of FAII for the same per-share price initially paid for by Sponsor. Subsequent to those transfers, Sponsor held 8,525,000 Founder Shares. The Founder Shares automatically converted into Common Stock upon the consummation of the Business Combination (“Vesting Shares”). Pursuant to the Parent Sponsor Letter Agreement, the Insiders (as defines therein) further agreed that, all of the Vesting Shares shall be unvested and shall be subject to certain vesting and forfeiture provisions, as follows: (i) 33.33% of the Vesting Shares beneficially owned by the Insiders shall vest at such time as a $12.00 Common Share Price is achieved on or before the date that is ten years after the consummation of the Business Combination, (ii) 33.33% of the Vesting Shares beneficially owned by the Insiders shall vest at such time as a $14.00 Common Share Price is achieved on or before the date that is ten years after the consummation of the Business Combination and (iii) 33.34% of the Vesting Shares beneficially owned by the Insiders shall vest at such time as a $16.00 Common Share Price is achieved on or before the date that is ten years after the consummation of the Business Combination. Sponsor Private Placement Warrants Substantially concurrently with the closing of FAII’s initial public offering (“IPO”), the Sponsor purchased an aggregate 5,933,333 Private Placement Warrants for a price of $1.50 per warrant. Each Private Placement Warrant was exercisable to purchase one share of FAII Class A common stock at $11.50 per share. Each Private Warrant entitles the holder to purchase one share of our Common Stock at $11.50 per share. At the closing of the Business Combination, the Sponsor transferred and surrendered for no consideration 2,966,667 of its Private Placement Warrants. 2,966,666 Private Placement Warrants are outstanding at this time. Related Party Notes Prior to FAII’s IPO, the Sponsor loaned FAII an aggregate of $97,250 to cover expenses related to FAII’s IPO pursuant to a promissory note. The promissory note was non-interest bearing, unsecured and due on the earlier of April 30, 2021 and the closing of the FAII’s IPO. FAII repaid the promissory note in full on August 14, 2020. Office Space and Related Support Services On August 14, 2020, FAII entered into an agreement with an affiliate of Sponsor to pay a monthly fee of $20,000 for office space and related support services. Upon completion of the Business Combination, we ceased paying these monthly fees TABLE OF CONTENTS PIPE Investment In connection with the PIPE Investment and consummation of the Business Combination, the Sponsor purchased 7,500,000 shares of FAII Class A common stock at $10.00 per share for an aggregate purchase price of $75 million. TABLE OF CONTENTS
Earnout Shares After the consummation of the Business Combination, Wilco Acquisition, LP (the sole holder of the Company Common Stock as of the date of the Merger Agreement) or its designees will havehad the contingent right to receive Earnout Shares upon the terms and subject to the conditions set forth in the Merger Agreement and the agreements contemplated thereunder in the amounts set forth below if the price targets set forth below are achieved any time between the closing and the date that is ten years after the consummation of the Business Combination: in the event the dollar volume-weighted average price (“VWAP”) of one share of Common Stock as reported on the NYSE is greater than $12.00 for at least five days out of a period of ten consecutive trading days ending on the trading day immediately prior to the date of determination, there will be a one-time issuance of 5,000,000 shares of Common Stock; in the event the VWAP of one share of Common Stock as reported on the NYSE is greater than $14.00 for at least five days out of a period of ten consecutive trading days ending on the trading day immediately prior to the date of determination, there will be a one-time issuance of 5,000,000 shares of Common Stock; and in the event the VWAP of one share of Common Stock as reported on the NYSE is greater than $16.00 for at least five days out of a period of ten consecutive trading days ending on the trading day immediately prior to the date of determination, there will be a one-time issuance of 5,000,000 shares of Common Stock. In the event that there is an agreement with respect to the sale or other change of control of ATI entered into after the closing and prior to the date that is ten years after the consummation of the Business Combination, that will result in the holders of Common Stock receiving a per share price in excess of the applicable VWAP set forth above, then the applicable Earnout Shares that have not such sale or change of control, ATI and the surviving company will take proper provision to ensure that any Earnout Shares that have not previously been issued will remain eligible to be paid through the date that is ten years after the consummation of the Business Combination. If, after the closing and on or before the date that is ten years after the consummation of the Business Combination, the outstanding shares of Common Stock are changed into a different number or class of shares by reason of any merger, stock split, division or subdivision of shares, stock dividend, reverse stock split, consolidation of shares, reorganization, reclassification, recapitalization or other similar transaction, then the number of Earnout Shares to be issued pursuant to the Merger Agreement will be adjusted to the extent appropriate to provide the same economic effect as contemplated by the Merger Agreement prior to such action. Advent International Expense Reimbursements We have reimbursed Wilco GP, Inc., which is affiliated with Advent, for expenses totaling approximately $174,547 for the period covering January 1, 2021 to December 31, 2021. The reimbursed expenses were incurred in the normal course of business and related to third-party expenses for board member search fees, the performance of proactive internal audit related to our cybersecurity capabilities, travel expenses and external legal and consulting fees. Series A Preferred Stock and Warrants On the Refinancing Date, the Company entered into a Series A Preferred Stock Purchase Agreement with the purchasers signatory thereto, including funds affiliated with Knighthead Capital Management, LLC (the “Investors”), pursuant to which the Investors purchased from the Company, in the aggregate, 165,000 shares of Series A Preferred Stock with an initial stated value of $1,000 per share, or $165.0 million of stated value in the aggregate, which includes warrants to purchase up to 11.5 million shares of Common Stock, for an aggregate purchase price of $163,350,000. The Series A Preferred Stock has priority over the Common Stock with respect to distribution rights, liquidation rights and dividend rights. The holders of the Series A Preferred Stock are entitled to cumulative dividends on the preferred shares at an initial dividend rate of 12.0%, which are payable in-kind, increasing 1.0% per annum on the first day following the fifth anniversary of the issuance and each one-year anniversary thereafter. However, from and after the third anniversary of the issuance of such preferred equity, we have the option to pay such dividends in cash at an interest rate of 1.0% lower than the paid-in-kind rate. The Series A Preferred Stock is perpetual and is mandatorily redeemable in certain circumstances such as a change of control, liquidation, winding up or dissolution, bankruptcy or other insolvency event, restructuring or capitalization transaction, or event of noncompliance. TABLE OF CONTENTS The Series A Preferred Stock includes approximately 11.5 million detachable warrants. Each warrant entitles the holder to purchase one share of Common Stock. The warrants are exercisable within 5 years from issuance. The strike price is $3.00 for 5.2 million of the issued warrants, and the strike price is $0.01 for 6.3 million of the issued warrants. If the Transaction is approved, the Series A Preferred Stock will be amended as described in Proposal 1. Investors’ Rights Agreement On the Refinancing Date, the Company also entered into an Investors’ Rights Agreement with the Investors (the “Investors’ Rights Agreement”). The Investors’ Rights Agreement sets forth the Investors’ right to designate one director to the Company’s Board of Directors (subject to certain conditions as summarized above) and to receive certain quarterly and annual financial and other information of the Company. The Investors’ Rights Agreement also sets forth restrictions on transfer of shares of Series A Preferred Stock by the Investors and rights of first refusal in favor of any holder that, individually or together with its affiliates, holds, in the aggregate, at least 25% of the then-outstanding Series A Preferred Stock. The Company also agreed in the Investors’ Rights Agreement to pay expenses incurred by Investors in connection with (i) any amendment, modification or waiver of a provision of any Transaction Document and (ii) the enforcement by the Investors of any of their rights in connection with the Transaction Documents, in each case subject to the terms and conditions set forth in the Investors’ Rights Agreement. If the Transaction is approved, the Investors’ Rights Agreement will be amended as described in Proposal 1. Procedures with Respect to Review and Approval of Related Party Transactions We maintain a Related Person Transaction Policy (the “Policy”) that sets forth the following policies and procedures for the review and approval or ratification of related person transactions by our Audit Committee. In accordance with the policy, our Audit Committee has overall responsibility for implementation of and compliance with the policy. Generally and subject to certain exceptions, a “Related Person Transaction” is a transaction, arrangement or relationship in which ATI or any of its subsidiaries was, is or will be a participant, involving an amount exceeding $120,000 and in which any related person (as defined in the Policy) had, has or will have a direct or indirect material interest. The Policy requires that notice of a proposed transaction or arrangement that could be a Related Person Transaction be provided in advance (or otherwise at the earliest possible opportunity) to the Chief Legal Officer or designee in the Legal Department, the Chair of the Board, the Chair of the Audit Committee or the Accounting Department. If it is determined that such transaction could be a Related Person Transaction, the proposed transaction will be submitted to our Audit Committee for consideration at its next meeting or sooner if determined to be necessary by the Accounting and Legal Departments, in consultation with the Chief Executive Officer or Chief Financial Officer, to the Chair of the Audit Committee. Under the Policy, the Audit Committee may, in its discretion based upon a determination that such transactions are in the best interests of the Company and such other determinations as the Audit Committee deems appropriate, (i) approve in advance such transactions, as applicable, (ii) request that the transaction be modified as a condition to the Board’s approval or ratification, or (iii) reject the transaction. We have also adopted policies and procedures designed to minimize potential conflicts of interest arising from any dealings we may have with our affiliates and have appropriate procedures for the disclosure of any real or potential conflicts of interest that may exist from time to time. TABLE OF CONTENTS COMPENSATION DISCUSSION AND ANALYSIS This Compensation Discussion and Analysis (“CD&A”) describes the material components of our executive compensation program during fiscal year 20212022 and provides an overview of our compensation philosophy and objectives for our named executive officers (“NEOs”). Our executive compensation program is designed to align total compensation with Company performance, while enabling us to attract, retain, and motivate individuals who can achieve sustained long-term growth and strong financial performance for our stockholders. Our pay-for-performance driven compensation philosophy and practices are directly tied to increased stockholder value. As a result, NEO compensation is heavily weighted towards providing equity awards and incenting for long-term stock price appreciation. Our NEOs for 20212022 consisted of: John Larsen(1) | | | Executive Chairman and Officea former member of the CEOoffice fulfilling the role of the Principal Executive Officer | Sharon Vitti | | | Chief Executive Officer, since April 28, 2022 | Joseph Jordan | | | Chief Financial Officer and Office of the CEO | Ray WahlJoanne Fong
| | | Chief Operating Officer and Office of the CEO
| Diana Chafey
| | | Chief Legal Officer and Corporate Secretary
| Joseph Zavalishin
| | | Chief Development OfficerSVP, Treasurer & Investor Relations
| Augustus Oakes | | | Chief Information Officer | Labeed DiabGary Carlson
| | | SVP, Field Operations | Ray Wahl | | | Former Chief Operating Officer, a former member of the office fulfilling the role of the Principal Executive Officer |
(1)
Joseph Zavalishin | Interim | | Former Chief Development Officer, a former member of the office fulfilling the role beginning August 9, 2021of the Principal Executive Officer |
Oversight of Executive Compensation Our Compensation Committee is responsible for oversight of our executive compensation program, which is regularly reviewed and discussed with management to ensure alignment with our short-term and long-term goals given the dynamic nature of our business and the market in which we compete for talent. Role of Compensation Committee Our Compensation Committee is primarily responsible for establishing executive compensation. It does so with the goals of motivating NEOs to achieve our business goals and objectives and enhance long-term stockholder value, while rewarding them for their contribution in achieving these goals and objectives. Our Compensation Committee considers the interests of stockholders and overall Company performance in establishing compensation for our NEOs. Our Compensation Committee and management reference national surveys and publicly available executive officer data for similar companies and general industry as an input for compensation decisions. Role of Management Management assists our Compensation Committee in establishing NEO compensation by providing information on Company and individual performance, market data, and business needs, strategy, and objectives. Our Compensation Committee also considers our Chief Executive Officer’s recommendations regarding adjustments to NEO compensation components (other than with respect to their own compensation, for which they recuse themselves from all discussions and recommendations). TABLE OF CONTENTS Use of a Peer Group Our Compensation Committee evaluates our executive compensation programs in comparison to those of a select peer group, which in 2021 consisted of 1614 similarly-sized public health care facilities companies. Our Compensation Committee uses the peer group to compare total direct compensation and the mix of compensation elements for each named executive officer against positions at peer group companies with similar responsibilities. Our Compensation Committee also uses the peer group to review executive pay programs and practices at those companies. For 2021 the peer group consisted of the following companies, which our Compensation Committee determined willwould be adequate to rely on and would continue to be used for 2022: Acadia Healthcare Company, Inc. | | | National HealthCareVision Holdings Corporation | Addus HomeCare Corporation | | | National Vision Holdings CorporationOption Care Health, Inc.
| Amedisys, Inc. | | | Option Care Health,RadNet, Inc.
| Brookdale Senior Living Inc. | | | RadNet, Inc.Select Medical Holdings Corporation
| Encompass Health Corporation | | | Select Medical Holdings Corporation
| Hanger, Inc.
| | | Surgery Partners, Inc. | LHC Group,MEDNAX, Inc.
| | | The Ensign Group, Inc. | MEDNAX, Inc.National HealthCare Corporation
| | | U.S. Physical Therapy, Inc. |
In setting compensation, the Committee considers the peer group companies with which we directly compete for executive talent and stockholder investment. Our Compensation Committee also relies on its general knowledge of executive compensation levels and practices. Most of the Company’s executive search and leadership advisory competitors, from which executive talent is often recruited, are privately held, and therefore not included in the above list of our public peer group companies as information on their compensation practices is difficult to obtain. We do not set a specific, relative percentile positioning for total direct compensation, or the elements of total direct compensation, as a target for named executive officer pay levels. Rather, we review the total direct compensation range for each position and the mix of elements to ensure that compensation is adequate to attract and retain key named executive officers. Our named executive officer compensation program is also designed to ensure that a significant proportion of the named executive officer’s compensation is delivered in equity and thus aligned with the interests of our stockholders. What is theThe Total Rewards Model?Model
The Company considers base salary, cash bonus, long-term incentive awards, health and wellness benefits, career development and perquisites as an executive’s Total Rewards. The Total Rewards model emphasizes an individual’s complete remuneration from the company. It allows the Company to compare the full suite of incentive and retentive tools with those of our peers. Use and consideration of an executive’s Total Reward helps the Company ensure we are retaining the best talent in the industry and motivating the highest levels of performance. Compensation Philosophy ATI is a purpose-driven company focused on extraordinary patient outcomes. We value fair pay for our high-performing talent in a fast-paced, exciting culture. We aim to build and evolve our business with individuals who are committed to improving the lives of others. We seek leaders who are passionate about this mission and want to join our culture of excellence. Our Total Rewards approach to compensation is designed to attract, incentivize, and retain high-quality talent as well as promote our unique corporate culture. TABLE OF CONTENTS Elements of Our NEOs’ Compensation Our executive compensation program for our NEOs is comprised of the following key components, aligning to our Total Rewards Model, each of which is further described below: Base Salary Base salary is a standard element of compensation required to attract and retain talent and provide executives with a base level of cash income. Our Compensation Committee reviews and determines base salary adjustments as part of its annual NEO compensation review, as well as when an NEO is promoted into a new position. In connection with our SPAC transaction, and the change to a public company, our Board increased the base salaries of two of our NEOs, which led to the following base salaries for the NEOs as of the beginning and the end of 2021,2022, as follows: NEO | | Beginning 2021
Annualized Base Salary | | Ending 2021
Annualized Base Salary | | Beginning 2022
Annualized Base Salary | | Ending 2022
Annualized Base Salary | John Larsen(1) | | NA | | $1,440,000(1) | | $1,440,000 | | $1,400,000 | Sharon Vitti(2) | | | $700,000 | | $700,000 | Joseph Jordan | | $384,750 | | $450,000 | | $450,000 | | $490,000 | Ray Wahl | | $410,400 | | $450,000 | | Diana Chafey | | $359,100 | | $359,100 | | Joseph Zavalishin | | $359,100 | | $359,100 | | Joanne Fong | | | $271,926 | | $280,001 | Augustus Oakes | | $300,000 | | $325,000 | | $325,000 | | $390,000 | Gary Carlson | | | $280,000 | | $305,000 | Ray Wahl(3) | | | $450,000 | | $490,000 | Joseph Zavalishin(4) | | | $359,100 | | $359,100 |
(1)
| In connection with Mr. Larsen’s appointment as Executive Chair,Chairman, the Company determined to compensate him by paying him an additional $720,000, paid over six months. Mr. Larsen received $555,517$537.231 of such amount in 2021.2022. Mr. Larsen’s annualized salary of $1,440,000 was set to 85% of ATI’s previous CEO cash compensation inclusive of base and target bonus.bonus |
(2)
| Ms. Vitti hire date was April 28, 2022. Her starting base annual salary was $700,000 and stayed the same through December 31, 2022. |
(3)
| Mr. Wahl’s employment terminated on December 16, 2022. His base annual salary at that time was $490,000 |
(4)
| Mr. Zavalishin’s employment terminated on July 8, 2022. His base annual salary at that time was $359,100. |
Annual Incentive Bonus Plan The Company maintains the Annual Incentive Bonus (AIB) Plan for our NEOs. The intent of the AIB Plan is to reward high performance aligned with the Company’s strategic mission. NEOs, in addition to key corporate staff, are eligible to participate in the AIB Plan. Annual cash awards will be forfeited for employees who are terminated prior to the payout of such bonus under the AIB plan. The bonus payouts under the AIB Plan are designed to incentivize achievement of the Company’s EBITDA target as set by our Board at the beginning of each fiscal year. The Company provided updated financial EBITDA guidance later in 2021,2022, which was lower than the EBITDA target set by the Board for purposes of the AIB plan. While the Compensation Committee did not make any adjustments to the EBITDA target for purposes of the AIB plan, as a result, the target was not met and the executives would not have received a bonus. However, considering the Company’s challenges and leadership transitions, despite the Company’s underperformance, the Compensation Committee approved discretionary funding at approximately 50% fundingof the budgeted bonus pool for annual incentive bonuses in recognition of performance efforts during a challenging year to retain ATI’s talent at all eligible levels. TABLE OF CONTENTS Accordingly, the Compensation Committee approved bonus payouts to the NEOs consistent with the Company’s key corporate staff and other employees, as follows: Name | | 2021 Base Salary
($) | | 2021 AIB Target
(% of Base Salary) | | 2021 AIB Target
Opportunity
($) | | Discretionary 2021
Annual Bonus
Earned
($) | | 2022 Base
Salary
($) | | 2022 AIB
Target
(% of
Base
Salary) | | 2022 AIB
Target
Opportunity
($) | | Discretionary
2022
Annual Bonus
Earned
($) | John Larsen | | $1,440,000(1) | | NA | | NA | | NA | | $1,440,000(1) | | NA | | NA | | NA | Sharon Vitti | | | $700,000 | | 100% | | $700,000 | | $450,000(2) | Joseph Jordan | | $450,000 | | 75% | | $337,500 | | $168,750 | | $490,000 | | 75% | | $367,500 | | $210,000 | Joanne Fong | | | $280,001 | | 35% | | $98,000 | | $75,000 | Augustus Oakes | | | $390,000 | | 75% | | $292,500 | | $157,000 | Gary Carlson | | | $305,000 | | 55% | | $167,750 | | $98,875 | Ray Wahl | | $450,000 | | 75% | | $337,500 | | $168,750 | | $490,000 | | 75% | | $367,500 | | $46,000 | Diana Chafey | | $359,100 | | 75% | | $269,325 | | $134,663 | | Joseph Zavalishin | | $359,100 | | 75% | | $269,325 | | $134,663 | | $359,100 | | 75% | | $269,325 | | $16,833 | Augustus Oakes | | $325,000 | | 50% | | $162,500 | | $81,250 | |
(1)
| In connection with Mr. Larsen’s appointment as Executive Chair, the Company determined to compensate him by paying him an additional $720,000, paid over six months. Mr. Larsen received $555,517$537,231 of such amount in 2021.2022. Mr. Larsen’s annualized salary of $1,440,000 was set to 85% of ATI’s previous CEO cash compensation inclusive of base and target bonus.bonus |
(2)
| Pursuant to the terms of her employment agreement, Ms. Vitti’s bonus was entitled to a minimum guaranteed bonus in this amount. |
Long-Term Equity Incentives In connection with the closingAs of the Business Combination, our Board and stockholders approved the ATI Physical Therapy 2021 Equity Incentive Plan (the “2021 Plan”). Effective as of the consummation of the Business Combination, 20.7March 31, 2023 approximately 10.9 million shares of Common Stock were reserved for issuance under the 2021 Plan.
For 2021,2022, the Compensation Committee granted restricted stock units and stock options to our NEOs, as follows: Name | | Target
LTI
Value ($) | | Restricted
Stock
Units ($) | | Restricted
Stock
Units (#) | | Stock
Options
($) | | Stock
Options
(#) | | Target
LTI
Value ($) | | Restricted
Stock
Units ($) | | Restricted
Stock
Units (#) | | Stock
Options
($) | | Stock
Options
(#) | John Larsen(1) | | $480,000 | | $240,000 | | 70,175 | | $240,000 | | 134,216 | | 0 | | 0 | | 0 | | 0 | | 0 | Sharon Vitti | | | $1,700,000 | | $850,000 | | 544,872 | | $851,063 | | 956,251 | Joseph Jordan | | $500,000 | | $250,000 | | 73.099 | | $250,000 | | 139,808 | | $500,000 | | $250,000 | | 143,678 | | $132,392 | | 133,729 | Joanne Fong | | | $150,000 | | $74,999 | | 43,103 | | $79,588 | | 78,800 | Augustus Oakes | | | $250,000 | | $125,000 | | 71,839 | | $132,392 | | 133,729 | Gary Carlson | | | $175,000 | | $109,500 | | 62,931 | | $92,852 | | 91,933 | Ray Wahl | | $500,000 | | $250,000 | | 73,099 | | $250,000 | | 139,808 | | $500,000 | | $250,000 | | 143,678 | | $264,782 | | 267,457 | Diana Chafey | | $250,000 | | $125,000 | | 36,550 | | $125,000 | | 69,904 | | Joseph Zavalishin | | $250,000 | | $125,000 | | 36,550 | | $125,000 | | 69,904 | | $250,000 | | $125,000 | | 71,839 | | $132,392 | | 133,729 | Augustus Oakes | | $250,000 | | $125,000 | | 36,550 | | $125,000 | | 69,904 | |
(1)
| Mr. Larsen did not receive equity in his interim role as Executive Chairman during 2022. All equity granted to Mr. Larsen in 2022 pertained to his role as Chairman of the Board and is reported in the Director Compensation table. |
The Compensation Committee decided on this mix of long-term incentives to balance numerous goals, including attracting, motivating, and retaining our NEOs, while aligning them with the long-term interests of our stockholders. RSUs granted as part of the 20212022 annual equity grant vest one-third on each of the first three anniversaries of the date of the grant,grant. For Mr. Jordan, Mr. Oakes, Mr. Wahl and Mr. Zavalishin, stock options granted as part of the 20212022 annual equity grant vest one-third on each of the first three anniversaries of the date of the grant. For Ms. Fong and Mr. Carlson, stock options granted as part of the 2022 annual equity grant vest one-fourth on each of the first four anniversaries of the date of the grant. Wilco Acquisition, LP 2016 Equity Incentive Plan Prior to the Business Combination, Wilco Acquisition, LP adopted the Wilco Acquisition, LP 2016 Equity Incentive Plan (the “2016 Plan”), granting Incentive Common Units (“ICUs”), subject to time-based and performance-based vesting. In connection with the Business Combination, ICU holders received distributions of shares of common stock and restricted shares of common stock (“Restricted Shares”) from Wilco Acquisition, LP TABLE OF CONTENTS based upon the distribution priorities under the Wilco Acquisition, LP limited partnership agreement. Any Restricted Shares are subject to certain vesting provisions of restricted stock agreements (“Restricted Stock Agreements”) executed by such holders and the terms of the 2021 Plan. See Note 10 - Share-Based Compensation to the Company’s consolidated financial statements in Part II, Item 8, of the Company’s Annual Report on Form 10-K for a description of the terms applicable to the restricted shares of common stock, and see the “Beneficial Ownership of Our Common Stock,” “Outstanding Equity Awards at Fiscal Year-End” and “Agreements with Executive Officers” herein for additional information on the outstanding shares of Common Stock and restricted shares of Common Stock held by named executive officers and directors. Additionally, pursuant to the 2016 Plan, ATI Management was permitted to allocate a pool of unallocated ICUs and ICUs returned due to forfeitures. In lieu of a distribution of shares of Common Stock held by Wilco Acquisition,
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LP, the Company granted restricted shares of Common Stock from the 2021 Plan with the consent of Wilco Acquisition, LP to cancel an equal number of shares of Common Stock held by the partnership. The Company and Wilco Acquisition, LP have cancelled such restricted shares and the Company is proposing to amend, subject to stockholder approval, the 2021 Plan to increase the share reserve by an equal number of Class A common shares of ATI. See Proposal No. 5 – Increase the Number of Shares Available for Issuance Under the ATI Physical Therapy 2021 Equity Incentive Plan in Connection with Cancellation of Certain Shares Previously Held by Wilco Acquisition, LP and the Forfeiture of Certain Shares Subject to Restricted Stock Agreements. These restricted shares were awarded to certain senior leaders, including 41,385 restricted shares of Common Stock awarded to Ms. Chafey for her work on the Business Combination (the “Chafey Restricted Shares”). These restricted shares are subject to certain vesting provisions of Restricted Stock Agreements executed by the holders of such shares and the terms of the 2021 Plan. See Note 10 - Share-Based Compensation to the Company’s consolidated financial statements in Part II, Item 8, of the Company’s Annual Report on Form 10-K for a description of the terms applicable to the restricted shares of Common Stock, and see “Summary Compensation Table,” “Stock Vested,” “Outstanding Equity Awards at Fiscal Year-End” and “Agreements with Executive Officers” herein for additional information on the Chafey Restricted Shares.
Additional NEO Compensation 401(k) Plan The Company maintains a tax-qualified 401(k) savings plan (the “401(k) Plan”), in which all of our employees, including our NEOs, are eligible to participate. The 401(k) Plan allows participants to contribute up to 80% of base salary on a pre-tax basis (or on a post-tax basis, with respect to elective Roth deferrals) into individual retirement accounts, subject to any maximum annual limits set by the Internal Revenue Service. The Company provides for per pay period matches to employees of up to 50% of an employee’s first 6% of contributions to the 401(k) Plan. Participants are immediately, fully vested in their own contributions and any Company matches once eligible for match. Participants become eligible for the Company match after one year of service with the Company during which they performed at least 1,000 hours of service. Employee Benefits and Perquisites Our NEOs are eligible to receive the same employee benefits that are generally available to all of our full-time employees, subject to the satisfaction of certain eligibility requirements. This includes medical, dental and vision benefits, flexible spending accounts, short-term and long-term disability, life insurance, and accidental death and dismembermentlife insurance. Our NEOs also receive certain additional perquisites, including executive physicals, tax preparation and planning and cell phone service reimbursement. We do not view perquisites or personal benefits as a significant component of our executive compensation program. But we have provided such benefits in limited circumstances where we believe it is appropriate to assist an NEO in the performance of their duties, to make our NEOs more efficient and effective, for security purposes, and for recruitment, motivation, and retention purposes. Nonqualified Deferred Compensation The Company maintains a non-qualified deferred compensation plan (the “Supplemental Retirement Benefit Plan”) under which a select group of highly compensated employees are permitted to supplement contributions made under the 401(k) Plan by deferring up to 50% of their base salary. There is no corresponding Company match provided in the non-qualified plan. Any refunds for prior year contributions returned due to discrimination testing can be rolled into the non-qualified plan at 100%. Severance Benefits Many of our NEOs are parties to employment agreements with the Company that provide for certain severance benefits in certain circumstances as described below. Other Compensation Practices and Policies Hedging and Pledging Activities Under our Insider Trading Policy, our employees, including our NEOs and members of our Board, are prohibited from hedging or pledging our stock, engaging in short selling of our securities, trading in derivative securities of our Company, holding our securities in a margin account, or otherwise pledging them as collateral for a loan. TABLE OF CONTENTS
Tax Implications of Executive Compensation Section 162(m) of the Internal Revenue Code places a limit of $1 million in compensation per year on the amount public companies may deduct with respect to certain executive officers. When determining compensation for our NEOs, our Compensation Committee balances many factors, including the limitation on the Company’s ability to deduct compensation imposed by Section 162(m) in addition to market trends for similar roles and positions and determines compensation it believes is in the best interests of the Company’s stockholders’ long-term interests. TABLE OF CONTENTS Accounting for Stock-Based Compensation The Company follows ASC 718 for our stock-based compensation awards. ASC 718 requires us to measure, and recognize, the compensation expense for all share-based payment awards made to our employees and independent members of our Board, based on grant date fair value. This calculation is performed for accounting purposes and reported in the executive compensation tables included below in this proxy, even though the recipient of an equity award may never realize any value from the awards the recipient was granted. Compensation-Related Risks Our Compensation Committee has reviewed our compensation policies and practices to assess whether they encourage our NEOs to take inappropriate risk. Our Compensation Committee believes that the Company’s compensation programs do not create risks that are reasonably likely to have a material adverse effect on the Company. The mix of fixed and variable compensation prevents undue focus on short-term results and is intended to align the long-term interests of our NEOs with those of our stockholders. Compensation Tables The section below contains information, both narrative and tabular, regarding the compensation paid to our NEOs for the fiscal year 2021.2022. Delinquent Section 16(a) Reports To our knowledge, based solely on a review of the copies of the reports required pursuant to Section 16(a) of the Exchange Act that have been furnished to us and written representations that no other reports were required, during the fiscal year ended December 31, 2021,2022, all Section 16(a) filing requirements applicable to our directors, executive officers, and greater than 10% beneficial owners have been met, except for the Form 3 for Ms. Sparks filed in connection with her appointment to the Board and Form 4s for each of Ms. Chafey and Mr. Rhodes related to net settlement upon vesting of previously disclosed awards, which were each inadvertently delayed.met. TABLE OF CONTENTS SUMMARY COMPENSATION TABLE Name and Principal Position | | Year | | Salary
($) | | Bonus
($)(2) | | Stock
Awards
($)(3)(4) | | Option
Awards
($)(3)(4) | | Change in
Pension Value
and Non-
qualified
Deferred
Compensation
Earnings ($)(5) | | All
Other
Compensation
($)(6) | | Total ($) | | Year | | Salary
($) | | Bonus
($)(2) | | Stock
Awards
($)(3)(4) | | Option
Awards
($)(3) | | Change in
Pension Value
and Non-
qualified
Deferred
Compensation
Earnings
($) | | All
Other
Compensation
($)(4) | | Total
($) | John Larsen
Executive Chairman(1)
| | 2021 | | 555,517 | | 0 | | 302,499 | | 287,586 | | 0 | | 0 | | 1,145,602 | | Joseph Jordan
Chief Financial Officer
| | | 2021 | | 415,895 | | 168,750 | | 249,999 | | 237,674 | | 3,335 | | 18,443 | | 1,094,096 | | | 2020 | | 369,538 | | 169,281 | | 0 | | 0 | | 0 | | 10,678 | | 549,497 | | | 2019 | | 349,808 | | 187,500 | | 436,818 | | 0 | | 0 | | 7,897 | | 982,023 | | Ray Wahl
Chief Operating Officer
| | | 2021 | | 428,622 | | 168,750 | | 249,999 | | 237,674 | | 2,877 | | 22,615 | | 1,110,537 | | | 2020 | | 394,840 | | 153,900 | | 0 | | 0 | | 0 | | 47,344 | | 596,084 | | | 2019 | | 321,442 | | 225,000 | | 140,019 | | 0 | | 0 | | 69,442 | | 755,903 | | Diana Chafey
Chief Legal Officer
| | | 2021 | | 359,100 | | 134,663 | | 266,538 | | 118,837 | | 0 | | 17,733 | | 896,871 | | | 2020 | | 344,200 | | 134,663 | | 0 | | 0 | | 0 | | 4,053 | | 482,916 | | | 2019 | | 350,000 | | 262,500 | | 120,698 | | 0 | | 0 | | 8,655 | | 741,853 | | Joseph Zavalishin
Chief Development Officer
| | | 2021 | | 357,719 | | 134,663 | | 125,001 | | 118,837 | | 7,173 | | 10,850 | | 754,243 | | | 2020 | | 330,424 | | 234,663 | | 0 | | 0 | | 0 | | 13,453 | | 578,540 | | | 2019 | | 82,115 | | 166,884 | | 272,766 | | 0 | | 0 | | 15,451 | | 537,216 | | Augustus Oakes
Chief Information Officer
| | | 2021 | | 311,346 | | 81,250 | | 125,001 | | 118,837 | | 0 | | 16,871 | | 653,305 | | | 2020 | | 260,892 | | 61,072 | | 220,073 | | 0 | | 0 | | 4,285 | | 546,322 | | | 2019 | | 246,250 | | 84,000 | | 0 | | 0 | | 0 | | 931 | | 331,181 | | Labeed Diab
Former Chief Executive Officer
| | | 2021 | | 446,250 | | 281,000 | | 0 | | 0 | | 1,505,165 | | 710,642 | | 2,943,057 | | | 2020 | | 693,750 | | 359,100 | | 0 | | 0 | | 0 | | 21,376 | | 1,074,226 | | | 2019 | | 619,231 | | 700,000 | | 1,463,686 | | 0 | | 0 | | 32,525 | | 2,815,442 | | John Larsen
Executive Chairman
| | | | 2022 | | 537,231 | | 0 | | | | 0 | | 0 | | 0 | | 537,231 | | | 2021 | | 555,517 | | 0 | | 302,499 | | 287,586 | | 0 | | 0 | | 1,145,602 | Sharon Vitti,
CEO
| | | 2022 | | 449,615 | | 450,000 | | 850,000 | | 851,063 | | 0 | | 37,144 | | 2,637,822 | Joseph Jordan,
CFO
| | | | 2022 | | 471,885 | | 210,000 | | 250,000 | | 132,392 | | (2,940) | | 16,178 | | 1,077,515 | | | 2021 | | 415,895 | | 168,750 | | 249,999 | | 237,674 | | 3,335 | | 18,443 | | 1,094,096 | | | 2020 | | 369,538 | | 169,281 | | 0 | | 0 | | 0 | | 10,678 | | 549,497 | Joanne Fong
SVP
| | | | 2022 | | 278,904 | | 75,000 | | 74,999 | | 79,588 | | 0 | | 6,074 | | 514,565 | | | 2021 | | 265,987 | | 61,770 | | 60,661 | | | | | | 1,928 | | 390,346 | | | 2020 | | 263,925 | | 46,187 | | | | | | | | 928 | | 311,040 | Augustus Oakes
CIO
| | | | 2022 | | 359,000 | | 157,000 | | 125,000 | | 132,392 | | 0 | | 15,918 | | 789,310 | | | 2021 | | 311,346 | | 81,250 | | 125,001 | | 118,837 | | 0 | | 16,871 | | 653,305 | | | 2020 | | 260,892 | | 61,072 | | 220,073 | | 0 | | 0 | | 4,285 | | 546,322 | Gary Carlson
SVP
| | | | 2022 | | 294,519 | | 98,875 | | 109,500 | | 92,852 | | 0 | | 7,205 | | 602,951 | | | 2021 | | 280,000 | | 77,000 | | 65,575 | | 0 | | 0 | | 928 | | 423,503 | | | 2020 | | 254,615 | | 77,000 | | 0 | | 0 | | 0 | | 3,395 | | 335,010 | Ray Wahl,
Former COO
| | | | 2022 | | 470,000 | | 46,000 | | 250,000 | | 264,782 | | (2,180) | | 16,678 | | 1,045,280 | | | 2021 | | 428,622 | | 168,750 | | 249,999 | | 237,674 | | 2,877 | | 22,615 | | 1,110,537 | | | 2020 | | 394,840 | | 153,900 | | 0 | | 0 | | 0 | | 47,344 | | 596,084 | Joseph Zavalishin,
Former CDO
| | | | 2022 | | 200,267 | | 16,833 | | 125,000 | | 132,392 | | (7,418) | | 292,168 | | 759,242 | | | 2021 | | 357,719 | | 134,663 | | 125,001 | | 118,837 | | 7,173 | | 10,850 | | 754,243 | | | 2020 | | 330,424 | | 234,663 | | 0 | | 0 | | 0 | | 13,453 | | 578,540 |
(1)
| John Larsen became ATI’s Executive Chairman on August 9, 2021. August 30, 2021 through April 27, 2022 he was a member of the leadership team fulfilling the role of Principal Executive Officer. The Summary Compensation table includes all feescompensation earned serving onunder the BoardExecutive Chairman role and the Director Compensation table includes what he was paid for his role as Chairman of Directors are included in the above table as follows: $112,440 cash fees, 34,952 stock options valued at $59,418, and 18,275 restricted stock units valued at $62,500.Board. |
(2)
| Cash bonuses earned in 2021 and 2022 2 were discretionary awards paid to retain bonus-eligible employees, including the above NEOs.NEOs, Ms. Vitti’s bonus was required to be paid pursuant to the terms of her employment agreement and not deemed discretionary. |
(3)
| The award values for periods prior to the Closing Date of the Business Combination reflect the value of the shares distributed by Wilco Acquisition, LP on December 16, 2021 (the “Distribution Date”) discussed herein relating to ICUs granted to the NEOs during such prior periods and held by the NEOs on the Distribution Date. The value of the shares reflected in the table is $3.14, which was the share price as of the close of trading on the Distribution Date. |
(4)
| The assumptions used in determining the values disclosed in the Stock Awards and Option Awards columns are set out in the 20212022 Consolidated Financial Statements included in Part II, Item 8, of our Annual Report on Form 10-K filed on March 1, 2022.16, 2023. |
(5)
| Former Chief Executive Officer, Labeed Diab, stepped down effective August 7, 2021. John Larsen was appointed and named Executive Chairman and took an active role in leading the Company along with Ray Wahl, Chief Operating Officer, and Joseph Jordan, Chief Financial Officer. Mr. Diab received $1,505,165 in deferred compensation related to his previous employers’ contingent signing bonus repayment, negotiated to the amount owed plus interest. |
(6) (4)
| Amounts shown in the All-Other Compensation column for 20212022 are comprised of the following: |
| | | 401(k)
Match | | Executive
Physical | | Other* | | Tax Gross-
Ups | | Termination
or CIC
Payment/
Accrual | | Total | | | 401(k)
Match | | Executive
Physical | | Other* | | Tax
Gross-
Ups | | Termination
or CIC
Payment/
Accrual | | Total | John Larsen | | $— | | $— | | $— | | $— | | $— | | $— | | $— | | $— | | $— | | $— | | $— | | $— | Sharon Vitti | | | $— | | $— | | $37,144 | | $— | | $— | | $37,144 | Joseph Jordan | | $9,750 | | $5,694 | | $1,428 | | $1,571 | | $— | | $18,443 | | $10,250 | | $— | | $5,928 | | $— | | $— | | $16,178 | Joanne Fong | | | $5,146 | | $— | | $928 | | $— | | $— | | $6,074 | Augustus Oakes | | | $9,990 | | $— | | $5,928 | | $— | | $— | | $15,918 | Gary Carlson | | | $6,277 | | $— | | $928 | | $— | | $— | | $7,205 | Ray Wahl | | $9,750 | | $— | | $928 | | $11,937 | | $— | | $22,615 | | $10,250 | | $— | | $6,428 | | $— | | $— | | $16,678 | Diana Chafey | | $7,402 | | $7,445 | | $328 | | $2,559 | | $— | | $17,733 | | Joseph Zavalishin | | $8,507 | | $— | | $928 | | $1,415 | | $— | | $10,850 | | $6,008 | | $— | | $512 | | $— | | $285,648 | | $292,168 | Augustus Oakes | | $9,120 | | $5,418 | | $928 | | $1,405 | | $— | | $16,871 | | Labeed Diab | | $9,750 | | $5,279 | | $214 | | $10,879 | | $684,519 | | $710,642 | |
*
| Other perquisites include: life insurance benefits, long term disability insurance benefits, tax planning and preparation, cell phone reimbursements, and non-compete considerations. Also, includes housing and furniture rental for Ms. Vitti in Illinois. |
TABLE OF CONTENTS Grants of Plan-Based Awards Fiscal Year 20212022 The following table provides information regarding equity and non-equity incentive plan-based awards granted to our NEOs for the year ended December 31, 2021.2022. Except as set forth below, there were no other grants of equity to NEOs during 2021.2022. GRANTS OF PLAN BASED AWARDS John Larsen | | | 11/23/2021 | | | 11/22/2021 | | | 88,450 | | | | | | | | | $302,499 | | | | 11/23/2021 | | | 11/22/2021 | | | | | | 169,168 | | | 3.42 | | | $287,586 | Joseph Jordan | | | 11/23/2021 | | | 11/22/2021 | | | 73,099 | | | 139,808 | | | 3.42 | | | $249,999 | | | | 11/23/2021 | | | 11/22/2021 | | | | | | | | | | | | $237,674 | Ray Wahl | | | 11/23/2021 | | | 11/22/2021 | | | 73,099 | | | | | | | | | $249,999 | | | | 11/23/2021 | | | 11/22/2021 | | | | | | 139,808 | | | 3.42 | | | $237,674 | Diana | | | 11/23/2021 | | | 11/22/2021 | | | 77,935 | | | | | | | | | $266,538 | Chafey(1) | | | 11/23/2021 | | | 11/22/2021 | | | | | | 69,904 | | | 3.42 | | | $118,837 | Joseph | | | 11/23/2021 | | | 11/22/2021 | | | 36,550 | | | | | | | | | $125,001 | Zavalishin | | | 11/23/2021 | | | 11/22/2021 | | | | | | 69,904 | | | 3.42 | | | $118,837 | Augustus | | | 11/23/2021 | | | 11/22/2021 | | | 36,550 | | | | | | | | | $125,001 | Oakes | | | 11/23/2021 | | | 11/22/2021 | | | | | | 69,904 | | | 3.42 | | | $118,837 |
John Larsen(2) | | | | | | | | | 0 | | | | | | | | | 0 | Sharon Vitti | | | 5/12/2022 | | | | | | 544,872 | | | | | | | | | $850,000 | | | | 5/12/2022 | | | | | | | | | 956,251 | | | $1.56 | | | $851,063 | Joseph Jordan | | | 3/7/2022 | | | | | | 143,678 | | | | | | | | | $250,000 | | | | 3/7/2022 | | | | | | | | | 133,729 | | | $1.74 | | | $132,392 | Joanne Fong | | | 3/7/2022 | | | | | | 43,103 | | | | | | | | | $74,999 | | | | 3/7/2022 | | | | | | | | | 78,800 | | | $1.74 | | | $79,588 | Gary Carlson | | | 3/7/2022 | | | | | | 62,931 | | | | | | | | | $109,500 | | | | 3/7/2022 | | | | | | | | | 91,933 | | | $1.74 | | | $92,852 | Augustus Oakes | | | 3/7/2022 | | | | | | 71,839 | | | | | | | | | $125,000 | | | | 3/7/2022 | | | | | | | | | 133,729 | | | $1.74 | | | $132,392 | Ray Wahl | | | 3/7/2022 | | | | | | 143,678 | | | | | | | | | $250,000 | | | | 3/7/2022 | | | | | | | | | 267,457 | | | $1.74 | | | $264,782 | Joseph Zavalishin | | | 3/7/2022 | | | | | | 71,839 | | | | | | | | | $125,000 | | | | 3/7/2022 | | | | | | | | | 133,729 | | | $1.74 | | | $132,392 |
(1)
| Ms. Chafey’s award includes shares of Common Stock awarded in lieu of a distribution of shares of Common Stock from Wilco Acquisition, LP related to the unallocated pool of ICUs discussed herein. See discussion under Wilco Acquisition, LP 2016 Equity Incentive Plan. The award was valued at $141,537 and the shares vest in quarterly installments over three years with a vest start date of the Closing Date of the Business Combination.
|
(2)
| The amounts reported represent the grant date fair value associated with the grant of these restricted stock, as computed in accordance with ASC 718. See Note 13 |
(2)
| John Larsen did not receive equity in his interim role as Executive Chairman during 2022. All equity granted to the Audited Financial Statements for a discussionhim in 2022 pertained to his role as Chairman of the relevant assumptions usedBoard and is reported in calculating these amounts.the Director Compensation table. |
TABLE OF CONTENTS Outstanding Equity Awards at Fiscal Year-End The following table provides information regarding all outstanding stock options held by each individual as of December 31, 20212022. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END | | | Option Awards | | Stock Awards | | | Option Awards | | Stock Awards | Name | | Number of Securities
Underlying
Unexercised Options
(#) Unexercisable | | Option
Exercise
Option Price
($)(1) | | Expiration
Date | | Number of
Shares or Units
of Stock That
Have Not Vested
(#)(2) | | Market Value of
Shares or Units
of Stock That
Have Not Vested
($)(3) | | Number of
Securities
Underlying
Unexercised Options
(#) Unexercisable | | Option
Exercise
Option Price
($)(1) | | Expiration
Date | | Number of
Shares or Units
of Stock That
Have Not Vested
(#)(2) | | Market Value of
Shares or Units
of Stock That
Have Not Vested
($)(3)(5) | John Larsen(4) | | 169,168 | | 3.42 | | 11/23/2031 | | 97,995 | | 332,203 | | 134,216 | | 3.42 | | 11/23/2031 | | 46,784 | | 14,035 | Sharon Vitti | | | 956,251 | | 1.56 | | 5/12/2032 | | 544,872 | | 163,462 | Joseph Jordan | | 139,808 | | 3.42 | | 11/23/2031 | | 192,944 | | 654,080 | | 139,808 | | 3.42 | | 11/23/2031 | | 262,788 | | 78,836 | | | | 133,729 | | 1.74 | | 3/7/2032 | | | | | Joanne Fong | | | 78,800 | | 1.74 | | 3/7/2032 | | 57,559 | | 17,268 | Augustus Oakes | | | 69,904 | | 3.42 | | 11/23/2031 | | 132,649 | | 39,795 | | | | 133,729 | | 1.74 | | 3/7/2032 | | | | | Gary Carlson | | | 91,933 | | 1.74 | | 3/7/2032 | | 82,262 | | 24,679 | Ray Wahl | | 139,808 | | 3.42 | | 11/23/2031 | | 159,414 | | 540,413 | | 46,602 | | 3.42 | | 11/23/2031 | | | | | Diana Chafey | | 69,904 | | 3.42 | | 11/23/2031 | | 127,716 | | 432,957 | | Joseph Zavalishin | | 69,904 | | 3.42 | | 11/23/2031 | | 99,893 | | 338,637 | | 0 | | | | | | | | | Augustus Oakes | | 69,904 | | 3.42 | | 11/23/2031 | | 97,769 | | 331,437 | |
(1)
| StockFor Mr. Larsen, Mr. Jordan and Mr. Oakes, stock options granted as part of the 2022 annual equity grant vest one-third on each of the first three anniversaries of the Closing Dategrant date. For Ms. Fong and Mr. Carlson, stock options granted as part of the Business Combination.2022 annual equity grant vest one-fourth on each of the first four anniversaries of the of the grant date. |
(2)
| Restricted shares of Common Stock held by each NEO as of December 31, 2021,2022, including restricted shares of Common Stock received in distribution from Wilco Acquisition, LP related to ICUs held by each NEO. Restricted shares of Common Stock vest in installments on each quarterly anniversary of the Closing Date of the Business Combination over the shorter of: (a) the eight-year period from the original grant date of the underlying ICUs, or (b) three years post-Closing Date, subject to the NEO’s continued service through each vesting date. |
(3)
| The market value of shares of outstanding restricted stock is based on the stock price of $3.39,$0.30 the closing stock price on December 31, 2021.2022. |
(4)
| Only equity granted to John Larsen in his role as Chairman of the Board is included in this table. Mr. Larsen was not granted equity in connection with his role as Executive Chairman. |
(5)
| All of Mr. Zavalishin options were forfeited and all RSU’s under the 2021 Plan were also forfeited. However, Mr. Zavalishin’s awards under the 2016 Plan were accelerated and vested. The accelerated awards are included in the amount above. For Mr. Wahl, one tranche of his November 23, 2021 stock option grant vested prior to his termination and are outstanding. All other options and all RSU’s under the 2021 Plan were forfeited. However, Mr. Wahl’s awards under the 2016 Plan were accelerated and vested and are included in the amount above. |
TABLE OF CONTENTS Stock That Vested in 20212022 The following table summarizes the number and market value of stock awards held by each NEO that vested during 2021.2022. OPTION EXERCISES AND STOCK VESTED John Larsen | | | 2,962 | | | 10,468 | Joseph Jordan | | | 30,288 | | | 108,979 | Ray Wahl | | | 24,839 | | | 83,174 | Diana Chafey | | | 22,344 | | | 81,372 | Joseph Zavalishin | | | 14,841 | | | 50,402 | Augustus Oakes | | | 16,376 | | | 56,182 | Labeed Diab | | | 466,142 | | | 1,463,686 |
(1)
| For the period from January 1, 2021 through June 16, 2021 pricing of the market value reported in this table is based on the closing price on the date the ICUs were distributed on December 16, 2021 of $3.14. For the period from June 16, 2021 through December 31, 2021, the market value reported in this table is based upon the closing price of our Common Stock. |
John Larsen | | | 45,301 | | | $37,117 | Sharon Vitti | | | 0 | | | $0 | Joseph Jordan | | | 62,333 | | | $72,357 | Joanne Fong | | | 7,692 | | | $11,958 | Augustus Oakes | | | 31,007 | | | $35,721 | Gary Carlson | | | 9,752 | | | $15,261 | Ray Wahl | | | 50,265 | | | $52,794 | Joseph Zavalishin | | | 63,343 | | | $88,808 |
Non-Qualified Deferred Compensation The following table summarizes NEO non-qualified deferred compensation. TABLE OF CONTENTS NONQUALIFIED DEFERRED COMPENSATION Name | | Executive
Contributions in
Last FY
($)(1) | | Aggregate Earnings
in Last FY
($)(2) | | Aggregate Balance
at Last FYE
($) | | Executive
Contributions in
Last FY
($)(1) | | Aggregate Earnings
in Last FY
($)(2) | | Aggregate Balance
at Last FYE
($) | Joseph Jordan | | 1,734 | | 2,065 | | 16,940 | | | | (2,940) | | 14,000 | Ray Wahl | | 1,666 | | 490 | | 8,173 | | | | (2,180) | | 5,993 | Joseph Zavalishin | | 20,800 | | 7,261 | | 52,132 | | 12,000 | | (7,418) | | 56,714 |
(1)
| The full amount shown for executive contributions is included in the base salary figures for each NEO shown above in the Summary Compensation Table. |
(2)
| The amount shown under aggregate earnings reflects the NEO’s gain or loss based upon the individual allocation their account balance. These gains or losses do not represent current income to the NEO and have not been included in any of the compensation tables shown above. |
Potential Payments Upon Termination or Change-in-Control Agreements with Executive Officers The Company has entered into employment agreements with Messrs.Ms. Vitti, Mr. Kantz, Mr. Cox, Mr. Gregerson, Mr. Jordan, Wahl, Zavalishin, OakesMs. Tansey and Diab, as well as with Ms. Chafey.Mr. Oakes. The material terms of these employment agreements are detailed below, including the potential payment upon termination, except for Mr. DiabZavalishin, Ms. Chafey and Mr. Wahl who waseach were no longer employed by the Company at the end of 20212022 and thus his summary detailstheir summaries detail what heeach was paid as a result of histheir departure. The Company and Mr. Larsen havedid not entered intohave an employment agreement covering his services as Executive Chairman. Nor have the parties agreed on payments with respect to Mr. Larsen’s termination.Chairman during part of 2021 and 2022. The Company’s employment agreements with Messrs.Ms. Vitti, Mr. Kantz, Mr. Cox, Mr. Gregerson, Mr. Jordan, Wahl, Zavalishin,Ms. Tansey and Mr. Oakes and Ms. Chafey (the “Executive Employment Agreements”), provide for an initial term of three years that automatically renews for one-year terms thereafter, unless notice of non-renewal is provided 30 days before the renewal date, and a minimum base salary of $450,000 per year$700,000 for Messrs.Ms. Vitti, $490,000 for Mr. Cox, Mr. Gregerson and Ms. Tansey, and Mr. Jordan and Wahl, $359,100$390,000 for Ms. ChafeyMr. Kantz and Mr. Zavalishin, and $325,000 for Mr. Oakes. In addition, the Executive Employment Agreements provide for annual target bonuses equal TABLE OF CONTENTS
to 75% of base salary for Messrs.Mr. Kantz, Mr. Cox, Mr. Gregerson, Mr. Jordan, Wahl,Ms. Tansey and Zavalishin and(as amended on June 20, 2022) Mr. Oakes. Ms. Chafey, and Mr. Oakes’Vitti’s Executive Employment Agreement provides for annual target bonuses equal to 50%100% of base salary. The Executive Employment Agreements also provide for other standard benefits and perquisites, such as reimbursement of reasonable business expenses and entitlement to health and welfare benefits generally available to other executive employees, including vacation and sick leave, medical, dental, life and disability insurance benefits. The Executive Employment Agreements provide that Messrs.Ms. Vitti be granted long-term incentive equity awards from ATI for each of 2022, 2023 and 2024, that Mr. Cox be granted long-term incentive equity awards from ATI for each of 2023 and 2024, that Mr. Katz, Mr. Gregerson and Ms. Tansey be granted long-term incentive equity awards from ATI for 2023, that Mr. Jordan and Wahl be granted long-term incentive equity awards from ATI in each of 2021, 2022 and 2023 and that Ms. Chafey, Mr. Zavalishin and Mr. Oakes be granted incentive equity awards from ATI in 2021. The aggregate grant-date value of such annual equity awards willare to be $1,700,000 for Ms. Vitti in respect to each of 2022, 2023 and 2024, and $1,000,000 for Mr. Cox in 2023 and $500,000 in respect to 2024, and $500,000 for Messrs. JordanMr. Gregerson and WahlMs. Tansey in respect of 20212023, and $250,000 for Mr. Kantz and Mr. Oakes in respect of 2023, and $500,000 for Mr. Jordan in respect of 2022 and $750,000 in respect of 2023, and is $250,000 for2023. Ms. Chafey, Mr. Zavalishin and Mr. Oakes in respect of 2021. FiftyVitti’s agreement provides that fifty percent (50%) of the aggregate value of the equity awards in respect of 20212022, 2023, and 2022 is2024 are to be granted in the form of restricted stock units and the remaining fifty percent (50%) is to be granted in the form of stock options; for Mr. Cox, his agreement provides that one hundred percent (100%) of the aggregate value of the equity awards in respect of 2023 and 2024 are to be granted in the form of restricted stock units; for Mr. Gregerson, his agreement provides that one hundred percent (100%) of the aggregate value of the equity awards in respect of 2023 are to be granted in the form of restricted stock units; for Ms. Tansey and Mr. Kantz, their agreements provide that fifty percent (50%) of the aggregate value of the equity awards in respect of 2023, are to be granted in the form of restricted stock units and the remaining fifty percent (50%) is to be granted in the form of stock options. The forms of equity awards in respect of subsequent years will be determined by ATI’s Compensation Committee after consultation with an external compensation consultant. TABLE OF CONTENTS The equity awards are governed by the terms of the Executive Employment Agreements, the 2021 Plan, the Restricted Stock Agreements, and certain Restricted Stock Unit Award Agreements and Stock Option Award Agreements (the “Award Agreements”), as applicable. The equity awards in respect of fiscal year 20212022 will vest in three equal annual installments over three years from the Closing Date of the Business Combination or date of grant, depending on the award, and vesting of equity awards in respect of subsequent years will be determined by the Company’s Compensation Committee after consultation with an external compensation consultant. With respect to years following 2023, Messrs.Mr. Kantz, Mr. Gregerson, Ms. Tansey and Mr. Jordan and Wahl will be eligible to receive equity awards on terms and conditions determined by the Company’s Compensation Committee after consultation with an external compensation consultant. For Ms. Chafey, Mr. Zavalishin and Mr. Oakes, withWith respect to years following 2021, they2024, Ms. Vitti and Mr. Cox will be eligible to receive equity awards on terms and conditions determined by the Company’s Compensation Committee after consultation with an external compensation consultant. Mr. Oakes is now eligible to receive equity awards on terms and conditions determined by the Company’s Compensation Committee after consultation with an external compensation consultant. Under the terms of Ms. Vitti’s agreement, in the event of a termination without cause by the Company or a termination for good reason by Ms. Vitti, during the term of her Executive Employment Agreement and at any time other than within 24 months following a change in control, Ms. Vitti will receive (i) an amount equal to 1.5 times the sum of annual base salary and target bonus amount, payable in substantially equal installments over 18 month from termination; (ii) an annual bonus for the then-current fiscal year based on actual performance for such year, pro-rated from the first date of such fiscal year through Ms. Vitti’s last date of continued active employment, payable at the same time as annual bonuses are paid other senior executives of the Company; (iii) reimbursement of COBRA costs for a coverage period of 12 months, if elected, the employer and employee portion of any COBRA health and welfare premiums for a period equal to eighteen (18) months from the date of termination, or, if earlier, (x) the first date that Ms. Vitti is no longer eligible for COBRA, or (y) the first date that Ms. Vitti becomes eligible for health benefits from another employer; or (b) upon termination during the 24-month period following a Change in Control (i) an amount equal to 2.0 times the sum of (x) Ms. Vitti’s base salary and (y) Target Bonus, in a lump sum on the first payroll date, (ii) an annual bonus for the then-current fiscal year based on actual performance for such year, pro-rated from the first date of such fiscal year through Ms. Vitti’s last date of continued active employment, payable at the same time as annual bonuses are paid other senior executives of the Company, (iii) if elected, the employer and employee portion of any COBRA health and welfare premiums for a period equal to eighteen (18) months from the date of such termination, or, if earlier, (x) the first date that Ms. Vitti is no longer eligible for COBRA or (y) the first date that Ms. Vitti becomes eligible for health benefits from another employer, and (iv) all prior unvested grants of equity incentive compensation made to Ms. Vitti pursuant to the Company’s 2021 Equity Incentive Plan as of the date of such termination. Under the terms of the agreements, in the event of a termination without cause by the Company or a termination for good reason by Messrs.Mr. Cox, Mr. Kantz, Mr. Gregerson, Mr. Jordan, Wahl, Zavalishin,Ms. Tansey or Mr. Oakes, or Ms. Chafey, during the term of their respective Executive Employment Agreements and at any time other than within 18 months following a change in control, each will receive (i) an amount equal to 1.25 times the sum of annual base salary and target bonus amount, payable in 15 monthly installments; (ii) a pro-rated annual bonus based on actual performance for the year in which termination occurs; (iii) reimbursement of COBRA costs for a coverage period of 12 months, and (iv) immediate vesting of any restricted shares received in connection with ICUs granted under the 2016 Plan. In the event of a termination of without cause by the Company or termination for good reason by Messrs.Mr. Cox, Mr. Kantz, Mr. Gregerson, Mr. Jordan, Wahl, Zavalishin,Ms. Tansey or Mr. Oakes, or Ms. Chafey, within 18 months following a change in control, each are to receive (i) an amount equal to 1.5 times the sum of his annual base salary and target bonus amount, payable in a lump sum; (ii) a pro-rated annual bonus based on actual performance for the year in which termination occurs; (iii) reimbursement of COBRA costs for a coverage period of 12 months, and (iv) immediate vesting of any restricted shares received in connection with the ICUs granted under the 2016 Plan. Any such severance payments will be subject to applicable taxes and the executive’s execution and non-revocation of a general release of claims and continued compliance with restrictive covenant provisions. Any unvested RSUs and stock options are forfeited immediately upon termination of employment (for any reason), and any vested stock options are forfeited immediately upon termination for cause. Any vested options must be exercised prior to the earliest to occur of (i) the expiration date (which is 10 years after the grant date), (ii) 12 months after termination of employment due to death or disability, (iii) 90 days following termination of employment other than for death, disability, or termination for cause, or (iv) the date of termination for cause. Upon a change in control, (i) any awards under the Award Agreements are to be continued and or assumed by the Company or surviving company, or substituted by the surviving company with substantially similar terms for the outstanding awards, and (ii) and Restricted Shares and the Chafey Restricted Shares are to vest immediately prior to the change in control. Additionally, if a participant’s employment or service is terminated upon or within 24 months following a change in control by ATI without cause or upon such other circumstances as determined by TABLE OF CONTENTS the Compensation Committee, the unvested portion (if any) of all outstanding awards held by the participant will immediately vest (and, to the extent applicable, become exercisable) and be paid in full upon such termination, with any performance conditions deemed achieved (i) for any completed performance period, based on actual performance, or (ii) for any partial or future performance period, at the greater of the target level or actual performance, unless otherwise provided in an award agreement. TABLE OF CONTENTS
Most Executive Employment Agreements contain restrictive covenants generally prohibiting each executive from providing services to a competitor or soliciting employees or business contacts for 15 months following termination of employment, or for 18 months if the executive receives enhanced severance upon a qualifying termination within 18 months following a change in control. In addition, the Executive Employment Agreements mandate that the confidentiality obligations continue after termination of employment. Any compensation payable under an Executive Employment Agreement, and any awards under the Award Agreements and Restricted Stock Agreements, are subject to recoupment under the 2021 Plan and applicable law, including the provisions of Section 945 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules, regulations and requirements adopted thereunder by the SEC and/or national securities exchange on which the Company’s shares are listed. Under the terms of the 2021 Plan, if after termination of employment the Committee determines in its discretion that the executive engaged in an act or omissions that would have warranted termination for cause, or after termination the executive violated any continuing obligation or duty in respect of the Company, such executive’s rights, payments and benefits with respect to an award are subject to cancellation, forfeiture and/or recoupment. As defined in a substantively similar manner under the relevant agreements: “Termination for cause” means termination of employment for (i) willful misfeasance or nonfeasance (including not following the reasonable written direction of the Board, any committee or the Company’s CEO (other than due to disability), or repeated intentional refusal to perform assigned duties (other than due to disability), which in each case continues uncured for 30 days after written notice; (ii) personally engaging in illegal conduct or any act of moral turpitude which reasonably could be expected to harm the Company; (iii) breaching in any material respect the Executive Employment Agreement (other than due to disability) which continues uncured for 30 days after written notice, other than a breach of confidentiality or restrictive covenants (which do not require written notice or opportunity to cure); or (iv) commencement of employment with another company without prior consent. “Termination without cause” means the Company’s termination of the executive other than for cause or due to executive’s death or disability. “Termination for good reason” means voluntary termination by executive if (i) there is a reduction in executive’s annual salary or percentage target bonus opportunity then in effect; (ii) the Company acts in any way that adversely affects employee’s participation in or materially reduce executive’s benefits under any benefit plan of the Company, except those changes generally affecting similarly situated employees; (iii) the Company materially breaches the terms of the Executive Employment Agreement; or (iv) there is a material diminution of executive’s job title, reporting relationship or job duties or responsibilities that are materially inconsistent with the position under the agreement; in each case provided that (y) executive notifies the Board in writing of any event constituting the basis for a termination for good reason within 30 days after their knowledge of the initial existence of the circumstance, and (z) the Company fails to cure such circumstance within 30 after such notice. “Disability” means an executive’s inability to perform the essential duties, responsibilities, and functions of their position as a result of any mental or physical disability or incapacity for a length of time that the Company determines is sufficient to satisfy such obligations as it may have to provide leave under applicable family and medical leave laws and/or “reasonable accommodation” under applicable federal, state or local disability laws. “Change in control” means (i) any person (other than the Company, any trustee or other fiduciary holding securities under any employee benefit plan of the Company, or any company owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of shares of Common Stock), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company’s then outstanding securities, (ii) during any period of two consecutive years (the “Board Measurement Period”) individuals who at the beginning of such period constitute the Board and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in paragraph TABLE OF CONTENTS (i), (iii) or (iv) of this definition, or a director initially elected or nominated as a result of an actual or threatened election contest with respect to directors or as a result of any other actual or threatened solicitation of proxies by or on behalf of any person other than the Board) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the Board Measurement Period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the Board, (iii) merger or consolidation of the TABLE OF CONTENTS
Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation (provided that a merger or consolidation effected to implement a recapitalization of the Company or similar transaction in which no Person other than those covered by the exceptions in (i) above acquires more than 50% of the combined voting power of the Company’s then outstanding securities (which is not a change in control), or (iv) the stockholders of the Company approve the consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets other than (y) the sale or disposition of all or substantially all of the assets of the Company to a person(s) who beneficially own, directly or indirectly, more than 50% of the combined voting power of the outstanding voting securities of the Company at the time of the sale or (z) pursuant to a spinoff type transaction, directly or indirectly, of such assets to the stockholders of the Company. Mr. DiabDiana Chafey
Effective August 7, 2021, Labeed DiabSeptember 20, 2022, Diana Chafey stepped down from her positions as Chief Legal Officer of the Company. Joe Zavalishin Effective July 8, 2022, Joe Zavalishin stepped down from his positions as Chief ExecutiveDevelopment Officer of the Company and as a member of the Board.Company. The Company and Mr. DiabZavalishin have entered into a mutual release pursuant to which Mr. DiabZavalishin is eligible for the following payments and benefits: (i) 1.5x1.25x the sum of his base salary and target bonus in 2022, paid over 1815 months from the date of termination; (ii) a prorated bonus for the current year, based on actual performance, paid at the time bonuses are paid to other employees; (iii) continued coverage of health benefits for up to 1812 months, if elected; and (iv) the vesting of all restricted shares receivedunvested grants of equity compensation made to him pursuant to the Wilco Acquisition LP 2016 Equity Incentive Plan. Ray Wahl Effective December 16, 2022, Ray Wahl stepped down from his positions as Chief Operating Officer of the Company. The Company and Wahl have entered into a mutual release pursuant to which Wahl is eligible for the following payments and benefits: (i) 1.25x the sum of his base salary and bonus in connection with2022, paid over 15 months from the ICUs granteddate of termination; (ii) a prorated bonus for the current year, based on March 31, 2019actual performance, paid at the time bonuses are paid to other employees; (iii) continued coverage of health benefits for up to 12 months, if elected; and December 31, 2019 under(iv) the vesting of all unvested grants of equity compensation made to him pursuant to the Wilco Acquisition LP 2016 Equity Incentive Plan. TABLE OF CONTENTS Potential Payments Upon Termination | | | Involuntary
Termination (not for
Cause or with Good
Reason) within 18
months of a CIC | | Involuntary
Termination (not for
Cause or with Good
Reason) not within 18
months of a CIC | | Disability | | Death | | | Involuntary
Termination
(not for
Cause or
with Good
Reason)
within 18
months of a
CIC(1) | | Involuntary
Termination
(not for
Cause or
with Good
Reason) not
within 18
months of a
CIC(2)(3) | | Disability | | Death | John Larsen
Cash Severance Payments | | | | | | | | | | | | $— | | $— | | $— | | $— | | John Larsen | | | $— | | $— | | $— | | $— | Cash Severance Payments | | | $— | | $— | | $— | | $— | Accelerated Equity Vesting | | $— | | $— | | $— | | $— | | $— | | $— | | $— | | $— | Total | | $— | | $— | | $— | | $— | | $— | | $— | | $— | | $— | Joseph Jordan
Cash Severance Payments | | | | | | | | | | | | td,181,250 | | $900,000 | | $450,000 | | $— | | Sharon Vitti
| | | | | | | | | | Cash Severance Payments | | | $2,800,000 | | $2,100,000 | | $700,000 | | $0 | Accelerated Equity Vesting | | $654,080 | | $654,080 | | $— | | $— | | $1,707,579 | | $— | | $0 | | $0 | Total | | $1,835,330 | | $1,554,080 | | $450,000 | | $— | | $4,507,579 | | $2,100,000 | | $700,000 | | $0 | Ray Wahl
Cash Severance Payments | | | | | | | | | | | | td,181,250 | | $900,000 | | $450,000 | | $— | | Joseph Jordan
| | | | | | | | | | Cash Severance Payments | | | $1,286,250 | | $1,071,875 | | $490,000 | | $0 | Accelerated Equity Vesting | | $540,413 | | $540,413 | | $— | | $— | | $17,403 | | $17,403 | | $0 | | $0 | Total | | $1,721,663 | | $1,440,413 | | $450,000 | | $— | | $1,303,653 | | $1,089,278 | | $490,000 | | $0 | Diana Chafey
Cash Severance Payments | | | | | | | | | | | | $942,638 | | $718,200 | | $359,100 | | $— | | Eimile Tansey
| | | | | | | | | | Cash Severance Payments | | | $1,286,250 | | $1,071,875 | | $490,000 | | $0 | Accelerated Equity Vesting | | $432,957 | | $432,957 | | $— | | $— | | $0 | | $0 | | $0 | | $0 | Total | | $1,375,595 | | $1,151,157 | | $359,100 | | $— | | $1,286,250 | | $1,071,875 | | $490,000 | | $0 | Joseph Zavalishin
Cash Severance Payments | | | | | | | | | | | | $942,638 | | $718,200 | | $359,100 | | $— | | Augustus Oakes
| | | | | | | | | | Cash Severance Payments | | | $1,023,750 | | $853,125 | | $390,000 | | $0 | Accelerated Equity Vesting | | $338,637 | | $338,637 | | $— | | $— | | $9,075 | | $9,075 | | $0 | | | Total | | $1,281,275 | | $1,056,837 | | $359,100 | | $— | | $1,033,825 | | $862,200 | | $390,000 | | $0 | Augustus Oakes
Cash Severance Payments | | | | | | | | | | | | $731,250 | | $609,375 | | $325,000 | | $— | | Christopher Cox
| | | | | | | | | | Cash Severance Payments | | | $1,286,250 | | $1,071,875 | | $490,000 | | $0 | Accelerated Equity Vesting | | $331,437 | | $331,437 | | $— | | $— | | $0 | | $0 | | $0 | | $0 | Total | | $1,062,687 | | $940,812 | | $325,000 | | $— | | $1,286,250 | | $1,071,875 | | $490,000 | | $0 | Scott Gregerson
| | | | | | | | | | Cash Severance Payments | | | $1,286,250 | | $1,071,875 | | $490,000 | | $0 | Accelerated Equity Vesting | | | $0 | | $0 | | $0 | | $0 | Total | | | $1,286,250 | | $1,071,875 | | $490,000 | | $0 | Erik Kantz
| | | | | | | | | | Cash Severance Payments | | | $1,023,750 | | $853,125 | | $390,000 | | | Accelerated Equity Vesting | | | $1,310 | | $1,310 | | $0 | | | Total | | | $1,025,060 | | $854,435 | | $390,000 | | |
TABLE OF CONTENTS
(1)
| For Ms. Vitti this applies to a Change In Control within 24 months |
(2)
| For Ms. Vitti this applies to a Change In Control not within 24 months |
(3)
| The market value of shares of outstanding restricted stock is based on the stock price of $0.30 the closing stock price on December 31, 2022. |
Compensation Committee Interlocks and Insider Participation The Compensation Committee includes Carmine Petrone, Joanne Burns and John Larsen. None of our executive officers serves as a member of the Board of Directors or Compensation Committee (or other committee performing equivalent functions) of any entity that has one or more executive officers serving on the Board or the Compensation Committee. TABLE OF CONTENTS Pursuant to the Exchange Act, we are required to disclose in this proxy statement the ratio of the total annual compensation of our CEO to the median of the total annual compensation of all of our employees (excluding our CEO). Based on SEC rules for this disclosure and applying the methodology described below, we have determined that our CEO’s total compensation for fiscal year 2022 was $2,600,792 and the median of the total compensation of all of our employees (excluding our CEO) for fiscal year 2022 was $40,843. Accordingly, we estimate the ratio of our CEO’s total compensation for fiscal year 2022 to the median of the total compensation of all of our employees (excluding our CEO) for fiscal year 2022 to be 64 to 1. We selected December 31, 2022, our 2022 fiscal year end, as the date we would use to identify our median employee. To identify the median-compensated employee (excluding our CEO), we used W2 box three Medicare wages. In making this determination, we included all full-time, part-time, seasonal, and temporary workers employed by the Company at the end of the last completed fiscal year and did not make any cost-of-living adjustments in identifying the median employee. This pay ratio is an estimate calculated in a manner consistent with SEC rules based on the methodology described above. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions. As such, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. TABLE OF CONTENTS Pay Versus Performance (a) | | | (b) | | | (bb) | | | (c) | | | | | | (d) | | | (e) | | | (f) | | | (g) | | | (h) | | | (i) | 2022 | | | 2,637,822 | | | 537,231 | | | 1,227,258 | | | 483,793 | | | 797,875 | | | 597,384 | | | 3 | | | 108 | | | (493,047) | | | 6,712 | 2021 | | | 2,943,057 | | | 1,145,602 | | | 4,448,222 | | | 1,153,662 | | | 901,810 | | | 910,686 | | | 34 | | | 112 | | | (782,028) | | | 39,771 |
(1)
| Represents the total compensation paid to Sharon Vitti, our current Principal Executive Officer (“PEO” #1) since April 28, 2022. The dollar amounts reported in column (b) are the amounts of total compensation reported for Ms. Vitti in the “Total” column of the Summary Compensation Table (“SCT”). Former Chief Executive Officer, Labeed Diab, stepped down effective August 7, 2021. |
(2)
| Represents the total compensation paid to John Larsen, our prior Principal Executive Officer (“PEO” #2). The dollar amounts in column (bb) are the amounts of total compensation reported for Mr. Larsen in the “Total” column of the Summary Compensation Table (“SCT”). John Larsen became ATI’s Executive Chairman on August 9, 2021, August 30, 2021 through April 27, 2022, he was acting CEO. |
(3)
| The dollar amounts reported in column (c) represent the amount of “compensation actually paid” (“CAP”) to the PEO computed in accordance with Item 402(v) of Regulation S-K, adjustments were made to the PEO’s total compensation for each year to determine the CAP. |
(4)
| The dollar amounts reported in column (d) represent the average of the amounts for the Company’s NEOs as a group (excluding the PEO) in the “Total” column of the SCT. For 2022, the Non-PEO NEOs were Joseph Jordan, Ray Wahl, Augustus Oakes, Joseph Zavalishin, Gary Carlson, and Joanne Fong. For 2021, the Non-PEO NEOs were Joseph Jordan, Ray Wahl, Diana Chafey, Joseph Zavalishin, and Augustus Oakes. |
(5)
| The dollar amount reported in column (e) represents the average amount of “compensation actually paid” to the Non-PEO NEOs as a group, as computed in accordance with Item 402(v) of Regulation S-K, adjustments were made to average total compensation for the Non-PEO NEOs as a group for each year to determine the compensation actually paid. |
(6)
| TSR calculation start date is 6/17/21 (rather than 1/1/21) since that is the date our Class A common stock began trading on the NYSE following the Business Combination / de-SPAC. |
2022 | | | 2,637,822 | | | 1,701,063 | | | 290,499 | | | — | | | — | | | 1,227,258 | 2021 | | | 2,943,057 | | | — | | | — | | | 1,505,165 | | | — | | | 4,448,222 | | PEO #2 SCT Total TO CAP Reconciliation
| Year | | | Reported Summary
Compensation
Table Total for PEO
($) | | | Minus: Reported
Summary
Compensation
Table Value of
Equity Awards
($) | | | Plus: Equity
Award
Adjustments
($) | | | Plus: Reported
Change in Pension
Value Deferred
Compensation
Earnings in
Summary
Compensation
Table
($) | | | Plus: Pension
Benefit
Adjustments
($) | | | Compensation
Actually
Paid to PEO
($) | 2022 | | | 537,231 | | | 128,696 | | | 75,258 | | | — | | | — | | | 483,793 | 2021 | | | 1,145,602 | | | 590,085 | | | 598,145 | | | — | | | — | | | 1,153,662 |
2022 | | | 290,499 | | | — | | | — | | | — | | | — | | | — | | | 290,499 | 2021 | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
TABLE OF CONTENTS 2022 | | | 19,648 | | | 24,419 | | | — | | | 31,191 | | | — | | | — | | | 75,258 | 2021 | | | 598,145 | | | — | | | — | | | — | | | — | | | — | | | 598,145 |
2022 | | | 797,875 | | | 294,816 | | | 99,041 | | | (4,716) | | | — | | | 597,384 | 2021 | | | 901,810 | | | 369,679 | | | 374,094 | | | 4,462 | | | — | | | 910,686 |
2022 | | | 45,487 | | | 41,839 | | | — | | | 11,715 | | | — | | | — | | | 99,041 | 2021 | | | 374,094 | | | — | | | — | | | — | | | — | | | — | | | 374,094 |
Compensation Committee Report The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis provided above. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement for filing with the SEC. Compensation Committee: Carmine Petrone, Chair
Joanne M. Burns
John L. Larsen NON-BINDING ADVISORY VOTE ON THE COMPENSATION OF
OUR NAMED EXECUTIVE OFFICERS As required by Section 14A of the Exchange Act, we are providing stockholders with the opportunity to approve, on an advisory basis, the compensation of our named executive officers as described in the Compensation Discussion and Analysis and the Compensation Tables. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and our executive compensation philosophy and practices, as discussed in this Proxy Statement. As discussed in those disclosures, our compensation programs are designed to align total executive compensation with Company performance while enabling us to attract, retain, and motivate executives who can achieve sustained long-term growth and strong financial performance for our stockholders. Our Compensation Committee continually reviews the compensation program for our named executive officers to ensure it achieves the desired goals of aligning our executive compensation structure with our stockholder interests. As an advisory vote, this proposalProposal is not binding. However, our Board of Directors and Nominating and Corporate Governance Committee value the opinions expressed by stockholders in their vote on this proposalProposal and will consider the outcome of the vote when making future decisions regarding the compensation of our named executive officers. We are asking our stockholders to indicate their support for the compensation of our named executive officers by voting “FOR” the following resolution: “RESOLVED, that the stockholders approve, on an advisory basis, the Company’s compensation of its named executive officers, as disclosed in the Proxy Statement for the 2023 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis and the compensation tables regarding named executive officer compensation, together with the accompanying narrative disclosure.” Unless the Board modifies its policy on the frequency of future executive compensation advisory votes, the next executive compensation advisory vote will be held at the 2024 Annual Meeting of Stockholders. OUR BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS TABLE OF CONTENTS NON-BINDING ADVISORY VOTE ONAPPROVAL THE FREQUENCY OF FUTURE NON-BINDING ADVISORY
VOTES ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
As required by Section 14A of the Exchange Act, we are providing our stockholders with an opportunity to make a non-binding, advisory vote on the frequency of future non-binding advisory votes on the compensation of our named executive officers. This non-binding advisory vote must be submitted to stockholders at least once every six years.
You have four choices for voting on this proposal. You can choose whether future non-binding advisory votes on the compensation of our named executive officers should be conducted every “1 YEAR,” “2 YEARS,” or “3 YEARS.” You may also “ABSTAIN” from voting. The frequency that receives the greatest number of votes cast by stockholders on this matter at the meeting will be deemed to be the preferred frequency option of our stockholders.
After careful consideration, our Board of Directors recommends that future non-binding advisory votes on compensation of our named executive officers be held every one year. Our Board of Directors believes that holding a vote every year is consistent with having a regular dialogue with our stockholders on corporate governance matters, including the compensation of our named executive officers. An annual stockholder vote allows our stockholders to provide us with regular feedback regarding the effectiveness of our compensation programs, and provides our Board of Directors and Compensation Committee with the opportunity to consider stockholder views as part of its regular compensation review.
Stockholders are not voting to approve or disapprove the Board of Directors’ recommendation. Instead, stockholders may indicate their preference regarding the frequency of future non-binding advisory votes on the compensation of our named executive officers by selecting one year, two years, or three years. Stockholders that do not have a preference regarding the frequency of future advisory votes may abstain from voting on the proposal.
As an advisory vote, this proposal is not binding. However, our Board of Directors and Nominating and Corporate Governance Committee value the opinions expressed by stockholders in their vote on this proposal and will consider the outcome of the vote when making future decisions regarding the frequency of holding future non-binding advisory votes on the compensation of our named executive officers.
OUR BOARD OF DIRECTORS RECOMMENDS HOLDING FUTURE NON-BINDING ADVISORY VOTES ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS EVERY “1 YEAR”
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APPROVE AN AMENDMENTTO THEAMENDMENT TO ATI PHYSICAL THERAPY, INC. 2021 EQUITY INCENTIVE PLAN TO INCREASE THE NUMBER OF SHARES AVAILABLE FOR ISSUANCE UNDER THE PLAN IN CONNECTION WITH THE CANCELLATION OF CERTAIN SHARES PREVIOUSLY HELD BY WILCO ACQUISITION, LP AND THE FORFEITURE OF CERTAIN SHARES SUBJECT TO RESTRICTED STOCK AGREEMENTS
At the Annual Meeting, the stockholders will be asked to approve an amendment to the ATI Physical Therapy, Inc. 2021 Equity Incentive Plan, as amended, (the “2021 Plan”). The 2021 Plan is attached hereto as Appendix C. Such approval will require the affirmative vote of majority of the votes cast by the stockholders present in person or represented by proxy at the meeting and entitled to vote thereon. If approved, the number of shares of Common Stock available for issuance under the 2021 Plan will be increased by 560,97937,000,000 shares from 20,728,25421,289,233 shares to 21,289,233, plus58,289,233 shares. If this Proposal 7 is approved, such increase would take place prior to the numbereffectiveness of restricted shares of Common Stock distributed by Wilco Acquisition, LP that are forfeited by the holder upcontemplated reverse stock split pursuant to a maximum of 837,166 shares of Common Stock, which will constitute the maximum number of additional shares that may be issued under the 2021 Plan as incentive stock options.Proposal 5, if Proposal 5 is also approved. On April 13, 2022,March 21, 2023, our Board of Directors unanimously adopted the amendment to our 2021 Plan (the “2021 Plan Amendment”), a copy of which is attached hereto as Appendix AD. Background The 2021 Plan allows the Company to grant executive officers, key employees, members of itsthe Company’s Board of Directors and other service providers of the Company stock options, stock appreciation rights, restricted stock, performance awards and restricted stock units. The purpose of granting awards under the 2021 Plan is to enhance our long-term performance and to provide the selected individuals with an incentive to improve our growth and profitability by acquiring a proprietary interest in the Company’s success. The 2021 Plan was originally adopted by the Company’s Board of Directors on May 5, 2021 and by the Company’s stockholders on June 15, 2021, prior to the time that we became a publicly held company. As At our annual meeting of March 31,stockholders held on June 2, 2022, approximately 9,394,978 shares of Common Stock remained available for issuance in respect of new awards under the 2021 Plan (the “share reserve”). The Company and Wilco Acquisition, LP cancelled 560,979 shares of Common Stock ofstockholders approved an amendment to the Company received by Wilco Acquisition, LP in connection with the Business Combination in respect of approximately an equal number of shares of Common Stock that were reserved for issuance under the 2016 Plan, but not granted to identified recipients. As part of the Business Combination and, in connection with such cancellation, the Company proposed to amend, subject to stockholder approval, theCompany’s 2021 Plan to increase the share reservenumber of shares of common stock reserved for issuance by 560,979 shares, of Common Stock (the same amount as the cancelled shares). In addition, the Company proposedor from 20,728,254 shares to amend, subject to stockholder approval, the 2021 Plan to increase the share reserve by21,289,233 shares, plus the number of restricted shares of Common Stock distributed by Wilco Acquisition, LP that arewere forfeited by the holder up to a maximum of 837,166 shares of Common Stock, which was the total number of restricted shares of Common Stock distributed to the holders that remained subject to vesting under the terms of the Restricted Stock Agreements executed by the holders.
As of December 31, 2022 approximately 10.9 million shares of Common Stock remained available for issuance for new awards under the 2021 Plan (the “Share Reserve”). The Board believes the increase represented by the 2021 Second Plan Amendment will be sufficient to ensure our ability to continue to grant stock options and other awards, which are vital to our ability to attract and retain outstanding and highly skilled individuals in the extremely competitive labor markets in which we must compete. Our ability to issue shares under the 2021 Plan, also allows the Company to preserve capital, to incentivize our employees and to align the employees interests with those of our stockholders. Our employees are our most valuable asset, and such awards are crucial to our ability to motivate individuals to achieve our goals. As such, the Company proposed to amend, subject to stockholder approval, the 2021 Plan to increase the share reserve by 37,000,000 shares of Common Stock. Accordingly, the Company’s Board of Directors has adopted a 2021 Plan Second Amendment, subject to stockholder approval. The 2021 Plan Second Amendment increases the number of shares of Common Stock available for issuance under the 2021 Plan by 560,979, plus37,000,000. Consistent with past practice, the numberBoard of Directors granted restricted sharesstock to Employees and Non-Employee Directors in March, with a vesting schedule of Common Stock distributed by Wilco Acquisition, LP that are forfeited bythree years, with the holder upfirst tranche of stock to a maximumvest in March 2024. The restricted stock is issuable, subject to stockholder approval of 837,166 shares of Common Stock, which will also constitute the maximum2021 Plan Amendment. If the 2021 Plan Amendment is not approved, the aggregate number of shares of the Company’s common stock that currently may be issued pursuant to Awards under the 2021 Plan as incentive stock options.will be approximately 10.9 million shares and the March 2023 Awards will not be able to be issued until a further increase in the 2021 Plan is approved by stockholders. Summary of the 2021 Plan The principal features of the 2021 Plan are summarized below. The summary does not purport to be a complete statement of the terms of the 2021 Plan and is qualified in its entirety by reference to the full text of the 2021 Plan.Plan, attached hereto. TABLE OF CONTENTS Purpose The purpose of the 2021 Plan is to align the interests of eligible participants with our stockholders by providing incentive compensation tied to ATI’s performance. The intent of the 2021 Plan is to advance ATI’s interests and increase stockholder value by attracting, retaining and motivating key personnel. Awards The types of awards available under the Incentive Plan include stock options (both incentive and non-qualified), SARs, restricted stock awards, RSUs and stock-based awards. All awards granted to participants under the 2021 Plan will be represented by an award agreement. TABLE OF CONTENTS
Shares Available If this proposalProposal is approved, the number of shares of Common Stock available for issuance under the 2021 Plan will be increased by 560,97937,000,000 from 20,728,25421,289,233 to 21,289,233, plus the number of restricted shares of Common Stock distributed by Wilco Acquisition, LP that are forfeited by the holder up to a maximum of 837,166 shares of Common Stock,58,289,233 subject to certain provisions of the 2021 Plan including regarding adjustment as summarized below under “Adjustments”. Within the share reserve, currently a total of 21,289,233 shares of Common Stock are available for awards of incentive stock options. As of December 31, 2021,2022, under the 2021 Plan there were: 774,7965,312,739 shares of Common Stock subject to outstanding options and an aggregate of 851,9664,374,518 shares of restricted stock or shares underlying restricted stock unit awards outstanding but not yet vested, based on the passage of time. If any award granted under the 2021 Plan is cancelled, expired, forfeited, surrendered or otherwise terminated without consideration or delivery of the shares to the participant, then such shares will be returned to the 2021 Plan and be available for future awards under the 2021 Plan. However, shares that are withheld from any award in payment of the exercise, base or purchase price or taxes, or not issued or delivered as a result of the settlement of an award in cash, or repurchased by ATI on the open market with the proceeds of a stock option, will not be returned to the 2021 Plan nor be available for future awards under the 2021 Plan. The share reserve will be reduced by one share for each share subject to an award. If a share that was subject to an award is returned to the share reserve, the share reserve will be credited with one share. Eligibility Any employee, officer, non-employee director or any natural person who is a consultant or other personal service provider to ATI or any of its subsidiaries or affiliates can participate in the 2021 Plan, at the Committee’s (as defined below) discretion. In its determination of eligible participants, the Committee may consider any and all factors it considers relevant or appropriate, and designation of a participant in any year does not require the Committee to designate that person to receive an award in any other year. As of the Record Date,December 31, 2022, approximately 2,073352 employees, six7 executive officers, four5 non-employee directors and no consultants or other personal service providers are anticipated to be eligible to participate in the 2021 Plan. Effective Date and Duration The 2021 Plan took effect as of June 15, 2021 (the “Effective Date”) and will terminate on the tenth anniversary of the Effective Date, subject to earlier amendment or termination. See “Plan Amendments or Termination” below. Administration Pursuant to its terms, the 2021 Plan may be administered by the Compensation Committee of the ATI Board of Directors, such other committee of the ATI Board of Directors appointed by the ATI Board of Directors to administer the 2021 Plan or the ATI Board of Directors, as determined by the ATI Board of Directors (such administrator of the Incentive Plan, the “Committee”). The Committee has the power and discretion necessary to administer the 2021 Plan, with such powers including, but not limited to, the authority to select persons to participate in the 2021 Plan, determine the form and substance of awards under the 2021 Plan, determine the conditions and restrictions, if any, subject to which such awards will be made, modify the terms of awards, accelerate the vesting of awards, and make determinations regarding a participant’s termination of employment or service for purposes of an award. The Committee’s determinations, interpretations and actions under the Incentive Plan are binding on ATI, the participants in the 2021 Plan and all other parties. The 2021 Plan is administered by our Compensation Committee, which solely consists of TABLE OF CONTENTS independent directors, as appointed by the Board of Directors from time to time. The Compensation Committee may delegate authority to one or more officers of ATI to grant awards to eligible persons other than members of the ATI Board of Directors or who are subject to Rule 16b-3 of the Exchange Act, as permitted under the 2021 Plan and under applicable law. Stock Options A stock option grant entitles a participant to purchase a specified number of shares of Common Stock during a specified term (with a maximum term of ten years) at an exercise price that will not be less than the fair market value of a share as of the date of grant. The Committee will determine the requirements for vesting and exercisability of the stock options, which may be based on the continued employment or service of the participant with ATI for a specified time period, upon the TABLE OF CONTENTS
attainment of performance goals or both. The stock options may terminate prior to the end of the term or vesting date upon termination of employment or service (or for any other reason), as determined by the Committee. Unless approved by the ATI stockholders, the Committee may not take any action with respect to a stock option that would be treated as a “repricing” under the then applicable rules, regulations or listing requirements of the stock exchange on which shares of Common Stock are listed, or that would result in the cancellation of “underwater” stock options in exchange for cash or other awards, other than in connection with a change in control. Stock options granted under the 2021 Plan will be either non-qualified stock options or incentive stock options (with incentive stock options intended to meet the applicable requirements under the Code). Stock options are nontransferable except in limited circumstances. Stock Appreciation Rights A SAR granted under the 2021 Plan will give the participant a right to receive, upon exercise or other payment of the SAR, an amount in cash, shares of Common Stock or a combination of both equal to (i) the excess of (a) the fair market value of a share on the date of exercise less (b) the base price of the SAR that the Committee specified on the date of the grant multiplied by (ii) the number of shares as to which such SAR is exercised or paid. The base price of a SAR will not be less than the fair market value of a share as of the date of grant. The right of exercise in connection with a SAR may be made by the participant or automatically upon a specified date or event. SARs are nontransferable, except in limited circumstances. The Committee will determine the requirements for vesting and exercisability of the SARs, which may be based on the continued employment or service of the participant with ATI for a specified time period or upon the attainment of specific performance goals. The SARs may be terminated prior to the end of the term (with a maximum term of ten years) upon termination of employment or service, as determined by the Committee. Unless approved by ATI stockholders, the Committee may not take any action with respect to a SAR that would be treated as a “repricing” under the then applicable rules, regulations or NYSE listing requirements, or that would result in the cancellation of “underwater” SARs in exchange for cash or other awards, other than in connection with a change in control. Restricted Stock Awards A restricted stock award is a grant of a specified number of shares of Common Stock to a participant, which restrictions will lapse upon the terms that the Committee determines at the time of grant. The Committee will determine the requirements for the lapse of the restrictions for the restricted stock awards, which may be based on the continued employment or service of the participant with ATI over a specified time period, upon the attainment of performance goals, or both. The participant will have the rights of a stockholder with respect to the shares granted under a restricted stock award, including the right to vote the shares and receive all dividends and other distributions with respect thereto, unless the Committee determines otherwise to the extent permitted under applicable law. If a participant has the right to receive dividends paid with respect to a restricted stock award, such dividends shall not be paid to the participant until the underlying award vests. Any shares granted under a restricted stock award are nontransferable, except in limited circumstances. A participant may make an election under Section 83(b) of the Code for tax planning purposes, other in connection with a change in control. Restricted Stock Units AnA RSU granted under the 2021 Plan will give the participant a right to receive, upon vesting and settlement of the RSUs, one share per vested unit or an amount per vested unit equal to the fair market value of one share as of
TABLE OF CONTENTS the date of determination, or a combination thereof, at the discretion of the Committee. The Committee may grant RSUs together with dividend equivalent rights (which will not be paid until the award vests), and the holder of any RSUs will not have any rights as a stockholder, such as dividend or voting rights, until the shares Common Stock underlying the RSUs are delivered. The Committee will determine the requirements for vesting and payment of the RSUs, which may be based on the continued employment or service of the participant with ATI for a specified time period and also upon the attainment of specific performance goals. RSUs will be forfeited if the vesting requirements are not satisfied. RSUs are nontransferable, except in limited circumstances. TABLE OF CONTENTS
Stock-Based Awards Stock-based awards may be granted to eligible participants under the 2021 Plan and consist of an award of, or an award that is valued by reference to, shares of Common Stock. A stock-based award may be granted for past employment or service, in lieu of bonus or other cash compensation, as director’s compensation or any other purpose as determined by the Committee. The Committee will determine the requirements for the vesting and payment of the stock-based award, with the possibility that awards may be made with no vesting requirements. Upon receipt of the stock-based award that consists of shares of Common Stock, the participant will have all rights of a stockholder with respect to the shares of Common Stock, including the right to vote and receive dividends (which will not be paid until the award vests). Performance-Based Compensation All types of awards granted under the 2021 Plan may be granted with vesting, payment, lapse of restrictions and/or exercisability requirements that are subject to the attainment of specific performance goals. The Committee may adjust performance goals, or the manner of measurement thereof, as it deems appropriate. Plan Amendments or Termination The Company’s Board of Directors may amend, modify, suspend or terminate the 2021 Plan; provided that if such amendment, modification, suspension or termination materially and adversely affects any award, ATI must obtain the affected participant’s consent, subject to changes that are necessary to comply with applicable laws. Certain amendments or modifications of the 2021 Plan may also be subject to the approval of our stockholders as required by SEC and NYSE rules or applicable law. Termination of Service Awards under the 2021 Plan may be subject to reduction, cancellation or forfeiture upon termination of service or failure to meet applicable performance conditions or other vesting terms. Under the 2021 Plan, unless an award agreement provides otherwise, if a participant’s employment or service is terminated for cause, or if after termination the Committee determines that the participant engaged in an act that falls within the definition of cause, or if after termination the participant engages in conduct that violates any continuing obligation of the participant with respect to ATI, ATI may cancel, forfeit and/or recoup any or all of that participant’s outstanding awards. In addition, if the Committee makes the determination above, ATI may suspend the participant’s right to exercise any stock option or SAR, receive any payment or vest in any award pending a determination of whether the act falls within the definition of cause (as defined in the 2021 Plan). If a participant voluntarily terminates employment or service in anticipation of an involuntary termination for cause, that shall be deemed a termination for cause. Right of Recapture Awards granted under the 2021 Plan may be subject to recoupment in accordance with Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (regarding recoupment of erroneously awarded compensation). ATI has the right to recoup any gain realized by the participant from the exercise, vesting or payment of any award if, within one year after such exercise, vesting or payment (a) the participant is terminated for cause, (b) if after the participant’s termination the Committee determines that the participant engaged in an act that falls within the definition of cause or materially violated any continuing obligation of the participant with respect to ATI or (c) the Committee determines the participant is subject to recoupment due to a clawback policy. TABLE OF CONTENTS Change in Control Under the 2021 Plan, in the event of a change in control of ATI, as defined in the 2021 Plan, all outstanding awards shall either be (a) continued or assumed by the surviving company or its parent or (b) substituted by the surviving company or its parent for awards, with substantially similar terms (with appropriate adjustments to the type of consideration payable upon settlement, including conversion into the right to receive securities, cash or a combination of both, and with appropriate adjustment of performance conditions or deemed achievement of such conditions (i) for any completed performance period, based on actual performance, or (ii) for any partial or future performance period, at the greater of the target level or actual performance, unless otherwise provided in an award agreement). TABLE OF CONTENTS
Only to the extent that outstanding awards are not continued, assumed or substituted upon or following a change in control, the Committee may, but is not obligated to, make adjustments to the terms and conditions of outstanding awards, including without limitation (i) acceleration of exercisability, vesting and/or payment immediately prior to, upon or following such event, (ii) upon written notice, provided that any outstanding stock option and SAR must be exercised during a period of time immediately prior to such event or other period (contingent upon the consummation of such event), and at the end of such period, such stock options and SARs shall terminate to the extent not so exercised, and (iii) cancellation of all or any portion of outstanding awards for fair value (in the form of cash, shares, other property or any combination of such consideration), less any applicable exercise or base price. Notwithstanding the foregoing, if a participant’s employment or service is terminated upon or within 24 months following a change in control by ATI without cause or upon such other circumstances as determined by the Committee, the unvested portion (if any) of all outstanding awards held by the participant will immediately vest (and, to the extent applicable, become exercisable) and be paid in full upon such termination, with any performance conditions deemed achieved (i) for any completed performance period, based on actual performance, or (ii) for any partial or future performance period, at the greater of the target level or actual performance, unless otherwise provided in an award agreement. Assumption of Awards in Connection with an Acquisition The Committee may assume or substitute any previously granted awards of an employee, director or consultant of another corporation who becomes eligible by reason of a corporate transaction. The terms of the assumed award may vary from the terms and conditions otherwise required by the 2021 Plan if the Committee deems it necessary. The assumed awards will not reduce the total number of shares available for awards under the 2021 Plan. Adjustments In the event of any recapitalization, reclassification, share dividend, extraordinary cash dividend, stock split, reverse stock split, merger, reorganization, consolidation, combination, spin-off or other similar corporate event or transaction affecting the shares of Common Stock, the Committee will make equitable adjustments to (i) the number and kind of shares or other securities available for awards and covered by outstanding awards, (ii) the exercise, base or purchase price or other value determinations of outstanding awards, and/or (iii) any other terms of an award affected by the corporate event. If Proposal 5, to enact a reverse stock split is approved by our Stockholders, after the 2021 Plan Second Amendment is approved, the share amounts of the 2021 Plan will be proportionately adjusted. Award Limits A non-employee director may not be granted during a calendar year awards that have a fair value that, when added to all other cash compensation received in respect of service as a member of the Board of Directors that year, exceeds $500,000. U.S. Federal Tax Consequences Incentive Stock Options An optionee recognizes no taxable income for regular income tax purposes as a result of the grant or exercise of an incentive stock option qualifying under Section 422 of the Code. Optionees who neither dispose of their shares within two years following the date the option was granted nor within one year following the exercise of the option TABLE OF CONTENTS normally will recognize a capital gain or loss equal to the difference, if any, between the sale price and the purchase price of the shares. If an optionee satisfies such holding periods upon a sale of the shares, ATI will not be entitled to any deduction for federal income tax purposes. If an optionee disposes of shares within two years after the date of grant or within one year after the date of exercise (a “disqualifying disposition”), the difference between the fair market value of the shares on the exercise date and the option exercise price (not to exceed the gain realized on the sale if the disposition is a transaction with respect to which a loss, if sustained, would be recognized) will be taxed as ordinary income at the time of disposition. Any gain in excess of that amount will be a capital gain. If a loss is recognized, there will be no ordinary income, and such loss will be a capital loss. Any ordinary income recognized by the optionee upon the disqualifying disposition of the shares generally should be deductible by ATI for federal income tax purposes, except to the extent such deduction is limited by applicable provisions of the Code. The difference between the option exercise price and the fair market value of the shares on the exercise date is treated as an adjustment in computing the optionee’s alternative minimum taxable income and may be subject to an TABLE OF CONTENTS
alternative minimum tax which is paid if such tax exceeds the regular tax for the year. Special rules may apply with respect to certain subsequent sales of the shares in a disqualifying disposition, certain basis adjustments for purposes of computing the alternative minimum taxable income on a subsequent sale of the shares and certain tax credits which may arise with respect to optionees subject to the alternative minimum tax. Nonqualified Stock Options Options not designated or qualifying as incentive stock options will be nonqualified stock options having no special tax status. An optionee generally recognizes no taxable income as the result of the grant of such an option. Upon exercise of a nonqualified stock option, the optionee normally recognizes ordinary income equal to the amount by which the fair market value of the shares on such date exceeds the exercise price. If the optionee is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of shares acquired by the exercise of a nonqualified stock option, any gain or loss, based on the difference between the sale price and the fair market value on the exercise date, will be taxed as capital gain or loss. Stock Appreciation Rights In general, no taxable income is reportable when SARs are granted to a participant. Upon exercise, the participant will recognize ordinary income in an amount equal to the fair market value of any cash or shares received. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Any additional gain or loss recognized upon any later disposition of the shares would be capital gain or loss. Restricted Stock Awards A participant acquiring restricted stock generally will recognize ordinary income equal to the fair market value of the shares on the vesting date. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. The participant may elect, pursuant to Section 83(b) of the Code, to accelerate the ordinary income tax event to the date of acquisition by filing an election with the IRS no later than 30 days after the date the shares are acquired. Upon the sale of shares acquired pursuant to a restricted stock award, any gain or loss, based on the difference between the sale price and the fair market value on the date the ordinary income tax event occurs, will be taxed as capital gain or loss. Restricted Stock Unit Awards There are no immediate tax consequences of receiving an award of RSUs. A participant who is awarded RSUs will be required to recognize ordinary income in an amount equal to the fair market value of shares issued to such participant at the end of the applicable vesting period or, if later, the settlement date elected by the Committee or a participant. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Any additional gain or loss recognized upon any later disposition of any shares received would be capital gain or loss. Stock-Based Awards The tax consequences associated with any other stock-based award of unrestricted shares or an award that is valued by reference to shares granted under the 2021 Plan will vary depending on the specific terms of the award. A participant acquiring unrestricted shares generally will recognize ordinary income equal to the fair market value TABLE OF CONTENTS of the shares on the grant date. The factors that will determine the timing and character of the income include whether or not the award has a readily ascertainable fair market value, whether or not the award is subject to forfeiture provisions or restrictions on transfer, the nature of the property to be received by the participant under the award and the participant’s holding period and tax basis for the award or underlying Common Stock. Section 409A Section 409A provides certain requirements for non-qualified deferred compensation arrangements with respect to an individual’s deferral and distribution elections and permissible distribution events. Certain types of awards granted under the 2021 Plan may be subject to the requirements of Section 409A. It is intended that the 2021 Plan TABLE OF CONTENTS
and all awards comply with, or be exempt from, the requirements of Section 409A. If an award is subject to and fails to satisfy the requirements of Section 409A, the recipient of that award may recognize ordinary income on the amounts deferred under the award, to the extent vested, which may be prior to when the compensation is actually or constructively received. Also, if an award that is subject to Section 409A fails to comply with Section 409A’s provisions, Section 409A imposes an additional 20% federal income tax on compensation recognized as ordinary income, as well as interest on such deferred compensation. Tax Effect for ATI ATI generally will be entitled to a tax deduction in connection with an award under the 2021 Plan in an amount equal to the ordinary income realized by a participant and at the time the participant recognizes such income (for example, the exercise of a nonqualified stock option). Special rules limit the deductibility of compensation paid to our chief executive officer, chief financial officer and the other “covered employees” as determined under Section 162(m) and applicable guidance. Under Section 162(m), the annual compensation paid to any of these covered employees, including awards that ATI grants pursuant to the 2021 Plan, whether performance-based or otherwise, will be subject to the $1 million annual deduction limitation. It is possible that all or a portion of the compensation paid to covered employees in the form of equity grants under the 2021 Plan may not be deductible by ATI, to the extent that the annual deduction limitation is exceeded. THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF CURRENT U.S. FEDERAL INCOME TAXATION UPON PARTICIPANTS AND ATI WITH RESPECT TO AWARDS UNDER THE 2021 PLAN. IT DOES NOT PURPORT TO BE COMPLETE AND DOES NOT DISCUSS THE IMPACT OF EMPLOYMENT OR OTHER TAX REQUIREMENTS, THE TAX CONSEQUENCES OF A PARTICIPANT’S DEATH, OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE, OR FOREIGN COUNTRY IN WHICH THE PARTICIPANT MAY RESIDE. New Plan Benefits Because grantsAmendment to 2021 Equity Incentive Plan
The following table sets forth, for each of the individuals and groups indicated, the total number of shares of our common stock subject to awards that have been granted (even if not currently outstanding) under the 2021 Equity Incentive Plan are subject to the discretion of the Committee, it is not possible to determine the benefits that will be received by executive officers, other employees and directors if the 2021 Plan Amendment is approved by the stockholders.through March 31, 2023. Sharon Vitti, Chief Executive Officer | | | 5,147,059 | John Larsen(1) Executive Chairman | | | 367,647 | Joseph Jordan, Chief Financial Officer | | | 2,205,882 | Joanne Fong, SVP, Treasurer and Head of Investor Relations | | | 514,706 | Augustus Oakes, Chief Information Officer | | | 735,294 | Gary Carlson, SVP, Field Operations | | | 514,706 | All current executive officers as a group | | | 9,485,294 | All Non-Named Executive Officer Employees as a Group (Including all Officers who are not Executive Officers) | | | 25,676,557 | All current directors who are not executive officers as a group | | | 1,176,472 |
However, it is anticipated that, among others, all of our current executive officers, including our named executive officers, and our non-employee directors will receive awards under the 2021 Plan.(1)
| From August 30, 2021 through April 27, 2022, Mr. Larsen was a member of the leadership team fulfilling the role of Principal Executive Officer. |
TABLE OF CONTENTS Other Information The closing price of a share of Common Stock on April 5, 2022March 31, 2023 was $1.85$.0.2542 per share. The following table shows the number of shares of Common Stock underlying outstanding stock option and RSU awards as of December 31, 2021,2022, that have been granted to certain individuals or groups of individuals under the 2021 Plan since the plan’s inception. Name and Position or Group | | Shares
Underlying
Outstanding
Stock Option
Awards | | Shares
Underlying
Outstanding
RSU
Awards[(1)] | | Total | | Shares
Underlying
Outstanding
Stock Option
Awards | | Shares
Underlying
Outstanding
RSU
Awards[(1)] | | Total | NEOs of ATI
| | | | | | | | | | | | John Larsen, Executive Chairman and Office of the CEO | | 134,216 | | 70,175 | | 204,391 | | Joseph Jordan, Chief Financial Officer and Office of the CEO | | 139,808 | | 73,099 | | 212,907 | | Ray Wahl, Chief Operating Officer and Office of the CEO | | 139,808 | | 73,099 | | 212,907 | | Diana Chafey, Chief Legal Officer and Corporate Secretary | | 69,904 | | 36,550 | | 147,389 | | Joseph Zavalishin, Chief Development Officer | | 69,904 | | 36,550 | | 106,454 | | Sharon Vitti, Chief Executive Officer | | | 956,251 | | 544,872 | | 1,501,123 | Joseph Jordan, Chief Financial Officer | | | 273,537 | | 216,777 | | 490,314 | John Larsen, Chief Executive Officer | | | 236,032 | | 124,370 | | 360,402 | Gary Carlson, SVP, Field Operations | | | 91,933 | | 82,105 | | 174,038 | Joanne Fong, SVP, Treasurer & Investor Relations | | | 78,800 | | 60,840 | | 139,640 | Augustus Oakes, Chief Information Officer | | 69,904 | | 36,550 | | 106,454 | | 203,663 | | 108,389 | | 312,052 | Labeed Diab, Former Chief Executive Officer | | — | | — | | — | | All Current Executive Officers as a Group | | 623,544 | | 326,023 | | 949,567 | | 1,840,186 | | 1,137,353 | | 2,977,539 | All Current Directors Who Are Not Executive Officers as a Group | | 116,300 | | 66,654 | | 182,954 | | 302,302 | | 160,261 | | 462,563 | Each Nominee for Election as Director
| | | | | | | | | | Andrew McKnight
| | | | | | | | Teresa Sparks
| | | | | | | | Joanne Burns | | | 81,453 | | 43,356 | | 124,809 | James Parisi | | | 81,453 | | 43,356 | | 124,809 | John Maldonado | | | — | | — | | — | Sharon Vitti (See Above) | | | | | | | | Each Associate of Any of Such Directors, Executive Officers or Nominees | | — | | — | | — | | — | | — | | — | Each Other Person Who Received or is to Receive 5% of Such Options or Rights | | — | | — | | — | | — | | — | | — | All Current Employees, Including Current Officers who are not Executive Officers as a Group | | — | | — | | — | | 2,969,129 | | 3,539,117 | | 6,508,246 |
(1)
| Assumes continuation of service to satisfy vesting requirements. |
Equity Compensation Plan Information The following table sets forth certain information as of December 31, 2021,2022 with respect to the shares of the Company’s Common Stock that may be issued under the Company’s existing compensation plans that have been approved by stockholders and plans that have not been approved by stockholders. Equity compensation plans approved by stockholders | | | 1,626,762 | | | $3.41 | | | 18,996,019 | Equity compensation plans not approved by stockholders | | | | | | | | | | Total | | | 1,626,762 | | | | | | 18,996,019 |
(1)
| Based on the price of the Company’s Common Stock on the grant dates of November 23, 2021 and December 28, 2021 of $3.42 and $3.11, respectively. |
Equity compensation plans approved by stockholders | | | 5,312,739 | | | $1.84 | | | 10,862,247 | Equity compensation plans not approved by stockholders | | | 0 | | | $0 | | | 0 | Total | | | 5,312,739 | | | $1.84 | | | 10,862,247 |
Board Recommendation The Board of Directors seeks stockholder approval of the 2021 Plan Amendment to comply with applicable NYSE listing requirements and with the amendment provisions of the 2021 Plan. TABLE OF CONTENTS The 2021 Plan Amendment will not become effective unless and until stockholder approval is obtained. If stockholders do not approve this Proposal 5,7, the 2021 Plan will instead remain in effect in accordance with its pre-existing terms and without giving effect to the 2021 Plan Amendment. The Board of Directors believes that approval of the 2021 Plan Second Amendment is appropriate to replace the shares held by Wilco Acquisition, LP or holders of restricted shares that were or are cancelled or forfeited to enable the Company to continue to provide reasonable and competitive compensation to its employees and other service providers and thereby attract and retain the most qualified personnel. If the Proposal to enact a reverse stock split is approved by our Stockholders, after the 2021 Plan Second Amendment is approved, the share amounts of the 2021 Plan will be proportionately adjusted. OUR BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” “FOR” THE APPROVAL OF THE 2021 PLAN AMENDMENTSECOND AMENDMENT. TABLE OF CONTENTS STOCKHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING Our Bylaws provide that, for stockholder nominations to our Board of Directors or other proposals to be considered at an annual meeting, the stockholder must give timely notice thereof in writing to the Company’s Secretary. To be timely for our 20232024 annual meeting of stockholders, a stockholder’s notice of nomination or other proposal of business must be delivered to or mailed and received by our Chief Legal Officer and Corporate Secretary at our principal executive offices not earlier than February 2, 2023, 2024 and not later than March 4, 2023., 2024. A stockholder’s notice to the Chief Legal Officer and Corporate Secretary must set forth as to each matter the stockholder proposes to bring before the annual meeting the information required by our Bylaws. Stockholder proposals submitted pursuant to Rule 14a-8 under the Exchange Act and intended to be presented at our 2023 annual meeting of stockholders must be received by us not later than December 22, 2022, 2023 in order to be considered for inclusion in our proxy materials for that meeting. In addition to satisfying the foregoing requirements, to comply with the universal proxy rules, (once they become effective), stockholders who intend to solicit proxies in support of director nominees other than the Company's nominees must provide notice that sets forth the information required by Rule 14a-19 under the Securities Exchange Act of 1934, as amended, no later than April 3,20, 2023. WHERE YOU CAN FIND ADDITIONAL INFORMATION We are subject to the reporting and information requirements of the Securities Exchange Act of 1934, as amended, and as a result file reports, proxy statements and other information with the SEC. The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding registrants, such as ATI Physical therapy, Inc., that file electronically with the SEC. We also maintain a website at www.atipt.com, at which you may access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. The information contained in, or that can be accessed through, our website is not part of this Information Statement. AVAILABILITY OF SEC FILINGS, CODE OF CONDUCT, AND COMMITTEE CHARTERS Copies of our reports on Forms 10-K, 10-Q, 8-K, all amendments to those reports filed with the SEC, our code of conduct, corporate governance guidelines, and the charters of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are posted on and may be obtained through our website, investors.atipt.com. ELECTRONIC DELIVERY OF STOCKHOLDER COMMUNICATIONS We encourage you to help us conserve natural resources, as well as significantly reduce printing and mailing costs, by signing up to receive your stockholder communications electronically via e-mail. With electronic delivery, you will be notified via e-mail as soon as future annual reports and proxy statements are available on the Internet, and you can submit your stockholder votes online. Electronic delivery can also eliminate duplicate mailings and reduce the amount of bulky paper documents you maintain in your personal files. To sign up for electronic delivery: Registered Owner (you hold our Common Stock in your own name through our transfer agent, Computershare, Inc.,Continental Stock Transfer & Trust Company or you are in possession of stock certificates): visit www.computershare.comhttps://continentalstock.com/ and log into your account to enroll. Beneficial Owner (your shares are held by a brokerage firm, a bank, a trustee or a nominee): If you hold shares beneficially, please follow the instructions provided to you by your broker, bank, trustee or nominee. Your electronic delivery enrollment will be effective until you cancel it. Stockholders who are record owners of shares of our Common Stock may call Computershare, Inc.,Continental Stock Transfer & Trust Company, our transfer agent, by phone at 1-800-736-3001800.509.5586 or visit www.computershare.comhttps://continentalstock.com/ with questions about electronic delivery. TABLE OF CONTENTS “HOUSEHOLDING”—STOCKHOLDERS SHARING THE SAME LAST NAME AND ADDRESS The SEC has adopted rules that permit companies and intermediaries (such as brokers) to implement a delivery procedure called “householding.” Under this procedure, multiple stockholders who reside at the same address may TABLE OF CONTENTS
receive a single copy of our annual report and proxy materials, including the Notice of Internet Availability, unless the affected stockholder has provided contrary instructions. This procedure reduces printing costs and postage fees and helps protect the environment as well. This year, a number of brokers with account holders who are our stockholders will be “householding” our annual report and proxy materials, including the Notice of Internet Availability. A single Notice of Internet Availability and, if applicable, a single set of annual report and other proxy materials will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that it will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. Stockholders may revoke their consent at any time by calling Broadridge at (866) 540-7095 or writing to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York, 11717. We will bear the entire cost of solicitation, including the preparation, assembly, printing and mailing of a Notice of Internet Availability of Proxy Materials, this Proxy Statement, the proxy card and any additional soliciting materials furnished to stockholders. Upon written or oral request, we will promptly deliver a separate copy of the Notice of Internet Availability and, if applicable, our annual report and other proxy materials to any stockholder at a shared address to which a single copy of any of those documents was delivered. To receive a separate copy of the Notice of Internet Availability and, if applicable, annual report and other proxy materials, you may write our Chief Legal Officer and Corporate Secretary at 790 Remington Blvd. Bolingbrook, IL 60440. Any stockholders who share the same address and receive multiple copies of our Notice of Internet Availability or annual report and other proxy materials who wish to receive only one copy in the future can contact their bank, broker or other holder of record to request information about householding, or our VP Chief Legal Officer and Secretary at the address or telephone number listed above. Our Board of Directors does not presently intend to bring any other business before the Annual Meeting and, so far as is known to our Board of Directors, no matters are to be brought before the Annual Meeting except as specified in the Notice of Annual Meeting of Stockholders. As to any business that may arise and properly come before the Annual Meeting, however, it is intended that proxies, in the form enclosed, will be voted in respect thereof in accordance with the judgment of the persons voting such proxies. TABLE OF CONTENTS THIRD AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
ATI PHYSICAL THERAPY, INC. [•], 2023 ATI Physical Therapy, Inc., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), DOES HEREBY CERTIFY AS FOLLOWS: 1. The name of the Corporation is “ATI Physical Therapy, Inc.” The Corporation was incorporated under the name Fortress Value Acquisition Corp. II by the filing of its original certificate of incorporation with the Secretary of State of the State of Delaware on June 10, 2020 (the “Original Certificate”). 2. This Third Amended and Restated Certificate of Incorporation (the “Third Amended and Restated Certificate”), which amends, restates and integrates the provisions of the certificate of incorporation of the Corporation as heretofore in effect (the “Prior Certificate”), was duly adopted in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware, as amended from time to time (the “DGCL”). 3. The text of the Prior Certificate is hereby amended and restated in its entirety to read as follows: ARTICLE I
NAME The name of the corporation is ATI Physical Therapy, Inc. (the “Corporation”). ARTICLE II
PURPOSE The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the DGCL. In addition to the powers and privileges conferred upon the Corporation by law and those incidental thereto, the Corporation shall possess and may exercise all the powers and privileges that are necessary or convenient to the conduct, promotion or attainment of the business or purposes of the Corporation. ARTICLE III
REGISTERED AGENT The address of the Corporation’s registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801, and the name of the Corporation’s registered agent at such address is The Corporation Trust Company. ARTICLE IV
CAPITALIZATION Section 4.1 Authorized Capital Stock. The total number of shares of all classes of capital stock, each with a par value of $0.0001 per share, which the Corporation is authorized to issue is 471,000,000 shares, consisting of (a) 450,000,000 shares of Class A common stock (the “Common Stock”), (b) 20,000,000 shares of Class F common stock (the “Class F Common Stock”) and (c) 1,000,000 shares of preferred stock (the “Preferred Stock”). Section 4.2 Class F Common Stock. Upon the filing of the Certificate of Merger (the “Certificate of Merger”) with the Secretary of State of the State of Delaware as contemplated by the Agreement and Plan of Merger, dated as of February 21, 2021, by and among the Corporation, FVAC Merger Corp. II and Wilco Holdco, Inc., each share of Class F Common Stock outstanding immediately prior to the filing of the Certificate of Merger shall automatically be converted into one share of Common Stock without any action on the part of any person, including the Corporation, and concurrently with such conversion, the number of authorized shares of Class F Common Stock shall be reduced to zero. It is intended that the conversion of Class F Common Stock into Common Stock will be treated as a reorganization within the meaning of Section 368(a)(1)(E) of the Internal Revenue Code of 1986, as amended. Section 4.3 Preferred Stock. The Board of Directors of the Corporation (the “Board”) is hereby expressly authorized to provide out of the unissued shares of the Preferred Stock for one or more series of Preferred Stock and TABLE OF CONTENTS to establish from time to time the number of shares to be included in each such series and to fix the voting rights, if any, designations, powers, preferences and relative, participating, optional, special and other rights, if any, of each such series and any qualifications, limitations and restrictions thereof, as shall be stated in the resolution or resolutions adopted by the Board providing for the issuance of such series and included in a certificate of designation (a “Preferred Stock Designation”) filed pursuant to the DGCL, and the Board is hereby expressly vested with the authority to the full extent provided by law, now or hereafter, to adopt any such resolution or resolutions. Without limiting the generality of the foregoing, the resolution or resolutions providing for the creation and issuance of any series of Preferred Stock may provide that such series shall be superior or rank equally or be junior to any other series of Preferred Stock to the extent permitted by law and this Third Amended and Restated Certificate (including any Preferred Stock Designation). Except as otherwise required by law, holders of any series of Preferred Stock shall be entitled only to such voting rights, if any, as shall expressly be granted thereto by this Third Amended and Restated Certificate (including any Preferred Stock Designation). Section 4.4 Common Stock. (i) Except as otherwise required by law or this Third Amended and Restated Certificate (including any Preferred Stock Designation), the holders of the Common Stock shall exclusively possess all voting power with respect to the Corporation. (ii) Except as otherwise required by law or this Third Amended and Restated Certificate (including any Preferred Stock Designation), the holders of shares of Common Stock shall be entitled to one vote for each such share on each matter properly submitted to the stockholders on which the holders of the Common Stock are entitled to vote. (iii) Except as otherwise required by law or this Third Amended and Restated Certificate (including any Preferred Stock Designation), at any annual or special meeting of the stockholders of the Corporation, holders of the Common Stock shall have the exclusive right to vote for the election of directors and on all other matters properly submitted to a vote of the stockholders. Notwithstanding the foregoing, except as otherwise required by law or this Third Amended and Restated Certificate (including any Preferred Stock Designation), holders of Common Stock shall not be entitled to vote on any amendment to this Third Amended and Restated Certificate (including any amendment to any Preferred Stock Designation) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series of Preferred Stock are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this Third Amended and Restated Certificate (including any Preferred Stock Designation) or the DGCL. (b) Dividends. Subject to applicable law and the rights, if any, of the holders of any outstanding series of the Preferred Stock, the holders of shares of Common Stock shall be entitled to receive such dividends and other distributions (payable in cash, property or capital stock of the Corporation) when, as and if declared thereon by the Board from time to time out of any assets or funds of the Corporation legally available therefor and shall share equally on a per share basis in such dividends and distributions. (c) Liquidation, Dissolution or Winding Up of the Corporation. Subject to applicable law and the rights, if any, of the holders of any outstanding series of the Preferred Stock, in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, after payment or provision for payment of the debts and other liabilities of the Corporation, the holders of shares of Common Stock shall be entitled to receive all the remaining assets of the Corporation available for distribution to its stockholders, ratably in proportion to the number of shares of Common Stock held by them. (d) Transfer Rights. Subject to applicable law and the transfer restrictions set forth in Article VII of the Amended and Restated Bylaws of the Corporation (as such may be amended from time to time, the “Bylaws”), shares of Common Stock and the rights and obligations associated therewith shall be fully transferable to any transferee. Section 4.5 Rights and Options. The Corporation has the authority to create and issue rights, warrants and options entitling the holders thereof to acquire from the Corporation any shares of its capital stock of any class or classes, with such rights, warrants and options to be evidenced by or in instrument(s) approved by the Board. The TABLE OF CONTENTS Board is empowered to set the exercise price, duration, times for exercise and other terms and conditions of such rights, warrants or options; provided, however, that the consideration to be received for any shares of capital stock issuable upon exercise thereof may not be less than the par value thereof. Section 4.6 No Class Vote on Changes in Authorized Number of Shares of Stock. Subject to the rights of the holders of any outstanding series of Preferred Stock, the number of authorized shares of any class or classes of stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of at least a majority of the voting power of the stock of the Corporation entitled to vote thereon irrespective of the provisions of Section 242(b)(2) of the DGCL. ARTICLE V
BOARD OF DIRECTORS Section 5.1 Board Powers. The business and affairs of the Corporation shall be managed by, or under the direction of, the Board. In addition to the powers and authority expressly conferred upon the Board by statute, this Third Amended and Restated Certificate or the Bylaws, the Board is hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the DGCL, and this Third Amended and Restated Certificate and any Bylaws adopted by the stockholders. Section 5.2 Number, Election and Term. (a) The number of directors of the Corporation, shall be fixed from time to time in the manner provided in the Bylaws. (b) Subject to Section 5.5 hereof, any director elected or appointed prior to the date of the 2023 annual meeting of stockholders shall serve for the remainder of the term of the class of directors to which such director was originally elected or appointed. Each director elected at the 2023 annual meeting of stockholders shall be elected for a one-year term expiring at the 2024 annual meeting of stockholders. Each director elected at the 2024 annual meeting of stockholders shall be elected for a one-year term expiring at the 2025 annual meeting of stockholders. At the 2025 annual meeting of stockholders and at each annual meeting of stockholders thereafter, all directors shall be elected for a one-year term expiring at the next annual meeting of stockholders. Subject to Section 5.5 hereof, each director shall serve from the date of such director’s election or appointment and until such director’s term expires and such director’s successor is duly elected and qualified, subject, however, to such director’s earlier death, resignation or removal. In no case shall a decrease in the number of directors shorten the term of any incumbent director. Subject to the rights of the holders of one or more series of Preferred Stock, voting separately by class or series, to elect directors pursuant to the terms of one or more series of Preferred Stock, the election of directors shall be determined by a plurality of the votes cast by the stockholders present in person or represented by proxy at the meeting and entitled to vote thereon. (c) Unless and except to the extent that the Bylaws shall so require, the election of directors need not be by written ballot. Section 5.3 Newly Created Directorships and Vacancies. Subject to Section 5.5 hereof, newly created directorships resulting from an increase in the number of directors and any vacancies on the Board resulting from death, resignation or removal may be filled solely and exclusively by a majority vote of the remaining directors then in office, even if less than a quorum, or by a sole remaining director (and not by stockholders), and any director so chosen shall hold office until the next annual meeting of stockholders and until his or her successor has been duly elected and qualified, subject, however, to such director’s earlier death, resignation or removal. Section 5.4 Removal. Subject to Section 5.5 hereof and except as otherwise required by law, any or all of the directors may be removed from office at any time, with or without cause, by the affirmative vote of holders of a majority of the voting power of all then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class. Section 5.5 Preferred Stock - Directors. Notwithstanding any other provision of this Article V, and except as otherwise required by law, whenever the holders of one or more series of the Preferred Stock shall have the right, voting separately by class or series, to elect one or more directors, the term of office, the filling of vacancies, the removal from office and other features of such directorships shall be governed by the terms of such series of the Preferred Stock as set forth in this Third Amended and Restated Certificate (including any Preferred Stock Designation). TABLE OF CONTENTS ARTICLE VI
BYLAWS In furtherance and not in limitation of the powers conferred upon it by law, the Board shall have the power and is expressly authorized to adopt, amend, alter or repeal the Bylaws. The affirmative vote of a majority of the Board shall be required to adopt, amend, alter or repeal the Bylaws. The Bylaws also may be adopted, amended, altered or repealed by the stockholders; provided, however, that in addition to any vote of the holders of any class or series of capital stock of the Corporation required by law or by this Third Amended and Restated Certificate (including any Preferred Stock Designation), the affirmative vote of the holders of at least a majority of the voting power of all then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required for the stockholders to adopt, amend, alter or repeal the Bylaws; provided further, however, amendments or repeals of Article VIII of the Bylaws shall require the affirmative vote of the stockholders holding at least 65% of the voting power of all outstanding shares of capital stock of the Corporation; and, provided further, however, that no Bylaws hereafter adopted by the stockholders shall invalidate any prior act of the Board that would have been valid if such Bylaws had not been adopted. ARTICLE VII
MEETINGS OF STOCKHOLDERS; ACTION BY WRITTEN CONSENT Section 7.1 Meetings. Subject to the rights, if any, of the holders of any outstanding series of the Preferred Stock, and to the requirements of applicable law, special meetings of stockholders of the Corporation may be called only by the Chairman of the Board, the Chief Executive Officer of the Corporation, or the Board pursuant to a resolution adopted by a majority of the Board, and the ability of the stockholders to call a special meeting is hereby specifically denied. Except as provided in the foregoing sentence, special meetings of stockholders may not be called by another person or persons. Any such special meeting so called may be postponed, adjourned, rescheduled or cancelled by the Board or other person calling the meeting. Section 7.2 Advance Notice. Advance notice of stockholder nominations for the election of directors and of business to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner provided in the Bylaws. Section 7.3 Action by Written Consent. Except as may be otherwise provided for or fixed pursuant to this Third Amended and Restated Certificate (including any Preferred Stock Designation), any action required or permitted to be taken by the stockholders of the Corporation must be effected by a duly called annual or special meeting of such stockholders and may not be effected by written consent of the stockholders. ARTICLE VIII
LIMITED LIABILITY; INDEMNIFICATION Section 8.1 Limitation of Director Liability. A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for any breach of fiduciary duty by such director as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL as the same exists or may hereafter be amended unless they violated their duty of loyalty to the Corporation or its stockholders, acted in bad faith, knowingly or intentionally violated the law, authorized unlawful payments of dividends, unlawful stock purchases or unlawful redemptions, or derived improper personal benefit from their actions as directors. If the DGCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended. Any amendment, modification or repeal of the foregoing sentence shall not adversely affect any right or protection of a director of the Corporation hereunder in respect of any act or omission occurring prior to the time of such amendment, modification or repeal. Section 8.2 Indemnification and Advancement of Expenses. (a) To the fullest extent permitted by applicable law, as the same exists or may hereafter be amended, the Corporation shall indemnify, defend and hold harmless each person who is or was made a party or is threatened to be made a party to or is otherwise involved in any threatened, pending or completed action, suit, or proceeding, whether civil, criminal, administrative or investigative, including an action by or in the right of the Corporation to procure a judgment in its favor (each, a “proceeding”) by reason of the fact that he or she is or was a director or officer of the Corporation or any of its subsidiaries or, while a director or officer of the Corporation or any of its TABLE OF CONTENTS subsidiaries or, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, other enterprise or nonprofit entity, including service with respect to an employee benefit plan (an “indemnitee”), whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent, or in any other capacity while serving as a director, officer, employee or agent, against all liability and loss suffered and expenses (including, without limitation, attorneys’ fees and disbursements, judgments, fines, Employment Retirement Income Security Act of 1974 excise taxes, damages, claims and penalties and amounts paid in settlement) reasonably incurred by such indemnitee in connection with such proceeding. The Corporation shall, to the fullest extent not prohibited by applicable law, pay as incurred the expenses (including attorneys’ fees) incurred by an indemnitee in defending or otherwise participating in any proceeding in advance of its final disposition (including by making payment directly to applicable third parties if requested by the indemnitee); provided, however, that, to the extent required by applicable law, an advancement of expenses incurred by an indemnitee in his or her capacity as a director or officer of the Corporation (and not in any other capacity in which service was or is rendered by such indemnitee including, without limitation, service to an employee benefit plan), shall be made only upon the Corporation’s receipt of an undertaking, by or on behalf of the indemnitee, to repay all amounts so advanced if it shall ultimately be determined that the indemnitee is not entitled to be indemnified under this Section 8.2 or otherwise. The rights to indemnification and advancement of expenses conferred by this Section 8.2 shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director, officer, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators. Notwithstanding the foregoing provisions of this Section 8.2(a), except for proceedings to enforce rights to indemnification (which are, for the avoidance of doubt, indemnified proceedings) and advancement of expenses, the Corporation shall indemnify and advance expenses to an indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was, or is, authorized by the Board. (b) The rights to indemnification and advancement of expenses conferred on any indemnitee by this Section 8.2 shall not be exclusive of any other rights that any indemnitee may have or hereafter acquire under law, this Third Amended and Restated Certificate, the Bylaws, an agreement, vote of stockholders or disinterested directors, or otherwise. (c) Any repeal or amendment of this Section 8.2 by the stockholders of the Corporation or by changes in law, or the adoption of any other provision of this Third Amended and Restated Certificate inconsistent with this Section 8.2, shall, unless otherwise required by law, be prospective only (except to the extent such amendment or change in law permits the Corporation to provide broader indemnification rights on a retroactive basis than permitted prior thereto), and shall not in any way diminish or adversely affect any right or protection existing at the time of such repeal or amendment or adoption of such inconsistent provision in respect of any proceeding (regardless of when such proceeding is first threatened, commenced or completed) arising out of, or related to, any act or omission occurring prior to such repeal or amendment or adoption of such inconsistent provision. (d) This Section 8.2 shall not limit the right of the Corporation, to the extent and in the manner authorized or permitted by law, to indemnify and to advance expenses to persons other than indemnitees. ARTICLE IX
CORPORATE OPPORTUNITY Section 9.1 The doctrine of corporate opportunity, or any other analogous doctrine, shall not apply with respect to the Corporation or any of its officers or directors, or any of their respective affiliates, in circumstances where the application of any such doctrine would conflict with any fiduciary duties or contractual obligations they may have as of the date of this Third Amended and Restated Certificate or in the future. In addition to the foregoing, the doctrine of corporate opportunity shall not apply to any other corporate opportunity with respect to any of the directors or officers of the Corporation unless such corporate opportunity is offered to such person solely in his or her capacity as a director or officer of the Corporation and such opportunity is one the Corporation is legally and contractually permitted to undertake and would otherwise be reasonable for the Corporation to pursue. Section 9.2 Without limiting the foregoing, to the extent permitted by applicable law, each of Advent International Corporation and its successors and Affiliates (as defined in Section 10.3) and any of their respective managed investment funds and portfolio companies (but excluding the Corporation and its subsidiaries) and their respective partners, members, directors, employees, stockholders, agents and any successor by operation of law (including by merger) of any such Person (each, an “Exempted Person”) shall not have any fiduciary duty to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as the Corporation or any of its subsidiaries, except as otherwise expressly provided in any agreement entered into between the TABLE OF CONTENTS Corporation and such Exempted Person. To the fullest extent permitted by applicable law and subject to Section 9.1, the Corporation, on behalf of itself and its subsidiaries, renounces any interest or expectancy of the Corporation and its subsidiaries in, or in being offered an opportunity to participate in, business opportunities that are from time to time available to the Exempted Persons, even if the opportunity is one that the Corporation or its subsidiaries might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so, and each such Exempted Person shall have no duty to communicate or offer such business opportunity to the Corporation (and there shall be no restriction on the Exempted Persons using the general knowledge and understanding of the industry in which the Corporation operates which it has gained as an Exempted Person in considering and pursuing such opportunities or in making investment, voting, monitoring, governance or other decisions relating to other entities or securities) and, to the fullest extent permitted by applicable law and subject to Section 9.1, shall not be liable to the Corporation or any of its subsidiaries or stockholders for breach of any fiduciary or other duty, as a director or officer or otherwise, by reason of the fact that such Exempted Person pursues or acquires such business opportunity, directs such business opportunity to another person or fails to present such business opportunity, or information regarding such business opportunity, to the Corporation or its subsidiaries, or uses such knowledge and understanding in the manner described herein, in each case, except as otherwise expressly provided in any agreement entered into between the Corporation and such Exempted Person. In addition to and notwithstanding the foregoing, a corporate opportunity shall not be deemed to belong to the Corporation if it is a business opportunity that the Corporation is not financially able or contractually permitted or legally able to undertake, or that is, from its nature, not in the line of the Corporation’s business or is of no practical advantage to it or that is one in which the Corporation has no interest or reasonable expectancy. Any person or entity purchasing or otherwise acquiring any interest in any shares of stock of the Corporation shall be deemed to have notice of the provisions of this Article IX. Section 9.3 Neither the alteration, amendment, addition to or repeal of this Article IX, nor the adoption of any provision of this Third Amended and Restated Certificate (including any Preferred Stock Designation) inconsistent with this Article IX, shall eliminate or reduce the effect of this Article IX in respect of any business opportunity first identified or any other matter occurring, or any cause of action, suit or claim that, but for this Article IX, would accrue or arise, prior to such alteration, amendment, addition, repeal or adoption. This Article IX shall not limit any protections or defenses available to, or indemnification or advancement rights of, any director or officer of the Corporation under this Third Amended and Restated Certificate, the Bylaws or applicable law. ARTICLE X
BUSINESS COMBINATIONS Section 10.1 Opt Out of DGCL 203. The Corporation shall not be governed by Section 203 of the DGCL. Section 10.2 Limitations on Business Combinations. Notwithstanding the foregoing, from the time that the opt-out in Section 10.1 becomes effective, the Corporation shall not engage in any business combination, at any point in time at which the Common Stock is registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended, with any interested stockholder for a period of three years following the time that such stockholder became an interested stockholder, unless: (a) prior to such time, the Board approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder; (b) upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the Corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares owned by: (i) persons who are directors and also officers; or (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or (c) at or subsequent to such time, the business combination is approved by the Board and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least two-thirds of the outstanding voting stock of the Corporation which is not owned by the interested stockholder. Section 10.3 Definitions. For purposes of this Article X, the term: (a) “Affiliate” means, with respect to any person, any other person that controls, is controlled by, or is under common control with such person. TABLE OF CONTENTS (b) “associate,” when used to indicate a relationship with any person, means: (i) any corporation, partnership, unincorporated association or other entity of which such person is a director, officer or partner or is, directly or indirectly, the owner of 20% or more of any class of voting stock; (ii) any trust or other estate in which such person has at least a 20% beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity; and (iii) any relative or spouse of such person, or any relative of such spouse, who has the same residence as such person. (c) “business combination,” when used in reference to the Corporation and any interested stockholder of the Corporation, means: (i) any merger or consolidation of the Corporation or any direct or indirect majority-owned subsidiary of the Corporation: (A) with the interested stockholder; or (B) with any other corporation, partnership, unincorporated association or other entity if the merger or consolidation is caused by the interested stockholder and as a result of such merger or consolidation Section 10.2 is not applicable to the surviving entity; (ii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), except proportionately as a stockholder of the Corporation, to or with the interested stockholder, whether as part of a dissolution or otherwise, of assets of the Corporation or of any direct or indirect majority-owned subsidiary of the Corporation which assets have an aggregate market value equal to 10% or more of either the aggregate market value of all the assets of the Corporation determined on a consolidated basis or the aggregate market value of all the outstanding stock of the Corporation; (iii) any transaction which results in the issuance or transfer by the Corporation or by any direct or indirect majority-owned subsidiary of the Corporation of any stock of the Corporation or of such subsidiary to the interested stockholder, except: (A) pursuant to the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into stock of the Corporation or any such subsidiary which securities were outstanding prior to the time that the interested stockholder became such; (B) pursuant to a merger under Section 251(g) of the DGCL; (C) pursuant to a dividend or distribution paid or made, or the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into stock of the Corporation or any such subsidiary which security is distributed, pro rata to all holders of a class or series of stock of the Corporation subsequent to the time the interested stockholder became such; (D) pursuant to an exchange offer by the Corporation to purchase stock made on the same terms to all holders of said stock; or (E) any issuance or transfer of stock by the Corporation; provided, however, that in no case under items (C) – (E) of this subsection (iii) shall there be an increase in the interested stockholder’s proportionate share of the stock of any class or series of the Corporation or of the voting stock of the Corporation (except as a result of immaterial changes due to fractional share adjustments); (iv) any transaction involving the Corporation or any direct or indirect majority-owned subsidiary of the Corporation which has the effect, directly or indirectly, of increasing the proportionate share of the stock of any class or series, or securities convertible into the stock of any class or series, of the Corporation or of any such subsidiary which is owned by the interested stockholder, except as a result of immaterial changes due to fractional share adjustments or as a result of any purchase or redemption of any shares of stock not caused, directly or indirectly, by the interested stockholder; or (v) any receipt by the interested stockholder of the benefit, directly or indirectly (except proportionately as a stockholder of the Corporation), of any loans, advances, guarantees, pledges, or other financial benefits (other than those expressly permitted in subsections “(i)”-“(iv)” above) provided by or through the Corporation or any direct or indirect majority-owned subsidiary. (d) “control,” including the terms “controlling,” “controlled by” and “under common control with,” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting stock, by contract, or otherwise. A person who is the owner of 20% or more of the outstanding voting stock of the Corporation, partnership, unincorporated association or other entity shall be presumed to have control of such entity, in the absence of proof by a preponderance of the evidence to the contrary. Notwithstanding the foregoing, a presumption of control shall not apply where such person holds voting stock, in good faith and not for the purpose of circumventing this Article X, as an agent, bank, broker, nominee, custodian or trustee for one or more owners who do not individually or as a group have control of such entity. TABLE OF CONTENTS (e) “Exempt Transferee” means (i) any person that acquires (other than in an Excluded Transfer) directly from Advent International Corporation or any of its Affiliates or successors, ownership of voting stock of the Corporation, and is designated in writing by the transferor as an “Exempt Transferee” for the purpose of this Article X; and (ii) any person that acquires (other than in an Excluded Transfer) directly from a person described in clause “(i)” of this definition or from any other Exempt Transferee ownership of voting stock of the Corporation, and is designated in writing by the transferor as an “Exempt Transferee” for the purpose of this Article X. (f) “Excluded Transfer” means (i) a transfer to a person that is not an Affiliate of the transferor, which transfer is by gift or otherwise not for value, including a transfer by dividend or distribution by the transferor, (ii) a transfer in a public offering that is registered under the Securities Act of 1933, as amended (the “Securities Act”), (iii) a transfer to one or more broker-dealers or their affiliates pursuant to a firm commitment purchase agreement for an offering that is exempt from registration under the Securities Act, (iv) a transfer made through the facilities of a registered securities exchange or automated inter-dealer quotation system and (v) a transfer made in compliance with the manner of sale limitations of Rule 144(f) under the Securities Act or any successor rule or provision. (g) “interested stockholder” means any person (other than the Corporation or any direct or indirect majority-owned subsidiary of the Corporation) that: (i) is the owner of 15% or more of the outstanding voting stock of the Corporation; or (ii) is an Affiliate or associate of the Corporation and was the owner of 15% or more of the outstanding voting stock of the Corporation at any time within the three year period immediately prior to the date on which it is sought to be determined whether such person is an interested stockholder; or (iii) an Affiliate or associate of any such person described in clauses “(i)” and “(ii)”; provided, however, that the term “interested stockholder” shall not include: (A) Sponsor Holders or their transferees, any Exempt Transferee or any of their respective Affiliates or successors or any “group”, or any member of any such group, to which such persons are a party under Rule 13d-5 of the Exchange Act; or (B) any person whose ownership of shares in excess of the 15% limitation set forth herein is the result of (x) any action taken solely by the Corporation, or (y) share redemptions by existing stockholders; provided, that such person specified in this clause “(B)” shall be an interested stockholder if thereafter such person acquires additional shares of voting stock of the Corporation, except as a result of further corporate action not caused, directly or indirectly, by such person. For the purpose of determining whether a person is an interested stockholder, the voting stock of the Corporation deemed to be outstanding shall include stock deemed to be owned by the person through application of the definition of “owner” below but shall not include any other unissued stock of the Corporation which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise. (h) “owner,” including the terms “own” and “owned,” when used with respect to any stock, means a person that individually or with or through any of its Affiliates or associates: (i) beneficially owns such stock, directly or indirectly; or (ii) has: (A) the right to acquire such stock (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise; provided, however, that a person shall not be deemed the owner of stock tendered pursuant to a tender or exchange offer made by such person or any of such person’s Affiliates or associates until such tendered stock is accepted for purchase or exchange; or (B) the right to vote such stock pursuant to any agreement, arrangement or understanding; provided, however, that a person shall not be deemed the owner of any stock because of such person’s right to vote such stock if the agreement, arrangement or understanding to vote such stock arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made to 10 or more persons; or (iii) has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent as described in item (B) of subsection “(ii)” above), or disposing of such stock with any other person that beneficially owns, or whose Affiliates or associates beneficially own, directly or indirectly, such stock. (i) “person” means any individual, corporation, partnership, unincorporated association or other entity. (j) “stock” means, with respect to any corporation, capital stock and, with respect to any other entity, any equity interest. TABLE OF CONTENTS (k) “Sponsor Holders” means the investment funds affiliated with Advent International Corporation and their successors and Affiliates. (l) “voting stock” means stock of any class or series entitled to vote generally in the election of directors. ARTICLE XI
AMENDMENT OF THIRD AMENDED AND RESTATED CERTIFICATE OF INCORPORATION The Corporation reserves the right at any time and from time to time to amend, alter, change or repeal any provision contained in this Third Amended and Restated Certificate (including any Preferred Stock Designation), and other provisions authorized by the laws of the State of Delaware at the time in force that may be added or inserted, in the manner now or hereafter prescribed by this Third Amended and Restated Certificate and the DGCL; and, except as set forth in Article VIII, all rights, preferences and privileges of whatever nature herein conferred upon stockholders, directors or any other persons by and pursuant to this Third Amended and Restated Certificate in its present form or as hereafter amended are granted subject to the right reserved in this Article XI. Notwithstanding any other provisions of this Third Amended and Restated Certificate of Incorporation or any provision of law which might otherwise permit a lesser vote or no vote, but in addition to any affirmative vote of the holders of any particular class or series of the Corporation required by law or by this Certificate of Incorporation or any certificate of designation filed with respect to a series of Preferred Stock, the affirmative vote of the holders at least 66.7% of the voting power of all outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to alter, amend or repeal Article V. TABLE OF CONTENTS IN WITNESS WHEREOF, ATI Physical Therapy, Inc. has caused this Third Amended and Restated Certificate to be duly executed and acknowledged in its name and on its behalf by an authorized officer as of the date first set forth above. | | | ATI PHYSICAL THERAPY, INC. | | | | | | | | | | | By: | | | | | | | Name: | | | | | | | Title: | | | |
TABLE OF CONTENTS CERTIFICATE OF AMENDMENT
to the
THIRD AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
of
ATI PHYSICAL THERAPY, INC.
ATI PHYSICAL THERAPY, INC., a corporation organized and existing under the General Corporation Law of the State of Delaware (the “Corporation”), does hereby certify as follows: FIRST: The name of the Corporation is ATI Physical Therapy, Inc. SECOND: The Corporation’s Second Amended and Restated Certificate of Incorporation was filed with the Secretary of State of the State of Delaware (the “Secretary of State”) on June 16, 2021 (the “Certificate of Incorporation”). THIRD: ARTICLE IV of the Corporation’s Certificate of Incorporation is hereby amended by inserting the following subsection (a) at the end of section 4.1: (a) Reverse Stock Split. Effective as of 5:00 Eastern Time (the “Effective Time”) on [the date this Certificate of Amendment to the Certificate of Incorporation is filed with the Secretary of State] each () shares of the Corporation’s Common Stock issued and outstanding or held by the Corporation in treasury stock immediately prior to the Effective Time (the “Prior Common Stock”) shall automatically without further action on the part of the Corporation or any holder of Common Stock be reclassified, combined, converted and changed into one (1) fully paid and nonassessable share of Common Stock and shall represent one share of Common Stock from and after the Effective Time (the “Reverse Stock Split”). The par value of the Common Stock following the Reverse Stock Split shall remain at $0.0001 per share. Each certificate that immediately prior to the Effective Time represented shares of Common Stock (“Old Certificates”) shall thereafter represent that number of shares of Common Stock into which the shares of Common Stock represented by the Old Certificate shall have been combined, subject to the elimination of fractional share interests as described below. Notwithstanding the foregoing, no fractional shares shall be issued to the holders of record of Prior Common Stock in connection with the Reverse Stock Split and, instead, each fractional share resulting from the Reverse Stock Split shall be automatically rounded up to the nearest whole number. FOURTH: The Board of Directors and the stockholders of the Corporation have duly approved and adopted the foregoing amendment in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be duly adopted and executed in its corporate name and on its behalf by its duly authorized officer as of the day of , 2023. ATI PHYSICAL THERAPY, INC. By: | | | | | | | Name: | | | | | | | Title: | | | | | | |
TABLE OF CONTENTS ATI Physical Therapy
2021 EQUITY INCENTIVE PLAN 1. Purpose. The purpose of the ATI Physical Therapy 2021 Equity Incentive Plan is to further align the interests of eligible participants with those of the Company’s stockholders by providing incentive compensation opportunities tied to the performance of the Company and its Common Stock. The Plan is intended to advance the interests of the Company and increase stockholder value by attracting, retaining and motivating key personnel upon whose judgment, initiative and effort the successful conduct of the Company’s business is largely dependent. 2. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth below: “Affiliate” means any Person directly or indirectly controlling, controlled by, or under common control with such other Person. “Award” means an award of a Stock Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit, or Stock-Based Award granted under the Plan. “Award Agreement” means a notice or an agreement entered into between the Company and a Participant setting forth the terms and conditions of an Award granted to a Participant as provided in Section 15.2 hereof. “Beneficial Owner” has the meaning ascribed to such term in Rule 13d-3 under the Exchange Act. “Board” means the Board of Directors of the Company. “Cause” has the meaning set forth in Section 13.2 hereof. “Change in Control”has the meaning set forth in Section 11.4 hereof. “Code” means the Internal Revenue Code of 1986, as amended. “Committee” means (i) the Compensation Committee of the Board, (ii) such other committee of no fewer than two members of the Board who are appointed by the Board to administer the Plan or (iii) the Board, as determined by the Board. “Common Stock” means the Company’s common stock, par value $0.0001 per share. “Company” means ATI Physical Therapy, Inc. (f/k/a Fortress Value Acquisition Corp. II), a Delaware corporation, or any successor thereto. “Date of Grant” means the date on which an Award under the Plan is granted by the Committee or such later date as the Committee may specify to be the effective date of an Award. “Disability” means, unless otherwise defined in an Award Agreement, a disability described in Treasury Regulations Section 1.409A-3(i)(4)(i)(A). A Disability shall be deemed to occur at the time of the determination by the Committee of the Disability. “Effective Date”has the meaning set forth in Section 16.1 hereof. “Eligible Person” means any Person who is an officer, employee, Non-Employee Director, or any natural person who is a consultant or other personal service provider of the Company or any of its Subsidiaries. “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time. “Fair Market Value” means, as applied to a specific date, the price of a share of Common Stock that is based on the opening, closing, actual, high, low or average selling prices of a share of Common Stock reported on any established stock exchange or national market system including without limitation the New York Stock Exchange (“NYSE”) and the National Market System of the National Association of Securities Dealers, Inc. Automated Quotation System on the applicable date, the preceding trading day, the next succeeding trading day, or an average of trading days, as determined by the Committee in its discretion. Unless the Committee determines otherwise or unless otherwise specified in an Award Agreement, Fair Market Value shall be deemed to be equal to the closing price TABLE OF CONTENTS of a share of Common Stock on the date as of which Fair Market Value is to be determined, or if shares of Common Stock are not publicly traded on such date, as of the most recent date on which shares of Common Stock were publicly traded. Notwithstanding the foregoing, if the Common Stock is not traded on any established stock exchange or national market system, the Fair Market Value means the price of a share of Common Stock as established by the Committee; provided that if the calculation of Fair Market Value is for purposes of setting an exercise or base price of a Stock Option or a Stock Appreciation Right, then such calculations shall be based on a reasonable valuation method that is consistent with the requirements of Section 409A of the Code and the regulations thereunder. “Incentive Stock Option” means a Stock Option granted under Section 6 hereof that is intended to meet the requirements of Section 422 of the Code and the regulations thereunder. “Non-Employee Director” means a member of the Board who is not an employee of the Company or any of its Subsidiaries. “Nonqualified Stock Option” means a Stock Option granted under Section 6 hereof that is not an Incentive Stock Option. “Participant” means any Eligible Person who holds an outstanding Award under the Plan. “Person” means an individual, corporation, partnership, association, trust, unincorporated organization, limited liability company or other legal entity. All references to Person shall include an individual Person or a group (as defined in Rule 13d-5 under the Exchange Act) of Persons. “Plan” means the ATI Physical Therapy 2021 Equity Incentive Plan as set forth herein, effective as of the Effective Date and as may be amended from time to time, as provided herein, and includes any sub-plan or appendix that may be created and approved by the Board to allow Eligible Persons of Subsidiaries to participate in the Plan. “Restricted Stock Award” means a grant of shares of Common Stock to an Eligible Person under Section 8 hereof that are issued subject to such vesting and transfer restrictions as the Committee shall determine, and such other conditions, as are set forth in the Plan and the applicable Award Agreement. “Restricted Stock Unit” means a contractual right granted to an Eligible Person under Section 9 hereof representing notional unit interests equal in value to a share of Common Stock to be paid or distributed at such times, and subject to such conditions, as set forth in the Plan and the applicable Award Agreement. “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time. “Service” means a Participant’s employment with the Company or any Subsidiary or a Participant’s service as a Non-Employee Director, consultant or other service provider with the Company or any Subsidiary, as applicable. “Stock Appreciation Right” means a contractual right granted to an Eligible Person under Section 7 hereof entitling such Eligible Person to receive a payment, representing the excess of the Fair Market Value of a share of Common Stock over the base price per share of the right, at such time, and subject to such conditions, as are set forth in the Plan and the applicable Award Agreement. “Stock-Based Award” means a grant of shares of Common Stock or any award that is valued by reference to shares of Common Stock to an Eligible Person under Section 10 hereof. “Stock Option” means a contractual right granted to an Eligible Person under Section 6 hereof to purchase shares of Common Stock at such time and price, and subject to such conditions, as are set forth in the Plan and the applicable Award Agreement. “Subsidiary”means an entity (whether or not a corporation) that is wholly or majority owned or controlled, directly or indirectly, by the Company or any other Affiliate of the Company that is so designated, from time to time, by the Committee, during the period of such Affiliated status; provided, however, that with respect to Incentive Stock Options, the term “Subsidiary” shall include only an entity that qualifies under Section 424(f) of the Code as a “subsidiary corporation” with respect to the Company. “Treasury Regulations” means regulations promulgated by the United States Treasury Department. TABLE OF CONTENTS 3. Administration. 3.1 Committee Members. The Plan shall be administered by the Committee. To the extent deemed necessary by the Board, each Committee member shall satisfy the requirements for (i) an “independent director” under rules adopted by the NYSE or other principal exchange on which the Common Stock is then listed and (ii) a “nonemployee director” within the meaning of Rule 16b-3 under the Exchange Act. Notwithstanding the foregoing, the mere fact that a Committee member shall fail to qualify under any of the foregoing requirements shall not invalidate any Award made by the Committee which Award is otherwise validly made under the Plan. The Board may exercise all powers of the Committee hereunder and may directly administer the Plan. Neither the Company nor any member of the Board or Committee shall be liable for any action or determination made in good faith by the Board or Committee with respect to the Plan or any Award thereunder. 3.2 Committee Authority. The Committee shall have all powers and discretion necessary or appropriate to administer the Plan and to control its operation, including, but not limited to, the power to (i) determine the Eligible Persons to whom Awards shall be granted under the Plan, (ii) prescribe the restrictions, terms and conditions of all Awards, (iii) interpret the Plan and terms of the Awards, (iv) adopt rules for the administration, interpretation and application of the Plan as are consistent therewith, and interpret, amend or revoke any such rules, (v) make all determinations with respect to a Participant’s Service and the termination of such Service for purposes of any Award, (vi) correct any defect(s) or omission(s) or reconcile any ambiguity(ies) or inconsistency(ies) in the Plan or any Award thereunder, (vii) make all determinations it deems advisable for the administration of the Plan, (viii) decide all disputes arising in connection with the Plan and to otherwise supervise the administration of the Plan, (ix) subject to the terms of the Plan, amend the terms of an Award in any manner that is not inconsistent with the Plan, (x) accelerate the vesting or, to the extent applicable, exercisability of any Award at any time (including, but not limited to, upon a Change in Control or upon termination of Service of a Participant under certain circumstances (including, without limitation, upon retirement)) and (xi) adopt such procedures, modifications or subplans as are necessary or appropriate to permit participation in the Plan by Eligible Persons who are foreign nationals or employed outside of the United States. The Committee’s determinations under the Plan need not be uniform and may be made by the Committee selectively among Participants and Eligible Persons, whether or not such Persons are similarly situated. The Committee shall, in its discretion, consider such factors as it deems relevant in making its interpretations, determinations and actions under the Plan including, without limitation, the recommendations or advice of any officer or employee of the Company or board of directors of a Subsidiary or such attorneys, consultants, accountants or other advisors as it may select. All interpretations, determinations, and actions by the Committee shall be final, conclusive, and binding upon all parties. 3.3 Delegation of Authority. The Committee shall have the right, from time to time, to delegate in writing to one or more officers of the Company the authority of the Committee to grant and determine the terms and conditions of Awards granted under the Plan, subject to the requirements of Section 157(c) of the Delaware General Corporation Law (or any successor provision) or such other limitations as the Committee shall determine. In no event shall any such delegation of authority be permitted with respect to Awards granted to any member of the Board or to any Eligible Person who is subject to Rule 16b-3 under the Exchange Act. The Committee shall also be permitted to delegate, to any appropriate officer or employee of the Company, responsibility for performing certain ministerial functions under the Plan. In the event that the Committee’s authority is delegated to officers or employees in accordance with the foregoing, all provisions of the Plan relating to the Committee shall be interpreted in a manner consistent with the foregoing by treating any such reference as a reference to such officer or employee for such purpose. Any action undertaken in accordance with the Committee’s delegation of authority hereunder shall have the same force and effect as if such action was undertaken directly by the Committee and shall be deemed for all purposes of the Plan to have been taken by the Committee. 4. Shares Subject to the Plan. 4.1 Number of Shares Reserved. Subject to adjustment as provided in Section 4.2 and Section 4.4 hereof, the total number of shares of Common Stock that are available for issuance under the Plan (the “Share Reserve”) shall equal. Within the Share Reserve, the total number of shares of Common Stock available for issuance as Incentive Stock Options shall equal 20,728,254. Each share of Common Stock subject to an Award shall reduce the Share Reserve by one share. Any shares of Common Stock delivered under the Plan shall consist of authorized and unissued shares or treasury shares. TABLE OF CONTENTS 4.2 Share Replenishment. Following the Effective Date, to the extent that an Award granted under this Plan is canceled, expired, forfeited or surrendered without consideration or otherwise terminated without delivery of the shares of Common Stock to the Participant under the Plan, the shares of Common Stock retained by or returned to the Company will (i) not be deemed to have been delivered under the Plan (ii) be available for future Awards under the Plan, and (iii) increase the Share Reserve by one share for each share that is retained by or returned to the Company. Notwithstanding the foregoing, shares of Common Stock that are (x) withheld from any Stock Option or Stock Appreciation Right in payment of the exercise, base or purchase price or taxes relating to such an Award, (y) not issued or delivered as a result of the net settlement of any Award, or (z) repurchased by the Company on the open market with the proceeds of an Option, will be deemed to have been delivered under the Plan and will not be available for future Awards under the Plan. 4.3 Awards Granted to Non-Employee Directors. No Non-Employee Director may be granted, during any calendar year, Awards having a fair value (determined on the date of grant) that, when added to all cash compensation paid to the Non-Employee Director in respect of the Non-Employee Director’s service as a member of the Board for such calendar year, exceeds $500,000. 4.4 Adjustments. If there shall occur any change with respect to the outstanding shares of Common Stock by reason of any recapitalization, reclassification, stock dividend, extraordinary cash dividend, stock split, reverse stock split or other distribution with respect to the shares of Common Stock or any merger, reorganization, consolidation, combination, spin-off or other corporate event or transaction or any other change affecting the Common Stock (other than regular cash dividends to stockholders of the Company), the Committee shall, in the manner and to the extent it considers appropriate and equitable to the Participants and consistent with the terms of the Plan, cause an adjustment to be made to (i) the maximum number and kind of shares of Common Stock or other securities provided in Section 4.1 hereof, (ii) the number and kind of shares of Common Stock, units or other securities or rights subject to then outstanding Awards, (iii) the exercise, base or purchase price for each share or unit or other security or right subject to then outstanding Awards, (iv) other value determinations applicable to the Plan and/or outstanding Awards, and/or (v) any other terms of an Award that are affected by the event. Notwithstanding the foregoing, (a) any such adjustments shall, to the extent necessary, be made in a manner consistent with the requirements of Section 409A of the Code and (b) in the case of Incentive Stock Options, any such adjustments shall, to the extent practicable, be made in a manner consistent with the requirements of Section 424(a) of the Code, unless otherwise determined by the Committee. 5. Eligibility and Awards. 5.1 Designation of Participants. Any Eligible Person may be selected by the Committee to receive an Award and become a Participant. The Committee has the authority, in its discretion, to determine and designate from time to time those Eligible Persons who are to be granted Awards, the types of Awards to be granted, the number of shares of Common Stock or units subject to Awards to be granted and the terms and conditions of such Awards consistent with the terms of the Plan. In selecting Eligible Persons to be Participants, and in determining the type and amount of Awards to be granted under the Plan, the Committee shall consider any and all factors that it deems relevant or appropriate. Designation of a Participant in any year shall not require the Committee to designate such Person to receive an Award in any other year or, once designated, to receive the same type or amount of Award as granted to such Participant in any other year. 5.2 Determination of Awards. The Committee shall determine the terms and conditions of all Awards granted to Participants in accordance with its authority under Section 3.2 hereof. An Award may consist of one type of right or benefit hereunder or of two or more such rights or benefits granted in tandem. 5.3 Award Agreements. Each Award granted to an Eligible Person shall be represented by an Award Agreement. The terms of the Award, as determined by the Committee, will be set forth in the applicable Award Agreements as described in Section 15.2 hereof. 6. Stock Options. 6.1 Grant of Stock Options. A Stock Option may be granted to any Eligible Person selected by the Committee, except that an Incentive Stock Option may be granted only to an Eligible Person satisfying the conditions of Section 6.7(a) hereof. Each Stock Option shall be designated on the Date of Grant, in the discretion of the Committee, as an Incentive Stock Option or as a Nonqualified Stock Option. All Stock Options granted under the Plan are intended to comply with or be exempt from the requirements of Section 409A of the Code, to the extent applicable. TABLE OF CONTENTS 6.2 Exercise Price. The exercise price per share of a Stock Option (other than a Stock Option substituted or assumed under Section 15.9) shall not be less than one hundred percent (100%) of the Fair Market Value of a share of Common Stock on the Date of Grant. The Committee may in its discretion specify an exercise price per share that is higher than the Fair Market Value of a share of Common Stock on the Date of Grant. 6.3 Vesting of Stock Options. The Committee shall, in its discretion, prescribe in an award agreement the time or times at which or the conditions upon which, a Stock Option or portion thereof shall become vested and/or exercisable. The requirements for vesting and exercisability of a Stock Option may be based on the continued Service of the Participant with the Company or a Subsidiary for a specified time period (or periods), on the attainment of a specified performance goal(s) and/or on such other terms and conditions as approved by the Committee in its discretion. If the vesting requirements of a Stock Option are not satisfied, the Award shall be forfeited. 6.4 Term of Stock Options. The Committee shall in its discretion prescribe in an Award Agreement the period during which a vested Stock Option may be exercised; provided, however, that the maximum term of a Stock Option shall be ten (10) years from the Date of Grant. The Committee may provide that a Stock Option will cease to be exercisable upon or at the end of a specified time period following a termination of Service for any reason as set forth in the Award Agreement or otherwise. A Stock Option may be earlier terminated as specified by the Committee and set forth in an Award Agreement upon or following the termination of a Participant’s Service with the Company or any Subsidiary, including by reason of voluntary resignation, death, Disability, termination for Cause or any other reason. Subject to compliance with Section 409A of the Code and the provisions of this Section 6, the Committee may extend at any time the period in which a Stock Option may be exercised, but not beyond ten (10) years from the Date of Grant. 6.5 Stock Option Exercise; Tax Withholding. Subject to such terms and conditions as specified in an Award Agreement (including applicable vesting requirements), a Stock Option may be exercised in whole or in part at any time during the term thereof by notice in the form required by the Company, together with payment of the aggregate exercise price and applicable withholding tax. Payment of the exercise price may be made: (i) in cash or by cash equivalent acceptable to the Committee, or, (ii) to the extent permitted by the Committee in its sole discretion in an Award Agreement or otherwise (A) in shares of Common Stock valued at the Fair Market Value of such shares on the date of exercise, (B) through an open-market, broker-assisted sales transaction pursuant to which the Company is promptly delivered the amount of proceeds necessary to satisfy the exercise price, (C) by reducing the number of shares of Common Stock otherwise deliverable upon the exercise of the Stock Option by the number of shares of Common Stock having a Fair Market Value on the date of exercise equal to the exercise price, (D) by a combination of the methods described above or (E) by such other method as may be approved by the Committee. In accordance with Section 15.10 hereof, and in addition to and at the time of payment of the exercise price, the Participant shall pay to the Company the full amount of any and all applicable income tax, employment tax and other amounts required to be withheld in connection with such exercise, payable under such of the methods described above for the payment of the exercise price as may be approved by the Committee and set forth in the Award Agreement. 6.6 Limited Transferability of Nonqualified Stock Options. All Stock Options shall be nontransferable except (i) upon the Participant’s death, in accordance with Section 15.3 hereof or (ii) in the case of Nonqualified Stock Options only, for the transfer of all or part of the Stock Option to a Participant’s “family member” (as defined for purposes of the Form S-8 registration statement under the Securities Act), or as otherwise permitted by the Committee to the extent also permitted by the general instructions of the Form S-8 registration statement, as may be amended from time to time, in each case as may be approved by the Committee in its discretion at the time of proposed transfer; provided, in each case, that any permitted transfer shall be for no consideration. The transfer of a Nonqualified Stock Option may be subject to such terms and conditions as the Committee may in its discretion impose from time to time. Subsequent transfers of a Nonqualified Stock Option shall be prohibited other than in accordance with Section 15.3 hereof. 6.7 Additional Rules for Incentive Stock Options. (a) Eligibility. An Incentive Stock Option may be granted only to an Eligible Person who is considered an employee for purposes of Treasury Regulation Section 1.421-1(h) with respect to the Company or any Subsidiary that qualifies as a “subsidiary corporation” with respect to the Company for purposes of Section 424(f) of the Code. (b) Annual Limits. No Incentive Stock Option shall be granted to a Participant as a result of which the aggregate Fair Market Value (determined as of the Date of Grant) of the Common Stock with respect to which TABLE OF CONTENTS incentive stock options under Section 422 of the Code are exercisable for the first time in any calendar year under the Plan and any other stock option plans of the Company or any Subsidiary or parent corporation, would exceed $100,000, determined in accordance with Section 422(d) of the Code. This limitation shall be applied by taking Stock Options into account in the order in which granted. Any Stock Option grant that exceeds such limit shall be treated as a Nonqualified Stock Option. (c) Additional Limitations. In the case of any Incentive Stock Option granted to an Eligible Person who owns, either directly or indirectly (taking into account the attribution rules contained in Section 424(d) of the Code), stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Subsidiary, the exercise price shall not be less than one hundred ten percent (110%) of the Fair Market Value of a share of Common Stock on the Date of Grant and the maximum term shall be five (5) years. (d) Termination of Service. An Award of an Incentive Stock Option may provide that such Stock Option may be exercised not later than (i) three (3) months following termination of Service of the Participant with the Company and all Subsidiaries (other than as set forth in clause (ii) of this Section 6.7(d)) or (ii) one year following termination of Service of the Participant with the Company and all Subsidiaries due to death or permanent and total disability within the meaning of Section 22(e)(3) of the Code, in each case as and to the extent determined by the Committee to comply with the requirements of Section 422 of the Code. (e) Other Terms and Conditions; Nontransferability. Any Incentive Stock Option granted hereunder shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as are deemed necessary or desirable by the Committee, which terms, together with the terms of the Plan, shall be intended and interpreted to cause such Incentive Stock Option to qualify as an “incentive stock option” under Section 422 of the Code. A Stock Option that is granted as an Incentive Stock Option shall, to the extent it fails to qualify as an “incentive stock option” under the Code, be treated as a Nonqualified Stock Option. An Incentive Stock Option shall by its terms be nontransferable other than by will or by the laws of descent and distribution, and shall be exercisable during the lifetime of a Participant only by such Participant. (f) Disqualifying Dispositions. If shares of Common Stock acquired by exercise of an Incentive Stock Option are disposed of within two years following the Date of Grant or one year following the transfer of such shares to the Participant upon exercise, the Participant shall, promptly following such disposition, notify the Company in writing of the date and terms of such disposition and provide such other information regarding the disposition as the Company may reasonably require. 6.8 Repricing Prohibited. Subject to the adjustment provisions contained in Section 4.4 hereof and other than in connection with a Change in Control, without the prior approval of the Company’s stockholders, neither the Committee nor the Board shall cancel a Stock Option when the exercise price per share exceeds the Fair Market Value of one share of Common Stock in exchange for cash or another Award or cause the cancellation, substitution or amendment of a Stock Option that would have the effect of reducing the exercise price of such a Stock Option previously granted under the Plan or otherwise approve any modification to such a Stock Option, that would be treated as a “repricing” under the then applicable rules, regulations or listing requirements adopted by the NYSE or other principal exchange on which the Common Stock is then listed. 6.9 No Rights as Stockholder. The Participant shall not have any rights as a stockholder with respect to the shares underlying a Stock Option until such time as shares or Common Stock are delivered to the Participant pursuant to the terms of the Award Agreement. 7. Stock Appreciation Rights. 7.1 Grant of Stock Appreciation Rights. Stock Appreciation Rights may be granted to any Eligible Person selected by the Committee. Stock Appreciation Rights may be granted on a basis that allows for the exercise of the right by the Participant, or that provides for the automatic exercise or payment of the right upon a specified date or event. Stock Appreciation Rights shall be non-transferable, except as provided in Section 15.3 hereof. All Stock Appreciation Rights granted under the Plan are intended to comply with or otherwise be exempt from the requirements of Section 409A of the Code, to the extent applicable. 7.2 Terms of Share Appreciation Rights. The Committee shall in its discretion provide in an Award Agreement the time or times at which or the conditions upon which, a Stock Appreciation Right or portion thereof shall become vested and/or exercisable. The requirements for vesting and exercisability of a Stock Appreciation Right may be TABLE OF CONTENTS based on the continued Service of a Participant with the Company or a Subsidiary for a specified time period (or periods), on the attainment of a specified performance goal(s) and/or on such other terms and conditions as approved by the Committee in its discretion. If the vesting requirements of a Stock Appreciation Right are not satisfied, the Award shall be forfeited. A Stock Appreciation Right will be exercisable or payable at such time or times as determined by the Committee; provided, however, that the maximum term of a Stock Appreciation Right shall be ten (10) years from the Date of Grant. Subject to compliance with Section 409A of the Code and the provisions of this Section 7.2, the Committee may extend at any time the period in which a Stock Appreciation Right may be exercised, but not beyond ten (10) years from the Date of Grant. The Committee may provide that a Stock Appreciation Right will cease to be exercisable upon or at the end of a period following a termination of Service for any reason. The base price of a Stock Appreciation Right shall be determined by the Committee in its discretion; provided, however, that the base price per share shall not be less than one hundred percent (100%) of the Fair Market Value of a share of Common Stock on the Date of Grant (other than with respect to a Stock Appreciation Right substituted or assumed under Section 15.9). 7.3 Payment of Stock Appreciation Rights. A Stock Appreciation Right will entitle the holder, upon exercise or other payment of the Stock Appreciation Right, as applicable, to receive an amount determined by multiplying: (i) the excess of the Fair Market Value of a share of Common Stock on the date of exercise or payment of the Stock Appreciation Right over the base price of such Stock Appreciation Right, by (ii) the number of shares as to which such Stock Appreciation Right is exercised or paid. Payment of the amount determined under the foregoing may be made, as approved by the Committee and set forth in the Award Agreement, in shares of Common Stock valued at their Fair Market Value on the date of exercise or payment, in cash or in a combination of shares of Common Stock and cash, subject to applicable tax withholding requirements. 7.4 Repricing Prohibited. Subject to the adjustment provisions contained in Section 4.4 hereof and other than in connection with a Change in Control, without the prior approval of the Company’s stockholders, neither the Committee nor the Board shall cancel a Stock Appreciation Right when the base price per share exceeds the Fair Market Value of one share of Common Stock in exchange for cash or another Award or cause the cancellation, substitution or amendment of a Stock Appreciation Right that would have the effect of reducing the base price of such a Stock Appreciation Right previously granted under the Plan or otherwise approve any modification to such Stock Appreciation Right that would be treated as a “repricing” under the then applicable rules, regulations or listing requirements adopted by the NYSE or other principal exchange on which the Common Stock is then listed. 7.5 No Rights as Stockholder. The Participant shall not have any rights as a stockholder with respect to the shares underlying a Stock Appreciation Right unless and until such time as shares or Common Stock are delivered to the Participant pursuant to the terms of the Award Agreement. 8. Restricted Stock Awards. 8.1 Grant of Restricted Stock Awards. A Restricted Stock Award may be granted to any Eligible Person selected by the Committee. The Committee may require the payment by the Participant of a specified purchase price in connection with any Restricted Stock Award. 8.2 Vesting Requirements. The restrictions imposed on shares granted under a Restricted Stock Award shall lapse in accordance with the vesting requirements specified by the Committee in the Award Agreement. The requirements for vesting of a Restricted Stock Award may be based on the continued Service of the Participant with the Company or a Subsidiary for a specified time period (or periods), on the attainment of a specified performance goal(s) and/or on such other terms and conditions as approved by the Committee in its discretion. If the vesting requirements of a Restricted Stock Award are not satisfied, the Award shall be forfeited and the shares of Common Stock subject to the Award shall be returned to the Company. 8.3 Transfer Restrictions. Shares granted under any Restricted Stock Award may not be transferred, assigned or subject to any encumbrance, pledge or charge until all applicable restrictions are removed or have expired, except as provided in Section 15.3 hereof. Failure to satisfy any applicable restrictions shall result in the subject shares of the Restricted Stock Award being forfeited and returned to the Company. The Committee may require in an Award Agreement that certificates (if any) representing the shares granted under a Restricted Stock Award bear a legend making appropriate reference to the restrictions imposed, and that certificates (if any) representing the shares granted or sold under a Restricted Stock Award will remain in the physical custody of an escrow holder until all restrictions are removed or have expired. TABLE OF CONTENTS 8.4 Rights as Stockholder. Subject to the foregoing provisions of this Section 8 and the applicable Award Agreement, the Participant shall have all rights of a stockholder with respect to the shares granted to the Participant under a Restricted Stock Award, including the right to vote the shares and receive all dividends and other distributions paid or made with respect thereto, unless the Committee determines otherwise at the time the Restricted Stock Award is granted. The Committee shall determine and set forth in a Participant’s Award Agreement whether or not a Participant holding a Restricted Stock Award granted hereunder shall have the right to exercise voting rights with respect to the period during which the Restricted Stock Award is subject to forfeiture (the “Restriction Period”), and have the right to receive dividends on the Restricted Stock Award during the Restriction Period (and, if so, on what terms) provided that if a Participant has the right to receive dividends paid with respect to the Restricted Stock Award, such dividends shall be subject to the same vesting terms as the related Restricted Stock Award. 8.5 Section 83(b) Election. If a Participant makes an election pursuant to Section 83(b) of the Code with respect to a Restricted Stock Award, the Participant shall file, within thirty (30) days following the Date of Grant, a copy of such election with the Company and with the Internal Revenue Service, in accordance with the regulations under Section 83 of the Code. The Committee may provide in an Award Agreement that the Restricted Stock Award is conditioned upon the Participant’s making or refraining from making an election with respect to the Award under Section 83(b) of the Code. 9. Restricted Stock Units. 9.1 Grant of Restricted Stock Units. A Restricted Stock Unit may be granted to any Eligible Person selected by the Committee. The value of each Restricted Stock Unit is equal to the Fair Market Value of a share of Common Stock on the applicable date or time period of determination, as specified by the Committee. Restricted Stock Units shall be subject to such restrictions and conditions as the Committee shall determine. Restricted Stock Units shall be non-transferable, except as provided in Section 15.3 hereof. 9.2 Vesting of Restricted Stock Units. The Committee shall, in its discretion, determine any vesting requirements with respect to Restricted Stock Units, which shall be set forth in the Award Agreement. The requirements for vesting of a Restricted Stock Unit may be based on the continued Service of the Participant with the Company or a Subsidiary for a specified time period (or periods), on the attainment of a specified performance goal(s) and/or on such other terms and conditions as approved by the Committee in its discretion. If the vesting requirements of a Restricted Stock Unit Award are not satisfied, the Award shall be forfeited. 9.3 Payment of Restricted Stock Units. Restricted Stock Units shall become payable to a Participant at the time or times determined by the Committee and set forth in the Award Agreement, which may be upon or following the vesting of the Award. Payment of a Restricted Stock Unit may be made, as approved by the Committee and set forth in the Award Agreement, in cash or in shares of Common Stock or in a combination thereof, subject to applicable tax withholding requirements. Any cash payment of a Restricted Stock Unit shall be made based upon the Fair Market Value of a share of Common Stock, determined on such date or over such time period as determined by the Committee. 9.4 Dividend Equivalent Rights. Dividends shall not be paid with respect to Restricted Stock Units. Dividend equivalent rights may be granted with respect to the Shares subject to Restricted Stock Units to the extent permitted by the Committee and set forth in the applicable Award Agreement; provided that any dividend equivalent rights granted shall be subject to the same vesting terms as the related Restricted Stock Units. 9.5 No Rights as Stockholder. The Participant shall not have any rights as a stockholder with respect to the shares subject to a Restricted Stock Unit until such time as shares of Common Stock are delivered to the Participant pursuant to the terms of the Award Agreement. 10. Stock-Based Awards. 10.1 Grant of Stock-Based Awards. A Stock-Based Award may be granted to any Eligible Person selected by the Committee. A Stock-Based Award may be granted for past Services, in lieu of bonus or other cash compensation, as directors’ compensation or for any other valid purpose as determined by the Committee. The Committee shall determine the terms and conditions of such Awards, and such Awards may be made without vesting requirements. In addition, the Committee may, in connection with any Stock-Based Award, require the payment of a specified purchase price. TABLE OF CONTENTS 10.2 Rights as Stockholder. Subject to the foregoing provisions of this Section 10 and the applicable Award Agreement, upon the issuance of shares of Common Stock under a Stock-Based Award the Participant shall have all rights of a stockholder with respect to the shares of Common Stock, including the right to vote the shares and receive all dividends and other distributions paid or made with respect thereto. If a Participant has the right to receive dividends paid with respect to the Stock-Based Award, such dividends shall be subject to the same vesting terms as the related Stock-Based Award, if applicable. 11. Change in Control. 11.1 Effect on Awards. Upon the occurrence of a Change in Control, all outstanding Awards shall either (a) be continued or assumed by the Company (if it is the surviving company or corporation) or by the surviving company or corporation or its parent (with such continuation or assumption including conversion into the right to receive securities, cash or a combination of both), or (b) substituted by the surviving company or corporation or its parent of awards (with such substitution including conversion into the right to receive securities, cash or a combination of both), with substantially similar terms for outstanding Awards (with appropriate adjustments to the type of consideration payable upon settlement of the Awards or other relevant factors, and with any applicable performance conditions adjusted pursuant to Section 12 or deemed achieved (i) for any completed performance period, based on actual performance, or (ii) for any partial or future performance period, at the greater of the target level or actual performance, in each case as determined by the Committee (with the Award remaining subject only to time vesting), unless otherwise provided in an Award Agreement). 11.2 Certain Adjustments. To the extent that outstanding Awards are not continued, assumed or substituted pursuant to Section 11.1 upon or following a Change in Control, the Committee is authorized (but not obligated) to make adjustments in the terms and conditions of outstanding Awards, including without limitation the following (or any combination thereof): (a) acceleration of exercisability, vesting and/or payment of outstanding Awards immediately prior to the occurrence of such event or upon or following such event; (b) upon written notice, providing that any outstanding Stock Options and Stock Appreciation Rights are exercisable during a period of time immediately prior to the scheduled consummation of the event or such other period as determined by the Committee (contingent upon the consummation of the event), and at the end of such period, such Stock Options and Stock Appreciation Rights shall terminate to the extent not so exercised within the relevant period; and (c) cancellation of all or any portion of outstanding Awards for fair value (in the form of cash, Common Shares, other property or any combination thereof) as determined in the sole discretion of the Committee; provided, however, that, in the case of Stock Options and Stock Appreciation Rights or similar Awards, the fair value may equal the excess, if any, of the value or amount of the consideration to be paid in the Change in Control transaction to holders of shares of Common Stock (or, if no such consideration is paid, Fair Market Value of the shares of Common Stock) over the aggregate exercise or base price, as applicable, with respect to such Awards or portion thereof being canceled, or if there is no such excess, zero; provided, further, that if any payments or other consideration are deferred and/or contingent as a result of escrows, earn outs, holdbacks or any other contingencies, payments under this provision may be made on substantially the same terms and conditions applicable to, and only to the extent actually paid to, the holders of Common Shares in connection with the Change in Control. 11.3 Certain Terminations of Service. Notwithstanding the provisions of Section 11.1, if a Participant’s Service with the Company and its Subsidiaries is terminated upon or within twenty four (24) months following a Change in Control by the Company without Cause or upon such other circumstances as determined by the Committee, the unvested portion (if any) of all outstanding Awards held by the Participant shall immediately vest (and, to the extent applicable, become exercisable) and be paid in full upon such termination, with any applicable performance conditions deemed achieved (i) for any completed performance period, based on actual performance, or (ii) for any partial or future performance period, at the greater of the target level or actual performance, in each case as determined by the Committee, unless otherwise provided in an Award Agreement. TABLE OF CONTENTS 11.4 Definition of Change in Control. Unless otherwise defined in an Award Agreement or other written agreement approved by the Committee, “Change in Control” means, and shall occur, if: (a) any Person (other than the Company, any trustee or other fiduciary holding securities under any employee benefit plan of the Company, or any company owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of shares of Common Stock), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company’s then outstanding securities; (b) during any period of two consecutive years (the “Board Measurement Period”) individuals who at the beginning of such period constitute the Board and any new director (other than a director designated by a Person who has entered into an agreement with the Company to effect a transaction described in paragraph (a), (c), or (d) of this section, or a director initially elected or nominated as a result of an actual or threatened election contest with respect to directors or as a result of any other actual or threatened solicitation of proxies by or on behalf of any Person other than the Board) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the Board Measurement Period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the Board; (c) a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; provided, however, that a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person (other than those covered by the exceptions in (i) above) acquires more than 50% of the combined voting power of the Company’s then outstanding securities shall not constitute a Change in Control of the Company; or (d) the stockholders of the Company approve the consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets other than (i) the sale or disposition of all or substantially all of the assets of the Company to a Person or Persons who beneficially own, directly or indirectly, more than 50% of the combined voting power of the outstanding voting securities of the Company at the time of the sale or (ii) pursuant to a spinoff type transaction, directly or indirectly, of such assets to the stockholders of the Company. Notwithstanding the foregoing, to the extent necessary to comply with Section 409A of the Code with respect to the payment of “nonqualified deferred compensation,” “Change in Control” shall be limited to a “change in control event” as defined under Section 409A of the Code. 12. Performance Goals; Adjustment. The Committee may provide for the performance goals to which an Award is subject, or the manner in which performance will be measured against such performance goals, to be adjusted in such manner as it deems appropriate, including, without limitation, adjustments to reflect charges for restructurings, non-operating income, the impact of corporate transactions or discontinued operations, events that are unusual in nature or infrequent in occurrence and other non-recurring items, currency fluctuations, litigation or claim judgements, settlements, and the effects of accounting or tax law changes. In addition, with respect to a Participant hired or promoted following the beginning of a performance period, the Committee may determine to prorate the performance goals in respect of such Participant’s Awards for the partial performance period. 13. Forfeiture Events. 13.1 General. The Committee may specify in an Award Agreement at the time of the Award that the Participant’s rights, payments and benefits with respect to an Award are subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, without limitation, termination of Service for Cause, violation of laws, regulations or material Company policies, breach of noncompetition, non-solicitation, confidentiality or other restrictive covenants that may apply to the Participant, application of a Company clawback policy relating to financial restatement, or other conduct by the Participant that is detrimental to the business or reputation of the Company. TABLE OF CONTENTS 13.2 Termination for Cause. (a) Treatment of Awards. Unless otherwise provided by the Committee and set forth in an Award Agreement, if (i) a Participant’s Service with the Company or any Subsidiary shall be terminated for Cause or (ii) after termination of Service for any other reason, the Committee determines in its discretion either that, (1) during the Participant’s period of Service, the Participant engaged in an act or omission which would have warranted termination of Service for Cause or (2) after termination, the Participant engages in conduct that violates any continuing obligation or duty of the Participant in respect of the Company or any Subsidiary, such Participant’s rights, payments and benefits with respect to an Award shall be subject to cancellation, forfeiture and/or recoupment, as provided in Section 13.3 below. The Company shall have the power to determine whether the Participant has been terminated for Cause, the date upon which such termination for Cause occurs, whether the Participant engaged in an act or omission which would have warranted termination of Service for Cause or engaged in conduct that violated any continuing obligation or duty of the Participant in respect of the Company or any Subsidiary. Any such determination shall be final, conclusive and binding upon all Persons. In addition, if the Company shall reasonably determine that a Participant has committed or may have committed any act which could constitute the basis for a termination of such Participant’s Service for Cause or violates any continuing obligation or duty of the Participant in respect of the Company or any Subsidiary, the Company may suspend the Participant’s rights to exercise any Stock Option or Stock Appreciation Right, receive any payment or vest in any right with respect to any Award pending a determination by the Company of whether an act or omission could constitute the basis for a termination for Cause as provided in this Section 13.2. (b) Definition of Cause. “Cause” means with respect to a Participant’s termination of Service, the following: (a) in the case where there is no employment agreement, consulting agreement, change in control agreement or similar agreement in effect between the Company or an Affiliate and the Participant (or where there is such an agreement but it does not define “cause” (or words of like import, which shall include but not be limited to “gross misconduct”)), termination due to a Participant’s (1) failure to substantially perform Participant’s duties or obey lawful directives that continues after receipt of written notice from the Company and a ten (10)-day opportunity to cure; (2) gross misconduct or gross negligence in the performance of Participant’s duties; (3) fraud, embezzlement, theft, or any other act of material dishonesty or misconduct; (4) conviction of, indictment for, or plea of guilty or nolo contendere to, a felony or any crime involving moral turpitude; (5) material breach or violation of any agreement with the Company or its Affiliates, any restrictive covenant applicable to Participant, or any Company policy (including, without limitation, with respect to harassment); or (6) other conduct, acts or omissions that, in the good faith judgment of the Company, are likely to materially injure the reputation, business or a business relationship of the Company or any of its Affiliates; or (b) in the case where there is an employment agreement, consulting agreement, change in control agreement or similar agreement in effect between the Company or an Affiliate and the Participant that defines “cause” (or words of like import, which shall include but not be limited to “gross misconduct”), “cause” as defined under such agreement. With respect to a termination of Service for a non-employee director, Cause means an act or failure to act that constitutes cause for removal of a director under applicable Delaware law. Any voluntary termination of Service by the Participant in anticipation of an involuntary termination of the Participant’s Service for Cause shall be deemed to be a termination for Cause. 13.3 Right of Recapture. (a) General. If at any time within one (1) year (or such longer time specified in an Award Agreement or other agreement with a Participant or policy applicable to the Participant) after the date on which a Participant exercises a Stock Option or Stock Appreciation Right or on which a Stock-Based Award, Restricted Stock Award or Restricted Stock Unit vests, is settled in shares or otherwise becomes payable, or on which income otherwise is realized or property is received by a Participant in connection with an Award, (i) a Participant’s Service is terminated for Cause, (ii) the Committee determines in its discretion that the Participant is subject to any recoupment of benefits pursuant to the Company’s compensation recovery, “clawback” or similar policy, as may be in effect from time to time, or (iii) after a Participant’s Service terminates for any other reason, the Committee determines in its discretion either that, (1) during the Participant’s period of Service, the Participant engaged in an act or omission which would have warranted termination of the Participant’s Service for Cause or (2) after a Participant’s termination of Service, the Participant engaged in conduct that violated any continuing obligation or duty of the Participant in respect of the Company or any Subsidiary, then, at the sole discretion of the Committee, any gain realized by the Participant from the exercise, vesting, payment, settlement or other TABLE OF CONTENTS realization of income or receipt of property by the Participant in connection with an Award, shall be repaid by the Participant to the Company upon notice from the Company, subject to applicable law. Such gain shall be determined as of the date or dates on which the gain is realized by the Participant, without regard to any subsequent change in the Fair Market Value of a share of Common Stock. To the extent not otherwise prohibited by law, the Company shall have the right to offset the amount of such repayment obligation against any amounts otherwise owed to the Participant by the Company (whether as wages, vacation pay or pursuant to any benefit plan or other compensatory arrangement). (b) Accounting Restatement. If a Participant receives compensation pursuant to an Award under the Plan based on financial statements that are subsequently restated in a way that would decrease the value of such compensation, the Participant will, to the extent not otherwise prohibited by law, upon the written request of the Company, forfeit and repay to the Company the difference between what the Participant received and what the Participant should have received based on the accounting restatement, in accordance with (i) any compensation recovery, “clawback” or similar policy, as may be in effect from time to time to which such Participant is subject and (ii) any compensation recovery, “clawback” or similar policy made applicable by law including the provisions of Section 945 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules, regulations and requirements adopted thereunder by the Securities and Exchange Commission and/or any national securities exchange on which the Company’s equity securities may be listed (the “Policy”). By accepting an Award hereunder, the Participant acknowledges and agrees that the Policy, whenever adopted, shall apply to such Award, and all incentive-based compensation payable pursuant to such Award shall be subject to forfeiture and repayment pursuant to the terms of the Policy. 14. Transfer, Leave of Absence, Etc. For purposes of the Plan, except as otherwise determined by the Committee, the following events shall not be deemed a termination of Service: (a) a transfer to the service of the Company from a Subsidiary or from the Company to a Subsidiary, or from one Subsidiary to another; or (b) an approved leave of absence for military service or sickness, a leave of absence where the employee’s right to re-employment is protected either by a statute or by contract or under the policy pursuant to which the leave of absence was granted, a leave of absence for any other purpose approved by the Company or if the Committee otherwise so provides in writing. 15. General Provisions. 15.1 Status of Plan. The Committee may authorize the creation of trusts or other arrangements to meet the Company’s obligations to deliver shares of Common Stock or make payments with respect to Awards. 15.2 Award Agreement. An Award under the Plan shall be evidenced by an Award Agreement in a written or electronic form approved by the Committee setting forth the number of shares of Common Stock or other amounts or securities subject to the Award, the exercise price, base price or purchase price of the Award, the time or times at which an Award will become vested, exercisable or payable and the term of the Award. The Award Agreement also may set forth the effect on an Award of a Change in Control and/or a termination of Service under certain circumstances. The Award Agreement shall be subject to and incorporate, by reference or otherwise, all of the applicable terms and conditions of the Plan, and also may set forth other terms and conditions applicable to the Award as determined by the Committee consistent with the limitations of the Plan. The grant of an Award under the Plan shall not confer any rights upon the Participant holding such Award other than such terms, and subject to such conditions, as are specified in the Plan as being applicable to such type of Award (or to all Awards) or as are expressly set forth in the Award Agreement. The Committee need not require the execution of an Award Agreement by a Participant, in which case, acceptance of the Award by the Participant shall constitute agreement by the Participant to the terms, conditions, restrictions and limitations set forth in the Plan and the Award Agreement as well as the administrative guidelines of the Company in effect from time to time. In the event of any conflict between the provisions of the Plan and any Award Agreement, the provisions of the Plan shall prevail. 15.3 No Assignment or Transfer; Beneficiaries. Except as provided in Section 6.6 hereof or as otherwise provided by the Committee to the extent not prohibited under Section A.1.(5) of the general instructions of Form S-8, as may be amended from time to time, Awards under the Plan shall not be assignable or transferable by the Participant, and shall not be subject in any manner to assignment, alienation, pledge, encumbrance or charge. Notwithstanding the foregoing, in the event of the death of a Participant, except as otherwise provided by the Committee, an outstanding Award may be exercised by or shall become payable to the Participant’s beneficiary as determined under the Company 401(k) retirement plan or other applicable retirement or pension plan. In lieu of such TABLE OF CONTENTS determination, a Participant may, from time to time, name any beneficiary or beneficiaries to receive any benefit in case of the Participant’s death before the Participant receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant and will be effective only when filed by the Participant in writing (in such form or manner as may be prescribed by the Committee) with the Company during the Participant’s lifetime. In the absence of a valid designation as provided above, if no validly designated beneficiary survives the Participant or if each surviving validly designated beneficiary is legally impaired or prohibited from receiving the benefits under an Award, the Participant’s beneficiary shall be the legatee or legatees of such Award designated under the Participant’s last will or by such Participant’s executors, personal representatives or distributees of such Award in accordance with the Participant’s will or the laws of descent and distribution. The Committee may provide in the terms of an Award Agreement or in any other manner prescribed by the Committee that the Participant shall have the right to designate a beneficiary or beneficiaries who shall be entitled to any rights, payments or other benefits specified under an Award following the Participant’s death. Any transfer permitted under this Section 15.3 shall be for no consideration. 15.4 No Right to Employment or Continued Service. Nothing in the Plan, in the grant of any Award or in any Award Agreement shall confer upon any Eligible Person or any Participant any right to continue in the Service of the Company or any of its Subsidiaries or interfere in any way with the right of the Company or any of its Subsidiaries to terminate the employment or other service relationship of an Eligible Person or a Participant for any reason or no reason at any time. 15.5 Rights as Stockholder. A Participant shall have no rights as a holder of shares of Common Stock with respect to any unissued securities covered by an Award until the date the Participant becomes the holder of record of such securities. Except as provided in Section 4.4 hereof, no adjustment or other provision shall be made for dividends or other stockholder rights, except to the extent that the Award Agreement provides for dividend payments or dividend equivalent rights. The Committee may determine in its discretion the manner of delivery of Common Stock to be issued under the Plan, which may be by delivery of stock certificates, electronic account entry into new or existing accounts or any other means as the Committee, in its discretion, deems appropriate. The Committee may require that the stock certificates (if any) be held in escrow by the Company for any shares of Common Stock or cause the shares to be legended in order to comply with the securities laws or other applicable restrictions. Should the shares of Common Stock be represented by book or electronic account entry rather than a certificate, the Committee may take such steps to restrict transfer of the shares of Common Stock as the Committee considers necessary or advisable. 15.6 Trading Policy and Other Restrictions. Transactions involving Awards under the Plan shall be subject to the Company’s insider trading and Regulation FD policy and other restrictions, terms and conditions, to the extent established by the Committee or by applicable law, including any other applicable policies set by the Committee, from time to time. 15.7 Section 409A Compliance. To the extent applicable, it is intended that the Plan and all Awards hereunder comply with, or be exempt from, the requirements of Section 409A of the Code and the Treasury Regulations and other guidance issued thereunder, and that the Plan and all Award Agreements shall be interpreted and applied by the Committee in a manner consistent with this intent in order to avoid the imposition of any additional tax under Section 409A of the Code. In the event that any (i) provision of the Plan or an Award Agreement, (ii) Award, payment, transaction or (iii) other action or arrangement contemplated by the provisions of the Plan is determined by the Committee to not comply with the applicable requirements of Section 409A of the Code and the Treasury Regulations and other guidance issued thereunder, the Committee shall have the authority to take such actions and to make such changes to the Plan or an Award Agreement as the Committee deems necessary to comply with such requirements. No payment that constitutes deferred compensation under Section 409A of the Code that would otherwise be made under the Plan or an Award Agreement upon a termination of Service will be made or provided unless and until such termination is also a “separation from service,” as determined in accordance with Section 409A of the Code. Notwithstanding the foregoing or anything elsewhere in the Plan or an Award Agreement to the contrary, if a Participant is a “specified employee” as defined in Section 409A of the Code at the time of termination of Service with respect to an Award, then solely to the extent necessary to avoid the imposition of any additional tax under Section 409A of the Code, the commencement of any payments or benefits under the Award shall be deferred until the date that is six (6) months plus one (1) day following the date of the Participant’s termination of Service or, if earlier, the Participant’s death (or such other period as required to comply with Section 409A). For purposes of Section 409A of the Code, a Participant’s right to receive any installment payments pursuant to this Plan or any Award granted hereunder shall be treated as a right to receive a series of separate and distinct payments. For the avoidance TABLE OF CONTENTS of doubt, each applicable tranche of Common Shares subject to vesting under any Award shall be considered a right to receive a series of separate and distinct payments. In no event whatsoever shall the Company be liable for any additional tax, interest or penalties that may be imposed on a Participant by Section 409A of the Code or any damages for failing to comply with Section 409A of the Code. 15.8 Securities Law Compliance. No shares of Common Stock will be issued or transferred pursuant to an Award unless and until all then applicable requirements imposed by Federal and state securities and other laws, rules and regulations and by any regulatory agencies having jurisdiction, and by any exchanges upon which the shares of Common Stock may be listed, have been fully met. As a condition precedent to the issuance of shares of Common Stock pursuant to the grant or exercise of an Award, the Company may require the Participant to take any action that the Company determines is necessary or advisable to meet such requirements. The Committee may impose such conditions on any shares of Common Stock issuable under the Plan as it may deem advisable, including, without limitation, restrictions under the Securities Act, under the requirements of any exchange upon which such shares of the same class are then listed, and under any blue sky or other securities laws applicable to such shares. The Committee may also require the Participant to represent and warrant at the time of issuance or transfer that the shares of Common Stock are being acquired solely for investment purposes and without any current intention to sell or distribute such shares. 15.9 Substitution or Assumption of Awards in Corporate Transactions. The Committee may grant Awards under the Plan in connection with the acquisition, whether by purchase, merger, consolidation or other corporate transaction, of the business or assets of any corporation or other entity, in substitution for awards previously granted by such corporation or other entity or otherwise. The Committee may also assume any previously granted awards of a former employee or a current employee, director, consultant or other service provider of another corporation or entity that becomes an Eligible Person by reason of such corporation transaction. The terms and conditions of the substituted or assumed awards may vary from the terms and conditions that would otherwise be required by the Plan solely to the extent the Committee deems necessary for such purpose. To the extent permitted by applicable law and the listing requirements of the NYSE or other exchange or securities market on which the Common Shares are listed, any such substituted or assumed awards shall not reduce the Share Reserve. 15.10 Tax Withholding. The Participant shall be responsible for payment of any taxes or similar charges required by law to be paid or withheld from an Award or an amount paid in satisfaction of an Award. Any required withholdings shall be paid by the Participant on or prior to the payment or other event that results in taxable income in respect of an Award. The Award Agreement may specify the manner in which the withholding obligation shall be satisfied with respect to the particular type of Award, which may include permitting the Participant to elect to satisfy the withholding obligation by tendering shares of Common Stock to the Company or having the Company withhold a number of shares of Common Stock having a value in each case up to the maximum statutory tax rates in the applicable jurisdiction or as the Committee may approve in its discretion (provided that such withholding does not result in adverse tax or accounting consequences to the Company), or similar charge required to be paid or withheld. The Company shall have the power and the right to require a Participant to remit to the Company the amount necessary to satisfy federal, state, provincial and local taxes, domestic or foreign, required by law or regulation to be withheld, and to deduct or withhold from any shares of Common Stock deliverable under an Award to satisfy such withholding obligation. 15.11 Unfunded Plan. The adoption of the Plan and any reservation of shares of Common Stock or cash amounts by the Company to discharge its obligations hereunder shall not be deemed to create a trust or other funded arrangement. Except upon the issuance of shares of Common Stock pursuant to an Award, any rights of a Participant under the Plan shall be those of a general unsecured creditor of the Company, and neither a Participant nor the Participant’s permitted transferees or estate shall have any other interest in any assets of the Company by virtue of the Plan. Notwithstanding the foregoing, the Company shall have the right to implement or set aside funds in a grantor trust, subject to the claims of the Company’s creditors or otherwise, to discharge its obligations under the Plan. 15.12 Other Compensation and Benefit Plans. The adoption of the Plan shall not affect any other share incentive or other compensation plans in effect for the Company or any Subsidiary, nor shall the Plan preclude the Company from establishing any other forms of share incentive or other compensation or benefit program for employees of the Company or any Subsidiary. The amount of any compensation deemed to be received by a Participant pursuant to an Award shall not constitute includable compensation for purposes of determining the amount of benefits to which a Participant is entitled under any other compensation or benefit plan or program of the Company or a Subsidiary, including, without limitation, under any pension or severance benefits plan, except to the extent specifically provided by the terms of any such plan. TABLE OF CONTENTS 15.13 Plan Binding on Transferees. The Plan shall be binding upon the Company, its transferees and assigns, and the Participant, the Participant’s executor, administrator and permitted transferees and beneficiaries. 15.14 Severability. If any provision of the Plan or any Award Agreement shall be determined to be illegal or unenforceable by any court of law in any jurisdiction, the remaining provisions hereof and thereof shall be severable and enforceable in accordance with their terms, and all provisions shall remain enforceable in any other jurisdiction. 15.15 Governing Law. The Plan, all Awards and all Award Agreements, and all claims or causes of action (whether in contract, tort or statute) that may be based upon, arise out of or relate to the Plan, any Award or Award Agreement, or the negotiation, execution or performance of any such documents or matter related thereto (including any claim or cause of action based upon, arising out of or related to any representation or warranty made in or in connection with the Plan, any Award or Award Agreement, or as an inducement to enter into any Award Agreement), shall be governed by, and enforced in accordance with, the internal laws of the State of Delaware, including its statutes of limitations and repose, but without regard to any borrowing statute that would result in the application of the statute of limitations or repose of any other jurisdiction. 15.16 No Fractional Shares. No fractional shares of Common Stock shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash, other securities or other property shall be paid or transferred in lieu of any fractional shares of Common Stock or whether such fractional shares or any rights thereto shall be canceled, terminated or otherwise eliminated. 15.17 No Guarantees Regarding Tax Treatment. Neither the Company nor the Committee make any guarantees to any Person regarding the tax treatment of Awards or payments made under the Plan. Neither the Company nor the Committee has any obligation to take any action to prevent the assessment of any tax on any Person with respect to any Award under Section 409A of the Code, Section 4999 of the Code or otherwise and neither the Company nor the Committee shall have any liability to a Person with respect thereto. 15.18 Data Protection. By participating in the Plan, each Participant consents to the collection, processing, transmission and storage by the Company, its Subsidiaries and any third party administrators of any data of a professional or personal nature for the purposes of administering the Plan. 15.19 Awards to Non-U.S. Participants. To comply with the laws in countries other than the United States in which the Company or any of its Subsidiaries or Affiliates operates or has employees, Non-Employee Directors or consultants, the Committee, in its sole discretion, shall have the power and authority to (i) modify the terms and conditions of any Award granted to Participants outside the United States to comply with applicable foreign laws, (ii) take any action, before or after an Award is made, that it deems advisable to obtain approval or comply with any necessary local government regulatory exemptions or approvals and (iii) establish subplans and modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable. Any subplans and modifications to Plan terms and procedures established under this Section 15.19 by the Committee shall be attached to this Plan document as appendices. 16. Term; Amendment and Termination; Stockholder Approval. 16.1 Term. The Plan shall be effective as of the date of its approval by the stockholders of the Company (the “Effective Date”). Subject to Section 16.2 hereof, the Plan shall terminate on the tenth anniversary of the Effective Date. 16.2 Amendment and Termination. The Board may from time to time and in any respect, amend, modify, suspend or terminate the Plan; provided, however, that no amendment, modification, suspension or termination of the Plan shall materially and adversely affect any Award theretofore granted without the consent of the Participant or the permitted transferee of the Award. The Board may seek the approval of any amendment, modification, suspension or termination by the Company’s stockholders to the extent it deems necessary in its discretion for purposes of compliance with Section 422 of the Code or for any other purpose, and shall seek such approval to the extent it deems necessary in its discretion to comply with applicable law or listing requirements of NYSE or other exchange or securities market. Notwithstanding the foregoing, the Board shall have broad authority to amend the Plan or any Award under the Plan without the consent of a Participant to the extent it deems necessary or desirable in its discretion to comply with, take into account changes in, or interpretations of, applicable tax laws, securities laws, employment laws, accounting rules and other applicable laws, rules and regulations. TABLE OF CONTENTS Amendment No. 1 to the
ATI Physical Therapy, Inc.
2021 EQUITY INCENTIVE PLAN
As adopted by resolution of the Board of Directors on April 13, 2022 The ATI Physical Therapy Inc. 2021 Equity Incentive Plan (“Plan”) is hereby amended by replacing Section 4.1 with the following: 4.1 Number of Shares Reserved.Reserved. Subject to adjustment as provided in Section 4.2 and Section 4.4 hereof, the total number of shares of Common Stock that are available for issuance under the Plan (the “Share Reserve”“Share Reserve”) shall equal 21,289,233. Within the Share Reserve, the total number of shares of Common Stock available for issuance as Incentive Stock Options shall equal 21,289,233. In addition, the Share Reserve and the shares of Common Stock available for issuance as Incentive Stock Options shall be increased by the number of shares of Common Stock, if any, up to a maximum of 837,166 shares of Common Stock, that (i) were distributed by Wilco Acquisition, LP (the “Partnership”“Partnership”) to a participant in the Wilco Acquisition, LP 2016 Equity Incentive Plan pursuant to the terms of a restricted stock agreement between such participant, the Company and the Partnership and (ii) were or are forfeited by the participant. Each share of Common Stock subject to an Award shall reduce the Share Reserve by one share. Any shares of Common Stock delivered under the Plan shall consist of authorized and unissued shares or treasury shares. Except as amended above, the terms of the Plan shall be and remain unchanged, and the Plan as amended is hereby ratified and confirmed and shall remain in full force and effect. TABLE OF CONTENTS Appendix DAmendment No. 2 to the
ATI Physical Therapy, Inc.
2021 EQUITY INCENTIVE PLAN
As adopted by resolution of the Board of Directors on March 21, 2023 The ATI Physical Therapy Inc. 2021 Equity Incentive Plan (“Plan”) is hereby amended by replacing Section 4.1 with the following: 4.1 Number of Shares Reserved. Subject to adjustment as provided in Section 4.2 and Section 4.4 hereof, the total number of shares of Common Stock that are available for issuance under the Plan (the “Share Reserve”) shall equal 58,289,233. Within the Share Reserve, the total number of shares of Common Stock available for issuance as Incentive Stock Options shall equal 58,289,233. In addition, the Share Reserve and the shares of Common Stock available for issuance shall be increased by the number of shares of Common Stock, if any, that were or are forfeited by the participant. Each share of Common Stock subject to an Award shall reduce the Share Reserve by one share. Any shares of Common Stock delivered under the Plan shall consist of authorized and unissued shares or treasury shares. Except as amended above, the terms of the Plan shall be and remain unchanged, and the Plan as amended is hereby ratified and confirmed and shall remain in full force and effect. |
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